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Home , March 8

12204 Federal Register / Vol. 81, No. 45 / Tuesday, 8, 2016 / Rules and Regulations

DEPARTMENT OF HEALTH AND matters related to Navigators, non- B. Part 146—Requirements for the Group HUMAN SERVICES Navigator assistance personnel, and Health Insurance Market certified application counselors under C. Part 147—Health Insurance Reform 45 CFR Parts 144, 147, 153, 154, 155, part 155. Requirements for the Group and 156, and 158 Individual Health Insurance Markets Briana Levine, (301) 492–4247, for D. Part 153—Standards Related to [CMS–9937–F] matters related to agents and brokers. Reinsurance, Risk Corridors, and Risk Dana Krohn, (301) 492–4412, for Adjustment under the Affordable Care RIN 0938–AS57 matters related to employer notification Act and verification. E. Part 154—Health Insurance Issuer Rate Patient Protection and Affordable Care Rachel Arguello, (301) 492–4263, for Increases: Disclosure and Review Act; HHS Notice of Benefit and matters related to open enrollment Requirements Payment Parameters for 2017 periods and special enrollment periods F. Part 155—Exchange Establishment Standards and Other Related Standards AGENCY: Centers for Medicare & under part 155. Under the Affordable Care Act Medicaid Services (CMS), HHS. Anne Pesto, (410) 786–3492, for G. Part 156—Health Insurance Issuer ACTION: Final rule. matters related to eligibility Standards Under the Affordable Care determinations and appeals of eligibility Act, Including Standards Related to SUMMARY: This final rule sets forth determinations for Exchange Exchanges payment parameters and provisions participation and insurance affordability H. Part 158—Issuer Use of Premium Revenue: related to the risk adjustment, programs, and eligibility determinations Reporting and Rebate Requirements reinsurance, and risk corridors for exemptions. IV. Collection of Information Requirements A. ICRs Regarding Student Health Insurance programs; cost-sharing parameters and Kate Ficke, (301) 492–4256, for Coverage cost-sharing reductions; and user fees matters related to exemptions from the B. ICRs Regarding Submission of Risk for Federally-facilitated Exchanges. It shared responsibility payment. Corridors Data also provides additional amendments Ryan Mooney, (301) 492–4405, for C. ICRs Regarding Submission of Rate Filing regarding the annual open enrollment matters related to enrollment. Justification period for the individual market for the Terence Kane, (301) 492–4449, for D. ICRs Regarding Election to Operate an 2017 and 2018 benefit years; essential matters related to the income threshold. Exchange after 2014 health benefits; cost sharing; qualified Christelle Jang, (410) 786–8438, for E. ICRs Regarding Standards for Certified Application Counselors health plans; Exchange consumer matters related to the SHOP. F. ICRs Regarding Network Adequacy assistance programs; network adequacy; Krutika Amin, (301) 492–5153, for Standards patient safety; the Small Business matters related to the Federally- G. ICR Regarding Monthly SHOP Enrollment Health Options Program; stand-alone facilitated Exchange user fee. Reconciliation Files Submitted by dental plans; third-party payments to Leigha Basini, (301) 492–4380, for Issuers qualified health plans; the definitions of matters related to essential health H. ICR Regarding Patient Safety Standards large employer and small employer; fair benefits, network adequacy, essential I. ICRs Regarding Other Notices health insurance premiums; student community providers, and other V. Regulatory Impact Analysis A. Statement of Need health insurance coverage; the rate standards for QHP issuers. B. Overall Impact review program; the medical loss ratio Ielnaz Kashefipour, (301) 492–4376, C. Impact Estimates of the Payment Notice program; eligibility and enrollment; for matters related to standardized Provisions and Accounting Table exemptions and appeals; and other options and third party payment of D. Regulatory Alternatives Considered related topics. premiums and cost sharing. E. Regulatory Flexibility Act DATES: These regulations are effective Rebecca Zimmermann, (301) 492– F. Unfunded Mandates on 9, 2016. 4396, for matters related to stand-alone G. Federalism H. Congressional Review Act FOR FURTHER INFORMATION CONTACT: Jeff dental plans. Wu, (301) 492–4305, Krutika Amin, Cindy Chiou, (301) 492–5142, for Acronyms and Abbreviations (301) 492–5153, or Lindsey Murtagh matters related to QHP issuer oversight. Pat Meisol, (410) 786–1917, for Affordable Care Act The collective term for (301) 492–4106, for general information. the Patient Protection and Affordable Care David Mlawsky, (410) 786–6851, for matters related to cost-sharing Act (Pub. L. 111–148) and the Health Care matters related to fair health insurance reductions and the premium adjustment and Education Reconciliation Act of 2010 premiums, student health insurance percentage. (Pub. L. 111–152), as amended coverage, and the single risk pool. Nidhi Singh Shah, (301) 492–5110, for AHRQ Agency for Healthcare Research and Kelly Drury, (410) 786–0558, for matters related to patient safety Quality matters related to risk adjustment. standards. APTC Advance payments of the premium Christina Whitefield, (301) 492–4172, tax credit Adrianne Glasgow, (410) 786–0686, AV Actuarial value for matters related to reinsurance, for matters related to the medical loss ratio program. BBEDCA Balanced Budget and Emergency distributed data collection, and Deficit Control Act of 1985 administrative appeals of financial SUPPLEMENTARY INFORMATION: CCN CMS Certification Number transfers. Table of Contents CFR Code of Federal Regulations Melissa Jaffe, (301) 492–4129, for CHIP Children’s Health Insurance Program matters related to risk corridors. I. Executive Summary CMP Civil money penalty Lisa Cuozzo, (410) 786–1746, for II. Background CMS Centers for Medicare & Medicaid matters related to rate review. A. Legislative and Regulatory Overview Services Jennifer Stolbach, (301) 492–4350, for B. Stakeholder Consultation and Input CSR Cost-sharing reduction C. Structure of Final Rule ECN Exemption certificate number matters related to establishing a State III. Provisions of the Final Regulations and ECP Essential community provider Exchange, and State-based Exchanges Analyses and Responses to Public EHB Essential health benefits on the Federal Platform. Comments FFE Federally-facilitated Exchange Emily Ames, (301) 492–4246, and A. Part 144—Requirements Relating to Health FF–SHOP Federally-facilitated Small Michelle Koltov, (301) 492–4225, for Insurance Coverage Business Health Options Program

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FPL Federal poverty level individual market Exchanges are option with a specified cost-sharing FR Federal Register eligible to receive a premium tax credit structure at each of the bronze, silver FTE Full-time equivalent to make health insurance more (with cost-sharing reduction (CSR) plan GDP Gross domestic product affordable, and reductions in cost- variations), and gold metal levels. This HCC Hierarchical condition category HEN Hospital engagement network sharing payments to reduce out-of- policy does not restrict issuers’ ability to HHS United States Department of Health pocket expenses for health care services. offer non-standardized options. We and Human Services These Affordable Care Act reforms also anticipate differentially displaying these HICS Health Insurance Casework System include the premium stabilization standardized options to allow HIOS Health Insurance Oversight System programs (risk adjustment, reinsurance consumers to compare plans based on HIPAA Health Insurance Portability and and risk corridors) and rules that differences in price and quality rather Accountability Act of 1996 (Pub. L. 104– mitigate the potential impact of adverse than cost-sharing structures. 191) selection and stabilize the price of We are also finalizing policies relating HRSA Health Resources and Services health insurance in the individual and to network adequacy for QHPs on the Administration FFEs. We proposed, but are not HSA Health Savings Account small group markets. In previous IRS Internal Revenue Service rulemaking, we have outlined the major finalizing, a minimum quantitative MAGI Modified adjusted gross income provisions and parameters related to network adequacy threshold for each MAT Medication assisted treatment many Affordable Care Act programs. State. As States continue their work to MLR Medical loss ratio In this rule, we seek to improve implement the National Association of MV Minimum value States’ ability to operate efficient Insurance Commissioners’ (NAIC’s) NAIC National Association of Insurance Exchanges by leveraging the economies Health Benefit Plan Network Access and Commissioners of scale available through the Federal Adequacy Model Act (NAIC Network NHEA National Health Expenditure eligibility and enrollment platform and Adequacy Model Act), we will continue Accounts information technology infrastructure. to use the same quantitative time- OMB Office of Management and Budget OPM United States Office of Personnel We are finalizing a codification of a new distance standards in our review of Management Exchange model—the State-based plans for QHP certification on the FFEs, PBM Prescription benefit manager Exchange using the Federal platform which we will detail in the annual PHS Act Public Health Service Act (SBE–FP). This Exchange model will Letter to Issuers, which we are issuing PII Personally identifiable information enable State-based Exchanges (SBEs) to in final form concurrently with this PMPM Per member per month execute certain processes using the final rule. We are finalizing our PRA Paperwork Reduction Act of 1995 Federal eligibility enrollment proposed policy regarding standardized PSO Patient safety organization infrastructure. The SBE–FP will be categorization of network breadth for PSQIA Patient Safety and Quality Improvement Act (Pub. L. 109–41) required to enter into a Federal platform QHPs on the FFEs on HealthCare.gov. QHP Qualified health plan agreement with HHS that will define a We are also finalizing two provisions to QIO Quality improvement organizations set of mutual obligations, including the address provider transitions in the FFE RADV Risk adjustment data validation set of Federal services upon which the and a standard for all QHPs governing SADP Stand-alone dental plan SBE–FP agrees to rely. Under this cost sharing that would apply in certain SBC Summary of benefits and coverage Exchange model, certain requirements circumstances when an enrollee SBE State-based Exchange that were previously only applicable to receives essential health benefit (EHB) SBE–FP State-based Exchange on the QHPs offered on a Federally-facilitated provided by an out-of-network ancillary Federal platform Exchange (FFE) and their downstream provider at an in-network setting. SHOP Small Business Health Options and delegated entities will apply to We discuss the authority for FFEs to Program continue to select QHPs based on The Code Internal Revenue Code of 1986 QHPs offered on an SBE–FP and their (26 U.S.C. 1, et seq.) downstream and delegated entities. For meeting the interests of qualified 2017, we are finalizing a mechanism individuals and qualified employers. I. Executive Summary through which SBE–FPs will offset We will use this authority to strengthen The Patient Protection and Affordable some of the Federal costs of providing oversight as needed in the short term. Care Act (Pub. L. 111–148) and the this infrastructure. In addition, we are We also seek to improve consumers’ Health Care and Education finalizing rules requiring agents and ability to make choices regarding health Reconciliation Act of 2010 (Pub. L. 111– brokers facilitating enrollments through insurance coverage by ensuring they 152), as amended (the Affordable Care SBE–FPs to comply with the FFE receive high-quality assistance in their Act) enacted a set of reforms that are registration and training requirements. interactions with the Exchange. For making high-quality health insurance We are also finalizing a number of example, this final rule amends program coverage and care more affordable and amendments that will improve the requirements for Navigators, certain accessible to millions of Americans. stability of the Exchanges and support non-Navigator assistance personnel, and These reforms include the creation of consumers’ ability to make informed certified application counselors. These competitive marketplaces called choices when purchasing health amendments will require FFE Affordable Insurance Exchanges, or insurance. These include the Navigators to assist consumers with ‘‘Exchanges’’ (in this final rule, we also introduction of ‘‘standardized options’’ certain post-enrollment and other issues call an Exchange a Health Insurance in the individual market FFEs. beginning in 2018, require all Navigators to provide targeted MarketplaceSM,1 or MarketplaceSM) Additional amendments will increase assistance to underserved or vulnerable through which qualified individuals the accessibility of high-quality health populations, and require Navigators and and qualified employers can purchase insurance and improve competition, non-Navigator assistance personnel to health insurance coverage. In addition, transparency, and affordability. Our intent in offering standardized complete training prior to conducting many individuals who enroll in options is to simplify the consumer outreach and education activities. We qualified health plans (QHPs) through shopping experience and to allow are also amending our rules regarding 1 Health Insurance MarketplaceSM and consumers to more easily compare plans the giving of gifts by Navigators, certain MarketplaceSM are service marks of the U.S. across issuers in the individual market non-Navigator assistance personnel, and Department of Health & Human Services. FFEs. We are finalizing a standardized certified application counselors. In

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addition, we are finalizing our proposal the maximum annual limitations on cost provisions to student health insurance that certified application counselor sharing for the 2017 benefit year for coverage. designated organizations will be cost-sharing reduction plan variations. II. Background required to submit data and information We also finalize standards for stand- related to the organization’s certified alone dental plans (SADPs) related to A. Legislative and Regulatory Overview application counselors, upon the the annual limitation on cost sharing, The Patient Protection and Affordable request of the Exchanges in which they and standards related to third party Care Act (Pub. L. 111–148) was enacted operate. payments for premiums and cost on , 2010. The Health Care and In addition, this final rule takes sharing made on behalf of enrollees by Education Reconciliation Act of 2010 several steps to increase transparency. Federal, State, and local governments; (Pub. L. 111–152), which amended and This rule finalizes provisions to Ryan White HIV/AIDS programs; and revised several provisions of the Patient enhance the transparency of rates in all Indian tribes, tribal organizations, or Protection and Affordable Care Act, was States and the effectiveness of the rate urban Indian organizations. enacted on , 2010. In this final review program. We finalize several improvements that rule, we refer to the two statutes This rule also establishes dates for the seek to ensure consumers have access to individual market annual open collectively as the Affordable Care Act. affordable, high-quality health care Subtitles A and C of title I of the enrollment period for future benefit coverage. We are amending years. For 2017 and 2018, we will Affordable Care Act reorganized, requirements for QHPs, including amended, and added to the provisions maintain the same open enrollment essential community providers (ECPs) period we adopted for 2016—that is, of part A of title XXVII of the Public and meaningful difference Health Service Act (PHS Act) relating to 1 of the year preceding the requirements. This rule also contains benefit year through 31 of the group health plans and health insurance technical amendments to QHP issuer issuers in the group and individual benefit year, and for 2019 and later oversight provisions. This rule includes benefit years, we are establishing an markets. amendments to further strengthen the Section 2701 of the PHS Act, as added open enrollment period of patient safety requirements for QHP through 15 of the year by the Affordable Care Act, restricts the issuers offering coverage through preceding the benefit year. The rule also variation in premium rates charged by a Exchanges. finalizes two narrow changes to the health insurance issuer for non- Exchange re-enrollment hierarchy, For consumers purchasing coverage grandfathered health insurance coverage prioritizing re-enrollment into silver through the Small Business Health in the individual or small group market plans, and providing Exchanges with Options Program (SHOP), we finalize a to certain specified factors. The factors the flexibility to re-enroll consumers new ‘‘vertical choice’’ model for are: Family size, rating area, age, and into plans of other Exchange issuers if Federally-facilitated SHOPs for plan tobacco use. the consumer is enrolled in a plan from years beginning on or after , Section 2701 of the PHS Act operates an issuer that does not have another 2017, under which employers would be in coordination with section 1312(c) of plan available for re-enrollment through able to offer qualified employees a the Affordable Care Act. Section 1312(c) the Exchange. choice of all plans across all available of the Affordable Care Act generally We summarize input we have actuarial value levels of coverage from requires a health insurance issuer to received on whether special enrollment a single issuer. States with a Federally- consider all enrollees in all health plans periods are being appropriately facilitated Small Business Health (except for grandfathered health plans) provided, and discuss our plans to Options Program (FF–SHOP) will have offered by such issuer to be members of conduct an assessment of special the opportunity to recommend that a single risk pool for each of its enrollment periods granted to vertical choice not be implemented in individual and small group markets. consumers through the FFEs. We are their State, and SBEs relying on the FF– States have the option to merge the also codifying a number of Exchange SHOP eligibility and enrollment individual market and small group policies relating to exemptions in order platform will be able to choose not to market risk pools under section to provide certainty and transparency have vertical choice implemented in 1312(c)(3) of the Affordable Care Act. around these policies for all their State. Section 2702 of the PHS Act, as added stakeholders. We also finalize adjustments to our by the Affordable Care Act, requires We are finalizing our proposals for the programs and rules, as we do each year, health insurance issuers that offer risk adjustment program—in particular, so that our rules and policies reflect the health insurance coverage in the group we are finalizing our introduction of latest market developments. We finalize or individual market in a State to offer preventive services into the the following changes and clarifications coverage to and accept every employer methodology, and our calculation of to the Health Insurance Portability and and individual in the State that applies model coefficients based on the 2012, Accountability Act of 1996 (HIPAA) and for such coverage unless an exception 2013, and 2014 MarketScan claims data. Affordable Care Act health insurance applies.2 This final rule also amends the risk reform requirements. We revise the Section 2703 of the PHS Act, as added corridors provisions related to the definitions of small employer and large by the Affordable Care Act, and sections reporting of allowable costs. employer to bring them into 2712 and 2741 of the PHS Act, as added In addition to provisions aimed at conformance with the Protecting by HIPAA and codified prior to the stabilizing premiums, we are finalizing Affordable Coverage for Employees Act enactment of the Affordable Care Act, several provisions related to cost (Pub. L. 114–60). We also finalize require health insurance issuers that sharing. First, we are finalizing the provisions to ensure that a network plan offer health insurance coverage in the premium adjustment percentage for in the small group market with a limited group or individual market to renew or 2017, which is used to set the rate of service area can be appropriately rated increase for several parameters detailed for sale based on geography. Lastly, we 2 Before enactment of the Affordable Care Act, the Health Insurance Portability and Accountability Act in the Affordable Care Act, including finalize some of the proposed provisions of 1996 amended the PHS Act (formerly section the maximum annual limitation on cost regarding the application of the 2711) to generally require guaranteed availability of sharing for 2017. We are also finalizing actuarial value (AV) and single risk pool coverage for employers in the small group market.

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continue in force such coverage at the described in section 1302(a) of the affordable health insurance coverage option of the plan sponsor or individual Affordable Care Act, including coverage options. unless an exception applies. of the services described in section Section 1311(c)(6)(B) of the Section 2718 of the PHS Act, as added 1302(b) of the Affordable Care Act, to Affordable Care Act states that the by the Affordable Care Act, generally adhere to the cost-sharing limits Secretary is to set annual open requires health insurance issuers to described in section 1302(c) of the enrollment periods for Exchanges for submit an annual medical loss ratio Affordable Care Act, and to meet the AV calendar years after the initial (MLR) report to HHS, and provide levels established in section 1302(d) of enrollment period. rebates to enrollees if the issuers do not the Affordable Care Act. Section 2707(a) Sections 1311(d)(4)(K) and 1311(i) of achieve specified MLR thresholds. of the PHS Act, which is effective for the Affordable Care Act direct all Section 2794 of the PHS Act, as added plan or policy years beginning on or Exchanges to establish a Navigator by the Affordable Care Act, directs the after January 1, 2014, extends the program. Secretary of HHS (the Secretary), in coverage of the EHB package to non- Section 1311(h)(1) of the Affordable conjunction with the States, to establish grandfathered individual and small Care Act specifies that a QHP may a process for the annual review of group coverage, irrespective of whether contract with health care providers and unreasonable increases in premiums for such coverage is offered through an hospitals with more than 50 beds only health insurance coverage.3 The law Exchange. In addition, section 2707(b) if they meet certain patient safety also requires health insurance issuers to of the PHS Act directs non- standards, including use of a patient submit to the Secretary and the grandfathered group health plans to safety evaluation system, a applicable State justifications for ensure that cost sharing under the plan comprehensive hospital discharge unreasonable premium increases prior does not exceed the limitations program, and implementation of health to the implementation of the increases. described in sections 1302(c)(1) and (2) care quality improvement activities. Section 2794(b)(2) of the PHS Act of the Affordable Care Act. Section 1311(h)(2) of the Affordable Care Act also provides the Secretary further directs the Secretary, in Section 1302(d) of the Affordable Care flexibility to establish reasonable conjunction with the States, to monitor Act describes the various levels of exceptions to these patient safety premium increases of health insurance coverage based on actuarial value. requirements and section 1311(h)(3) of coverage offered through an Exchange Consistent with section 1302(d)(2)(A) of the Affordable Care Act allows the and outside of an Exchange beginning the Affordable Care Act, actuarial value Secretary flexibility to issue regulations with plan years starting in 2014. is calculated based on the provision of to modify the number of beds described Section 1252 of the Affordable Care EHB to a standard population. Section in section 1311(h)(1)(A) of the Act provides that any standard or 1302(d)(3) of the Affordable Care Act Affordable Care Act. requirement adopted by a State under directs the Secretary to develop title I of the Affordable Care Act, or any Section 1312(a)(2) of the Affordable guidelines that allow for de minimis Care Act provides that in a SHOP, a amendment made by title I of the variation in AV calculations. Affordable Care Act, is to be applied qualified employer may select any level Section 1311(b)(1)(B) of the of coverage under section 1302(d) of the uniformly to all health plans in each Affordable Care Act directs that the insurance market to which the standard Affordable Care Act to be made Small Business Health Options Program available to employees through the and requirement apply. assist qualified small employers in Section 1302 of the Affordable Care SHOP, and that employees may then, in facilitating the enrollment of their Act provides for the establishment of an turn, choose plans within the level employees in qualified health plans EHB package that includes coverage of selected by the qualified employer. offered in the small group market. EHB (as defined by the Secretary), cost- Section 1321(a) of the Affordable Care Sections 1312(f)(1) and (2) of the sharing limits, and actuarial value Act provides broad authority for the Affordable Care Act define qualified requirements. The law directs that EHBs Secretary to establish standards and individuals and qualified employers. be equal in scope to the benefits covered regulations to implement the statutory Under section 1312(f)(2)(B) of the by a typical employer plan, and that requirements related to Exchanges, Affordable Care Act, beginning in 2017, they cover at least the following 10 QHPs and other components of title I of States will have the option to allow general categories: Ambulatory patient the Affordable Care Act. Section issuers to offer QHPs in the large group services; emergency services; 1321(a)(1) directs the Secretary to issue market through an Exchange.4 hospitalization; maternity and newborn regulations that set standards for care; mental health and substance use Section 1311(c)(1)(B) of the meeting the requirements of title I of the disorder services, including behavioral Affordable Care Act requires the Affordable Care Act with respect to, health treatment; prescription drugs; Secretary to establish minimum criteria among other things, the establishment rehabilitative and habilitative services for provider network adequacy that a and operation of Exchanges. and devices; laboratory services; health plan must meet to be certified as Sections 1313 and 1321 of the preventive and wellness services and a QHP. Affordable Care Act provide the chronic disease management; and Section 1311(c)(5) of the Affordable Secretary with the authority to oversee pediatric services, including oral and Care Act requires the Secretary to the financial integrity of State vision care. continue to operate, maintain, and Exchanges, their compliance with HHS Section 1301(a)(1)(B) of the update the Internet portal developed standards, and the efficient and non- Affordable Care Act directs all issuers of under section 1103 of the Affordable discriminatory administration of State QHPs to cover the EHB package Care Act to provide information to Exchange activities. Section 1321 of the consumers and small businesses on Affordable Care Act provides for State 3 The implementing regulations in part 154 limit flexibility in the operation and the scope of the requirements under section 2794 4 If a State elects this option, the rating rules in enforcement of Exchanges and related of the PHS Act to health insurance issuers offering section 2701 of the PHS Act and its implementing requirements. health insurance coverage in the individual market regulations will apply to all coverage offered in or small group market. See Rate Increase Disclosure such State’s large group market (except for self- When operating an FFE under section and Review; Final Rule, 76 FR 29964, 29966 (May insured group health plans) under section 1321(c)(1) of the Affordable Care Act, 23, 2011). 2701(a)(5) of the PHS Act. HHS has the authority under sections

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1321(c)(1) and 1311(d)(5)(A) of the exempt individuals to maintain payment parameters for the 2015 benefit Affordable Care Act to collect and spend minimum essential coverage for each year to expand the provisions related to user fees. In addition, 31 U.S.C. 9701 month or make the individual shared the premium stabilization programs, permits a Federal agency to establish a responsibility payment. Section setting forth certain oversight provisions charge for a service provided by the 5000A(f) of the Code defines minimum and establishing the payment agency. Office of Management and essential coverage as any of the parameters in those programs (proposed Budget (OMB) Circular A–25 Revised following: (1) Coverage under a 2015 Payment Notice). We published establishes Federal policy regarding specified government sponsored the 2015 Payment Notice final rule in user fees and specifies that a user charge program; (2) coverage under an eligible the , 2014 Federal Register (79 will be assessed against each employer-sponsored plan; (3) coverage FR 13743). identifiable recipient for special benefits under a health plan offered in the In the , 2014 Federal derived from Federal activities beyond individual market within a State; and Register (79 FR 70673), we published a those received by the general public. (4) coverage under a grandfathered proposed rule outlining the benefit and Section 1321(c)(2) of the Affordable health plan. Section 5000A(f)(1)(E) of payment parameters for the 2016 benefit Care Act authorizes the Secretary to the Code authorizes the Secretary of year to expand the provisions related to enforce the Exchange standards using HHS, in coordination with the Secretary the premium stabilization programs, civil money penalties (CMPs) on the of the Treasury, to designate other setting forth certain oversight provisions same basis as detailed in section 2723(b) health benefits coverage as minimum and establishing the payment of the PHS Act. Section 2723(b) of the essential coverage. parameters in those programs (proposed PHS Act authorizes the Secretary to The Protecting Affordable Coverage 2016 Payment Notice). We published impose CMPs as a means of enforcing for Employees Act amended section the 2016 Payment Notice final rule in the individual and group market 1304(b) of the Patient Protection and the 27, 2015 Federal Register reforms contained in Part A of title Affordable Care Act and section 2791(e) (80 FR 10749). XXVII of the PHS Act when a State fails of the PHS Act to amend the definition 2. Program Integrity to substantially enforce these of small employer in these statutes to provisions. mean, in connection with a group health In the 19, 2013 Federal Register Section 1321(d) of the Affordable Care plan with respect to a calendar year and (78 FR 37031), we published a proposed Act provides that nothing in title I of the a plan year, an employer who employed rule that proposed certain program Affordable Care Act should be an average of at least 1 but not more integrity standards related to Exchanges construed to preempt any State law that than 50 employees on business days and the premium stabilization programs does not prevent the application of title during the preceding calendar year and (proposed Program Integrity Rule). The I of the Affordable Care Act. Section who employs at least 1 employee on the provisions of that proposed rule were 1311(k) of the Affordable Care Act first day of the plan year. It also finalized in two rules, the ‘‘first Program specifies that Exchanges may not amended these statutes to make Integrity Rule’’ published in the establish rules that conflict with or conforming changes to the definition of 30, 2013 Federal Register (78 FR 54069) prevent the application of regulations large employer, and to provide that a and the ‘‘second Program Integrity issued by the Secretary. State may treat as a small employer, Rule’’ published in the 30, 2013 Section 1341 of the Affordable Care with respect to a calendar year and a Federal Register (78 FR 65045). Act requires the establishment of a plan year, an employer who employed 3. Exchanges transitional reinsurance program in each an average of at least 1 but not more State to help pay the cost of treating than 100 employees on business days We published a request for comment high-cost enrollees in the individual during the preceding calendar year and relating to Exchanges in the , market in benefit years 2014 through who employs at least 1 employee on the 2010 Federal Register (75 FR 45584). 2016. Section 1342 of the Affordable first day of the plan year. We issued initial guidance to States on Care Act directs the Secretary to Exchanges on , 2010. We establish a temporary risk corridors 1. Premium Stabilization Programs proposed a rule in the 15, 2011 program that reduces the impact of In the , 2011 Federal Register Federal Register (76 FR 41865) to inaccurate rate setting from 2014 (76 FR 41929), we published a proposed implement components of the through 2016. Section 1343 of the rule outlining the framework for the Exchanges, and a rule in the , Affordable Care Act establishes a premium stabilization programs. We 2011 Federal Register (76 FR 51201) permanent risk adjustment program to implemented the premium stabilization regarding Exchange functions in the provide payments to health insurance programs in a final rule, published in individual market, eligibility issuers that attract higher-risk the March 23, 2012 Federal Register (77 determinations, and Exchange standards populations, such as those with chronic FR 17219) (Premium Stabilization Rule). for employers. A final rule conditions, funded by payments from In the , 2012 Federal implementing components of the those that attract lower-risk populations, Register (77 FR 73117), we published a Exchanges and setting forth standards thereby reducing incentives for issuers proposed rule outlining the benefit and for eligibility for Exchanges was to avoid higher-risk enrollees. payment parameters for the 2014 benefit published in the , 2012 Sections 1402 and 1412 of the year to expand the provisions related to Federal Register (77 FR 18309) Affordable Care Act provide for, among the premium stabilization programs and (Exchange Establishment Rule). other things, reductions in cost sharing set forth payment parameters in those We established standards for SHOP in for EHB for qualified low- and programs (proposed 2014 Payment the 2014 Payment Notice. We also set moderate-income enrollees in silver Notice). We published the 2014 forth standards related to Exchange user level health plans offered through the Payment Notice final rule in the March fees in the 2014 Payment Notice. We individual market Exchanges. 11, 2013 Federal Register (78 FR established an adjustment to the FFE Section 5000A of the Internal 15409). user fee in the Coverage of Certain Revenue Code of 1986 (the Code), as In the , 2013 Federal Preventive Services Under the added by section 1501(b) of the Register (78 FR 72321), we published a Affordable Care Act final rule, Affordable Care Act, requires all non- proposed rule outlining the benefit and published in the , 2013 Federal

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Register (78 FR 39869) (Preventive FR 81003). A final rule with comment address the treatment of student health Services Rule). period implementing the rate review insurance coverage with regard to the In a final rule published in the July program was published in the , AV and single risk pool requirements. 17, 2013 Federal Register (78 FR 2011 Federal Register (76 FR 29963) The regulations in part 153 codify 42823), we established standards for (Rate Review Rule). The provisions of how HHS will evaluate the risk Navigators and non-Navigator assistance the Rate Review Rule were amended in adjustment and reinsurance data personnel in FFEs and for non- final rules published in the submitted to an issuer’s dedicated Navigator assistance personnel funded 6, 2011 Federal Register (76 FR 54969), distributed data environment. This rule through an Exchange establishment the , 2013 Federal Register also includes the risk adjustment user grant. This final rule also established a (78 FR 13405), the , 2014 Federal fee for 2017 and outlines certain certified application counselor program Register (79 FR 30339), and the modifications to the HHS risk for Exchanges and set standards for that February 27, 2015 Federal Register (80 adjustment methodology. This rule program. FR 10749). clarifies reporting requirements for the risk adjustment, reinsurance, and risk 4. Essential Health Benefits and 7. Medical Loss Ratio corridors programs. Actuarial Value We published a request for comment The regulations in part 154 outline On , 2011, HHS released on section 2718 of the PHS Act in the certain modifications to enhance the a bulletin 5 (the EHB Bulletin) that 14, 2010 Federal Register (75 FR transparency and effectiveness of the outlined an intended regulatory 19297), and published an interim final rate review program. We require the approach for defining EHB, including a rule with a 60-day comment period submission of a Unified Rate Review benchmark-based framework. HHS also relating to the MLR program on Template from all issuers offering single published a bulletin that outlined its , 2010 (75 FR 74863). A final risk pool coverage in the individual and intended regulatory approach to rule with a 30-day comment period was small group market, including coverage calculations of AV on , published in the December 7, 2011 with rate decreases or unchanged rates, 2012.6 A proposed rule relating to EHBs Federal Register (76 FR 76573). An as well as rates for new plans. We also and AVs was published in the interim final rule with a 60-day announce our intention to disclose all November 26, 2012 Federal Register (77 comment period was published in the proposed rate increases for single risk FR 70643). We established requirements December 7, 2011 Federal Register (76 pool coverage at a uniform time on the relating to EHBs and AVs in the FR 76595). A final rule was published CMS Web site, including rates with Standards Related to Essential Health in the Federal Register on , 2012 increases of less than 10 percent. Benefits, Actuarial Value, and (77 FR 28790). Finally, we reiterate the process for establishing the uniform timeline that Accreditation Final Rule, which was B. Stakeholder Consultation and Input published in the , 2013 proposed rate increases subject to Federal Register (78 FR 12833) (EHB HHS consulted stakeholders on the review and all final rate increases Rule). policies related to the operation of (including those not subject to review) Exchanges, including the SHOP and the for single risk pool coverage must be 5. Market Rules premium stabilization programs. We posted at a uniform time by States with A proposed rule relating to the 2014 have held a number of listening sessions Effective Rate Review Programs. health insurance market rules was with consumers, providers, employers, The regulations in part 155 include published in the November 26, 2012 health plans, the actuarial community, clarifications related to the functions of Federal Register (77 FR 70584). A final and State representatives to gather an Exchange, and establish the rule implementing the health insurance public input. We consulted with individual market open enrollment market rules was published in the stakeholders through regular meetings period for the 2017 and 2018 benefit February 27, 2013 Federal Register (78 with the National Association of years. Certain proposals in part 155 are FR 13406) (2014 Market Rules). Insurance Commissioners, regular related to the eligibility and verification A proposed rule relating to Exchanges contact with States through the processes related to eligibility for and Insurance Market Standards for Exchange Establishment grant and insurance affordability programs. We 2015 and Beyond was published in the Exchange Blueprint approval processes, also amend and clarify rules related to , 2014 Federal Register (79 FR and meetings with Tribal leaders and enrollment of qualified individuals into 15808) (2015 Market Standards representatives, health insurance QHPs. We describe changes to the Proposed Rule). A final rule issuers, trade groups, consumer process of submitting certain exemption implementing the Exchange and advocates, employers, and other applications and options for State Insurance Market Standards for 2015 interested parties. We considered all Exchanges to handle exemptions. The and Beyond was published in the May public input we received as we finalized regulations also provide for a 27, 2014 Federal Register (79 FR 30239) developed the policies in this final rule. Federal platform agreement through (2015 Market Standards Rule). which a State Exchange may agree to C. Structure of Final Rule rely on the FFE for certain functions as 6. Rate Review The regulations outlined in this final an SBE–FP. We also finalize various A proposed rule to establish the rate rule will be codified in 45 CFR parts proposals related to the SHOPs. We review program was published in the 144, 147, 153, 154, 155, 156 and 158. amend the standards applicable to the , 2010 Federal Register (75 The regulations in part 144, consistent consumer assistance functions with recent legislation, revise the performed by Navigators, non-Navigator 5 Essential Health Benefits Bulletin. (Dec. 16, definitions of ‘‘large employer’’ and assistance personnel, and certified 2011), available at https://www.cms.gov/CCIIO/ ‘‘small employer.’’ application counselors. We also discuss Resources/Files/Downloads/essential_health_ The regulations in part 147 clarify the our approach to QHP certification, and benefits_bulletin.pdf. definition of principal business address, modify standards for FFE-registered 6 Actuarial Value and Cost-Sharing Reductions agents and brokers and requirements for Bulletin. (Feb. 24, 2012), available at https:// and establish the appropriate rating area www.cms.gov/CCIIO/Resources/Files/Downloads/ under specific circumstances, for HHS-approved vendors of FFE training. Av-csr-bulletin.pdf. purposes of geographic rating. They also Part 155 also includes clarification to

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the policy regarding additional State- questions or comments regarding Response: We appreciate the required benefits. proposed changes. We received a importance of ensuring coverage The regulations in part 156 establish number of comments and suggestions purchased through the Exchanges is parameters related to cost sharing, that were outside the scope of the affordable to consumers, and believe including the premium adjustment proposed rule that will not be addressed affordability is critical to the success of percentage, the maximum annual in this final rule. the Exchanges. limitation on cost sharing, and the In this final rule, we provide a reductions in the maximum annual summary of each proposed provision, a A. Part 144—Requirements Relating to limitation for cost-sharing plan summary of those public comments Health Insurance Coverage variations for 2017. We amend the received that directly related to 1. Definitions (§ 144.103) timeframe to request reconsideration proposals, our responses to them, and a Section 144.103 sets forth definitions under the administrative appeals description of the provisions we are of terms that are used throughout parts process applicable to the premium finalizing. 146 through 150. In the proposed rule, Comment: We received a number of stabilization programs. Amendments to we discussed the definition of ‘‘plan comments stating that the comment part 156 also include provisions related year’’ and proposed revisions to the period was unreasonably short, making to EHB prescription drug rules. We definitions of small employer and large it difficult for stakeholders to provide amend network adequacy requirements employer that would be consistent with in-depth analysis and input. (including application of out-of-network recent legislation. We also proposed a Commenters urged HHS to provide a costs to the annual limitation on cost technical correction in the definition of sharing for EHBs covered under QHPs comment period of 60 days from the excepted benefits to cross reference the in the small group and individual date of publication in the Federal group market provisions in § 146.145(b) markets), and essential community Register for this and future HHS Notices rather than § 146.145(c). We are provider requirements. We establish of Benefit and Payment Parameters. finalizing these provisions as proposed. standardized options for cost-sharing Response: The timeline for structures, indexing for the stand-alone publication of this final rule a. Plan Year dental plan annual limitation on cost accommodates issuer filing deadlines In the preamble to the proposed rule sharing, changes to our process for for the 2017 benefit year. A 60-day (80 FR at 79495), we explained that we updating the AV Calculator for QHPs, comment period would have delayed interpret the definition of plan year in meaningful difference standards for the publication of this final rule, and § 144.103 with respect to both QHPs, and minor changes to QHP issuer created significant challenges for States, grandfathered and non-grandfathered oversight standards. We also amend Exchanges, issuers, and other entities in group health plans to mean a period that provisions related to the third-party meeting deadlines related to is no longer than 12 months. premium payments from certain entities implementing these rules. Comment: One commenter requested and the next phase of implementation Comment: We received a number of clarification that a plan year may be for patient safety standards for issuers of comments disapproving of the wide shorter than 12 months under certain QHPs offered on Exchanges. array of topics covered in the rule. circumstances. The amendments to the regulations in Response: Many of the programs Response: A plan year may be shorter part 158 finalize revisions related to the covered by this final rule are closely than 12 months under certain definitions of large employer and small linked. To simplify the regulatory circumstances, but a plan year may not employer consistent with recent process, facilitate public comment, and be longer than 12 months. legislation. provide the information needed to meet statutory deadlines, we have elected to b. Large Employer and Small Employer III. Provisions of the Final Regulations propose and finalize these regulatory We proposed to revise the regulatory and Analyses and Responses to Public provisions in one rule, as we have in definitions of large employer and small Comments years past. employer in §§ 144.103 and 155.20 In the December 2, 2015 Federal Comment: A number of comments, consistent with section 1304(b) of the Register (80 FR 75487), we published many focused primarily on proposals Affordable Care Act and section 2791(e) the ‘‘Patient Protection and Affordable related to network adequacy, urged HHS of the PHS Act, as amended by the Care Act; HHS Notice of Benefit and to allow States to continue their Protecting Affordable Coverage for Payment Parameters for 2017’’ proposed oversight of their insurance markets and Employees Act. We also proposed to rule. We received 524 comments, defer to the NAIC for the development codify statutory language providing that including 112 substantially similar of important industry-wide, State-based in the case of an employer that was not letters regarding our solicitation for standards. in existence throughout the preceding comment on whether the substance use Response: We aim to establish Federal calendar year, the determination of disorder requirement in essential health oversight standards that complement whether the employer is a large benefits needs additional clarification State standards while meeting Federal employer or a small employer is based regarding medication-assisted treatment obligations, including for qualified on the average number of employees for opioid addiction. Comments were health plans on Federally-facilitated that it is reasonably expected the received from the National Association Exchanges. We will continue to employer will employ on business days of Insurance Commissioners, State coordinate closely with State authorities in the current calendar year. We are departments of insurance, State to address compliance issues, eliminate finalizing these revisions as proposed. Exchanges, a member of Congress, duplicative requirements or review, and Comment: Several commenters health insurance issuers, providers, to reduce the burden on stakeholders. supported our proposed definitions of consumer groups, labor entities, Comment: Several comments large employer and small employer, industry groups, patient safety groups, emphasized the importance of ensuring including the codification related to national interest groups, and other coverage is affordable to consumers, or employers that were not in existence stakeholders. The comments ranged expressed concern that coverage throughout the preceding calendar year. from general support of or opposition to purchased through the Exchanges is not Response: We are finalizing the the proposed provisions to specific affordable. revisions to the definitions of large

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employer and small employer in We proposed to amend § 147.102 to does not have a business location in the §§ 144.103 and 155.20 as proposed.7 provide for an additional principal issuer’s service area, but has employees business address to be identified within who live or reside within the service B. Part 146—Requirements for the a plan’s service area in these area, the geographic rating area for Group Health Insurance Market circumstances so that the plan can be purposes of the network plan is the 1. Guaranteed Availability of Coverage appropriately rated for sale to the rating area where the greatest number of for Employers in the Small Group employer. In such instances, the employees within the plan’s service area Market (§ 146.150) additional principal business address live or reside as of the beginning of the would be the business address within plan year. We believe these standards For a discussion of the proposed the plan’s service area where the for identifying an applicable rating area amendment to § 146.150, please see the greatest number of employees work as of within the issuer’s service area will preamble to § 147.104. the beginning of the plan year, or, if ensure that a network plan can be C. Part 147—Health Insurance Reform there is no such business address, an appropriately rated for sale to the Requirements for the Group and address within the service area selected employer consistent with guaranteed Individual Health Insurance Markets by the employer that reasonably reflects availability requirements. where the greatest number of employees Comment: One commenter suggested 1. Fair Health Insurance Premiums live or reside as of the beginning of the we define ‘‘substantial worksite’’ to (§ 147.102) plan year. determine when a business address a. Principal Business Address As stated in the preamble to the registered solely for purposes of service proposed rule, SHOPs, including the of process would be considered the Under section 2701 of the PHS Act FF–SHOPs, may use the address that employer’s principal business address and regulations at § 147.102, the rating was used to establish a qualified for rating purposes. area for a small group plan is based on employer’s eligibility for participation Response: The final rule does not the group policyholder’s principal in the SHOP to determine the applicable provide a specific definition of business address. We proposed to geographic rating area when calculating substantial worksite. We believe the amend § 147.102(a)(1)(ii) to provide that premiums for participating employers. term is sufficiently clear and will not if the employer has registered an in- The intent of these proposals was to cause confusion. Nevertheless, we will State principal business address with establish a uniform set of rules that can monitor the implementation of this the State, that location is the principal be applied as simply as possible, while policy in considering whether it is business address. We noted that an in- allowing plans to be properly rated. appropriate to clarify what constitutes a State address registered solely for We are finalizing the provisions substantial worksite in the future. purposes of service of process would proposed in § 147.102 of the proposed Comment: One commenter requested not be considered the employer’s rule without substantive modification. that the FF–SHOP verify that an address principal business address, unless it is However, we are finalizing the entered by an employer is the official a substantial worksite for the employer’s regulatory text in a way that does not principal place of business. We also business. If an in-State principal refer to a location where employees live received a comment requesting that we business address is not registered with or reside as a principal business modify the FF–SHOP application the State or is only registered for address, as we believe doing so in the process to allow more than one account purposes of service of process and is not proposed regulatory text was confusing, per State and thus, allow for more than a substantial worksite, we proposed that and we are making additional minor one rating area for an employer. the employer would designate as its edits for clarity. These are not Response: Under § 155.710(b)(3), one principal business address the business substantive modifications, as the criterion for being a qualified employer address within the State where the proposed rule and this final rule apply eligible to purchase coverage through a greatest number of employees work in the same test to determine the SHOP is that the employer has its the applicable State. policyholder’s rating area with respect principal business address in the When a network plan offered in a to a network plan in such a situation. Exchange service area and offers State has a limited service area, we Comment: Several commenters coverage to all its full-time employees noted that this policy could result in an supported our proposed definition of through that SHOP, or offers coverage to issuer having to make a plan available principal business address, and our each eligible employee through the under the guaranteed availability rules approach for allowing an employer to SHOP serving that employee’s primary to an employer—because the employer identify an additional principal worksite. If we receive a report that has an employee who lives, works, or business address within the service area incorrect or inaccurate information has resides in the service area—but not be of a network plan. Two commenters been provided on an FF–SHOP able to apply a geographic rating factor suggested HHS should not modify the application, we may investigate and under the current rule—because the standards for geographic rating, take corrective action as needed. issuer might not have established rates suggesting that the proposed rule Further, as stated in the preamble to the applicable to the location of the provides opportunities and incentives proposed rule, due to operational employer’s principal business address for small employers to select an address limitations, the SHOPs, including the outside the plan’s service area. based upon factors other than the true FF–SHOPs, may not be able to business location of the employer. accommodate multiple principal 7 This final rule has no effect on previously These commenters did not provide an business addresses within a State for issued guidance by CMS clarifying that offices of alternative approach to allow plans to premium calculation purposes. As a the Members of Congress, as qualified employers, are eligible to participate in a SHOP regardless of be rated in this circumstance. result, due to current operational the size requirements set forth in the definition of Response: We have revised the limitations, when a single employer ‘‘qualified employer’’ in 45 CFR 155.20. See proposed rule text such that it no longer application is completed in a State with Members of Congress and Staff Accessing Coverage refers to an employer selecting a an FF–SHOP, plan availability and through Health Insurance Exchanges (Marketplaces) (Sept. 30, 2013), available at: https://www.cms.gov/ location where employees live or reside premium calculations will be based on CCIIO/Resources/Fact-Sheets-and-FAQs/ as a principal business address. The rule the principal business address entered Downloads/members-of-congress-faq-9-30-2013.pdf. instead provides that if an employer on the FF–SHOP employer application.

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Comment: One commenter asked for contiguous areas with similar pricing curve should be increased by a set clarification on the interaction between and network dynamics that may warrant amount for plans with embedded § 155.710(b)(3) (governing eligibility placing them in the same service area. pediatric dental benefits. One standards for SHOP) and One commenter stated that limiting the commenter stated that we should § 147.102(a)(1)(ii) (governing geographic number of rating areas to the number of consider using data consistent with data rating). metropolitan statistical areas plus one used to calibrate risk adjustment to Response: If SHOPs, including the would be arbitrary. One commenter determine child age factors, while one FF–SHOPs, have operational limitations stated that basing rating areas on the commenter stated that the age that do not permit them to fully relative population of each area would calibration for children must be implement the policy described above, require frequent changes in rating areas adjusted in the uniform age curve. they may use the address that was used due to population shifts. Response: We recognize that the child to establish a qualified employer’s Many commenters also opposed age band and factor may need to be eligibility for participation in the SHOP aligning rating areas with service areas. updated to better reflect the health risk to determine which plans are available One stated that such an alignment could of children and intend to address child to the employer, as well as the cause issuers to leave an entire age rating in future rulemaking or applicable geographic rating area when geographic area rather than attempt to guidance. calculating premiums for participating establish contracts with providers in employers. other parts of a rating area, due to 2. Guaranteed Availability of Coverage additional costs associated with (§ 147.104) b. Other Issues Related to Rating Areas establishing a broader network. One a. Product Discontinuance and Market In the preamble to the proposed rule, commenter observed that rating areas Withdrawal Exceptions to Guaranteed we noted that we have observed wide are based on geographic differences in Availability variations in the size of rating areas in cost of care, while service areas are In the proposed rule, we expressed the various States. We identified a constructed to ensure that a network concern about whether it would be in concern that this variation could lead to plan has providers that can serve consumers’ or issuers’ interest to require smaller rating areas with a high enrollees in specific geographic concentration of higher-risk groups, locations. One commenter observed that guaranteed availability of a product which potentially compromises the risk- aligning rating areas with service areas while the issuer is in the process of spreading objective that the single risk could result in a significant increase in winding down operations with respect pool requirement is intended to achieve. the number of plans submitted for to that product or all its products in a At the same time, States are the primary approval and rate review and Health market. Therefore, we proposed to regulators of health insurance, and we Insurance Oversight System (HIOS) plan codify an exception to the guaranteed believe it is important to recognize the IDs. availability requirements under unique needs of each State. We also Response: We are not making changes § 147.104 when the exception to recognize the consumer disruption that to these regulations in this final rule, guaranteed renewability of coverage could result from changes to rating and will consider these comments as we related to discontinuing a product or all areas. Therefore, we sought comment on continue to study these issues. coverage in the market applies. whether we should seek more Specifically, we proposed that an issuer uniformity in the size of rating areas or c. Child Age Rating may deny coverage to new individuals establish a minimum size for rating Section 147.102(e) provides for a or employers during the applicable 90- areas, and if so, how that should be uniform age curve in each State. When day or 180-day notice period when the achieved, consistent with the principle a State does not specify an age curve, a issuer is discontinuing a product or of flexibility for States. Federal default uniform age curve will exiting the market. We proposed that an We also recognized the inconsistency apply. We stated in the proposed rule issuer must apply the denial uniformly that can occur between an issuer’s rating that we are investigating the child age to all employers or individuals in the area and the service area of some of its rating factor in the Federal uniform age large group, small group, or individual network-based plans. We indicated that curve, and seek to determine whether market, as applicable, in the State it could be beneficial for the rating area the default factor is appropriate, or fails consistent with applicable State law, and the service area to generally be to adequately differentiate the health and without regard to the claims consistent and sought comment on risk of children of different ages. We experience or any health-status related whether and how to achieve this sought comment and data on the most factor relating to those individuals or objective. appropriate child age curve, and the employers and their employees (or their Comment: One commenter supported policy reasons underlying any respective dependents). We proposed rating areas of a minimum size as a way recommendation. that this exception not relieve issuers of to spread risk, and two others suggested Comment: One commenter did not their obligations to existing applying a minimum number of support a varying child age curve, policyholders, such as their obligation residents per rating area or a minimum believing that in the individual market, to enroll dependents under an number that is no less than a specified children may need more care at certain applicable special enrollment period. percentage of residents in the non- ages, so a fixed age rating factor that We proposed parallel provisions under metropolitan statistical areas of a State. applies to all children should continue § 146.150 addressing guaranteed Many commenters, however, stated to apply. With regard to the current availability of coverage for employers in their opposition to any further Federal fixed factor, several commenters stated the small group market under the regulation defining rating areas, stating that the current default factor of 0.635 HIPAA rules. that the States are best equipped to for children under age 21 may be set too We are not finalizing the provisions determine how rating areas are low. proposed in §§ 147.104 and 146.150 of established. One commenter stated that Several commenters supported a the proposed rule. As noted in the our example that each rating area be a varying child age curve, and set forth proposed rule, the product contiguous area would adversely affect specific age gradations. Two discontinuance exception to the service area strategies that identify non- commenters stated that the child age guaranteed renewability requirement in

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§ 147.106(c) requires an issuer to permitted by applicable law and highest-risk individuals. One provide notice in writing, in the form regulations.8 commenter stated that we should amend the guaranteed availability requirements and manner specified by the Secretary, b. Minimum Participation and so that any employer, regardless of size, to each plan sponsor or individual, as Contribution Rules applicable, (and to all participants and that can document that it is subject to beneficiaries covered under such In the proposed rule, we expressed Code section 4980H, must be sold a concern that the use of minimum group coverage) of the discontinuation at least policy anytime during the year. The participation and employer contribution 90 calendar days before the date the commenter stated that we should rules to deny coverage in the small coverage will be discontinued. The consider this approach for the entire group market could result in some small group market as well. market withdrawal exception to the applicable large employers, as defined Response: This final rule does not guaranteed renewability requirement in in section 4980H of the Code, not make any changes to the guaranteed § 147.106(d) requires an issuer to reasonably being able to offer coverage availability requirements as they apply provide notice in writing to the to their full-time employees (and their in connection with minimum applicable State authority and to each dependents) and therefore potentially participation or contribution rules. We plan sponsor or individual, as being liable for an employer shared note that States have flexibility to applicable (and to all participants and responsibility payment under section further restrict the use of minimum beneficiaries covered under the 4980H of the Code, particularly in States employer contribution or group coverage) of the discontinuation at least that elect to expand the small group participation rules as appropriate. 180 calendar days prior to the date the market to include employers with up to 100 employees. 3. Guaranteed Renewability of Coverage coverage will be discontinued. We (§ 147.106) therefore proposed to interpret the In recognition of this dynamic, we interaction between the guaranteed noted that a State electing to expand its Title XXVII of the PHS Act includes availability and these guaranteed small group market to include several exceptions to its guaranteed renewability provisions to permit an employers with up to 100 employees renewability provisions, including when a group health plan sponsor has issuer to deny enrollments during the may opt, under its own authority, to prohibit an issuer from restricting the violated a material plan provision applicable product discontinuance or availability of small group coverage relating to employer contribution or market withdrawal notice period. based on employer contribution or group participation rules, provided However, with regard to situations group participation rules. Alternatively, applicable State law allows an where an issuer decides to discontinue in cases where a State expands the exception to guaranteed renewability a product, we are concerned that the definition of a small employer to under such circumstances; and for proposed policy could have an impact include employers with up to 100 coverage made available in the on the issuer’s risk pool and rating for employees, we could amend the individual market, or small or large its other products. While a market guaranteed availability regulations, with group market only through one or more withdrawal does not have the same respect to small employers with 51–100 bona fide associations, if the impact since all of the issuer’s products employees or with respect to all small individual’s or employer’s membership in a market are being discontinued, we employers altogether, to achieve this in the association ceases. Although the believe this interpretation of the objective. We sought comment on such Affordable Care Act removed from Title interaction between the laws to provide an approach. XXVII these exceptions as they applied for an exception to the guaranteed Comment: Several commenters stated to guaranteed availability, it did not do availability requirements would have to that we should retain the ability of so with respect to guaranteed be applied consistently in both a issuers to limit, to to renewability. Therefore, as we pointed product discontinuance and market of each year, when issuers out in the preamble to the proposed withdrawal situation. Therefore, going must sell a policy to a small employer rule, a large employer whose coverage is forward, we will not interpret these that fails to meet the issuer’s group non-renewed for one of these reasons, and a small employer whose coverage is statutes to recognize an exception to the participation or contribution rules. non-renewed due to membership guaranteed availability requirement in Some commenters stated that issuers ceasing in an association, could be seen either scenario, and the issuer must should retain this ability even with respect to groups of 51–100 employees, to have a right to immediately purchase continue to offer coverage to and accept as doing otherwise would have an that same coverage (if available in the every employer or individual in the adverse impact on risk pools. One market) from that same issuer in State that applies for coverage under a commenter stated that if we eliminate accordance with guaranteed availability. product until such time that the product the ability of issuers to apply minimum In the preamble to the proposed rule, we is discontinued. contribution and participation rules, we suggested that this renders effectively Consistent with previous guidance, should at least exempt issuers from meaningless these two exceptions to with regard to individuals who enroll in having to offer and renew coverage to guaranteed renewability in these a product after the specified deadline employers that selectively offer insured contexts, and we proposed to amend for providing the applicable product and self-funded coverage § 147.106 to remove these guaranteed discontinuance or market withdrawal simultaneously to separate classes of renewability exceptions. notice and before the particular product employees. Such employers, the For the reasons discussed in greater or products are discontinued, HHS will commenter stated, leave issuers with the detail below, the final rule does not remove the guaranteed renewability consider an issuer to satisfy the 8 exceptions related to failure to satisfy requirement to provide notice if the CMS Insurance Standards Bulletin Series, Form and Manner of Notices when Discontinuing or minimum employer contribution or issuer provides prominent and effective Renewing a Product in the Group or Individual group participation rules, or loss of notice at the time of application or Market (Sept. 2, 2014), available at https:// association membership, because we enrollment that the product will be www.cms.gov/CCIIO/Resources/Regulations-and- Guidance/Downloads/Renewal-Notices-9-3-14- have determined upon further discontinued, in any form and manner FINAL.pdf. consideration these exceptions can

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affect the insurance plan choices institution of higher education from claims. We proposed that permissible available to consumers and employers. offering a student health insurance plan plan-level adjustments to these index Comment: Two commenters suggested to the extent that the requirement is rates would be limited to those we should not remove the guaranteed otherwise permitted under applicable permitted under our rules. This renewability exceptions when a small Federal, State, or local law. HHS has approach would continue to allow rates employer’s membership in an exercised its authority under section for student health insurance coverage to association ceases. The commenters 1560(c) of the Affordable Care Act to reflect the unique characteristics of the stated that typically a blanket master modify some of its rules as applied to student population at the particular policy is issued to the association and student health insurance coverage, institution, while more clearly it would not be appropriate for small including those related to the delineating our intent with regard to the employers who leave the association to guaranteed availability, guaranteed treatment of student health insurance continue to receive coverage through the renewability, and single risk pool coverage. We sought comment on any same policy. requirements. potential operational challenges Response: Based on the comments As we stated in the preamble to the associated with this proposal, including received and after further review and proposed rules, our intent in exempting potential challenges related to filing consideration of the statutory student health insurance coverage from rates for student health insurance provisions, we have concluded that the the single risk pool requirement was to coverage and how this policy might be guaranteed availability requirements do provide that student health insurance adjusted to address those challenges. not render effectively meaningless the issuers need not include their student We finalize in this rule our proposal guaranteed renewability exceptions for health insurance coverage in their that student health insurance issuers loss of association membership or overall individual market (or merged may establish one or more risk pools per failure to meet group participation or market) risk pool, and also need not institution of higher education, contribution rules. For example, an have one single risk pool composed of provided that the risk pools are based employer with association coverage their total statewide book of student on a bona fide school-related leaving the association mid-year and health insurance business. Rather, we classification and not based on a health losing coverage may be subject to a intended that issuers could establish factor as described in § 146.121. In different premium rate under a new risk pools for students and their response to comments, we are not policy based on a quarterly rate update dependents separate from the issuer’s finalizing our proposal that student in the small group market or a new individual market or merged market risk health insurance coverage must comply experience rate in the large group pool, including by establishing separate with the single risk pool index rate market. Further, we recognize that risk pools for different institutions of setting methodology. However, we are association members who cease higher education, or multiple risk pools requiring that student health insurance membership in an association and lose within a single institution. However, as rates reflect the claims experience of coverage may have their deductible and explained in the preamble to the individuals who comprise the risk pool maximum out of pocket limit reset proposed rule, we have learned that and any adjustments to rates within a under a new policy. The same logic student health insurance issuers may be risk pool must be based on actuarially applies with respect to employers using certain rating factors that lead to justified factors. We are also removing whose coverage is terminated mid-year rates that might not be actuarially outdated provisions in § 147.145(b)(2) for failure to meet an issuer’s justified. and (d) providing that student health As stated in the preamble to the participation or contribution rules. And, insurance issuers may impose annual proposed rule, we do not intend to small employers whose coverage is dollar limits for policy years beginning disrupt rate setting for student health terminated for failure to meet minimum before January 1, 2014. Those insurance, but we do seek to ensure that participation or contribution rules might provisions, by their own terms, no rates are based on actuarially justified not be able to purchase new coverage longer apply, as student health factors. To clarify our intent, we until the next annual enrollment period insurance issuers are subject to the proposed, for policy years beginning on provisions in § 147.126 that prohibit from November 15 to December 15. For or after January 1, 2017, that student annual dollar limits on EHB for policy these reasons, we believe these health insurance coverage be subject to years beginning on or after January 1, exceptions to guaranteed renewability the index rate setting methodology of 2014. Accordingly, we are finalizing the continue to have relevance, and we are the single risk pool provision in the AV provision proposed in paragraph not finalizing our proposal to remove regulation at § 156.80(d). However, (b)(4) at paragraph (b)(2), and deleting them from the regulations. student health insurance issuers still outdated paragraphs (d) and (e). 4. Student Health Insurance Coverage would be permitted to establish separate Comment: While one commenter (§ 147.145) risk pools from their individual market supported the proposal to subject single risk pool (or merged market risk student health insurance issuers to the a. Index Rate Setting Methodology for pool, where applicable) for student index rate setting methodology, several Student Health Insurance Coverage health insurance coverage, including by commenters were opposed to the Under § 147.145, student health establishing separate risk pools for proposal, citing concerns about insurance coverage is a type of different institutions of higher additional administrative and regulatory individual health insurance coverage education, or multiple risk pools within burdens on both issuers and State that, subject to certain limited a single institution, provided they are regulators, as well as concerns about exceptions, must comply with the PHS based on a bona fide school-related limiting consumer choice and flexibility Act requirements that apply to classification (for example, graduate and undermining the role of institutions individual health insurance coverage. students and undergraduate students) of higher education in arranging for However, section 1560(c) of the and not a health status-related factor as coverage that best meets the needs of Affordable Care Act provides that described in § 146.121. Consistent with their student populations. nothing in title I of the Affordable Care our single risk pool policy, the index Response: After carefully considering Act (or an amendment made by title I) rates for these risk pools would be based these comments, we have determined is to be construed to prohibit an upon actuarially justified estimates of not to apply the single risk pool index

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rate setting methodology to student establish separate risk pools for students generally accepted actuarial principles health insurance coverage. While we and dependents. Other commenters and methodologies. We sought comment continue to have concerns that student suggested that issuers should be on this proposal, including whether to health insurance issuers may be setting permitted to apply actuarially justified continue to require student health rates that are not based upon actuarially rating factors to distinguish between insurance issuers to determine the justified estimates of claims, we are also students and their dependents who are actuarial value of their coverages by mindful of the concerns about potential on the same plan or cross-subsidize using the actuarial value calculator, as administrative burden. The single risk between students and dependents in currently required, instead of through pool rate setting methodology is one order to keep premiums for dependent actuarial certification. means of ensuring rates are actuarially coverage affordable. We are finalizing our proposal to justified. Therefore, while student Response: Under this final rule, an require student health insurance issuers will not be required to use that issuer may create separate risk pools for coverage to meet a minimum 60 percent particular methodology to establish students and dependents. Dependent actuarial value, as opposed to meeting rates, the final rule requires that rates rates may vary from those for students any specific metal level. We are not for student health insurance coverage as long as dependents constitute a finalizing our proposal that actuarial reflect the claims experience of separate risk pool and are enrolled in value would be determined by individuals who comprise the risk pool separate coverage from students. certification of an actuary but rather and any adjustments to rates within a However, consistent with the rating require that it be determined using the risk pool must be actuarially justified. rules under section 2701 of the PHS Act, actuarial value calculator, as is the case We intend to monitor whether factors if students and dependents are enrolled for other individual market and small are being used to develop rates for in the same coverage, then rates may not group market coverage. Requiring the student health insurance coverage that vary based on student or dependent actuarial value of student health are not actuarially justified, such as status, but may vary based on age and insurance coverage to be calculated adjusting rates based upon the length of family size. Nothing in this final rule using the same methodology as those time the coverage has been underwritten prevents an issuer from including other types of coverage will allow by the issuer. students and dependents in the same students and their dependents to better Comment: Several commenters risk pool. compare the generosity of student supported our proposal to permit health insurance with other available b. Actuarial Value Requirements for issuers to establish one or more risk coverage options, such as coverage Student Health Insurance Plans pools per institution of higher under a parent’s plan or coverage education, provided the risk pools are As stated in the preamble to the through the Exchange. We also specify based on a bona fide school-related proposed rule, many colleges and that this provision will apply for classification and not a health factor as universities have reported to us that ‘‘policy years’’ beginning on or after July described in § 146.121. Two they offer student health insurance 1, 2016 as opposed to plan years commenters urged us not to permit plans that are rich in benefits (for beginning on or after January 1, 2017. multiple risk pools within a single example, providing an actuarial value of The reference to ‘‘policy years’’ is the institution of higher education, 96 percent) and that they are reluctant more appropriate term with regard to expressing concern that subgroups to reduce the level of benefits to meet student health insurance coverage, a could be discriminatory in nature. One an actuarial value metal level. We stated type of individual market coverage. We commenter requested clarification that that because enrollees in student health recognize that student health plans issuers may create risk pools comprised insurance plans are not typically typically operate on a policy year that of more than one college or university. selecting among such plans, there is less is not the calendar year, and therefore Response: The final rule provides that need for standardization of actuarial we have modified the provision to take student risk pools must be based on a levels in this part of the individual effect beginning with coverage for the bona fide school-related classification market. Therefore, we proposed to add upcoming academic year as was our and not a health factor as defined in an exemption to the requirements for intent in the proposed rule. § 146.121. The risk pools may include student health insurance coverage in Comment: Several commenters enrollees at one or multiple institutions § 147.145, under which, for plan years supported our proposal to require of higher educations in the State or beginning on or after January 1, 2017, student health insurance plans to meet nationally, or certain subgroups within student health insurance coverage at least 60 percent actuarial value, a single institution of higher education, would be exempt from the actuarial instead of meeting any specific metal provided that the risk pools are based value ‘‘metal level’’ requirements under level. However, several commenters on a bona fide classification and not section 1302(d) of the Affordable Care stated that student health insurance discriminatory based on health status. Act, as implemented in §§ 156.135 and plans should be required to meet metal We believe these standards balance 156.140, but would be required to levels, for purposes of transparency and issuer flexibility with appropriate provide an actuarial value of at least 60 comparability with other plans. safeguards against potentially percent. To determine a plan’s actuarial Response: Although we are finalizing discriminatory risk pooling practices. value for purposes of the application of the 60 percent actuarial value proposal, We note that nothing prevents a State the 60 percent actuarial value we agree that it is important for from requiring broader risk pooling with requirement to student health insurance enrollees and potential enrollees in respect to student health insurance coverage, we proposed to require student health insurance plans to be coverage than provided for in this final student health insurance coverage able to compare such plans with others rule (for example, requiring each issuers to obtain certification by an for which they may be eligible, such as student health insurance issuer to actuary that the plan provides an their parents’ plan or an individual establish one risk pool comprised of its actuarial value of at least 60 percent. market non-student plan. In the entire student health insurance book of This determination would be required proposed rule, we had solicited business). to be made by a member of the comments on whether to require student Comment: Some commenters American Academy of Actuaries, based health insurance issuers to specify, in requested clarification that issuers may on analysis in accordance with their summary of benefits and coverage

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(SBC) documents, enrollment materials, 1. Sequestration resources provided for by Federal law, marketing materials, or other materials, In accordance with the OMB Report to and the risk adjustment program is not the actuarial value of the coverage, the Congress on the Joint Committee specifically exempted under section 255 next lowest metal level the coverage Reductions for Fiscal Year 2016,9 both of the BBEDCA. Therefore, as clarified would otherwise satisfy, based on its the transitional reinsurance program in the OMB Report to Congress on the actuarial value, or any other data that and permanent risk adjustment program Joint Committee Reductions for Fiscal would give enrollees and prospective are subject to the fiscal year 2016 Year 2016, the risk adjustment program enrollees information about the sequestration. The Federal government’s is subject to sequestration. Under actuarial value of the coverage. Several 2016 fiscal year began on , section 256(k)(6) of the BBEDCA and the commenters supported this general 2015. The reinsurance program will be underlying authority for these programs, approach. One opposed it, arguing that sequestered at a rate of 6.8 percent for funds that are sequestered in fiscal year the actuarial value for student health payments made from fiscal year 2016 2016 from the reinsurance and risk insurance coverage is an unreliable resources (that is, funds collected adjustment programs will become indicator of the true value of the plan. during the 2016 fiscal year). To meet the available for payment to issuers in fiscal However, we believe that disclosing the sequestration requirement for the risk year 2017 without further Congressional actuarial value of the coverage, and the adjustment program for fiscal year 2016, action. next lowest metal level the coverage HHS will sequester risk adjustment 2. Provisions and Parameters for the would otherwise satisfy, based on its payments made using fiscal year 2016 Permanent Risk Adjustment Program actuarial value, would be a helpful tool. resources in all States where HHS Therefore, we are finalizing a In subparts D and G of 45 CFR part operates risk adjustment at a 153, we established standards for the requirement that student health sequestration rate of 7.0 percent. HHS insurance issuers must disclose, in any administration of the risk adjustment estimates that increasing the program. The risk adjustment program plan materials summarizing the terms of sequestration rate for all risk adjustment the coverage, the actuarial value of the is a permanent program created by payments made in fiscal year 2016 to all section 1343 of the Affordable Care Act coverage and the metal level (or next issuers in the States where HHS lowest metal level) the coverage would that transfers funds from lower risk, operates risk adjustment by 0.2 percent non-grandfathered plans to higher risk, satisfy. This requirement will not apply will permit HHS to meet the required to the SBC, unless and until such non-grandfathered plans in the national risk adjustment program individual and small group markets, information is incorporated into the sequestration percentage of 6.8 percent SBC template and instructions. inside and outside the Exchanges. In noted in the OMB Report to Congress. accordance with § 153.310(a), a State Comment: One commenter HHS, in coordination with OMB, has recommended removing the 92 percent that is approved or conditionally determined that, under section 256(k)(6) approved by the Secretary to operate an actuarial value cap on platinum level of the Balanced Budget and Emergency student plans instead of eliminating the Exchange may establish a risk Deficit Control Act of 1985 (the adjustment program, or have HHS do so metal level requirements altogether. BBEDCA), as amended, and the Response: We believe that the same on its behalf. underlying authority for these programs, On , 2016, we announced reasons to give platinum plans the funds that are sequestered in fiscal that HHS will hold a public conference flexibility with respect to actuarial value year 2016 from the reinsurance and risk to discuss potential improvements to also apply to other metal level plans. adjustment programs will become the HHS risk adjustment methodology Therefore, we are providing flexibility available for payment to issuers in fiscal for the 2018 benefit year and beyond. in this final rule for student health year 2017 without further Congressional The conference will take place on insurance plans to provide any AV at or action. If the Congress does not enact , 2016, in the Grand above 60 percent. deficit reduction provisions that replace Auditorium at the Centers for Medicare D. Part 153—Standards Related to the Joint Committee reductions, these and Medicaid Services in Baltimore, Reinsurance, Risk Corridors, and Risk programs will be sequestered in future Maryland.10 Prior to the conference, we Adjustment Under the Affordable Care fiscal years, and any sequestered intend to issue a White Paper that will Act funding will become available in the be open for public comment. The fiscal year following the one in which conference and White Paper will focus In the proposed rule, we proposed a it was sequestered. number of modifications to the risk on what we have learned from the 2014 Comment: One commenter stated that benefit year of the risk adjustment adjustment, reinsurance, and risk risk adjustment payments should not be corridors programs. program, and specific areas of potential subject to sequestration because the risk refinements to the methodology, Comment: One commenter asked that adjustment program is budget neutral including prescription drug model HHS present all regulatory information and the Federal government is simply exploration, accounting for partial year related to the premium stabilization transferring funds among issuers. enrollment, future recalibrations using programs in a clear, transparent, reliable Response: The BBEDCA requires all risk adjustment data, and discussion of and timely manner. Another commenter non-exempt budgetary resources be the risk adjustment transfer formula. asked that the risk adjustment and sequestered in amounts sufficient to Registration for the conference opened reinsurance data collection achieve the savings targets established on , 2016, and is available at requirements be limited to data in the Budget Control Act of 2011. Risk https://www.regtap.info/ until March currently held by plans in order to not adjustment payments are subject to 23, 2016, for onsite attendance increase the administrative burden on sequestration as they are budgetary registration, and , 2016, for providers. remote attendance registration. Response: HHS is committed to 9 Office of Management and Budget, OMB Report Stakeholders who are unable to attend providing regulations and guidance in a to the Congress on the Joint Committee Reductions for Fiscal Year 2016 (Feb. 2, 2015), available at clear and timely manner, and seeks to https://www.whitehouse.gov/sites/default/files/ 10 HHS-Operated Risk Adjustment Methodology minimize the administrative burden of omb/assets/legislative_reports/sequestration/2016_ Meeting; March 31, 2016, 81 FR 4633 (Jan. 27, our data collection. jc_sequestration_report_speaker.pdf. 2016).

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the conference in person may live fewer than 5,000 enrollees or less than b. Proposed Updates to the Risk stream the conference and provide 5 percent market share be exempt from Adjustment Model (§ 153.320) feedback via the webinar. Additional risk adjustment. Two commenters In the proposed rule, we proposed to information can be found at https:// requested that HHS set a cap on risk continue to use the same risk www.regtap.info/RAonsite.php. adjustment transfers based on MLR adjustment methodology finalized in the a. Overview of the HHS Risk when the amount of the transfer causes 2014 Payment Notice. We proposed to Adjustment Model (§ 153.320) the issuer’s MLR to hit 90 percent. make certain updates to the risk Specifically, the commenters requested The HHS risk adjustment model adjustment model to incorporate excluding issuers with an MLR of 90 predicts plan liability for an average preventive services into our simulation percent or greater, and capping an enrollee based on that person’s age, sex, of plan liability, and to reflect more and diagnoses (risk factors), producing a issuer’s risk adjustment payment once it current data. The proposed data updates risk score. The HHS risk adjustment causes the issuer’s MLR to rise to 90 are similar to the ones we effectuated for methodology utilizes separate models percent. 2016 risk adjustment in the 2016 for adults, children, and infants to Response: We agree that the risk Payment Notice. We proposed to account for cost differences in each of adjustment program is intended to work recalculate the weights assigned to the these age groups. In each of the adult with the fair rating rules under the various hierarchical condition categories and demographic factors in and child models, the relative costs Affordable Care Act to reimburse issuers our risk adjustment models using the assigned to an individual’s age, sex, and who take on riskier enrollees, not to most recent data available. As we diagnoses are added together to produce prevent issuers, including small and previously described, in the adult and a risk score. Infant risk scores are fast-growing issuers, from participating child models, enrollee health risks are determined by inclusion in one of 25 in the individual and small group mutually exclusive groups, based on the estimated using the HHS risk markets. In this final rule, we are adjustment model, which assigns a set infant’s maturity and the severity of its finalizing more accurate model diagnoses. If applicable, the risk score is of additive factors that reflect the coefficients for 2017 benefit year risk relative costs attributable to multiplied by a cost-sharing reduction adjustment. We will discuss in the adjustment. demographics and diagnoses. Risk upcoming White Paper potential future The enrollment-weighted average risk adjustment factors are developed using score of all enrollees in a particular risk improvements to the HHS risk claims data and reflect the costs of a adjustment-covered plan, or the plan adjustment methodology that we believe given disease relative to average liability risk score, within a geographic will continue to improve the accuracy of spending. The longer the lag in data rating area is one of the inputs into the the model and benefit all consumers used to develop the risk factors, the risk adjustment payment transfer and issuers in these markets by helping greater the potential that the costs of formula, which determines the payment ensure fair rating practices across those treating one disease versus another have or charge that an issuer will receive or risk pools because issuers will have the changed in a manner not fully reflected be required to pay for that plan. Thus, expectation of accurate risk adjustment in the risk factors. the HHS risk adjustment model predicts payments. Any changes we make to the To provide risk adjustment factors average group costs to account for risk HHS risk adjustment methodology that best reflect more recent treatment across plans, which, as we stated in the would be implemented through patterns and costs, we proposed to 2014 Payment Notice, accords with the rulemaking as necessary. recalibrate the HHS risk adjustment models for 2017 by using more recent Actuarial Standards Board’s Actuarial Comment: One commenter requested claims data to develop updated risk Standards of Practice for risk that HHS verify that plans that are factors. The risk factors published in the classification. subject to risk adjustment data We received several general proposed 2017 Payment Notice were validation (RADV) are correctly comments regarding the HHS risk developed using the Truven Health implementing the definition of small ® adjustment methodology. Analytics 2012 and 2013 MarketScan Comment: Many commenters group, suggesting that eligibility can be Commercial Claims and Encounters reiterated their support for the HHS risk verified with an employer’s wage and database (MarketScan); we proposed to adjustment methodology. Some tax statements. update the risk factors in the HHS risk commenters requested a cap on risk Response: We will consider ways to adjustment model using 2012, 2013, and adjustment transfers. Some commenters enhance the RADV audits in 2014 MarketScan data in the final 2017 also suggested that, under our operationally feasible ways without Payment Notice when 2014 MarketScan methodology, low-cost and low-risk- infringing on the States’ primary became available. In using 2012, 2013, score issuers subsidize higher cost regulatory and oversight authority over and 2014 MarketScan data, we blend, or issuers, and that the model has adverse health insurance issuers. average, the resulting coefficients from effects on limited network plans and Comment: One commenter the separately solved models from each new, small, and fast-growing plans. recommended that HHS advance its dataset. We do not weight one year more Commenters requested exempting new, schedule for publishing the proposed heavily than the others. small, and fast-growing plans from risk We stated that we believe we can Notice of Benefit and Payment adjustment for the first 3 to 5 plan years, more accurately account for high-cost Parameters to early fall, and requested in recognition of the difficulty they are conditions with new treatments that are that HHS provide a 60-day comment having in obtaining complete not reflected in our model due to lags hierarchical condition categories (HCC) period to allow for more detailed and in the data available to us for diagnostic classifications for their substantive comments on major recalibration. We believe that stability enrollees. Commenters also suggested proposed changes to the risk adjustment across our models is important, but gradually phasing in new issuers to risk model. sought comment and data that may adjustment or instituting a credibility Response: We are exploring our inform better methods of accurately threshold for participation. One flexibility in moving the Payment compensating for new treatments for commenter requested that issuers with Notice schedule to an earlier timeframe. high cost conditions. For example, we

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sought comment on whether there are commenter recommended HHS use drug trend rate through 2017. We ways to model the severity of these 2013, 2014, and 2015 MarketScan data believe that using these more granular conditions in a manner that will more for 2017 risk adjustment, and 2014, trend rates better reflect the growth in fully capture the highest cost enrollees. 2015, and 2016 MarketScan data for specialty drug expenditures and drugs Comment: One commenter requested 2018 risk adjustment, stating that HHS generally as compared to medical and that HHS incorporate 2014 and 2015 should finalize the process and surgical expenditures. Further, we data for the individual and small group methodology in each year’s Payment believe that more accurately trending populations subject to risk adjustment, Notice and release the updated factors drug expenditures through 2017 will giving issuers notice of this later. A commenter acknowledged that more accurately compensate issuers incorporation no later than December the incorporation of new 2014 data in providing new treatments associated 2016, so that they can determine and the calibration of the risk weights helps with specific HCCs by providing a more file plan year 2018 rates with each State. address new high-cost treatments, but finely tuned estimate of the relative Response: Under our current that under the current model, the costs of various conditions under the distributed data collection approach, we benefits of the modification are limited HHS risk adjustment methodology. We do not have access to enrollee-level because the use of 3-year averaging have incorporated different trend factors data, which is necessary for risk means it will take 3 years for the risk for (i) traditional drugs, (ii) specialty adjustment recalibration. However, we weights to fully reflect changes in drugs, and (iii) medical and surgical intend to discuss incorporating enrollee- treatment patterns. Commenters expenditures, and are finalizing this level data in future recalibrations in the recommended that HHS consider approach for 2017 risk adjustment. This upcoming White Paper, which will be whether individual market data might approach is reflected in the finalized published for public comment. show different relative weights for coefficients in this final rule. Comment: Commenters stated that certain high-cost conditions than the We proposed to incorporate risk adjustment coefficients are too low population currently used for the risk preventive services into our simulation for enrollees without HCCs and too high adjustment calibration. Commenters of plan liability in the recalibration of for those with one or more HCCs. One also recommended that HHS evaluate the risk adjustment models for 2017. We commenter recommended that the adult the increase in costs for chronic identified preventive services for the and child models be calculated conditions (specifically Hepatitis C, for 2012, 2013, and 2014 MarketScan regionally or specifically for each State. which expensive prescription drug samples using procedure and diagnosis One commenter encouraged HHS to therapies have become recently codes, prescription drug therapeutic include socioeconomic status and oral available) year over year and trend or classes, and enrollee age and sex. We health services in the model, especially adjust the aggregated claims data or relied on lists of preventive services the child model. model to reflect the changes—this from several major issuers, the Response: We have attempted to preventive services used for the AV address the range between enrollees would allow HHS to respond to changes in treatment practices without relying Calculator, and Medicare’s preventive without HCCs and those with HCCs by services benefit to operationalize finalizing the incorporation of on additional external data. One commenter recommended that more preventive services definitions for preventive services into our simulation incorporation in the risk adjustment of plan liability. While overall this is weight and credibility should be given to the most recent data to best capture models. We then adjusted plan liability not a very large effect, it does have a by adding 100 percent of preventive emerging trends in treatments, drug noticeable effect on certain demographic services covered charges to simulate therapies, and costs. subgroups, resulting in more accurate plan liability for all metal levels. We payments for enrollees without HCCs. Response: We agree with commenters also applied standard benefit cost As for calculating the adult and child that there may be more precise ways to sharing rules by metal level to covered models regionally or by State, we trend expenditures to accommodate the charges for non-preventive services. believe that the use of the geographic data lag and more accurately reflect the Total adjusted simulated plan liability is cost factor (GCF) in the payment transfer introduction of new treatments, the sum of preventive services covered formula should reflect prevailing including prescription drug therapies, charges, and non-preventive services utilization and expenditure patterns in for high cost conditions. Based on simulated plan liability. the geographic location of the plan’s commenters’ feedback on the need to We re-estimated the risk adjustment enrollees. We intend to explore whether better model the risk of high-cost models by metal level, predicting plan accounting for socioeconomic status is conditions and rapidly changing health liability adjusted to account for feasible in the risk adjustment model in care costs, we re-examined the preventive services without cost the future. underlying trend factor we used to trend sharing. We compared the model Comment: All commenters on this medical and prescription drug coefficients predicting original (that is, section of the proposed rule supported expenditures in the MarketScan data, non-adjusted for preventive services) HHS’s efforts to make the risk because those expenditures account for and adjusted simulated plan liability. adjustment models more accurate by a large portion of the recent changes in Adjusting for preventive services addressing the lag in available health costs to treat high-cost conditions. increases age-sex coefficients relative to claims data. Many commenters also Because we were using the same trend HCC coefficients, especially in the lower supported various approaches in more for both sets of expenditures, we looked metal tiers (bronze and silver), and in accurately addressing high-cost at historical MarketScan drug data, age/sex ranges with high preventive conditions, which are particularly subdivided by traditional (including services expenditures (for example, susceptible to the lag in health claims branded and generic) drugs, specialty young adult females). The implication costs because of the rapidly rising costs drugs, and medical and surgical of the changes to the model coefficients of certain specialty drugs. One expenditures, and found varying growth is that the risk scores of healthy commenter opposed the use of 2014 rates. In order to address commenters’ enrollees (whose risk scores are based data unless the updated model is feedback, we consulted with actuaries solely on model age-sex coefficients) provided in time to be used for 2017 and industry reports to derive a will likely rise relative to the risk scores rate filings. Conversely, another specialty drug trend rate and traditional of the less healthy (whose risk scores

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include one or more HCC coefficients in preventive services at the plan level. We off label use or drugs approved for addition to an age-sex coefficient), believe that this increased accuracy for treatment of a single condition. One especially in bronze and silver plans. As demographic factors coupled with our commenter recommended that all a result of the risk score changes for adjustments to medical and prescription prescription drugs used to treat HCC individuals, we expect that the drug expenditures will promote conditions be included. Commenters incorporation of preventive services will increased accuracy for all enrollees, stated that including prescription drugs increase the risk scores of bronze and with and without HCCs. We are could significantly increase payment silver plans with healthier enrollees finalizing the incorporation of accuracy and yield benefits to the relative to other plans’ risk scores when preventive services into our simulation payment system far in excess of any preventive services are taken into of plan liability as proposed. additional administrative burden. account. This incorporation of Additionally, we are evaluating Commenters further stated that preventive services will more accurately whether and how we may incorporate prescription drug claims data have compensate risk adjustment covered prescription drug data in the Federally certain advantages in that the data are plans with enrollees who use preventive certified risk adjustment methodology fairly uniform across plans and do not services. that HHS uses when it operates risk have many of the issues associated with Comment: Most commenters adjustment. Prescription drug data diagnosis data, such as timeliness and supported the incorporation of could be used in the risk adjustment inconsistency of reporting across preventive services into our simulation methodology to supplement diagnostic providers, in addition to already being of plan liability in the risk adjustment data by using the prescription drug data included in EDGE Server data and model. Two commenters expressed as a severity indicator, or as a proxy for readily available to HHS. Commenters concern that this change would diagnoses in cases where diagnostic also stated that including prescription unintentionally create an incentive for data are likely to be incomplete. We are drugs as a proxy for missing diagnoses issuers to attract and retain healthier assessing these approaches, with could level the playing field for smaller individuals rather than higher risk particular sensitivity to reliability and issuers that are less experienced with individuals, while another commenter the potential for strategic behavior with medical coding. Similarly, commenters supported including preventive respect to prescribing behavior. As we supported the inclusion of pharmacy services, but suggested that the noted in the 2014 Payment Notice, we data to address partial year enrollees approach proposed by HHS appears to did not use prescription drug utilization with chronic conditions that have compensate all plans, regardless of as a predictor of expenditures to avoid prescription drug claims, but may not whether their members receive creating adverse incentives to modify have a provider encounter with a preventive services, thereby creating a discretionary prescribing. We are documented diagnosis. One commenter ‘‘free rider’’ problem. One commenter evaluating whether we can improve the requested that HHS work with noted that while the incorporation of models’ predictive power through the stakeholders to refine the prescription preventive services does increase incorporation of prescription drugs drug data that would be utilized if this demographic factors for catastrophic without unduly incentivizing altered proposal is finalized and requested that plans and for females within bronze prescribing behavior. We sought HHS consider how to gather and plans, the impact of this change is comment and any data that could incorporate data on prescription drug relatively small and does not resolve inform effective methods of utilization collected by electronic health concerns about unbalanced incentives incorporating prescription drug data in records. Commenters cautioned HHS to to attract enrollees with HCC diagnoses. future recalibrations. be mindful that different characteristics Response: Section 2713 of the PHS Comment: Most commenters of prescription drug utilization will be Act, as added by the Affordable Care supported incorporating prescription Act requires that individual and small drugs as predictors in the risk more or less predictive depending on group non-grandfathered plans (among adjustment model either as a proxy for the condition. Commenters also warned others) provide coverage for a range of missing diagnoses or an indicator of that gaming concerns need to be preventive services and may not impose severity. Some commenters shared balanced with the desire to enhance the cost sharing on patients receiving these HHS’s concerns about creating risk adjustment methodology’s services. We believe it is essential that incentives to modify discretionary predictive power. A commenter also we are consistent with the goals of the prescribing to artificially increase the cautioned that the proposed use of Affordable Care Act and provide severity of diagnoses and one prescription drug data should have compensation to issuers who are commenter expressed concern about definitions and guardrails that delineate required to provide these services keeping the model current with its use. Lastly, commenters stated that without cost sharing. As such, we also pharmaceutical developments that using prescription drug data is believe that accurately accounting for could create an additional operational important because without an accurate services provided by issuers to healthier burden for both health plans and HHS. risk adjustment methodology that enrollees is a fair adjustment to real, Some commenters suggested that accounts for the extra costs that plans baseline costs paid by these issuers. As prescription drugs be included for 2017 incur by enrolling high-risk patients, for concerns about a ‘‘free rider’’ risk adjustment. One commenter plans have an incentive to design problem, all risk adjustment covered requested that HHS incorporate benefits in a manner that discourages plans are required to provide zero cost prescription drugs as soon as possible. enrollment by these patients. sharing preventive services. Even if Commenters supported 2018 Response: We will explore the different enrollees use preventive implementation (rather than 2017) and incorporation of prescription drugs in services to different extents, by one commenter suggested that any the risk adjustment model in the White incorporating zero cost sharing changes to include prescription drugs Paper and at the conference in March preventive services in the calculation of should include greater detail and go 2016. We agree with commenters that plan liability when calibrating the through the regular notice and comment prescription drugs have the potential to models’ coefficients, we will increase process. Commenters suggested that increase the predictive power of the risk the accuracy of the model overall, HHS include prescription drug data in adjustment models. We agree that accounting for any differential use of a limited manner, such as drugs with no different prescription drugs will likely

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be more or less predictive depending on noted Massachusetts’ adjustment for analyze this issue and include our the condition. We also remain cautious partial-year enrollment, and suggested findings in the White Paper for about creating incentives to modify that HHS consider additional analysis to discussion at the March 31, 2016 risk discretionary prescribing to artificially determine whether that approach is adjustment conference. increase the severity of diagnoses. appropriate for the HHS risk adjustment c. List of Factors To Be Employed in the However, we look forward to continuing methodology. One commenter suggested Model (§ 153.320) to explore this potential improvement to a member-level adjustment while the models with stakeholders and to another commenter suggested a The HHS risk adjustment models share our developments in the White duration-based adjustment. Another predict annualized plan liability Paper and at the risk adjustment commenter recommended that the expenditures using age and sex conference on March 31, 2016. adjustment vary by metal level and categories and the HHS HCCs included Lastly, we stated in the proposed rule length of time enrolled, with higher in the HHS risk adjustment model. that we would like to explore the effect weights for gold and platinum plans and Dollar coefficients were estimated for of partial year enrollment in the HHS shorter enrollment periods. One these factors using weighted least risk adjustment methodology. We have commenter suggested that HHS should squares regression, where the weight received input that issuers are permit risk scores to travel with an was the fraction of the year enrolled. experiencing higher than expected enrollee across issuers. Two claims costs for partial year enrollees. We are including the same HCCs that commenters opposed an explicit were included in the original risk We have also received input that the adjustment for partial year enrollees, methodology does not capture enrollees adjustment calibration in the 2014 because they said such an adjustment Payment Notice. For each model, the with chronic conditions who may not would accommodate liberal have accumulated diagnoses in their factors are the statistical regression enforcement of special enrollment dollar values for each HCC in the model partial year enrollment. At the same periods, incentivizing issuers to employ time, as compared to full year enrollees divided by a weighted average plan loose eligibility standards to gain liability for the full modeling sample. of the same relative risk, partial year members, but ultimately eroding enrollees are less likely to have The factors represent the predicted individual market stability. A few relative incremental expenditures for spending that exceeds the deductible or commenters recommended that to better annual limitation on cost sharing. We each HCC. The factors resulting from the address partial year enrollment in risk blended factors from the 2012, 2013, sought comment on how the adjustment, changes should be made to methodology could be made more and 2014 separately solved models special enrollment period processes and (with the incorporation of preventive predictive for partial year enrollees. policies to encourage continuous Comment: Many commenters services, and with different trend rates coverage and prevent fraud and abuse. supported addressing partial year for medical and surgical expenditures, Commenters stated that unverified enrollees in the model. One commenter for traditional prescription drug noted that many medical events for special enrollment periods have expenditures, and for specialty enrollees in the commercial market (for produced selection issues for health prescription drug expenditures) are example, maternity, surgeries) represent plans, as enrollees enter through a shown in the tables below. For a given acute rather than chronic events, so the special enrollment period, utilize high- enrollee, the sums of the factors for the enrollee can incur most of their annual cost services, and then switch to a lower enrollee’s HCCs are the total relative medical expenses during a short period metal level plan in the following open predicted expenditures for that enrollee. of time. Commenters suggested that the enrollment period or drop coverage Table 1 contains factors for each adult use of prescription drug claims could altogether. One commenter cautioned model, including the interactions. Table help address enrollees with a chronic that any additions to the model to 2 contains the HHS HCCs in the severity condition but who do not have a account for partial year enrollment illness indicator variable. Table 3 provider encounter with a documented should improve reliability and contains the factors for each child diagnosis. Commenters also suggested predictive power, not influence clinical model. Table 4 contains the factors for that the impact of partial year judgment or plan behavior with respect each infant model. We are finalizing enrollment could be measured by taking to enrollees’ coverage. these factors, with the adjustment for a population that had multiple years of Response: We appreciate commenters’ the differing medical and traditional enrollment and comparing risk scores substantive feedback on accounting for and specialty prescription drug trend and health care costs when only a partial year enrollment in future factors incorporated in the 2012, 2013, partial year is considered. Commenters recalibrations and will continue to and 2014 blended coefficients.

TABLE 1—ADULT RISK ADJUSTMENT MODEL FACTORS

Factor Platinum Gold Silver Bronze Catastrophic

Demographic Factors

Age 21–24, Male...... 0.236 0.180 0.119 0.082 0.081 Age 25–29, Male...... 0.246 0.186 0.122 0.083 0.082 Age 30–34, Male...... 0.287 0.216 0.138 0.089 0.088 Age 35–39, Male...... 0.346 0.264 0.172 0.112 0.111 Age 40–44, Male...... 0.420 0.326 0.221 0.151 0.149 Age 45–49, Male...... 0.496 0.392 0.273 0.192 0.191 Age 50–54, Male...... 0.633 0.512 0.372 0.275 0.274 Age 55–59, Male...... 0.722 0.585 0.429 0.320 0.318 Age 60–64, Male...... 0.843 0.683 0.502 0.372 0.369 Age 21–24, Female...... 0.379 0.296 0.200 0.138 0.137 Age 25–29, Female...... 0.460 0.359 0.247 0.173 0.172

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TABLE 1—ADULT RISK ADJUSTMENT MODEL FACTORS—Continued

Factor Platinum Gold Silver Bronze Catastrophic

Age 30–34, Female...... 0.582 0.466 0.337 0.254 0.252 Age 35–39, Female...... 0.668 0.542 0.405 0.318 0.316 Age 40–44, Female...... 0.742 0.604 0.455 0.357 0.355 Age 45–49, Female...... 0.750 0.608 0.450 0.344 0.342 Age 50–54, Female...... 0.845 0.691 0.518 0.398 0.395 Age 55–59, Female...... 0.849 0.690 0.510 0.380 0.378 Age 60–64, Female...... 0.909 0.734 0.537 0.395 0.392

Diagnosis Factors

HIV/AIDS ...... 8.942 8.450 8.099 8.142 8.143 Septicemia, Sepsis, Systemic Inflammatory Response Syndrome/Shock ...... 10.686 10.511 10.405 10.461 10.462 Central Nervous System Infections, Except Viral Menin- gitis ...... 6.632 6.532 6.468 6.489 6.489 Viral or Unspecified Meningitis ...... 4.657 4.422 4.263 4.222 4.222 Opportunistic Infections...... 8.503 8.404 8.337 8.319 8.319 Metastatic Cancer...... 24.314 23.880 23.578 23.637 23.638 Lung, Brain, and Other Severe Cancers, Including Pedi- atric Acute Lymphoid Leukemia ...... 12.630 12.296 12.062 12.066 12.066 Non-Hodgkin‘s Lymphomas and Other Cancers and Tu- mors ...... 5.845 5.611 5.435 5.388 5.387 Colorectal, Breast (Age < 50), Kidney, and Other Cancers 5.152 4.918 4.738 4.690 4.689 Breast (Age 50+) and Prostate Cancer, Benign/Uncertain Brain Tumors, and Other Cancers and Tumors ...... 2.957 2.786 2.650 2.597 2.596 Thyroid Cancer, Melanoma, Neurofibromatosis, and Other Cancers and Tumors...... 1.448 1.295 1.160 1.069 1.067 Pancreas Transplant Status/Complications ...... 5.455 5.233 5.091 5.112 5.114 Diabetes with Acute Complications ...... 1.187 1.049 0.925 0.822 0.820 Diabetes with Chronic Complications ...... 1.187 1.049 0.925 0.822 0.820 Diabetes without Complication ...... 1.187 1.049 0.925 0.822 0.820 Protein-Calorie Malnutrition ...... 13.686 13.693 13.702 13.762 13.763 Mucopolysaccharidosis ...... 2.277 2.159 2.061 2.008 2.007 Lipidoses and Glycogenosis...... 2.277 2.159 2.061 2.008 2.007 Amyloidosis, Porphyria, and Other Metabolic Disorders ..... 2.277 2.159 2.061 2.008 2.007 Adrenal, Pituitary, and Other Significant Endocrine Dis- orders ...... 2.277 2.159 2.061 2.008 2.007 Liver Transplant Status/Complications ...... 16.042 15.868 15.759 15.771 15.772 End-Stage Liver Disease...... 7.119 6.877 6.718 6.736 6.737 Cirrhosis of Liver ...... 3.852 3.690 3.569 3.535 3.535 Chronic Hepatitis...... 3.852 3.690 3.569 3.535 3.535 Acute Liver Failure/Disease, Including Neonatal Hepatitis 4.430 4.269 4.158 4.148 4.148 Intestine Transplant Status/Complications ...... 32.604 32.555 32.516 32.559 32.559 Peritonitis/Gastrointestinal Perforation/Necrotizing Enterocolitis ...... 11.820 11.561 11.383 11.413 11.413 Intestinal Obstruction...... 6.537 6.272 6.101 6.120 6.121 Chronic Pancreatitis...... 5.455 5.233 5.091 5.112 5.114 Acute Pancreatitis/Other Pancreatic Disorders and Intes- tinal Malabsorption...... 2.702 2.515 2.379 2.331 2.331 Inflammatory Bowel Disease...... 3.657 3.392 3.190 3.098 3.096 Necrotizing Fasciitis...... 6.576 6.378 6.239 6.254 6.255 Bone/Joint/Muscle Infections/Necrosis...... 6.576 6.378 6.239 6.254 6.255 Rheumatoid Arthritis and Specified Autoimmune Disorders 4.848 4.587 4.394 4.385 4.385 Systemic Lupus Erythematosus and Other Autoimmune Disorders ...... 1.205 1.070 0.952 0.868 0.867 Osteogenesis Imperfecta and Other Osteodystrophies ...... 3.115 2.917 2.758 2.699 2.697 Congenital/Developmental Skeletal and Connective Tissue Disorders ...... 3.115 2.917 2.758 2.699 2.697 Cleft Lip/Cleft Palate...... 1.295 1.137 1.010 0.942 0.941 Hemophilia ...... 46.436 46.150 45.931 45.939 45.939 Myelodysplastic Syndromes and Myelofibrosis ...... 12.671 12.534 12.440 12.448 12.449 Aplastic Anemia ...... 12.671 12.534 12.440 12.448 12.449 Acquired Hemolytic Anemia, Including Hemolytic Disease of Newborn...... 9.737 9.576 9.454 9.445 9.445 Sickle Cell Anemia (Hb-SS) ...... 9.737 9.576 9.454 9.445 9.445 Thalassemia Major...... 9.737 9.576 9.454 9.445 9.445 Combined and Other Severe Immunodeficiencies ...... 5.432 5.284 5.182 5.183 5.183 Disorders of the Immune Mechanism ...... 5.432 5.284 5.182 5.183 5.183 Coagulation Defects and Other Specified Hematological Disorders ...... 2.805 2.707 2.628 2.599 2.599 Drug Psychosis...... 3.830 3.574 3.380 3.286 3.284 Drug Dependence...... 3.830 3.574 3.380 3.286 3.284

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TABLE 1—ADULT RISK ADJUSTMENT MODEL FACTORS—Continued

Factor Platinum Gold Silver Bronze Catastrophic

Schizophrenia ...... 3.189 2.934 2.744 2.680 2.679 Major Depressive and Bipolar Disorders ...... 1.714 1.547 1.404 1.308 1.307 Reactive and Unspecified Psychosis, Delusional Disorders 1.714 1.547 1.404 1.308 1.307 Personality Disorders...... 1.176 1.043 0.910 0.814 0.812 Anorexia/Bulimia Nervosa...... 2.693 2.527 2.392 2.334 2.333 Prader-Willi, Patau, Edwards, and Autosomal Deletion Syndromes ...... 2.632 2.504 2.403 2.354 2.353 Down Syndrome, Fragile X, Other Chromosomal Anoma- lies, and Congenital Malformation Syndromes ...... 1.056 0.951 0.849 0.778 0.776 Autistic Disorder...... 1.176 1.043 0.910 0.814 0.812 Pervasive Developmental Disorders, Except Autistic Dis- order ...... 1.176 1.043 0.910 0.814 0.812 Traumatic Complete Lesion Cervical Spinal Cord ...... 12.005 11.851 11.737 11.735 11.735 Quadriplegia ...... 12.005 11.851 11.737 11.735 11.735 Traumatic Complete Lesion Dorsal Spinal Cord ...... 9.157 9.000 8.886 8.874 8.875 Paraplegia ...... 9.157 9.000 8.886 8.874 8.875 Spinal Cord Disorders/Injuries ...... 5.635 5.424 5.275 5.246 5.246 Amyotrophic Lateral Sclerosis and Other Anterior Horn Cell Disease...... 3.029 2.792 2.625 2.585 2.585 Quadriplegic Cerebral Palsy ...... 1.206 0.997 0.839 0.777 0.776 Cerebral Palsy, Except Quadriplegic ...... 0.124 0.068 0.034 0.011 0.011 Spina Bifida and Other Brain/Spinal/Nervous System Con- genital Anomalies...... 0.071 0.019 0.000 0.000 0.000 Myasthenia Gravis/Myoneural Disorders and Guillain-Barre Syndrome/Inflammatory and Toxic Neuropathy ...... 5.247 5.099 4.994 4.971 4.971 Muscular Dystrophy...... 2.147 1.981 1.860 1.785 1.784 Multiple Sclerosis ...... 13.590 13.187 12.905 12.950 12.951 Parkinson‘s, Huntington‘s, and Spinocerebellar Disease, and Other Neurodegenerative Disorders ...... 2.147 1.981 1.860 1.785 1.784 Seizure Disorders and Convulsions ...... 1.495 1.337 1.207 1.137 1.136 Hydrocephalus ...... 6.388 6.266 6.165 6.139 6.138 Non-Traumatic Coma, and Brain Compression/Anoxic Damage ...... 9.207 9.070 8.964 8.958 8.957 Respirator Dependence/Tracheostomy Status ...... 34.719 34.708 34.706 34.772 34.773 Respiratory Arrest...... 10.554 10.403 10.306 10.370 10.371 Cardio-Respiratory Failure and Shock, Including Res- piratory Distress Syndromes ...... 10.554 10.403 10.306 10.370 10.371 Heart Assistive Device/Artificial Heart ...... 35.114 34.869 34.711 34.771 34.772 Heart Transplant...... 35.114 34.869 34.711 34.771 34.772 Congestive Heart Failure ...... 3.280 3.171 3.095 3.089 3.089 Acute Myocardial Infarction ...... 10.129 9.795 9.580 9.691 9.693 Unstable Angina and Other Acute Ischemic Heart Disease 5.227 4.952 4.779 4.793 4.794 Heart Infection/Inflammation, Except Rheumatic ...... 6.297 6.163 6.063 6.042 6.041 Specified Heart Arrhythmias ...... 2.829 2.681 2.565 2.512 2.511 Intracranial Hemorrhage...... 9.423 9.144 8.954 8.963 8.964 Ischemic or Unspecified Stroke ...... 3.167 2.982 2.869 2.875 2.876 Cerebral Aneurysm and Arteriovenous Malformation ...... 3.940 3.742 3.600 3.559 3.558 Hemiplegia/Hemiparesis ...... 5.468 5.374 5.317 5.360 5.361 Monoplegia, Other Paralytic Syndromes ...... 3.452 3.319 3.226 3.207 3.207 Atherosclerosis of the Extremities with Ulceration or Gan- grene ...... 10.940 10.840 10.784 10.853 10.854 Vascular Disease with Complications ...... 7.727 7.543 7.416 7.417 7.417 Pulmonary Embolism and Deep Vein Thrombosis ...... 3.841 3.675 3.555 3.529 3.529 Lung Transplant Status/Complications ...... 36.419 36.227 36.103 36.180 36.181 Cystic Fibrosis...... 18.011 17.687 17.444 17.467 17.467 Chronic Obstructive Pulmonary Disease, Including Bronchiectasis ...... 0.942 0.825 0.717 0.641 0.640 Asthma ...... 0.942 0.825 0.717 0.641 0.640 Fibrosis of Lung and Other Lung Disorders ...... 1.889 1.771 1.682 1.641 1.640 Aspiration and Specified Bacterial Pneumonias and Other Severe Lung Infections ...... 7.594 7.520 7.471 7.485 7.485 Kidney Transplant Status ...... 10.183 9.919 9.744 9.735 9.735 End Stage Renal Disease ...... 38.463 38.228 38.078 38.198 38.201 Chronic Kidney Disease, Stage 5 ...... 2.088 1.989 1.925 1.920 1.920 Chronic Kidney Disease, Severe (Stage 4) ...... 2.088 1.989 1.925 1.920 1.920 Ectopic and Molar Pregnancy, Except with Renal Failure, Shock, or Embolism ...... 1.340 1.156 0.979 0.795 0.791 Miscarriage with Complications...... 1.340 1.156 0.979 0.795 0.791 Miscarriage with No or Minor Complications ...... 1.340 1.156 0.979 0.795 0.791 Completed Pregnancy With Major Complications ...... 3.630 3.150 2.862 2.712 2.713 Completed Pregnancy With Complications ...... 3.630 3.150 2.862 2.712 2.713 Completed Pregnancy with No or Minor Complications ...... 3.630 3.150 2.862 2.712 2.713

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TABLE 1—ADULT RISK ADJUSTMENT MODEL FACTORS—Continued

Factor Platinum Gold Silver Bronze Catastrophic

Chronic Ulcer of Skin, Except Pressure ...... 2.356 2.233 2.150 2.134 2.134 Hip Fractures and Pathological Vertebral or Humerus Fractures ...... 9.460 9.245 9.100 9.136 9.136 Pathological Fractures, Except of Vertebrae, Hip, or Hu- merus ...... 2.000 1.871 1.758 1.688 1.687 Stem Cell, Including Bone Marrow, Transplant Status/ Complications ...... 31.027 31.022 31.017 31.035 31.036 Artificial Openings for Feeding or Elimination ...... 10.038 9.946 9.886 9.924 9.925 Amputation Status, Lower Limb/Amputation Complications 5.263 5.112 5.015 5.044 5.045

Interaction Factors

Severe illness x Opportunistic Infections ...... 10.408 10.632 10.799 10.894 10.895 Severe illness x Metastatic Cancer ...... 10.408 10.632 10.799 10.894 10.895 Severe illness x Lung, Brain, and Other Severe Cancers, Including Pediatric Acute Lymphoid Leukemia ...... 10.408 10.632 10.799 10.894 10.895 Severe illness x Non-Hodgkin‘s Lymphomas and Other Cancers and Tumors ...... 10.408 10.632 10.799 10.894 10.895 Severe illness x Myasthenia Gravis/Myoneural Disorders and Guillain-Barre Syndrome/Inflammatory and Toxic Neuropathy ...... 10.408 10.632 10.799 10.894 10.895 Severe illness x Heart Infection/Inflammation, Except Rheumatic ...... 10.408 10.632 10.799 10.894 10.895 Severe illness x Intracranial Hemorrhage ...... 10.408 10.632 10.799 10.894 10.895 Severe illness x HCC group G06 (G06 is HCC Group 6 which includes the following HCCs in the blood disease category: 67, 68) ...... 10.408 10.632 10.799 10.894 10.895 Severe illness x HCC group G08 (G08 is HCC Group 8 which includes the following HCCs in the blood disease category: 73, 74) ...... 10.408 10.632 10.799 10.894 10.895 Severe illness x End-Stage Liver Disease ...... 1.906 2.039 2.141 2.225 2.226 Severe illness x Acute Liver Failure/Disease, Including Neonatal Hepatitis...... 1.906 2.039 2.141 2.225 2.226 Severe illness x Atherosclerosis of the Extremities with Ul- ceration or Gangrene ...... 1.906 2.039 2.141 2.225 2.226 Severe illness x Vascular Disease with Complications ...... 1.906 2.039 2.141 2.225 2.226 Severe illness x Aspiration and Specified Bacterial Pneu- monias and Other Severe Lung Infections ...... 1.906 2.039 2.141 2.225 2.226 Severe illness x Artificial Openings for Feeding or Elimi- nation ...... 1.906 2.039 2.141 2.225 2.226 Severe illness x HCC group G03 (G03 is HCC Group 3 which includes the following HCCs in the musculo- skeletal disease category: 54, 55) ...... 1.906 2.039 2.141 2.225 2.226

TABLE 2—HHS HCCSINTHESEVERITY ILLNESS INDICATOR VARIABLE

Description

Septicemia, Sepsis, Systemic Inflammatory Response Syndrome/Shock. Peritonitis/Gastrointestinal Perforation/Necrotizing Enter colitis. Seizure Disorders and Convulsions. Non-Traumatic Coma, Brain Compression/Anoxic Damage. Respirator Dependence/Tracheostomy Status. Respiratory Arrest. Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes. Pulmonary Embolism and Deep Vein Thrombosis.

TABLE 3—CHILD RISK ADJUSTMENT MODEL FACTORS

Factor Platinum Gold Silver Bronze Catastrophic

Demographic Factors

Age 2–4, Male ...... 0.224 0.145 0.067 0.021 0.020 Age 5–9, Male ...... 0.155 0.098 0.038 0.004 0.004 Age 10–14, Male...... 0.220 0.158 0.089 0.053 0.053 Age 15–20, Male...... 0.290 0.219 0.142 0.097 0.096 Age 2–4, Female...... 0.178 0.109 0.044 0.011 0.010 Age 5–9, Female...... 0.127 0.076 0.027 0.003 0.002 Age 10–14, Female...... 0.204 0.145 0.085 0.054 0.054

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TABLE 3—CHILD RISK ADJUSTMENT MODEL FACTORS—Continued

Factor Platinum Gold Silver Bronze Catastrophic

Age 15–20, Female...... 0.330 0.248 0.157 0.101 0.100

Diagnosis Factors

HIV/AIDS ...... 4.875 4.437 4.110 4.033 4.032 Septicemia, Sepsis, Systemic Inflammatory Response Syndrome/Shock ...... 17.228 17.069 16.969 16.994 16.995 Central Nervous System Infections, Except Viral Menin- gitis ...... 10.808 10.631 10.506 10.511 10.511 Viral or Unspecified Meningitis ...... 3.128 2.925 2.775 2.687 2.686 Opportunistic Infections ...... 22.943 22.880 22.834 22.825 22.825 Metastatic Cancer...... 36.648 36.404 36.207 36.207 36.207 Lung, Brain, and Other Severe Cancers, Including Pedi- atric Acute Lymphoid Leukemia ...... 12.117 11.833 11.604 11.547 11.546 Non-Hodgkin’s Lymphomas and Other Cancers and Tu- mors ...... 9.328 9.058 8.836 8.754 8.753 Colorectal, Breast (Age <50), Kidney, and Other Cancers 3.508 3.291 3.097 2.989 2.987 Breast (Age 50+) and Prostate Cancer, Benign/Uncertain Brain Tumors, and Other Cancers and Tumors ...... 3.016 2.816 2.642 2.538 2.537 Thyroid Cancer, Melanoma, Neurofibromatosis, and Other Cancers and Tumors...... 1.723 1.553 1.397 1.294 1.292 Pancreas Transplant Status/Complications ...... 30.468 30.333 30.245 30.256 30.256 Diabetes with Acute Complications ...... 2.521 2.197 1.946 1.703 1.699 Diabetes with Chronic Complications ...... 2.521 2.197 1.946 1.703 1.699 Diabetes without Complication ...... 2.521 2.197 1.946 1.703 1.699 Protein-Calorie Malnutrition ...... 13.570 13.484 13.421 13.450 13.450 Mucopolysaccharidosis ...... 8.509 8.238 8.020 7.987 7.986 Lipidoses and Glycogenosis...... 8.509 8.238 8.020 7.987 7.986 Congenital Metabolic Disorders, Not Elsewhere Classified 8.509 8.238 8.020 7.987 7.986 Amyloidosis, Porphyria, and Other Metabolic Disorders ..... 8.509 8.238 8.020 7.987 7.986 Adrenal, Pituitary, and Other Significant Endocrine Dis- orders ...... 8.509 8.238 8.020 7.987 7.986 Liver Transplant Status/Complications ...... 30.468 30.333 30.245 30.256 30.256 End-Stage Liver Disease ...... 13.077 12.927 12.822 12.821 12.821 Cirrhosis of Liver ...... 9.604 9.445 9.326 9.286 9.286 Chronic Hepatitis...... 2.567 2.418 2.280 2.216 2.215 Acute Liver Failure/Disease, Including Neonatal Hepatitis 12.729 12.576 12.460 12.447 12.447 Intestine Transplant Status/Complications ...... 30.468 30.333 30.245 30.256 30.256 Peritonitis/Gastrointestinal Perforation/Necrotizing Enterocolitis ...... 14.795 14.463 14.217 14.238 14.238 Intestinal Obstruction...... 5.389 5.155 4.965 4.885 4.884 Chronic Pancreatitis...... 9.713 9.478 9.319 9.319 9.319 Acute Pancreatitis/Other Pancreatic Disorders and Intes- tinal Malabsorption...... 2.561 2.426 2.303 2.217 2.216 Inflammatory Bowel Disease...... 6.321 5.943 5.650 5.553 5.551 Necrotizing Fasciitis...... 4.467 4.231 4.041 3.989 3.988 Bone/Joint/Muscle Infections/Necrosis...... 4.467 4.231 4.041 3.989 3.988 Rheumatoid Arthritis and Specified Autoimmune Disorders 3.904 3.662 3.448 3.365 3.364 Systemic Lupus Erythematosus and Other Autoimmune Disorders ...... 1.305 1.154 1.003 0.893 0.891 Osteogenesis Imperfecta and Other Osteodystrophies ...... 1.560 1.429 1.303 1.232 1.231 Congenital/Developmental Skeletal and Connective Tissue Disorders ...... 1.560 1.429 1.303 1.232 1.231 Cleft Lip/Cleft Palate...... 1.563 1.351 1.172 1.061 1.059 Hemophilia ...... 66.792 66.309 65.939 65.927 65.927 Myelodysplastic Syndromes and Myelofibrosis ...... 15.978 15.807 15.672 15.654 15.654 Aplastic Anemia ...... 15.978 15.807 15.672 15.654 15.654 Acquired Hemolytic Anemia, Including Hemolytic Disease of Newborn...... 7.706 7.432 7.214 7.145 7.144 Sickle Cell Anemia (Hb-SS) ...... 7.706 7.432 7.214 7.145 7.144 Thalassemia Major...... 7.706 7.432 7.214 7.145 7.144 Combined and Other Severe Immunodeficiencies ...... 6.686 6.507 6.364 6.310 6.309 Disorders of the Immune Mechanism ...... 6.686 6.507 6.364 6.310 6.309 Coagulation Defects and Other Specified Hematological Disorders ...... 4.828 4.689 4.560 4.494 4.493 Drug Psychosis...... 5.390 5.135 4.948 4.887 4.887 Drug Dependence...... 5.390 5.135 4.948 4.887 4.887 Schizophrenia ...... 5.242 4.853 4.561 4.472 4.471 Major Depressive and Bipolar Disorders ...... 1.913 1.691 1.485 1.334 1.332 Reactive and Unspecified Psychosis, Delusional Disorders 1.913 1.691 1.485 1.334 1.332 Personality Disorders...... 0.783 0.653 0.504 0.376 0.374 Anorexia/Bulimia Nervosa...... 2.742 2.539 2.370 2.309 2.308

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TABLE 3—CHILD RISK ADJUSTMENT MODEL FACTORS—Continued

Factor Platinum Gold Silver Bronze Catastrophic

Prader-Willi, Patau, Edwards, and Autosomal Deletion Syndromes ...... 3.362 3.155 3.013 2.980 2.979 Down Syndrome, Fragile X, Other Chromosomal Anoma- lies, and Congenital Malformation Syndromes ...... 1.787 1.605 1.459 1.378 1.376 Autistic Disorder...... 1.771 1.577 1.389 1.248 1.246 Pervasive Developmental Disorders, Except Autistic Dis- order ...... 0.907 0.766 0.597 0.448 0.445 Traumatic Complete Lesion Cervical Spinal Cord ...... 13.209 13.168 13.154 13.225 13.227 Quadriplegia ...... 13.209 13.168 13.154 13.225 13.227 Traumatic Complete Lesion Dorsal Spinal Cord ...... 11.619 11.410 11.267 11.269 11.270 Paraplegia ...... 11.619 11.410 11.267 11.269 11.270 Spinal Cord Disorders/Injuries ...... 4.847 4.614 4.433 4.359 4.358 Amyotrophic Lateral Sclerosis and Other Anterior Horn Cell Disease...... 8.218 7.979 7.791 7.744 7.744 Quadriplegic Cerebral Palsy ...... 3.387 3.141 2.983 2.995 2.996 Cerebral Palsy, Except Quadriplegic ...... 0.861 0.675 0.530 0.451 0.450 Spina Bifida and Other Brain/Spinal/Nervous System Con- genital Anomalies...... 1.282 1.135 1.010 0.944 0.943 Myasthenia Gravis/Myoneural Disorders and Guillain-Barre Syndrome/Inflammatory and Toxic Neuropathy ...... 9.635 9.457 9.315 9.279 9.279 Muscular Dystrophy...... 3.374 3.176 3.021 2.948 2.947 Multiple Sclerosis...... 8.431 8.101 7.852 7.820 7.820 Parkinson’s, Huntington’s, and Spinocerebellar Disease, and Other Neurodegenerative Disorders ...... 3.374 3.176 3.021 2.948 2.947 Seizure Disorders and Convulsions ...... 2.095 1.913 1.735 1.609 1.607 Hydrocephalus ...... 5.122 5.002 4.912 4.903 4.903 Non-Traumatic Coma, and Brain Compression/Anoxic Damage ...... 7.539 7.391 7.276 7.236 7.235 Respirator Dependence/Tracheostomy Status ...... 40.112 40.012 39.969 40.084 40.086 Respiratory Arrest...... 12.354 12.151 12.015 12.013 12.013 Cardio-Respiratory Failure and Shock, Including Res- piratory Distress Syndromes ...... 12.354 12.151 12.015 12.013 12.013 Heart Assistive Device/Artificial Heart ...... 30.468 30.333 30.245 30.256 30.256 Heart Transplant...... 30.468 30.333 30.245 30.256 30.256 Congestive Heart Failure ...... 6.999 6.888 6.791 6.751 6.751 Acute Myocardial Infarction...... 9.715 9.553 9.443 9.441 9.442 Unstable Angina and Other Acute Ischemic Heart Disease 6.438 6.331 6.260 6.262 6.262 Heart Infection/Inflammation, Except Rheumatic ...... 16.113 15.984 15.888 15.866 15.866 Hypoplastic Left Heart Syndrome and Other Severe Con- genital Heart Disorders ...... 6.323 6.111 5.905 5.794 5.792 Major Congenital Heart/Circulatory Disorders ...... 1.778 1.651 1.493 1.391 1.389 Atrial and Ventricular Septal Defects, Patent Ductus Arteriosus, and Other Congenital Heart/Circulatory Dis- orders ...... 1.202 1.090 0.952 0.872 0.871 Specified Heart Arrhythmias ...... 4.399 4.213 4.049 3.984 3.983 Intracranial Hemorrhage...... 15.936 15.685 15.510 15.504 15.504 Ischemic or Unspecified Stroke ...... 8.574 8.456 8.381 8.396 8.396 Cerebral Aneurysm and Arteriovenous Malformation ...... 3.865 3.650 3.490 3.433 3.432 Hemiplegia/Hemiparesis ...... 4.815 4.703 4.625 4.610 4.610 Monoplegia, Other Paralytic Syndromes ...... 3.627 3.487 3.391 3.361 3.361 Atherosclerosis of the Extremities with Ulceration or Gan- grene ...... 15.571 15.296 15.096 15.012 15.011 Vascular Disease with Complications ...... 18.826 18.672 18.564 18.569 18.569 Pulmonary Embolism and Deep Vein Thrombosis ...... 15.291 15.130 15.023 15.041 15.042 Lung Transplant Status/Complications ...... 30.468 30.333 30.245 30.256 30.256 Cystic Fibrosis...... 20.415 19.976 19.647 19.686 19.687 Chronic Obstructive Pulmonary Disease, Including Bronchiectasis ...... 0.435 0.348 0.231 0.149 0.147 Asthma ...... 0.435 0.348 0.231 0.149 0.147 Fibrosis of Lung and Other Lung Disorders ...... 4.116 3.973 3.845 3.789 3.788 Aspiration and Specified Bacterial Pneumonias and Other Severe Lung Infections ...... 10.256 10.199 10.157 10.177 10.177 Kidney Transplant Status ...... 16.425 16.083 15.843 15.848 15.848 End Stage Renal Disease ...... 39.805 39.631 39.521 39.592 39.593 Chronic Kidney Disease, Stage 5 ...... 7.087 6.923 6.771 6.675 6.673 Chronic Kidney Disease, Severe (Stage 4) ...... 7.087 6.923 6.771 6.675 6.673 Ectopic and Molar Pregnancy, Except with Renal Failure, Shock, or Embolism ...... 1.126 0.939 0.750 0.559 0.555 Miscarriage with Complications...... 1.126 0.939 0.750 0.559 0.555 Miscarriage with No or Minor Complications ...... 1.126 0.939 0.750 0.559 0.555 Completed Pregnancy With Major Complications ...... 3.159 2.712 2.427 2.240 2.240 Completed Pregnancy With Complications ...... 3.159 2.712 2.427 2.240 2.240

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TABLE 3—CHILD RISK ADJUSTMENT MODEL FACTORS—Continued

Factor Platinum Gold Silver Bronze Catastrophic

Completed Pregnancy with No or Minor Complications ...... 3.159 2.712 2.427 2.240 2.240 Chronic Ulcer of Skin, Except Pressure ...... 1.941 1.836 1.731 1.675 1.675 Hip Fractures and Pathological Vertebral or Humerus Fractures ...... 5.725 5.450 5.215 5.124 5.123 Pathological Fractures, Except of Vertebrae, Hip, or Hu- merus ...... 1.574 1.428 1.264 1.147 1.145 Stem Cell, Including Bone Marrow, Transplant Status/ Complications ...... 30.468 30.333 30.245 30.256 30.256 Artificial Openings for Feeding or Elimination ...... 14.575 14.480 14.443 14.551 14.553 Amputation Status, Lower Limb/Amputation Complications 8.195 7.923 7.727 7.631 7.630

TABLE 4—INFANT RISK ADJUSTMENT MODELS FACTORS

Group Platinum Gold Silver Bronze Catastrophic

Extremely Immature * Severity Level 5 (Highest) ...... 378.927 377.561 376.491 376.507 376.508 Extremely Immature * Severity Level 4 ...... 194.401 193.057 192.003 191.981 191.981 Extremely Immature * Severity Level 3 ...... 46.419 45.304 44.390 44.236 44.234 Extremely Immature * Severity Level 2 ...... 46.419 45.304 44.390 44.236 44.234 Extremely Immature * Severity Level 1 (Lowest) ...... 46.419 45.304 44.390 44.236 44.234 Immature *Severity Level 5 (Highest) ...... 190.323 189.030 188.013 188.027 188.028 Immature *Severity Level 4 ...... 85.852 84.500 83.442 83.437 83.437 Immature *Severity Level 3 ...... 46.419 45.304 44.390 44.236 44.234 Immature *Severity Level 2 ...... 28.986 27.832 26.907 26.738 26.736 Immature *Severity Level 1 (Lowest) ...... 28.986 27.832 26.907 26.738 26.736 Premature/Multiples * Severity Level 5 (Highest) ...... 156.158 154.846 153.824 153.791 153.791 Premature/Multiples * Severity Level 4 ...... 32.573 31.292 30.290 30.173 30.173 Premature/Multiples * Severity Level 3 ...... 17.215 16.169 15.315 15.020 15.016 Premature/Multiples * Severity Level 2 ...... 8.942 8.081 7.334 6.884 6.876 Premature/Multiples * Severity Level 1 (Lowest) ...... 6.222 5.557 4.867 4.376 4.367 Term *Severity Level 5 (Highest) ...... 130.728 129.499 128.518 128.414 128.413 Term *Severity Level 4 ...... 16.874 15.867 15.038 14.685 14.681 Term *Severity Level 3 ...... 6.324 5.648 4.969 4.448 4.438 Term *Severity Level 2 ...... 3.857 3.319 2.700 2.139 2.128 Term *Severity Level 1 (Lowest) ...... 1.639 1.321 0.772 0.358 0.350 Age1 *Severity Level 5 (Highest) ...... 54.166 53.499 52.963 52.894 52.892 Age1 *Severity Level 4 ...... 9.298 8.787 8.351 8.169 8.167 Age1 *Severity Level 3 ...... 3.380 3.034 2.676 2.465 2.461 Age1 *Severity Level 2 ...... 2.155 1.873 1.549 1.320 1.316 Age1 *Severity Level 1 (Lowest) ...... 0.572 0.441 0.274 0.199 0.197 Age 0 Male ...... 0.685 0.637 0.608 0.554 0.553 Age 1 Male ...... 0.145 0.127 0.106 0.081 0.081

TABLE 5—HHS HCCS INCLUDED IN INFANT MODEL MATURITY CATEGORIES

Maturity category HCC/description

Extremely Immature ...... Extremely Immature Newborns, Birthweight < 500 Grams. Extremely Immature ...... Extremely Immature Newborns, Including Birthweight 500–749 Grams. Extremely Immature ...... Extremely Immature Newborns, Including Birthweight 750–999 Grams. Immature ...... Premature Newborns, Including Birthweight 1000–1499 Grams. Immature ...... Premature Newborns, Including Birthweight 1500–1999 Grams. Premature/Multiples ...... Premature Newborns, Including Birthweight 2000–2499 Grams. Premature/Multiples ...... Other Premature, Low Birthweight, Malnourished, or Multiple Birth Newborns. Term ...... Term or Post-Term Singleton Newborn, Normal or High Birthweight. Age 1 ...... All age 1 infants.

TABLE 6—HHS HCCS INCLUDED IN INFANT MODEL SEVERITY CATEGORIES

Severity Category HCC

Severity Level 5 (Highest) ...... Metastatic Cancer. Severity Level 5 ...... Pancreas Transplant Status/Complications. Severity Level 5 ...... Liver Transplant Status/Complications. Severity Level 5 ...... End-Stage Liver Disease. Severity Level 5 ...... Intestine Transplant Status/Complications. Severity Level 5 ...... Peritonitis/Gastrointestinal Perforation/Necrotizing Enterocolitis. Severity Level 5 ...... Respirator Dependence/Tracheostomy Status. Severity Level 5 ...... Heart Assistive Device/Artificial Heart.

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TABLE 6—HHS HCCS INCLUDED IN INFANT MODEL SEVERITY CATEGORIES—Continued

Severity Category HCC

Severity Level 5 ...... Heart Transplant. Severity Level 5 ...... Congestive Heart Failure. Severity Level 5 ...... Hypoplastic Left Heart Syndrome and Other Severe Congenital Heart Disorders. Severity Level 5 ...... Lung Transplant Status/Complications. Severity Level 5 ...... Kidney Transplant Status. Severity Level 5 ...... End Stage Renal Disease. Severity Level 5 ...... Stem Cell, Including Bone Marrow, Transplant Status/Complications. Severity Level 4 ...... Septicemia, Sepsis, Systemic Inflammatory Response Syndrome/Shock. Severity Level 4 ...... Lung, Brain, and Other Severe Cancers, Including Pediatric Acute Lymphoid Leu- kemia. Severity Level 4 ...... Mucopolysaccharidosis. Severity Level 4 ...... Major Congenital Anomalies of Diaphragm, Abdominal Wall, and Esophagus, Age < 2. Severity Level 4 ...... Myelodysplastic Syndromes and Myelofibrosis. Severity Level 4 ...... Aplastic Anemia. Severity Level 4 ...... Combined and Other Severe Immunodeficiencies. Severity Level 4 ...... Traumatic Complete Lesion Cervical Spinal Cord. Severity Level 4 ...... Quadriplegia. Severity Level 4 ...... Amyotrophic Lateral Sclerosis and Other Anterior Horn Cell Disease. Severity Level 4 ...... Quadriplegic Cerebral Palsy. Severity Level 4 ...... Myasthenia Gravis/Myoneural Disorders and Guillain-Barre Syndrome/Inflammatory and Toxic Neuropathy. Severity Level 4 ...... Non-Traumatic Coma, Brain Compression/Anoxic Damage. Severity Level 4 ...... Respiratory Arrest. Severity Level 4 ...... Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes. Severity Level 4 ...... Acute Myocardial Infarction. Severity Level 4 ...... Heart Infection/Inflammation, Except Rheumatic. Severity Level 4 ...... Major Congenital Heart/Circulatory Disorders. Severity Level 4 ...... Intracranial Hemorrhage. Severity Level 4 ...... Ischemic or Unspecified Stroke. Severity Level 4 ...... Vascular Disease with Complications. Severity Level 4 ...... Pulmonary Embolism and Deep Vein Thrombosis. Severity Level 4 ...... Aspiration and Specified Bacterial Pneumonias and Other Severe Lung Infections. Severity Level 4 ...... Chronic Kidney Disease, Stage 5. Severity Level 4 ...... Hip Fractures and Pathological Vertebral or Humerus Fractures. Severity Level 4 ...... Artificial Openings for Feeding or Elimination. Severity Level 3 ...... HIV/AIDS. Severity Level 3 ...... Central Nervous System Infections, Except Viral Meningitis. Severity Level 3 ...... Opportunistic Infections. Severity Level 3 ...... Non-Hodgkin’s Lymphomas and Other Cancers and Tumors. Severity Level 3 ...... Colorectal, Breast (Age < 50), Kidney and Other Cancers. Severity Level 3 ...... Breast (Age 50+), Prostate Cancer, Benign/Uncertain Brain Tumors, and Other Cancers and Tumors. Severity Level 3 ...... Lipidoses and Glycogenosis. Severity Level 3 ...... Adrenal, Pituitary, and Other Significant Endocrine Disorders. Severity Level 3 ...... Acute Liver Failure/Disease, Including Neonatal Hepatitis. Severity Level 3 ...... Intestinal Obstruction. Severity Level 3 ...... Necrotizing Fasciitis. Severity Level 3 ...... Bone/Joint/Muscle Infections/Necrosis. Severity Level 3 ...... Osteogenesis Imperfecta and Other Osteodystrophies. Severity Level 3 ...... Cleft Lip/Cleft Palate. Severity Level 3 ...... Hemophilia. Severity Level 3 ...... Disorders of the Immune Mechanism. Severity Level 3 ...... Coagulation Defects and Other Specified Hematological Disorders. Severity Level 3 ...... Prader-Willi, Patau, Edwards, and Autosomal Deletion Syndromes. Severity Level 3 ...... Traumatic Complete Lesion Dorsal Spinal Cord. Severity Level 3 ...... Paraplegia. Severity Level 3 ...... Spinal Cord Disorders/Injuries. Severity Level 3 ...... Cerebral Palsy, Except Quadriplegic. Severity Level 3 ...... Muscular Dystrophy. Severity Level 3...... Parkinson’s, Huntington’s, and Spinocerebellar Disease, and Other Neurodegenerative Disorders. Severity Level 3 ...... Hydrocephalus. Severity Level 3 ...... Unstable Angina and Other Acute Ischemic Heart Disease. Severity Level 3 ...... Atrial and Ventricular Septal Defects, Patent Ductus Arteriosus, and Other Con- genital Heart/Circulatory Disorders. Severity Level 3 ...... Specified Heart Arrhythmias. Severity Level 3 ...... Cerebral Aneurysm and Arteriovenous Malformation. Severity Level 3 ...... Hemiplegia/Hemiparesis. Severity Level 3 ...... Cystic Fibrosis. Severity Level 3 ...... Fibrosis of Lung and Other Lung Disorders. Severity Level 3 ...... Pathological Fractures, Except of Vertebrae, Hip, or Humerus.

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TABLE 6—HHS HCCS INCLUDED IN INFANT MODEL SEVERITY CATEGORIES—Continued

Severity Category HCC

Severity Level 2 ...... Viral or Unspecified Meningitis. Severity Level 2 ...... Thyroid, Melanoma, Neurofibromatosis, and Other Cancers and Tumors. Severity Level 2 ...... Diabetes with Acute Complications. Severity Level 2 ...... Diabetes with Chronic Complications. Severity Level 2 ...... Diabetes without Complication. Severity Level 2 ...... Protein-Calorie Malnutrition. Severity Level 2 ...... Congenital Metabolic Disorders, Not Elsewhere Classified. Severity Level 2 ...... Amyloidosis, Porphyria, and Other Metabolic Disorders. Severity Level 2 ...... Cirrhosis of Liver. Severity Level 2 ...... Chronic Pancreatitis. Severity Level 2 ...... Inflammatory Bowel Disease. Severity Level 2 ...... Rheumatoid Arthritis and Specified Autoimmune Disorders. Severity Level 2 ...... Systemic Lupus Erythematosus and Other Autoimmune Disorders. Severity Level 2 ...... Congenital/Developmental Skeletal and Connective Tissue Disorders. Severity Level 2 ...... Acquired Hemolytic Anemia, Including Hemolytic Disease of Newborn. Severity Level 2 ...... Sickle Cell Anemia (Hb-SS). Severity Level 2 ...... Drug Psychosis. Severity Level 2 ...... Drug Dependence. Severity Level 2 ...... Down Syndrome, Fragile X, Other Chromosomal Anomalies, and Congenital Mal- formation Syndromes. Severity Level 2 ...... Spina Bifida and Other Brain/Spinal/Nervous System Congenital Anomalies. Severity Level 2 ...... Seizure Disorders and Convulsions. Severity Level 2 ...... Monoplegia, Other Paralytic Syndromes. Severity Level 2 ...... Atherosclerosis of the Extremities with Ulceration or Gangrene. Severity Level 2 ...... Chronic Obstructive Pulmonary Disease, Including Bronchiectasis. Severity Level 2 ...... Chronic Ulcer of Skin, Except Pressure. Severity Level 1 (Lowest) ...... Chronic Hepatitis. Severity Level 1 ...... Acute Pancreatitis/Other Pancreatic Disorders and Intestinal Malabsorption. Severity Level 1 ...... Thalassemia Major. Severity Level 1 ...... Autistic Disorder. Severity Level 1 ...... Pervasive Developmental Disorders, Except Autistic Disorder. Severity Level 1 ...... Multiple Sclerosis. Severity Level 1 ...... Asthma. Severity Level 1 ...... Chronic Kidney Disease, Severe (Stage 4). Severity Level 1 ...... Amputation Status, Lower Limb/Amputation Complications. Severity Level 1 ...... No Severity HCCs.

d. Cost-Sharing Reductions Adjustments looking at other elements of adverse of the premiums and cost sharing paid (§ 153.320) selection and induced demand within for by Medicaid on their behalf. In We proposed to continue including an the individual market that are not Massachusetts, Connector Care plans adjustment for the receipt of cost- currently captured in the risk represent these Medicaid alternative sharing reductions in the model to adjustment model. Another commenter plans in the individual market. To account for increased plan liability due requested that if HHS were to operate address this induced utilization in the to increased utilization of health care risk adjustment in Massachusetts in context of cost-sharing reduction plan services by enrollees receiving cost- 2017, HHS should include a cost- variations in the HHS risk adjustment sharing reductions. The proposed cost- sharing reduction adjustment table that methodology, our methodology sharing reduction adjustment factors for will account for the higher AVs of the increases the risk score for individuals 2017 risk adjustment are unchanged ‘‘Connector Care’’ plans with wrap- in these plan variations by the same from those finalized in the 2016 around subsidies in Massachusetts. factor that we use to adjust for induced Payment Notice and are set forth in Response: As we stated in the 2015 utilization for individuals enrolled in Table 7. These adjustments are effective Payment Notice, in some States, cost-sharing plan variations to adjust for for 2015, 2016, and 2017 risk expansion of Medicaid benefits under induced utilization for individuals adjustment, and are multiplied against section 2001(a) of the Affordable Care enrolled in the corresponding Medicaid the sum of the demographic, diagnosis, Act may take the form of enrolling alternative plan variations. Here, those and interaction factors. We will newly Medicaid-eligible enrollees into factors are both 1.12. We intend to continue to evaluate this adjustment in individual market plans. These evaluate these adjustments in the future future years as more data becomes enrollees could be placed into silver after data from the initial years of risk available. plan variations—either the 94 percent adjustment is available. We are Comment: One commenter also silver plan variation or the zero cost finalizing the cost-sharing reduction recommended that HHS consider sharing plan variation—with a portion adjustment factors as proposed.

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TABLE 7—COST-SHARING REDUCTION ADJUSTMENT

Induced Household income Plan AV utilization factor

Silver Plan Variant Recipients

100–150% of FPL ...... Plan Variation 94% ...... 1.12 150–200% of FPL ...... Plan Variation 87% ...... 1.12 200–250% of FPL ...... Plan Variation 73% ...... 1.00 >250% of FPL ...... Standard Plan 70% ...... 1.00

Zero Cost-Sharing Recipients

<300% of FPL ...... Platinum (90%) ...... 1.00 <300% of FPL ...... Gold (80%) ...... 1.07 <300% of FPL ...... Silver (70%) ...... 1.12 <300% of FPL ...... Bronze (60%) ...... 1.15

Limited Cost-Sharing Recipients

>300% of FPL ...... Platinum (90%) ...... 1.00 >300% of FPL ...... Gold (80%) ...... 1.07 >300% of FPL ...... Silver (70%) ...... 1.12 >300% of FPL ...... Bronze (60%) ...... 1.15

e. Model Performance Statistics subpopulations. The predictive ratio for squared statistic and the predictive ratio (§ 153.320) each of the HHS risk adjustment models are in the range of published estimates is the ratio of the weighted mean for concurrent risk adjustment To evaluate the model’s performance, predicted plan liability for the model models.11 Because we are blending, that we examined its R-squared and sample population to the weighted is to mean, averaging, the coefficients predictive ratios. The R-squared mean actual plan liability for the model from separately solved models based on statistic, which calculates the sample population. The predictive ratio MarketScan 2012, 2013, and 2014 data, percentage of individual variation represents how well the model does on we are publishing the R-squared statistic explained by a model, measures the average at predicting plan liability for for each model and year separately to predictive accuracy of the model that subpopulation. A subpopulation verify their statistical validity. The R- overall. The predictive ratios measure that is predicted perfectly would have a squared statistic for each model is the predictive accuracy of a model for predictive ratio of 1.0. For each of the shown in Table 8. different validation groups or HHS risk adjustment models, the R-

TABLE 8—R-SQUARED STATISTIC FOR HHS RISK ADJUSTMENT MODELS

R-Squared statistic Risk adjustment model 2012 2013 2014

Platinum Adult ...... 0.3905 0.3790 0.3610 Platinum Child ...... 0.2669 0.2518 0.2341 Platinum Infant ...... 0.2848 0.3223 0.3089 Gold Adult ...... 0.3865 0.3746 0.3558 Gold Child ...... 0.2621 0.2467 0.2288 Gold Infant ...... 0.2826 0.3204 0.3069 Silver Adult ...... 0.3828 0.3707 0.3512 Silver Child ...... 0.2576 0.2422 0.2241 Silver Infant ...... 0.2812 0.3191 0.3054 Bronze Adult ...... 0.3808 0.3686 0.3488 Bronze Child ...... 0.2554 0.2400 0.2218 Bronze Infant ...... 0.2812 0.3190 0.3052 Catastrophic Adult ...... 0.3807 0.3685 0.3488 Catastrophic Child ...... 0.2554 0.2400 0.2218 Catastrophic Infant ...... 0.2812 0.3190 0.3052

f. Overview of the Payment Transfer average risk scores will continue to be calculation of payments and charges in Formula (§ 153.320) calculated as the member month- the Premium Stabilization Rule. In the weighted average of individual enrollee 2014 Payment Notice, we combined We did not propose to alter our risk scores. We defined the calculation those concepts into a risk adjustment payment transfer methodology. Plan of plan average actuarial risk and the payment transfer formula. Risk

11 Winkleman, Ross and Syed Mehmud. ‘‘A Health Risk Assessment.’’ Society of Actuaries (Apr. 2007), available at https://www.soa.org/research/ Comparative Analysis of Claims-Based Tools for research-projects/health/hlth-risk-assement.aspx.

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adjustment transfers (payments and adjustment expenses, and taxes that are geographic region, not to State averages, charges) will be calculated after issuers calculated on premium after risk to avoid regional biases and to permit a have completed risk adjustment data adjustment transfers, by using a fairer and more accurate comparison. reporting. The payment transfer formula specified percentage of State average Response: We did not propose includes a set of cost adjustment terms premiums. The commenter suggested changes to the transfer formula, and that require transfers to be calculated at the specified percentage could be therefore, are not addressing comments the geographic rating area level for each determined based on data submitted by that are outside the scope of this plan (that is, HHS will calculate two issuers on the Unified Rate Review rulemaking. We may be able to evaluate separate transfer amounts for a plan that Template (URRT) for the portion of geographic differences in the future if operates in two rating areas). premium needed for claims and on data we obtain enrollee-level data for future The payment transfer formula is from financial reporting statements for recalibrations—a topic that we also designed to provide a per member per claim adjustment expenses and relevant intend to discuss in the White Paper month (PMPM) transfer amount. The taxes as a percent of premium and could and at the March 31, 2016 risk PMPM transfer amount derived from the vary by State or market. Some adjustment conference. payment transfer formula would be commenters opposed the use of the (1) Overview of the Payment Transfer multiplied by each plan’s total member statewide average premium because it Formula months for the benefit year to determine disadvantages issuers with below the total payment due or charge owed average premiums. Commenters Although we did not propose to by the issuer for that plan in a rating requested that 2014 and later risk change the payment transfer formula area. adjustment transfers for all plans with from what was finalized in the 2014 Comment: Commenters requested that below average premiums in a State be Payment Notice (78 FR 15430 through administrative expenses be removed calculated using the plans’ own average 15434), we believe it is useful to from the calculation of the statewide premium amount or average claims cost, republish the formula in its entirety, average premium. A commenter so that efficient plans are not penalized since, as noted above, we are suggested that amending the transfer using the Statewide average premium. recalibrating the HHS risk adjustment formula by eliminating administrative Commenters requested use of a ‘‘care model. Transfers (payments and costs from the statewide average coordination factor’’ in the risk transfer charges) will be calculated as the premium would make it ‘‘benefit cost formula, and stated that risk adjustment difference between the plan premium based.’’ A commenter suggested that results are distorted by regional biases, estimate reflecting risk selection and the HHS consider basing the payment risks, and coding and demographic plan premium estimate not reflecting transfer on a portion of State average differences. One commenter risk selection. As finalized in the 2014 premium—namely, the portion recommended that risk scores be Payment Notice, the HHS risk representing the sum of claims, claims compared to other scores in the same adjustment payment transfer formula is:

Where: level, and catastrophic plans are treated meaning of § 153.20 must remit a user PA¯ s = State average premium; as a separate risk pool for purposes of fee to HHS equal to the product of its PLRSi = plan i’s plan liability risk score; risk adjustment. monthly enrollment in the plan and the AVi = plan i’s metal level AV; per enrollee per month risk adjustment g. State-Submitted Alternate Risk ARFi = allowable rating factor; user fee specified in the annual HHS Adjustment Methodology IDFi = plan i’s induced demand factor; notice of benefit and payment GCFi = plan i’s geographic cost factor; s = plan i’s share of State enrollment. We are not recertifying the alternate parameters for the applicable benefit i State methodology for use in year. The denominator is summed across all Massachusetts for 2017 risk adjustment. OMB Circular No. A–25R establishes plans in the risk pool in the market in Massachusetts and HHS will begin the Federal policy regarding user fees, and the State. transition that will allow HHS to specifies that a user charge will be The difference between the two operate risk adjustment in assessed against each identifiable premium estimates in the payment Massachusetts in 2017. HHS will recipient for special benefits derived transfer formula determines whether a operate risk adjustment in all States for from Federal activities beyond those plan pays a risk transfer charge or the 2017 benefit year. received by the general public. The risk receives a risk transfer payment. Note adjustment program will provide special h. Risk Adjustment User Fee that the value of the plan average risk benefits as defined in section 6(a)(1)(b) (§ 153.610(f)) score by itself does not determine of Circular No. A–25R to issuers of risk whether a plan would be assessed a As noted above, if a State is not adjustment covered plans because it charge or receive a payment—even if the approved to operate or chooses to forgo will mitigate the financial instability risk score is greater than 1.0, it is operating its own risk adjustment associated with potential adverse risk possible that the plan would be assessed program, HHS will operate risk selection. The risk adjustment program a charge if the premium compensation adjustment on the State’s behalf. As also will contribute to consumer that the plan may receive through its described in the 2014 Payment Notice, confidence in the health insurance rating practices (as measured through HHS’s operation of risk adjustment on industry by helping to stabilize the allowable rating factor) exceeds the behalf of States is funded through a risk premiums across the individual and plan’s predicted liability associated adjustment user fee. Section small group health insurance markets. with risk selection. Risk adjustment 153.610(f)(2) provides that an issuer of In the 2016 Payment Notice, we transfers are calculated at the risk pool a risk adjustment covered plan with the estimated Federal administrative

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expenses of operating the risk fee. First, we determined that our reinsurance program stops paying adjustment program to be $1.75 per expected contract costs for 2017 risk claims for a high-cost individual). The enrollee per year, based on our adjustment are lower than anticipated, coinsurance rate, attachment point, and estimated contract costs for risk currently estimated at approximately reinsurance cap together constitute the adjustment operations. For the 2017 $24 million. Then, we looked at the uniform reinsurance payment benefit year, we proposed to use the enrollment assumptions we were using parameters. same methodology to estimate our to calculate the previous benefit year We provided in the 2015 Payment administrative expenses to operate the user fees. Because we now have actual Notice (79 FR 13777) that HHS will use program. These contracts cover 2014 risk adjustment enrollment, we any excess contributions for reinsurance development of the model and were able to base expected 2017 payments for a benefit year by methodology, collections, payments, enrollment on projected member month increasing the coinsurance rate for that account management, data collection, enrollment rather than total enrollees. benefit year up to 100 percent before data validation, program integrity and We are revising the risk adjustment user rolling over any remaining funds in the audit functions, operational and fraud fee to reflect lower contract costs for the next year. In the proposed rule, we analytics, stakeholder training, and 2017 benefit year and more accurate proposed that if any contribution operational support. To calculate the enrollment projections. Therefore, we amounts remain after calculating user fee, we divided HHS’s projected are finalizing the 2017 risk adjustment reinsurance payments for the 2016 total costs for administering the risk user fee at $1.56 per enrollee per year, benefit year (and after HHS increases adjustment programs on behalf of States or $0.13 PMPM. the coinsurance rate to 100 percent for by the expected number of enrollees in the 2016 benefit year), HHS would 3. Provisions and Parameters for the risk adjustment covered plans (other decrease the 2016 attachment point of Transitional Reinsurance Program than plans not subject to market reforms $90,000 to pay out any remaining and student health plans, which are not The Affordable Care Act directs that contribution amounts to issuers of subject to payments and charges under a transitional reinsurance program be reinsurance-eligible plans in an the risk adjustment methodology HHS established in each State to help equitable manner for the 2016 benefit uses when it operates risk adjustment stabilize premiums for coverage in the year. on behalf of a State) in HHS-operated individual market from 2014 through We received numerous comments in risk adjustment programs for the benefit 2016. In the 2014 Payment Notice, we support of this proposal and are year. expanded on the standards set forth in finalizing this provision as proposed. We estimated that the total cost for subparts C and E of the Premium Comment: One commenter stated that HHS to operate the risk adjustment Stabilization Rule and established the changing the reinsurance payment program on behalf of States for 2017 reinsurance payment parameters and parameters at the end of the program— would be approximately $52 million, uniform reinsurance contribution rate instead of identifying and updating the and that the risk adjustment user fee for the 2014 benefit year. In the 2015 parameters in earlier benefit years as would be $1.80 per enrollee per year. Payment Notice, we established the current information is available—would We stated that the risk adjustment user reinsurance payment parameters and be disruptive. The commenter stated fee contract costs for 2017 include costs uniform reinsurance contribution rate that this proposal would cause related to 2017 risk adjustment data for the 2015 benefit year and certain disruption for States that exercised the validation, and are slightly higher than oversight provisions related to the option to create supplemental the 2016 contract costs because some operation of the reinsurance program. In reinsurance programs and that need to contracts were rebid. We do not the 2016 Payment Notice, we set uniform reinsurance payment anticipate that Massachusetts’ decision established the reinsurance payment parameters. to use the Federal risk adjustment parameters and uniform reinsurance Response: The final 2016 reinsurance methodology will substantially affect contribution rate for the 2016 benefit coinsurance rate and attachment point, the risk adjustment user fee rate for year and certain clarifying provisions which would reflect a potential increase 2017. related to the operation of the in coinsurance rate from 50 to 100 Comment: One commenter strongly reinsurance program. percent and a potential decrease in the supported the assessment of a higher attachment point from $90,000 to an a. Decreasing the Reinsurance risk adjustment user fee to support the amount that pays out remaining Attachment Point for the 2016 Benefit RADV program. Another commenter contributions in an equitable manner, Year requested transparency for the user fee will not be set until HHS confirms the rate and that HHS consider less costly Section 1341(b)(2)(B) of the total amount of contributions available alternatives. One commenter expressed Affordable Care Act directs the and reinsurance payment requests for concern over the risk adjustment user Secretary, in establishing standards for the 2016 benefit year. HHS understands fee proposal since HHS collected the transitional reinsurance program, to that no State-operated reinsurance increased user fees accounting for 2014 include a formula for determining the program established supplemental risk adjustment data validation in 2016 amount of reinsurance payments to be reinsurance payment parameters under but delayed 2014 risk adjustment data made to non-grandfathered, individual §§ 153.220(d) and 153.232 and therefore validation. This commenter market issuers for high-risk claims that no States will be affected by this recommended that HHS use those provides for the equitable allocation of provision. We believe that expending all increased fees to pay for risk adjustment funds. In the Premium Stabilization remaining reinsurance contribution data validation in 2017 and decline to Rule (77 FR 17228), we provided that funds as payments for the 2016 benefit increase user fees for 2017 risk reinsurance payments to issuers of year will support the reinsurance adjustment. reinsurance-eligible plans will be made program’s goals of promoting Response: In response to the comment for a portion of an enrollee’s claims nationwide premium stabilization and regarding risk adjustment data costs paid by the issuer (the coinsurance market stability in the early years of validation costs, we re-examined all rate) that exceeds an attachment point Exchange operations while providing assumptions that went into the (when reinsurance would begin), subject issuers with incentives to continue to calculation of the risk adjustment user to a reinsurance cap (when the effectively manage enrollee costs.

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Comment: One commenter asked that administrative services-only contractors certified estimate that is lower than the HHS use excess reinsurance or other third parties that assist a actual cost-sharing reductions provided contributions to fund the deficit in the contributing entity with compliance would affect the MLR calculation and risk corridors program. with reinsurance program requirements. the risk corridors financial transfers by Response: Section 1341 of the However, HHS will finalize as proposed increasing incurred claims and Affordable Care Act establishes the the amendment to § 153.405(i) allowable costs, thereby increasing the transitional reinsurance program to specifying that a contributing entity that MLR and potentially increasing the risk compensate non-grandfathered chooses to use a third party corridors payment or lowering the risk individual market plans for high-cost administrator, administrative services- corridors charge. We believe that enrollees in the initial years of the only contractor, or other third party to requiring an update of these reported Exchange. We believe that our policy to assist with its obligations under the amounts through recalculation of the expend any remaining reinsurance reinsurance program must ensure that risk corridors and MLR amounts for the contribution funds as reinsurance this third party administrator, 2014 benefit year will be disruptive to payments for the 2016 benefit best administrative services-only contractor, the market and consumers, as well as aligns with that statutory purpose. or other third party cooperates with any administratively burdensome and b. Audit Authority Extends to Entities audit under that section. We note that difficult to operationalize for issuers That Assist Contributing Entities under § 153.405(i) HHS, or its designee, and HHS. Therefore, consistent with our (§ 153.405(i)) has the authority to audit contributing earlier guidance, we proposed to add a entities’ compliance with their new paragraph (g) to the risk corridors In accordance with § 153.405(i), HHS obligations under the reinsurance payment methodology set forth in or its designee has the authority to audit program. § 153.510 stating that if the issuer a contributing entity to assess Comment: One commenter disagreed reported a certified estimate of 2014 compliance with the reinsurance with HHS’s proposal to extend the audit cost-sharing reductions on its 2014 MLR program requirements. In 2014, HHS authority to third party administrators, and Risk Corridors Annual Reporting implemented a streamlined approach administrative services-only contractors, Form that is lower than the actual cost- through which a contributing entity, or or other third parties, arguing that it was sharing reductions provided (as a third party such as a third party unnecessary and would increase the calculated under § 156.430(c) for the administrator or an administrative costs of compliance. 2014 benefit year, which will take place services-only contractor acting on behalf Response: We recognize the in the spring of 2016), HHS would make of a contributing entity, could register commenter’s concerns about increasing an adjustment to the amount of the on Pay.gov, calculate the annual compliance costs, and are not finalizing issuer’s 2015 benefit year risk corridors enrollment count and schedule our proposal to extend the audit payment or charge measured by the full reinsurance contribution payments. authority. However, a contributing difference between the certified estimate During the 2014 and 2015 contribution entity that uses a third party reported and the actual cost-sharing submission process, many third party administrator, administrative services- reductions provided as calculated under administrators and administrative only contractor, or other third party to § 156.430(c) in order to address the services-only contractors assisted assist with its obligations under the impact of the inaccurate reporting on contributing entities by calculating the the risk corridors and MLR calculations contributing entity’s annual enrollment reinsurance program must ensure that such organization cooperates with any for the 2014 benefit year. We are count and maintaining the records finalizing this policy and the necessary to validate that enrollment. In audit of the contributing entity under this section. amendment to § 153.510(g) as proposed. the proposed rule, we proposed to Comment: Several commenters amend § 153.405(i) to specify that the 4. Provisions for the Temporary Risk recommended that, to the extent the audit authority extends to any third Corridors Program certified estimate of cost-sharing party administrators, administrative This section contains proposals reductions reported on the 2014 MLR services-only contractors, or other third related to the temporary risk corridors and Risk Corridors Annual Reporting parties that complete any part of the program, and therefore applies only to Form is lower than the actual cost- reinsurance contribution submission issuers of QHPs, as defined at § 153.500, sharing reductions provided, the process on behalf of contributing with respect to the benefit years 2014 difference should be reflected as an entities or otherwise assist contributing through 2016. adjustment to the cost-sharing reduction entities with compliance with the amount reported for the 2015 benefit requirements for the transitional a. Risk Corridors Payment Methodology year rather than the risk corridors reinsurance program. Additionally, we (§ 153.510(g)) payment or charge. proposed to amend § 153.405(i) to To ensure the integrity of data used in Response: We note that we are also specify that a contributing entity that risk corridors and MLR calculations, in amending § 153.710(g) (see III.D.5.d of chooses to use a third party prior guidance we indicated that we this preamble) to require that issuers administrator, administrative services- would propose in the HHS Notice of adjust the cost-sharing reduction only contractor, or other third party to Benefit and Payment Parameters for amount reported for the 2015 benefit assist with its obligations under the 2017 an adjustment to correct for any year to account for the difference reinsurance program must ensure that inaccuracies in risk corridors payment between cost-sharing reduction amounts this third party administrator, and charge amounts that could result reported for the 2014 benefit year and administrative services-only contractor, from issuers reporting a certified actual cost-sharing reduction amounts or other third party cooperate with any estimate of cost-sharing reductions on as determined under § 156.430(c). The audit under this section. the 2014 MLR and Risk Corridors separate, direct adjustment to the 2015 After reviewing the comments Annual Reporting Form.12 The use of a risk corridors payment or charge set received on this proposal, we will not finalize our amendment to § 153.405(i) 12 Cost-Sharing Reduction Amounts in Risk Resources/Regulations-and-Guidance/Downloads/ that extended the audit authority to Corridors and Medical Loss Ratio Reporting (Jun. Advance-CSR-Payment-and-RC-MLR-submission_ third party administrators, 19, 2015), available at https://www.cms.gov/CCIIO/ 6192015.pdf.

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forth in § 153.510(g) was intended as a have evaluated the results of the true-up to the final dedicated distributed data program integrity measure, to help of 2014 experience. environment report with any ensure that issuers did not report 5. Distributed Data Collection for the discrepancies, rather than the 15- certified estimates of cost-sharing HHS-Operated Programs calendar-day timeframe set forth in reduction amounts for the 2014 benefit § 153.710(e) (now finalized as year that they knew would likely be a. Interim Dedicated Distributed Data § 153.710(d)). Environment Reports (§ 153.710(d)) lower than their advance payment Response: HHS will continue to amounts. In the proposed rule, we proposed require issuers to respond within 15 b. Risk Corridors Data Requirements deleting § 153.710(d), which sets forth calendar days to the final dedicated (§ 153.530) an interim discrepancy reporting distributed data environment report. As process by which an issuer must notify we explained in the 2015 Payment In the proposed rule (80 FR 75488), HHS of any discrepancy it identifies Notice final rule (79 FR 13790), the 15- we proposed to amend § 153.530 to between the data to which the issuer has calendar day reporting timeframe for the require that for the 2015 and later provided access to HHS through its final dedicated distributed data benefit years, issuers must true up their dedicated distributed data environment environment report is necessary so that claims liabilities and reserve amounts (that is, an issuer’s EDGE server) and the HHS can notify issuers of their risk that were used to determine their interim dedicated distributed data adjustment payment or charge and total allowable costs reported for the risk environment report (that is, an issuer’s estimated reinsurance payments by June corridors program for the preceding interim EDGE report), or confirm to 30 of the year following the applicable benefit year to reflect the actual claims HHS that the information in the interim benefit year, as required under payments made through of the report accurately reflects the data to §§ 153.310(e) and 153.240(b)(1)(ii). year following the benefit year. We also which the issuer has provided access to requested comments on how to handle HHS through its dedicated distributed Comment: One commenter asked HHS the true-up of unpaid claims estimates data environment in accordance with to release guidance on the 2015 for 2016, suggesting four alternatives: § 153.700(a) for the timeframe specified discrepancy reporting process in early provide for a 2017 payment or charge; in the report. We proposed that this January. provide for a simplified true-up process; change would be effective beginning Response: HHS intends to issue future require that the 2016 estimate be based with the 2016 benefit year.13 guidance on the final discrepancy on actual 2014 and 2015 amounts; or We received numerous comments in reporting process set forth in provide for no true-up in the final year. support of this proposal, and are § 153.710(e) (now finalized as Comment: One commenter supported finalizing this provision as proposed. § 153.710(d)) prior to the final our proposal. Several commenters We also finalize our proposal to remove discrepancy reporting window. opposed our proposal, noting that any any cross-references in §§ 153.710 and improvement in the accuracy of risk 156.1220 to the interim discrepancy b. Risk Adjustment Interim Reports reporting process currently codified at corridor payments to issuers under the We did not propose any provisions proposal would be outweighed by the § 153.710(d) and conforming amendments to redesignate paragraph related to risk adjustment interim administrative burden on issuers, and reports in the Payment Notice. However, minimized by the operational (e) as paragraph (d), as well as to revise we received a number of comments mechanics of the risk corridor program and redesignate paragraph (f) as (e). related to the schedule of risk and the potential for continued shortfall Comment: Some commenters asked adjustment reports and the availability in the program. However, most of these that HHS confirm that there will of additional information prior to the commenters were primarily concerned continue to be a robust process to allow final summary report on June 30 of the with our proposal to require claims issuers to identify and resolve potential year following the applicable benefit valuation at June 30 rather than March discrepancies throughout the data year. 31, and not with the proposal to true- submission process. up claims estimates. Other commenters Response: HHS is committed to Comment: Several commenters opposed only the true-up of 2016 working with issuers prior to the data requested that HHS issue the summary unpaid claims estimates, and submission deadline to address any data report earlier than June 30. Commenters additionally expressed concern that issues so that reinsurance payment and also requested interim or quarterly 2014 and 2015 claims experience may risk adjustment transfer calculations can reports so that issuers could incorporate not accurately reflect 2016 experience. be made accurately and timely. improved estimates into rate setting. Throughout the data collection period, Response: We acknowledge Commenters suggested HHS provide HHS will continue to maintain a help commenters’ concern regarding the interim reports with issuers’ calculated desk, host user group calls and potential lack of practical advantages of risk scores, market-wide risk scores, and webinars, and make reports available to requiring claims valuation at June 30 the other components of the payment issuers on their respective EDGE servers rather than March 31 and requiring a transfer formula, including the to assist issuers with the identification true-up of 2016 unpaid claims Statewide average premium. and resolution of data submission errors estimates. However, we continue to Commenters also recommended that and to provide technical assistance. believe that a true-up of 2014 and 2015 HHS disclose any issues with the Comment: One commenter asked that unpaid claims estimates is important to completeness of data in the report so HHS allow issuers 30 days to respond preserve the integrity of the risk that issuers can take this into account when reviewing results. Commenters corridors program. Therefore, we are 13 For the 2015 benefit year, issuers are not further suggested that HHS may want to finalizing the amendment adding required to confirm that the information in the § 153.530(b)(2)(iv) as proposed with interim report accurately reflects the reinsurance consider publishing additional details respect to the true-up of 2014 and 2015 and risk adjustment data to which the issuer has such as the issuer’s market share, experience in the reporting for the 2015 provided access through its EDGE server; or market average distribution by metal describe any discrepancy an issuer identifies in the plan, market allowable rating factor, and and 2016 benefit years. We will address interim report. See FAQ 14247 (Dec. 15, 2015), the true-up of 2016 experience after we available at www.regtap.info. market proportion of claims with HCCs.

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Response: We issued an FAQ on the 2014 benefit year.15 In the proposed apply the HHS risk adjustment January 8, 2016 14 stating that we will rule, we proposed to codify this practice methodology, HHS proposed to perform release an interim public summary for future benefit years to support the an outlier analysis using select metrics report in March 2016 for those States integrity of payments and charges under that target reinsurance data quality and and risk pools where the risk the HHS-operated risk adjustment risk adjustment data quality.18 As with adjustment data that has been submitted program and payments under the our data quantity metrics, HHS plans to by , 2016 meets HHS’s data reinsurance program, both of which describe in guidance, on an annual sufficiency thresholds. The interim depend upon the submission of accurate basis, the metrics used for a given summary report will include the and complete by issuers. benefit year.19 An issuer may be following transfer formula elements by Consistent with the approach for assessed a risk adjustment default State and risk pool: (1) Average monthly review of 2014 benefit year data, to charge if it does not meet data quality premiums; (2) average plan liability risk determine if an issuer meets data standards on any of the risk adjustment score; (3) average allowable rating quantity standards, we proposed that metrics, and may forfeit reinsurance factor; (4) average actuarial value; (5) HHS would compare an issuer’s self- payments it might otherwise have billable member months; and (6) reported baseline data of total received if it does not meet data quality geographic cost factors. We will also enrollment and claims counts by market standards for any of the reinsurance metrics. provide issuers with an interim report to the data submitted to the issuer’s dedicated distributed data environment. HHS would conduct these data that contains their own issuer-specific quantity and quality analyses after the information and that will not be An issuer whose total enrollment counts were lower than its baseline data deadline for submission of data released publicly. We are providing this submission by the deadline for specified in § 153.730 (that is, , information because issuers have submitting data to the dedicated of the year following the applicable indicated that, taken in concert with 20 distributed data environment would be benefit year). We proposed to add a other data available to them, it may help subject to a default risk adjustment new paragraph (f) to § 153.710 to specify them formulate more accurate estimates charge under § 153.740(b). An issuer that HHS will assess default risk of their risk adjustment transfers. whose total claims counts were lower adjustment charges based on these However, we continue to caution that than its baseline data submission by the analyses no later than the date of the data provided in these interim reports deadline for submitting data to the notification provided by HHS under will be preliminary, do not represent dedicated distributed data environment § 153.310(e) (that is, June 30 of the year any determination by HHS regarding the would be subject to a default risk following the applicable benefit year); credibility of the data submitted, and adjustment charge only if the default and to describe the responsibilities of that final risk adjustment results may be charge was lower than the charge it issuers in relation to the quantity and substantially different. would have received through the risk quality analyses. In § 153.710(f)(1), we adjustment transfer calculation. proposed to codify the requirement for c. Evaluation of Quality and Quantity of issuers to provide baseline data on their EDGE Data Submissions (§ 153.710(f)) Additionally, an issuer with either a low enrollment count or a low claims count total enrollment and claims counts by Under § 153.740(b), if an issuer of a following the final data submission market, in a format and on a timeline risk adjustment covered plan fails to deadline would forgo reinsurance specified by HHS in guidance. In provide HHS with access to the required payments for any claims that it failed to § 153.710(f)(2), we proposed that if HHS identifies a data outlier that would data in a dedicated distributed data submit. In the proposed rule, HHS cause the data that a risk adjustment environment such that HHS cannot stated that it would set forth in covered plan or a reinsurance-eligible apply the applicable Federally certified guidance, on an annual basis, the plan made available through a dedicated risk adjustment methodology to appropriate threshold by which HHS will deem data sufficient as to quantity distributed data environment to fail calculate the risk adjustment payment HHS’s quality thresholds, the issuer transfer amount for the risk adjustment for a given benefit year.16 We also stated that HHS would also specify in may, within 10 calendar days of covered plan in a timely fashion, HHS receiving notification of the outlier, will assess a default risk adjustment guidance the format and timeline for submission of baseline data to HHS.17 charge. Similarly, under §§ 153.420 and 18 For the 2014 benefit year, HHS used the 153.740(a), an issuer of a reinsurance- To determine if an issuer meets the following five key metrics: Percentage of all eligible plan will forfeit reinsurance data quality standards required for HHS enrollees with at least one HCC; average number of to calculate reinsurance payments and conditions per enrollee with at least one HCC; payments it otherwise might have issuer average risk score; percentage of individual received if the issuer fails to establish a market enrollees with reinsurance payments; and 15 dedicated distributed data environment EDGE Server Data Bulletin—INFORMATION; average reinsurance payment per enrollee for which Evaluation of EDGE Data Submissions (Apr. 24, the issuer would receive reinsurance payments. or fails to meet the data requirements set 2015), available at https://www.cms.gov/CCIIO/ 19 For information on the data quality thresholds forth in §§ 153.420 and 153.700 through Resources/Regulations-and-Guidance/Downloads/ that will be used to evaluate issuer’s EDGE server 153.730. On , 2015, HHS EDGE-guidance-42415-final.pdf. data for the 2015 benefit year related to the release released guidance entitled ‘‘Evaluation 16 For information on the data quantity thresholds of interim reinsurance payments and interim risk that will be used to evaluate issuer’s EDGE server of EDGE Data Submissions’’ describing adjustment summary reports, see EDGE Server Data data for the 2015 benefit year related to the release Bulletin—INFORMATION; Evaluation of EDGE the approach it would use to evaluate of interim reinsurance payments and interim risk Data Submissions for 2015 Benefit Year for Interim whether the quality and quantity of the adjustment summary reports, see EDGE Server Data Reinsurance Payment and Interim Risk Adjustment data that an issuer provided to a Bulletin—INFORMATION; Evaluation of EDGE Summary Report (Jan. 20, 2016), available at Data Submissions for 2015 Benefit Year for Interim https://www.regtap.info/uploads/library/ dedicated distributed data environment Reinsurance Payment and Interim Risk Adjustment EDGEServer_DataBulletin_5CR_012016.pdf. was sufficient for HHS to calculate Summary Report (Jan. 20, 2016), available at Guidance on the on-going and final quantity reinsurance payments and apply the https://www.regtap.info/uploads/library/ evaluation processes will be released in the near _ _ _ HHS risk adjustment methodology for EDGEServer DataBulletin 5CR 012016.pdf. future. Guidance on the on-going and final quantity 20 For the 2015 benefit year, the data submission evaluation processes will be released in the near deadline is Monday, , 2016 because April 30, 14 See FAQ 14572, (Jan. 8, 2016), available at future. 2016 is a Sunday. See FAQ 14472, (Dec. 21, 2015), https://www.regtap.info/. 17 Ibid. available at https://www.regtap.info.

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submit a justification of the outlier for deadline is necessary because HHS must Response: As we stated in the HHS to consider in determining review an issuer’s outlier justification to proposed rule in the preamble section to whether the issuer met the reinsurance calculate reinsurance payments and § 156.1220, an issuer may file a request and risk adjustment data requirements. apply the HHS risk adjustment for reconsideration if it believes that We indicated that HHS expects to methodology by the June 30 HHS made a processing error, perform informal data quantity and notification. incorrectly applied its methodology, or quality analyses throughout the data Comment: Some commenters asked made a mathematical error related to the submission process, providing issuers that the data quantity and quality data quantity and quality standards. For with time to address any outlier before analysis prior to the data submission example, an issuer may file a request for the data submission deadline. Issuers deadline for an applicable benefit year reconsideration to challenge the may provide justifications of data be robust and that HHS quickly respond assessment of a default risk adjustment outliers, updates to their respective to issuers to allow them to identify and charge if the issuer believes the default EDGE server data, and corrected resolve issues during the data charge was assessed because HHS baseline enrollment or claims counts at submission process. incorrectly applied its methodology any time during the data submission Response: HHS will perform informal regarding data quantity and quality process, and are encouraged to do so as data quantity and quality analyses standards. We note that, under early as possible. The timeframe we throughout the data submission process, § 156.1220(a)(4)(ii), a reconsideration proposed in § 153.710(f)(2) would apply providing issuers with reports and with respect to a processing error by to the final data quantity and quality notices to allow time to address any HHS, HHS’s incorrect application of the analyses only, which are performed outliers before the data submission relevant methodology, or HHS’s following the deadline for submission of deadline. HHS encourages issuers to mathematical error may be requested data specified in § 153.730 (that is, April work with HHS any time an issue or only if, to the extent the issue could 30, of the year following the applicable problem is encountered. Issuers may have been previously identified by the benefit year). provide justifications, update their issuer to HHS under § 153.710(d)(2), it We are finalizing these provisions as EDGE server data, and correct baseline was identified and remains unresolved. proposed, with two modifications. In enrollment or claims counts at any time d. Data Requirements (§ 153.710(g)) § 153.710(f), we are removing the during the data submission process, and proposed language that set forth a time are encouraged to do so as early as We proposed revising limitation for HHS to assess a default possible. § 153.710(g)(1)(iii) to require an issuer to risk adjustment charge based on the data Comment: One commenter report the amount of cost-sharing quantity and quality analyses because recommended that HHS provide full reductions calculated under § 156.430(c) the administrative appeals process set transparency into the evaluation in its annual MLR and risk corridors forth in § 156.1220 could result in process, including with respect to how report, regardless of whether the issuer imposition of a default risk adjustment HHS intends to apply its measurements had any unresolved discrepancy under charge. For example, if we determine for baseline data and quality. Another § 156.1210, or whether the issuer had during the administrative appeals commenter asked that HHS publish the submitted a request for reconsideration process that a data submission error was timeframes for the data quantity and under § 156.1220(a)(1)(v). Additionally, of such magnitude that the issuer did quality analysis in the annual Letter to consistent with the process outlined in not meet the data quantity and quality Issuers. § 153.710(g)(2), we proposed to require thresholds set forth for that benefit year, Response: HHS strives to be an issuer to adjust the cost-sharing then we may assess a default risk transparent with respect to these reduction amount it reports on its 2015 adjustment charge if that charge is lower processes, and will issue guidance risk corridors and MLR forms by the than the charge the issuer is being regarding the data quantity and quality difference (if any) between the reported assessed for that benefit year. We also process and timeframes. See https:// cost-sharing reduction amount used to changed the heading for § 153.710(f) www.cms.gov/CCIIO/Programs-and- adjust allowable costs and incurred from ‘‘Data Sufficiency’’ to ‘‘Evaluation Initiatives/Premium-Stabilization- claims on the 2014 MLR Annual of Dedicated Distributed Data.’’ Programs/index.html or http:// Reporting Form and the amount of cost- Comment: Numerous commenters www.regtap.info/. sharing reductions as calculated under asked that HHS extend the 10-day Comment: One commenter urged HHS § 156.430(c) for the 2014 benefit year. Consistent with the approach deadline to submit an explanation of the to publish the timeline and format for outlier to HHS. Several commenters currently outlined in § 153.710(g)(2), we submission of baseline data as soon as asked that HHS provide issuers 15 days proposed to amend this paragraph to possible prior to the applicable benefit or 30 days to respond. One commenter require an issuer to report any year. adjustment made or approved by HHS agreed with the 10-day deadline. Response: HHS will continue to Response: The 10-day deadline only for any risk adjustment payment or publish timeframe and guidance applies when HHS conducts the final charge, reinsurance payment, cost- materials related to the baseline quality and quantity analyses of the data sharing reduction payment to reflect submission process as soon as submitted to an issuer’s dedicated actual cost-sharing reduction amounts practicable. HHS has already released distributed data environment, which are received, or risk corridors payment or guidance regarding the submission of performed following the deadline for charge, where the adjustment has not baseline data for the 2015 benefit year.21 submission of data specified in been accounted for in a prior MLR and Comment: One commenter requested § 153.730 (that is, April 30 of the year Risk Corridors Annual Reporting Form that HHS establish an appeals process following the applicable benefit year). in the next following year. For example, for issuers whose data is determined to As noted above, HHS will continuously if an issuer’s risk adjustment charges or fail the data quantity and quality analyze the quantity and quality of an payments are adjusted as a result of the standards. issuer’s data, providing reports and administrative appeals process, the notices to issuers and allowing time to 21 2015 EDGE Server Status and Baseline issuer should adjust these reported correct any outliers during the data Reporting (Oct, 20, 2015), available at https:// amounts in the next MLR and risk submission window. The 10-day www.regtap.info/reg_library.php?libfilter_topic=3. corridors reporting cycle, after the

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appeal has been resolved. Similarly, if guidance.22 HHS will also finalize as to resubmit data due to such an HHS makes changes to an issuer’s risk proposed the conforming amendments adjustment, and that all issuers should adjustment charges or payments after to the introductory language at prepare to disburse rebates by the the risk corridors and MLR reporting § 153.710(g)(1) to remove the cross- deadline. For those cycle has closed for the applicable references to the interim discrepancy issuers who may be notified an reporting year, the issuer should adjust reporting process currently codified at adjustment that does not meet the ‘‘de these reported amounts in the next MLR § 153.710(d). See III.D.5.a of this minimis’’ criteria by , HHS and risk corridors reporting cycle to preamble for a discussion of the will work with the issuer to facilitate account for the difference between the conforming amendments related to the resubmission of its MLR and risk reported amounts and the amounts removal of interim discrepancy corridors submissions and to address actually received or paid for the reporting process. the impact on MLR rebates, if necessary, previous benefit year. However, if an Comment: One commenter agreed in a manner that limits additional issuer is notified about the modification with the proposal to require an issuer to operational burden for the issuer. during an open MLR and risk corridors report any adjustment made or Comment: One commenter asked that submission period, it must report the approved by HHS for any risk HHS not finalize § 153.710(g)(1)(iii), modified amounts in that open adjustment payment or charge, stating this change would limit the reporting cycle. reinsurance payment, cost-sharing ability of issuers with alternative reduction payment to reflect actual cost- payment models to receive cost-sharing We also proposed to clarify in sharing reduction amounts received, or reduction amounts for capitated § 153.710(g)(1)(iii) that cost-sharing risk corridors payment or charge, where payment arrangements. reduction amounts to be reported under the adjustment has not been accounted Response: The language under this section must exclude amounts for in a prior MLR and Risk Corridors § 153.710(g)(1)(iii) does not limit the reimbursed to providers of services or Annual Reporting Form, in the ability of issuers with alternative items. This clarifying language is following year, but further payment arrangements to receive cost- consistent with how the instructions for recommended that we establish a cut-off sharing reduction payments, and is cost-sharing reductions amounts are date for notifications of adjustments of consistent with other cost-sharing reported under §§ 153.530(b)(2)(iii) (risk June 30, after which adjustments must reduction reporting requirements, for corridors data requirements) and be reported in the following year’s MLR example, allowable costs under 158.140(b)(iii) (MLR data requirements). and risk corridors reporting cycle. The § 153.530(b)(2)(iii) (risk corridors data We also proposed to revise paragraph commenter suggested that notifications requirements) must be reduced by the (g)(1)(iv) to require that for medical loss by June 30 would give issuers sufficient amount of cost-sharing reduction ratio reporting only, issuers should time to incorporate data changes into payments received by the issuer, except report the risk corridors payment to be their MLR and risk corridors for, or excluding, any part of those made or charge assessed by HHS, as submissions by the reporting payments used by the issuer to reflected under § 153.510. Lastly, HHS deadline. reimburse providers. Response: We recognize that, in some learned in the first year of e. Good Faith Safe Harbor implementation of the premium cases, the timing of notifications of stabilization and Exchange financial changes to data such as risk adjustment In the second Program Integrity Rule, assistance programs that some flexibility charges or payments may affect an we finalized § 153.740(a), which permits is needed when reporting these program issuer’s MLR and risk corridors HHS to impose civil money penalties amounts for purposes of risk corridors submission. Issuers must adhere to the upon issuers of risk adjustment covered and MLR reporting. As such, we July 31 regulatory deadline for plans and reinsurance-eligible plans for proposed in § 153.710(g)(3) that HHS submitting MLR and risk corridors data failure to adhere to certain standards have the ability to modify the reporting for the preceding benefit year. In order relating to their dedicated distributed instructions set forth in § 153.710(g)(1) to accommodate potential adjustments data environments. In the proposed and (2) through guidance. Our intent in to reinsurance payments, risk rule, consistent with our previous issuing any such guidance would be to adjustment payments or charges, or statements in the 2016 Payment Notice (80 FR 10780), we stated that we would avoid having the application of the payments or charges resulting from the not be extending the good-faith safe reporting instructions lead to unfair or cost-sharing reduction reconciliation harbor to 2016. Starting in the 2016 misleading financial reporting in process, in the period immediately after calendar year and beyond, civil money exceptional circumstances. the issuance of the June 30 report while also maintaining the accuracy of issuers’ penalties may be imposed if an issuer of Based on comments received, we are MLR and risk corridors submissions, we a risk adjustment covered plan or finalizing these provisions as proposed, are modifying § 153.710(g)(2) to specify reinsurance-eligible plan fails to with one modification. We are that if HHS notifies an issuer about an establish a dedicated distributed data modifying § 153.710(g)(2) to specify that adjustment by August 15, the issuer environment in a manner and timeframe an issuer must report any adjustment must report the adjustment in the specified by HHS; fails to provide HHS made or approved by HHS by August current year reporting cycle, unless the with access to the required data in such 15, or the next applicable business day, adjustment meets the criteria for a ‘‘de environment in accordance with of the reporting year for any risk minimis’’ change outlined in prior § 153.700(a) or otherwise fails to comply adjustment payment or charge, guidance.23 We note that we expect only with the requirements of §§ 153.700 including an assessment of risk a small number of issuers to be required through 153.730; fails to adhere to the adjustment user fees; any reinsurance reinsurance data submission payment; any cost-sharing reduction 22 Risk Corridors and Medical Loss Ratio (MLR) requirements set forth in § 153.420; or payment or charge; or any risk corridors Resubmissions for the 2014 Benefit Year, (Aug. 14, fails to adhere to the risk adjustment payment or charge, in the current MLR 2015), available at https://www.regtap.info/ data submission and data storage and risk corridors reporting year, unless uploads/library/RC_MLR_ResubmissionFAQ_5CR_ 081415.pdf. requirements set forth in §§ 153.610 the adjustment meets the criteria for a 23 https://www.regtap.info/uploads/library/RC_ through 153.630, even if the issuer has ‘‘de minimis’’ change outlined in prior MLR_ResubmissionFAQ_5CR_081415.pdf. made good faith efforts to comply with

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these requirements. This safe harbor Where: deterrent value. We stated that we provision parallels a similar safe harbor Tn = total default risk adjustment charge for believe the proposed 90th percentile for QHP issuers in FFEs under § 156.800 a plan n; default charge will incentivize issuers to that also expired at the end of the 2015 Cn = the PMPM amount for plan n; and participate in the risk adjustment calendar year. See III.G.7 of this En = the total enrollment (total billable program. preamble for the accompanying member months) for plan n. Comment: Commenters generally discussion of the safe harbor provision In the second final Program Integrity supported the increased default risk under § 156.800. However, we are Rule, we provided that En could be adjustment charge for 2015 benefit year clarifying that HHS will not impose calculated using an enrollment count risk adjustment. Two commenters civil money penalties under § 153.740(a) provided by the issuer, using enrollment opposed the increase, stating the in 2016 or later based on activities that data from the issuer’s MLR and risk increase is overly punitive. occurred in the 2014 or 2015 calendar corridors filings for the applicable Response: We believe that the year if the issuer acted in good faith at benefit year, or other reliable data increased default charge will encourage that time. sources. participation in the second year of Comment: Several commenters asked In the 2015 Payment Notice, we implementation of the risk adjustment HHS to extend the good faith safe harbor determined that we would calculate program. In establishing the amount of to 2016, while others supported our Cn—the PMPM amount for a plan— the default charge, we must balance proposal. Some commenters asked that equal to the product of the statewide setting a fair risk allocation and HHS allow a good faith safe harbor for average premium (expressed as a PMPM discouraging strategic behavior from all new processes, such as policy-based amount) for a risk pool and the 75th issuers with low-risk enrollees against payments and reconciliation of advance percentile plan risk transfer amount avoiding unduly penalizing issuers who payments of cost-sharing reductions. expressed as a percentage of the fail to make proper submissions for Response: HHS will not extend the respective Statewide average PMPM operational, and not strategic, reasons. good faith safe harbor to cover conduct premiums for the risk pool. The In the second year of risk adjustment, in 2016 or later years (including with nationwide percentile would reflect we believe that most issuers will respect to activities that occur in the only plans in States where HHS is encounter fewer operational difficulties 2016 calendar year or later relating to operating the risk adjustment program in establishing an EDGE server and data from earlier benefit years). We and would be calculated based on the meeting data quantity and quality believe that the 2 calendar years that we absolute value of plan risk transfer thresholds, and that the opportunity for provided under this policy were amounts. The PMPM amount strategic behavior is greater because risk sufficient to permit issuers to transition determined using the method described transfer distributions will be better into compliance with the applicable risk here would be multiplied by the non- understood. We believe that raising the adjustment, reinsurance and distributed compliant plan’s enrollment, as default risk adjustment charge from the data collection requirements. Of course, determined using the sources finalized 75th percentile PMPM transfer amount in all our enforcement actions, we will in the second final Program Integrity to the 90th percentile transfer amount is continue to take into account all facts Rule, to establish the plan’s total default a fair balancing of these goals. We are and circumstances, including the risk adjustment charge. finalizing this policy as proposed reasonable good faith action of issuers. For the second year of risk For the 2016 benefit year, we Comment: A few commenters asked adjustment, the 2015 benefit year, we proposed a separate calculation of Cn for that HHS make clear that the good faith proposed to calculate Cn in the same issuers where En statewide, in the safe harbor continues to apply to manner, but increased to the 90th individual and small group markets conduct for benefit years prior to 2016 percentile plan risk transfer amount combined, is 500 billable member in perpetuity. expressed as a percentage of the months or fewer. For these issuers, we Response: HHS will not impose civil respective statewide average PMPM proposed to calculate Cn, or the PMPM money penalties in 2016 or later based premiums for the risk pool. We believe charge for a plan, as 14 percent of on activities that occurred in the 2014 that the 75th percentile was reasonable premium, which we calculated as the or 2015 calendar year if the issuer acted for the initial year of risk adjustment, as mean charge as a percent of premium of in good faith at that time. we did not yet know the distribution of issuers with 500 billable member risk adjustment transfers and issuers months or fewer in the 2014 benefit year f. Default Risk Adjustment Charge were more likely to experience technical in the small group market. We based the (§ 153.740(b)) difficulties in establishing a dedicated charge itself on the experience of small In the second Program Integrity Rule distributed data environment. In the group issuers in the 2014 benefit year, and the 2015 Payment Notice, HHS second year of risk adjustment, now that as we believe that individual market indicated that a default risk adjustment issuers have set up EDGE servers and issuers are more likely to set up an charge will be assessed if an issuer does participated in the calculation of risk EDGE server because of the availability not establish a dedicated distributed adjustment transfers, we believe that of reinsurance. Limiting the data environment or submits inadequate adjusting the default charge upwards to applicability in the 2016 benefit year of risk adjustment data. In the 2016 the 90th percentile of plan risk transfer this default charge to issuers with 500 Payment Notice, we established how a amounts expressed as a percentage of billable member months or fewer is default risk adjustment charge will be the respective statewide average PMPM intended to ensure that the only issuers allocated among risk adjustment premiums for the risk pool will with this option are issuers that are so covered plans. encourage continued compliance with small that their removal from the overall As described in the second final risk adjustment data submission risk adjustment risk pool would have a Program Integrity Rule, the total risk requirements. We are concerned that, minimal impact on transfers adjustment default charge for a risk absent this change, some issuers may nationwide. In 2014, approximately 125 adjustment covered plan equals a prefer receiving a default charge at the issuers would have had fewer than 500 PMPM amount multiplied by the plan’s 75th percentile over participating in the member months in the individual and enrollment. risk adjustment program; a default small group markets combined. Of those Tn = Cn * En charge at this level might lack sufficient approximately 125 small issuers, 80

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were assessed risk adjustment charges pool. We are finalizing this policy as meet the definition of ‘‘health insurance greater than the proposed default charge proposed. issuer’’), and so we proposed to permit of 14 percent of premium PMPM. Those a guaranty fund to participate in those g. Insolvent Issuers charges amounted to less than 0.09 programs notwithstanding these percent (that is, less than one tenth of We are aware that a health insurance definitions, to the extent it has taken one percent) of total risk adjustment issuer may become insolvent or exit a over liability for a risk adjusted covered charges assessed nationally. Assuming market during a benefit year. In some plan or reinsurance eligible plan during every one of those issuers elect to accept cases, another entity, such as another a benefit year. the proposed 14 percent default risk issuer or liquidator may take over the We sought comment on these policies, charge, and none of the small issuers issuer’s operations, or a State guaranty including with respect to permissible that received risk adjustment payments fund may become responsible for paying ways in which the acquiring entity’s or with charges below 14 percent of claims for the insolvent issuer. In some arrangements may differ and other ways premium PMPM did so (which we instances when this occurs, both the of ensuring the submission of the data believe unlikely, due to the insolvent issuer and the entity seeking necessary for HHS to calculate the risk administrative expenses of setting up an to acquire business from the insolvent adjustment financial transfer amounts EDGE server), the assessment of the issuer would lack a full year of enrollee and the reinsurance payment amounts proposed 14 percent of premium default data to submit to the EDGE server for when another party will take over charge on those 80 issuers would have the risk adjustment or reinsurance operations of the insolvent issuer, or resulted in a 0.05 percent reduction in programs. pay claims on behalf of the insolvent To address this concern, we proposed risk adjustment charges collected issuer, during a benefit year. We also to clarify that an entity acquiring or nationally. Because issuers of this size solicited comments on whether entering into another arrangement with have a minimal impact on the overall additional flexibility is needed with an issuer to serve the current enrollees risk adjustment risk pools and have a respect to the data submission under a plan, or a State guaranty fund disproportionately high operational requirements for the reinsurance and that is responsible for paying claims on burden to comply with risk adjustment risk adjustment programs, such as with behalf of the insolvent issuer, with data submission requirements, we respect to the definition of a ‘‘paid substantially the same coverage terms believe that a separate default charge for claim’’ to account for situations when may accrue the previous months of these issuers would promote efficiency claims experience for purposes of risk an issuer is unable to pay claims for and data quality in the risk adjustment adjustment and reinsurance to fully covered services, for example, due to program. We proposed to establish this reflect the enrollees’ risk and claims insolvency. risk adjustment default charge as the costs. We proposed the ‘‘substantially We received a number of comments mean charge in the small group for these the same’’ standard because we on these policies. Most commenters small issuers, or 14 percent of statewide understood that in many of these supported the general intent of the average premium PMPM, to compensate situations, an acquiring entity’s platform policies but requested additional on average for the absence of these may require some adjustments to the information or clarification of certain immaterial amounts in the affected risk plan arrangements and coverage terms. aspects of them. We are finalizing this pools. We intend that this policy would As part of meeting this standard, an policy with certain clarifications, as apply only to the very smallest issuers, acquiring entity would be required to detailed below. in recognition of the disproportionately carry over of accumulators for Comment: Two commenters requested high operational burden on these deductibles and annual limitations on that we clarify the term ‘‘substantially issuers. cost sharing. If the substantially the the same’’ in this context, and one of Comment: Commenters opposed the same standard is met, and the insolvent these commenters questioned whether a separate, lower default charge, stating issuer and acquiring entity agree that guaranty fund that pays only a portion that compliance with risk adjustment is the acquiring entity will accrue the of the original covered benefits would a cost of doing business under the previous months of claims experience, meet this standard. Affordable Care Act. One commenter the acquiring entity must take Response: With respect to the stated that the 500-member-months responsibility for submitting to HHS acquisition of business from an threshold is too small. One commenter complete and accurate claims and insolvent issuer, an acquiring entity recommended a graded approach to the baseline information for that benefit must, at a minimum, carry over default risk charge that would adjust the year (including data from the insolvent accumulators for deductibles and percentile factor from 50th to 75th for issuer) in accordance with HHS’s annual limitations on cost sharing to those issuers with 500 to 2,000 billable operational guidance to maintain meet the substantially the same members to allow an issuer more eligibility to receive payments under standard. We note that this standard is flexibility as they transition into this program for the given benefit year. unrelated to the standards under participation on the EDGE server. One Operationally, the acquiring entity may § 153.500 for determining whether a commenter recommended that the elect to have the insolvent issuer submit health plan offered outside of the threshold should be 720,000 billable the data on behalf of both entities. We Exchange is the same as a QHP for the member months. will work with issuers and other purposes of the risk corridors program. Response: We agree that, in general, acquiring entities in these situations to We will continue to monitor situations compliance with risk adjustment is a facilitate the submission of the involving issuer insolvencies and intend cost of doing business under the new necessary data to EDGE servers for HHS to issue further guidance as necessary. market rules. However, as we explained to calculate risk adjustment financial Comment: Two commenters in the proposed rule, we believe that an transfers and reinsurance payments. expressed concern about the exception for the very smallest issuers We also recognized that guaranty opportunity for gaming by acquiring recognizes that for those issuers the funds may not meet all of the issuers if they have the option, but are administrative costs of implementing an requirements to be considered a risk not required to accrue and submit EDGE server will substantially outweigh adjustment covered plan or reinsurance claims experience for the insolvent the risk adjustment benefits to the risk eligible plan (for example, they may not issuer, because they could select the

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approach that would be most favorable issuer and the EDGE server does not applicable threshold. This amendment to their risk adjustment calculation. support the submission of individual strengthens consumer protections Response: We appreciate the concern, claims from providers. against unreasonable rate increases by but we believe that a single EDGE server Comment: One commenter ensuring that coverage with a significant submission better reflects the true recommended that, in the event that an rate increase due to changes in rating economic risk of the enrollment in the issuer in a market in a State is unable factors is subject to review. plans of the insolvent issuer, and note to pay a risk adjustment charge in full, We maintain that the plan level rate that an acquiring entity taking over the HHS adjust both risk adjustment increase, as opposed to the product insolvent issuer’s business could payments and charges in that market level rate increase, will determine structure the acquisition to provide for and State, rather than only payments, to whether the increase is subject to separate submissions. We will work ensure that the shortfall is distributed review. The plan level trigger was with issuers and acquiring entities in proportionally among issuers in the risk finalized in the 2016 Payment Notice these situations to facilitate the pool. (80 FR 10781) effective for coverage submission of accurate and complete Response: We appreciate the beginning on or after January 1, 2017. data to EDGE servers that is necessary recommendation and will consider Comment: Some commenters to calculate risk adjustment financial proposing this approach in rulemaking expressed concern regarding the transfers and reinsurance payments. for future benefit years. inclusion of premium rating factors and Comment: One commenter requested HHS clarify how rate changes E. Part 154—Health Insurance Issuer encouraged us to address situations should be calculated according to the involving a State guaranty fund or Rate Increases: Disclosure and Review proposal. liquidator separately from those Requirements Response: All rating factors, including involving an acquiring issuer, given 1. Disclosure and Review Provisions rating area and tobacco use factors, should be captured in the calculation of their differing roles and responsibilities. a. Rate Increases Subject To Review This commenter also requested that plan rate changes. The intent here, in (§ 154.200) liquidators, in addition to guaranty the context of the rate review program, funds, be given explicit ability to In the proposed rule, we proposed is to measure the premium change based participate in the reinsurance and risk amending paragraph (c)(2) of § 154.200 on an issuer’s current population adjustment programs as they are often to re-establish that a rate increase for compared to that same population if the responsible for providing pre- single risk pool coverage effective on or new rates were implemented. This is liquidation coverage. Another after January 1, 2017, must be calculated not intended to capture demographic commenter questioned whether a as the premium-weighted average rate changes, such as a member aging up or guaranty fund would be able to increase for all enrollees. The proposed moving to a new geographic location. change would reverse a previous participate in risk adjustment under b. Submission of Rate Filing amendment 24 that defined a rate State law or operationally. A separate Justification (§ 154.215) commenter proposed that the policies increase for single risk pool coverage apply to providers in the same manner effective on or after January 1, 2017 as In the proposed rule, we proposed to as guaranty associations, because the an increase in the plan-adjusted index revise § 154.215(a)(1) to require health majority of issuers in its State are not rate. We note that the previous insurance issuers to submit the Unified subject to the guaranty association to amendment also established a plan level Rate Review Template (also known as pay claims; however, providers are trigger for a product being subject to Part I of the Rate Filing Justification) for required to hold consumers harmless if review for coverage effective on or after all single risk pool coverage in the their insurance company becomes January 1, 2017. The proposed individual or small group (or merged) insolvent. amendment maintained the plan level market, regardless of whether any plan Response: We clarify that this policy trigger for the subject-to-review within a product is subject to a rate permits participation of a liquidator or threshold. increase. This proposal was made to a State guaranty fund in the risk We proposed the amendment to the carry out the Secretary’s responsibility, adjustment and reinsurance programs, calculation method because an increase in conjunction with the States, under to the extent it has taken over liability in the plan-adjusted index rate does not section 2794(b)(2)(A) of the PHS Act to for a risk adjustment covered plan or reflect changes to adjustment factors for monitor premium increases of health reinsurance eligible plan during a rating area, age, or tobacco use. For insurance coverage offered through as benefit year, unless otherwise example, an issuer could change well as outside of an Exchange. We also prohibited by State law. We recognize geographic rating area factors such that expressed our intent to disclose that restrictions under State law, or members in a certain rating area receive information that is not a trade secret or operational limits, may apply. In the a larger increase, but if the plan- confidential commercial or financial case where a guaranty fund assumes adjusted index rate did not meet or information for all proposed rate liability for a risk-adjustment covered exceed the threshold then the rate increases for single risk pool coverage, plan or reinsurance eligible plan, the increase would not be subject to rate rather than only proposed rate increases guaranty fund would submit data acting review. subject to review, as well as all final rate on behalf of the insolvent issuer; We are finalizing this section as increases. however, the insolvent issuer would proposed, so that a rate increase for We proposed to revise paragraph (a) retain responsibility for the single risk pool coverage effective on or to insert paragraph (a)(1) to establish coordination of the EDGE data after January 1, 2017 is subject to review that health insurance issuers must submission. While we understand that if the average increase, including submit the Unified Rate Review policyholders in some States are not premium rating factors described in Template (‘‘URRT,’’ also known as Part covered by guaranty funds, it is not § 147.102, for all enrollees weighted by I of the Rate Filing Justification) for all clear how providers could coordinate premium volume for any plan within single risk pool products in the the submission of an EDGE server the product meets or exceeds the individual or small group (or merged) because the responsibility to submit market, regardless of whether any plan data to the EDGE server applies to the 24 80 FR 10749, 10863 (Feb. 27, 2015). within a product is subject to a rate

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increase. We also proposed to insert obligation to post proposed rate Exchange QHP filing deadlines; 30 paragraph (a)(2) to capture the existing increases under § 154.301(b). however, we understand some States requirement that issuers must submit a Comment: Some commenters may face challenges in doing so. Issuers URRT and an Actuarial Memorandum requested that HHS should make final in States without effective rate review (also known as Parts I and III of the Rate rate information publicly available at programs 31 must submit proposed rate Filing Justification) when a single risk least 15 days before open enrollment. filings for single risk pool coverage (for pool product has a plan that is subject Response: Final rate increase both QHPs and non-QHPs) on a date set to a rate increase of any size. Similarly, information must be posted at a uniform by the State, so long as the date is not we proposed to insert paragraph (a)(3) to time for all single risk pool coverage later than , 2016. Further, we capture the existing requirement that an (regardless of whether the coverage is note that all States retain flexibility to issuer must provide that all three parts sold on the Exchange) by the first day establish an earlier submission date 26 of the Rate Filing Justification (that is, of open enrollment, but States may under § 154.220(b). establish an earlier uniform posting the Part I URRT, the Part II written d. Submission and Posting of Final timeframe with appropriate notice to description justifying a rate increase, Justifications for Unreasonable Rate CMS.27 We believe this timeframe and the Part III Actuarial Memorandum) Increases (§ 154.230) when a single risk pool product has a strikes a balance between providing We proposed to fix a typographical plan with a rate increase that is subject State and Federal regulators sufficient error and change the cross reference in to review. Accordingly, we proposed to time to complete their reviews, while providing consumers the information § 154.230(c)(2)(i) to reference revise paragraph (b) to provide that a § 154.215(h) rather than § 154.215(i). Rate Filing Justification for single risk needed to make informed purchasing decisions. There were no comments submitted pool plans must include one or more of regarding this section. We are finalizing the three parts, as appropriate, but not c. Timing of Providing the Rate Filing the amendment as proposed. necessarily all three. We also proposed Justification (§ 154.220) to remove and reserve paragraph (c), as e. CMS’s Determinations of Effective In the proposed rule, we proposed Rate Review Programs (§ 154.301) it was unnecessary in light of the technical changes to § 154.220 to proposed amendments to paragraphs (a) remove references to rate increases and In the proposed rule, we restated that and (b). We are finalizing all of the clarify that the timeframes listed pertain making rate information available to the amendments to this regulation as to all single risk pool products with or public at a uniform time (rather than a proposed. without rate changes to conform with rolling basis) is one of the criteria for Comment: A majority of commenters the proposed amendments to § 154.215. determining whether a State has an 32 supported the proposal and several We are finalizing the amendments to Effective Rate Review program. We recommended that all proposed rate this regulation as proposed. expressed our intent to propose a changes should be made public, rather Comment: Some commenters uniform timeline for release of proposed than just proposed rate increases. Some requested that HHS change the filing rate increases subject to review and for commenters, however, expressed deadline to a time after the risk all final rate increases for single risk concern regarding the proposal, citing adjustment report is released to issuers. pool coverage. We are maintaining the the statutory obligation to review only Other commenters suggested States requirement for releasing rate unreasonable premium increases, rather establish their own rate filing information at a uniform time rather than all increases. A few commenters submission deadlines rather than than on a rolling basis. We released the adhering to HHS filing deadlines. proposed timeline for the 2016 Filing stated that publicizing rate filings before 33 they are finalized eliminates Response: We acknowledge the Year on December 23, 2015. Public competitive advantages for plans. comments, and consistent with the comments were accepted until January approach outlined in guidance being 22, 2016. We are releasing the final Response: We are finalizing the 34 released with this rule,28 we are timeline in guidance with this final proposal to collect rate filings for all providing States with an effective rate rule, as discussed above. single risk pool products in order to review program 29 with additional Comment: Many commenters carry out the Secretary’s statutory expressed support for requiring States to 25 flexibility with respect to the responsibility to monitor premium submission deadline for proposed rate post all rate increases at the same time. increases of health insurance coverage. filings for single risk pool products. Some commenters opposed having a HHS will post information for all Issuers in a State effective rate review uniform posting timeline, requesting proposed rate filings for the individual program must submit proposed rate that States be able to establish the and small group markets within a state filings for single risk pool coverage (for timeline for SBEs. at a uniform time to promote fair market both QHPs and non-QHPs) on a date set competition between issuers through by the State, so long as the date is not 30 Final 2017 Letter to Issuers in the Federally- facilitated Marketplaces (Feb. 29, 2016). and outside of the Exchange and further later than July 15, 2016. We encourage enhance transparency of the rate-setting 31 For the 2017 plan year, health insurance issuers States with effective rate review in Alabama, Missouri, Oklahoma, Texas, and process. We note that States with an programs that are served by the Wyoming are required to submit rate filings for Effective Rate Review Program are HealthCare.gov platform to set a date review by CMS to determine reasonableness. required to post proposed rate increases that aligns with the Federally-facilitated 32 § 154.301(b). subject to review and have a mechanism 33 DRAFT Bulletin: Timing of Submission and Posting of Rate Filing Justifications for the 2016 for receiving public comments on those 26 § 154.301(b)(1)(ii). Filing Year for Single Risk Pool Coverage1 Effective proposed rate increases. CMS’s decision 27 § 154.301(b)(2). on or after January 1, 2017, (Dec. 23, 2015), to post information for all proposed rate 28 CMS Insurance Standards Bulletin: Timing of available at https://www.cms.gov/CCIIO/Resources/ filings for single risk pool coverage does Submission and Posting of Rate Filing Justifications Regulations-and-Guidance/Downloads/Timeline- not affect or change the State’s for the 2016 Filing Year for Single Risk Pool Bulletin-12-23-15-FINAL.pdf. Coverage, (Feb. 29, 2016). 34 CMS Insurance Standards Bulletin: Timing of 29 See 45 CFR 154.301 for a list of criteria that Submission and Posting of Rate Filing Justifications 25 Section 2794(b)(2)(A) of the Public Health CMS considers when evaluating whether a State has for the 2016 Filing Year for Single Risk Pool Service Act. an effective rate review program Coverage (Feb. 29, 2016).

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Response: The requirement for a State related to the definitions of small to ensure HHS has sufficient time to with an Effective Rate Review program employer and large employer in accurately assess a State’s progress and to post proposed rate increases that it § 155.20, please see the preamble to ability to timely build the necessary reviews, and to have a mechanism for § 144.103. We did not propose to change Exchange information technology. In receiving public comments on those the applicability of the counting our experience, the process for seeking proposed rate increases, has been in methodology under section 4980H(c)(2) approval to operate a State Exchange effect for several years. The uniform of the Code to these definitions in involves substantial technical assistance timeline requires States to ensure that § 155.20, but we proposed amendments and collaboration between HHS and the the proposed rate increases subject to to these definitions that eliminate State in developing plans to transition review, as well as all final rate language about the timing of the from one Exchange operational model increases, are released to the public at applicability of the counting and information technology the same time. This policy ensures that methodology under section 4980H(c)(2) infrastructure to another, including key rate information is available of the Code under these definitions, milestones, deadlines, and contingency simultaneously for coverage offered because that language is no longer measures. Since the completion of some through and outside of the Exchange, relevant. We did not receive any of these key milestones and deadlines which enhances transparency and comments regarding this aspect of the would need to occur prior to the promotes fair market competition. We proposal and are finalizing as proposed submission of the Blueprint application, note that the guidance being released the elimination of the language about we proposed that we will make that with this final rule provides States with the timing of applicability of the technical assistance available and an effective rate review program with counting methodology under section initiate the transition process following flexibility to set a date to post proposed 4980H(c)(2) of the Code. submission of a declaration letter from rate filings for single risk pool products We proposed to amend § 155.20 to the State, as provided for in the with rate increases subject to review, add a definition for ‘‘Federal platform Blueprint approval process. The provided the date set by the State is no agreement’’ to apply to this part. We declaration letter would serve as formal later than , 2016. Nothing in defined a Federal platform agreement to notification to HHS of a State’s intent to this rule prevents States from making mean an agreement entered into by a operate a State Exchange, including additional information available to the State Exchange and HHS, under which operating an SBE–FP, and to submit a public, or prevents States from the State Exchange agrees to rely on the Blueprint (or Blueprint update) for HHS establishing earlier uniform timeframes Federal platform to carry out select approval. The declaration letter would for public disclosure. Exchange functions. We are finalizing initiate coordination between the State the definition, with a slight and HHS on a transition plan. The F. Part 155—Exchange Establishment modification to reflect the fact that the declaration letter would also serve as a Standards and Other Related Standards State election to implement the SBE–FP starting point for HHS to communicate Under the Affordable Care Act would occur through the Blueprint the operational steps that a State must 1. Definitions (§ 155.20) process in § 155.106(c) rather than the complete in order to become an SBE, as In § 155.20, we proposed to amend Federal platform agreement, which will well as a starting point for HHS to assess the definition of ‘‘applicant’’ for the reflect the agreement between the a State’s progress by the time of the small group market so that the term also parties and will be entered into at the State’s Blueprint or Blueprint update includes an employer seeking eligibility end of the Blueprint process. The submission. We would require a to purchase coverage through a SHOP, Federal platform agreement, which we declaration letter approximately 21 without necessarily enrolling in that will publish later this year, will also months prior to the beginning of the coverage themselves. The current contain the parties’ mutual obligations SBE’s first annual enrollment and definition of an applicant contemplates with respect to those Exchange approximately 9 months prior to the an employer, employee, or former functions and related matters. beginning of an SBE–FP’s first annual employee seeking eligibility for For a discussion of the provisions of open enrollment. HHS would assess enrollment in a QHP through the SHOP this final rule regarding standardized later submissions on a case-by-case for himself or herself. For consistency options, please see the preamble to part basis, recognizing operational realities with our existing regulations governing 156, regarding standardized options. and need for adequate notice for the SHOP application process at 2. General Standards Related to the stakeholders, including issuers and §§ 155.710 and 155.715 and for Establishment of an Exchange consumers. consistency with how the small group In § 155.106(a)(2), we proposed to a. Election To Operate an Exchange market typically works, we proposed require States that are establishing a After 2014 (§ 155.106) that the term applicant also include an State Exchange (not including a State employer who is seeking eligibility to We proposed to modify the Exchange using the Federal platform for purchase coverage through a SHOP, but timeframes for submission and approval certain functions) to submit an who is not seeking to enroll in that of documentation specifying how an Exchange Blueprint at least 15 months coverage for himself or herself. We Exchange established by a State or a prior to the date the Exchange proposes received no comments on this proposal regional Exchange meets the Exchange to begin open enrollment as a State and are finalizing this amendment as approval standards (that is, the Exchange. We also proposed in proposed. Exchange Blueprint). Based on our § 155.106(a)(3) to increase the time that We proposed to modify the experience over the last two open the State must have in effect an definitions of ‘‘small employer’’ and enrollment periods, we believe the approved or conditionally approved ‘‘large employer’’ at § 155.20 to align current Exchange Blueprint application Exchange Blueprint from 6.5 months to with the Protecting Affordable Coverage deadlines for States intending to operate 14 months prior to the date the for Employees Act, which was recently a State Exchange do not sufficiently Exchange proposes to begin open enacted, as further described in the balance the need to provide States with enrollment as a State Exchange. We preamble to § 144.103. For a discussion time to adequately prepare their recognized that in some situations the of the provisions of this final rule Blueprint applications against the need open enrollment period may not have

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been established when Blueprints are assessment of the State’s progress. A enacted on or before , 2011 due. Therefore, we proposed in commenter indicated that they would (even if not effective until a later date) paragraph (a)(5), if the open enrollment also like to see a timeline for when the may be considered EHB, which would period for the year the State intends to Federal platform agreement must be obviate the requirement for the State to begin operating an SBE has not been fully executed. Finally, comments were defray costs for these State-required established, a State should assume open received regarding the need for HHS to benefits. This policy continues to apply. enrollment will begin on the same date publish the operational steps involved Therefore, benefits required by a State as open enrollment is to begin for the in the transition to an SBE–FP, through action taking place after year in which they are submitting the including the need for issuer outreach December 31, 2011 that directly apply to Blueprint. and flexibility in transition plans for the QHPs are not considered EHB We proposed to revise paragraph (b) individual States. (unless enactment is directly to clarify that HHS will operate the Response: We are finalizing the attributable to State compliance with Exchange if a State Exchange ceases regulations as proposed. We believe that Federal requirements, as discussed operations. the Blueprint timeline provides below). We proposed to add a paragraph (c) to sufficient time for a State to become or Although benefits requirements establish requirements for a State that transition to an SBE–FP because that enacted by States after December 31, elects to operate an SBE–FP. These transition will begin with the 2011 that directly apply to the QHP and States must submit an Exchange submission of the declaration letter. Part that were not enacted for purposes of Blueprint (or submit an update to an of the technical assistance provided compliance with Federal requirements existing approved Exchange Blueprint) upon submission of the declaration are not considered EHB,36 the base- at least 3 months prior to the date open letter will be the communication of the benchmark plan might cover some of enrollment is to begin for the State as an operational steps that a State must those non-EHB. Nonetheless, issuers SBE–FP; and must have in effect an complete in order to become an SBE– must treat those benefits as they would approved, or conditionally approved, FP, including the operational steps other non-EHB, such as those identified Exchange Blueprint and operational States are required to take with their in § 156.115(d),37 and the State must readiness assessment at least 2 months issuers. We plan to publish guidance on defray the cost. We proposed to codify prior to the date on which the Exchange these operational steps. this interpretation in § 155.170(a)(2). proposes to begin open enrollment as an At § 155.170(a)(3), we currently SBE–FP. If the State Exchange has a b. Additional Required Benefits (§ 155.170) require the Exchange to identify which conditionally approved Exchange additional State-required benefits, if Blueprint application, we proposed that Section 1311(d)(3)(B) of the any, are in excess of EHB. We proposed it would not be required to submit a Affordable Care Act permits a State, at to amend paragraph (a)(3) to designate new Blueprint application, but instead its option, to require QHPs to cover the State, rather than the Exchange, as must submit any significant changes to benefits in addition to the EHB, but the entity that identifies which State- that application for HHS approval at requires a State to make payments, required benefits are not EHB. We least 3 months prior to the date on either to the individual enrollee or to proposed this change because we which the Exchange proposes to begin the issuer on behalf of the enrollee, to believe insurance regulators are open enrollment as an SBE–FP. As part defray the cost of these additional State- generally more familiar with State- of HHS’s approval or conditional required benefits. In the 2016 Payment required benefits. We believe each State approval of the Exchange Blueprint or Notice, we instructed States to select a should determine the appropriate State amended Blueprint, these States must new EHB base-benchmark plan to take entity best suited to identify newly execute a Federal platform agreement effect beginning for the 2017 plan year. required benefits. Additionally, for and be required to coordinate with HHS The final EHB base-benchmark plans on a transition plan. consistency of terminology, we selected as a result of this process have proposed to amend paragraph (a)(3) to Lastly, we want to be clear that we 35 been made publicly available. replace the reference to ‘‘in excess of only proposed changes to the timelines Section 1311(d)(3)(B) of the EHB’’ with ‘‘in addition to EHB.’’ for submission of the Blueprint Affordable Care Act refers to situations In current § 155.170(c)(2)(iii), we application. We did not otherwise in which the State requires QHPs to require QHP issuers to quantify the cost propose any modifications to the cover benefits. That section is not attributable to each additional State- information and documents that States specific to State statutes, and we have required benefit and report their must submit as part of the Exchange interpreted that section to apply not calculations to the Exchange. We Blueprint application. only in cases of legislative action but proposed to designate the State as the We are finalizing our proposals as also in cases of State regulation, entity that receives issuer calculations proposed, except that, in order to guidance, or other State action. in paragraph (c)(2)(iii). Since the provide additional time for the Therefore, we proposed to reword Affordable Care Act requires the State to transition, we are amending the timing § 155.170(a)(2) to make clear that a remit a payment to an enrollee or issuer, of the Federal platform agreement, so benefit required by the State through we stated that we believe the calculation that it must be executed prior to action taking place on or before should be sent directly to the State approval or conditional approval of the December 31, 2011 is considered an rather than to the Exchange. Exchange Blueprint. EHB. Comment: Several commenters In the EHB Rule (78 FR 12837 through expressed concern that the proposed 36 The 2016 Payment Notice provides that States 12838), we discussed § 155.170(a)(2), are not expected to defray the cost of State-required Blueprint submission and approval which implements section 1311(d)(3)(B) benefits enacted on or after January 1, 2012 that timelines for a State transitioning to an of the Affordable Care Act. In our were required in order to comply with new Federal SBE–FP do not allow sufficient time for discussion of that provision, we requirements. (80 FR 10749, 10813 (Feb. 27, 2015)). a State and its issuers to make the 37 An issuer of a plan offering EHB may not provided that State-required benefits include routine non-pediatric dental services, necessary operational changes to routine non-pediatric eye exam services, long-term/ prepare for the State’s transition to the 35 Available at https://downloads.cms.gov/cciio/ custodial nursing home care benefits, or non- SBE–FP model, and for HHS to make an FinalListofBMPs_15_10_21.pdf. medically necessary orthodontia as EHB.

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The 2016 Payment Notice specified coverage by individual and small group employees, but not to employers with that a State may need to supplement QHPs does not have to be defrayed, 1–50 employees. This may arise because habilitative services if the base- because the State-required benefit does the State-required benefit was designed benchmark plan does not cover such not apply directly to those QHPs. to apply only in the large group market services. We noted that if a State We noted that some States have when the large group market included supplements the base-benchmark plan, imposed new benefit requirements only employers with more than 50 there is no requirement to defray the on individual and small group plans employees, but the State has since then cost of the benefits added through that are not QHPs such that only availed itself of the option to define a supplementation, as long as the State individual and small group plans sold small employer as an employer with 1– must supplement the base-benchmark to outside the Exchange must cover the 100 employees. comply with the Affordable Care Act or State-required benefit. We noted that a We noted that section 2702 of the PHS another Federal requirement. Examples QHP generally may be sold outside the Act and § 147.104 generally require an of such Federal requirements include: Exchanges in which case it would be issuer to offer all approved products to Requirements to provide benefits and subject to these new benefit any individual or employer in the services in each of the 10 categories of requirements. We cautioned States, market for which the product was EHB; requirements to cover preventive however, that imposing different benefit approved and to accept any individual services; requirements to comply with mandates depending on a plan’s status or employer that applies for any the Mental Health Parity and Addiction as a QHP or because it is sold through approved product in a given market. If Equity Act; and the removal of the Exchange may violate section 1252 a State elects to expand the definition of discriminatory age limits from existing of the Affordable Care Act. Under this small employer so that it covers benefits. section, State standards or requirements employers with 1–100 employees, all implementing, or related to, standards products approved for sale in the small In some States, the base-benchmark or requirements in title I of the Act must group market (defined by the State as 1– plan may be a large group (non- be applied uniformly within a given 100 employees) generally must be Medicaid HMO or State employee) plan. insurance market. Thus, if a State offered to employers with 1–100 We stated that we have received requires that non-QHPs in the employees. This effectively means that questions regarding State-required individual or small group market existing State benefits mandates that benefits that are embedded in those provide any benefits, under section apply to insurance coverage sold to large group base-benchmark plans. As 1252, the State must require QHPs sold employers with 51–100 employees stated earlier in this section, if the State- through the Exchange in that same would then effectively also apply to all required benefit in question was market to provide those same benefits, products sold to employers with 1–100 required by State action after December and consistent with our earlier stated employees. As long as the benefit was 31, 2011, applies directly to the QHP, policy at § 155.170(a)(2), States would required by State action taken on or and was not enacted for purposes of generally be required to defray the cost before December 31, 2011, the compliance with Federal requirements, of QHPs providing the required benefits expansion of coverage would not trigger the benefit is not considered EHB, even if they were required through State the requirement to defray, because the if the benefit is embedded in the base- action taking place after December 31, expansion was required to comply with benchmark plan. However, we stated 2011. Federal guaranteed availability laws. If that a benefit required only in the large We noted that the Protecting a State does not opt to expand the group market and reflected in a large Affordable Coverage for Employees Act, definition of small employer to 1–100 group base-benchmark plan is not an enacted in October 2015, amended the employees, then any State-required EHB for QHPs offered in the individual definitions of small employer and large benefits applicable in the large group or small group markets because such a employer in section 1304(b) of the market (including to employers with benefit requirement does not apply Affordable Care Act and section 2791(e) 51–100 employees) would continue to directly to those plans, and to the extent of the PHS Act such that a small not apply in the small group market. If it is included in the base-benchmark employer is generally 38 an employer a State-required benefit was imposed by plan, it may be substituted for, in with 1–50 employees, with the option State action taking place January 1, 2012 accordance with § 156.115(b). Therefore, for States to expand the definition of or later, then defrayal generally would the State would not have to defray the small employer to 1–100 employees.39 be required. We are finalizing our cost of individual and small group We noted that several States have proposals and clarifications as market QHPs covering State-required enacted benefit requirements that would proposed. benefits that are required in the large apply to small group insurance plans Comment: Several commenters agreed group market only. (However, to the offered to employers with 51–100 that a benefit required by a State extent the State permits large group through action taking place on or before plans to be sold as QHPs through the 38 Prior to enactment of the Protecting Affordable December 31, 2011 is considered an State’s Exchange, the State would have Coverage for Employees Act, small employer was EHB. Multiple commenters supported to defray the cost of the large group defined to mean, in connection with a group health the proposal that States and not the QHPs covering the mandated benefit.) plan with respect to a calendar year and a plan year, Exchange identify what is in addition to an employer who employed an average of at least We noted that plans subject to the EHB 1 but not more than 100 employees on business EHB. requirements offered in the individual days during the preceding calendar year and who Response: We agree that a benefit and small group markets in those States employs at least 1 employee on the first day of the required by action taking place on or would have to be substantially equal to plan year. In case of plan years beginning before before December 31, 2011 is considered January 1, 2016, a State was able to elect to define the base-benchmark plan, and therefore small employer by substituting ‘‘50 employees’’ for EHB; this has been our policy since may cover the State-required benefit as ‘‘100 employees’’. For ease of reference with regard releasing the EHB Rule. We recognize EHB since it is embedded in the base- to this section, we will refer to employers as having that States regulators are generally more benchmark plan. In such a case, we 1–50 or 1–100 employees. familiar with State-required benefits 39 States that elect to extend the small employer proposed to clarify that the benefit is an definition were requested to notify CMS of their than an Exchange. We believe each State EHB because it is covered by the base- election by , 2015 at marketreform@ should determine the appropriate State benchmark plan, but the cost of cms.hhs.gov. entity best suited to identify newly

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required benefits. Therefore, we are 155.170(c)(2)(i) through (iii) states that for plan management functions, finalizing the rule as proposed. QHP issuers’ calculations must (1) be including QHP certification functions, Comment: Numerous commenters based on an analysis performed in subject to certain rules requiring the questioned how States can supplement accordance with generally accepted SBE–FP to require its QHP issuers to an EHB category without assuming the actuarial principles and methodologies; comply with certain FFE standards financial burden. Multiple commenters (2) conducted by a member of the governing QHPs and issuers (as sought guidance on how to determine American Academy of Actuaries; and proposed in § 155.200(f)(2) of this that a State requirement, particularly a (3) reported to the State. proposed rule), and consumer support habilitative services requirement, goes Comment: Some commenters functions, subject to FFE rules beyond EHB, and how to determine the disagreed with our interpretation that governing consumer assistance additional cost attributed to each such State-required benefits that apply only functions. additional required benefit. to individual and small group plans that Under § 155.200(f)(1), we proposed Response: The ten categories of EHB, are not QHPs may violate section 1252 that a State may receive approval or and the process for supplementing base- of the Affordable Care Act. conditional approval to operate an SBE– benchmark plans to establish EHB- Response: Section 1252 of the FP through the Blueprint process under benchmark plans, are outlined in Affordable Care Act provides that State proposed § 155.106(c) and meet its § 156.110. In the 2016 Payment Notice requirements under Title I of the obligations under § 155.200(a) by (80 FR 10749, 10813), we stated that Affordable Care Act must be applied entering into a Federal platform benefit requirements enacted by States uniformly to all health plans in an agreement with HHS. Through the after December 31, 2011 that directly insurance market. We reiterate that a Federal platform agreement, an SBE–FP apply to QHPs, and that were not requirement that depends upon a plan’s would agree to rely on HHS for services enacted for purposes of compliance status as a QHP or whether it is sold related to the individual market with Federal requirements are not through the Exchange may violate Exchange, the SHOP Exchange, or both considered EHB. We also stated that if section 1252 of the Affordable Care Act. the individual market and SHOP the base-benchmark plan does not Comment: Some commenters Exchanges. The Federal platform include coverage for habilitative expressed concerns about agreement would specify the Federal services, the State may define that discriminatory benefit design, and services on which the State Exchange benefit category. There is no sought further guidance regarding what relies, the user fee (as specified at requirement to defray the cost of the benefit designs could be deemed § 156.50(c)(2)) that HHS will collect State-required benefits, as long as the discriminatory. from issuers in that SBE–FP for the State requirement is consistent with Response: Under § 156.125(a), an Federal services, and other mutual section 1302 of the Affordable Care Act issuer does not provide EHB if its obligations relating to the arrangement, and § 156.110. We also note that benefit design, or the implementation of including obligations for the transfer of § 156.110(f) allows States to determine its benefit design, discriminates based data. The Federal platform agreement services included in the habilitative on an individual’s age, expected length would specify expectations between the services and devices category if the of life, present or predicted disability, State and HHS across various base-benchmark plan does not include degree of medical dependency, quality operational areas. We indicated our coverage; and that States are not of life, or other health conditions. intent to release the Federal platform expected to defray the cost of State- Furthermore, plans may not establish agreement at a later date. We noted that required benefits enacted after annual dollar limits on individual items at this point the Federal services on December 31, 2011 that were required in or services that are EHB. We will which SBE–FPs may rely will come as order to comply with new Federal consider providing further guidance an entire package. That is, HHS will not requirements. We are affirming that the regarding discriminatory benefit design at this time offer a ‘‘menu’’ of Federal State has the flexibility to define in the future. services from which an SBE–FP may habilitative services; however, the State select some but not other services must use a reasonable interpretation as 3. General Functions of an Exchange available on the Federal platform. to what services are habilitative. a. Functions of an Exchange (§ 155.200) However, we indicated we would Further, a State may also modify that explore the feasibility of doing so in the definition in future years, as medical We proposed a technical correction to future. evidence and treatments evolve. We § 155.200(a) to include a reference to Although the SBE–FPs would retain note that any State definition must subpart M, which establishes oversight primary responsibility for certifying comply with applicable and program integrity standards for QHPs and overseeing QHPs and issuers, nondiscrimination rules. This final rule State Exchanges, and subpart O, which we proposed under § 155.200(f)(2) to requires the State to determine, based establishes quality reporting standards require an SBE–FP to establish and on these standards, when State for Exchanges. oversee certain requirements for its requirements require issuers to provide We also proposed to amend § 155.200 QHPs and QHP issuers that are no less benefits in addition to EHB. by adding a paragraph (f) to address strict than the requirements that apply Section 155.170(c)(1) requires issuers SBE–FPs. This arrangement is intended to QHPs and QHP issuers on an FFE. We to quantify the cost attributable to each to permit a State Exchange to leverage proposed these requirements to include additional State-required benefit. We are existing Federal assets and operations the existing and proposed standards finalizing our proposal that QHP issuers by relying on HHS services for under the following sections: must report their calculation to the performing certain Exchange functions, § 156.122(d)(2) (the requirement for State. Since the State is required by particularly eligibility and enrollment QHPs to make available published up- statute to remit a payment to an enrollee functions. The SBE–FP would also rely to-date, accurate, and complete or issuer, we believe the calculation on HHS to perform certain consumer formulary drug list on its Web site in a should be sent directly to the State call center functions and casework format and at times determined by rather than to the Exchange. The actual processes, and maintain related HHS); § 156.230 (network adequacy cost attributed can then be made public information technology infrastructure. standards); § 156.235 (essential by the State, if it so chooses. Section The SBE–FP would retain responsibility community providers standards);

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§ 156.298 (meaningful difference § 156.705 and the compliance reviews may require State specific language in standards); § 156.330 (changes of for QHP issuers standards of § 156.715, contracts. ownership of issuers requirement); will ensure that the SBE–FP has Response: We are finalizing the § 156.340(a)(4) (QHP issuer compliance authority at least as strong as that regulations as proposed. We intend to and compliance of delegated and possessed by HHS to enforce describe the availability of new downstream entities requirements); compliance with these standards and capabilities of the Federal platform that § 156.705 (maintenance of records will ensure that the SBE–FP and HHS would allow for SBE–FPs to select standard); § 156.715 (compliance are able to access all records upon certain Federal services to use or to reviews standard); and § 156.1010 request from the issuers in the SBE–FPs. customize particular functionality in (casework standards). Applying the casework standards at future rules, through our annual Applying the changes of ownership § 156.1010 will ensure that the SBE–FP rulemaking process, as well as in future issuers’ requirement to SBE–FPs will and HHS can respond to problems about versions of the Federal platform help fulfill the Federal platform’s need which they both bear responsibility. agreement. At this time we do not for data and technical consistency. It Since SBE–FPs must use the Federally foresee State-specific customization of will ensure that HHS maintains the operated Health Insurance Casework the language in the Federal platform most accurate and updated information System (HICS) for handling consumer agreement, but will engage with States to present a consistent experience to casework and meeting casework as part of the process of finalizing the consumers through its branded resolution timeframes as part of agreement. platform, HealthCare.gov. HHS must be utilizing the Federal platform for Comment: We received a comment able to monitor and provide regulatory eligibility and enrollment functions, the that the proposed requirement to use the oversight over change in control SBE–FP would not be overseeing Federally operated HICS system creates situations with regards to the operation casework processes. However, as with procedural burdens on State-based of the Federal platform. Change in all other Exchange types, State consumer advocacy staff. The control has a significant operational departments of insurance will still commenter recommended that impact on the Federal platform and handle appropriate consumer consumer complaints for SBE–FPs requires the expenditure of considerable complaints related to issuers in their should be referred directly to the appropriate State authority for technical resources to effectuate the States. For cases that are Exchange- resolution. change throughout the multiple systems related, or those in which the consumer Response: We are finalizing the that constitute the Federal platform. has chosen to contact the Exchange even Applying the formulary drug list, regulations as proposed. The Federally after contacting the appropriate network adequacy, meaningful operated HICS system is closely tied to department of insurance, HHS would difference, and essential community the SBE–FP’s utilization of the Federal oversee the routing and resolution of providers standards will ensure that all platform for eligibility and enrollment casework. HHS’s intent is to work QHPs on HealthCare.gov meet a functions. While SBE–FPs must rely on collaboratively with the SBE–FP, similar consistent minimum standard and that the Federally operated HICS system for to how HHS works with SPMs. consumers obtaining coverage as a processing casework, we are open to result of applying through Finally, we proposed under future possibility of HHS coordination HealthCare.gov are guaranteed plans § 155.200(f)(3) that HHS will work with with SBE–FP States on consumer that meet these minimum standards. SBE–FPs to enforce the FFE standards communications pertaining to casework HHS has designed and implemented listed under § 155.200(f)(2) directly and complaints to the extent it is policy and operations for the FFE such against SBE–FP issuers or plans who do operationally feasible. Should such that shoppers at HealthCare.gov can not meet these standards. In that coordination be operationally feasible, experience a consistent standard of circumstance, we proposed that HHS the roles and responsibilities between service. We proposed that SBE–FPs that would have the authority to suppress a HHS and the State would be specified wish to rely on the HealthCare.gov plan under § 156.815. This will ensure through the Federal platform agreement. platform require their issuers to meet that consumers shopping for coverage Comment: Regarding our proposals to certain minimum standards as well, on HealthCare.gov have access to plans apply certain FFE QHP standards to since their consumers are obtaining the that are in compliance with the FFE SBE–FP issuers, along with our coverage through HealthCare.gov. SBE– standards with which SBE–FP issuers proposed requirements pertaining to the FPs have the flexibility to exceed these must comply as a condition of offering enforcement of those standards, we minimum standards to the extent they QHPs through a State Exchange on the received some comments that were do not present display problems on Federal platform. supportive and comments that were HealthCare.gov. Although we clearly We intend to work closely and opposed. The commenters that opposed recognize that the SBE–FPs are SBEs, collaboratively with SBE–FPs, and the proposed requirements stated that and thus legally distinct from FFEs, this believe that our collaboration with SBE–FP States should maintain sole difference will not always be apparent States that currently use the Federal authority for setting standards for, and to HealthCare.gov consumers. Not platform with respect to enforcement certifying, QHPs. One commenter stated having these standards apply may lead matters has been close and effective. We that using two sets of enforcement to consumer confusion and dilution of are finalizing our proposals as proposed. standards would lead to consumer harm consumer goodwill with respect to the Comment: One commenter indicated and insurer confusion. Another plans available on HealthCare.gov. The that the inability of the Federal platform commenter expressed concern that the States would still be responsible for to accommodate State customization for application of FFE standards could conducting QHP certification reviews SBE–FPs is a major disincentive for result in inconsistent treatment of off- for these standards. SBEs to use the Federal platform. The Exchange QHPs and recommended that Applying the QHP issuer compliance commenter also expressed concerns SBE–FP QHPs should be governed by and compliance of delegated or about the proposed Federal platform the same State rules as SBEs to ensure downstream entities requirement at agreement not being able to be market parity. Another commenter § 156.340(a)(4), which involves the customized by individual State, as State stated that the proposed requirements maintenance of records standards of procurement and contracting officials may cause confusion regarding the legal

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status of SBE–FPs and the true extent to consumer assistance features is regarding their health plan, coverage, or which certain Federal Exchange duplicative and would cause confusion a determination under such plan or requirements and limitations apply. One among consumers. Commenters also coverage. We have also established commenter recommended that we recommended further clarification under § 155.205(d) and (e) that each explicitly state in the final rule that the between a toll-free call center and a toll- Exchange must provide consumer implementing guidance issued through free telephone hotline, and defining assistance, outreach, and education the annual Letter to Issuers also applies minimum functional requirements of a functions, which must include a to issuers on SBE–FPs. toll-free hotline. Commenters also asked Navigator program and can include a Response: We are finalizing the rules that HHS clarify the minimum non-Navigator assistance personnel as proposed. HHS will coordinate with requirements for the SBE–FPs program. the SBE–FP on enforcement of FFE informational Web site. We proposed to amend § 155.210(e) standards listed under § 155.200(f)(2) Response: We are finalizing the by adding a new paragraph (e)(8) to through plan suppression. SBE–FP proposed requirement for the SBE–FP to require Navigators in all Exchanges to States are being required to incorporate operate a toll-free hotline and provide targeted assistance to serve certain FFE QHP standards into their informational Web site, as this is based underserved or vulnerable populations State’s QHP standards and QHP on statutory minimum functional within the Exchange service area. certification process; thus, there would requirements that an SBE (including an Navigators already must have expertise be only one set of QHP standards that SBE–FP) must meet. A toll-free call in the needs of underserved and apply to all issuers in a particular SBE– center includes capabilities for vulnerable populations, and we believe FP State. An SBE–FP would have the processing eligibility and enrollment that also requiring Navigators to provide flexibility to exceed those FFE QHP actions and accessing consumer targeted assistance to these populations standards when setting their QHP information to process these actions, is critical to improving access to health standards and QHP certification process whereas a toll-free hotline includes the care for communities that often should they elect to. There may be capability to provide information to experience a disproportionate burden of differences in standards set by an SBE– consumers and appropriately direct disease. We also believe that Navigators FP State for QHPs that participate in the consumers to the Federally operated call should focus their outreach and Exchange versus plans that are offered center or HealthCare.gov to apply for, enrollment assistance efforts on harder- outside of the Exchange, which can also and enroll in, coverage through the to-reach populations and the remaining occur in SBE and FFE States. Moving Exchange. Both the toll-free hotline and uninsured. forward, the annual Letter to Issuers the informational Web site that an SBE– Because the characteristics of will include implementing guidance FP is required to operate must include underserved and vulnerable populations that is specific to SBE–FPs. the capability to direct consumers to the may vary over time and from region to Federal platform services, including the region, we proposed to permit each b. Consumer Assistance Tools and FFE call center and HealthCare.gov Web Exchange to define and identify the Programs of an Exchange (§ 155.205) site, to apply for, and enroll in, underserved and vulnerable populations We proposed two amendments to Exchange coverage. We are finalizing in its service area, and to update these § 155.205 to address functions of an the requirement for SBE–FPs to operate definitions as appropriate. This could SBE–FP. First, because an SBE–FP relies a toll-free hotline and informational include an Exchange allowing its on HHS to carry out eligibility and Web site. Navigator grantees to propose which enrollment functions, which would communities to target, for the include relying on the FFE call center to c. Standards Applicable to Navigators Exchange’s approval (for example, in carry out these functions, we proposed Under §§ 155.210 and 155.215; their grant applications). In FFEs, we to amend § 155.205(a) to exempt an Standards Applicable to Consumer proposed to identify populations as SBE–FP from the requirement to operate Assistance Tools and Programs of an vulnerable or underserved through our Exchange Under § 155.205(d) and (e); a toll-free call center, and instead Navigator funding opportunity and Standards Applicable to Non- provide that an SBE–FP must at a announcements and to give FFE Navigator Assistance Personnel in an minimum operate a toll-free telephone Navigator grant applicants an FFE and to Non-Navigator Assistance hotline to respond to requests for opportunity to propose additional Personnel Funded Through an Exchange assistance to consumers in their State, communities to target during the grant Establishment Grant (§§ 155.205, in accordance with section 1311(d)(4)(B) application process. We proposed that 155.210 and 155.215) of the Affordable Care Act. the primary criteria used to identify Secondly, we proposed to amend To help consumers apply for and such populations within the FFEs § 155.205(b) by adding paragraph (b)(7) enroll in QHPs and insurance would be that the population is to provide that an SBE–FP must, at a affordability programs through the disproportionately without access to minimum, operate an informational Exchange, we established consumer coverage or care, or at a greater risk for Internet Web site in accordance with assistance programs, including the poor health outcomes. Members of these section 1311(d)(4)(C) of the Affordable Navigator program described at section populations could be identified by age Care Act. The informational Web site 1311(d)(4)(K) and 1311(i) of the groups, demographics, disease, would direct consumers to Affordable Care Act and § 155.210. geography, or other characteristics as HealthCare.gov to apply for, and enroll Among other duties, Navigators are defined or approved by the Exchange. In in, coverage through the Exchange. required to conduct public education FFEs, our proposal would apply We are also finalizing an amendment activities to raise awareness of the beginning with the application process to § 155.205(b)(1), related to availability of QHPs; to distribute fair for Navigator grants awarded in 2018. standardized options. For a discussion and impartial information concerning Although we did not propose to of this amendment, please see the enrollment in QHPs and the availability extend this requirement to certified preamble discussion of standardized of Exchange financial assistance; to application counselors and non- options. facilitate enrollment in QHPs; and to Navigator assistance personnel subject Comment: Some comments stated that provide referrals for any enrollee with a to § 155.215, we stated in the preamble having SBE–FPs maintain these grievance, complaint, or question to the proposed rule that we would

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encourage certified application Navigators, non-Navigator assistance coverage or care, or are at a greater risk counselors and non-Navigator assistance personnel, and certified application for poor health outcomes. personnel subject to § 155.215 to counselors in the FFEs. Comment: We received several prioritize assisting the vulnerable and Comment: We received several comments requesting that HHS further underserved populations identified by comments regarding how Exchanges explain how Navigators are expected to the Exchange in their communities, and should identify vulnerable or target or focus their work on these we recognize that many of these underserved populations. Many populations, while still fulfilling the assisters already focus their efforts on commenters suggested data sources to requirement to assist any consumer such populations. consult when identifying these seeking assistance. Commenters Navigators would not be serving these populations. Several commenters expressed concern that this requirement target populations exclusively, since all requested that HHS provide a list of might compel Navigator organizations to Navigators are required to assist any underserved or vulnerable populations, limit their services to certain consumer seeking assistance. As we made up of populations where there populations or create such a perception. have explained previously, all was either a documented lower rate of Response: This provision does not Navigators should have the ability to insurance prior to the implementation require Navigators to limit their services help any individual who seeks of the Affordable Care Act or where to the specific populations they are assistance, even if that consumer is not current enrollment rates are lower than targeting, and we rely on Navigators’ a member of the community or group those of other populations. Commenters creativity and local knowledge to the Navigator intends to target (see 78 recommended specific populations for structure their programs so that they FR 20589; 78 FR 42830; 79 FR 30270; identification, including low-income target one or more vulnerable and 79 FR 30278). individuals and families; people of underserved populations while remaining open to all consumers. For We are finalizing this provision as color; women; people living with HIV/ proposed. example, a Navigator grantee might AIDS; people living with disabilities; Comment: We received many open an application and enrollment rural communities; lesbian, gay, comments supporting our proposal to assistance location in an area populated bisexual, and transgender people; require Navigators in all Exchanges to by a community that has historically people with limited English proficiency; provide targeted assistance to serve experienced heath care access barriers, people with transportation limitations; underserved or vulnerable populations and reach out to community members in people with mental health needs; within the Exchange service area. ways that are culturally competent and children and youth with special health Commenters agreed that reaching these linguistically appropriate to that care needs; cancer survivors; low populations is important to increasing community, while remaining ready to awareness among remaining uninsured income immigrants; patients with rare serve any consumer seeking assistance. consumers regarding coverage options diseases; survivors of domestic violence; In the FFEs, we will provide more available through the Exchange, helping abandoned spouses; and pregnant information regarding Navigator duties, consumers find affordable coverage that women enrolled in coverage that is not scope of activities, and program meets their needs, and narrowing health minimum essential coverage. In requirements in the Navigator funding disparities. In addition, commenters addition, several commenters requested opportunity announcement. SBEs, stated that Navigators are uniquely that HHS ensure that SBEs consult with including SBE–FPs, have flexibility to positioned to serve these populations local stakeholders when defining provide further guidance in this area as because of established ties and pre- underserved and vulnerable well. Finally, we continue to remind existing relationships. Commenters also populations. Navigators that we interpret Navigators’ agreed that this provision should not be Response: Because the characteristics duty to provide fair and impartial extended to certified application of underserved and vulnerable information and services under counselors and non-Navigator assistance populations may vary over time and § 155.210(e)(2) to require that all personnel subject to § 155.215, but said from region to region, we believe that Navigators should have the ability to that it would be helpful for HHS to SBEs are best positioned to identify the help any individual who seeks educate these assister types about this underserved and vulnerable populations assistance from the Navigator, even if kind of targeted assistance and how they in their States who most need targeted that consumer is not a member of the can support Navigators’ efforts. assistance and support. Therefore, we community or group the Navigator Response: We agree that requiring do not intend to provide a list or intends to target. Navigators to target assistance to otherwise identify these populations in Comment: We received several underserved and vulnerable populations SBEs, including SBE–FPs. We comments regarding the selection is critical to improving access to health encourage SBEs to work with local process for Navigator grantees. Some coverage. We are not extending this stakeholders and Navigators to identify commenters requested that HHS requirement to certified application populations to target, using reliable encourage Exchanges to prioritize entity counselors and non-Navigator assistance sources of data. For FFEs, HHS will types (such as safety net providers) or personnel subject to § 155.215 in this identify vulnerable or underserved applicants capable of reaching final rule, but continue to encourage populations through our Navigator underserved or vulnerable populations, these assister types to prioritize funding opportunity announcements and some recommended specific reaching and assisting the vulnerable and will give FFE Navigator grant populations of Navigator grant and underserved populations identified applicants an opportunity to propose applicants that should be given by the Exchange in their communities, additional communities to target during preference. In addition, commenters and we recognize that many of these the grant application process, beginning requested that HHS ensure that assister types already focus efforts on with the application process for Exchanges adjust their grant-making such populations. HHS has previously Navigator grants awarded in 2018. The criteria to account for the greater time and will continue to provide technical primary criteria the FFEs will use to and resources necessary to reach assistance and resources on reaching identify vulnerable or underserved underserved and vulnerable and serving a variety of vulnerable and populations will be if they are communities. A few commenters underserved populations to all disproportionately without access to requested that Navigators be required or

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encouraged to collaborate with commenters were concerned about how proposal to include helping consumers providers and other organizations, such these activities would be funded. file appeals of eligibility determinations as patient-focused and community- Response: Under § 155.210(b)(2)(i), made by an Exchange (including SHOP based organizations that are also Navigators in all Exchanges must be Exchanges) related to enrollment in a engaged in consumer health and patient trained in the needs of underserved and QHP, special enrollment periods, education, in order to ensure that vulnerable populations. Under exemptions from the individual shared underserved and vulnerable populations § 155.215(b)(2)(xii), Navigators in FFEs responsibility payment that are granted are receiving assistance. A few must additionally receive training on by the Exchange, participation as an commenters also requested that HHS working effectively with individuals employer in a SHOP, and any insurance develop guidance for FFE Navigators, with limited English proficiency; people affordability program, including FFE non-Navigator assistance personnel, with a full range of disabilities; and eligibility determinations for Exchange and FFE certified application counselors vulnerable, rural, and underserved financial assistance, Medicaid, the on collaborating and forming populations. SBEs, including SBE–FPs, Children’s Health Insurance Program partnerships with groups that are are responsible for administering their (CHIP), and Basic Health Programs. engaged in reaching populations, own Navigator programs, including We also proposed at § 155.210(e)(9)(ii) consumer health, and patient education. funding and budgets, and may provide to require that Navigators in all Response: For FFEs, we will take or require additional training and Exchanges help consumers understand these comments into consideration technical assistance to address the and apply for exemptions from the when drafting Navigator selection needs of the populations they have individual shared responsibility criteria for the Navigator funding identified as vulnerable and payment that are granted by the opportunity announcements for 2018 underserved. In FFEs, Navigator Exchange. We explained that this and future years. We agree that local applicants will have an opportunity to assistance with Exchange-granted collaboration and leveraging community propose budgets in their Navigator exemptions would include informing partnerships might help Navigators applications to cover the costs of these consumers about the requirement to reach marginalized communities, and activities. maintain minimum essential coverage we intend to issue guidance for FFE In § 155.210, we proposed to add and the individual shared responsibility Navigators with additional information paragraph (e)(9) to specify that payment; helping consumers fill out and on collaborating or partnering with Navigators in all Exchanges would be submit Exchange-granted exemption other community organizations. SBEs, required to help consumers with certain applications and obtain any necessary including SBE–FPs, are responsible for other types of assistance, including forms prior to or after applying for the administering their own Navigator post-enrollment assistance. We designed exemption; explaining what the programs, including determining their this proposal to ensure that consumers exemption certificate number is and own selection process, consistent with would have access to skilled assistance how to use it; and helping consumers statutory and regulatory authority. beyond applying for and enrolling in understand and use the Exchange tool to Comment: We received several health coverage, including, for example, find bronze plan premiums. We comments regarding the timeframes in assistance with the process of filing explained that this duty would also which these populations would be Exchange eligibility appeals or with include explaining the general purpose identified. Commenters requested that applying through the Exchange for of Internal Revenue Service (IRS) Form Exchanges regularly re-identify these exemptions from the individual shared 8965, Health Coverage Exemptions, to populations. Some commenters responsibility payment, providing basic consumers, consistent with IRS requested that these populations be information about reconciliation of published guidance on the topic, and identified at least 3 months prior to the premium tax credits, and understanding explaining how to access this form and beginning of open enrollment and that basic concepts related to using health related tax information on IRS.gov. applicants be allowed to identify new coverage. We discussed the statutory Navigators may not provide tax populations for each grant cycle. authority for these proposals in the assistance or interpret tax rules within Response: SBEs, including SBE–FPs, preamble to the proposed rule. their capacity as Exchange Navigators, retain flexibility to administer their own We proposed at § 155.210(e)(9)(i) to and our proposal would not require Navigator programs, and we encourage require Navigators in all Exchanges to Navigators to help consumers apply for SBEs to regularly revisit the ways they help consumers with the process of exemptions claimed through the tax define and identify vulnerable and filing appeals of Exchange eligibility filing process. We noted that we would, underserved populations to ensure that determinations. We did not propose to however, interpret the assistance the results remain current and relevant. establish a duty for Navigators to provided under § 155.210(e)(9)(ii) to In FFEs, we will continue to prioritize represent a consumer in an appeal, sign include helping consumers generally publicizing and awarding Navigator an appeal request, or file an appeal on understand the availability of grants in a transparent and timely the consumer’s behalf. We explained exemptions claimed through the tax fashion. We intend to identify these that we believe that helping consumers filing process and how to obtain them. populations when each funding understand Exchange appeal rights We noted that this interpretation would opportunity announcement is when they have received an adverse help ensure that Navigators share published, at least 60 days prior to the eligibility determination, and assisting information about the full scope of date applications are due. them with the process of completing possible exemptions while not Comment: Several commenters and submitting appeal forms, would providing actual tax assistance or tax requested that HHS and States ensure help to facilitate enrollment and would advice. We requested comment on that Navigators receive adequate help consumers obtain fair and whether we should require that, prior to resources, including funding and impartial information about enrollment, providing this assistance and training, to work with vulnerable and including information about available information, Navigators provide underserved populations. Commenters exemptions from the individual shared consumers with a disclaimer stating that urged HHS to tailor training responsibility payment that would help they are not acting as tax advisers and opportunities to population-specific consumers decide whether or not to cannot provide tax advice within their messages and content. Several enroll in coverage. We interpreted this capacity as Exchange Navigators. We

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also sought comment on whether a would be expected to familiarize on this process; and basic concepts Navigator’s duty to provide assistance themselves with the availability of related to health coverage and how to with filing exemption applications materials on IRS.gov, including the use it. under proposed § 155.210(e)(9)(ii) and Form 8962 instructions, IRS Publication We noted that providing assistance filing appeals of exemption application 974 Premium Tax Credit, and relevant with certain other post-enrollment denials under proposed FAQs, and to refer consumers with issues already falls within the scope of § 155.210(e)(9)(i) should be limited, in questions about tax law to those existing required Navigator duties. We light of the resource limitations that resources or to other resources, such as explained that we interpret the existing Navigators and their funding agencies free tax return preparation assistance requirements to facilitate enrollment in may face. We sought comment on from the Volunteer Income Tax QHPs under section 1311(i)(3)(C) of the whether this assistance should be Assistance or Tax Counseling for the Affordable Care Act and § 155.210(e)(3), limited, for example, to consumers who Elderly programs. and to provide information that assists have applied for or have been denied To help ensure consumers have consumers with submitting the coverage or financial assistance, as seamless access to Exchange-related tax eligibility application under opposed to those who only seek to avoid information beyond the basic § 155.210(e)(2), to include assistance the individual shared responsibility information that Navigators can provide, with updating an application for payment, in order not to reduce the we proposed at § 155.210(e)(9)(v) that coverage through an Exchange, assistance available to consumers Navigators be required to refer including reporting changes in seeking coverage. consumers to licensed tax advisers, tax circumstances and assisting with In addition, we proposed at preparers, or other resources for submitting information for eligibility § 155.210(e)(9)(iii) to require Navigators assistance with tax preparation and tax redeterminations. to help consumers with the Exchange- advice related to consumer questions Additionally, we explained in the related components of the premium tax about the Exchange application and proposed rule preamble our credit reconciliation process, such as by enrollment process, exemptions from interpretation that Navigators are ensuring they have access to their Forms the requirement to maintain minimum already permitted under existing 1095–A, Health Insurance Marketplace essential coverage and the individual statutory and regulatory provisions to Statement, and receive general, high- shared responsibility payment, and help with a variety of other post- level information about the purpose of premium tax credit reconciliation. enrollment issues. For example, this form that is consistent with We proposed at § 155.210(e)(9)(iv) to Navigators may educate consumers published IRS guidance on the topic. require Navigators in all Exchanges to about their rights with respect to We explained that under the proposal, help consumers understand basic coverage available through an Exchange, Navigators would be required to help concepts related to health coverage and such as nondiscrimination protections, consumers obtain IRS Forms 1095–A how to use it. We explained that these prohibitions on preexisting condition and 8962, Premium Tax Credit (PTC), activities could be supported by existing exclusions, and preventive services and the instructions for Form 8962, and resources such as the HHS From available without cost sharing. to provide general information, Coverage to Care initiative, which we Navigators may also assist consumers consistent with applicable IRS encouraged Navigators to review, and with questions about paying premiums guidance, about the significance of the which is now available in multiple for coverage enrolled in through an forms. Navigators would also be languages at https:// Exchange and help consumers obtain required to help consumers understand marketplace.cms.gov/c2c. We explained assistance with coverage claims denials. (1) how to report errors on the Form that this proposal would improve We are finalizing the proposals with 1095–A; (2) how to find silver plan consumers’ access to health coverage several modifications to paragraphs premiums using the Exchange tool; and information both when selecting a plan (b)(2) and (e)(9). We are revising the (3) the difference between advance and when using their coverage. We requirement that Navigators must payments of the premium tax credit and anticipated that this assistance would provide the post-enrollment and other the premium tax credit and the potential vary depending on each consumer’s assistance activities described in implications for enrollment and re- needs and goals. § 155.210(e)(9) to give SBEs the option enrollment of not filing a tax return and To ensure that all Navigators receive of requiring or authorizing any of these not reconciling any advance payments training in every area for which we activities, and to make all of these of the premium tax credit that were paid proposed a corresponding Navigator activities required in FFEs under on consumers’ behalf. duty, we proposed at § 155.210(b)(2)(v) Navigator grants awarded in 2018 or any As noted above, Navigators may not through (viii) to require all Exchanges, later year, and optional (but authorized) provide tax assistance or advice, or including SBEs, to develop and before then. interpret tax rules and forms within disseminate training standards to be met We are revising the training their capacity as Exchange Navigators, by all entities and individuals carrying requirements under § 155.210(b)(2) to but their expertise related to the out Navigator functions to ensure specify that in any Exchange opting to consumer-facing aspects of the expertise in: The process of filing require Navigators to perform any of the Exchange, including eligibility and appeals of Exchange eligibility assistance topics specified in paragraph enrollment rules and procedures, determinations; general concepts (e)(9), the training topic corresponding uniquely qualifies them to help regarding exemptions from the to the required paragraph (e)(9) consumers understand and obtain requirement to maintain minimum assistance topic would also be required. information from the Exchange that is essential coverage and the individual Because all assistance topics specified necessary to the premium tax credit shared responsibility payment, in paragraph (e)(9) will be required in reconciliation process. We indicated including the application process for FFEs under Navigator grants awarded in that because this proposal would exemptions granted through the 2018 or any later year, all training topics include a requirement that Navigators Exchange, and IRS resources on will be required in all FFEs under provide consumers with information exemptions; the Exchange-related Navigator grants awarded in 2018 or any and assistance understanding the components of the premium tax credit later year. We are adding a training availability of IRS resources, Navigators reconciliation process and IRS resources provision at § 155.210(b)(2)(ix) to ensure

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that Navigators who are required under assistance beyond enrollment would be required in FFEs beginning with paragraph (e)(9)(v) to provide referrals help Navigators maintain relationships Navigator grants awarded in 2018. to licensed tax advisers, tax preparers, with consumers across coverage years, However, we want to emphasize that or other resources are also trained on which may be vital to successful FFE Navigator grantees will be this topic. enrollment, reenrollment, coverage authorized to provide assistance with We are adding language to utilization, and coverage continuity for any of the topics listed in § 155.210(e)(9) §§ 155.210(e)(6)(i), 155.215(g)(1), and some consumers. Several commenters before 2018, when providing assistance 155.225(f)(1) to require that, prior to stated that SBEs should have the in all those topics will be required of providing assistance, Navigators, non- flexibility to choose whether to require them. If FFE Navigator grantees choose Navigator assistance personnel subject Navigators in their States to perform to provide any of the assistance to § 155.215, and certified application these additional functions. Other specified in § 155.210(e)(9) before 2018, counselors must provide consumers commenters disagreed that post- we would expect them to familiarize with a disclaimer stating that they are enrollment assistance falls within themselves with related needs in their not acting as tax advisers or attorneys Navigators’ statutorily authorized communities and build competency in when providing assistance as duties. One commenter recommended the assistance activities they are Navigators, non-Navigator assistance delaying implementation of these providing. As we noted in the preamble personnel, and certified application requirements for 2 years to give States to the proposed rule, under counselors (respectively), and cannot time to establish and implement § 155.215(b)(2), Navigators in FFEs must provide tax or legal advice within their training requirements, and to give already be trained on the tax respective capacities as Navigators, non- Navigators time to become familiar with implications of enrollment decisions, Navigator assistance personnel, and these new requirements. Several the individual responsibility to have certified application counselors. commenters recommended making health coverage, eligibility appeals, and We are also revising the assistance these activities optional for grantees. rights and processes for QHP appeals provisions at paragraph (e)(9) as follows: Response: We agree that SBEs should and grievances. FFE Navigators are also • To make it more clear that already required under § 155.215(b)(2) Navigator assistance with Exchange have the flexibility to determine effective approaches to post-enrollment to receive training on applicable eligibility appeals under paragraph administrative rules, processes, and (e)(9)(i) does not require Navigators to and other Navigator assistance based on local experience. For example, some systems related to Exchanges and QHPs. help consumers through the entire HHS will continue to build and improve SBEs make the proposed types of Exchange eligibility appeals process, we its training materials in these areas, and assistance available to consumers have added the word ‘‘understanding’’ in 2018 will expand on the formal FFE through different types of community- to this provision. Navigator training that HHS already based consumer advocacy and patient • To make minor changes to provides on the new assistance topics advocacy organizations, and business paragraphs (e)(9)(ii) and (v) to ensure listed in § 155.210(e)(9). Until then, in associations and tax clinics, rather than consistent usage of the term ‘‘individual addition to HHS’s existing formal from Navigators. We do not want to shared responsibility payment,’’ and to training, we will continue to provide compel SBEs to disrupt or replace make a minor change to paragraph FFE Navigators with additional successful consumer assistance (e)(9)(ii) to consistently use the term information related to the new ‘‘claim’’ to describe how consumers strategies, and therefore the final rule assistance activities through informal apply for exemptions through the tax gives SBEs, including SBE–FPs, the webinars, newsletters, and technical filing process. flexibility to decide whether or not they assistance tools like fact sheets and slide • To remove ‘‘understanding’’ from will require or authorize their presentations. FFE Navigator grantees the beginning of paragraph (e)(9)(iii) Navigators to provide any or all of the that opt to carry out any of the because we interpret assistance with assistance topics listed at assistance activities in § 155.210(e)(9) Exchange-related components of the § 155.210(e)(9). Any SBE opting to should draw upon these materials to premium tax credit reconciliation require its Navigators to provide any or ensure their staff and volunteers are process to also include helping all of the types of assistance listed at adequately prepared to provide that consumers access and use certain § 155.210(e)(9) would also be required assistance. Exchange tools and resources, and to to provide training on the corresponding If SBEs, including SBE–FPs, choose to add ‘‘understanding’’ before ‘‘the training topics at § 155.210(b)(2)(v) authorize (but not require) their availability of IRS resources’’ in through (ix), and we are modifying the Navigators to provide the assistance paragraph (e)(9)(iii) to more clearly training topic proposals to reflect this topics listed at § 155.210(e)(9), we specify the type of assistance with IRS policy. would expect them to ensure that their resources that is included under this We also agree that a 2-year delay will Navigators are sufficiently prepared to provision. give FFEs more time to expand coverage provide this assistance, either by • To expand the assistance under of the new assistance topics in the including the corresponding training paragraph (e)(9)(iv), with understanding formal FFE training materials, and give topics at § 155.210(b)(2)(v) through (ix) basic concepts related to health FFE Navigators more time to familiarize in their Navigator training standards, or coverage and how to use it, to also themselves with the new requirements. through informal continuing education include helping consumers understand Such a delay also aligns with the timing such as webinars, fact sheets, their rights related to health coverage, of the next FFE Navigator funding supplementary trainings and and to make a parallel change to the opportunity announcement in 2018 and certifications, and other technical corresponding training topic at thus allows 2018 grant applicants to assistance. However, because we believe paragraph (b)(2)(viii). structure their proposals to meet these SBEs are in the best position to Comment: Many commenters new requirements while not disrupting determine the extent of training that is supported our proposed additional current grantee work plans and budgets. appropriate for duties they are Navigator duties to provide post- Therefore, we are specifying that the authorizing (but not requiring) their enrollment and other assistance. A new assistance topics and the Navigators to perform, SBEs (including number of commenters agreed that corresponding training provisions will SBE–FPs) would not be required to

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provide training on the topics listed in providing post-enrollment assistance be § 155.210(e)(9)(v), and are adding the § 155.210(b)(2)(v) through (ix) unless subject to background checks and words ‘‘and rights’’ to they required the corresponding forms required to be licensed, carry errors and § 155.210(b)(2)(viii) to parallel a related of assistance under § 155.210(e)(9). omissions insurance, and be under the modification to § 155.210(e)(9)(iv) that Finally, in the preamble to the oversight of State regulators. is discussed below. proposed rule we discussed the Response: We believe it is important Section 155.215(b)(1)(iii) already statutory authority for the assistance for consumers to have access to a variety requires FFE Navigators, after topics specified in § 155.210(e)(9), and of assistance options. Additionally, completing required training, to we refer commenters to those Navigators in all States are required complete and achieve a passing score on discussions, at 80 FR 75520–75522. under § 155.210(c)(1)(iii) to meet any all approved certification examinations Comment: Many commenters were licensing, certification, or other prior to carrying out any consumer concerned that requiring these new standards prescribed by the State or assistance functions under § 155.205(d) duties without additional funding Exchange, so long as the standards do and (e) or § 155.210. FFE Navigators would cause undue burden, discourage not prevent the application of the must also obtain continuing education program participation, or detract from provisions of title I of the Affordable and be certified or recertified on at least Navigators’ time and resources to help Care Act. an annual basis under consumers enroll in coverage. Many Comment: A number of commenters § 155.215(b)(1)(iv). Under commenters requested that HHS invest supported our proposal that all § 155.210(b)(2), all Exchanges, including in the Consumer Assistance Programs Exchanges be required to provide SBEs and SBE–FPs, are required to established under section 2793 of the training that would prepare Navigators develop training standards that ensure PHS Act instead of, or in addition to, for the additional proposed areas of expertise in the topics specified at these requirements. responsibility. Many commenters urged § 155.210(b)(2), but SBEs, including Response: We expect that providing us to ensure that this training be robust, SBE–FPs, have flexibility in creating for SBE flexibility and phasing in supported by technical assistance, and examination or certification implementation of § 155.210(e)(9) in carefully monitored and updated. Many requirements for their Navigators. FFEs will mitigate some of commenters’ commenters suggested that we specify Comment: Many commenters said concerns about funding sources. FFE additional training topics. One they do not believe the new Navigator Navigators may cover the costs of these commenter asked how HHS would post-enrollment requirements are additional activities using Navigator ascertain training competency. appropriate for other assister types, such grant funds and will have the Response: We are finalizing the new as certified application counselors or opportunity to propose budgets during training provisions largely as proposed, non-Navigator assistance personnel the grant application process, and but are adding introductory language so subject to § 155.215, who may have current FFE Navigators may revise their that their applicability is aligned to more limited time and resources. One work plans if they opt to carry out these whether the corresponding assistance commenter thought that these assister activities before they become required. activities are required under final types should be encouraged to help We agree that Consumer Assistance § 155.210(e)(9). If an Exchange consumers understand and use their Programs established under section (including an FFE) opts to require its coverage. Another commenter stated 2793 of the PHS Act have served an Navigators to perform any or all of the that certified application counselors are important role for consumers with types of assistance specified in well positioned to provide post- health insurance concerns. We also paragraph (e)(9), the Exchange’s training enrollment assistance because many are remind commenters that § 155.210(e)(4) standards under paragraph (b)(2) must in community health centers. A few already requires Navigators in all States include corresponding training on any commenters recommended that certified to provide referrals to any applicable of the required assistance topics. For application counselors, non-Navigator office of health insurance consumer example, an Exchange opting to require assistance personnel subject to assistance or health insurance its Navigators to help consumers § 155.215, and Federally Qualified ombudsman established under section understand the process of filing Health Center enrollment counselors 2793 of the PHS Act, or any other Exchange eligibility appeals under should have access to the new Navigator appropriate State agency, for any § 155.210(e)(9)(i) must ensure its training and resources related to post- enrollee with a grievance, complaint, or Navigators have expertise in this topic enrollment and other assistance. question regarding their health plan, by including the process of filing Response: We agree that non- coverage, or a determination under the Exchange eligibility appeals under Navigator assistance personnel subject plan or coverage. Many States operate § 155.210(b)(2)(v) in its training to § 155.215 and certified application an office of health insurance consumer standards. All of the training topics in counselors may have more limited assistance or a health insurance § 155.210(b)(2)(v) through (ix) must be resources than Navigators, and that ombudsman. The critical assistance included in the training standards for tailoring duties to each of these three provided by these offices will continue Navigators in FFEs under Navigator assister types fosters a robust pool of to be an important complement to and grants awarded in 2018 or any later different kinds of consumer assistance. resource for Navigators, and HHS will year, because that is when all the Therefore, we are not finalizing any continue to explore ways to fund activities specified under paragraph assistance or training requirements Consumer Assistance Programs. (e)(9) will be required in FFEs, as parallel to § 155.210(b)(2)(v)–(ix) and However, we note that this existing discussed above and as specified in (e)(9) for non-Navigator assistance referral requirement is not sufficient to paragraph (e)(9). We believe this final personnel subject to § 155.215 or cover the new assistance activities policy will ensure that all Navigators certified application counselors. As we under § 155.210(e)(9). required to perform functions under noted in the preamble to the proposed Comment: A few commenters said paragraph (e)(9) will be adequately rule, the requirement under they believe the proposed Navigator trained in each required topic. § 155.210(e)(2) to provide information duties duplicate services provided by We are also adding a new that assists consumers with submitting issuers or agents and brokers. Several § 155.210(b)(2)(ix) to correspond to the the eligibility application (which also commenters requested that Navigators referral assistance specified in applies to certain non-Navigator

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assistance personnel through support expected from them in these handle, disclose, access, maintain, store, § 155.215(a)(2)(i)), could include areas. and use PII as needed to do so. In any helping consumers report changes in Response: Each Navigator grantee and event, the exact extent to which and the circumstances and submit information each individual Navigator should have conditions under which each SBE may for eligibility redeterminations. We also the ability to help any individual who permit or require its Navigators to noted in the preamble to the proposed presents themselves for assistance. create, collect, handle, disclose, access, rule that under § 155.215(b), non- Additionally, we expect that all maintain, store, and use PII is a matter Navigator assistance personnel subject individuals carrying out Navigator within the reasonable discretion of the to § 155.215 and Navigators in FFEs are duties would be trained to perform all SBE, so long as the SBE’s standards subject to the same training of the duties of a Navigator and would comply with § 155.260 and otherwise do requirements. In addition, all FFE be equipped to assist consumers with not act as an impediment to the training modules can be accessed by the the activities described in performance of required or authorized public, including by certified § 155.210(e)(9) in Exchanges where the Navigator duties under § 155.210. application counselors and non- activities described in § 155.210(e)(9) Comment: We asked for comment on Navigator assistance personnel subject are required or authorized. Below, we whether we should make explicit in the to § 155.215. As noted in the preamble discuss examples of the kinds of regulation any of our interpretations of to the proposed rule, nothing prevents assistance we interpret § 155.210(e)(9) to existing statutes and regulations that non-Navigator assistance personnel include. would permit (but not require) subject to § 155.215 or certified Comment: Several commenters asked Navigators to perform certain kinds of application counselors from helping us to explain whether Navigators are post-enrollment assistance, such as with activities that are consistent with permitted to collect, disclose, access, assistance with coverage claims denials. their existing regulatory duties. maintain, store or use personally We also asked for comment on whether identifiable information (PII) to carry Although we are not requiring any there are additional forms of post- out these additional duties. One assistance or training requirements enrollment assistance that Exchanges commenter asked us to explain how parallel to the new provisions under should require Navigators to provide, consumer privacy protections will be § 155.210(b)(2)(v) through (ix) and (e)(9) commensurate with their general legal ensured and enforced. authority. One commenter for non-Navigator assistance personnel Response: Under their grant terms and subject to § 155.215 or certified recommended that we specify in conditions, FFE Navigators are regulation any Navigator activities we application counselors, we believe that permitted to create, collect, handle, interpret to be permitted but not a disclaimer stating that these assisters disclose, access, maintain, store, or use required. Some commenters are not acting as tax advisers or consumer PII only to perform functions recommended that additional post- attorneys (as discussed below) is an that they are authorized to perform enrollment activities should be important consumer protection that under the terms of their grant, including required, including filing complaints should apply regardless of whether functions authorized or required under with regulators, assisting pregnant these assisters are providing assistance § 155.210, or for other purposes for women enrolled in QHPs to understand on the topics specified at which the consumer provides his or her their coverage options and ensure § 155.210(e)(9). For this reason, and to specific, informed consent. Once this continuity of coverage, and helping align parallel provisions requiring rule takes effect, the activities under enrollees pursue coverage determination Navigators, non-Navigator assistance paragraph (e)(9) will be authorized appeals and formulary exceptions. personnel subject to § 155.215, and Navigator functions in FFEs, both before Response: Because we are sensitive to certified application counselors to and after 2018. Therefore, after this rule the concerns commenters expressed provide consumers with information takes effect, FFE Navigators may create, about Navigators’ limited time and about their respective functions and collect, handle, disclose, access, resources to perform the new activities responsibilities, we are revising maintain, store, and use consumer PII to described in § 155.210(e)(9), we are not §§ 155.215(g)(1) and 155.225(f)(1) to perform these functions, and we will adding provisions that require or permit require that, prior to providing update guidance and model consent any additional activities commenters assistance, non-Navigator assistance forms to reflect this. HHS has a variety recommended at this time. Instead, we personnel subject to § 155.215 and of enforcement options in the event of have tried to limit the modifications to certified application counselors provide a violation of these standards, including the proposed activities in this final rule consumers with a disclaimer stating that implementing corrective action plans or to changes that provide additional detail they are not acting as tax advisers or pursuing civil money penalties under about the scope of the specific post- attorneys when providing assistance § 155.206 or § 155.285, or withholding enrollment and other new assistance (respectively) as non-Navigator or terminating grant funds. With respect activities that we proposed adding to assistance personnel and certified to SBEs, § 155.260(b) directs SBEs to the rule. application counselors, and cannot execute a contract or agreement with Comment: With respect to our provide tax or legal advice within their Navigators that binds them to privacy proposed requirement that Navigators (respective) capacities as non-Navigator and security standards that, among provide information and assistance with assistance personnel and certified other things, take into consideration a filing Exchange eligibility appeals, application counselors. Navigator’s authorized duties and many commenters were concerned that Comment: A number of commenters activities. If an SBE opts to require or consumers’ legal rights may be cautioned that Navigators should not be authorize the activities specified in compromised without proper legal expected to become, or be held out as, § 155.210(e)(9) after that provision takes representation, and stated that experts in the new assistance topics effect, we would expect that SBE Navigators should serve primarily as a specified in § 155.210(e)(9). Several privacy and security standards would bridge to connect consumers with legal commenters asked that we further reflect SBEs’ decisions to require or assistance. One commenter stated that define what we mean by ‘‘assistance authorize Navigators to carry out these Navigators should have the option of with’’ so that Navigators can be clear additional activities, and would give assisting consumers with appeals only about the full extent of consumer Navigators the ability to create, collect, when they have the expertise to do so.

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Several asked us to clarify that and meet the deadline for appealing an § 155.227 outside of their capacity as Navigators may not serve as authorized Exchange eligibility determination; (2) Navigators, they should keep any representatives for consumers filing helping consumers understand that they activities as a consumer’s authorized appeals. Commenters urged HHS to have a right to appeal eligibility representative separate from their clearly define the types of information determinations made by an Exchange Navigator duties and should not use Navigators must provide related to (including SHOP Exchanges) related to Navigator grant funds for these appeals and create guidelines to help enrollment in a QHP, special enrollment activities, because these activities are Navigators and consumers recognize periods, exemptions from the individual not authorized Navigator functions where legal assistance becomes shared responsibility payment that are under HHS regulations. appropriate or necessary. Several granted by the Exchange, participation Assistance provided under this commenters recommended that this as an employer in a SHOP, and any provision does not include assistance duty be limited to making consumers insurance affordability program, with appeals of coverage decisions by aware of their right to appeal, providing including eligibility determinations for issuers, but only assistance with appeals basic education on the appeals process, Exchange financial assistance, of eligibility determinations made by an and making appropriate referrals for Medicaid, the Children’s Health Exchange. However, as we said in the legal assistance when possible. To Insurance Program, and Basic Health preamble to the proposed rule, facilitate these referrals, commenters Programs; (3) helping consumers Navigators are already permitted, but asked HHS to help FFE Navigator understand the process of appealing not required, to help consumers obtain grantees identify methods of those eligibility determinations and assistance with coverage claims denials establishing relationships with local what steps to take to complete an and to educate consumers about their legal services organizations and other appeal; (4) helping consumers access rights with respect to coverage available State offices to help with the appeals relevant Exchange resources, such as through an Exchange. Additionally, process. One commenter suggested that appeal request forms and mailing under the new language about rights Navigators should also provide addresses for appeals, and Exchange that we are adding to § 155.210(e)(9)(iv), information and assistance with appeal guidance on appeals; and (5) providing Navigators providing assistance under denials. One commenter asked how consumers with information about free that paragraph should inform these proposed requirements might or low-cost legal help in their area, consumers who have questions about affect Medicaid appeals in States that including local legal aid or legal coverage claims denials that they have have delegated the authority to make services organizations and other State the right to appeal adverse benefit Medicaid and CHIP eligibility offices to help with the Exchange determinations and to have the appeal determinations to the Exchange. A eligibility appeals process. Assistance reviewed by an independent third party. number of commenters interpreted our under this provision may also include Finally, as indicated above, helping proposal to mean that Navigators would helping consumers collect supporting consumers with the process of filing be required to help consumers appeal documentation for the appeal (such as Exchange eligibility appeals includes, adverse coverage decisions. screenshots of relevant information from where applicable, helping consumers Response: We recognize that helping the online application). understand the process of filing an consumers through the entire Exchange appeal of a modified adjusted gross appeals process may require more Although the assistance under income (MAGI)-based Medicaid or CHIP resources and expertise than many § 155.210(e)(9)(i) includes helping eligibility determination, where the Navigators can offer. To that end, we are consumers understand the general State has delegated authority to the narrowing this provision by adding the availability of a right to appeal adverse Exchange to adjudicate these appeals. word ‘‘understanding’’ to make clear Exchange eligibility determinations and Comment: Commenters supported our that any assistance required under this the process for appealing them, proposals to require Navigators to provision is limited to activities that Navigators should not, in their capacity provide consumers with information help consumers understand the process as Navigators, cross the line into and assistance regarding exemptions. of filing Exchange eligibility appeals, providing legal advice, such as by One commenter disagreed with our and does not include a requirement to recommending that consumers take proposal, arguing that exemptions help consumers through the entire specific action with respect to that right. assistance is counter to the goal of the Exchange eligibility appeals process. It For example, Navigators could help Affordable Care Act. The majority of does not prevent Navigators who are consumers understand the difference commenters recommended exemptions authorized or required to provide between an appeal and an expedited assistance not be limited to certain assistance under this provision from appeal, but should not help them decide consumers because helping with providing such longer-term assistance, which one is best suited to their exemptions is minimally burdensome as long as they do not provide legal circumstances. We suggest that and because of the importance of skilled advice in their capacity as Navigators, as Navigators familiarize themselves with assistance to consumers who cannot discussed below. We also appreciate the any laws defining legal advice in the access coverage. Several commenters critical and established role that legal States in which they operate, as this suggested that Navigators should have services organizations play in helping may help them ascertain when they the flexibility, if they are unable to fully consumers understand and access their might be taking an action that could meet consumer demand, to prioritize Exchange eligibility appeal rights, and constitute providing legal advice. We helping consumers apply for and enroll have incorporated providing also note that we did not propose nor in coverage over helping consumers information about free and low-cost are we establishing a duty for Navigators seek exemptions during open legal help into our expectations for to represent a consumer in an appeal, enrollment. Several commenters assistance under this provision, as sign an appeal request, or file an appeal recommended that this duty include discussed below. on the consumer’s behalf, either as a assistance with understanding the We interpret assistance under this legally authorized representative or requirement to maintain minimum provision to include the following otherwise. Although HHS regulations do essential coverage and the individual activities, as relevant to consumers’ not prohibit Navigators from serving as shared responsibility payment, the needs: (1) Helping consumers identify authorized representatives under general purpose of and where to access

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IRS Form 8965, Health Coverage and submit Exchange-granted consumers with a disclaimer stating that Exemptions, and how to use applicable exemption applications and obtain any they are not acting as tax advisers and Exchange tools to find bronze plan and necessary forms prior to or after cannot provide tax advice within their second-lowest cost silver plan applying for the exemption; (3) capacity as Navigators. One commenter premiums. Several commenters explaining what the exemption stated that requiring a disclaimer was recommended that Navigators’ duty certificate number is and how to use it; unnecessary because Navigators do not with respect to exemptions should be (4) helping consumers understand the provide tax advice and many already limited to education about, but not availability of exemptions from the provide a disclaimer to this effect. Some assistance with, obtaining an requirement to maintain minimum commenters recommended that we exemption. One commenter asked for essential coverage and from the require a similar disclaimer that guidance on how this requirement individual shared responsibility Navigators are not acting as legal would apply to SBE Navigators, since payment that are claimed through the representatives and cannot provide legal most States’ Exchange-granted tax filing process and how to claim advice or legal representation within exemptions are processed by an FFE, them; (5) helping consumers use any their capacity as Navigators. Some rather than an SBE. applicable Exchange tool to find lowest commenters recommended that the Response: We are not limiting cost bronze and second-lowest cost disclaimer be required to be written, Navigator assistance with exemptions silver plan premiums (that is, the FFE provided in a linguistically appropriate under paragraph (e)(9)(ii) to a specific tool or any similar tool offered by an manner, or included in our model consumer population because we agree SBE); and (6) helping consumers authorization form for FFE Navigators. that Navigator services should not be understand the availability of IRS Response: We agree that prior to exclusively available to a predefined set resources on this topic, including providing assistance, Navigators should of consumers and closed to others. explaining the general purpose of and provide consumers with a disclaimer Where resources are limited, Navigators how to access IRS Form 8965, Health stating that they are not acting as tax providing assistance under this Coverage Exemptions, and the advisers or attorneys when providing provision may prioritize helping instructions for that form. We assistance as Navigators, and cannot consumers seeking to apply for and emphasize that explaining the general provide tax or legal advice in their enroll in coverage. For example, during purpose of IRS Form 8965 to consumers capacity as Navigators. We are therefore a busy enrollment event, Navigators must be done consistent with IRS adding language to § 155.210(e)(6)(i) to may choose to limit exemptions published guidance on the topic, and specify that such a disclaimer must be assistance to directing consumers to must include providing information on included as part of the information exemptions resources on HealthCare.gov where to access this form and related provided to applicants about the and IRS.gov, and schedule another time tax information on IRS.gov. Navigator’s functions and for consumers to return for additional With respect to exemptions granted responsibilities and that both the assistance. But we also continue to through the Exchange, we do not believe disclaimer and the information expect that Navigators will serve all that Navigators’ activities related to provided about Navigator functions and consumers seeking assistance. exemptions should be limited to responsibilities must be provided prior We believe that the Affordable Care education only. However, to help ensure to providing assistance. We do not Act contemplates that Navigators will that Navigators do not provide tax interpret this requirement to mean that assist consumers with making an advice in their capacity as Navigators, Navigators must provide such a informed decision about whether to we are finalizing the portion of this disclaimer prior to providing general enroll in health coverage, and making proposal that limits Navigators’ required outreach and education. Although we this decision will often require involvement in exemptions claimed do not specify the method of delivering consumers to have a basic through the tax filing process to the disclaimers, we plan to add these understanding of available exemptions. providing general information and disclaimers to our model authorization We are finalizing § 155.210(e)(9)(ii) helping consumers access IRS resources, form for FFE Navigators. The generally as proposed, except that for rather than assistance with claiming requirement under § 155.210(e)(5) that clarity and consistent use of exemptions on the tax return or filling Navigators must provide information in terminology we are modifying the out IRS forms. For example, Navigators a manner that is culturally and reference to the individual shared acting in their capacity as Navigators linguistically appropriate to the needs of responsibility requirement to refer to the must not help consumers fill out IRS the population being served by the individual shared responsibility Form 8965 or help them report having Exchange and accessible to people with payment, and are changing language minimum essential coverage on their tax disabilities will apply to these about ‘‘how to apply for’’ exemptions return. We believe this limitation is disclaimers. Finally, as discussed above, claimed through the tax filing process to sufficient to protect both consumers and we are adding a parallel disclaimer ‘‘how to claim’’ them. Because Navigators. requirement for non-Navigator exemptions assistance needs will vary In any SBEs that opt to require or assistance personnel subject to among consumers, and to avoid being authorize this assistance, Navigators § 155.215 and certified application overly prescriptive, we are not will be required or authorized counselors, under §§ 155.215(g)(1) and expanding the assistance specifically (respectively) to help consumers access 155.225(f)(1) (respectively). required under this provision to include Exchange-granted exemptions, whether Comment: Many commenters the activities recommended by consumers in that State access those supported our proposal to require commenters. We interpret assistance exemptions through the SBE or FFEs, Navigators to provide consumers with under this provision to include the and, as in any Exchange, they will be assistance with understanding the following activities, as relevant to limited to providing only general Exchange-related components of the consumers’ needs: (1) Informing information about exemptions claimed premium tax credit reconciliation consumers about the requirement to on the tax return in their capacity as process, and the availability of IRS maintain minimum essential coverage Navigators. resources on this process. Commenters and the individual shared responsibility Comment: Many commenters said agreed that although Navigators should payment; (2) helping consumers fill out that Navigators should provide not provide tax advice, informing

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consumers of the tax implications of resources on this process, to better the forms, and how to request receiving advance payment of the capture our interpretation that corrections to the forms. Navigators premium tax credit is an essential Navigators are not authorized to should be able to help consumers access component of helping consumers enroll. interpret those resources, and can IRS resources relating to these forms. Several commenters recommended that instead only direct consumers to them. However, we are not requiring we specify that this assistance entails This edit also helps align this provision Navigators providing assistance under helping consumers: (1) Access and with the similar requirement in this provision to help consumers access understand IRS Forms 1095–A, –B, and § 155.210(e)(9)(ii) that Navigators help these forms or report errors. –C, (2) understand how to report Form consumers understand the availability Comment: We received support from 1095 errors, (3) understand how to use of IRS resources on exemptions. commenters for our proposal to require applicable Exchange tools to find silver Where Navigators are also tax Navigators to help consumers plan premiums, and (4) understand the professionals, they might be in a understand basic concepts related to purpose of IRS Form 8962. A few position to assist clients with both the health coverage and how to use it. commenters suggested that Navigators Exchange-related and the tax filing Several commenters recommended that should also provide information about components of the premium tax credit this assistance include helping reliable resources on this process from reconciliation process, but should keep consumers understand their rights sources other than the IRS. Other these duties separate and not perform related to health coverage. Some commenters were concerned that our any tax assistance within their capacity recommended that we specify topics in proposal would stretch Navigators’ as Navigators or using Navigator grant addition to the examples we included in capacity and distract from enrollment, funds. As part of Navigators’ assistance the preamble to the proposed rule, and that tax professionals, not with Form 1095–A, they may, for including helping consumers Navigators, are best suited to assist example, explain to consumers why understand out-of-pocket cost consumers with tax-related issues. Some they received the form and what the calculators and provider and formulary commenters asked us to clarify the information on the form means, explain lookup tools, common utilization prohibition on providing tax advice, one why they may have received more than management definitions, including step commenter requested that we add this one copy of the form, help them find the therapy and prior authorization, and prohibition to § 155.210(d), and another form in their online account or get a what an Explanation of Benefits asked how it will be enforced. copy of the form, explain what they Statement is and how to read it. Other should do if they think the form may commenters stated that because this Response: We are finalizing this have gone to the wrong address, or if assistance will vary depending on each provision largely as proposed. Because they think the information on their form consumer’s health insurance literacy, not all consumers will require is incorrect or does not include a needs, and goals, additional specificity information and assistance with each of dependent they added to their coverage. is unnecessary. the topics commenters recommended On the other hand, Navigators who are Response: We agree with commenters that we include in this provision, we are acting in their capacity as Navigators that consumers’ rights with respect to not expanding the final rule to include should not, for example, help coverage available through an Exchange, them. However, we interpret assistance consumers fill out IRS Form 8962, such as nondiscrimination protections under this provision to include helping advise consumers about whether to file and prohibitions on preexisting consumers with the following, as an amended tax return, or help them condition exclusions, are critical for relevant to their needs: (1) The complete their income tax return. We consumers to understand when Exchange-related components of the believe it is critically important to accessing or attempting to access premium tax credit reconciliation ensure that consumers are provided coverage through an Exchange. process; (2) accessing and with the most authoritative, accurate, Additionally, in the preamble to the understanding the general purpose of and up-to-date resources related to proposed rule, we explained that the IRS Form 1095–A; (3) understanding premium tax credit reconciliation, and assistance provided under this how to report Form 1095–A errors; (4) thus IRS-approved resources must be provision could include helping using any applicable Exchange tool to the primary resource to which consumers understand the right to find second-lowest cost silver plan Navigators refer consumers. coverage of certain preventive health premiums (that is, the FFE tool or any We disagree with commenters that services without cost sharing, and that similar tool offered by an SBE); and (5) Navigators should be required to help we interpret existing HHS regulations to understanding the availability of IRS consumers access and understand IRS permit Navigators to educate consumers resources on this process, including the Forms 1095–B and 1095–C. Form 1095– about their rights with respect to general purpose of and how to access B, Health Coverage, is an annual form coverage available through an Exchange. IRS Form 8962, and the instructions for issued by providers of minimum Therefore, we are adding the phrase that form. To avoid confusion about the essential coverage to report certain ‘‘and rights’’ to § 155.210(e)(9)(iv) to scope of this provision, we are removing information to the IRS and to taxpayers ensure that Navigators’ activities in this the word ‘‘understanding’’ from the about individuals who had coverage area include education about these beginning of the provision, because during the year. Form 1095–C, topics. However, to avoid crossing the Navigators’ assistance with the Employer-Provided Health Insurance line into providing legal advice, Exchange-related components of the Offer and Coverage, is an annual form Navigators should not, in their capacity premium tax credit reconciliation issued by certain large employers to as Navigators, recommend that process would include not only helping report to the IRS and to taxpayers consumers take specific action with consumers understand Exchange tools information about offers of employer- respect to these rights. We are also and resources but also helping sponsored coverage for the year. Unlike adding the phrase ‘‘and rights’’ to the consumers access and use these tools the Form 1095–A, these forms are not corresponding training provision related and resources. We are also adding issued by an Exchange. The IRS has to this duty at § 155.210(b)(2)(viii). ‘‘understanding’’ before the provision’s resources that explain the purpose of Because the health literacy information description of Navigators’ assistance these forms, how they relate to the tax consumers need varies depending on with respect to the availability of IRS filing process, how to request copies of their circumstances, we are not

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requiring Navigators to help consumers contractual relationship. While we do regulatory requirements, including the with specific health literacy topics. not require QHP issuers to provide their requirement at § 155.210(e)(2) that Instead, we interpret assistance under affiliated agents and brokers with plan Navigators provide information and this provision to include, for example, information, we continue to leverage services in a fair, accurate, and impartial helping consumers understand: (1) Key existing practices and encourage agents manner, and the conflict of interest terms used in health coverage materials, and brokers to work directly with QHP provision at § 155.210(d)(4) prohibiting such as ‘‘deductible’’ and issuers within whom they have a Navigators from receiving any ‘‘coinsurance,’’ and how they relate to contractual relationship to obtain the consideration directly or indirectly from the consumer’s health plan; (2) the cost necessary information on that issuer’s any health insurance issuer or issuer of and care differences between a visit to QHPs. Navigator organizations may stop loss insurance in connection with the emergency department and a visit to invite issuers in their area to share the enrollment of any individuals or a primary care provider under the information or attend education employees in a QHP or a non-QHP. We coverage options available to the sessions regarding plan benefits and interpret the requirement under consumer; (3) how to identify in- details. As long as all issuers in the § 155.210(e)(2) that Navigators provide network providers and how to make and Exchange service area are invited and information and services in a fair, prepare for an appointment with a all applicable Navigator conflict-of- accurate, and impartial manner to mean provider; (4) how the consumer’s interest provisions are followed, that Navigators must not accept coverage addresses steps that often are including the rule prohibiting payment in exchange for providing a taken after an appointment with a Navigators from receiving any referral or recommending the services of provider, such as making a follow-up consideration directly or indirectly from another organization. We intend to issue appointment and filling a prescription; any health insurance issuer or stop-loss guidance for FFE Navigators with and (5) the right to coverage of certain insurance issuer in connection with the additional information on collaborating preventive health services without cost enrollment of any individuals or or partnering with other organizations. sharing. employees in a QHP or non-QHP, such The referrals discussed under this Comment: A few commenters asked an event would not represent a conflict provision include referrals to licensed for clarification about whether the duty of interest or violate a Navigator’s duty tax advisers, tax preparers, or other proposed in § 155.210(e)(9)(iv) pertains under § 155.210(e)(2) to provide resources for assistance with tax to general education about health information and services in a fair, preparation and tax advice. Licensed tax coverage or to assisting individuals with accurate, and impartial manner. advisers are one type of tax professional, activities such as making appointments Comment: Most commenters but not the only type. ‘‘Licensed’’ can or filling prescriptions, which they supported our proposal that Navigators mean any type of professional license believed would be overly burdensome. be required to provide referrals to that qualifies someone to prepare taxes, Several commenters stated that there are licensed tax advisers, tax preparers, or and could include certified public insufficient educational resources other resources for assistance with tax accountants and attorneys. We agree available and asked HHS to create preparation and tax advice related to that VITA and TCE programs may often template materials and identify other consumer questions about the Exchange be the best resources for referral under resources on these topics. One application and enrollment process, this provision. commenter asked HHS to undertake or exemptions from the requirement to To ensure that Navigators who are support a thorough assessment of maintain minimum essential coverage required under paragraph (e)(9) to consumer health insurance literacy and from the individual shared provide referrals to licensed tax needs. Some commenters noted that responsibility requirement, and advisers, tax preparers, or other issuers often provide additional training premium tax credit reconciliations. resources for assistance with tax and materials to agents and brokers Commenters requested detail about how preparation and tax advice are also about their plans, and recommended such a referral mechanism would work; trained on this topic, we are adding a that HHS require issuers to provide for example, whether Navigators would corresponding training provision at Navigators with this kind of be allowed to refer consumers to a § 155.210(b)(2)(ix). We are also information. specific tax professional, as opposed to replacing a reference in paragraph Response: The assistance provided a general listing of tax professionals. (e)(9)(v) to the individual shared under § 155.210(e)(9)(iv) only includes Other commenters asked HHS for responsibility requirement with a providing information and assistance guidance on limitations and strategies reference to the individual shared with understanding basic concepts and for referring and collaborating with tax responsibility payment, to ensure rights related to health coverage and preparation services, legal services consistent use of terminology. how to use it; it does not include patient organizations, community experts, We also proposed to amend advocacy or case management. With patient-focused and community-based §§ 155.205(d) and 155.215(b)(1)(i) to respect to needs assessments, we organizations, and other State offices. specify that any individual or entity remind Navigators in FFEs of their One commenter questioned the term carrying out consumer assistance obligations under § 155.215(c)(1) to ‘‘licensed tax adviser,’’ noting that IRS functions under § 155.205(d) and (e) or develop and maintain general does not provide such a license. § 155.210, in both SBEs and FFEs, knowledge about the racial, ethnic, and Another asked HHS to specify IRS’s would be required to complete training cultural groups in their service area, Volunteer Income Tax Assistance prior to performing any assister duties, including each group’s health literacy (VITA) and Tax Counseling for the including before conducting outreach and other needs, and under Elderly (TCE) programs as appropriate and education activities, as well as § 155.215(c)(2) to collect and maintain points of referral. And one commenter before providing application and updated information to help understand asked HHS to partner with the Internal enrollment assistance. Section the composition of the communities in Revenue Service (IRS) to provide 155.215(b) already requires Navigators the service area. training and education to tax preparers. and non-Navigator assistance personnel Agents and brokers often receive Response: All referrals from a in FFEs and non-Navigator assistance information on health plans from the Navigator to other organizations must be personnel funded through Exchange issuers with whom they have a consistent with applicable statutory and Establishment grants under section

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1311(a) of the Affordable Care Act to Response: We appreciate the support about Exchanges and providing obtain certification by the Exchange for this proposal and agree that it is application and enrollment assistance. prior to carrying out any consumer essential that consumers trust that These individuals may of course assistance functions under § 155.205(d) Navigators and non-Navigator assistance conduct outreach and education about and (e) or § 155.210. We proposed to personnel are properly informed and Exchanges as long as they do not amend § 155.215(b)(1)(i) to specify that trained when consumers seek out their represent themselves as Exchange- the consumer assistance functions services, whether those services include approved Navigators, non-Navigator referenced in that provision would assistance with an Exchange application assistance personnel, or certified include outreach and education or education about the Exchange. We application counselors. activities. In addition, we proposed to recognize commenters’ concerns that Comment: One commenter expressed amend § 155.205(d) to require that the timing of the FFE Navigator and concern about how this provision could training be completed not only before non-Navigator assistance personnel reasonably be enforced. providing the assistance described in training may prevent some Navigators Response: Exchanges have discretion that paragraph, but also before and non-Navigator assistance personnel to pursue a variety of enforcement conducting the outreach and education in FFEs from conducting outreach and options in the event of Navigator or non- activities specified in paragraph (e). enrollment work during periods when Navigator assistance personnel This proposal sought to ensure that training is being updated and noncompliance with any applicable individuals and organizations subject to relaunched prior to the start of a new statutory or regulatory requirements or §§ 155.205(d) and (e), 155.210, and open enrollment period for the prohibitions. These options include 155.215 do not perform any Exchange individual market. We will continue to implementing corrective action plans or outreach and education activities or strive to complete FFE training updates pursuing civil money penalties under application and enrollment assistance prior to FFE Navigator and non- § 155.206 or withholding or terminating while identifying as or holding Navigator assistance personnel grant or contract funds. FFE Navigators themselves out to the public as certification deadlines. We believe there and FFE non-Navigator assistance personnel who wish to file a complaint Exchange-approved Navigators or non- is great value in ensuring that or grievance against other FFE Navigator assistance personnel, prior to Navigators in FFEs and non-Navigator Navigators or FFE non-Navigator completing Exchange requirements, assistance personnel subject to assistance personnel can contact their including training and certification. The § 155.215 complete recertification Project Officer or point of contact at proposed amendments would not apply training prior to providing any outreach CMS. FFE certified application to certified application counselors, but or assistance to consumers because counselors should direct complaints or § 155.225(d)(1) already requires certified there are often changes in Exchange grievances to the certified application application counselors to complete and operations and policy from year to year counselor inbox at CACQuestions@ achieve a passing score on all Exchange and we want to ensure that these cms.hhs.gov. We also rely on approved certification examinations assisters are providing the most up to date and accurate information to communication with State regulatory prior to functioning as certified agencies (such as Departments of application counselors. consumers. Therefore, we are not exempting Navigators in FFEs and non- Insurance) and CMS Regional Offices We are finalizing these amendments Navigator assistance personnel subject regarding FFE Navigator and FFE non- as proposed. to § 155.215 who are eligible to be Navigator assistance personnel conduct. Comment: The majority of recertified from this requirement. Section 155.210(d)(6) currently commenters supported our proposal to Comment: A few commenters prohibits Navigators from providing to require that Navigators and non- requested clarification regarding an applicant or potential enrollee any Navigator assistance personnel complete individuals who are not yet certified or gifts unless they are of nominal value; training prior to performing any assister are not acting as Navigators or non- or any promotional items that market or duties, including before conducting Navigator assistance personnel at promote the products or services of a outreach and education activities, as Navigator and non-Navigator assistance third party, when those promotional well as before providing application and personnel organizations but who may be items are being used as an inducement enrollment assistance. These serving as spokespeople and conducting for enrollment. Through a cross- commenters also recommended public education activities about the reference to § 155.210(d) in exempting Navigators in FFEs and non- Exchange and the Exchange assistance § 155.215(a)(2)(i) and a parallel Navigator assistance personnel subject available from the organization. One provision in § 155.225(g)(4), this to § 155.215 who are eligible to be commenter requested that HHS allow prohibition also applies to non- recertified from the requirement in newly hired, but not fully trained or Navigator assistance personnel subject § 155.215(b) to complete recertification certified Navigators to conduct to § 155.215, and to certified application training prior to conducting outreach outreach, as long as they disclose they counselors. and education. A few commenters are not yet certified to conduct To reduce confusion about when gifts expressed concern regarding the enrollment assistance and immediately and promotional items can be provided availability and content of training. refer consumers to a fully trained and to applicants and potential enrollees, we Commenters also were concerned that certified Navigator. A few commenters proposed to amend §§ 155.210(d)(6) and this provision would prevent Navigators opposed our proposal due to concern 155.225(g)(4) to specify that gifts of any and non-Navigator assistance personnel that it would prohibit such activities. value (including third-party subject to § 155.215 from conducting Response: As explained in the promotional items of any value) should year-round outreach education, if proposed rule preamble, nothing in the never be provided to applicants or training is not available year round, or Exchange regulations prohibits potential enrollees as an inducement for recommended that training be available individuals who are not trained and enrollment. We also proposed to specify at least 2 months prior to open certified as Exchange-approved that gifts that are not provided as an enrollment so that new assisters subject Navigators, non-Navigator assistance inducement for enrollment may be to this requirement can complete the personnel, or certified application provided to applicants and potential training and begin assisting consumers. counselors from conducting outreach enrollees if they do not exceed nominal

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value.40 We proposed that this nominal We are finalizing the amendments to d. Ability of States To Permit Agents value restriction would apply both to §§ 155.210(d)(6) and 155.225(g)(4) as and Brokers To Assist Qualified each individual gift and to the proposed. Individuals, Qualified Employers, or cumulative value of multiple gifts, Comment: Many commenters Qualified Employees Enrolling in QHPs including promotional items. We further supported our proposals, agreeing that (§ 155.220) proposed that the nominal value the amendments clarify the rule and We proposed additional standards restriction on the cumulative value of strike the right balance between under § 155.220 for oversight and multiple gifts would only apply to allowing Navigators, non-Navigator enforcement of standards applicable to single encounters between the assister assistance personnel subject to agents, brokers, and web-brokers who and an individual, and not to multiple § 155.215, and certified application facilitate enrollment in the FFEs. These encounters, so that assisters would not counselors to use gifts and promotional standards were proposed under the have to collect PII as a means of tracking items in outreach while ensuring they Secretary’s authority to establish the number and value of gifts provided are never used to induce enrollment. procedures for States to permit agents to an individual consumer across Some commenters asked for examples of and brokers to assist consumers multiple encounters, such as all permissible and impermissible gifts, enrolling in QHPs through the FFEs, as encounters in a single calendar year or promotional items, and legitimate described in sections 1312(e) of the enrollment season. We noted that we expenses. Several commenters asked for Affordable Care Act. would consider a single outreach or guidance on the terms ‘‘nominal’’ and In the proposed rule, we explained educational event to be a ‘‘single ‘‘products or services of a third party.’’ that we were considering an option to encounter’’; that is, the assisters subject One commenter suggested that our rule enhance the direct enrollment process, to the proposed requirement would not may conflict with the beneficiary so that an applicant who initiated be permitted to provide multiple gifts to inducement rules that apply to enrollment directly with a web-broker the same consumer at the same outreach Medicare and State health care entity using the web-broker’s non- event if the cumulative value of those programs, potentially creating Exchange Web site could remain on the gifts exceeded nominal value. difficulties for Navigators that are health web-broker’s Web site to complete the We proposed to define ‘‘gifts,’’ for care providers. application and enroll in coverage, purposes of §§ 155.210(d)(6) and instead of being redirected to the Response: As we noted in the Exchange Web site to complete the 155.225(g)(4), to include gift items, gift preamble to the proposed rule, we have cards, cash cards or cash, as well as application and receive an eligibility previously defined ‘‘nominal value’’ as determination. Under the proposal, the promotional items that market or a cash value of $15 or less, or an item promote the products or services of a web-broker’s Web site could obtain worth $15 or less, based on the retail eligibility information from the third party. Language in purchase price of the item, regardless of §§ 155.210(d)(6) and 155.225(g)(4) Exchange to support the consumer in the actual cost (79 FR 15831 and 79 FR selecting and enrolling in a QHP with currently provides that gifts, gift cards, 30283). This nominal value limit Exchange financial assistance. or cash may exceed nominal value for applies to all gifts, including gift items, Accordingly, we proposed to revise the purpose of providing reimbursement gift cards, cash cards, cash, and § 155.220(c)(1) to ensure that the for legitimate expenses incurred by a promotional items that market or Exchange maintained its role in consumer in an effort to receive promote the products or services of a determining eligibility when an Exchange application assistance, such third party. Some illustrative examples applicant initiates enrollment with a as travel or postage expenses. We of permissible gifts and promotional web-broker on the web-broker’s non- proposed to amend this language to items include pens, magnets, or key Exchange Web site, by requiring the indicate that the reimbursement of chains worth $15 or less each, including agent or broker to ensure that the legitimate expenses, such as travel and if such items bear the name or logo of applicant completed an eligibility postage expenses, when incurred by a a local business, or community or social verification and enrollment application consumer in an effort to receive service program. Such items may, for through the Exchange Web site, or an Exchange application assistance, would example, be provided to consumers at Exchange-approved web service using not be considered a gift, and therefore, outreach and education events or at the FFE single streamlined application. would not be subject to the proposed other forums attended by members of Additionally, we solicited comments on restrictions on providing gifts. the general public, as long as they are the proposal to require web-broker Finally, existing regulations under not being provided as an inducement to entities to use the FFE single §§ 155.210(d)(7) and 155.215(a)(2)(i) enrollment. By ‘‘inducing enrollment,’’ streamlined application without already prohibit the use of Exchange we mean conditioning receipt of the deviation from the language of the funds by Navigators and by non- items on a consumer’s actually enrolling application questions and the sequence Navigator assistance personnel subject in coverage, as opposed to encouraging of information required for an eligibility to § 155.215 to purchase gifts or gift consumers to seek or receive application determination or redetermination. We cards, or promotional items that market or other authorized assistance. To the solicited comments on how much or promote the products or services of extent that Federal or State health flexibility web-broker entities should be a third party, that would be provided to program beneficiary inducement rules afforded relative to the consumer any applicant or potential enrollee. We apply to entities or individuals who also experience on its non-Exchange Web did not propose to amend this serve as Navigators, non-Navigator site. We also sought comment on provision. assistance personnel subject to additional matters HHS should consider § 155.215, or certified application to improve the direct enrollment 40 We have previously defined ‘‘nominal value’’ counselors, those entities and process, such as requiring HHS approval as a cash value of $15 or less, or an item worth $15 individuals must comply with those of alternative enrollment pathway or less, based on the retail purchase price of the rules as well as the applicable program processes, additional consumer item, regardless of the actual cost. (79 FR 15807, 15831 (Mar. 21, 2014) and 79 FR 30239, 30283 (May rules under §§ 155.210(d)(6), safeguard protections, additional web- 27, 2014). 155.215(a)(2)(i), and 155.225(g)(4). broker reporting requirements, and

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establishing more robust privacy and registered with the FFEs, or be conduct requirements to provide security requirements including permitted to assist with or facilitate consumers and the FFEs with correct requiring adoption of cyber security best enrollment through the FFEs, or assist information if HHS determined that the practices and specificity as to the individuals in applying for Exchange agent or broker had a reasonable cause collection and use of consumer financial assistance for QHPs. For for any failure to provide correct information. We also proposed to adopt consistency with these proposed information and that the agent or broker parallel standards for the use of QHP termination standards, we proposed acted in good faith. We also proposed issuer Web sites under corresponding updates to paragraphs that the violation of these standards § 156.265(b)(2)(ii). See III.G.5.c of this (g)(3) and (4), and proposed amending could result in the termination for cause preamble for a discussion of the paragraph (f)(4) to remove the of the agent’s or broker’s agreements amendments to § 156.265(b)(2)(ii). unnecessary reference to paragraph (g). with the FFEs as described in We proposed to amend paragraph We proposed adding paragraph § 155.220(g), or the imposition of other (g)(2)(ii) to clarify that HHS could § 155.220(j) to establish standards of penalties as authorized by law. determine an agent or broker to be conduct for agents and brokers that In § 155.220(k), we proposed penalties noncompliant if HHS finds that the assist consumers to enroll in coverage for agents and brokers registered with agent or broker violated any term or through the FFEs to protect consumers the FFEs other than termination of the condition of the agreement with the and ensure the proper administration of agreements with the FFEs. In FFEs required under paragraph (d) of the FFEs. In § 155.220(j)(1)(i) through § 155.220(k)(1), we proposed that if HHS (iii), we proposed that an agent or determined that an agent or broker this section, or any term or condition of broker that assisted with or facilitated failed to comply with the requirements an agreement with the FFEs required enrollment of qualified individuals, of § 155.220 he or she could be denied under § 155.260(b). We proposed to add qualified employers, or qualified the right to enter into an agreement with § 155.220(g)(5) to address suspension or employees through an FFE, or assisted the FFEs in future years, and could be termination of an agent’s or broker’s individuals in applying for Exchange subject to CMPs as described in agreements with the FFEs in cases financial assistance for QHPs sold § 155.285 if the violation involved the involving potential fraud or abusive through the FFEs, would have to: (1) provision of false or fraudulent conduct. We proposed in Execute the required agreement under information to an Exchange or the § 155.220(g)(5)(i)(A) that if HHS § 155.260(b)(2); (2) register with the improper use or disclosure of reasonably suspected that an agent or FFEs as described in paragraph (d)(1) of information. In § 155.220(k)(2), we broker may have engaged in fraud or this section; and (3) comply with the proposed that the denial of the right to abusive conduct using PII of an FFE standards of conduct proposed in enter into an agreement with the FFEs Exchange applicant or enrollee, or in this paragraph. In § 155.220(j)(2), we in future years would be subject to 30 connection with an Exchange proposed that the agents and brokers calendar days’ advance notice and the enrollment or application, HHS could described in paragraph (j)(1) would have reconsideration process established in suspend the agent’s or broker’s to: (1) Provide consumers with correct § 155.220(h). The imposition of CMPs agreement and accompanying information, without omission of for the provision of false or fraudulent registration with the FFEs for up to 90 material fact, regarding the FFEs, QHPs information to an Exchange or the calendar days, with the suspension (including SADPs 41) offered through improper use or disclosure of effective as of the date of the notice to the FFEs and insurance affordability information would be subject to the the agent or broker. We further proposed programs, and refrain from marketing or advance notice and appeals process under § 155.220(g)(5)(i)(B) if the agent or conduct that is misleading or coercive, described in § 155.285. broker failed to submit information or discriminates based on race, color, Finally, in § 155.220(l) we proposed during this 90-day period, HHS could national origin, disability, age, sex, that an agent or broker who enrolled terminate the required agreements for gender identity, or sexual orientation; qualified individuals, qualified cause effective immediately upon (2) provide the FFEs with correct employers, or qualified employees in expiration of the 90-day period, under information under section 1411(b) of the coverage in a manner that constituted § 155.220(g)(5)(ii). In § 155.220(g)(5)(ii), Affordable Care Act; (3) obtain the enrollment through an SBE–FP, or we proposed that if HHS reasonably consent of the individual, employer, or assisted individual market consumers confirmed the credibility of an employee prior to assisting with or with submission of applications for allegation that an agent or broker facilitating enrollment in coverage Exchange financial assistance through engaged in fraud or abusive conduct through an FFE, or prior to assisting an SBE–FP would have to comply with using personally identifiable with the application for financial all applicable FFE standards in information of Exchange enrollees or assistance for QHPs sold through the § 155.220. applicants, or in connection with an FFEs; (4) protect consumer PII in Comment: The proposal for the Exchange enrollment or application, or accordance with § 155.260(b)(3) and the enhanced direct enrollment process was notified by a State or law agreement described in § 155.260(b)(2); received broad support by many enforcement authority of the State or and (5) comply with all applicable commenters, who stated they believe law enforcement authority’s finding or Federal and State laws and regulations. enabling the applicant to remain on a determination of fraud or behavior that In § 155.220(j)(3), we proposed that an web-broker’s or issuer’s non-Exchange would constitute abusive conduct in Web site would improve the consumer agent or broker would be considered to such a circumstance, HHS would notify experience by supporting more seamless be in compliance with the standard of the agent or broker and terminate, transitions than the existing direct immediately and permanently, the 41 As detailed in the Exchange Establishment Rule enrollment functionality. One agent’s or broker’s agreements with the (77 FR 18309, 18315) (Mar. 27, 2012), with some commenter stated the proposal would FFEs. In § 155.220(g)(5)(iii), we limited exceptions, SADPs are considered a type of increase enrollment, as the current proposed that during the 90-day QHP. We expect agents, brokers, and web-brokers direct enrollment functionality requires registered with the FFEs to comply with applicable suspension period, as well as following rules and requirements in connection with SADPs, a consumer to be directed back and the termination of the FFE agreements, just as they must comply with those rules in forth between the direct enrollment Web the agent or broker would not be connection with medical QHPs. site and HealthCare.gov, leading some

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consumers to drop out of the process and flexible manner, with clear and sufficient detail for implementation no before completing enrollment out of concise guidelines. Other commenters earlier than 2018. frustration over operational strongly recommended that HHS Response: Based on the comments ineffeciencies or duplication. confirm that all web-brokers adhere to received, we are finalizing the proposal Commenters also broadly supported our certain criteria prior to offering to enhance the direct enrollment proposal for the Exchange to continue enhanced direct enrollment services, process with some modifications, as being the entity responsible for making including ensuring web-broker’s noted below. eligibility determinations and to application questions and flows provide We appreciate the many comments continue to be the system of record for accurate eligibility assessments and and recommendations on the direct enrollment. Other commenters opposed meet other requirements, such as enrollment proposal we received. While the proposal, citing the increased risk of providing appropriate consumer we believe that an enhanced direct consumers receiving inaccurate or support, displaying all plan information enrollment process will provide a more misleading information that might affect fully and accurately, and demonstrating seamless consumer experience, we agree eligibility determinations and consumer compliance with privacy and security with commenters that implementing the choice. Some commenters urged HHS to standards via regular audits. One proposal will be a significant take several considerations into account commenter asked HHS to adopt a undertaking for HHS, web-brokers, and before moving forward with the ‘‘check-list and review of required plan issuers, and that such an effort will proposal, including the potential choice elements’’ template that would require sufficient time for operational negative impact on Medicaid-eligible enable HHS to validate the entities’ plan planning and preparation, such as populations. choice displays, tools, and elements of identifying and testing the Exchange- FFE single streamlined application. their application. Another commenter approved web services under We proposed to require web-brokers to encouraged HHS to minimally require § 155.220(c)(1) that can be used to use the single streamlined application web-brokers to submit a Minimum support the enhanced direct enrollment without deviation from the language of Acceptable Risk Standards for process, and ensuring privacy and the application questions and the Exchanges ‘‘(MARS–E) Compliance security risks are addressed and sequence of information required for an Manual’’ as a pre-condition to offering mitigated. HHS will not provide such an eligibility determination. In support of the enhanced direct enrollment option during the individual market the proposal, a few commenters stated eligibility service, which would detail open enrollment period for 2017 that HHS should grant entities how they manage and comply with coverage, but seeks to make this option flexibility in the application process to MARS–E compliance processes. One available for the individual market open enable integration into existing commenter stated that HHS should enrollment period for 2018 coverage. We intend to supplement the framework processes, and enable more innovation require web-based entities to seek prior we are finalizing in this rule with more for a better consumer experience. Some approval for alternative direct specific guidance and requirements in commenters recommended that HHS enrollment processes by presenting their future rulemaking, such as specific instead use the FFE single streamlined alternatives to HHS for review, before guidelines for a pre-approval process application as a baseline, and allow using any display features or tools that under § 155.220(c)(4)(i)(F), and web-brokers the opportunity to tailor vary from those available on the requirements for privacy and security. applications for specific target Exchange Web site. populations. One commenter stated that Until then, web-brokers must continue consumers should only be required to Timing. We received many comments to comply with the current direct answer questions that are relevant to on the timing related to implementation enrollment process, through which a their personal circumstances, so as to of the enhanced direct enrollment consumer is directed to HealthCare.gov reduce consumer burden and proposal. Some commenters wanted an to complete the eligibility application, application time. Another commenter aggressive implementation timeline, and all associated guidance. This means stated that allowing minor changes to urging HHS to finalize and implement direct enrollment entities are not the wording of specific questions could the FFE single streamline application permitted at this time to use non- help enhance the consumer experience, process early in 2016 so that testing Exchange Web sites to complete the so long as the overall meaning of the could occur well in advance of the 2017 Exchange eligibility application or question is maintained. Individual Market Open Enrollment automatically populate data collected Other commenters called HHS’s period. Other commenters from consumers into HealthCare.gov proposal to require web-brokers and recommended HHS pursue a more through any non-Exchange Web site. issuers to strictly adhere to existing measured approach, noting that Completion of the Exchange eligibility eligibility Exchange language a developing, testing, and implementing application on a non-Exchange Web ‘‘prudent safeguard,’’ citing concerns the enhanced process will be a site, or collection of data through a non- that enhanced direct enrollment would significant undertaking for HHS, web- Exchange Web site that is then used to increase the risk of consumers receiving brokers, and QHP issuers. One complete the eligibility application, will inaccurate or misleading information commenter stated that a measured be considered a violation of the direct that might affect eligibility approach would allow entities to use enrollment entity’s agreement with the determinations and consumer choice, the Exchange approved web service for FFEs. and the potential for consumer a transitional period alongside the While enhanced direct enrollment confusion around communication with traditional direct enrollment pathway. will not be available in the individual Exchanges. Another commenter urged that HHS market open enrollment period for 2017 HHS approval of alternative wait several years before implementing coverage, we are finalizing our proposal enrollment pathway processes. HHS the proposal, and gather and analyze to revise § 155.220(c)(1) to enable web- solicited comments on requiring HHS data on the consumer experience with broker entities who use HHS-approved approval of alternative enrollment web-based entities during 2016, conduct direct enrollment processes to facilitate processes in the proposed rule. Some an examination of its oversight of web- enrollment through the FFEs to either commenters urged that HHS implement brokers and QHP issuers in 2017, and ensure the applicant’s completion of an the approval process in a collaborative then propose any expansion with eligibility verification and enrollment

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through the Exchange Internet Web site applicable Exchange standards, only, and would not apply to SBEs that as described in § 155.405, or ensure that including Exchange notice requirements do not use the HealthCare.gov platform, the eligibility application information is under § 155.230 and Exchange privacy nor alter any State-specific rules related submitted for an eligibility and security standards related to to Medicaid eligibility. determination through an Exchange- handling PII under § 155.260(b). Comment: HHS solicited feedback on approved web service. This will allow We have also renumbered the current experiences with enrollment through applicants to complete the entire requirements that apply when an web-brokers, including any concerns Exchange application and enrollment Internet Web site of an agent or broker with privacy and security of the process on the web-broker’s non- is used to complete the QHP selection information transmitted through web- Exchange Web site. We believe this process in new § 155.220(c)(3)(i). No brokers by expanding direct enrollment process will grant direct enrollment changes were made to these existing to incorporate the FFE single entities the operational flexibility to requirements or the accompanying streamlined application and suggestions expand front-end, consumer-facing regulatory text. We note that, as for improvements, including requiring channels for enrollment, and provide outlined in § 155.220(c)(3)(ii)(A), these additional information display consumers with a more seamless requirements would also apply when an requirements (such as the lowest cost experience. Internet Web site of an agent or broker plan at each metal level) beyond those However, we also share commenters’ is used to complete the Exchange outlined in § 155.220(c)(3) to ensure that concerns that allowing this flexibility eligibility application. consumers understand basic without additional protections in place We agree with commenters that urged information about cost and availability may increase the risk of imprecise, HHS to adopt an approval process to of qualified health plans. We received inaccurate, or misleading eligibility ensure that the web-broker non- several comments opposing HHS results. In light of those considerations Exchange Web site seeking to offer implementing additional consumer and the accompanying comments stand-alone direct enrollment eligibility protection and privacy and security received, we are adding new services meets all applicable standards with respect to the use of the § 155.220(c)(3)(ii)(A) through (D) to requirements in order to protect enhanced direct enrollment process. clearly articulate the requirements consumers. Accordingly, we have added Some commenters stated that existing associated with completing an Exchange § 155.220(c)(4)(i)(F) to outline a process web-broker requirements are sufficient eligibility application on a web-broker’s for HHS to verify that these entities have to ensure appropriate consumer non-Exchange Web site. These met all of the applicable requirements of protections. One commenter said issuers requirements may be amended over this section before the non-Exchange and web-brokers should not be required time as implementation activities begin Web site is used to complete the to display the lowest-cost plan in each and once experience is gained under the Exchange eligibility application. metal level because existing decision new process (once implemented). The primary objective of the new support tools can filter plans based on Consistent with the proposal in the requirements outlined in customer input. However, one proposed rule, § 155.220(c)(3)(ii)(B) § 155.220(c)(3)(ii) and (c)(4)(i)(F) is to commenter suggested requiring requires all language related to ensure that the Exchange is able to conspicuous notice to consumers to application questions, and the sequence produce an accurate eligibility ensure they are aware they are applying the questions are presented on the direct determination from an eligibility for Exchange coverage. Several enrollment entity’s non-Exchange Web application completed by a direct commenters provided specific site to be identical to that of the FFE enrollment entity on a non-Exchange recommendations to ensure that Single Streamlined Application. We Web site for enrollment in a QHP consumers understand that they are acknowledge the comments requesting offered through the Exchange, including applying for Exchange coverage, deviations from the FFE single eligibility for advance payments of the including creating standardized streamlined application to enhance the premium tax credit and cost-sharing application ID numbers that enable consumer experience, and are finalizing reductions, as well as enrollments in consumers to create HealthCare.gov language permitting such deviations Medicaid, CHIP or the Basic Health accounts that would link to their web- with HHS approval. We will only Program. Alignment with the FFE Single broker accounts. Several commenters approve minor modifications that do not Streamlined Application regarding did not support requiring branding on change the intent or meaning of the sequence and language on a non- web-brokers’ sites, since many web- questions, decrease the probability of Exchange Web site to the FFE brokers build platforms for their accurate answers and eligibility application is critical to ensuring that strategic partners with an expectation of determinations, or affect the the information provided to the maintaining brand continuity. Others dependencies and structure of the Exchange through the Exchange supported specific branding dynamic application. approved web-service represents a requirements, recommending a We are also adding new complete understanding of a consumer’s consumer-tested ‘‘seal of approval’’ to § 155.220(c)(3)(ii)(C), which sets out a circumstance, and is directly tied to demonstrate that the web-broker’s more general requirement that any non- ensuring accurate eligibility results. As application was approved by HHS. One Exchange Web site facilitating the noted above, HHS will consider commenter suggested that direct completion of an Exchange eligibility allowing minor deviations from the enrollment non-Exchange Web sites application ensure that all information standardized language, in order to display a standard disclaimer that necessary for the completion of the improve readability or the consumer notifies consumers that eligibility application related to the consumer’s experience. We will provide guidance determinations for Exchange coverage applicable eligibility circumstance are on the process for seeking approval to are made by the Exchange and not the submitted through an Exchange- deviate from the standardized language. web-broker or issuer, and directing that approved web service. New We clarify that the requirements any questions, concerns, or appeals § 155.220(c)(3)(ii)(D) requires that the related to the direct enrollment process related to an eligibility determination be process used for consumers to complete rules are applicable to FFEs (including submitted to the Exchange. the eligibility application on the non- FFEs where States perform plan Commenters generally agreed that Exchange Web site comply with all management functions) and SBE–FPs web-brokers should continue to follow

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existing privacy and security standards, section to ensure ongoing compliance (g)(5)(ii) to clarify that HHS will limit including the Minimum Acceptable with applicable standards. We are terminations without 30-days advance Risk Standards for Exchanges (MARS– adding § 155.220(c)(5), which authorizes notice to those situations where there is E). Specific suggestions include HHS to periodically monitor and audit a finding or determination by a Federal requiring approval from CMS’s Chief agents and brokers approved under this or State entity that an agent or broker Information Security Officer, and the subpart. This audit authority would has engaged in fraud, or abusive CMS Chief Technology Officer, extend to agents or brokers who follow conduct that may result in imminent or providing CMS with a current MARS– the current direct enrollment pathway ongoing consumer harm. In response to E Compliance Manual and SSP System that uses a non-Exchange Web site to comments received from the public on Security Plan (SSP) subject to complete QHP selection, as well as this matter, we are also adding verification via a pre-delegation audit by agents or brokers who follow the paragraph (g)(6) to clarify that the State CMS, and appointing a designated, enhanced direct enrollment pathway department of insurance or equivalent dedicated Privacy Officer responsible that uses a non-Exchange Web site to State producer licensing authority will for attesting to the organization’s complete the Exchange eligibility be notified by HHS in cases of a adherence to privacy standards as application. suspension or termination of the agent’s outlined in the web-broker’s agreement Comment: One commenter stated that or broker’s agreements and registration with HHS. there was a drafting error in paragraph with an FFE effectuated under Other comments raised several (f)(4). That paragraph relates to paragraph (g). HHS will also coordinate concerns about the privacy and security termination without cause, but the with affected QHP issuers if it will not of consumers’ personally identifiable language in that paragraph uses the impede any State or Federal law information, particularly citizenship phrase ‘‘for cause.’’ enforcement investigation and as and immigration status, and asked HHS Response: We confirm the drafting permitted under applicable Federal or to clarify how these entities would error—we are correcting the paragraph State law. collect, store, and use PII. Some to read ‘‘without cause.’’ Comment: Several commenters were commenters wanted HHS to clarify that Comment: While many commenters concerned that the proposal did not web-based entities will not gather and supported the proposal for suspension afford sufficient due process protections store data beyond that necessary for and termination of an agent’s or broker’s to agents and brokers, and pointed out HealthCare.gov, State-based Exchanges, agreements with the FFEs in cases of that a 90-day suspension period could and Medicaid eligibility and enrollment potential fraud or abusive conduct, prevent a wrongly accused agent or via ‘‘cookies’’ or other tracking tools, several commenters opposed the broker from participating in most or all and would not store or use information proposal as an encroachment on, or of an individual market open gathered from consumers in the preemption of, State law. These enrollment period for a given plan year. application process for marketing other commenters asked that HHS refer These commenters urged HHS to products. instances of fraud and abuse to the provide notice and opportunity to Response: We agree that State, encouraged the FFE to work respond before implementing a implementing the proposal will be a closely with the State regulator to suspension, as well as provide further significant undertaking for HHS, and ensure consumers are protected, and guidance on what would define ‘fraud’ that privacy and security risks must be urged HHS to allow the States to or ‘abusive conduct.’ Commenters addressed prior to implementation. We regulate agents licensed do business in proposed measures such as suspending intend for the standards outlined in this their State ‘‘without interference.’’ or terminating based on clear, section to provide a framework to Commenters also requested that HHS unequivocal, and convincing evidence, prepare for the implementation to coordinate with issuers on issues of a threat of immediate consumer harm, support use of the enhanced direct agent and broker fraud, and inform and the opportunity for an appeal enrollment option in future years. We issuers when HHS has notified a State’s hearing before an administrative law will continue to consider commenters’ department of insurance regarding judge. Some commenters suggested that recommendations on ensuring specific fraud or misconduct issues. a 90-day suspension period may not be consumers are protected, and intend to Response: The proposal we are sufficient to conduct a full investigation, propose further protections in future finalizing relating to agent or broker and suggested a longer timeframe for rulemaking. suspension or termination if HHS suspension as well as a reference to Comment: HHS also solicited reasonably suspects fraud or abusive § 155.1210 to emphasize the record comments on about the current agent conduct pertains only to agents’ and retention obligation of an agent along and broker provisions in § 155.220 as brokers’ agreements and registration with HHS’s ability to access or audit applied to web-brokers, including with the FFEs to assist consumers with agent and broker records. suggestions for improvements in the enrollments through the FFEs; it does Response: Section 1313(a)(5) of the future, such as increased monitoring not otherwise interfere with any State Affordable Care Act provides the and oversight activities. Commenters authority to regulate agents or brokers authority to implement any measure or supported HHS conducting regular who are licensed to business in their procedure that the Secretary determines audits over web-brokers. Additionally, jurisdiction. While HHS may suspend or is appropriate to reduce fraud and abuse some commenters supported ongoing terminate the FFE agreements with an in the administration of the Exchanges. monitoring of plan selection and agent or broker, this suspension or We believe that a 90-day suspension is enrollment patterns through termination would not impact State not an unreasonable timeframe where comprehensive data analysis. Others licensure of an agent or broker. As there is suspected fraud or abuse by an stated that audits need to be conducted stated in the preamble to the proposed agent or broker, who may sell plans ‘‘equitably,’’ and that HHS should assist rule, the investigations and enforcement through the FFE not only during open web-brokers in coming into compliance related to the conduct of agents and enrollment but throughout the year. We if violations are identified. brokers with respect to enrollments note that a similar requirement for Response: We agree with commenters through or interactions with the FFEs Medicare providers, 42 CFR 405.371, that supported HHS conducting regular will be conducted in coordination with gives HHS the authority to suspend audits of agents and brokers under this States. We are finalizing paragraph payments for at least 180 days where

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there is reliable information that an is best understood by the consumers regulators can investigate the overpayment exists, or there is a they serve, which may result in minor misconduct to see if additional credible allegation of fraud. HHS inaccuracies in the information consumer harm has occurred in off- intends to use this suspension and provided to FFEs, and asked HHS to Exchange sales. termination authority to stop further adopt a standard of good faith without Response: Because agents and brokers FFE enrollment activity by the agent or the necessity of a finding of reasonable will be accessing the Federal platform to broker in cases where the misconduct cause. Two commenters requested enroll consumers in SBE–FP QHPs, we may cause imminent or ongoing clarification of the requirement for are finalizing § 155.220(l), to require consumer harm. Further, we are consumer consent. Commenters also that they be registered with HHS (which modifying paragraph (g)(5)(i)(B) to requested clarification on the includes training through HHS or an require HHS to review and make a prohibition on the use of the words HHS-approved vendor as described in determination whether to lift the ‘‘exchange’’ and ‘‘marketplace’’ in § 155.222 for agents and brokers serving suspension within 30 days of receipt of business names and Web sites since the individual market consumers), and that evidence to rebut the allegation of fraud words ‘‘exchange’’ and ‘‘marketplace’’ that they comply with all applicable or abusive conduct. This provides an are common and have been part of the FFE standards in § 155.220. As stated opportunity to limit the length of the names of Web addresses of many long- above, HHS will work closely with State suspension with the timely submission standing insurance-related businesses departments of insurance (or equivalent of rebuttal evidence. that pre-date the Exchanges and are not State regulators of agents and brokers) in We are finalizing the proposed intentionally misleading. SBE–FP States in oversight of agents paragraphs (g)(5)(i)–(ii) so that Response: In addition to the standards and brokers. The roles and suspension or termination will be of conduct requirements in § 155.220(j), responsibilities of HHS and the State effective starting on the date of the the FFE privacy and security agreement will be specified through the Federal notice in cases of actions related to contains specific requirements for platform agreement. While HHS will suspected fraud, or abusive conduct that protecting PII, PHI, and Federal tax consider future alternatives that would may cause imminent or ongoing information. The requirement to provide allow SBE–FPs to provide Exchange consumer harm; for other terminations accurate information to consumers is training, we note that States may require for cause under paragraph (g)(1), agents not intended to target generalities or licensed agents and brokers to receive and brokers will receive 30 days’ notice minor imprecisions, but rather State-specific SBE–FP training as part of with opportunity to respond prior to misrepresentations of material their continuing education to maintain termination as currently described in information that would affect a a State license. paragraph (g)(3). We are finalizing consumer’s choice of coverage or We are finalizing these provisions as proposed paragraph(g)(5)(i)(B) with subsidies. As described in preamble to proposed, with the following modification, so that in cases where the the proposed rule,42 we would interpret modifications. We are finalizing agent or broker submits evidence during § 155.220(j)(2)(i), which requires agents, § 155.220(c)(1) to require agents or the suspension period, HHS will review brokers and web-brokers to refrain from brokers to ensure an applicant’s it and make a determination whether to marketing or conduct that is misleading, completion of an eligibility verification lift the suspension within 30 days of to require that agents, brokers, and web- and enrollment application through an receipt of the evidence; if the rebuttal brokers avoid the use of the terms Exchange Internet Web site, or through evidence fails to convince HHS to lift Marketplace or Exchange or other words an Exchange-approved Web service, the suspension, or if the agent or broker in the name of a business or Web site subject to meeting the requirements fails to submit rebuttal evidence during if doing so could reasonably cause under new paragraphs § 155.220(c)(3)(ii) the 90-day suspension period, HHS may confusion with a Federal program or and (c)(4)(i)(F). To ensure that the terminate for cause the agent or broker’s Web site. We intend to provide further information provided to the Exchange agreements with the FFEs under information on the requirements for through non-Exchange Web sites paragraph (g)(5)(ii). consumer consent under represents a complete and accurate We note that § 155.1210 applies to § 155.220(j)(2)(iii) in future guidance. determination of a consumer’s eligibility Exchanges and agents of Exchanges, but Comment: While several commenters for enrollment through the FFEs, we are not agents of QHP issuers. However, approved of extending the FFE adding § 155.220(c)(3)(ii)(B) to require agents and brokers are downstream standards for agents and brokers to all language related to application entities of QHP issuers, and they should SBE–FP States, others wanted more questions, and the sequence of be bound by their agreement with the flexibility for SBE–FP States to train, questions presented on the agent or QHP issuer to provide access to records, register, and provide oversight of agents broker’s non-Exchange Web site, to use under § 156.340(b)(4), and maintain and brokers. Commenters suggested the same language as the FFE single records in accordance with the standard allowing SBE–FPs to design and streamlined application in § 155.405. at § 156.705, and HHS may request administer their own individual training We are also adding § 155.220(c)(3)(ii)(C) those records as part of an investigation and certification program with to require all information for the or audit. treatment of State-specific requirements consumer’s applicable eligibility Comment: Commenters generally and regulations that may not be circumstances are submitted through an agreed with the standards of conduct adequately addressed by FFE training Exchange-approved Web service; and proposed in § 155.220(j) for agents and and registration. One commenter § 155.220(c)(3)(ii)(D) to require the brokers as important consumer suggested that State-specific regulations process used for consumers to complete protections. One commenter suggested and training materials should be made the eligibility application to comply HHS go further in implementing available for voluntary incorporation by with all applicable Exchange standards, standards for protecting PII, protected the individual SBE–FP. Another including §§ 155.230 and 155.260(b). To health information (PHI), and Federal commenter requested that all allegations ensure maximum consumer protection, tax information. Other commenters of agent misconduct in SBE–FP States we are also adding new suggested that agents should be able to be referred to the State so State § 155.220(c)(4)(i)(F) to outline a process maintain flexibility to answer for HHS to verify entities meet all consumers’ questions in a manner that 42 80 FR 75526 (December 2, 2015). requirements of this section prior to

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using a non-Exchange Web site to e. Standards for HHS-Approved we proposed that vendors would only complete the Exchange eligibility Vendors of FFE Training for Agents and be required to collect, store and share application. In addition, we are adding Brokers (§ 155.222) with HHS FFE training completion data. § 155.220(c)(5) to enable HHS to In the proposed rule, we proposed We also proposed adding a paragraph periodically monitor and audit entities changes to the standards for HHS- (b)(6) to require vendors to provide to assess compliance with standards in approved vendors of FFE training for technical support to agent and broker this section. We are correcting an error agents and brokers outlined in users of the vendor’s FFE training as in paragraph (f)(4) to change ‘‘for cause’’ § 155.222. To prevent duplication with specified by HHS. In preamble, we to ‘‘without cause.’’ We are finalizing HHS functions, we proposed noted that HHS has the authority to (g)(5)(i)(A) to add ‘‘that may cause eliminating the requirement that require approved vendors to provide imminent or ongoing consumer harm’’ vendors perform information technical support, as well as FFE after ‘‘abusive conduct.’’ To clarify the verification functions, including State training, in accordance with HHS guidelines and in a manner and format process for submitting evidence to rebut licensure verification and identity that complies with Section 508 of the the allegation of fraud or abusive proofing, as well as other changes to Rehabilitation Act of 1973.43 We also conduct, we are amending paragraph improve the vendor training model. (g)(5)(i)(B) to add that if the agent or To reflect that HHS-approved vendors proposed that, the World Wide Web broker submits such evidence during would no longer be required to perform Consortium’s Web Content Accessibility the suspension period, HHS will review Guidelines (WCAG) 2.0 Level AA information verification functions, we 44 the evidence and make a determination proposed amending § 155.222(a)(1) to standards could also be considered an whether to lift the suspension within 30 provide that a vendor must be approved acceptable national standard for Web days after HHS’s receipt of evidence. If by HHS, and removing the reference to site accessibility. Comment: Commenters supported the the rebuttal evidence does not persuade information verification. We also proposed improvements to standards for HHS to lift the suspension, or if the proposed in § 155.222(a)(2) to remove vendors that wish to be approved by agent or broker fails to submit rebuttal the requirement that vendors must HHS to offer agent and broker FFE evidence during the suspension period, require agents and brokers to provide training. They supported the proposed HHS may terminate the agent’s or proof of valid State licensure. Consistent change to § 155.222 that would broker’s agreements required under with these changes, we proposed eliminate the requirement that vendors paragraph (d) of this section and under amending § 155.222(b)(1) through (5) conduct identity-proofing, as the current § 155.260(b) for cause under paragraph and (d) to remove standards for years’ experience indicated that it was (g)(5)(ii) of this section. We are changing information verification, identity not needed and was duplicative of the language in paragraph (g)(5)(ii), proofing, verification of agents’ and existing Exchange practices. They also relating to grounds for termination brokers’ valid State licensure, and all supported the proposed requirement without notice. The proposed rule related standards that support these that vendors offer tier one help desk stated that if HHS reasonably confirms functions. We proposed to eliminate the support for agent and broker users. One the credibility of an allegation that an requirements in paragraphs (b)(1)(i) commenter requested that vendors be agent or broker engaged in fraud or through (ii) to submit an application able to provide an additional level of abusive conduct (or is notified by a demonstrating prior experience with help desk support (that is, tier two State or law enforcement authority of verification of State licensure and support) to brokers who were having the State or law enforcement authority’s identity proofing, and instead combine trouble navigating the CMS Enterprise finding or determination of fraud or into paragraph (b)(1) the existing Portal. The commenter also suggested behavior that would constitute abusive requirements to demonstrate prior that scripted responses, reflecting conduct). Based on comments discussed experience with online training and vendor input, be provided to vendors at above, we are revising this provision in technical support for a large customer least two weeks prior to the FFE training order to clarify the grounds for base. In paragraph (b)(2) we proposed to launch. One commenter supported the termination without advance notice and eliminate the requirement to adhere to provisions at § 155.222(b)(3) that require the role of the State. HHS specifications for content, format, vendors to share only training and delivery of information verification. We are also eliminating a redundancy completion data with HHS, as opposed In paragraph (b)(4) we proposed to within the proposed rule. Paragraph to all data about users, and asked that amend the standards for the agreement (g)(5)(ii), as originally proposed, HHS use that data to provide consumers that vendors must execute with HHS, to described the termination of the agent’s with information about the availability eliminate the requirement that vendors or broker’s agreement with the Exchange of the assistance that agents and brokers implement information verification provide. under § 155.260(b) as of the date of the processes. We proposed amending notice. Consequently, to reduce Response: HHS will continue to work § 155.222(b)(5) and (d) to remove with approved vendors to enhance duplication, we are deleting a similar references to information verification. sentence from (g)(5)(iii). We are adding customer service and technical support Other proposed changes to this to agents and brokers. Requirements for paragraph (g)(6) so that the State section incorporated the proposed department of insurance or equivalent vendors’ customer support and help standards for SBE–FPs, privacy and desks will be included in guidance State agent or broker licensing authority security measures, and technical will be notified in cases of suspensions provided to conditionally approved support requirements. In paragraph vendors. All agents and brokers who or terminations effectuated under (b)(2), we proposed to include SBE–FP paragraph (g). successfully complete FFE training States in the requirement to offer through an approved vendor or the CMS Finally, we have made a small continuing education units (CEUs) in Marketplace Learning Management number of non-substantive changes to five FFE States. In paragraph (b)(3) we System (MLMS), in addition to other the rule to make language consistent as proposed to eliminate the requirement well as to clarify the date on which the that vendors collect, store, and share 43 80 FR 75487, 75528 (December 2, 2015). 30-day window for reconsideration with HHS all data from agent and broker 44 For more information see, the WCAG Web site requests begins. users of the vendor’s training; instead at http://www.w3.org/TR/WCAG20/.

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FFE registration steps, will be added to number of consumers who received commenter requested that we develop a Find Local Help if they choose to make assistance applying for and selecting a means for certified application their contact information publicly QHP, enrolling in a QHP, or applying counselor organizations to voluntarily available. for Medicaid or CHIP. We anticipated report additional information that falls We are finalizing these provisions as that the monthly reports submitted to outside of the proposed performance proposed. the FFEs would provide information measures. Response: We agree that in general, f. Standards Applicable to Certified and data from the preceding month, and tracking performance data will enhance Application Counselors (§ 155.225) would be submitted electronically, through HIOS or another electronic the Exchanges’ ability to oversee and We proposed to amend § 155.225(b)(1) submission vehicle. We also said that support certified application counselor to provide that certified application we expected that some of the data that organizations, target outreach and counselor designated organizations FFEs would require from certified education efforts, and identify training must, as a condition of their designation application counselor designated needs. In FFEs, we believe the as certified application counselor organizations would be similar to what information and data reporting we organizations by the Exchange, provide is collected from Navigator grantees in proposed aligns well with HRSA’s the Exchange with information and data the FFEs.45 We explained that we did Affordable Care Act Health Center related to the number and performance not expect this information collection to Outreach and Enrollment Assistance of the organization’s certified include consumers’ PII. We requested grant reporting metrics. We also application counselors, and about the comments on our proposal, on the scope appreciate commenters’ suggestions for consumer assistance being provided by of information and data that Exchanges additional FFE data elements to be the organization’s certified application should collect, and on HHS’s specific reported. However, to minimize the counselors, upon request, in the form proposals for collecting information and burden on certified application and manner specified by the Exchange. data from certified application counselor organizations, we are not We explained that § 155.225(b)(1)(ii) counselor organizations in the FFEs, adding to or changing the kind of already requires certified application information and data to be collected in counselor designated organizations to including the proposed scope and timing of reports by these organizations FFEs. maintain a registration process and Comment: A few commenters method to track the performance of to the FFEs. We are finalizing this provision opposed this proposal, arguing that the certified application counselors, but it largely as proposed, with a modification requirements would be overly does not specify the type of performance to the frequency and timing of reporting burdensome and could lead some information that must be tracked, nor required by FFEs, from a monthly basis certified application counselor does it require that information be beginning in January 2017, to a organizations to discontinue their provided to the Exchange. We stated programs. Many commenters urged us that our proposed amendment would quarterly basis beginning with reports for the third quarter of calendar year to minimize the burden associated with give Exchanges valuable information certified application counselor that will aid in their oversight of 2017. Comment: We received mixed performance data reporting. certified application counselor programs comments related to our proposal to Commenters expressed concern that and improve Exchanges’ understanding collect data from certified application unfunded reporting burdens would of the scope of consumer assistance counselor organizations. Many further reduce the number of being provided in the Exchange service commenters supported the proposal, organizations able to provide critical area. The requirement would also enrollment assistance. Several improve the consumer assistance noting the value of tracking performance data. Many commenters also requested commenters expressed concern functions of the Exchange in other regarding the scope and frequency of the significant ways, for example, by that we coordinate with the Health Resources and Services Administration proposed FFE reporting requirements, providing information that could help and recommended requiring less an Exchange focus its outreach and (HRSA), which has reporting requirements related to their Affordable frequent reporting. education efforts, target its recruitment Response: We intend that any FFE Care Act Health Center Outreach and of certified application counselor information collection be Enrollment Assistance grants, in order organizations, and identify the need for straightforward, and place little burden increased technical assistance and to reduce duplication and on certified application counselor support for certified application administrative burden for Federally organizations, particularly given the counselor organizations. Qualified Health Centers that are both resource constraints faced by many We explained that under this HRSA grantees and serving as FFE- certified application counselor proposal, Exchanges could establish designated certified application organizations. We recognize that reporting standards tailored to their own counselor organizations. We also certified application counselor specific needs and objectives. In States received several specific suggestions for organizations are not expected or with FFEs, we proposed that HHS data elements to be collected by required to be funded by Exchanges. In would collect information and data from Exchanges, including metrics related to FFEs, to help minimize any burden on certified application counselor re-enrollment, assistance to consumers certified application counselors and designated organizations on a monthly with limited English proficiency, and certified application counselor basis beginning in January 2017. We post-enrollment activities. One organizations, while still providing proposed that the FFEs would require FFEs enough information to 45 The data collection requirements for FFE these organizations to report, at a Navigator grantees in 2015–2016 are specified in meaningfully improve oversight of minimum, data regarding the number of the Information Collection Request (OMB control certified application counselor individuals who have been certified by number 0938–1215) under the Cooperative programs, we are finalizing a quarterly, the organization; the total number of Agreement to Support Navigators in Federally- rather than monthly, reporting schedule, facilitated and State Partnership Exchanges (see the consumers who received application Paperwork Reduction Act package associated with beginning with reports for the third and enrollment assistance from the 80 FR 36810). http://www.reginfo.gov/public/do/ quarter of calendar year 2017, and are organization; and of that number, the PRAViewDocument?ref_nbr=201507-0938-001. otherwise finalizing the provision as

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proposed. Quarterly reporting submitted IT and data collection platforms to that HHS establish limits on both the to the FFEs will be aligned with avoid duplicative efforts. For example, scope and frequency of performance calendar year quarters (that is, Quarter commenters noted that certified data reporting requirements in all 1: January 1–March 31; Quarter 2: April application counselors working in FFEs Exchanges. Commenters also noted that 1–June 30; Quarter 3: –September provide their identification number and certified application counselor 30; and Quarter 4: October 1–December organization number on applications organizations that operate under the 31). Quarterly reports submitted to the submitted through HealthCare.gov and umbrella of national organizations FFEs should provide information and that this number should be used to would benefit from standardized data from the quarter and will be due 30 quantify the number of clients who reporting requirements across all days after the end of the quarter. For received application assistance. Exchanges. example, the first report that will be due Commenters also suggested that the Response: In SBEs, including SBE– under this rule, the third quarter report FFEs track the number of certified FPs, this provision only requires that for calendar year 2017, will cover the application counselors through the FFE organizations submit information and period from July 1, 2017 through online training system. data to the SBE upon request, in the September 30, 2017, and will be due Response: In FFEs, additional form and manner specified by the SBE, October 30, 2017. This quarterly guidance on the reporting requirements and therefore affords SBEs the flexibility reporting period and deadline will will be published through instructions to establish standards appropriate to generally align with both the FFE and trainings. We anticipate that their own specific needs and objectives. Navigator grant metrics and HRSA’s quarterly reports submitted to FFEs SBEs, including SBE–FPs, may weigh Affordable Care Act Health Center would provide information and data any increased administrative costs of Outreach and Enrollment Assistance from the preceding quarter, and would requiring regular reports against the grant reporting metrics. FFE Navigator be submitted electronically, through benefits of having additional quarterly reports are also due 30 days HIOS or another electronic submission information about the consumer after the end of the quarter, and the vehicle. We have considered assistance landscape in their State and quarterly reports under HRSA’s grants commenters’ suggestions related to decide whether, how, and when to are due approximately 10–15 days after alternative collection methods, but have collect data from certified application the end of the quarter. We believe that significant concerns with the quality, counselor organizations. In addition, we quarterly reports will provide the FFEs completeness, and accuracy of data encourage SBEs to take into with sufficient information to collected using these methods. The consideration the impact their reporting meaningfully improve oversight of certified application counselor requirements will have on organizations certified application counselor identification number field on that also serve as certified application programs. applications submitted through counselor organizations in States with We believe our final rule strikes the HealthCare.gov is not a required field, an FFE. We encourage SBEs to consider right balance between minimized and therefore is underreported. In using, at a minimum, the data elements burden and effective monitoring, and addition, this number would not used by the FFEs, in order to minimize that it will improve the consumer account for assistance certified the burden on organizations that also assistance functions of the Exchange by application counselors provide to serve as certified application counselor providing Exchanges with information consumers who do not complete an organizations in States with an FFE, but that could help focus their outreach and application through HealthCare.gov. they are not required to do so if they do education efforts, target recruitment of Tracking the number of certified not believe that doing so fits their certified application counselor application counselors in FFEs through State’s circumstances. organizations, and identify the need for our online training system only tracks As discussed earlier in this preamble, increased technical assistance and who has completed the FFE training, in the discussion of the amendments to support for certified application not who has been formally certified. In § 155.210(d)(6), we proposed to amend counselor organizations. We also FFEs, designated certified application § 155.225(g)(4), which prohibits remind SBEs (including SBE–FPs) that counselor organizations, not FFEs, certified application counselors in all this provision gives them the option, but certify individual certified application Exchanges from providing certain kinds does not require them, to establish counselors, and completion of the FFE of gifts and promotional items to an reporting standards and collect data training may be only one of several applicant or potential enrollee. For the from certified application counselor criteria prerequisite to certification. For same reasons discussed above, we organizations, because the rule only example, certified application counselor proposed to amend § 155.225(g)(4) requires organizations to provide data organizations may require additional consistent with our proposed and information to the Exchange upon employee training, and some States amendments to § 155.210(d)(6). Based the Exchange’s request. have additional requirements that must on comments received, discussed above Comment: We received many be met before an individual can be with the amendments to § 155.210(d)(6), comments requesting additional certified as a certified application we are finalizing this provision as guidance regarding performance metrics counselor. By collecting more accurate proposed. and the submission process for FFE information, we believe FFEs will be g. Privacy and Security of Personally reporting. Commenters requested clear better positioned to ensure adequate Identifiable Information (§ 155.260) guidance and instructions on defining assistance is available to consumers. the specific data elements to ensure that Comment: A few commenters agreed Section 155.260(a)(1) refers to organizations can easily and that SBEs should have the option to insurance affordability programs, as consistently report data. In addition, establish their own reporting defined in § 155.20. We proposed to commenters requested that the system requirements to align with their needs. make a technical correction to this for FFE reporting be easy to understand A few commenters requested that SBEs paragraph so that § 155.300, which and access, and that HHS provide be allowed an exemption from this contains the definition of insurance adequate training and support for the proposal if they determine that the affordability programs, is referenced system. We received many comments administrative costs are too instead. We are finalizing this provision suggesting that the FFE leverage existing burdensome. One commenter requested as proposed.

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h. Oversight and Monitoring of Privacy employer that an employee has been the employee (or an individual acting at and Security Requirements (§ 155.280) determined eligible for Exchange the request of the employee) has Section 155.280(a) permits HHS to financial assistance only if the employee received financial assistance under the oversee and monitor the FFEs and non- has also enrolled in a QHP through the Affordable Care Act. We intend to Exchange entities associated with FFEs Exchange. We also proposed to revise include language referencing section to ensure compliance with the privacy paragraph (h)(2) so that a notice sent in 1558 of the Affordable Care Act in and security standards established and accordance with § 155.310(h) must notices from the FFEs under implemented by an FFE under indicate that an employee has been § 155.310(h) for 2016, and we encourage § 155.260. Section 155.280(a) also determined eligible for Exchange SBEs to do the same. provides authority for HHS to monitor financial assistance and has enrolled in Comment: We received comments State Exchanges for compliance with the a QHP through the Exchange. We supporting both the policy that notices privacy and security standards clarified that for purposes of be sent in groups of employees and that established and implemented by the § 155.310(h), an employee is determined notices be sent on an employee-by- eligible for cost-sharing reductions State Exchanges under § 155.260. We employee basis. For example, one when the employee is determined proposed amending paragraph (a) to commenter expressed concern that eligible for cost-sharing reductions permit HHS to also oversee and monitor notifying employers in groups of based on income in accordance with SBE–FPs’ compliance with the privacy employees could delay the notification § 155.305(g) or § 155.350(a). process. Another commenter supported and security standards established and With regard to the timing of the implemented by an FFE under the proposal that the Exchange may employer notification required under choose the manner and timing by which § 155.260. paragraph (h), we proposed that the Comment: We received only a few to send notices. Exchange may choose to either (a) notify comments on this proposal. A few Response: To allow for operational employers on an employee-by-employee commenters supported extending HHS’s flexibility and the varying needs of basis as eligibility determinations are different Exchanges, we are finalizing authority to oversee and monitor made for Exchange financial assistance privacy and security standards to SBE– the proposed language allowing an and enrollment in a QHP through the Exchange to choose to send notices on FPs, but expressed concern that since Exchange, or (b) notify employers for SBE–FPs conduct some operations an employee-by-employee basis or in groups of employees who are groups of employees. We note, however, themselves, HHS should be required to determined eligible for Exchange oversee and monitor SBE–FPs to ensure that for 2016, the FFEs intend to send financial assistance and enroll in a QHP notices in groups of employees. protection of consumer PII. through the Exchange. Under both Response: We agree with the Comment: A few commenters options, the Exchange must notify requested that we further define the commenter that it is critical to ensure employers within a reasonable requirement to notify employers within protection of consumer’s PII, as well as timeframe following any month an a reasonable timeframe following any ensure cybersecurity generally, across employee was determined eligible for month an employee was determined all Exchange models. We are committed either form of Exchange financial eligible for Exchange financial to continue working with States to assistance and enrolled in a QHP, with ensure compliance with all State and the goal to notify employers as soon as assistance and enrolled in a QHP Federal requirements related to possible to provide the greatest benefit through the Exchange. They stated that Exchanges, including Exchange privacy to enrollees. We sought comment on that failure to send notices within one and security standards. We are these proposals. month could result in adverse tax finalizing the rule as proposed. Comment: Many commenters consequences for the employee. Response: While we understand the 4. Exchange Functions in the Individual supported the requirement that an concerns that the commenters Market: Eligibility Determinations for Exchange must notify an employer that expressed, we are finalizing this Exchange Participation and Insurance an employee has been determined provision as proposed in order to Affordability Programs eligible for Exchange financial assistance only if the employee has also provide the Exchange with flexibility to a. Options for Conducting Eligibility enrolled in a QHP through the make decisions based on its operational Determinations (§ 155.302) Exchange. A few commenters stated that capabilities. As we stated in the We proposed to amend § 155.302(a) the proposed change would reduce proposed rule, the Exchange must notify by adding an option for an SBE–FP to consumer confusion and minimize employers within a reasonable satisfy the requirement of conducting administrative burden. timeframe following any month an eligibility determinations by relying on Response: We are finalizing employee was determined eligible for HHS to carry out eligibility § 155.310(h) as proposed. either form of Exchange financial determination activity and other Comment: Several commenters assistance and enrolled in a QHP requirements within subpart D, through expressed concern that employer through the Exchange, with the goal to a Federal platform agreement. We did notices may contribute to employer notify employers as soon as possible to not receive any comments on this retaliation and requested that HHS provide the greatest benefit to enrollees proposal, and are finalizing it as expressly prohibit employer retaliation (Emphasis added). The goal of the proposed. and include such language on employer Exchange must be to send notices as notices and elsewhere. soon as possible. We remind b. Eligibility Process (§ 155.310(h)) Response: Section 1558 of the stakeholders that tax liability is We proposed to amend § 155.310(h), Affordable Care Act amended the Fair determined by the IRS, and is not which currently directs the Exchange to Labor Standards Act of 1938 to provide affected by these notices or the notify an employer that an employee that no employer may discharge or in employer appeals process. has been determined eligible for any manner discriminate against any Based on the comments received, we Exchange financial assistance. We employee with respect to his or her are finalizing paragraph (h) as proposed. proposed to revise this requirement so compensation, terms, conditions, or The FFEs intend to publish a sample that the Exchange must notify an other privileges of employment because notice that complies with § 155.310(h)

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for the benefit of employers, employees, Comment: One commenter avoid repayment of advance payments SBEs, and other stakeholders. recommended against adjusting the of the premium tax credit (APTC) at tax threshold because it would result in time, Exchanges should set the default c. Verification Process Related to adverse tax consequences for applicants. applied APTC amount at 85 percent. Eligibility for Insurance Affordability Instead, the commenter suggested that The commenter stated that this would Programs (§ 155.320) HHS should broaden the time period it allow for some flexibility for income In § 155.320(c), we proposed to allow uses when checking income from changes during the year, and protect an Exchange to establish a reasonable trusted data sources during the applicants against repayment during tax threshold at which the Exchange must verification process like Equifax reconciliation. follow the alternate verification process Workforce Solutions from 90 to 360 Response: HHS believes that it is where the applicant’s attested projected days. important to educate applicants about annual household income is sufficiently Response: HHS may examine the how changes in their income affect their below the annual income computed in proposal for expanding data used as part eligibility for the premium tax credit. accordance with § 155.320(c)(3)(ii)(A). of the electronic data service for upfront During plan selection, applicants are Currently, an applicant enters the verification of income as part of notified that they can accept the full alternate verification process if the consumers’ initial application amount of advance payments of the attested annual household income submission. premium tax credit for which they have submitted by the applicant is more than Comment: One commenter suggested been determined eligible, accept a 10 percent less than income data that an Exchange use the same standard smaller amount, or accept no advance received from trusted data sources, or if for entering the alternate verification payments and claim any premium tax no data is available from trusted data process as the Exchange uses to resolve credit they are eligible for on their tax sources. Under the proposal, in place of applicants with annual household returns. Applicants are also notified that the 10 percent threshold, the Exchange income data matching issues. they may have to pay money back would establish a reasonable threshold Response: The two processes are through the tax reconciliation process if in guidance that must be approved by different since they are comparing the APTC they receive exceeds the PTC HHS, must not be less than 10 percent, different data elements. The purpose of they can claim on their tax return. and can also include a threshold dollar the alternate verification process is to Comment: One commenter suggested amount. examine the difference in an applicant’s allowing for additional flexibility in attested projected annual household verification for annual household We are finalizing this rule as income and information from trusted income for certain occupations that proposed. data sources, whereas the resolution of have greater variability in their income Comment: Commenters data matching issues depends on an such as self-employed merchants, overwhelmingly supported adjusting the examination of whether an applicant’s artists, and small business owners. threshold in § 155.320(c). Commenters submitted documentation is satisfactory Response: HHS understands that stated that the current 10 percent evidence to support their attested projecting annual household income threshold is too restrictive and causes projected annual household income. can be difficult, particularly for too many applicants to enter the Comment: One commenter suggested applicants who have occupations that alternate verification process. that applicants be allowed to provide an have high variability in income. HHS Commenters stated that the alternate explanation for discrepancies in their has worked to improve the resolution of verification process is burdensome to income, and that a standardized form annual household income data applicants because providing proof of should be provided for applicants to matching issues for these applicants by projected income can be difficult. Some attest to their income as a means of performing outreach and creating commenters suggested that a reasonable verifying their income in the alternate educational materials with instructions threshold should not be less than 20 verification process. for verifying variable income. percent or 25 percent. Other Response: HHS believes the use of In § 155.320(d), we made certain commenters recommended that HHS written explanations that include proposals related to alternative also do more to assist applicants in the sufficient information to calculate an processes relating to verification of resolution of annual income data annual income are a valuable tool for enrollment in an eligible employer- matching issues. applicants, and has implemented sponsored plan and eligibility for Response: HHS will continue to study procedures for handling explanations of qualifying coverage in an eligible what threshold may be most income that accompany documentation employer-sponsored plan. In paragraph appropriate, taking into account normal of income. (d)(3), we proposed to redesignate fluctuations in applicants’ annual Comment: The majority of paragraph (d)(3)(i) as (d)(3)(ii) and household income and experience with commenters expressed support for redesignate paragraph (d)(3)(ii) as the tax reconciliation process. HHS will granting the Exchanges flexibility in (d)(3)(i). To preserve the accuracy of the release guidance for Exchanges on what setting a reasonable threshold to meet redesignated paragraph (d)(3)(ii), we constitutes a reasonable threshold and varying Exchange needs, including proposed to update the cross-reference to clarify the process for an Exchange to related to State demographics. One to paragraph (d)(3)(ii) with (d)(3)(i), and receive approval from HHS. HHS commenter stated that all Exchanges paragraph (d)(3)(iii) with (d)(4)(i), believes that clear outreach and notice should use the same threshold for discussed below. We also proposed to for applicants related to the annual applicants entering the alternate modify the requirement that the household income attestation process is verification process. Exchange select a statistically critical. To that end, HHS released a Response: HHS supports granting significant random sample of applicants new guide for applicants with annual Exchanges flexibility to establish a for whom the Exchange does not have household income data matching issues. reasonable threshold, but all thresholds data as specified in paragraphs (d)(2)(i) The guide is available at the HHS Web are subject to the same reasonability through (iii) and take steps to contact site: https://marketplace.HHS.gov/ standard. any employer identified on the outreach-and-education/household- Comment: One commenter suggested application for the applicant and the income-data-matching-issues.pdf. that as a strategy to help applicants members of his or her household to

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verify whether the applicant is enrolled Response: We understand that certain (including those QHP enrollees whose in an eligible employer-sponsored plan SBEs may prefer the flexibility to eligibility to enroll in Medicare is due or is eligible for qualifying coverage in implement either sampling or an to disability or end stage renal disease). an eligible employer-sponsored plan for alternate process indefinitely. However, Commenters had varied suggestions the benefit year for which coverage is the alternate process should be used as related to the form and content of the requested. This process is referred to as an interim measure to gather notices, but most suggested notices sampling. We proposed to modify this information about the verification containing information related to requirement as described in our in our process as Exchanges improve their deadlines for Medicare enrollment and discussion of proposed paragraph (d)(4) long-term verification programs. We penalties for late enrollment, of the proposed rule. These proposed will take these comments under instructions on how to terminate changes were intended to organize and advisement for future rulemaking. enrollment in a QHP or to remove a simplify the regulatory text. Comment: We also received several Medicare beneficiary from an We proposed to add paragraph (d)(4), comments pertaining more broadly to enrollment group prior to enrolling in proposing that for any benefit year for verification of enrollment in an eligible Medicare, and instructions on how to which an Exchange does not reasonably employer-sponsored plan and eligibility terminate financial assistance, such as expect to obtain sufficient verification for qualifying coverage in an eligible APTC, for which Medicare beneficiaries data, the Exchange must follow the employer-sponsored plan. are no longer eligible. Some commenters procedures described in paragraph Response: We agree with commenters had specific suggestions related to (d)(4)(i) or, in the alternative, for benefit on both the benefits of a comprehensive identifying and notifying QHP enrollees years 2016 and 2017, the Exchange may verification system for employer who are eligible for Medicare benefits establish an alternative process sponsored coverage, and on the due to disability or end stage renal approved by HHS. For the purposes of considerable operational challenges of disease. Finally, some commenters this section, the Exchange reasonably creating one. requested information related to how We are finalizing the changes to expects to obtain sufficient verification State-based Exchanges would be § 155.320(d) as proposed. data for any benefit year when, for the affected by new Medicare notice benefit year, the Exchange is able to d. Medicare Notices requirements. obtain data about enrollment in and We recognize the importance of a Response: We appreciate the eligibility for qualifying coverage in an smooth transition to Medicare coverage, comments related to this issue. We are eligible employer-sponsored plan from and sought comment on whether and working to incorporate additional at least one electronic data source that how to implement a notification that an online content to help clarify for is available to the Exchange and has enrollee may have become eligible for consumers who may be close to aging been approved by HHS, based on Medicare. For example, for enrollees in into Medicare, or who may already be evidence showing that the data source is an FFE, we considered pop up text on eligible for Medicare or receiving sufficiently current, accurate, and HealthCare.gov for individuals who are Medicare benefits, to provide better minimizes administrative burden. going to turn 65 during the benefit year. clarity around how Medicare and In paragraph (d)(4)(i), we proposed We sought comment on this and other Exchange coverage are intended to that the Exchange may conduct ways to promote smooth coverage work, and options consumers may have sampling. This paragraph is transitions. as they transition into Medicare substantially the same as current Comment: All commenters supported coverage from Exchange coverage. In paragraph (d)(3)(iii), with three implementation of the pop-up text on addition, we are working on enhancing differences described in the proposed HealthCare.gov for individuals who are consumer communications on how to rule: we proposed to (1) remove the going to turn 65 during the benefit year. transition from Exchange coverage to absolute requirement to conduct Most commenters also expressed a Medicare, and helping consumers sampling, and, for benefit years 2016 desire for more robust notice and understand where to find helpful and 2017, allow the Exchange to screening requirements. Several resources for both programs. We implement an alternative process commenters requested that the FFE welcome further input and assistance as approved by HHS; (2) remove the implement a screening process to we work towards implementing a language that appears in current identify QHP enrollees who are framework to ease QHP enrollees’ paragraph (d)(3)(iv), which discusses Medicare-eligible or who will be transition from coverage through the relief that is no longer applicable; and reaching Medicare eligibility during the Exchanges to Medicare enrollment. (3) appropriately update internal cross- benefit year. Several commenters 5. Exchange Functions in the Individual references. We proposed moving the suggested that the FFE provide Market: Enrollment in Qualified Health sampling requirement from paragraph additional education to QHP enrollees Plans (d)(3) and adding it to new paragraph nearing Medicare eligibility, including (d)(4) to more accurately reflect the role information related to Medicare a. Annual Eligibility Redetermination of the sampling process. In paragraph enrollment, penalties for not timely (§ 155.335(j)) (d)(4)(ii), we proposed to permit an enrolling in Medicare, the requirement In the Patient Protection and Exchange the option to implement an to return to the FFE in order to Affordable Care Act; Annual Eligibility alternate process to sampling approved terminate financial assistance for which Redeterminations for Exchange by HHS for the benefit years 2016 and Medicare beneficiaries no longer are Participation and Insurance 2017. eligible or to terminate their QHP Affordability Programs; Health Comment: Commenters generally enrollments, and options for those Insurance Issuer Standards Under the supported the proposal to permit an automatically enrolled into a Medicare Affordable Care Act, Including Exchange to implement an alternate Advantage plan. Most commenters also Standards Related to Exchanges final process to sampling approved by HHS requested that the option of a pop-up rule (79 FR 52994, 53000 (Sept. 5, for the benefit years 2016 and 2017. A screen on HealthCare.gov be augmented 2014)), we established a renewal and re- few SBEs opposed the sunset for the by notices sent to QHP enrollees nearing enrollment hierarchy at § 155.335(j) to alternate process to sampling. eligibility to enroll in Medicare minimize potential enrollment

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disruptions. To further minimize might affect the enrollee’s provider network, cost-sharing, deductibles, and potential disruptions of enrollee network, benefits, and continuity of other factors that affect overall costs, eligibility for cost-sharing reductions, care, or stand-alone dental coverage. continuity of care, and the consumer we proposed to amend § 155.335(j)(1) to Some commenters stated that education experience. We are not finalizing this create a new re-enrollment hierarchy for and proper notices could help ensure proposed additional re-enrollment all enrollees in a silver-level QHP that that enrollees actively re-enroll in hierarchy. is no longer available for re-enrollment. coverage if they are automatically re- Comment: Many commenters Specifically, if such an enrollee’s enrolled in a plan that does not fit their responded unfavorably to the suggestion current silver-level QHP is not available needs. Several commenters stressed that that enrollees in QHPs could be and the enrollee’s current product no issuers, who have the experience and automatically re-enrolled into off- longer includes a silver-level QHP information necessary to ensure Exchange plans because they would lose available through the Exchange, we enrollees are matched with a product any advance payments of the premium proposed that the enrollee’s coverage that most closely fits their needs while tax credit or cost-sharing reductions would be renewed in a silver-level QHP minimizing potential disruptions in they had been receiving. Several in the product offered by the same coverage and cost-sharing reductions, stressed that such a plan would cause issuer that is the most similar to the are in the best position to determine consumer confusion. enrollee’s current product, rather than which available plans are the most Response: In response to these in a plan one metal level higher or lower similar to plans that are no longer comments, and in order in to maintain than his or her current silver-level QHP, available. coverage with advance payments of the but within the same product. Response: We are sympathetic to the premium tax credit and cost-sharing Transitioning enrollees in this manner comments stating that enrollees should reductions for the majority of Exchange is an operationally efficient way to return to the FFEs to actively re-enroll enrollees who are receiving them, we maintain continuity for enrollees in the coverage that best fits their needs. are finalizing a rule that would provide eligible for cost-sharing reductions, and, We recognize, however, that automatic for auto-reenrollment through the because the benchmark plans for re-enrollment hierarchies must exist to Exchange, as opposed to permitting establishing the amount of the premium help those who do not take advantage of auto-reenrollment outside the Exchange. tax credit for which an eligible taxpayer the opportunity actively to choose Under this rule, an enrollee could is eligible is a silver-level plan, coverage for the benefit year. Therefore, automatically be re-enrolled into a QHP continued enrollment in a silver-level while we acknowledge that re- from a different issuer through the plan, as opposed to enrollment in a plan enrollment between products can result Exchange. Such reenrollments would be at a different metal level but in the same in disruption to provider networks, conducted as directed by the applicable product is likely to be more consumer benefits, and continuity of care, we State regulatory authority, or, where the protective. believe it is important to maintain applicable State’s regulatory authority We also sought comment on whether enrollees’ access to cost-sharing declines to act, to the extent permitted the hierarchy, together with rules reductions in silver plans, which might by applicable State law, in a similar related to guaranteed renewability, be vital to their ability to pay for QHP as determined by the Exchange. should permit a QHP enrollee to be coverage or care. We are finalizing this With regard to how Exchanges will automatically re-enrolled into a plan not provision of the rule as proposed, determine which plans such enrollees available through an Exchange, and except that for the purpose of clarity we should be auto-reenrolled into, we note under what circumstances such a re- are finalizing a slight modified version that this policy provides considerable enrollment should occur. of the language in paragraph (j)(1). flexibility to Exchanges to implement As in the 2016 Payment Notice Comment: We received many this rule, in recognition of the proposed rule, we also noted that we are comments regarding the proposed operational realities of implementing a exploring a change to the re-enrollment alternative re-enrollment hierarchy, re-enrollment hierarchy in the often hierarchy at § 155.335(j), which many of them mirroring comments unique circumstances in which an currently prioritizes re-enrollment with made to our proposal in the 2016 issuer is not returning to the Exchange. the same issuer in the same or a similar Payment Notice. Commenters who However, whenever feasible, the plan. opposed permitting an alternative low- Exchange should, and the FFE will In the proposed rule, we stated we cost enrollment hierarchy stated that, in attempt to, re-enroll enrollees in silver were considering an approach under most cases, the plan a consumer chooses metal-level QHPs no longer available which an enrollee in an FFE would be during open enrollment is one that the through the Exchange into the silver offered a choice of re-enrollment consumer has shopped for and has metal-level QHP offered by another hierarchies at the time of initial determined best meets his or her needs. issuer through the Exchanges of the enrollment, and could opt into being re- Additionally, commenters said that low- same product network type with the enrolled by default for the subsequent cost premiums do not necessarily lead lowest premium. If the QHPs that have year into a low-cost plan, rather than his to lower overall cost of coverage because become unavailable are in metal levels or her current plan or the plan specified deductibles, copayments, coinsurance, other than silver, then whenever in the current re-enrollment hierarchy. and out-of pocket limits may be higher feasible, the Exchange should and the Comment: Many commenters in QHPs with low premiums. A FFE will seek to re-enroll the affected supported our proposal with respect to minority of commenters supported the enrollees in the QHP available on the silver-level QHPs, agreeing that it assists proposal’s emphasis on low premiums. Exchange of the same metal level of the enrollees in those plans in maintaining Response: We appreciate the many same product network type with the access to cost-sharing reductions. These comments received regarding alternative lowest premium. Exchanges should, and commenters stressed that access to that re-enrollment hierarchies and are the FFEs will endeavor to, implement financial assistance can be of vital sensitive to the concerns raised by such a re-enrollment process for importance to many enrollees. Several commenters. We recognize that enrollees of QHPs whose issuers are commenters expressed concern that consumers consider many factors in discontinuing their coverage, for as automatically re-enrolling a silver-level addition to premium when selecting many groups as is feasible given the plan enrollee into a different product health coverage, including the provider short timelines and complex operations

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that could be required in these that specified our interpretation of these advance payments of the premium tax scenarios. Those groups for which such requirements. Specifically, we proposed credit must make full payment on all reenrollment is not feasible will need to to amend § 155.400(e)(1)(i) and (ii) to outstanding premiums owed in order to make an active plan selection to remain provide that, for prospective coverage, avoid entering a grace period or having enrolled in a QHP through the the binder payment must consist of the their coverage terminated. In response Exchange. We note that such a re- first month’s premium. To provide to requests from issuers, we proposed to enrollment generally would require a added flexibility for issuers, we also add flexibility to this rule to allow binder payment from a consumer in proposed that the deadline for a binder issuers the option to adopt a premium order to be effectuated. In future payment related to prospective coverage payment threshold policy to avoid guidance, we intend to update the with a prospective special effective date, situations in which an enrollee who Federal standard notices that address would have to be no earlier than the owes only a de minimis amount of how issuers that no longer have plans coverage effective date and no later than premium has his or her enrollment available through the Exchange should 30 calendar days from the date the terminated for non-payment of communicate with consumers. We issuer receives the enrollment premiums. anticipate providing that an issuer that transaction or the coverage effective Accordingly, at new § 155.400(g), we no longer has plans available through date, whichever is later. This would proposed to codify a provision related to the Exchange may notify its enrollees of align the requirement for enrollments premium payment threshold policies that fact, and may encourage them to with prospective special effective dates that would allow additional issuer enroll in the issuer’s off-Exchange plans, with the requirement for enrollments flexibility regarding when amounts but may not automatically enroll them with regular effective dates. We collected will be considered to satisfy in those plans, to avoid automatic proposed to add § 155.400(e)(1)(iii) to the obligation to pay amounts due, so enrollment in more than one plan. We reflect our interpretation, intended to long as issuers implement such a policy intend to provide additional guidance limit the risk that issuers would provide uniformly and without regard to health on the application of the rules related to retroactive coverage without receiving status, and the premium payment guaranteed renewability to this type of sufficient premium payments from threshold adopted is reasonable. This situation in the future. enrollees, that applicants requesting would allow issuers flexibility to Comment: We received a few coverage being effectuated under effectuate an enrollment, not to place an comments requesting more information retroactive effective dates, such as enrollee in a grace period for failure to regarding how the proposed alternative coverage in accordance with a special pay 100 percent of the amount due, and re-enrollment hierarchy would affect enrollment period or a successful not to terminate enrollments after stand-alone dental plans. Some eligibility appeal, must pay a binder exhaustion of the applicable grace commenters stated that the process for payment that consists of all premium period for enrollees. We are finalizing re-enrolling in a SADP should be due (meaning the premium for all these policies as proposed. Comment: We received several independent from re-enrollment in a months of retroactive coverage). If the comments regarding the proposal to set QHP. applicant pays only the premium for deadlines for payment of the first Response: Because we will not one month of coverage, we proposed month’s premium (binder payments). implement the proposed alternative that the issuer would be required to Some commenters appreciated the reenrollment hierarchy at this time and enroll the applicant in prospective flexibility that such a proposal gives to the policy for consumers whose issuer coverage in accordance with regular issuers to set such deadlines while exited the Exchange would not apply to effective dates. We also proposed to others commented that the proposal SADPs, we are not addressing how this specify that the deadline for payment of would resolve ambiguity revolving policy would affect SADPs. However, all premium due must be no earlier than around the binder payment deadlines we appreciate the comments raising this 30 calendar days from the date the for special and retroactive effective issue and, if the proposal is revisited in issuer receives the enrollment dates. Several commented that the the future, we will address concerns transaction or notification of the guidelines would provide consumer regarding SADPs then. enrollment. This change to the binder protection by not allowing payment due payment rules was intended to allow b. Enrollment of Qualified Individuals dates before the effective date of issuers flexibility to set a reasonable Into QHPs (§ 155.400) coverage. One commenter suggested that deadline for enrollees to submit the final rule allow issuers flexibility to (1) Rules for First Month’s Premium payment of retroactive premium, the offer consumers coverage effective dates Payments for Individuals Enrolling With total amount of which may consist of that would be more generous than those Regular, Special, and Retroactive payment for several months of coverage. contained in the proposal and another Coverage Effective Dates Based on our experience commenter stated that issuers should be We proposed to amend § 155.400(e) implementing the grace period permitted to set a binder payment related to the payment of the first provisions under our previous deadline no later than the coverage month’s premium (that is, binder rulemaking, particularly in cases effective date. payments), including deadlines, to involving advance payments of the Response: The final rule allows codify previously released guidance in premium tax credit, we identified the issuers flexibility to set binder payment section 8.2 of the updated Federally- need for additional flexibility for issuers deadlines within a set of parameters we facilitated Marketplace and Federally- to establish reasonable policies believe balances concerns about facilitated Small Business Health regarding premium collection that consumer protection and issuers’ desire Options Program Enrollment Manual,46 would allow issuers to collect a minimal to have flexibility regarding business amount of premium less than that decisions. While we are sympathetic to 46 Federally-facilitated Marketplace and which is owed without necessarily the desire to give consumers a generous Federally-facilitated Small Business Health Options triggering the consequences for non- amount of time to pay binder payments, Program Enrollment Manual (eff. Oct. 1, 2015), available at https://www.cms.gov/CCIIO/Resources/ payment of premiums. For example, in we believe that the final rule allows Regulations-and-Guidance/Downloads/Updated_ the Exchange Establishment Rule, we issuers to set payment deadlines in such ENR_Manual.pdf. established that enrollees receiving a way that consumers have ample time

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to effectuate coverage. We also note that Comment: One commenter expressed threshold. Issuers’ adoption of the the final rule allows issuers to set the concern about the proposed binder premium payment threshold could binder payment deadline on the payment rules for coverage with serve as a method to avoid terminating coverage effective date, but not on a date retroactive effective dates, noting that if enrollments for non-payment of earlier than the coverage effective date. an issuer receives only the premium for premium for enrollees who only owe a Comment: Some commenters were one month of coverage, the enrollees small amount of premium. We do not confused about the additional language would effectuate for prospective believe this policy will have the effect to allow first month’s premium coverage with a regular effective date. of increasing the number of consumers payments after the coverage effective The commenter thought this proposal to who enter the grace period or who are date, thinking that a person’s coverage be inconsistent with the FFE’s current terminated from coverage for non- could be effectuated prior to the person guidance related to altering coverage payment, the predicate for pended making their payment. These effective dates without instruction to do claims that are not eventually paid. commenters opposed allowing more so from the FFE, which generally, but Comment: One commenter sought individuals to appear to have effective not always, requires a transaction from clarification that, under the premium coverage and then have the coverage not the FFE in order to set or alter enrollees’ payment threshold policy proposed in be effectuated due to non-payment of coverage effective dates. the rule, unpaid premium within a premium by the payment deadline. Response: Although issuers generally reasonable threshold tolerance, is still Response: As we previously have should not grant or alter coverage an amount owed by the enrollee and stated, payment for first month’s effective dates without a transaction cannot be forgiven by the issuer. premium is required prior to coverage from the FFE, there are cases where FFE being effectuated. For the FFE, in cases guidance is sufficient to give rise to Response: Any amount that is unpaid where an enrollee, consistent with an such an alteration. For example, current but within the tolerance of a reasonable issuer’s payment policy, makes his or FFE guidance allows issuers to cancel premium payment threshold established her premium payment after the coverage coverage, without any directive from the by an issuer remains an amount owed effective date, but before the premium FFE, for enrollees who have not paid by the enrollee and cannot be forgiven payment deadline set by the issuer, the their binder payments by the applicable by the issuer. This remains true whether enrollee would receive a retroactive due date. We believe that allowing the premium payment threshold is effective date. Issuers may pend claims enrollees who make a binder payment utilized for any of the following while waiting for the first month’s insufficient to satisfy all premium due payments: binder payments, regularly- premium payment and either deny or but sufficient to effectuate prospective billed payments, or amounts owed by an reverse those claims based on whether coverage to effectuate prospectively enrollee while in a grace period. the enrollee makes the first month’s with a regular effective date protects Comment: Two commenters requested payment by the premium payment consumers and promotes the goal of that, due to that the complexity of deadline. We believe that it is getting consumers into coverage while creating the necessary operations appropriate to allow payments, if the not conflicting with current regulations framework to institute the premium issuer chooses, after the coverage or FFE policies. payment threshold policy, the effective date. Comment: Several organizations regulation should not be effective until Comment: One commenter commented on the proposal to codify 2017 or 2018. One commenter requested recommended a modification to the provision related to premium that the final rule provide for § 155.400(e)(1)(iii) to give consumers payment threshold policies which implementation of a threshold based, at requesting retroactive coverage effective allows additional issuer flexibility an issuer’s discretion, on a flat dollar dates more flexibility. The commenter regarding when amounts collected will amount or a percentage of the total felt that requiring a binder payment be considered to satisfy the obligation to member responsible portion of premium consisting of all premium due would be pay amounts due, so long as issuers owed. a hardship to lower-income enrollees implement such a policy uniformly and Finally, one commenter requested and, in order to avoid such hardship, without regard to health status and that that we amend the proposed rule to issuers should be required to accept the premium payment threshold make the premium payment threshold payment plans when consumers enroll adopted is reasonable. Most commenters mandatory for all issuers. Additionally, with a retroactive effective date. saw the proposal as providing important Response: While we understand it the commenter sought a change to the consumer protections and allowing proposed rule setting a 90 percent might be difficult for some consumers to sufficient flexibility for issuers to tailor pay all premium due to effectuate with percentage of member responsible the threshold as they wished, within the portion of premium as the mandatory a retroactive effective date, we believe parameters set by HHS. A few of the threshold for all issuers. that such a policy is necessary to commenters, however, claimed that the minimize the risk that providers and proposed rule would cause providers to Response: The proposed rule issuers would honor claims during, bear the burden of claims, subsequently included flexibility for issuers to potentially, several months of reversed by issuers, incurred during the implement a premium payment retroactive coverage without receiving second and third months of a grace threshold to suit their specific business, corresponding premium payments from period for enrollees receiving APTC. provided the threshold adopted is consumers. The proposed rule allows Response: We do not believe that reasonable. We did not consider consumers who might have difficulty codifying the premium payment utilizing a flat dollar amount threshold paying for retroactive coverage to enroll threshold will lead to additional rather than a percentage of premium with prospective coverage only. It is our uncompensated claims. The purpose of owed to be reasonable, because such an interpretation of § 155.400(e)(1)(iii) that the threshold, which issuers may utilize approach would not take into account a binder payment for retroactive at their option, is to keep enrollees from the possibility that even a low flat dollar coverage consists of all premium due, or entering a grace period or having their amount may represent a large portion of a payment sufficient to satisfy the enrollments terminated for non- an enrollee’s portion of premium after issuer’s premium payment threshold, if payment of premium when the amount application of APTC. We previously applicable. they owe is within a reasonable have recommended a premium payment

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threshold of 95 percent,47 which we We also sought comment on what the enrollment period by a month or consider to be reasonable. Although we open enrollment period for coverage through part of the Federal tax filing understand the desire to provide year 2018 and subsequent years should season. uniformity of consumer protections be. Response: After consideration of the across the FFEs, we do not wish to make We are finalizing the open enrollment comments, we are finalizing the open the premium payment threshold a period for coverage year 2017 as enrollment period for coverage year mandatory policy nor to set a mandatory proposed. 2017 as proposed, for consistency with threshold at a fixed percentage, as In response to comments received, we the 2016 open enrollment period, as specific facts may justify a higher or are similarly defining, at § 155.410(e)(2), discussed above. lower one. Finally, because the the open enrollment period for coverage Comment: We received varied premium payment threshold policy is year 2018 to be November 1, 2017 comments regarding the open implemented at the option of each through , 2018. These are the enrollment period for coverage year issuer, we do not believe there is a same start and end dates as for the open 2018 and for future coverage years. reason to delay implementation of the enrollment periods for the 2016 and Many commenters recommended regulation due to operational 2017 benefit years. We define the shifting to an earlier open enrollment complexity. coverage start dates for all open period that starts and ends prior to the enrollment periods beginning with the start of the coverage year, so that all (2) Reliance on HHS to Carry Out open enrollment period for the 2016 consumers have a full year of coverage. Enrollment and Related Functions benefit year, in three paragraphs at Among these commenters, some We also proposed to amend § 155.400 § 155.410(f)(2). Accordingly, for recommended shortening the open by adding a new paragraph (h) to reflect example, for the 2018 coverage year, the enrollment period by two weeks for an that SBE–FPs must agree to rely on HHS Exchange must ensure that coverage is open enrollment period that starts on to implement the functions related to effective January 1, 2018, for QHP October 1 and runs through December eligibility and enrollment within selections received by the Exchange on 15. Some of these commenters subpart E, through the Federal platform or before December 15, 2017; February recommended shortening the duration agreement. This reflects that eligibility 1, 2018, for QHP selections received by of the open enrollment period from 3 and enrollment functions must be the Exchange on or before , months to 2 months for an open performed together in the FFE, and that 2018; and , 2018, for QHP enrollment period that starts on October neither function can be performed selections received by the Exchange on 15 and runs through December 15. separately by an SBE–FPs at this time. or before January 31, 2018, and similarly Other commenters recommended We did not receive any comments on for other coverage years. We believe that shortening the duration of the open this proposal and are finalizing the this open enrollment period provides enrollment period to about six weeks, so policy as proposed. sufficient time for operational readiness it starts on November 1 and runs by the FFE and issuers, and provides through December 15. Several c. Annual Open Enrollment Period consistency for consumers and commenters recommended an open (§ 155.410) sufficient time for them to enroll in enrollment period that starts on October We proposed to amend paragraph (e) coverage. However, as further explained 15 and runs through either December 7 of § 155.410, which provides the dates below, we plan to shift to an earlier or December 15 in order to align the for the annual open enrollment period open enrollment end date for future Exchange and Medicare open in which qualified individuals may open enrollment periods, starting with enrollment periods. apply for or change coverage in a QHP. the open enrollment period for the 2019 Commenters opposed to an earlier We proposed to amend paragraph (e)(2) coverage year, and are therefore open enrollment period start date to define the open enrollment period for finalizing at § 155.410(e)(3) an open expressed concerns about providing coverage year 2017 to be November 1, enrollment period for all future coverage sufficient time for plans to be certified 2016, through January 31, 2017. We also years to run from November 1 through and for plans to be previewed prior to proposed to amend the annual open December 15 of the year prior to the the start of the open enrollment period. enrollment period coverage effective coverage year, with coverage effective Those opposed to an earlier open date provisions in paragraphs (f)(2)(i) the first day of the coverage year. enrollment period end date expressed through (iii) to include the coverage Comment: We received support from concern about consumer confusion over effective dates for 2017. most commenters for maintaining the the enrollment deadline. And, those We proposed this time period and same open enrollment period for opposed to shortening the duration of these coverage effective dates to remain coverage year 2017 as for coverage year the open enrollment period expressed consistent with the 2016 open 2016, as it provides consistency for concerns about the workforce enrollment period. This timeframe will consumers, reduces consumer confusion constraints of assisters, such as continue to partially overlap with the about coverage effective dates, and Navigators and certified application annual open enrollment period for continues to partially overlap with the counselors, agents, and brokers who Medicare and most employer offerings, open enrollment period for Medicare provide enrollment assistance which will benefit consumers by and for most employer offerings. We throughout the open enrollment period. facilitating smooth transitions between received several comments requesting Several commenters recommended a coverage and creating process an earlier open enrollment period that gradual shift to an earlier open efficiencies for issuers handling ends prior to the start of the benefit year enrollment period. These commenters enrollments and re-enrollments during and several comments requesting a later stressed the importance of enabling the same period. open enrollment period that continues consumers to enroll in coverage in through the Federal tax-filing season. January, since many consumers travel or 47 Federally-facilitated Marketplace and Several commenters requested are otherwise occupied during the last Federally-facilitated Small Business Health Options shortening the open enrollment period few months of the year. Among these Program Enrollment Manual, updated October 1, 2015, section 6.1, available at https://www.cms.gov/ for the 2017 coverage year by two commenters, some recommended CCIIO/Resources/Regulations-and-Guidance/ weeks, while other commenters maintaining the same open enrollment Downloads/Updated_ENR_Manual.pdf. requested lengthening the open period duration of 3 months for an open

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enrollment period that starts on October that consumers are enrolled by March, responsibility payment at tax time. 15 and runs through January 15. Other which supports coverage for most Other commenters requested the commenters recommended shortening consumers for the majority of the 2018 expansion of existing special enrollment the open enrollment period by coverage year and does not put any new periods, including adding provider approximately two weeks and keeping burdens on assisters, such as Navigators network and drug formulary errors to the same open enrollment start dates as and certified application counselors, the special enrollment period for plan or for coverage years 2016 and 2017, for an agents, brokers, and others providing benefit display errors under paragraph open enrollment period that starts on enrollment assistance. However, to (d)(4) of this section, allowing November 1 and runs through January support a full year of coverage for most dependents of Indians to enroll in or 15. Lastly, some of these commenters consumers, we plan to shift to an earlier change enrollments along with the recommended shortening the open open enrollment end date for the 2019 Indian through the special enrollment enrollment period to 2 months for one open enrollment period and all future period in paragraph (d)(8) of this that starts on November 15 and runs open enrollment periods. Starting with section, and allowing for a retroactive through January 15. the 2019 coverage year and beyond, we coverage start date for consumers who Several other commenters are setting an open enrollment period qualify for the special enrollment period recommended maintaining the same that runs through December 15. This due to a loss of minimum essential open enrollment period for 2018 and for change achieves our goals of shifting to coverage in paragraph (d)(1) of this future coverage years as for coverage an earlier open enrollment so that all section. Several commenters requested years 2016 and 2017. Doing so, these consumers who enroll during this time expansions to the timeframe and commenters point out, would allow for will receive a full year of coverage and applicability of special enrollment better planning and consistency. Many this will reduce selection risk for periods, including extending the length of these commenters also recommended issuers. We believe that shifting the of time in which a consumer may enroll that HHS establish an open enrollment open enrollment period end date to after qualifying for a special enrollment period for all future benefit years, which December 15 for the 2019 coverage year period from 60 to 90 days, and would enable issuers to engage in longer provides sufficient time for all entities extending all special enrollment periods term planning, assist with outreach and involved in the annual open enrollment offered through the Exchange to the off- enrollment efforts, and reduce consumer period process, including Exchanges Exchange market. confusion. and issuers, to make the necessary Other commenters requested Lastly, many commenters adjustments to meet this earlier restrictions in the number and recommended a later closing of the open deadline. We also believe that, as the availability of special enrollment enrollment period to better align with Exchanges grow and mature, a month- periods. One commenter requested the the Federal tax filing season. These and-a-half open enrollment period elimination of all special enrollment commenters noted that it is through the provides sufficient time for consumers periods that do not align with those Federal tax filing process that many to enroll in or change QHPs for the special enrollment periods offered by consumers have learned about the upcoming coverage year. Medicare or are not required by HIPAA, individual shared responsibility while another commenter stated that coverage requirement. While all of these d. Special Enrollment Periods special enrollment periods should be commenters agreed that the duration of (§ 155.420) limited to certain life-changing events. the open enrollment period should be Special enrollment periods are One commenter requested restricting extended, commenters were divided available to consumers under a variety the eligibility of the special enrollment about whether the start of the open of circumstances as described in period for gaining access to new QHPs enrollment period should be the same as § 155.420. We stated in the proposed as a result of a permanent move to only for the 2016 and 2017 coverage years, rule that we had heard concerns consumers who were previously November 1, or should start slightly regarding abuse of special enrollment enrolled in other minimum essential later on November 15. These periods, and we sought comments and coverage, and only allowing the new commenters were also divided about data regarding existing special dependent to enroll in or change his or whether the open enrollment period enrollment periods. her enrollment into a new QHP under should continue through most of the tax In order to review the integrity of the special enrollment period described filing season by continuing through special enrollment periods, the FFE will in paragraph (d)(2). One commenter or whether the open be conducting an assessment under requested that States with SBE–FPs enrollment period should continue past which we collect and review documents have the flexibility to establish State- the April tax-filing deadline to run from consumers to confirm their specific special enrollment periods to through April 30. However, the majority eligibility for the special enrollment address the particular needs of of these commenters recommended an periods under which they enrolled. We consumers in their State. open enrollment period that begins on note that where an Exchange undertakes Response: We are not finalizing new November 15 and runs through March such a review, the Exchange may either qualifying events, eliminating current 15. retroactively or prospectively end qualifying events, or changing the scope Response: After consideration of the coverage, consistent with Exchange of current qualifying events for special comments received, we are finalizing an regulations, if the Exchange determines enrollment periods at this time, but are open enrollment period for 2018 that that the special enrollment period was continuing to study this issue. As starts on November 1, 2017 and runs improperly granted under § 155.420. explained in guidance released on through January 31, 2018. Maintaining Comment: We received many , 2016,48 HHS has removed the same open enrollment period start comments related to amending the and end dates for coverage years 2016 number and scope of special enrollment 48 Special Enrollment Periods No Longer Utilized through 2018, will provide consistency periods. Several commenters requested by the Federally-facilitated Marketplaces and State- for consumers and will avoid putting the addition of new special enrollment based Marketplaces using the Federal Platform and Future CMS Actions (Jan. 19, 2016), available at new pressure on the QHP certification periods, including special enrollment https://www.regtap.info/uploads/library/ENR_ timeline for issuers. An open enrollment periods for pregnancy and for RetiredSEPs_011916_v1_5CR_011916.pdf; see also period end date of January 31 ensures individuals facing the individual shared FAQs on the Marketplace Residency Requirement

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certain special enrollment periods that Conversely, other commenters QHP coverage. To this end, we proposed were available in 2014 and 2015 expressed concern about the elimination to redesignate current paragraph because the specified time period has or limitation of existing special (b)(2)(vi) as (b)(2)(vii) and add a new ended, the situation it addressed has enrollment periods without documented paragraph (b)(2)(vi) to permit the been resolved, or needed system proof of abuse. Commenters stressed the Exchange to cancel an enrollee’s updates have been made. HHS important role special enrollment enrollment in a QHP under certain continues to review rules and guidance periods play in providing access to circumstances. This rule would permit related to special enrollment periods. needed coverage for consumers cancellations of fraudulent enrollments Comment: Commenters expressed throughout the year. Commenters that the Exchange discovers, even if the concerns about current misuse or abuse encouraged HHS to analyze how enrollee is never aware of the of special enrollment periods, including consumers access special enrollment enrollment. consumers who inappropriately obtain a periods by using available data sources, We proposed new paragraph special enrollment period on the basis and encouraged HHS to look at the (b)(1)(iv)(A), which would permit an of a loss of minimum essential coverage findings by SBEs that have already enrollee to retroactively terminate his or after being terminated from coverage conducted similar analyses. In addition, her coverage or enrollment if he or she due to a failure to pay premiums in commenters cautioned against ending a demonstrates to the Exchange that he or violation of § 155.420(e)(1). Some consumer’s coverage unless fraud has she attempted to terminate his or her commenters supported more clearly been proven. coverage or enrollment and experienced defining the eligibility parameters of Response: We appreciate the a technical error that did not allow the existing special enrollment periods, as important concerns being raised enrollee to effectuate termination of his well as the consequences for regarding this issue. We believe it is or her coverage or enrollment through inappropriately utilizing a special important that consumers and others the Exchange. Such an enrollee would enrollment period to enroll in coverage. providing enrollment assistance have 60 days after he or she discovered In response to our request for understand the eligibility criteria for the technical error to request retroactive comment and data to assess whether special enrollment periods, and so we termination. special enrollment periods are being will consider providing additional We proposed a new paragraph (d)(9), abused and to minimize potential clarification around existing special which would provide that the misuse and abuse of special enrollment enrollment periods. We continue to be retroactive termination date under periods, commenters expressed strong interested in better understanding how paragraph (b)(1)(iv)(A) would be no support for the Exchange to take actions consumers are accessing special sooner than 14 days after the earliest to verify consumer eligibility for special enrollment periods and whether they date that the enrollee could demonstrate enrollment periods moving forward, are doing so in an appropriate and that he or she contacted the Exchange to terminate his or her coverage or including requesting documentation accurate way. In light of the strong enrollment through the Exchange, supporting consumers’ eligibility for support commenters expressed for unless the issuer agrees to an earlier special enrollment periods. Several verifying eligibility for special effective date as set forth in commenters requested that the enrollment periods, we intend to § 155.430(d)(2)(iii). Exchange require consumers to submit conduct an assessment of QHP We proposed in paragraph documentation to either the Exchange or enrollments that have been made (b)(1)(iv)(B) to provide for cancellation issuers to verify their eligibility for a through special enrollment periods in for an enrollee who demonstrates to the special enrollment period. Some the FFE to ensure that consumers Exchange that his or her enrollment in commenters noted that requesting such properly accessed coverage and will a QHP through the Exchange was documentation at the time of the require documentation for select SEPs unintentional, inadvertent, or erroneous eligibility determination and before going forward, as described in recent and was the result of the error or 49 coverage has begun is least burdensome guidance posted on February 24, 2016. misconduct of an officer, employee, or for consumers and is preferred by e. Termination of Coverage (§ 155.430) agent of the Exchange or HHS, its issuers. To aid in verification of special instrumentalities, or a non-Exchange enrollment period eligibility, one issuer Under current rules, § 155.430(b)(1) entity providing enrollment assistance suggested implementing an online requires an Exchange to permit an or conducting enrollment activities. directory for issuers of consumers who enrollee to cancel or terminate his or her Such an enrollee would have 60 days have been terminated due to coverage in a QHP following from the point he or she discovered the nonpayment of premiums. Some appropriate notice to the Exchange or unintentional, inadvertent, or erroneous commenters requested that, until such the QHP issuer. We proposed to add enrollment to request cancellation. In verification has taken place, coverage paragraph (b)(1)(iv) to allow an enrollee determining whether an enrollee has not be effectuated under the special to retroactively cancel or terminate his demonstrated to the Exchange that his enrollment period. Other commenters or her enrollment in a QHP through the or her enrollment meets the criteria for suggested that the coverage of Exchange in very limited circumstances. cancellation under this paragraph, the consumers who were ultimately found For enrollees whose enrollment or Exchange would examine the totality of to be ineligible for special enrollment continued enrollment in a QHP resulted the circumstances surrounding the periods which they used to enroll in from an error, misconduct, or fraud enrollment, such as whether the coverage or did not submit the committed by an entity other than the enrollee was enrolled in other minimum necessary documentation in a timely enrollee, we aim to increase flexibility essential coverage at the time of his or manner should be canceled as of the under the regulations to permit such her QHP enrollment and whether he or date the enrollment became effective. enrollees to avoid the consequences of she submitted claims for services that entity’s actions by canceling the rendered to the QHP. These factors and the Special Enrollment Period due to a would serve to indicate the intentions of Permanent Move (Jan. 19, 2016), available at 49 2017 Final HHS Notice of Benefit and Payment https://www.regtap.info/uploads/library/ENR_ Parameters Fact Sheet. February 24, 2016. Available the enrollee and whether the enrollment FAQ_ResidencyPermanentMove_SEP_5CR_ at, https://www.cms.gov/CCIIO/Resources/Fact- really was undesired and unintended 011916.pdf. Sheets-and-FAQs/index.html#Premium. and would be weighed in making a

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determination whether a cancellation is around retroactive terminations and Comment: Many commenters warranted. We sought comment on what cancellations. endorsed our proposal to permit other factors are indicative of an Comment: Most commenters retroactive terminations and enrollee’s bona fide intent and could supported the proposed ‘‘60-days from cancellations for enrollees whose limit gaming and should be considered discovery’’ window for requesting the enrollment was unintentional, in this analysis. termination, while a few commenters inadvertent, or erroneous and was the In new paragraph (b)(1)(iv)(C), we suggested shorter windows (30–45 result of Exchange error or misconduct, proposed to allow cancellations for days). A few commenters agreed with citing examples of enrollments enrollees who are enrolled in a QHP the importance of providing a date after occurring under these circumstances without their knowledge or consent due which retroactive terminations and and stressing the importance of this to the fraudulent activity of any third cancellations will no longer be granted protection for consumers against undue party, including third parties who have for the preceding coverage year. financial burden. One commenter felt no connection with the Exchange. Such Response: We chose 60 days to align the provision did not go far enough to an enrollee would have 60 days from with our standard 60-day special adequately protect a Medicaid-eligible the point at which he or she discovered enrollment period window under enrollee who is unaware of his or her the fraudulent enrollment to request § 155.420. We recognize the need to Medicaid eligibility or unaware of his or cancellation. discontinue the ability for enrollees to her ineligibility for the premium tax We proposed new paragraph (d)(10), retroactively adjust coverage for the credit. A few commenters expressed which would provide that for preceding coverage year at some point. concern about harm to the risk pool and cancellation or retroactive terminations To that end, HHS issued a cut-off date the stability of the Exchanges through granted in accordance with paragraphs in 2015 after which retroactive gaming. They noted limitations in the (b)(1)(iv)(B) and (C), the cancellation or terminations through the FFE for 2014 Exchange’s ability to verify eligibility termination date would be the original coverage would no longer be granted, for special enrollment periods. One coverage effective date or a later date, as with the exception of those cases commenter recommended that enrollees determined appropriate by the adjudicated through the appeals only be permitted to initiate retroactive Exchange, based on the circumstances process. In determining the cut-off date terminations or cancellations when of the cancellation or termination. for terminations of enrollments through permitted under State law or in the case Finally, under our current rules, FFEs and SBE–FPs for future years, we of death. A few others recommended no § 155.430(b)(2) allows the Exchange to want to balance the operational needs of retroactive terminations or cancellations initiate termination of an enrollee’s issuers and potential future be granted if premiums were paid or coverage or enrollment in a QHP functionality changes to the FFEs’ claims were incurred. through the Exchange, and permits a enrollment system against the need to Response: We understand issuers’ QHP issuer to terminate such coverage provide adequate time to identify and concerns regarding adverse selection if or enrollment in certain circumstances. address erroneous, unknown, or retroactive terminations or cancellations We proposed to amend paragraph nonconsensual enrollments through are granted without merit. Our aim is to (b)(2)(ii)(A) to reflect the change to retroactive terminations and provide these types of retroactive § 156.270(d) and (g) that gives an cancellations. Accordingly, we are terminations or cancellations only for enrollee who, upon failing to timely pay codifying a provision permitting the enrollees who were clearly harmed by premium, is receiving APTC, a 3-month Exchange to set a date after which an error or misconduct. It is not grace period. retroactive terminations and intended for enrollees who either We also proposed in new paragraph cancellations will no longer be granted simply did not understand the rules of (b)(2)(vi) that the Exchange could cancel for the preceding coverage year, with their enrollment when they enrolled an enrollee’s enrollment that the the exception of those cases adjudicated and want to reduce any tax liability they Exchange determines was due to through the appeals process, based on face due to ineligibility for the premium fraudulent activity, including fraudulent these factors. tax credit, or who wish to retroactively activity by a third party with no Comment: Many commenters drop coverage when they realize they connection with the Exchange. New supported our proposal to permit did not use it. We expect these paragraph (d)(11) would provide that for retroactive terminations for enrollees terminations and cancellations to be cancellations granted in accordance who experienced a technical error by granted rarely and only following with paragraph (b)(2)(vi), the the Exchange that prevented them from thorough research of the facts and cancellation date would be the original terminating their coverage. Some circumstances. To that point, the FFE coverage effective date. The Exchange supporters noted enrollees sometimes will make these determinations only only would send the cancellation face challenges in terminating coverage based on research performed by HHS transaction following reasonable notice timely. Two commenters suggested we caseworkers. to the enrollee (recognizing that where make the effective date of termination Comment: Several commenters no contact information or false contact the date of the demonstrated attempt, commented on our provisions around information is available that notice may rather than 14 days following the granting enrollee-initiated and be impossible or impracticable). attempt. A few commenters expressed Exchange-initiated retroactive We noted that our current guidance concerns about potential gaming. cancellations in cases involving recognizes that at some point, the Response: This 14-day window fraudulent activity. Supporters cited Exchange must discontinue the ability proposed aligns with the regulation on examples of enrollee harm due to for enrollees to retroactively adjust voluntary, enrollee-initiated prospective fraudulent activity by agents and coverage for the preceding coverage terminations, and we note that issuers brokers. A few commenters noted that year. We stated that we are considering may permit earlier effective dates of coverage would not be effectuated codifying a deadline for requesting terminations under § 155.430(d)(2)(iii). without a binder payment and that cancellations or retroactive To minimize any opportunities for member materials would be sent that terminations. gaming, the Exchange will make these would signify enrollment. A few We received the following comments determinations based on research commenters felt this authority is already concerning the proposed provisions performed by HHS caseworkers. permitted under issuers’ rescission

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authority (§ 147.128(a)(1)). One rule with a few modifications. and financial assistance through the recommended we align the language Specifically, as discussed above, we are Exchange, but not Medicaid or CHIP. with the language around agent and eliminating references to fraud in Response: In certain circumstances, it broker fraud in § 155.220. Others paragraphs (b)(1)(iv)(C), (b)(2)(vi), and is possible that a State Exchange appeals recommended that we clearly define (d)(11) and referring instead to entity appeal decision regarding fraud and ensure verification of enrollments performed without the eligibility for Medicaid, CHIP, or the instances of fraud. enrollee’s knowledge or consent. We BHP could be escalated to and Response: These proposed rules believe that in certain cases a retroactive adjudicated by the HHS appeals entity. around cancellations for fraudulent termination can be justified where the However, as discussed below, at the activity are intended, in part, to address enrollment was performed without time of publication of this final rule, no concerns regarding individuals who knowledge or consent, even if fraud did State agency administering Medicaid, may have been enrolled without their not occur. In paragraph (b)(2)(vi), we CHIP, or the BHP has delegated appeals knowledge or consent, potentially also clarify that the enrollment to the State Exchange appeals entity in resulting in adverse tax consequences. performed without the enrollee’s a manner that would permit the HHS In some cases, the enrollee may not knowledge or consent could be appeals entity to adjudicate these discover the enrollment in time to performed by a third party that has no appeals. Therefore, we confirm that the request cancellation on his or her own connection with the Exchange. In right to appeal a decision issued by a behalf. addition, for consistency with State Exchange appeals entity under We recognize the legal and paragraphs (b)(1)(iv)(A) and (B), in § 155.505(b) currently is limited to administrative complexities involved in paragraph (b)(1)(iv)(C), we are requiring decisions related to eligibility for determining fraud and we understand that the enrollee ‘‘demonstrates to the enrollment in a qualified health plan the importance of making this rule Exchange’’ that he or she was enrolled through the Exchange (including narrow enough to prevent abuse, but not without his or her knowledge or enrollment periods), Exchange financial so narrow that it could never be used. consent. Finally, as described in assistance, exemptions from the To that end, we are finalizing response to comments above, we are individual shared responsibility paragraphs (b)(1)(iv)(C), (b)(2)(vi), and adding a new paragraph (d)(12) requirement, and denials of requests to (d)(11), except that we are replacing permitting the Exchange to establish a vacate dismissals by the State Exchange references to fraud with references to timeframe during which retroactive appeals entity. enrollments performed without enrollee terminations and cancellations for the As we explained in the final rule in ‘‘knowledge or consent.’’ In addition, in preceding coverage year must be the July 15, 2013 Federal Register (78 paragraph (b)(1)(iv)(C), we are adding initiated. FR 42160), States may choose to that the enrollee must ‘‘demonstrate to delegate authority to conduct Medicaid the Exchange’’ that he or she was 6. Appeals of Eligibility Determinations fair hearings for MAGI-based eligibility enrolled without his or her knowledge for Exchange Participation and determinations to the Exchange or consent. Insurance Affordability Programs operating in the State regardless of Comment: Some commenters a. General Eligibility Appeals whether the Exchange is an FFE, State suggested retroactive terminations or Requirements (§ 155.505) Exchange, or a State Partnership cancellations in circumstances other Exchange, in accordance with the than those we proposed. For example, a In § 155.505, we made certain Medicaid regulations at 42 CFR few commenters recommended that the proposals related to the general 431.10(c) and (d). If a State agency Exchange retroactively terminate or eligibility appeals requirements. We delegates authority to conduct MAGI- cancel enrollments granted under proposed to add paragraph (b)(1)(iii) to based eligibility appeals to an Exchange, special enrollment periods for which state more clearly that applicants and including a State Exchange, in the enrollee was not truly eligible. enrollees have the right to appeal a accordance with 45 CFR 431.10(c) and Another commenter recommended we determination of eligibility for an (d), such a delegation would extend to not permit retroactive cancellation enrollment period. We also proposed to the HHS appeals entity, if the State when a consumer does not pay his or add paragraph (b)(5) to clarify the Exchange appeals entity’s appeal her premium in the fourth quarter, and existing right under § 155.520(c) that decision were escalated under then moves to a different plan during applicants and enrollees have to appeal § 155.505(c)(2)(i). open enrollment with coverage effective a decision issued by the State Exchange However, States with State Exchanges January 1. Another commenter appeals entity. In paragraph (b)(4), we that are State governmental agencies recommended we create parameters to proposed to correct a typographical may also coordinate appeals, beyond permit retroactive terminations or error by replacing the word ‘‘or’’ with delegation under our rules, through a cancellations in instances of credit card the word ‘‘of,’’ and to replace ‘‘pursuant waiver granted under the theft. Finally, one commenter to’’ with ‘‘under.’’ Intergovernmental Cooperation Act. If a recommended we allow termination We are finalizing the changes as State delegates authority to conduct fair without penalty to auto-enrollees in the proposed. hearings through an Intergovernmental first 60 days of the year, or due to Comment: Commenters all supported Cooperation Act waiver to another State confusion over covered benefits or the proposal to clarify the existing rights agency, including a State Exchange or providers. to appeal a determination of eligibility State Exchange appeals entity, Medicaid Response: We understand the for an enrollment period and appeal a appeal decisions made by that entity commenters’ concerns; however, this decision issued by the State Exchange could not be escalated to the HHS proposed rule was limited to scenarios appeals entity. One commenter sought appeals entity (78 FR 42,160, 42,165 involving technical errors, misconduct clarification that the change to (July 15, 2013)). or fraudulent activity. We address some § 155.505(b)(5), related to the right to As of this publication, all State of our future activities around special appeal a decision issued by a State Exchanges have coordinated appeals enrollment periods elsewhere in this Exchange appeals entity, applies only to through an Intergovernmental rule. We are finalizing the provisions Exchange decisions related to eligibility Cooperation Act waiver, and therefore proposed in § 155.430 of the proposed for enrollment in a qualified health plan Medicaid appeal decisions made by a

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State Exchange appeals entity are not determined by the appeals entity that exceptional circumstance as appealable to the HHS appeals entity failure to timely submit was due to contemplated by the proposed rule, but under § 155.520(c) or § 155.505(b)(5). exceptional circumstances and should that the appellant waited an not preclude the appeal. unreasonable amount of time to b. Appeals Coordination (§ 155.510) We proposed that the appeals entity demonstrate it. We proposed to revise § 155.510(a)(1) may determine what constitutes an The examples above provide guidance to allow the appeals entity, the exceptional circumstance that should to appellants and representatives as to Exchange, or the agency administering not preclude an appeal notwithstanding what the appeals entity may consider an insurance affordability programs to the appellant’s failure to timely submit exceptional circumstance such that request information or documentation an appeal request. We also proposed failure to timely submit an appeal from the appellant that the appellant that the appeals entity may determine request should not preclude an appeal, already has provided if the agency does what is considered a reasonable and a reasonable timeframe to not have access to such information or timeframe for an appellant to demonstrate an exceptional documentation and cannot reasonably demonstrate an exceptional circumstance. We intend for these obtain it. Currently, § 155.510(a)(1) circumstance. examples to be illustrative and not prohibits the appeals entity or agency We are finalizing the provision as exhaustive, and believe that the appeals administering insurance affordability proposed. entity should decide on a case-by-case programs from asking an appellant to Comment: Commenters supported the basis whether an appeal request that is provide information or documentation proposed change to invalid due to untimely submission that the appellant already provided in § 155.520(d)(2)(i)(D). A few commenters nevertheless should be allowed to order to minimize the burden on the requested additional examples or proceed under paragraph (d)(2)(i)(d). appellant. guidelines as to what constitutes an We are finalizing our proposal, with ‘‘exceptional circumstance’’ such that d. Dismissals (§ 155.530) an addition as described below. failure to timely submit an appeal We proposed to revise § 155.530(a)(4) Comment: Commenters all supported request should not preclude an appeal. to allow an appeal to continue when an the proposed change to § 155.510(a)(1). Commenters also requested additional appellant dies if the executor, A few commenters cautioned that the guidance on what constitutes a administrator, or other duly authorized proposed amendment to paragraph ‘‘reasonable timeframe’’ to demonstrate representative of the estate requests to (a)(1) should not overly burden an exceptional circumstance. One SBE continue the appeal. appellants and recommended that it be supported the proposed amendment as Comment: Commenters supported the used as a time-limited, interim measure long as Exchange appeal entities have proposed change to § 155.530(a)(4). A until system functionality improves. the flexibility to determine what few commenters also recommended Response: We agree that proposed constitutions an exceptional allowing a spouse, partner, parent, or paragraph (a)(1) should not overly circumstance and a reasonable guardian of a deceased appellant to burden appellants. As proposed, timeframe. continue an appeal. They believed this paragraph (a)(1) permits the appeals Response: In the proposed rule, we may be necessary when an appellant, entity, Exchange, or agency provided several examples of situations especially a child or incapacitated adult, administering insurance affordability that might constitute an exceptional has not gone through the legal process programs to request information or circumstance under proposed paragraph of establishing an executor, documentation from the appellant if the (d)(2)(i)(d). We stated that a weather administrator, or other duly authorized agency does not have access to such emergency, such as a blizzard, hurricane representative. In such cases, the information or documentation and or tornado, may constitute an commenters recommend allowing a cannot reasonably obtain it. To further exceptional circumstance. We discussed family member to step into the shoes of ensure that paragraph (a)(1) does not scenarios in which severe weather the deceased appellant to prevent the overly burden appellants, we are causes a power outage making it dismissal of an appeal from imposing a finalizing paragraph (a)(1) to also impossible to prepare, mail, or fax financial hardship on the surviving require that the information or appeal requests to the appeals entity, members of the family. documentation requested is necessary to and situations when a disaster may Response: We agree with the properly adjudicate the appellant’s cause consumers to lose access to the commenters. Therefore, we are appeal. We believe that the addition of documents they need to complete and clarifying that if a deceased appellant this language will minimize any submit appeal requests. We also noted has not designated an executor, unnecessary burden on the appellant that if a consumer suffers a catastrophic administrator, or other duly authorized while also ensuring that appeals are medical event and is consequently representative, and one has not been adjudicated accurately. unable to submit an appeal request on appointed by the court, the deceased time, the appeals entity may determine c. Appeal Requests (§ 155.520) appellant’s spouse, legal civil or that this constitutes an exceptional domestic partner, or for a minor or We proposed to add paragraph circumstance under the proposed unmarried incapacitated appellant, (d)(2)(i)(D), concerning appellants exception. parent or legal guardian, is considered whose appeal request is determined We also provided guidance in the a duly authorized representative and invalid for failure to request an appeal proposed rule as to what constitutes a may continue the appeal. by the date determined in paragraph (b) reasonable timeframe to demonstrate an We are finalizing § 155.530(a)(4) as or (c) of this section. The proposed exceptional circumstance. We stated proposed. addition would require the appeals that if an appellant was unable to send entity to notify an appellant that, in the an appeal request on time due to a snow e. Informal Resolution and Hearing event the appeal request is invalid storm and power outage and sent the Requirements (§ 155.535) because it was not timely submitted, the request four months after the snow In § 155.535, we proposed appeal request may be considered valid storm and power outage had been amendments to the informal resolution if the applicant or enrollee demonstrates resolved, the appeals entity may find and notice of hearing requirements. In within a reasonable timeframe that the appellant experienced an § 155.535(a), we proposed a change to

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clarify that the requirements of the with our proposed change § 155.505(b) incorrect, the appellant may choose a informal resolution process described in to clarify that applicants and enrollees retroactive coverage effective date of paragraphs (a)(1) through (4) apply to have the right to appeal a determination January 1, 2016, February 1, 2016, or both the HHS appeals entity and a State of eligibility for an enrollment period. March 1, 2016 because the appellant Exchange appeals entity. Finally, we proposed to revise would have had the opportunity to In § 155.535(b), we proposed § 155.545(c)(1)(ii) so that the coverage make a QHP selection between providing two exceptions to the effective date for eligible appellants , 2015 and January 31, requirement that the appeals entity must requesting a retroactive appeal decision 2016 and receive one of those coverage send written notice to the appellant of effective date is the coverage effective effective dates (depending on when the the date, time, and location or format of date that the appellant did receive or QHP was selected). Even in this the hearing no later than 15 days prior could have received if the appellant had situation, the appellant may choose only to the hearing date. In paragraph (b)(1), enrolled in coverage under the incorrect from among those coverage effective we proposed an exception when an eligibility determination that is the dates that would have been available appellant requests an earlier hearing subject of the appeal. under the original enrollment period, date. In paragraph (b)(2), we proposed Comment: Commenters all supported and may not chose any coverage an exception to the notice requirement the proposed changes to § 155.545. effective date between the initial under paragraph (b) when a hearing date Some commenters recommended that, eligibility determination date and the sooner than 15 days is necessary to in the event the appeals entity takes date of the appeals decision. process an expedited appeal, as more than 90 days to process an appeal Accordingly, we are finalizing described in § 155.540(a), and the through no fault of the appellant, the paragraph (c)(1)(ii) as proposed, with appeals entity and appellant have appellant may choose a coverage one modification. Under the final mutually agreed to the date, time, and effective date that falls between the regulation, an appeals entity may only location or format of the hearing. These initial eligibility determination date and implement an appeal decision proposals were intended to create a the date of the appeals decision. They retroactively to the coverage effective more agreeable experience for the pointed out that while waiting for an date the appellant did receive or could appellant overall while also improving appeal to be adjudicated, an appellant have received if the appellant had efficiency for the appeals process. may have experienced a health issue for enrolled in coverage under the incorrect Comment: The comments received on which retroactive coverage would be eligibility determination that is the these proposed changes were largely helpful, but may not be in the financial subject of the appeal. We are changing supportive. Commenters recommended situation to pay back premiums for more the phrase ‘‘would have received’’ to that if written notice is not sent to an than a limited number of months. ‘‘could have received’’ to clarify that an appellant under paragraph (b)(2), then Response: To remain consistent with eligible appellant may choose from the appeals entity must contact both the other effective date regulations, we among the coverage effective dates that appellant and the appellant’s authorized cannot permit an appellant to choose a would have been available under the representative, if any, to agree upon a coverage effective date that falls original enrollment period. date, time, and location or format of the between the initial eligibility g. Employer Appeals Process (§ 155.555) hearing. determination date and the date of the Response: We agree with the appeal decision, except in the limited We proposed to make a technical commenter’s recommendation. The circumstance described below. Existing correction to § 155.555(e)(1) by simple act of contacting the appellant’s effective date regulations including removing the cross-reference to authorized representative could reduce those at §§ 155.410(f), 155.330(f), and paragraph (d)(3) of this section, which the likelihood of an unintended failure 155.420(b) allow for prospective or does not exist, and replacing it with to appear that could harm both the retroactive coverage effective dates, as paragraph (d)(1)(iii). appellant and the overall efficiency of appropriate, based on a triggering event We also proposed to amend the appeals process. This may be such as an eligibility determination or § 155.555(l) by revising paragraph (l) especially true for limited-English the birth of a child. The special coverage and adding paragraphs (l)(1) and (2) to proficient appellants who should not effective dates for certain special give the Exchange more operational suffer the harsh consequences because enrollment periods under flexibility in implementing an employer of a language barrier. § 155.420(b)(2)(iii), which requires the appeal decision. Currently under We are finalizing § 155.535(a) and Exchange to ensure a coverage effective § 155.555(l), when an employer appeal (b)(1) as proposed. We are finalizing date that is appropriate based on the decision affects an employee’s § 155.535(b)(2) to allow an exception to circumstances of the special enrollment eligibility, the Exchange is directed to the notice requirement under paragraph period, must be tied to a triggering event redetermine the employee’s eligibility (b) when a hearing date sooner than 15 and may not be chosen by the qualified and the eligibility of the employee’s days is necessary to process an individual or enrollee. household members, if applicable. We expedited appeal, as described in In the event an appeals entity finds proposed to amend § 155.555(l) so that, § 155.540(a), and the appeals entity, has that an eligibility determination, as after receipt of the notice from the contacted the appellant and appellant’s described in § 155.505(b)(1), was appeals entity under paragraph (k)(3) of authorized representative, if any, to incorrect, and the appellant had more this section, the Exchange must follow schedule a hearing on a mutually agreed than one coverage effective date the requirements in either paragraph to date, time, and location or format. available in the enrollment period that (l)(1) or (2) if the appeal decision affects the eligibility determination was made, the employee’s eligibility. Under f. Appeal Decisions (§ 155.545) the appellant may be permitted to proposed paragraph (l)(1), the Exchange In paragraph (b)(1), we proposed to choose a coverage effective date must promptly redetermine the remove the third appearance of the associated with the enrollment period. employee’s eligibility and the eligibility word ‘‘of’’ to correct a typographical For example, if the appeals entity of the employee’s household members, error. We proposed to revise paragraph determines that an eligibility if applicable, in accordance with the (c)(1)(i) to include cross references to determination made on November 25, standards specified in § 155.305, as § 155.330(f)(4) and (5), which aligns 2015 for the 2016 coverage year was currently provided in paragraph (l).

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Under proposed paragraph (l)(2), the that affects the employee’s eligibility by for being liable for an assessable Exchange must promptly notify the following the procedure described in payment under section 4980H of the employee of the requirement to report paragraph (1)(2). Code. An employee is subject to the changes in eligibility as described in Comment: One commenter who requirement to report a change in his or § 155.330(b)(1). We sought comment on supported the proposed changes to her eligibility under § 155.330(b)(1) the addition of the option described in § 155.555(l) wrote that, in order for the when the appeals entity determines that paragraph (1)(2), and whether it would option described in paragraph (l)(2) to his or her employer offered employer- help ensure the most accurate be meaningful, employees must have sponsored coverage that provides redetermination of eligibility for very clear instructions on how to update minimum value and is affordable for the insurance affordability programs by their application. employee. Independently, the Internal giving employees the opportunity to Response: We agree that a notice Revenue Service (IRS) will determine report any additional changes in their under § 155.555(l)(2) must provide clear whether an employer is liable for an eligibility information. instructions to the employee in order to employer shared responsibility payment We are finalizing § 155.555(l), and the be effective. For notices submitted by based on the employer shared technical correction to § 155.555(e)(1), the FFE, we intend to provide guidance responsibility provisions.50 If the IRS, in as proposed. on reporting changes in information its own review, determines that an Comment: Commenters generally with respect to eligibility through the employee of an applicable large supported the proposed addition of online application and the Marketplace employer is ultimately not eligible for § 155.555(l)(2). Several commenters Call Center, instructions on updating the premium tax credit under section supported this change because it would the online application questions to 36B of the Code, then, in general, the give consumers the opportunity to reflect that the employee has an offer of employer will not owe an employer update their application with any other employer-sponsored coverage that shared responsibility payment with changes that could affect eligibility provides minimum value and is respect to that full-time employee, even which would result in a more accurate affordable for the employee, and if the employee enrolled in a QHP with eligibility determination. One instructions on terminating enrollment APTC (regardless of whether the commenter provided an example of an in a QHP through the Exchange for employee reported a change with applicant who had employer-sponsored those who want to terminate enrollment respect to eligibility to the Exchange coverage through his or her spouse at upon being redetermined ineligible for following the outcome of an employer the time of applying for coverage Exchange financial assistance. appeal). through the Exchange, but later received Comment: Commenters suggested that a legal separation. One commenter who the Exchange be required to follow the 7. Exchange Functions in the Individual disagreed with the proposed addition of procedures outlined in both paragraphs Market: Eligibility Determinations for paragraph (l)(2) expressed concern that (l)(1) and (2). They recommended that Exemptions an employee who fails to update his or the Exchange send a notice under a. Eligibility Standards for Exemptions her eligibility may face a greater tax paragraph (l)(2) and, if an employee (§ 155.605) liability when filing his or her Federal does not update his or her application In § 155.605, we proposed to clarify tax return. within a specified period of time, the and streamline policies related to Response: As described in Exchange follow the procedure exemptions. Consistent with prior § 155.330(b)(1), an enrollee is required described paragraph (l)(1) to guidance, we proposed to permit any to report any change with respect to the redetermine the employee’s eligibility applicant whose gross income is below eligibility standards specified in and the eligibility of the employee’s his or her applicable filing threshold to § 155.305 within 30 days of such household members, if applicable. qualify for a hardship exemption and change. Before enrolling in coverage Response: We are concerned that such claim the exemption through the tax through the Exchange, applicants for a policy would cause considerable filing process. In addition, we proposed coverage must confirm their operational burden to the Exchange to permit individuals eligible for understanding that they must notify the while providing minimal benefit to the services from an Indian health care entity administering the program they employee. We believe that the policy as enroll in if information on their proposed balances the need for 50 In general, an applicable large employer (an application changes, and that such employees to receive an updated employer with at least 50 full-time employees, changes may affect the eligibility for eligibility determination after an appeal including full-time equivalent employees) will owe member(s) of their household. decision affects the employee’s an assessable payment to the IRS under section 4980H(a) of the Code if the employer fails to offer Nevertheless, we agree with eligibility, with the need to provide coverage to its full-time employees (and their commenters that the proposed change in operational flexibility to the Exchange. dependents) and at least one full-time employee § 155.555(l)(2) would give employees Accordingly, we are finalizing this receives the premium tax credit. An assessable another opportunity to update their provision as proposed, to give the payment under section 4980H(a) of the Code is calculated based on the employer’s number of full- application with changes that affect Exchange the option to follow either time employees, without regard to how many full- their eligibility or the eligibility of paragraph (l)(1) or (2) after receipt of the time employees receive the premium tax credit. An household members when an appeal notice under paragraph (k)(3) of this applicable large employer will owe an assessable decision under § 155.555 affects the payment under section 4980H(b) of the Code if it section. offers coverage to its full-time employees (and their employee’s eligibility. We are finalizing Comment: One commenter expressed dependents) but at least one full-time employee § 155.555(l) as proposed to permit the concern that an employee who does not receives the premium tax credit, which could occur Exchange, after receipt of the notice report his or her change in eligibility if the coverage offered did not provide minimum under paragraph (k)(3) of this section, to value or was not affordable. (For purposes of could place the employer at greater risk section 4980H, coverage may be considered follow either the requirements in either for an assessable payment under section affordable under an affordability safe harbor even paragraph (l)(1) or (2) if the appeal 4980H of the Code. if the coverage is not affordable for purposes of decision affects the employee’s Response: We disagree with the section 36B of the Code. 26 CFR 54.4980H–5(e)(2)). eligibility. As stated in the proposed proposition that an employee who does An assessable payment under section 4980H(b) of the Code is calculated based on the number of full- rule, for the 2016 benefit year, the FFE not report his or her change in eligibility time employees who receive the premium tax intends to implement appeal decisions could place the employer at greater risk credit.

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provider to claim a hardship exemption insurance risk pools. In addition, we shared responsibility payment with his through the tax filing process. We received a request for clarification of or her Federal income tax return. Under proposed that for the 2016 tax year and factors that an Exchange would examine section 5000A(e)(1) of the Code, an later that the Exchange no longer issue in order to approve a hardship individual is exempt if the amount that exemption certificate numbers (ECNs) exemption. he or she would be required to pay for for the following exemption types: Response: We will continue to minimum essential coverage (the members of a Health Care Sharing examine these comments and will not required contribution) exceeds a Ministry, individuals who are codify the list of hardship exemptions particular percentage (the required incarcerated, members of Federally previously established in public contribution percentage) of his or her recognized tribes, and individuals who guidance at this time. actual household income for a taxable are eligible for services from an Indian Comment: We received comments year. In addition, under § 155.605(g)(2) health care provider. We also proposed both in support of and against the (redesignated as § 155.605(d)(2) in this to codify a list of other hardship proposal to allow individuals to apply final rule), an individual is exempt if his exemptions previously established in for a hardship that occurred up to 3 or her required contribution exceeds the prior guidance and to clarify operational calendar years in the past. Commenters required contribution percentage of his standards for timeframes of hardship who supported this proposal thought or her projected household income for events and the duration of certain that it would provide greater flexibility a year. Finally, under § 155.605(g)(5) hardship exemptions. We are finalizing for Exchanges to approve hardship (redesignated as § 155.605(d)(5) in this the policy of streamlining of exemptions exemptions. Commenters who did not final rule), certain employed individuals offered through the tax filing process as support the proposal stated that 3 years are exempt if, on an individual basis, proposed; however, at this time, we will was overly broad and could lead to a the cost of self-only coverage is less than not codify the list of hardship destabilization of a health insurance risk the required contribution percentage, exemptions established in prior pool by providing an additional but the aggregate cost of individual guidance and will not finalize the incentive for healthy consumers to coverage through employers exceeds the proposal to permit an individual to claim an exemption in lieu of obtaining required contribution percentage, and obtain a hardship exemption for a health coverage. no family coverage is available through hardship experienced within 3 years of Response: In response to the concerns an employer at a cost less than the the date of application. raised by commenters, we will not required contribution percentage. Comment: We received comments in finalize § 155.605(d)(2) at this time. Section 5000A established the 2014 favor of eliminating unnecessary Similarly, we will not finalize the last required contribution percentage at 8 paperwork for individuals seeking an sentence of the introductory paragraph percent. For plan years after 2014, exemption due to their State not of § 155.605(d)(1), which establishes a section 5000A(e)(1)(D) of the Code and expanding Medicaid coverage. maximum length of any hardship 26 CFR 1.5000A–3(e)(2)(ii) provide that Commenters also supported exemption of the month before the the required contribution percentage is streamlining the exemption process for circumstance, the remainder of the the percentage determined by the members of a Health Care Sharing calendar year, and the next calendar Secretary of HHS that reflects the excess Ministry, members of Federally year. of the rate of premium growth between recognized Indian tribes and individuals Comment: We received a suggestion the preceding calendar year and 2013, eligible for services from an Indian that the Exchange establish an over the rate of income growth for that health care provider, and individuals exemption for people who are period. who were incarcerated by delegating erroneously determined ineligible for We established a methodology for these exemption types fully to the IRS. APTC and who do not enroll in a determining the excess of the rate of Response: In this final rule, we are qualified health plan as a result. premium growth over the rate of income finalizing the proposal to streamline the We also received one comment that growth for plan years after 2014 in the exemption application process for our proposal to codify the existing 2015 Market Standards Rule (79 FR consumers and to minimize paperwork hardship exemption time period related 30302), and we said future adjustments requirements for consumers in States to an appeal in § 155.605(d)(2)(xiv) would be published annually in the that did not expand Medicaid coverage. should be expanded to include the date HHS notice of benefit and payment We are finalizing the proposal to no of application, rather than a consumer’s parameters. longer require a denial notice for the potential coverage effective date. The Under the HHS methodology, the rate hardship exemption for applicants commenter stated that the current of premium growth over the rate of ineligible for Medicaid because their timeframe is too narrow for individuals income growth for a particular calendar State did not expand Medicaid who were unable to file an appeal of an year is the quotient of (x) 1 plus the rate coverage. In addition, we are finalizing eligibility determination within 90 days of premium growth between the the proposal to streamline exemption due to the fact that a data inconsistency preceding calendar year and 2013, processing for members of a Health Care generated during the application carried out to ten significant digits, Sharing Ministry, individuals who are process must be adjudicated before a divided by (y) 1 plus the rate of income incarcerated, members of Federally consumer may file an appeal. growth between the preceding calendar recognized Indian tribes, and Response: We are not codifying year and 2013, carried out to ten individuals who are eligible for services § 155.605(d)(2)(xiv) at this time, but will significant digits.51 from an Indian health care provider. continue to consider these issues and As the measure of premium growth Comment: We received comments comments for future rulemaking. for a calendar year, we established in supporting and opposing our proposal the 2015 Market Standards Rule that we to codify hardship criteria established in b. Required Contribution Percentage regulatory guidance. Commenters stated (§ 155.605(e)(3)) 51 We also defined the required contribution that any expansion of the hardship Under section 5000A of the Code, an percentage at § 155.600(a) to mean the product of 8 percent and the rate of premium growth over the exemption criteria could weaken the individual must have minimum rate of income growth for the calendar year, individual shared responsibility essential coverage for each month, rounded to the nearest one-hundredth of one provision and create instability in qualify for an exemption, or make a percent.

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would use the premium adjustment personal income receipts on assets, data that are not available for 2013 may percentage. The premium adjustment rental income, and personal current be made on a prospective basis. percentage is based on projections of transfer receipts, less contributions for Therefore, under the approach average per enrollee employer- government social insurance. finalized here, and using the NHEA sponsored insurance premiums from the The Office of the Actuary’s PI data, the rate of income growth for 2017 National Health Expenditure Accounts projection is generated using the is the percentage (if any) by which the (NHEA), which are calculated by the University of Maryland’s Long Term most recent projection of per capita PI CMS Office of the Actuary.52 (Below, in Inter-industry Forecasting Tool. The for the preceding calendar year ($49,875 § 156.130, we finalize the proposed Long Term Inter-industry Forecasting for 2016) exceeds the per capita PI for 2017 premium adjustment percentage of Tool model is a macro-economic model 2013, ($44,925), carried out to ten 1.1325256291 (or an increase of about that is based on the historical significant digits. The ratio of per capita 13.3 percent) over the period from 2013 relationships that exist between PI PI for 2016 over the per capita PI for to 2016. This reflects an increase of growth, GDP growth, and changes in 2013, using the finalized approach for about 4.9 percentage points other macro-economic variables. For both years, is estimated to be (1.1325256291–1.0831604752) for 2015– instance, the correlation between PI and 1.1101836394 (that is, per capita income 2016.) GDP is influenced by fluctuations in growth of about 11.0 percent). This As the measure of income growth for taxes and government transfer reflects an increase of about 3.0 a calendar year, we established in the payments, depreciation of capital stock, percentage points (1.1101836394– 2015 Market Standards Rule that we and retained earnings and transfer 1.0798864830) for 2015–2016. would use per capita Gross Domestic payments of private business.53 Thus, using the 2017 premium Product (GDP), using the projections of Estimates of GDP in the NHE projections adjustment percentage finalized in this rule, the excess of the rate of premium per capita GDP used for the NHEA, reflect economic assumptions from the growth over the rate of income growth which is calculated by the Office of the 2015 Medicare Trustees Report and are for 2013–2016 is 1.1325256291/ Actuary. We also stated in the 2015 updated to incorporate the latest 1.1101836394, or 1.0201245892. This Market Standards Rule (79 FR 30304), available consensus data from the results in a required contribution that we would-consider alternative monthly Blue Chip Economic percentage for 2017 of measures of income and premium Indicators. These same economic 8.00*1.0201245892, or 8.16 percent, growth should projections of those assumptions are used for producing when rounded to the nearest one- measures become available. projections of PI and employer- Subsequently, as part of its projections hundredth of one percent, an increase of sponsored insurance premiums, so of National Health Expenditures, the 0.27 percentage points from 2016 using this estimate will generate an Office of the Actuary published (8.16100–8.13399). The excess of the internally consistent estimate of the projections of personal income (PI) for rate of premium growth over the rate of growth in premiums relative to growth the first time in September 2014 and income growth also is used for in income. subsequently in July 2015. As a result, determining the applicable percentage in the proposed rule we said we were As stated in the proposed rule, we in section 36B(b)(3)(A) and the required considering substituting this new will continue to consider other changes contribution percentage in section measure of per capita PI for per capita to the measures of income per capita 36(c)(2)(C). GDP in the calculation for the required and premium growth as additional information becomes available and as c. Eligibility Process for Exemptions contribution percentage. We received (§ 155.610) one comment in support of our proposal we gain experience with the current to substitute per capita PI for per capita measures; we received no comments on In § 155.610, we proposed adding new GDP in the calculation to establish the other indices that we should develop or paragraph in § 155.610(k) which rate of income growth for the required consider. describes how the Exchange will handle contribution percentage, and are Since updating the required incomplete exemption applications. We finalizing it here. As stated in the contribution percentage for 2017 proposed that the Exchange will handle proposed rule, we believe per capita PI requires calculating the cumulative incomplete exemption applications in a better aligns with the statutory intent of difference between premium growth similar manner to the procedure for measuring the income of an individual and income growth between the handling incomplete health coverage than per capita GDP. The projections of preceding calendar year and 2013, we applications established under PI published by the Office of the also proposed in the proposed rule to § 155.310(k). Specifically, when the Actuary are consistent with the measure replace per capita GDP with per capita Exchange receives an application that published by the Bureau of Economic PI for all years beginning in 2013 and does not contain sufficient information Analysis, which reflects income then calculate cumulative income to make an eligibility determination, the received by individuals from all growth through 2016. We received no Exchange will: (1) Provide notice to the sources, including income from comments on this retrospective applicant indicating that information participation in production. approach, and are finalizing it here; as necessary to complete an eligibility Specifically, it includes compensation stated in the proposed rule, a determination is missing, specify the of employees (received), supplements to retrospective approach allows for missing information, and provide wages and salaries, proprietors’ income consistency across all years with the instructions for submitting the missing with adjustments for inventory most recent data available. We note that information; (2) provide the applicant valuation and capital consumption, potential future changes based on new with a period of no less than 10 and no more than 90 days starting from the date 52 For any given year the premium adjustment 53 For projections of PI and GDP, see Table 1 at on which the notice is sent to the percentage is the percentage (if any) by which the Centers for Medicare & Medicaid Services. National applicant to provide the information most recent NHEA projection of per enrollee Health Expenditure Data: Projected, available at needed to complete the application to employer-sponsored insurance premiums for the http://www.cms.gov/Research-Statistics-Data-and- current year exceeds the most recent NHEA Systems/Statistics-Trends-and-Reports/ the Exchange; and (3) if the Exchange projection of per enrollee employer-sponsored NationalHealthExpendData/ does not receive the requested insurance premiums for 2013. NationalHealthAccountsProjected.html. information, then the Exchange will

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notify the applicant that the Exchange State Exchanges that continue to use the whether to give the State in which the will not process the application and will HHS service for exemptions beyond the FF–SHOP is operating an opportunity to provide appeal rights to the applicant. start of open enrollment for 2016. recommend whether the FF–SHOP in We sought comment on this proposal. Comment: We received one comment that State should implement any Comment: We received comments about this section that supports the additional model of employer choice. which supported this proposal to recommendation to permit States to However, in all States, the FF–SHOPs handle incomplete exemption elect to use the HHS service for would continue to give employers the applications, however many exemptions. This commenter also option of offering a single QHP (or commenters found the 10-day minimum suggested that an SBE should be able to single SADP) as well as the option of timeframe to be too short and grant the hardship exemption offering a choice of all QHPs (or SADPs) recommended a minimum of 30 days to established in § 155.605(d)(2) for lack of at a single actuarial value level of submit missing information to the affordable coverage even if it does not coverage, and States would not be given Exchange instead. process other exemptions, because the an opportunity to recommend that these Response: We accept this State would have the eligibility options not be implemented in their recommendation, and will amend the information needed to determine State. regulation text to establish a minimum whether an individual qualifies for this We also proposed adding new of 30 days from the date on which the exemption from an individual’s health paragraph § 155.705(b)(3)(x) to provide notice is sent to an applicant to provide coverage application. that the employer choice models required information to the Exchange. Response: We accept this comment available through the FF–SHOP platform would be available for SBE– d. Verification Process Related to and have amended the regulation text to FPs utilizing the Federal platform for Eligibility for Exemptions (§ 155.615) permit a State Exchange to grant a hardship exemption to consumers the SHOP enrollment functions. We In § 155.615, we proposed to delete Exchange determines unable to afford discussed how, if we gave States with § 155.615(c), (d), (e), and (f)(3) to coverage based on their projected FF–SHOPs an opportunity to conform with a proposal under annual household income under recommend implementation of § 155.605 that would remove the ability § 155.605(d)(2) regardless of whether the additional employer choice models, for consumers to obtain an ECN from Exchange will grant other exemption States with SBE–FPs would be given the the Exchange for certain exemptions. types. same opportunity. We also proposed conforming Additionally, we proposed to amend redesignations of the remaining 8. Exchange Functions: Small Business paragraph (b)(4)(ii)(B) to specify the paragraphs under § 155.615. Elsewhere Health Options Program (SHOP) timeline under which qualified in this final rule, we are finalizing the a. Functions of a SHOP (§ 155.705) employers in an FF–SHOP must make relevant proposals under § 155.605. initial premium payments. We proposed Accordingly, we are finalizing as In § 155.705, we proposed to add new to add paragraph (b)(4)(ii)(B)(1) to proposed the deletions of paragraphs paragraphs (b)(3)(viii) and (ix) to specify specify that in the FF–SHOPs, payment (c), (d), (e), and (f)(3) from § 155.615 and that the FF–SHOPs would provide for the group’s first month of coverage the conforming redesignations. additional options for employer choice must be received by the premium Comment: We received comments for plan years beginning on or after aggregation services vendor on or before both in support of and against the 3-year January 1, 2017, namely a ‘‘vertical the 20th day of the month prior to the period for exemption criteria under the choice’’ option for QHPs and SADPs. month that coverage begins. We proposed rule at § 155.605(d)(3) and the Under this option, employers will be explained that electronic payments conforming amendment to able to offer qualified employees a would have to be completed or the § 155.615(c)(2). choice of all plans across all available premium aggregation services vendor Response: We will continue to levels of coverage from a single issuer. must have receipt of any hard copy consider the issues presented by We noted that existing SHOP check on or before the 20th day of the commenters, and will not finalize regulations at § 155.705(b)(3)(i)(B) and month prior to the month that coverage § 155.615(c)(2) at this time. (b)(3)(ii)(B) provide State-based SHOPs would begin. We also explained that if with the flexibility to provide employers an initial premium payment is not e. Options for Conducting Eligibility with vertical choice or other employer received by the premium aggregation Determinations for Exemptions choice options in addition to services vendor on or before the 20th (§ 155.625) ‘‘horizontal choice,’’ in which an day of the month prior to the month that We proposed to amend § 155.625(a)(2) employer selects a single actuarial value coverage would begin, coverage would and (b) to remove the deadline after coverage level and makes all plans at not be effectuated. We further explained which a State Exchange would be that coverage level available to qualified that grace period and reinstatement required to process exemption employees. We did not propose to alter opportunities under § 155.735(c)(2), applications for residents of the State by State-based SHOPs’ flexibility in this which are provided to groups that do the start of open enrollment for 2016, regard, unless the State-based SHOP not make timely payments after and to instead permit an Exchange to was relying on the Federal platform for coverage has taken effect, are not adopt the exemption eligibility SHOP enrollment functions. relevant in this context, and we determination service operated by HHS We also sought comment on whether proposed amendments to introductory indefinitely. Based on HHS’s operation the FF–SHOPs should make other language at § 155.735(c)(2) to reflect of this service to date, we have employer choice options available, this. determined that the HHS exemption including allowing participating In circumstances where an FF–SHOP option is an efficient process for State employers to select an actuarial value would be retroactively effectuating Exchanges that has minimized level of coverage, after which employees coverage for qualified employer groups, confusion for consumers. This proposal could choose from plans available at the FF–SHOP would need to receive follows an FAQ published on , that level and at the level above it, payment prior to effectuating coverage. 2015 in which HHS stated that it will which we refer to below as ‘‘contiguous We sought comment on the timing of not take any enforcement action against choice.’’ We also sought comment on when a premium payment should be

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required to be received by an FF–SHOP proposed employer choice options. selection. Offering multiple plans to a when coverage is effectuated Many commenters supported the qualified employer group allows an retroactively, and explained that we additional employer choice options issuer to enroll a greater share of the were considering a policy under which because they would enhance the appeal group than if multiple issuers offering payments for the first month’s coverage of FF–SHOPs for both employees and coverage in a single coverage level were and all months of the retroactive employers. One commenter encouraged vying for members of the group. Issuers coverage would have to be received and HHS to expand its proposal by allowing would thus likely enroll a more diverse processed no later than 30 days after the FF–SHOP employees to select from a risk pool from the qualified employer’s event that triggers the eligibility for wider variety of plans. Some group. While qualified employers may retroactive coverage. commenters did not support adding still choose to offer their qualified At paragraph (b)(4)(ii)(C)(2), we vertical choice as an additional employees horizontal choice or a single proposed to correct a cross reference to employer choice option, expressing plan, the availability of the additional § 155.705(b)(4)(ii)(B)(1) that should have concern about adverse selection because vertical choice option may help to been updated to cross-reference vertical choice could lead smaller mitigate the risk for adverse selection. § 155.705(b)(4)(ii)(C)(1) when paragraph employer groups with enrollees in need To mitigate concerns raised by (b)(4)(ii)(A) was added in the 2016 of more medical services to enroll in commenters and because we believe Payment Notice. higher metal level QHPs. Additionally, States are best positioned to understand We also proposed amendments to there is concern that even if vertical the small group market dynamic in their § 155.705(b)(11)(ii) to provide for FF– choice is available to employers, an State, HHS will provide States with an SHOPs to use a ‘‘fixed contribution employer could still select horizontal FF–SHOP an opportunity to recommend methodology’’ in addition to the choice or a single plan causing adverse that the FF–SHOP in their State not reference plan methodology set forth in selection. Commenters recommended make vertical choice available in their the current regulation. We proposed to that HHS consider the impact on State. For similar reasons, States with specify that when an employer decides selection and resulting changes in plan SBE–FPs utilizing the Federal platform to offer a single plan to qualified pricing when considering offering for SHOP enrollment functions will be employees, the employer would be vertical choice in an FF–SHOP. One able to opt out of making vertical choice required to use the fixed contribution commenter recommended that FF– available in their States. In States where methodology. We also proposed to SHOP members only be allowed to vertical choice is available, a qualified permit employers to choose between the enroll in one plan with one carrier to employer would have a choice of three reference plan contribution reduce complexity in the FF–SHOPs. employer choice options for both QHPs methodology and the proposed fixed Some commenters recommended that and SADPs: A single plan, all available contribution methodology when offering HHS promote the existing employer plans at a single level of coverage a choice of plans. Additionally, we choice options instead of adding new (horizontal choice, as provided for by proposed to add language to employer choice options at this time. the statute), and a choice of all plans § 155.705(b)(11)(ii) explaining that a Other commenters believed that offered by a single issuer across all tobacco surcharge, if applicable, would additional changes to employer choice levels of coverage (vertical choice). In be added to the monthly premium after will create confusion, add complexity, States where vertical choice is not an the employer contribution is applied to and create administrative challenges available option for qualified employers, the premium. Finally, we proposed to which would discourage participation the single plan option and horizontal streamline the discussion of the in FF–SHOPs. One commenter also choice option would continue to be reference plan contribution expressed concern about employer available to qualified employers. methodology described in Comment: We received several choice options, stating that if employers § 155.705(b)(11)(ii) and proposed comments supporting adding are required to select a specific issuer to removing § 155.705(b)(11)(ii)(D) because contiguous choice as an additional offer coverage to the group, provider the FF–SHOPs are currently not able to employer choice option because networks for employees could support basing employer contributions employers would have more QHP potentially be disrupted. To address on calculated composite premiums. options available to offer to their this, the commenter recommended that We are finalizing the provisions employees. One commenter regarding the FF–SHOP’s authority to HHS open all QHPs to employees recommends that HHS consider the provide vertical choice, but will provide enrolling in coverage through an FF– additional administrative costs of States with FF–SHOPs an opportunity SHOP. allowing additional choice options. to recommend that the FF–SHOP in Response: We are finalizing the Response: As stated, we believe their State not offer vertical choice in proposal to provide for a vertical choice additional employer choice options their State. States with SBE–FPs option in FF–SHOPs, for plan years could enhance the appeal of the FF– utilizing the Federal platform for SHOP beginning on or after January 1, 2017. SHOPs, and we will continue to explore enrollment functions will have the We agree with commenters that adding the option of contiguous choice authority to opt out of making vertical additional employer choice options can in the future, but are not adding a choice available in their States. enhance the appeal of the FF–SHOPs, contiguous choice option at this time, so Information about whether vertical and intend to work with stakeholders to that we can further consider the choice will be available in specific minimize any confusion stemming from potential for adverse selection that States with an FF–SHOP or SBE–FP will the introduction of vertical choice. Due could result from that option. be made public prior to the deadline for to operational limitations, at this time Comment: One commenter QHP certification application we are not offering a wider variety of recommended that States should not be submissions for the applicable year. We employer choice options. We appreciate permitted to make the decision on are also making a minor modification to the concerns raised about adverse whether to implement new approaches add ‘‘stand alone dental’’ to the first selection, but believe the fact that our for employer choice in FF–SHOPs and sentence of § 155.705(b)(3)(ix)(C). proposal limits vertical choice to a that it should be at the issuer’s option Comment: We received several single issuer’s plans will help allow the about which QHPs and SADPs to make comments concerning the additional issuer to manage the risk of adverse available to qualified employees. The

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commenter recommended that HHS implement the State’s recommendation. day of the month prior to the month that require States to conduct an assessment States with FF–SHOPs will be able to coverage begins increases the potential on the actuarial impact of various make recommendations regarding for issuers not to receive the initial employer choice approaches, and vertical choice on an annual basis. For premium payment until after the first determine safeguards that will protect plan years beginning in 2017 only, we month of effectuated coverage. These against adverse selection. Other strongly recommend that States with commenters recommended that issuers commenters also stated they do not FF–SHOPs submit their not be required to effectuate coverage agree with allowing States to opt in and recommendations to HHS on or before without payment from the FF–SHOP. out of offering vertical choice, and , 2016, via email to shop@ Response: We are finalizing the supported standardizing employer cms.hhs.gov. States that meet this provision with a modification to specify choice options across all States that deadline will provide the FF–SHOPs that a similar policy also applies under have an FF–SHOP or that rely on the sufficient time to review and implement circumstances of retroactive coverage. Federal platform for SHOP enrollment. State recommendations. HHS Under § 156.285(c)(8)(iii), FF–SHOP Another commenter encouraged HHS to anticipates that its decisions regarding issuers are required to effectuate only allow additional employer choice State recommendations for plan years coverage unless the FF–SHOP sends a options in States where the same option beginning in 2017 would be made by cancellation notice prior to the coverage currently exists in the off-Exchange , 2016, which would provide effective date. Section 156.285(c)(8)(iii) market, to prevent possible adverse issuers with sufficient time to determine does not require issuers to effectuate selection while promoting a stable small their involvement in the FF–SHOPs for coverage if the FF–SHOP does not group market. the following year. receive a premium payment by the Response: In order to provide for For these same reasons, we are deadline established for the FF–SHOP. State-specific evaluations of the impact finalizing our proposal to add a new If payment is not received by the FF– of vertical choice on adverse selection paragraph at § 155.705(b)(3)(x) to SHOP prior to that deadline, the FF– and resulting changes in plan pricing, provide that the employer choice SHOP will issue a cancellation notice. and to provide for more uniform small models available through the FF–SHOP We are finalizing the following group market coverage options both on platform will be available for SBE–FPs premium payment policies for and off-Exchange, States with an FF– utilizing the Federal platform for SHOP circumstances where an FF–SHOP SHOP will be given an opportunity to enrollment functions, except that SBE– would be retroactively effectuating recommend that the FF–SHOP in their FPs may decide against offering the coverage. These policies differ State not offer vertical choice. States employer choice models specified in somewhat from the policies we with SBE–FPs utilizing the Federal paragraphs (b)(3)(viii)(C) and explained we were considering in the platform for SHOP enrollment functions (b)(3)(ix)(C). Under the final rule, a State preamble to the proposed rule, because will be able to opt out of making vertical with an SBE–FP must notify HHS of its for operational reasons, premium choice available in their States. We decision against offering vertical choice payments must be received by the FF– believe that States are best positioned to in that State in advance of the annual SHOP premium aggregation services assess the impact of additional QHP certification application deadline, vendor by a certain date in order to be employer choice options based on local by a date to be established by HHS. processed in a timely manner. When market conditions. A State with an FF– Again, this deadline will give issuers coverage is effectuated retroactively, as SHOP that wishes to recommend against sufficient time to make informed discussed in the proposed rule offering vertical choice in that State decisions about whether to participate preamble, payment for the first month’s must submit a letter to HHS in advance in the SHOP, and will give us sufficient coverage and all months of the of the annual QHP certification time to implement the State’s decision. retroactive coverage must be received application deadline, by a date to be States with SBE–FPs will be able to and processed no later than 30 days established by HHS, describing and make decisions regarding vertical choice after the event that triggers the justifying the State’s recommendation, on an annual basis. For plan years eligibility for retroactive coverage. based on the anticipated impact vertical beginning in 2017 only, we strongly Additionally, however, in order for choice would have on the small group recommend that States with an SBE–FP coverage to be effectuated by the first market and consumers. A State-based utilizing the Federal platform for SHOP day of the following month, the Exchange utilizing the Federal platform enrollment functions notify HHS of employer must also make this payment for SHOP enrollment functions may their decisions on or before March 25, by the 20th day of the preceding month. decide against offering vertical choice 2016, via email to [email protected]. If payment is made after the 20th day of by notifying HHS of that decision. Again, States that meet this deadline a month, coverage will take effect as of HHS is requiring that a State with an will provide the FF–SHOPs sufficient the retroactive coverage effective date, FF–SHOP that wishes to recommend lead time to implement the State’s but coverage will not be effectuated against offering vertical choice in that decision. HHS anticipates that it will until the first day of the second month State make its recommendation to the announce the SBE–FP States that have following the payment, and the payment FF–SHOP by submitting a letter to HHS decided against offering vertical choice must include the premium for the in advance of the annual QHP for plan years beginning in 2017 on or intervening month. Regardless, in order certification application deadline, by a around April 1, 2016, which would to effectuate retroactive coverage for a date to be established by HHS. The provide issuers with sufficient time to qualified employer or qualified State’s letter must describe and justify decide whether to participate in the employee, such as under an appeal the State’s recommendation, based on SHOP for the following year. decision, all premiums owed must be the anticipated impact this additional Additional guidance will be provided paid in full, including any prior option would have on the small group to States regarding the notification or premiums owed for coverage back to the market and consumers. This deadline recommendation time frames for plan retroactive coverage effective date, as will give issuers sufficient time to make years beginning in 2018 and beyond. well as a premium pre-payment for the informed decisions about whether to Comment: Some commenters believe next month’s coverage. participate in the FF–SHOP, and will that requiring employer groups to make These policies also apply to SBE–FPs give the FF–SHOPs sufficient time to initial premium payments by the 20th that are utilizing the Federal platform

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for SHOP enrollment and premium reflect the possibility that employers responsible for paying the full premium aggregation functions, because premium might offer vertical choice under the amount. Another commenter stated that aggregation is an integral part of the amendments finalized in this rule. making the coverage available outside of eligibility and enrollment functions Comment: With respect to our the SHOP and requiring employers to managed through the FF–SHOP proposals to amend § 155.705(b)(11)(ii), make payments and send data directly platform. we received one comment stating that if to issuers will introduce complexity, Comment: We received a comment the FF–SHOP cannot support basing undue burden, and unnecessary expressing concern that employer employer contributions on calculated confusion due to the differing issuer and groups will not be able to make the full composite premiums, employers may SHOP data and payment methods. We premium payment within 30 days after lose interest in participating in FF– also received one comment the event that triggers eligibility for SHOPs. Another commenter stated that recommending that HHS wait to retroactive coverage, depending on how because this feature is widely available implement terminations of SHOP many months of retroactivity are off-Exchange, removing this option enrollment, rather than a termination of covered. The commenter recommended would put FF–SHOPs at a competitive the group’s coverage, until the that issuers not be required to effectuate disadvantage. Several commenters infrastructure exists to automate the retroactive coverage without full urged HHS to continue seeking feedback process. payment. on this feature. Response: In order to align with Response: We believe that 30 days Response: Because of operational regulations around guaranteed after the event that triggers eligibility for limitations, FF–SHOPs are not currently availability and guaranteed retroactive coverage is sufficient time able to support basing employer renewability, we are finalizing the for employer groups to make their full contributions on calculated composite provision as proposed. Employers can premium payment in order to have premiums. However, we appreciate the decide whether to contribute toward the retroactive coverage. This policy also concerns expressed by commenters and cost of employee coverage regardless of ensures that issuers receive payments in we are therefore not finalizing the whether the employee has coverage a timely manner. Issuers are not removal of this provision as proposed. through a SHOP. Employer groups required to effectuate coverage if an Instead, we are modifying the provision wishing to maintain their small group employer’s full payment is not received at § 155.705(b)(11)(ii)(D) to state that an coverage outside of a SHOP are by the deadline set by the FF–SHOP. FF–SHOP may permit employers to base encouraged to work directly with Issuers should not cancel an enrollment contributions on a calculated composite issuers to do so. If an employer offers transaction unless the FF–SHOP sends a premium for employees, for adult coverage outside of a SHOP, enrollment cancellation transaction. dependents, and for dependents below and payment functions will be between Comment: We received no comments age 21, which gives the FF–SHOPs the the group and the specific issuer, and regarding our proposal to correct the flexibility to implement this approach not through the SHOP. SHOPs are cross reference from in the future. We are also removing the encouraged to work directly with § 155.705(b)(4)(ii)(B)(1) to reference to ‘‘the reference plan’’ in this issuers and groups to address any § 155.705(b)(4)(ii)(C)(1). provision to reflect the availability of questions and concerns about the Response: We are finalizing this the fixed contribution methodology transfer of responsibility from the SHOP provision as proposed. under the amendments finalized in this to the issuer. SHOPs, and not issuers, Comment: With respect to our rule. We will continue to examine initiate all terminations of a group’s proposals to amend § 155.705(b)(11)(ii), supporting employer contributions enrollment through the SHOP, and this one commenter recommended that HHS based on calculated composite is how the FF–SHOP currently clarify that any tobacco surcharge would premiums in the FF–SHOPs. operationalizes terminations of group be paid to the FF–SHOP and not to enrollments. FF–SHOPs are not able to b. Eligibility Determination Process for issuers separately. Another commenter automate the process of terminating FF– SHOP (§ 155.715) recommended that the tobacco SHOP enrollment because it requires surcharges should be spread across the In order to align with our information from issuers and groups to costs of coverage for an entire group, interpretation of guaranteed availability ensure a transfer of responsibility rather than for the tobacco users only. and guaranteed renewability, we should a group’s coverage continue Response: Any applicable tobacco proposed to specify that the termination outside of the FF–SHOP. surcharges will continue to be paid described in § 155.715(g)(1) would be a directly to the FF–SHOP as part of the termination of the employer group’s c. Enrollment Periods Under SHOP group’s total premium payment and will enrollment through the SHOP, rather (§ 155.725) not be paid to issuers separately. We than a termination of a group’s coverage. In § 155.725, we proposed to amend disagree that the tobacco surcharge In many circumstances, an employer paragraph (c). Specifically, we proposed should be spread across the entire may offer to continue the same coverage to delete paragraph (c)(1) because it is group. The surcharge is a cost borne by outside of the SHOP, in which case the outdated, redesignate current paragraph the tobacco user and other enrollees in issuer should not terminate the (c)(2) as introductory text to paragraph a group should not be responsible for coverage. We are finalizing this (c), and redesignate the remaining sharing in its cost. We are finalizing the provision as proposed. paragraphs to reflect the new structure proposed amendments to Comment: Some commenters support of paragraph (c). § 155.705(b)(11)(ii) with a modification removing automatic terminations of We also proposed to redesignate to the language about tobacco SHOP coverage in order to be consistent § 155.725(e) as § 155.725(e)(1), and add surcharges for clarity. We are also with guaranteed renewability paragraph (e)(2) to specify that qualified modifying the proposed language about requirements. One commenter employers in the FF–SHOP must the contribution methodologies recommended that if an employer no provide qualified employees with an available to employers that offer a longer has SHOP coverage, the employer annual open enrollment period of at choice of plans to replace a reference to should be able to make no contribution least 1 week. Like all of § 155.725(e), ‘‘the level of coverage offered’’ with a toward the cost of employee coverage this amendment would only apply to reference to the ‘‘plans offered,’’ to through the SHOP. Employees would be renewals of SHOP participation.

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Additionally, we proposed experiences an event described in enrolled in a non-calendar year group amendments to § 155.725(h)(2) to § 155.420(d)(1)(ii), which provides for a health plan or individual health specify that in the case of an initial special enrollment period for insurance coverage. group enrollment or renewal, the event individuals enrolled in a non-calendar Response: We are finalizing the that triggers the group’s coverage year group health plan or individual provision as proposed. effective date in an FF–SHOP is not the health insurance coverage. d. Termination of SHOP Enrollment or We are finalizing these amendments plan selection of an individual qualified Coverage (§ 155.735) employee being enrolled as part of the as proposed. group enrollment, but the employer’s Comment: We received several To align with proposed amendments submission of all plan selections for the comments about the length of a to § 155.705(b)(4), we proposed to group, which we refer to in rule text as qualified employee’s annual open modify the introductory language of the group enrollment. This amendment enrollment period for renewals. Some § 155.735(c)(2) to specify that the would permit qualified employers to set commenters stated they believe the provisions related to termination of initial and annual enrollment periods proposed minimum annual open employer group health coverage for non- for their qualified employees that could enrollment period of one week is payment of premiums in FF–SHOPs include qualified employee plan insufficient. One commenter under paragraph (c)(2) do not apply to selections both before and after the 15th recommended that employees be premium payments for the first month day of the month. We also proposed to provided with a 30-day annual open of coverage. We did not receive any permit employers to select a coverage enrollment period, or at a minimum, a comments regarding this proposal, and effective date up to 2 months in two-week annual open enrollment are finalizing it as proposed. advance, provided that small group period. We also proposed amendments to market rates are available for the quarter Response: The proposed amendment § 155.735(d) to specify that if an in which the employer would like would not prevent a qualified employer enrollee changes from one QHP to coverage to take effect. Under the from offering annual enrollment periods another during the annual open proposal, if an employer submits its to qualified employees that are longer enrollment period or during a special group enrollment by the 15th day of any than one week. This regulation specifies enrollment period, the last day of month, the FF–SHOP would ensure a only the minimum length of the annual coverage would be the day before the coverage effective date of the first day of open enrollment period for qualified effective date of coverage in the the following month, unless the employees. We are finalizing this enrollee’s new QHP. employer opts for a later effective date provision as proposed because it would Additionally, we proposed at for which rates are available. If an enable qualified employers and § 155.735(d)(2)(iii) to require FF–SHOPs employer submits its group enrollment qualified employees, especially at very to send advance notices to qualified between the 16th day of the month and small companies, to finalize their employees before their dependents age the last day of the month, we proposed annual renewal process more quickly. off of their plan. The notice would be that the FF–SHOP ensure a coverage Comment: We received one comment sent 90 days in advance of the date effective date of the first day of the supporting our proposal to allow when the child dependent enrollee is no second following month, unless the employers to opt for a coverage effective longer eligible for coverage under the employer opts for a later effective date date up to 2 months in advance. The plan the employer purchased through for which rates are available. We note commenter stated that this amendment the FF–SHOP because he or she has that the effective date of coverage increases employer flexibility and may reached the maximum child dependent selected by a qualified employer improve the consumer’s experiences age for the plan. The notice would remains subject to the limit on waiting with SHOP. include information about the plan in periods under § 147.116. Response: We are finalizing the which the dependent is currently We also proposed to amend provision as proposed. We note that the enrolled, the date the dependent would § 155.725(i)(1) to provide that a SHOP effective date of coverage selected by a age off the plan, and information about be permitted to, but not be required to, qualified employer remains subject to next steps. In the FF–SHOPs, a provide for auto-renewals of qualified the limit on waiting periods under dependent aging off of the plan loses employees. We also proposed to amend § 147.116. eligibility for dependent coverage at the the language of the provision for Comment: One commenter supported end of the month of the dependent’s consistency with our interpretation of the proposed change to allow SHOPs to 26th birthday or at the end of the month guaranteed renewability. Specifically, if offer auto-renewals of qualified in which the issuer has set the a SHOP does not provide for auto- employees. However, another maximum dependent age limit (but in renewals for qualified employees, commenter did not support this some cases might have the option to qualified employees would have to automated process because of the risk of keep the coverage for a period of time review and provide a response to the error. after that date under applicable employer’s renewal offer of coverage. If Response: Auto-renewals provide a continuation coverage laws). This notice auto-renewal is available in a SHOP, more streamlined, efficient way to is intended to be a courtesy notice as qualified employees would not be renew coverage with minimal risk for enrollees would still receive a required to take any action to continue error, and our rule will permit SHOPs termination notice when their coverage in the prior year’s coverage through the to do so. We note that the FF–SHOPs are through the SHOP is terminating. SHOP. not able to support this feature at this We are finalizing these provisions Finally, we proposed to amend time. Additional guidance will be generally as proposed, with the § 155.725(j)(2)(i) to remove a reference provided if auto-renewal becomes exception of a technical correction to to § 155.420(d)(10), which was deleted available in the FF–SHOPs. paragraph (d)(2)(ii) to replace the in the 2016 Payment Notice. We also Comment: We received one comment citation to § 155.420(b)(2) with a citation proposed to specify that there would not supporting the proposal that there not to § 155.725(j)(5), the SHOP rule under be a SHOP special enrollment period be a SHOP special enrollment period which SHOP enrollments are when a qualified employee or when a qualified employee or effectuated pursuant to special dependent of a qualified employee dependent of a qualified employee is enrollment periods. Section

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155.725(j)(5) cross-references ever be sent by the SHOP to the original desired date had the original § 155.420(b), and thus also cross- employee. Another commenter eligibility determination been correct. references the retroactivity possible suggested that HHS retain the current Regardless of whether the group or under § 155.420(b)(2). regulatory language about the coverage employee has incurred claims, to Comment: We received one comment effective date after a successful appeal provide maximum flexibility to supporting our proposal to send decision or adopt an effective date that consumers, we believe that the decision qualified employees 90 days advance is the first of the month following the about whether to select a retroactive or notice of when a child dependent is no appeal decision, but not allow each prospective coverage or enrollment longer eligible for coverage under the group to choose. Some commenters effective date should be the employer’s plan the employer purchased through stated that only those who had or employee’s. While we acknowledge the FF–SHOP because he or she has retroactive claims would select the issuers’ concerns about who might reached the maximum child dependent retroactive date. Commenters also select retroactive coverage, we note that age for the plan. The commenter notes recommended that coverage should retroactive coverage would be that it is important to recognize that the never take effect more than a month effectuated only if the requisite age-off date may go well beyond a retroactively, or that coverage should premium payment is made in dependent’s twenty-sixth birthday, start immediately. accordance with depending on State dependent coverage Response: We are finalizing as § 155.705(b)(4)(ii)(B)(2), as finalized laws. proposed our proposal that employers here. In the FF–SHOPs, premiums owed Response: We are finalizing the and employees may file an appeal not for employees that are found eligible provision as proposed. If a State or only if a SHOP fails to provide an under an employee appeal decision will issuer sets maximum dependent age eligibility determination in a timely be collected from employers as part of limits greater than 26 years, the FF– manner, but also if a SHOP fails to the next monthly invoice for the group. SHOPs will send the notice 90 days in provide timely notice of an eligibility We are finalizing § 155.740(l)(3)(iii), advance of when the child dependent is determination. SHOPs may send a regarding the effective date of a denial no longer eligible for coverage under the notice of ineligibility if the information of eligibility under an appeal decision, plan the employer purchased through provided by an employee does not with a revision specifying that the an FF–SHOP. The FF–SHOPs will be match the information provided by the appeal decision would be effective as of able to accommodate issuer-specific and qualified employer. An FF–SHOP might the date of the notice of the appeal State-specific maximum dependent age send a notice of ineligibility to an decision. This is the same effective date limits. employee, for example, if the employee that applies under the current version of e. SHOP Employer and Employee inaccurately enters his or her unique § 155.740(l)(3), so there will not be any Eligibility Appeals Requirements participation code in the FF–SHOP change in policy regarding the effective (§ 155.740) employee application. We note that date of a denial of eligibility under an employers do not make SHOP eligibility appeal decision under this rule. We In § 155.740, we proposed determinations for employees. The have decided to maintain the current amendments relating to SHOP appeals. SHOPs make all eligibility policy because if an employer or We proposed to provide that employers determinations for employees. employee is denied eligibility and their and employees may file an appeal not Employers must offer SHOP coverage to appeal is also denied, the employer or only if a SHOP fails to provide an all full-time employees; other employee might never have had eligibility determination in a timely employees and former employees added enrollment or coverage through the manner, but also if a SHOP fails to to the employee roster are also eligible SHOP, and even if they did, would not provide timely notice of an eligibility for SHOP coverage. have been entitled to it. The SHOP determination. We also proposed to We are making a minor modification should therefore be able to make the allow employers and employees who to our proposal allowing employers and appeal decision effective as of the date successfully appeal a denial of SHOP employees to select either a retroactive of the notice of the appeal decision. eligibility to select whether the effective or prospective coverage or enrollment date of coverage or enrollment through effective date if the appeal decision 9. Exchange Functions: Certification of the SHOP under their appeal decision finds the employer or employee eligible, Qualified Health Plans will be retroactive to the effective date to specify that individual employees a. Certification Standards for QHPs of coverage or enrollment through the may select an effective date only when (§ 155.1000) SHOP that the employer or employee the appeal is of an individual (1) Denial of Certification would have had if they had correctly employee’s eligibility determination been determined eligible, or prospective (rather than an appeal of a Section 1311(e)(1)(B) of the from the first day of the month determination of eligibility for an Affordable Care Act states that following the date of the notice of the employer, which affects coverage or Exchanges may certify a health plan as appeal decision. Additionally, we enrollment for the entire group). We a QHP if such health plan meets the proposed that if eligibility is denied believe that if an employer or employee requirements for certification as under an appeal decision, the appeal applied for coverage or enrollment with promulgated by the Secretary and the decision would be effective on the first the intention that coverage would be Exchange determines that making day of the month following the date of effective on a specific date, received a available such health plan through such the notice of the appeal decision. denial of eligibility, and successfully Exchange is in the interests of qualified Comment: Some commenters said appealed the decision, the employer or individuals and qualified employers. they believe that if an employer only employee should be provided with the Section 1311(e)(1)(B) thereby affords adds eligible employees to the roster, option to select retroactive or Exchanges the discretion to deny then the SHOP will have no knowledge prospective coverage or enrollment, certification of QHPs that meet of ineligible employees. Therefore, the because the employer or employee was minimum QHP certification standards, process of employees appealing to the found to be eligible for SHOP coverage but are not ultimately in the interests of SHOP will never be a valid scenario and the group or employee could have qualified individuals and qualified because no ineligibility notification will had SHOP coverage as early as the employers. In the proposed rule, we

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stated that we interpret the ‘‘interest’’ concerns and meet certification Value Calculator with the addition of standard to mean QHPs should provide requirements rather than denying urgent care). We proposed one quality coverage to consumers to meet certification, and denials should only be standardized option at each of the the Affordable Care Act’s goals. used when a health plan is financially bronze, silver (and the three associated Section 155.1000 provides Exchanges impaired. They also recommended HHS silver CSR plan variations), and gold with broad discretion to certify health make specific requirements and levels of coverage. We proposed that an plans that otherwise meet the QHP examples available for comment (for issuer could offer a standardized option certification standards specified in part example, clarifying how consumer at one or more levels of coverage, with 156. HHS expects to continue to certify complaints would be used to assess past the exception that if it offers a silver the vast majority of plans that meet performance) before finalizing any standardized option, it must also offer certification standards. HHS will focus criteria. Other commenters agreed that the three associated standardized silver denials of certification in the FFEs HHS should use factors outlined in the CSR plan variations. We did not based on the ‘‘interest of the qualified proposed rule, such as consumer propose a standardized option at the individuals and qualified employers’’ complaints and past performance, as platinum level of coverage since only a standard on cases involving the integrity criteria for denying certification. Some small proportion of QHP issuers in the of the FFEs and the plans offered States shared information on their FFEs offer platinum plans. through them. Examples of issues that models. Other commenters wanted HHS We proposed that an issuer could could result in non-certification of a to take additional factors into account, offer more than one plan for each plan include concerns related to an such as a ‘‘history of repeated or standardized option within a service issuer’s material non-compliance with egregious violations’’ of area, subject to the meaningful applicable requirements, an issuer’s nondiscrimination standards and difference requirements defined at financial insolvency, or data errors network adequacy requirements. § 156.298. This could be accomplished, related to QHP applications and data Another commenter asked HHS to for example, if the issuer offers an HMO submissions. Under this approach, HHS consider safe harbors for innovative standardized option at a particular level could consider an assessment of past plan designs that provide incentives to of coverage as well as a PPO performance, including with respect to reduce the cost of health care to standardized option at the same level of oversight concerns raised through consumers while providing EHB and coverage. We also proposed that issuers compliance reviews and consumer meeting or exceeding minimum value would retain the flexibility to offer an complaints received, and the frequency (MV). unlimited number of non-standardized and extent of any data submission Response: As stated above, while we plans and that we would not limit the errors. In exercising this authority, HHS have existing authority to deny total number of QHPs that may be sold intends to adopt a measured approach certification based on the interest through an FFE in a rating area or that would take into consideration standard, we are not including any county, outside of any limitations under several factors, including available specific requirements or criteria in this the meaningful difference and other market competition and the availability final rule. HHS will continue to focus applicable QHP certification of operational resources. on cases involving the integrity of the requirements. We noted that the Office of Personnel FFEs and the plans offered through We encouraged issuers to offer at least Management (OPM) has the sole them, and, as discussed in the proposed one standardized option, particularly at discretion for contracting with multi- rule, will consider factors such as an the silver level of coverage (and the associated silver CSR plan variation State plans and as such retains the issuer’s material non-compliance with authority to selectively contract with levels). This would simplify the applicable requirements, an issuer’s multi-State plans. consumer shopping experience for the financial insolvency, or data errors Comment: Several commenters greatest number of FFE QHP enrollees, related to QHP applications and data opposed HHS’s proposal to deny since silver plans are the most common submissions. We expect to continue to certification to plans based on the and popular plans in terms of certify the vast majority of plans that interest standard, stating ‘‘additional’’ or enrollment in the FFEs. ‘‘new’’ HHS certification authority meet certification standards. We designed the standardized options would reduce competition and G. Part 156—Health Insurance Issuer to be as similar as possible to the most innovation, lead to arbitrary, Standards Under the Affordable Care popular (weighted by enrollment) QHPs inconsistent, and capricious Act, Including Standards Related to in the 2015 FFEs in order to minimize certification decisions, and interfere Exchanges market disruption and impact on with State reviews. Other commenters premiums. 1. Standardized Options agreed that HHS has existing authority We proposed that standardized to deny certification and supported the In order to provide a new option that options have the four drug tiers proposal. Those commenters believe could further simplify the consumer currently utilized in our consumer- that the use of such authority could plan selection process, we proposed six facing applications—generic, preferred promote the availability of high-value standardized options that issuers could brand, non-preferred brand, and health plans and innovative health care choose to offer in the individual market specialty drug tiers—with the option for delivery system reforms, encourage FFEs in plan year 2017. At § 156.20, we issuers to offer additional lower-cost insurers to minimize annual rate proposed to define a standardized tiers if desired, since slightly more than increases, and enable FFEs to become a option as a QHP with a cost-sharing half (56 percent) of the proposed 2016 ‘‘trusted source of quality coverage for structure specified by HHS. Each FFE QHPs had more than four drug consumers.’’ standardized option consists of a fixed tiers. Response: The interest standard was deductible; fixed annual limitation on We proposed that standardized previously codified in § 155.1000 (77 FR cost-sharing; and fixed copayment or options have no more than one in- 18467); thus, we did not propose new or coinsurance for a key set of EHB that network provider tier since varying cost additional certification authority. comprise a large percentage of the total sharing by provider tier affects the Comment: Some commenters stated allowable costs for an average enrollee actuarial value of a plan, making it HHS should work with plans to address (these are the EHB in the Actuarial difficult to standardize a cost-sharing

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structure. Additionally, only 14 percent facing plan comparison features in a § 156.20, which specifies definitions for of FFE enrollees in 2015 were enrolled manner that makes it easier for part 156. in QHPs with more than one in-network consumers to find and identify them, Overall, commenters were supportive tier, and only 6 percent of enrollees including distinguish them from non- of the specific standardized plan were covered by an issuer that did not standardized plans. We noted that we designs, but suggested some offer a single-tier plan in addition to a anticipate differentially displaying the modifications. The proposed 2017 multi-tier plan in the same county. standardized options to allow bronze standardized option closely We proposed that the standardized consumers to compare plans based on resembled a catastrophic plan, with a options would exempt from the differences in price and quality rather $6,650 deductible, an annual limitation deductible certain routine services, such than cost-sharing structure as well as on cost sharing equal to the maximum as primary care, specialist visits (at the providing information to explain the allowable annual limitation on cost silver and gold metal levels), and standardized options concept to sharing for 2017 (proposed to be generic drugs, to ensure that access to consumers. We also noted that we are $7,150), and 50 percent coinsurance for coverage translates into access to care considering whether to require QHP most types of benefits. Primary care for routine and chronic conditions and issuers or web-brokers to differentially visits (for the first three visits) and that enrollees receive some up-front display standardized options when a mental health/substance use outpatient value for their premium dollars. Among non-FFE Web site is used to facilitate services were exempt from the 2015 FFE QHPs, more than 85 percent enrollment in an FFE. deductible with a copayment of $45. of silver plan enrollees and more than We noted that multi-State plan issuers Generic drugs were also exempt from 50 percent of bronze plan enrollees may use the standardized options, but the deductible with a copayment of $35. selected plans that cover certain that OPM, at its discretion, may design The top three drug tiers each had a 50 services prior to application of the additional standardized options percent coinsurance rate. We are making deductible. (The figure for gold plan applicable only to multi-State plan a change to the cost sharing for each of enrollees was more than 90 percent. issuers. We would not display the OPM- the top three drug tiers in the bronze However, many gold plans have a $0 designed standardized options standardized option. In response to deductible, in which case, the concept applicable only to multi-State plan commenters who noted the relative of deductible-exempt services would issuers in a differential manner, paucity of bronze plans on the FFEs not be meaningful.) Primary care and however, in order to preserve with 50 percent coinsurance rates for generic drugs are the services most consistency in the standardized options drugs, the preferred brand drug tier now likely to be covered without a identified by HHS in the FFEs. has a 35 percent coinsurance; the non- deductible at all metal levels. Other preferred brand drug tier now has a 40 We are finalizing the HHS-specified services that are also likely to be percent coinsurance; and the specialty standardized options, but as further covered prior to the deductible, drug tier now has a 45 percent described below, we are specifying particularly by silver and gold plans, coinsurance. We are also making a some changes to the standardized include specialist visits and mental/ technical correction to the Bronze plan’s behavioral health and substance use options’ cost sharing, including one AV calculation to ensure that the disorder outpatient services. technical correction. These changes deductible and coinsurance apply We proposed that the standardized remain consistent with the general correctly after the first three primary options balance consumer preference for features and principles of standardized care visits, to align with the Final 2017 copayments over coinsurance with the options described in the preamble to the AV Calculator User Guide instructions. potential impact on premiums. Research proposed rule. We will make any Making this technical correction and the shows that consumers often prefer additional changes to the standardized above changes to drug coinsurance rates copayments to coinsurance because options in future rulemaking. The plans raises the AV for the plan to 61.88. copayments are more transparent and finalized in this rule apply beginning Thus, the AV for the final bronze make it easier for consumers to predict with the 2017 plan year and until any standardized option is 0.06 percent their out-of-pocket costs. On the other future changes are finalized. higher than the AV of the proposed hand, setting fixed copayments on a In addition, we are adding to bronze standardized option, which was national level for high-cost services § 155.205(b)(1) a new provision 61.82 (rounded to 61.8). The could lead to disparate premium effects codifying the Exchange’s authority to coinsurance rate for each of the top due to regional and issuer-specific cost differentially display standardized three drug tiers more closely reflects the differences, or it could lead to premium options on our consumer-facing plan average coinsurance rate for each of the increases or require corresponding comparison and shopping tools. (How top three drug tiers in the most popular increases in other forms of cost sharing, standardized options will be displayed (weighted by enrollment) QHPs in the if set too low. will take into consideration the results 2015 FFEs, which were 25 percent, 35 To reduce operational complexity, we of consumer testing, which is currently percent, and 45 percent, respectively. proposed to not vary the standardized in process.) We do not intend to require The new bronze standardized option options by State or by region. We QHP issuers or web-brokers to adhere to also addresses commenters’ concerns proposed one set of standardized differential display requirements of that the proposed design was options for all FFEs, including those in standardized options when using a non- inconsistent with the principle of which States perform plan management Exchange Web site to facilitate having four different drug tiers. Non- functions, recognizing that some States enrollment in a QHP through an generic drugs would all have had a 50 regulate the level of cost sharing applied Exchange at this time, but will consider percent coinsurance rate with the to certain benefits, such as emergency whether we should propose such a proposed version of the bronze room services and specialty drugs. standard in the future. Additionally, standardized option. We noted that we would be because the provision in § 155.205(b)(1) The proposed 2017 silver conducting consumer testing to help us refers to standardized options, we will standardized option had a $3,500 evaluate ways in which standardized finalize the definition of standardized deductible, an annual limitation on cost options, when certified by an FFE, option at § 155.20, which specifies the sharing equal to the maximum could be displayed on our consumer- definitions for part 155, instead of at allowable annual limitation on sharing

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for 2017, and a 20 percent enrollee copayment value for generic drugs. We between the cost sharing for certain coinsurance rate. Primary care visits, are increasing the copayment for generic benefits like primary care and specialty mental health/substance use outpatient drugs to $15 for the silver standardized visits. We are finalizing the three services, specialist visits, urgent care option to more closely reflect the standardized options at the silver cost- visits, and all drug benefits were exempt average copayment rate for generic sharing reduction variation levels. from the deductible, and all of the drugs in the most popular QHPs in the The proposed 2017 gold standardized deductible-exempt benefits had 2015 FFEs (weighted by enrollment). copayments instead of coinsurance, The actuarial value of the new option, which we are also finalizing as except for the specialty drugs tier, standardized silver option is 70.63 proposed, has a $1,250 deductible, a which had a 40 percent coinsurance percent (0.37 percent lower than the AV $4,750 annual limitation on cost rate. Emergency room services were of the proposed version). sharing, and a 20 percent coinsurance subject to the deductible, with a $400 The proposed silver cost-sharing rate for most types of benefits. Primary copayment applicable after the reduction standardized options reduced care visits, mental health and substance deductible. all cost sharing parameters successively use outpatient services, specialist visits, In the final rule, we are making a to meet the 73 percent, 87 percent, and urgent care visits, and all drug benefits change to the proposed silver 94 percent AV requirements. Where are not subject to the deductible. All of standardized option in response to possible, the cost-sharing reduction the benefits not subject to the deductible comments. The proposed silver standardized options and the non-cost- have copayments except for specialty standardized option and gold sharing reduction standardized silver drugs. standardized option had the same option maintain similar differentials

TABLE 9—FINAL 2017 STANDARDIZED OPTIONS

Silver 73% actu- Silver 87% actu- Silver 94% actu- Bronze Silver arial value vari- arial value vari- arial value vari- Gold ation ation ation

Actuarial Value (%) 61.88 ...... 70.63 ...... 73.55 ...... 87.47 ...... 94.30 ...... 79.98. Deductible ...... $6,650 ...... $3,500 ...... $3,000 ...... $700 ...... $250 ...... $1,250. Annual Limitation $7,150 ...... $7,150 ...... $5,700 ...... $2,000 ...... $1,250 ...... $4,750. on Cost Sharing. Emergency Room 50% ...... $400 (copay ap- $300 (copay ap- $150 (copay ap- $100 (copay ap- $250 (copay ap- Services. plies only after plies only after plies only after plies only after plies only after deductible). deductible). deductible). deductible). deductible). Urgent Care ...... 50% ...... $75 (*) ...... $75 (*) ...... $40 (*) ...... $25 (*) ...... $65 (*). Inpatient Hospital 50% ...... 20% ...... 20% ...... 20% ...... 5% ...... 20%. Services. Primary Care Visit .. $45 (* first 3 vis- $30 (*) ...... $30 (*) ...... $10 (*) ...... $5 (*) ...... $20 (*). its, then subject to deductible and 50% coin- surance). Specialist Visit ...... 50% ...... $65 (*) ...... $65 (*) ...... $25 (*) ...... $15 (*) ...... $50 (*). Mental Health/Sub- $45 (*) ...... $30 (*) ...... $30 (*) ...... $10 (*) ...... $5 (*) ...... $20 (*). stance Use Dis- order Outpatient Services. Imaging (CT/PET 50% ...... 20% ...... 20% ...... 20% ...... 5% ...... 20%. Scans, MRIs). Rehabilitative 50% ...... 20% ...... 20% ...... 20% ...... 5% ...... 20%. Speech Therapy. Rehabilitative OT/ 50% ...... 20% ...... 20% ...... 20% ...... 5% ...... 20%. PT. Laboratory Services 50% ...... 20% ...... 20% ...... 20% ...... 5% ...... 20%. X-rays ...... 50% ...... 20% ...... 20% ...... 20% ...... 5% ...... 20%. Skilled Nursing Fa- 50% ...... 20% ...... 20% ...... 20% ...... 5% ...... 20%. cility. Outpatient Facility 50% ...... 20% ...... 20% ...... 20% ...... 5% ...... 20%. Fee. Outpatient Surgery 50% ...... 20% ...... 20% ...... 20% ...... 5% ...... 20%. Physician/Sur- gical. Generic Drugs ...... $35 (*) ...... $15 (*) ...... $10 (*) ...... $5 (*) ...... $3 (*) ...... $10 (*). Preferred Brand 35% ...... $50 (*) ...... $50 (*) ...... $25 (*) ...... $5 (*) ...... $30 (*). Drugs. Non-Preferred 40% ...... $100 (*) ...... $100 (*) ...... $50 (*) ...... $10 (*) ...... $75 (*). Brand Drugs. Specialty Drugs ...... 45% ...... 40% (*) ...... 40% (*) ...... 30% (*) ...... 25% (*) ...... 30% (*). (*) = not subject to the deductible.

Comment: Many commenters standardized options in the individual towards simplifying the consumer supported our proposal to establish market FFEs in plan year 2017, as a step experience, both when shopping for

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health insurance and when making cost- specific changes to the standardized Response: We clarify that issuers may sharing payments to use covered health option designs, particularly with respect offer the standardized options as family care services. Some commenters to prescription drugs. Some commenters plans by doubling the maximum annual opposed our standardized options opposed the use of coinsurance for the limitation on cost-sharing and setting proposal, arguing that it will hamper specialty drug tier across all metal levels the family (other than self-only) innovation and limit competition and without the inclusion of specific and deductible at twice the deductible choice, and that differential or reasonable dollar level caps. Some provided here. preferential display of standardized commenters noted that the proposed Comment: Some commenters urged options could inadvertently steer bronze standardized option in effect has that we exempt habilitative and consumers with specific or special only two tiers, since the generic drug rehabilitative outpatient services from health care needs towards selecting tier has a proposed copayment of $35 the deductible in the standardized standardized options that are designed while the top three drug tiers all have options. Some commenters also for the average QHP enrollee and not for the same coinsurance rate of 50 percent. encouraged the creation of a a specific population. These Some commenters noted that the standardized platinum option. Some commenters expressed their concern proposed copayments for generic drugs commenters opposed designing the that our proposal represents a first step were set at the same copayment rate standardized options to be as similar as toward ultimately limiting or excluding ($10) for both the gold standardized possible to the 2015 QHPs, noting that non-standardized plans. These option and the silver standardized in their opinion, the 2015 QHPs often commenters stated that making option and recommended that the did not meet the needs of people with standardized options mandatory in the generic copayment be lower in the gold chronic conditions. future could stifle innovation in plan plan than in the silver plan. Some Response: We designed the plans to design, including value based insurance commenters asked that all four drug be as similar as possible to the 2015 design offerings, as well as competition tiers be exempt from the deductible, QHPs (as measured on an enrollment- in the case that standardized options are while others asked that drugs be subject weighted basis) in order to minimize sorted above non-standardized plans on to a separate deductible. Some disruption to the market and impact on our consumer-facing plan comparison commenters asked that we clarify that premiums. Only a minority of these and shopping tools. Among those who the copayment amounts for the drug plans exempted habilitative and supported the standardized options tiers are for thirty-day retail fills. Some rehabilitative outpatient services from proposal, many urged that offering them commenters asked that we clarify that the deductible. We will consider more should be mandatory, even in 2017. issuers are permitted to create lower deductible exempt services in future Response: We believe that cost tiers for any of the four drug tiers, years depending on changes in the QHP standardized options can simplify the not just for the generic drugs tier. For markets, enrollment patterns, and other consumer shopping experience and are example, commenters suggested that considerations. therefore finalizing the proposal for issuers should be permitted to create a Comment: Several commenters issuers to be able to offer standardized preferred specialty tier with lower cost expressed concern with our proposal to options if they choose. We recognize sharing than the specialty tier. Some establish a set of standardized options that these cost-sharing structures may commenters ask that we clarify that that would apply in all States in which not be appropriate for all issuers or all preferred and non-preferred pharmacies an FFE is currently operating, noting markets. We are not requiring issuers to are permitted with differential cost that States may have established or may offer standardized options, nor limiting sharing and that differential cost sharing wish to establish their own standardized their ability to offer other QHPs, and as is permitted for mail-service and retail plans specific to their State-wide a result, we do not believe that pharmacies, such that the standardized markets. standardized options will hamper cost sharing could represent cost innovation or limit choice. sharing at non-preferred retail Response: As we note in the preamble Additionally, we will seek to mitigate pharmacies, with lower cost sharing to § 156.350 in this final rule, it is not the risk that consumers with special available at preferred retail or mail- possible at this time for the Federal health care coverage needs incorrectly service pharmacies. platform to accommodate State choose a standardized option through Response: We are finalizing the customization, such as State-specific the use of tools that explain to standardized options as proposed display elements on Plan Compare. consumers which cost-sharing features except for the changes to the bronze and State-defined standardized plans that are standardized, and how they may silver standardized options discussed are different from HHS’s standardized differ from one another and from non- above and the following clarifications. options will not be displayed in the standardized plans, as well as how they We clarify that that copayment amounts same manner as HHS’s standardized can be used to simplify the shopping listed for the drug tiers are for thirty-day options on the Federal platform because experience. We believe that most prescription fills at retail pharmacies of the limitations described above. consumers with specialized health care and that issuers (or their prescription Further, in a State that has required needs will carefully shop for coverage benefit managers) may offer a lower standardization of certain cost-sharing that provides the right mix of cost- cost-sharing rate for mail order features of its QHPs or is considering sharing protections, benefits, and prescription fills, as is the most doing so in 2017 or beyond, issuers networks. common practice in the current market. must comply with State law, which may Comment: Several commenters agreed We also clarify that issuers may create mean that issuers in those States will be with the features of our proposed a lower cost tier for the generic drugs unable to offer some or all of the standardized options, including the tier for standardized options, but may standardized options established inclusion of certain deductible-exempt not do so for the three higher drug tiers through this rule-making. At this time, services, a single in-network provider in the standardized options. the FFEs will not be able to give tier, four drug tiers with the option of Comment: One commenter differential display to QHPs that differ lower-cost tiers, and copayments in recommended that we create from the standardized options finalized place of coinsurance where possible. We standardized options for family plans in in this final rule, even if the only also received many recommended addition to individual plans. differences are to comply with State

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laws. We will consider whether we may OMB Circular No. A–25R establishes assessment from percent of premium to be able to do so in the future, however. Federal policy regarding user fees, and a per member per month amount to Comment: HHS solicited comments specifies that a user charge will be decouple the user fee from medical on whether it should require QHP assessed against each identifiable inflation. We received one comment issuers or web-brokers to differentially recipient for special benefits derived asking whether the user fees collected in display standardized options when from Federal activities beyond those 2017 will exceed the costs of the FFE. using a non-Exchange Web site to received by the general public. As in We also received comments stating that facilitate enrollment in a QHP through benefit years 2014 to 2016, issuers the user fee rate is likely too low to the Exchange. Commenters voiced seeking to participate in an FFE in cover the full costs of the FFE. concerns that web-brokers already have benefit year 2017 will receive two Response: We will continue to assess to comply with existing plan display special benefits not available to the the FFE user fee as a percent of the requirements, such as displaying all general public: (1) The certification of monthly premium charged by issuers plans sold on the Exchange, and not their plans as QHPs; and (2) the ability participating in an FFE, in particular as displaying plans based on to sell health insurance coverage it relates to the adequacy of funding for compensation, and that should HHS through an FFE to individuals ongoing marketing and outreach. In adopt this policy, web brokers would determined eligible for enrollment in a accordance with OMB Circular No. A– need clear guidance and sufficient time QHP. These special benefits are 25R, issuers are charged the user fee in to prepare. provided to participating issuers exchange for receiving special benefits Response: We recognize that through the following Federal activities beyond those that are offered to the currently, web-brokers are expected to in connection with the operation of general public. Setting the user fee as a comply with display requirements FFEs: percent of premium ensures that the under § 155.220(c)(3), which includes • Provision of consumer assistance user fee generally aligns with the disclosing and displaying all QHP tools. business generated by the issuer as a information provided by the Exchange • Consumer outreach and education. result of participation in an FFE. or directly by QHP issuers consistent • Management of a Navigator Additionally, the user fee rate is set to with the requirements of § 155.205(b)(1) program. collect costs incurred for the special and (c), providing consumers the ability • Regulation of agents and brokers. benefits, no more or less, and user fee to view all QHPs offered through the • Eligibility determinations. collections are used solely to support Exchange, and displaying all QHP data • Enrollment processes. FFE user fee eligible functions. provided by the Exchange. We are not • Certification processes for QHPs Additionally, we proposed under requiring QHP issuers or web-brokers to (including ongoing compliance §§ 155.106(c) and 155.200(f) to allow adhere to differential display verification, recertification and State Exchanges to enter into a Federal requirements of standardized options decertification). platform agreement with HHS so that when using a non-Exchange Web site to • Administration of a SHOP the State Exchange may rely on the facilitate enrollment in a QHP through Exchange. Activities performed by the Federal platform for certain Exchange an Exchange at this time. We will Federal government that do not provide functions to enhance efficiency and consider whether such a standard issuers participating in an FFE with a coordination between State and Federal should apply to non-Exchange Web sites special benefit will not be covered by programs, and to leverage the systems in the future. Web-brokers and issuers this user fee. established by the FFE to perform should continue to comply with all OMB Circular No. A–25R further certain Exchange functions. We existing plan display requirements. states that user fee charges should proposed in § 156.50(c)(2) to charge generally be set at a level so that they SBE–FP issuers a user fee for the 2. FFE User Fee for the 2017 Benefit are sufficient to recover the full cost to services and benefits provided to the Year (§ 156.50) the Federal government of providing the issuers by HHS. For 2017, these Section 1311(d)(5)(A) of the service when the government is acting functions will include the Federal Affordable Care Act permits an in its capacity as sovereign (as is the Exchange information technology and Exchange to charge assessments or user case when HHS operates an FFE). call center infrastructure used in fees on participating health insurance Accordingly, we proposed to set the connection with eligibility issuers as a means of generating funding 2017 user fee rate for all participating determinations for enrollment in QHPs to support its operations. In addition, 31 FFE issuers at 3.5 percent. This user fee and other applicable State health U.S.C. 9701 permits a Federal agency to rate assessed on FFE issuers is the same subsidy programs, as defined at section establish a charge for a service provided as the 2014 to 2016 user fee rate. We are 1413(e) of the Affordable Care Act and by the agency. If a State does not elect finalizing the 2017 user fee rate for all enrollment in QHPs under § 155.400. As to operate an Exchange or does not have participating FFE issuers as proposed. previously discussed, OMB Circular No. an approved Exchange, section In addition, OMB Circular No. A–25R A–25R establishes Federal policy 1321(c)(1) of the Affordable Care Act requires that the user fee charge be regarding user fees, and specifies that a directs HHS to operate an Exchange sufficient to recover the full cost to the user charge will be assessed against within the State. Accordingly, at Federal government of providing the each identifiable recipient for special § 156.50(c), we specify that a special benefit. An exception was in benefits derived from Federal activities participating issuer offering a plan place for the 2014 to 2016 user fee rates, beyond those received by the general through an FFE must remit a user fee to to ensure that FFEs could support the public. We are finalizing our proposals HHS each month that is equal to the goals of the Affordable Care Act, under § 155.106(c) and § 155.200(f), and product of the monthly user fee rate including improving the health of the issuers seeking to participate in an SBE– specified in the annual HHS notice of population, reducing health care costs, FP in benefit year 2017 and beyond will benefit and payment parameters for and providing access to health coverage. receive special benefits not available to FFEs for the applicable benefit year and We have sought an exception to this the general public: The ability to sell the monthly premium charged by the policy again for 2017. health insurance coverage through a issuer for each policy under the plan Comment: Some commenters State Exchange that realizes efficiencies where enrollment is through an FFE. requested conversion of the FFE user fee by using the Federal platform to enroll

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individuals determined eligible for as to why we have not charged the SBE– that the user fee generally aligns with enrollment in a QHP, including FP user fees until now. the business generated by the issuer as individuals who may be eligible for Response: While a user fee rate of 3.0 a result of the special benefits provided. insurance affordability programs that percent reflects HHS’s actual costs, we We recognize that SBE–FPs may have may support premiums paid to issuers recognize that State Exchanges that are elected to cover Exchange costs offering plans through the State currently using the Federal platform differently. Therefore, at an SBE–FP’s Exchange by way of the Federal may find the abrupt change of the written request, HHS will collect from platform (HealthCare.gov), and the proposed user fee in 2017 challenging the SBE–FP the total amount that would ability to sell health insurance coverage for their health insurance markets. result from the user fee collected from to small employers eligible to purchase Therefore, for the 2017 benefit year, we issuers based on the percent of monthly QHPs for its employees through a SHOP have sought a waiver from OMB to the premiums charged by invoicing the Exchange. Other services that will be requirement that the user fee with State for the total user fee charge, and provided to issuers offering plans respect to SBE–FPs cover the full share not by collecting the fee directly from through an SBE–FP include the Federal of costs incurred by the FFE for SBE–FP issuers. Exchange information technology and providing these services, and, if we Comment: One commenter requested call center infrastructure used in receive this waiver, would reduce the unbundling of the costs of the Federal connection with eligibility user fee rate by one-half for the issuers platform, as States may not utilize all determinations for enrollment in QHPs in an SBE–FP, to provide these States aspects of the Federal platform bundle. and other applicable State health additional transition time to support the We also received comments urging HHS subsidy programs. We proposed to costs incurred by the FFE. That is, for to set a limit on the State’s portion of charge issuers offering QHPs through an the 2017 benefit year, issuers operating the assessment for covering the State’s SBE–FP a user fee rate of 3.0 percent of in an SBE–FP will be charged an costs. Commenters’ suggestions for the the monthly premium charged by the amount equal to 1.5 percent of user fee limit ranged from 3.5 percent to issuer for each policy under a plan premiums in the SBE–FP. 5 percent of premiums for combined offered through an SBE–FP. This fee We expect, in future rulemaking, to Federal and State user fee charges. would recover funding to support FFE propose that SBE–FP issuers would be Response: As we discuss in § 155.106, operations incurred by the Federal charged the full user fee rate covering HHS will not—at this time—offer a government associated with providing the full share of costs incurred by the menu of Federal services from which an the services described above. Federal platform for the special benefits SBE–FP may select some but not other provided to issuers in SBE–FPs. We services on the Federal platform. As The proposed user fee rate was note that we did not immediately assess such, we are finalizing the SBE–FP user calculated based on the proportion of a user fee on SBE–FP issuers because we fee eligible costs as a bundle as FFE costs that are associated with the did not establish our authority and proposed, and do not at this time FFE information technology intent to do so through rulemaking in anticipate unbundling the costs for each infrastructure, the consumer call center, time for rate-setting. We are drawing on Federal service. We will also continue and eligibility and enrollment services, our experience with SBE–FP operations assessing the user fee by market. This and allocating a share of those costs to in the 2014 and 2015 benefit years to means that, if an SBE–FP is not utilizing issuers in the relevant SBE–FPs. A establish a regulatory structure for SBE– Federal services for the SHOP Exchange, significant portion of expenditures for FPs and to help determine an the user fee would not be charged on FFE services are associated with the appropriate cost estimate for the SBE– SHOP issuers. Additionally, we do information technology, call center FP user fee. As was the case with the recognize the benefits of States infrastructure, and personnel who FFEs, the user fee will not fully capture operating their own plan management conduct eligibility determinations for our costs, so that we can ease the and customer support functions, and do enrollment in QHPs and other transition for States and their issuers to not intend to limit the State’s ability to applicable State health subsidy adapt to these higher fees. We note that generate revenue to support these programs as defined at section 1413(e) we similarly sought a waiver from OMB functions. of the Affordable Care Act, and who from the requirement that FFE user fees Comment: One commenter sought perform the functions set forth in fully account for costs in the early years confirmation that if a State is currently § 155.400 to facilitate enrollment in of the FFEs. developing its own SBE platform, but QHPs. We intend to review the costs Comment: Some commenters later decides instead to rely on the incurred to provide these special requested that HHS implement the user Federal platform under the SBE–FP benefits each year, and revise the user fee in SBE–FP States by invoicing the model, the SBE–FP model would be fee rate for issuers in SBE–FPs State directly for the costs incurred or available to the State. Additionally, the accordingly in the annual HHS notice of setting up a different methodology for commenter requested that in such a benefit and payment parameters. recouping the costs incurred. These situation the State be charged the same Comment: Commenters requested a commenters indicated that a State that user fee as charged to existing SBE–FPs. one-year delay in assessing the user fee wishes to fund its Exchange operations Response: The SBE–FP model option on issuers operating in an SBE–FP or a by assessing a fee on all insurance will be available per the timelines and reduction of the user fee for 2017, carriers selling individual market major conditions we describe in § 155.106. particularly noting that SBE–FPs require medical policies, both on and off The SBE–FP user fee for a particular additional time to integrate the user fee Exchange, the Federal user fee structure benefit year, established through into their State’s budget, and also that would require the SBE–FP to execute a rulemaking, will apply to all States that the impact of this user fee on premiums complex reconciliation process. use the SBE–FP for that benefit year, in SBE–FP States will be significant. Response: We will assess the user fee including those States that do not Commenters also noted charging SBE– rate as a percent of monthly premiums currently use the SBE–FP model. All FP issuers the full user fee rate would charged by issuers operating in an SBE– issuers on SBE–FPs for the 2017 benefit allow the State to make a fully informed FP, as established in prior rulemaking. year would receive the reduced 1.5 decision on the type of model to use for Setting the user fee as a percent of percent transitional rate. Additionally, 2017. We also have received questions premium charged by issuers ensures we note that nothing restricts a State

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from using its own revenue to support outdated reference to when quarterly drug that is included on the plan’s developing its own SBE platform. rate changes could first be implemented. formulary drug list. Because these two Comment: Other commenters stated We also reiterated that a health processes serve different purposes, we that the FFE and SBE–FP user fee rates insurance issuer may vary the plan- reaffirmed our belief that they are not are likely too low to provide all of the adjusted index rate for a particular plan duplicative and we did not propose to necessary functions for consumers, and from its market-wide index rate change these definitions. However, we that the assumption that FFE spend only adjusting only for the explicitly stated also clarified in the 2016 Payment 15 percent of user fee collections on factors in § 156.80(d)(2). Any plan level Notice that ‘‘nothing under this policy marketing, outreach, and plan adjustment not specifically stated, (§ 156.122(c)) precludes a State from management is too low. including adjusting for morbidity of requiring stricter standards in this area.’’ Response: Our current user fee rates plan enrollees, is not permissible. We stated in the proposed rule that we for issuers in an FFE and an SBE–FP are We received no comments on these received additional comment regarding based on our current anticipated specific issues and are finalizing the States’ coverage appeals laws and contract costs for providing the special provisions as proposed. regulations and non-formulary drugs. In our discussion, we noted that if a State benefits. Our cost distributions are 4. Essential Health Benefits Package based on larger estimated enrollment is subjecting non-formulary drugs to the through FFEs, and are not comparable to a. Provision of EHB (§ 156.115) standards under § 147.136 as opposed to what individual States may spend on In the 2016 final Payment Notice, we § 156.122(c), the State’s coverage these functions. Further, to ensure FFEs finalized regulation text at appeals laws or regulations would can support many of the goals of the § 156.115(a)(5) that discussed provide the enrollee with a different Affordable Care Act, we continuously habilitative services and devices. Due to process for review, and as a result a assess our operational strategy for FFE a technical error in the amendatory different process for obtaining coverage functions to maximize access to health instructions, the current CFR does not of the non-formulary drug. Specifically, insurance coverage, and could seek, reflect this finalized language, and § 147.136 has separate requirements for through notice and comment instead retains the language that was its external review process and allows rulemaking, to change the user fee rate finalized prior to being amended by the for a secondary level of internal review in future years to accommodate 2016 Payment Notice; therefore, we are before the final internal review increased or decreased spending on including regulation text in this determination for group plans. areas such as marketing and consumer rulemaking to make a technical As a result, if the State is subjecting outreach. correction to update the CFR to non-formulary drugs to § 147.136 and Additionally, to ease administrative language that was previously finalized. the health plans are also required to burdens on issuers and States, HHS comply with § 156.122(c), the health proposed to offer States the option to b. Prescription Drug Benefits (§ 156.122) plan may have to satisfy two standards have HHS collect an additional user fee In the proposed rule, we discussed for non-formulary drugs. Therefore, we from issuers at a rate specified by the three proposals related to prescription proposed amending § 156.122(c) to State to cover costs incurred by the drug benefits. First, § 156.122(c) establish that a plan, in a State that has State-based Exchange for the functions requires plans providing EHB to have coverage appeals laws or regulations the State retains. HHS would undertake processes in place that allow an that are more stringent than or are in this collection under the enrollee, an enrollee’s designee, or the conflict with our exceptions process Intergovernmental Cooperation Act of enrollee’s prescribing physician (or under § 156.122(c), and that include 1968 (IGCA) if a written request is made other prescriber) to request and gain reviews for non-formulary drugs, the by a State. If HHS agrees to provide such access to clinically appropriate drugs health plan’s exception process satisfies services, States may be required to not covered by the plan. Such § 156.122(c) if it complies with the reimburse HHS any additional costs that procedures must include a process to State’s coverage appeals laws or are associated with HHS’s provision of request an expedited review based on regulations. The purpose of § 156.122(c) such service. This coordination between exigent circumstances meeting the is to ensure that an enrollee has the the State and Federal programs would requirements under § 156.122(c)(2). For ability to request and gain access to reduce administrative burden on issuers plan years beginning in 2016 and clinically appropriate drugs not covered as well as the SBEs–FP. We did not thereafter, these processes must also by the plan. Regardless of whether a receive any comments on this proposal include certain processes and State’s coverage appeals laws or for HHS to collect an additional user fee timeframes for the standard review regulations satisfy § 156.122(c) or if the from issuers on behalf of the State. We process, and have an external review health plan meets § 156.122(c) through will provide additional guidance if we process if the internal review request is its exception process, we would expect receive such a request. denied. The costs of the non-formulary that an enrollee would retain the ability drug provided through the exceptions to request and gain access to clinically 3. Single Risk Pool (§ 156.80) process must count towards the annual appropriate drugs not covered by the We proposed to codify that any new limitation on cost sharing and AV of the plan. Therefore, we solicited comments rates set by an issuer in the small group plan. As discussed in the 2016 Payment on the scope of application of State market as part of a quarterly rate change Notice (80 FR 10750), the exceptions appeals laws or regulations that include would apply for new or renewing process established in this section is determinations for non-formulary drugs coverage on or after the rate effective distinct from the coverage appeals for this purpose, especially under date, and would apply for the entire the process established under § 147.136. medical necessity provisions. We also plan year. This policy is consistent with Specifically, the drug exceptions sought comment as to whether these the preamble to the second Program process applies to drugs that are not provisions would allow the enrollee the Integrity Rule (78 FR 65067). We also included on the plan’s formulary drug ability to request and gain access to proposed to make non-substantive list, while the coverage appeals clinically appropriate drugs not covered changes to the wording of that regulations apply if an enrollee receives by the plan in all cases through a State’s paragraph, including to delete an an adverse benefit determination for a coverage appeals laws or regulations. As

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the State generally is the primary publically available. Similarly, for contraceptive services as clarified in enforcer of the EHB requirements, the commenters supported or had concerns guidance under section 2713 of the PHS State would determine whether its with the OPM clarification with regard Act, both of which apply to non- coverage appeals laws or regulations to satisfying § 156.122(c). Some grandfathered individual and small would satisfy § 156.122(c) and therefore, commenters requested additional group market plans that are required to would allow the health plans in the clarification as to whether drugs count provide EHB.54 State to defer to the States’ coverage towards the annual limitation on cost Comment: Some commenters laws or regulations. We noted that we sharing, such as cases when a State’s supported a second level of internal consider multi-State plans that comply coverage appeals laws and regulations review and noted that including two with OPM’s coverage appeals are applying to non-formulary drugs. levels of internal review is consistent requirements to satisfy § 156.122(c). We Some commenters wanted clarification with current practices, improves considered codifying this interpretation. that this exceptions process is different administrative efficiency, and ensures Second, we proposed amending the from the preventive services’ exceptions enrollees obtain medically necessary process at § 156.122(c) to allow for a process. Other commenters submitted medications as soon as possible. The second level of internal review. For comments about other prescription drug commenters noted that having only one example, we considered using the same related issues beyond the scope of the level of internal review means more timelines as the first level of internal proposed rule. enrollees will rely on the external review, 72 hours for the standard review Response: We are finalizing our review process, which is costly. Some request and 24 hours for the expedited proposal that a State may determine that commenters sought additional time for review request. health plans in the State satisfy the the second level of review. Other Lastly, we sought comment on requirements of § 156.122(c) if the commenters opposed a second level of whether the substance use disorder health plans have a process through the internal review altogether and were requirement under EHB needs State’s coverage appeals laws and primarily concerned that the second additional clarification with regard to regulations to allow an enrollee to level of review could delay access and medication assisted treatment (MAT) for request and gain access to clinically could burden enrollees. Some opioid addiction. appropriate drugs not otherwise covered commenters wanted evidence that the We are finalizing one provision under by the health plan under standards at second level of review would help this final rule to allow a State to least as stringent as the requirements at enrollees, since the health plan determine that the health plans in the § 156.122(c). To meet this standard, the conducts the internal review, as State satisfy § 156.122(c) when the process must include an internal opposed to a third party. Some health plans are required to adopt an review, an external review, the ability to commenters wanted clarification as to exceptions process under the State’s expedite the reviews, and timeframes whether this revised rule would be coverage appeals laws and regulations that are the same as or shorter than effective for the 2016 plan year or apply that include review of non-formulary timeframes established under with enforcement discretion. Other drugs, and the exceptions process paragraphs (c)(1)(ii) and (c)(2)(iii) of this commenters were concerned that the contains requirements at least as paragraph. In the event that an rule would apply different standards in stringent as those under § 156.122(c). exception request is granted under 2016 versus 2017 (one level of internal Comment: Some commenters § 156.122(c)(4), the excepted drug(s) are review versus two). supported allowing the State to treated as an EHB including counting Response: We are not finalizing new determine that health plans in the State any cost-sharing towards the plan’s requirements in this area. A health plan, comply with § 156.122(c) by virtue of annual limitation on cost-sharing under at its election, may conduct a the State’s coverage appeals laws and § 156.130. concurrent second internal review in regulations applying to non-formulary While we appreciate commenters’ the standard review process and the drugs, as long as the health plans treat concerns about potential confusion if expedited review process within the the denied formulary exception as an two processes apply, we do not believe timeframes established under adverse coverage determination under that applying timeframes less stringent § 156.122(c)(1) and (2), but the health § 147.136. These commenters believed than those in the current § 156.122(c) plan is not required to do so. As that this proposal is within the State’s would benefit enrollees. We understand discussed in the preamble of the 2016 scope and would avoid duplication and that States may not be able to meet these Payment Notice (80 FR 10818), all of the potential operational and financial timeframes under their current coverage timeframes begin when the health plan burdens of having the two different appeals laws and regulations and that or its designee receives a request. An external review processes. Other States may have to change their laws enrollee or the enrollee’s prescribing commenters stated that HHS should and regulations in order to align the physician (or other prescriber) should require States to prove that they have a timeframes under § 156.122(c), if the strive to submit a completed request; stronger standard than that required by State wishes to use its current laws and however, health plans should not fail to the exception process and wanted HHS regulations to streamline processes and commence review if they have not yet to make the determination as to whether create efficiencies. The State is not received information that is not a State has a stronger standard. required to undertake this option. We necessary to begin review. Therefore, we Commenters wanted to know what also reaffirm that we consider multi- interpret § 156.122(c)’s reference to would make a State law ‘‘in conflict State plans that comply with OPM’s receipt of the request to mean that the with’’ the Federal standard and wanted coverage appeals requirements to satisfy health plan must begin the review HHS to study the issue to define the § 156.122(c). Lastly, we note that the following the receipt of information problem. These commenters were exceptions process under § 156.122(c) is generally concerned with the timeframe separate from other exceptions process 54 See the section entitled ‘‘Coverage of Food and differences between §§ 156.122(c) and required under applicable Federal or Drug Administration (FDA)-approved 147.136. Some commenters also wanted State law. In particular, compliance Contraceptives’’ in FAQS about Affordable Care Act Implementation (PART XXVI), (May 11, 2015), the State to certify that their laws with the exceptions process under available at https://www.cms.gov/CCIIO/Resources/ comply with § 156.122(c), such as with § 156.122(c) does not constitute Fact-Sheets-and-FAQs/Downloads/aca_ a tool, and to make the determinations compliance with the exceptions process implementation_faqs26.pdf.

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sufficient to begin the review. We note use disorders and develop action plans this formula, we proposed and are that the processes specified in to address these barriers. Both the EHB finalizing the premium adjustment § 156.122(c) are only required in requirement and Federal mental health percentage for 2017 at 13.25256291 connection with requesting and gaining and substance use disorder parity percent. We note that the 2013 premium access to clinically appropriate non- requirements apply to QHP coverage of used for this calculation has been formulary drugs, and are not required in medications to treat opioid dependence. updated to reflect the latest NHEA data. connection with utilization management Because these requirements extend We are also finalizing the following processes for drugs on the plan’s beyond QHPs, we anticipate issuing cost-sharing parameters for calendar formulary drug list. We also note that separate guidance with respect to MAT year 2017 based on our finalized 2017 § 156.122(c) only applies to non- in the near future. premium adjustment percentage. grandfathered individual and small Maximum Annual Limitation on Cost c. Premium Adjustment Percentage group market plans that are required to Sharing for Calendar Year 2017. Under (§ 156.130) provide EHB under section 2707(a) of § 156.130(a)(2), for the 2017 calendar the PHS Act and section 1302 of the Section 1302(c)(4) of the Affordable year, cost sharing for self-only coverage Affordable Care Act, as well as to QHPs Care Act directs the Secretary to may not exceed the dollar limit for under §§ 156.200(b)(3) and 156.20. We determine an annual premium calendar year 2014, increased by an will continue to monitor the adjustment percentage, which is used to amount equal to the product of that implementation of the drug exceptions set the rate of increase for three amount and the premium adjustment processes to determine whether further parameters detailed in the Affordable percentage for 2017, and for other than guidance on these processes is needed. Care Act: the maximum annual self-only coverage, the limit is twice the Comment: We received many limitation on cost sharing (defined at dollar limit for self-only coverage. comments supporting requiring § 156.130(a)), the required contribution Under § 156.130(d), these amounts must coverage of medication assisted percentage by individuals for minimum be rounded down to the next lowest treatment for opioid addiction as an essential coverage the Secretary may use multiple of 50. Using the premium EHB. These comments cited cost to determine eligibility for hardship adjustment percentage of 13.25256291 effectiveness, clinical evidence, and exemptions under section 5000A of the percent for 2017 we established above, inability to interchange MAT options in Code, and the assessable payment and the 2014 maximum annual support of requiring that all MATs be amounts under section 4980H(a) and (b) limitation on cost sharing of $6,350 for covered as an EHB. Commenters noted of the Code. Section 156.130(e) provides self-only coverage, which was published a lack of covered providers and related that the premium adjustment percentage by the IRS on May 2, 2013,56 we are services limiting access to appropriate is the percentage (if any) by which the finalizing the 2017 maximum annual MAT; a lack of and variation in coverage average per capita premium for health limitation on cost sharing as proposed at of specific types of treatments, such as insurance coverage for the preceding $7,150 for self-only coverage and methadone; utilization management calendar year exceeds such average per $14,300 for other than self-only practices for MAT as areas of concern capita premium for health insurance for coverage. and reasons to require coverage of MAT. 2013, and that this percentage will be Comment: Two commenters said the Commenters also noted the lack of MAT published annually in the HHS notice of annual rate of increase in the MOOP coverage by certain new State base- benefit and payment parameters. ($300 for individuals this year after a benchmark plans, including explicit Under the methodology established in $250 increase last year, and $600 for exclusions. Other commenters were not the 2015 Payment Notice and amended other than self-only coverage this year supportive of additional clarification on in the 2015 Market Standards Rule for on top of a $500 increase last year) is MAT coverage for substance use estimating average per capita premium unsustainable and negatively affects disorders or wanted to review a specific for purposes of calculating the premium enrollees’ willingness to use proposal for additional coverage, as adjustment percentage, the premium prescription drugs, which in turn affects MAT is required to be covered under adjustment percentage is calculated health outcomes. The commenters asked certain United States Pharmacopeia based on the projections of average per HHS to engage with stakeholders to (USP) categories and classes at enrollee employer-sponsored insurance develop an alternative methodology to § 156.122(a)(1). Commenters were also premiums from the NHEA, which is calculate the maximum annual concerned about setting a precedent in calculated by the Office of the Actuary. limitation on cost sharing. which MAT coverage is treated Accordingly, using the employer- Response: As discussed above, the differently from other EHB or drugs, sponsored insurance data, the premium maximum annual limitation on cost noting that EHBs are required under the adjustment percentage for 2017 is the sharing is calculated based on the statute to be equal to the scope of percentage (if any) by which the most premium adjustment percentage for the benefits provided under a typical recent NHEA projection of per enrollee employer plan. Some commenters employer-sponsored insurance NationalHealthExpendData/Downloads/ supported the use of Pharmacy & premiums for 2016 ($6,076) exceeds the ProjectionsMethodology2012.pdf; and Table 17: Therapeutics (P&T) Committees in most recent NHEA projection of per Health Insurance Enrollment and Enrollment Growth Rates (Jul. 22, 2015), available at https:// making drug coverage determinations enrollee employer-sponsored insurance www.cms.gov/Research-Statistics-Data-and- 55 and stated they were concerned that any premiums for 2013 ($5,365). Using Systems/Statistics-Trends-and-Reports/ coverage requirements could restrict NationalHealthExpendData/ and impede P&T Committees’ clinical 55 See Projections of National Health NationalHealthAccountsProjected.html (located in judgment. Others commented that Expenditures: Methodology and Model the NHE Projections 2014–2024—Tables link). For Specifications (Jul. 28, 2015), available at https:// additional information, see, also, National Health requiring MAT coverage could increase www.cms.gov/Research-Statistics-Data-and- Expenditure Projections 2012–2022, available at premiums. Systems/Statistics-Trends-and-Reports/ http://www.cms.gov/Research-Statistics-Data-and- Response: In October 2015, the NationalHealthExpendData/Downloads/ Systems/Statistics-Trends-and-Reports/ President issued a Memorandum ProjectionsMethodology.pdf; Projections of National NationalHealthExpendData/Downloads/ Health Expenditures: Methodology and Model Proj2012.pdf. directing Federal Departments and Specification (Sept. 18, 2013), available at http:// 56 See: IRS, 26 CFR 601.602: Tax forms and Agencies to identify barriers to www.cms.gov/Research-Statistics-Data-and- instructions (May 2, 2013), available at http:// medication-assisted treatment for opioid Systems/Statistics-Trends-and-Reports/ www.irs.gov/pub/irs-drop/rp-13-25.pdf.

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benefit year. The methodology Federal government. At § 156.420(a), we on cost sharing, $3,000 deductible, 20 established in 2015 to calculate the detailed the structure of these plan percent in-network coinsurance rate, premium adjustment percentage is variations and specified that QHP and the following services with based on a projection of annual issuers must ensure that each silver plan copayments that are not subject to the increases in per enrollee employer- variation has an annual limitation on deductible or coinsurance: $500 sponsored insurance premiums from the cost sharing no greater than the inpatient stay per day, $350 emergency National Health Expenditure Accounts applicable reduced maximum annual department visit, $25 primary care (estimated by the CMS Office of the limitation on cost sharing specified in office visit, and $50 specialist office Actuary). HHS believes it is the best the annual HHS notice of benefit and visit). All three test QHPs meet the AV available source of projected growth for payment parameters. Although the requirements for silver level health premium given statutory requirements amount of the reduction in the plans. and interaction with other maximum annual limitation on cost We then entered these test plans into measurements. However, as discussed sharing is specified in section the proposed 2017 AV Calculator in the 2015 Notice of Benefits and 1402(c)(1)(A) of the Affordable Care Act, developed by HHS and observed how Payment Parameters (79 FR 13802), section 1402(c)(1)(B)(ii) of the the reductions in the maximum annual HHS intends to review the methodology Affordable Care Act states that the limitation on cost sharing specified in for calculating annual premium growth Secretary may adjust the cost-sharing the Affordable Care Act affected the AVs after the initial years of reform-driven limits to ensure that the resulting limits of the plans. We found that the changes to benefits and plan design, do not cause the AVs of the health plans reduction in the maximum annual after the premium trend is more stable, to exceed the levels specified in section limitation on cost sharing specified in and as data on premiums become 1402(c)(1)(B)(i) of the Affordable Care the Affordable Care Act for enrollees available. Act (that is, 73 percent, 87 percent, or with a household income between 100 Comment: One commenter expressed 94 percent, depending on the income of and 150 percent of the Federal poverty concern over a growing gap between the the enrollee). Accordingly, we propose line (FPL) (2/3 reduction in the Affordable Care Act’s maximum annual to use a method we established in the maximum annual limitation on cost limitation on cost sharing and the 2014 Payment Notice for determining sharing), and 150 and 200 percent of the Internal Revenue Service’s out-of-pocket the appropriate reductions in the FPL (2/3 reduction), would not cause limit for high deductible health plans maximum annual limitation on cost the AV of any of the model QHPs to (HDHPs) used with health savings sharing for cost-sharing plan variations. exceed the statutorily specified AV level accounts. (The 2016 HHS maximum As we proposed above, the 2017 (94 and 87 percent, respectively). In out-of-pocket limitation for other than maximum annual limitation on cost self-only coverage was $600 above the contrast, the reduction in the maximum sharing would be $7,150 for self-only annual limitation on cost sharing 2016 IRS out-of-pocket limit on high coverage and $14,300 for other than self- deductible health plans for other than specified in the Affordable Care Act for only group coverage. We analyzed the enrollees with a household income self-only coverage.) The commenter also effect on AV of the reductions in the expressed concern that the IRS limit is between 200 and 250 percent of FPL maximum annual limitation on cost (1/2 reduction), would cause the AVs of not announced for some months after sharing described in the statute to the HHS limit is known, leading issuers two of the test QHPs to exceed the determine whether to adjust the specified AV level of 73 percent. As a to price products conservatively, and reductions so that the AV of a silver higher than they might otherwise if the result, we proposed that the maximum plan variation will not exceed the AV IRS limit had been known. annual limitation on cost sharing for specified in the statute. Below, we Response: HHS and IRS are bound by enrollees in the 2017 benefit year with different statutory parameters when describe our analysis for the 2017 a household income between 200 and calculating annual out-of-pocket limits. benefit year and our proposed results. 250 percent of FPL be reduced by HHS uses the premium adjustment Consistent with our analysis in the approximately 1/5, rather than 1/2. We percentage described above to adjust the 2014, 2015, and 2016 Payment Notices, further proposed that the maximum maximum out-of-pocket limit, and the we developed three test silver level annual limitation on cost sharing for IRS uses the Consumer Price Index, a QHPs, and analyzed the impact on AV enrollees with a household income measure of inflation, to adjust its out-of- of the reductions described in the between 100 and 200 percent of the FPL pocket limitation. Affordable Care Act to the estimated be reduced by approximately 2/3, as 2017 maximum annual limitation on specified in the statute, and as shown in d. Reduced Maximum Annual cost sharing for self-only coverage Table 10. These proposed reductions in Limitation on Cost Sharing (§ 156.130) ($7,150). The test plan designs are based the maximum annual limitation on cost Sections 1402(a) through (c) of the on data collected for 2016 plan year sharing should adequately account for Affordable Care Act direct issuers to QHP certification to ensure that they unique plan designs that may not be reduce cost sharing for EHBs for eligible represent a range of plan designs that captured by our three model QHPs. We individuals enrolled in a silver level we expect issuers to offer at the silver also noted that selecting a reduction for QHP. In the 2014 Payment Notice, we level of coverage through the Exchanges. the maximum annual limitation on cost established standards related to the For 2017, the test silver level QHPs sharing that is less than the reduction provision of these cost-sharing included a PPO with typical cost- specified in the statute would not reductions. Specifically, in 45 CFR part sharing structure ($7,150 annual reduce the benefit afforded to enrollees 156, subpart E, we specified that QHP limitation on cost sharing, $2,175 in aggregate because QHP issuers are issuers must provide cost-sharing deductible, and 20 percent in-network required to further reduce their annual reductions by developing plan coinsurance rate), a PPO with a lower limitation on cost sharing, or reduce variations, which are separate cost- annual limitation on cost sharing other types of cost sharing, if the sharing structures for each eligibility ($4,800 annual limitation on cost required reduction does not cause the category that change how the cost sharing, $2,775 deductible, and 20 AV of the QHP to meet the specified sharing required under the QHP is to be percent in-network coinsurance rate), level. We did not receive comments on shared between the enrollee and the and an HMO ($7,150 annual limitation this proposal, and are finalizing the

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reductions in the maximum annual We note that for 2017, as described in population to calculate AV. No State limitation on cost sharing for 2017 as § 156.135(d), States are permitted to submitted a data set by the September proposed. submit for approval by HHS State- 1 deadline. specific data sets for use as the standard

TABLE 10—REDUCTIONS IN MAXIMUM ANNUAL LIMITATION ON COST SHARING FOR 2017

Reduced Reduced maximum annual maximum annual limitation on cost limitation on cost Eligibility category sharing for sharing for other self-only coverage than self-only for 2017 coverage for 2017

Individuals eligible for cost-sharing reductions under § 155.305(g)(2)(i) (that is, 100–150 percent of FPL) ...... $2,350 $4,700 Individuals eligible for cost-sharing reductions under § 155.305(g)(2)(ii) (that is, 150–200 percent of FPL) ...... 2,350 4,700 Individuals eligible for cost-sharing reductions under § 155.305(g)(2)(iii) (that is, 200–250 percent of FPL) ...... 5,700 11,400

e. AV Calculation for Determining Level limitation on cost sharing based on a with the flexibility to update the AV of Coverage (§ 156.135) projected estimate to allow for Calculator sooner. We understand the Section 2707(a) of the PHS Act and compliance with § 156.130(a). importance for issuers and States to section 1302 of the Affordable Care Act Therefore, the major difference that we have time to use the final version of the direct issuers of non-grandfathered proposed under the revised § 156.135(g) AV Calculator to develop and adjust health insurance in the individual and was that the methodology, data sources, plan designs in advance of State filing small group markets, including QHPs, to and trigger for making updates in the deadlines. We believe that revised ensure that plans meet a level of AV Calculator would be more flexible § 156.135(g) will give HHS added coverage specified in section 1302(d)(1) than the previous § 156.135(g). This flexibility in changing the AV of the Affordable Care Act and codified amended provision will allow us more Calculator, which may result in HHS at § 156.140(b). On February 25, 2013, options in considering approaches to releasing the final AV Calculator earlier, HHS published the EHB Rule (78 FR making changes in the AV Calculator, such as by January 1 of the preceding 12833), implementing section 1302(d) of particularly as the health insurance benefit year. Regardless, we anticipate the Affordable Care Act, which required market and the AV Calculator evolve, releasing the final AV Calculator no that, to determine the level of coverage new methodological approaches are later than the end of the first quarter of for a given metal tier level, the developed, and new data becomes the preceding benefit year. calculation of AV be based upon the available. Comment: Some commenters provision of EHB to a standard We would also not be required to supported the flexibility for the trend population. Section 156.135(a) make each of these changes each year, factor calculation. Others expressed establishes that AV is generally to be although we could include these types wanting predictable and consistent calculated using the AV Calculator of material changes in our annual updates, wanting less frequent updates, developed and made available by HHS updating of the AV Calculator. We and wanting an increase to the de for a given benefit year. In the 2015 proposed that in developing the annual minimis range. Payment Notice (79 FR 13743), we updates to the AV Calculator, we would Response: We recognize the established at § 156.135(g) provisions continue to take into consideration importance of ensuring that the AV for updating the AV Calculator in future stakeholder feedback on needed changes Calculator accurately reflects the current plan years and in the proposed rule, we to the AV Calculator (through market and that changes to the AV proposed to amend those provisions to [email protected]) and to Calculator minimize disruption to allow for additional flexibility in our publicly release a draft version of the current plan designs through keeping approach and options for updating of AV Calculator and the AV Calculator AVs stable. We intend to carefully the AV Calculator in the future. Methodology for comment before weigh these factors when making Specifically, we proposed that HHS releasing the final AV Calculator. We changes. We do not intend to make will update the AV Calculator annually are finalizing these provisions as changes to the de minimis range at this for material changes that may include proposed. time. The de minimis range is intended costs, plan designs, the standard Comment: Commenters were to allow plans to float within a population, developments in the concerned about the timing of the reasonable range of +/¥ 2 percent. function and operation of the AV release of the AV Calculator, and We will also continue to work with Calculator and other actuarially relevant wanted the AV Calculator to be stakeholders on the development of the factors. Under the amended regulation, available sooner. Certain commenters AV Calculator updates. As noted above, we will continue to make updates to the did not support the revised language in developing the annual updates to the AV Calculator, as we have in previous without a timeframe. Commenters AV Calculator, we will continue to take years, including updates to the trend generally wanted the final AV into consideration stakeholder feedback factor, algorithms changes, and user Calculator to be available around on needed changes to the AV Calculator interface changes. We will also update January 1 of the preceding benefit year, (through [email protected]) the claims data and demographic in anticipation of State filing deadlines. and to publicly release a draft version of distribution being used in the AV Response: We are finalizing the the AV Calculator and the AV Calculator as needed, and continue to provision as proposed. One reason for Calculator Methodology for comment update the AV Calculator’s annual changing § 156.135(g) is to provide HHS before releasing the final AV Calculator.

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Additionally, we also intend to consult of Labor. In paragraph (d), we proposed modifications. We are modifying as needed with the American Academy that increases in the annual dollar limits paragraphs (a)(1) and (2) to apply the of Actuaries and the NAIC on needed for one child that do not result in a indexing formula to plan years changes to the AV Calculator. multiple of $25 will be rounded down, beginning after 2017 rather than 2016. Comment: One commenter was to the next lowest multiple of $25. We acknowledge that applying the concerned that the AV Calculator does We are finalizing the provision with indexing formula to plan years not take into account the scope of modifications to paragraphs (a)(1) and beginning after 2017 will ensure that the networks and formularies. Other (2) to apply the indexing formula to first application of the formula, for the commenters asked for the Minimum plan years beginning after 2017 and 2018 benefit year, will result in neither Value Calculator to be updated with a modification of the language of an increase nor a decrease in the annual consistently and discussed issues for the formula for increasing the annual limitation on cost sharing for that large group plans that use the MV limitation on cost sharing for purposes benefit year. However, we are seeking to Calculator, such as accounting for the of clarity. annual limitation on cost sharing. Comment: Several commenters balance stability in plan designs with Response: AV measures a plan’s cost supported our proposed approach to the desire to increase the annual sharing generosity on the basis of the raise the annual limitation on cost limitation on cost sharing to keep pace EHB being provided to a standard sharing over time using the CPI for with inflation. We will continue to population (and without regard to the dental services. Some commenters monitor the increase over time to ensure population to which that plan may asked that the proposal be implemented we are working towards our stated actually provide benefits) to determine sooner than for plan years beginning goals. As noted in the proposed rule, we the level of coverage. AV is not intended after 2016. Others requested using the will propose and finalize the annual to measure the scope of a network or 2014 CPI for dental services rather than increase to the dental annual limitation formulary. All plans required to comply the 2016 in order to have the annual on cost sharing according to the formula with AV must comply with EHB limitation on cost sharing increase in specified here in the annual Payment requirements (which establish the scope the next few years. Others asked that we Notice. of benefits, including the formulary, also consider increasing the annual being offered) and State and, in the case We did not receive any comments limitation on cost sharing to a set level suggesting that we use the premium of QHPs, Federal laws and regulations and then applying the indexing formula adjustment percentage defined in establish a plan’s network requirements. via the CPI for dental services in order § 156.130(e) instead. We did not receive We will work with the Department of to meet HHS’s stated interest in Treasury and the Internal Revenue providing preventive care without cost any comments opposing our proposal to Service to consider whether further sharing. We also received several increase the annual limitation on cost guidance is needed with regards to the comments requesting clarification of the sharing in $25 increments and will MV Calculator. Updates to the MV formula. finalize this provision as proposed. Calculator are beyond the scope of this Response: When we established We also are making a modification to rulemaking. specific values for the annual limitation the wording of the formula, though not f. Application to Stand-Alone Dental on cost sharing for SADPs in previous to its meaning. Under this final rule, as Plans Inside the Exchange (§ 156.150) rules,57 we intended to eventually index under the proposal, the annual the limitation to keep pace with At § 156.150, we proposed revisions limitation on cost sharing will be inflation and moderate potential to increase the annual limitation on cost increased by the same percentage the increases in premiums, similar to the sharing for SADPs. To make CPI for dental services increased annual limitation on cost sharing for adjustments to the annual limitation on between 2016 and the year that is 2 medical QHPs. Without such an cost sharing in subsequent years to keep years prior to the applicable benefit increase, over time we could see an pace with inflation, we proposed in year. increase in SADP premiums and fewer paragraph (a)(1) that for a plan year affordable dental options for consumers. Comment: A commenter asked that beginning after 2016, the dollar limit We believe that this formula balances we clarify that the annual limitation on applicable to a SADP for one covered the need to establish a process to cost sharing would never be reduced. child be increased by an amount equal increase the annual limitation on cost Another requested clarification whether to the product of that amount and the sharing over time against concerns with the provisions would be applied to off- quotient of consumer price index for increasing the maximum financial Exchange SADPs. dental services for the year 2 years prior liability to consumers. Response: We are clarifying that the to the benefit year, divided by the In the regulatory impact assessment in consumer price index for dental services proposed formula will not be used to the proposed rule, we noted our desire reduce the annual limitation on cost for 2016. In paragraph (a)(2), we for consumers to have access to sharing for SADPs. The updated formula proposed that the dollar limit for two or preventive services without cost language in paragraph (a)(1) specifically more covered children be twice the sharing. We acknowledge that this may notes that the annual dollar limit is dollar limit for one child described in be difficult to achieve at the low AV paragraph (a)(1) of this section. We level of 70 percent. However, we believe increased by the percent increase of the sought comment on whether the that to implement a one-time increase to consumer price index for dental premium adjustment percentage defined the annual limitation on cost sharing by services. We do not include a provision in § 156.130(e) should be used instead. a significant amount would be overly that would require a reduction. In paragraph (c), we proposed to burdensome for consumers. We also note that all Exchange- define the dental CPI, which is a sub- Accordingly, we are finalizing the component of the U.S. Department of certified SADPs must meet the same proposal as proposed, with minor Labor’s Bureau of Labor Statistics certification standards, including the Consumer Price Index specific to dental annual limitation on cost sharing, 57 Exchange Establishment Rule, 77 FR 18309 regardless of whether they are offered services. We would use the annual (Mar. 27, 2012); EHB Rule, 78 FR 12833 (Feb. 25, dental CPI published by the Department 2013). on or off Exchanges.

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5. Qualified Health Plan Minimum in the State. We anticipated including at would be detailed annually in Certification Standards least the following metrics in the list: conjunction with the Letter to Issuers. • Prospective time and distance We also proposed that issuers that did a. Network Adequacy Standards standards at least as stringent as the FFE not meet the specified standards would (§ 156.230) standard. be able to submit a justification to At § 156.230, we established the • Prospective minimum provider- account for any variances, and that the minimum criteria for network adequacy covered person ratios for the specialties FFE would review the justification to that health and dental plan issuers must with the highest utilization rate for its determine whether the variance is meet to be certified as QHPs, including State. reasonable based on circumstances, SADPs, in accordance with the We proposed that after HHS discussed such as the availability of providers and Secretary’s authority in section with States their selection to determine variables reflected in local patterns of 1311(c)(1)(B) of the Affordable Care Act. whether the State’s network adequacy care. Section 156.230(a)(2) requires all issuers standard would be acceptable under the We explained that we did not intend to maintain a network that is sufficient standard above, we would notify issuers in establishing these default standards in number and types of providers to via regulatory guidance about whether to prohibit certification of plans with assure that all services will be accessible the State standards or Federal default narrow networks or otherwise impede without unreasonable delay. Section standard would apply. innovation in plan design. Instead, we 156.230(b) sets forth standards for We proposed that when HHS stated that we intended to establish a access to provider directories requiring determined that a State’s network minimum floor consistent with the issuers to publish an up-to-date, adequacy standard is acceptable under levels generally maintained in the accurate, and complete provider the standard above, the State would market today, so that generally a very directory for plan years beginning on or certify to the FFE which plans meet the small number of plans would be after January 1, 2016, and § 156.230(c) network adequacy standard, and the identified as having networks deemed requires QHPs in the FFE to make this FFE in that State would rely on the inadequate. Our discussion of the State’s review for purposes of provider directory data available on its Federal default standard was intended determining whether a QHP meets the Web site in an HHS-specified format to provide issuers with more requirements under § 156.230(a)(2), and also submit this information to HHS transparency regarding our certification although those issuers would still be in a format and manner and at times processes. In that discussion, we required to submit to HHS provider determined by HHS. clarified that the process would be data, attest to the HHS network designed and implemented to achieve (1) State Selection of Minimum Network adequacy certification requirements, results similar to those yielded by the Adequacy Standards and meet other applicable HHS reviews conducted by the FFEs in prior standards, including the other standards The NAIC’s Network Adequacy Model certification cycles. We explained that under § 156.230. we believed this standard would Review Subgroup has completed In the proposed rule, we stated that significant work in the area of network promote predictability for issuers in the for States that do not review for network course of certification. We noted in the adequacy, which includes finalization adequacy, or do not select a standard as proposed rule that multi-State plan of a Network Adequacy Model Act, described above, the FFE would options will be considered to meet the which can be found at http:// conduct an independent review under a network adequacy requirements under www.naic.org/store/free/MDL-74.pdf, Federal default standard. We proposed § 156.230(a)(2) if they meet network that States can adopt in whole or in the Federal default standard to be a time adequacy standards established by part. We will continue to monitor the and distance standard. For the OPM. work of the NAIC in this area and of certification cycle for plan years For the reasons noted below, we are States’ implementation of these beginning in 2017, we stated that we not finalizing § 156.230(d) as proposed standards, and look forward to anticipated evaluating the QHP issuer at this time and will continue to work partnering with States and the NAIC in networks under this standard based on with States to determine how to best developing and promulgating network the numbers and types of providers, in ensure reasonable access while adequacy protections. In the interest of addition to their general geographic preventing duplicate review. furthering this work, we proposed a location. The standard proposed Comment: Many commenters raised number of standards related to network involved using a time and distance concerns about the use of a time and adequacy. standard at the county level. We also distance Federal default standard, and In recognition of the traditional role stated that we were considering using stated the new NAIC Network Adequacy States have in developing and enforcing standards similar to those used in Model Act does not include time and network adequacy standards, we Medicare Advantage, utilizing the distance standards. Commenters also proposed that FFEs would rely on State National Provider Identifier database, raised concerns that the proposed reviews for network adequacy in States and focusing on the specialties that standard could increase health care in which an FFE is operating, provided enrollees most generally use. Further, costs, would not adequately address that HHS determined that the State uses we explained that HHS was also network adequacy issues in all areas, an acceptable quantifiable network carefully considering other network and would not fit all types of plans, and adequacy metric commonly used in the standards, including those of individual numerous commenters asked that HHS health insurance industry to measure States, accrediting entities, and Federal give States time to enact the new NAIC network adequacy. health care programs, as it developed Network Adequacy Model Act rather We proposed that HHS would the time and distance standards for the than implementing the standard in the determine that a State’s network FFEs. final rule. adequacy assessment methodology We also stated that the proposed Response: We appreciate the concerns meets the standard above if the State county-specific time and distance raised and in response are declining to selects one or more standards from a list parameters that plans would be required finalize § 156.230(d) as proposed for the of metrics provided by HHS and applies to meet, including specifications for 2017 plan year. Our intention is to give them prospectively to the QHP issuers specific provider and facility types, States time to adopt the NAIC Network

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Adequacy Model Act provisions. We supported the use of time and distance circumstances when an enrollee note in particular that the NAIC standards for SADPs. Some commenters receives EHB provided by an out-of- Network Adequacy Model Act requested that the time and distance network ancillary provider at an in- highlights ‘‘specific quantitative standards be expanded to SBEs and network setting. We are also finalizing standards to ensure adequate access that multi-State plans, and that they be used our proposed policy regarding carriers must, at a minimum, satisfy in as the required standards, not a default. standardized categorization of network order to be considered to have a Response: We appreciate the breadth for QHPs on the Federal sufficient network,’’ and these include comments; however, we are not platform. provisions requiring a minimum finalizing the default time and distance (2) Additional Network Adequacy numbers of providers, and setting limits standard at this time. As discussed Standards on travel times and wait times. The Act above, our intention is to give States explains how these standards can be time to adopt the NAIC Network Under proposed § 156.230(e), which incorporated either in statute or in Adequacy Model Act provisions and we are finalizing as paragraph (d), we regulation. Further, we note that the implement associated standards. proposed two new requirements to NAIC Network Adequacy Model Act Comment: Many commenters offered address provider transitions. First, we was approved unanimously by all States suggestions for changing and expanding proposed new § 156.230(e)(1) to require and Washington, DC, and the NAIC has the State metrics listed in the preamble, QHP issuers in all FFEs to notify stated that it will be a priority of the including keeping or removing the time enrollees about a discontinuation in organization to have a majority of States and distance metric and provider- their network coverage of a contracted adopt the NAIC Network Adequacy covered person ratios, adding the provider. We proposed that a QHP in an Model Act within 3 years. We note our network sufficiency metrics from the FFE be required to make a good faith expectation that all States, including recently completed NAIC Network effort to provide written notice of a FFE States, will actively implement Adequacy Model Act, adding a metric discontinued provider, 30 days prior to these provisions, and we look forward related to standards for wait times, and the effective date of the change or to monitoring States’ progress this year, altering the two listed metrics to specify otherwise as soon as practicable, to all with a particular view to avoiding that they apply to specialties and enrollees who are patients seen on a duplicative Federal and State review subspecialties. Some commenters regular basis by the provider or receive processes. We will revisit this proposal suggested we implement an effective primary care from the provider whose in future rulemaking. We will continue network access review standard contract is being discontinued, the process used in previous years to comparable to the effective rate review irrespective of whether the contract is review network adequacy as part of the standard by State. being discontinued due to a termination annual certification process, and will Response: We are not finalizing our for cause or without cause, or due to a review network data for reasonable proposal establishing a minimum non-renewal. access. quantitative State network adequacy We also proposed that a discontinued For transparency, we are publishing measurement at this time. We wish to provider include both a provider that is separately details of the FFEs’ internal provide States time to adopt the NAIC being involuntarily removed from the QHP certification process for network Network Adequacy Model Act network, and a provider that is adequacy, including the metric used for provisions and associated standards. voluntarily leaving the network. To the internal review, to assess plans for Comment: Some commenters satisfy this requirement, we stated that network adequacy.58 These standards suggested that HHS provide that only we expect the issuer to try to work with are consistent with those we have used providers available through the plan’s the provider to obtain the list of affected in the past to assess potential QHPs for lowest tier of cost-sharing be counted patients or to use its claims data system compliance with the network adequacy for purposes of determining a network’s to identify enrollees who see the requirements; we believe that providing adequacy. affected providers. We said that we additional transparency about these Response: We intend to monitor the would encourage issuers, as part of the standards will help issuers with their practice of tiering of providers and will notice to consumers, to notify the network planning. consider implications of the practice for enrollee of other comparable in-network Comment: Many commenters network adequacy review in the future. providers in the enrollee’s service area, expressed support for the proposed time We remind all issuers, including those provide information on how an enrollee and distance standards, and many that use tiered networks, that they must could access the plan’s continuity of requested specific standards for specific continue to meet the current care coverage, and encourage the types of specialty care including requirement in § 156.230(a)(2) to enrollee to contact the plan with any pediatrics, cancer centers, women’s provide reasonable access to all covered questions. health, and transplant providers. services at all times throughout the plan Second, we proposed a new Commenters also requested that year. § 156.230(e)(2) to require that QHP additional standards be added to the As States continue their work to issuers in all FFEs ensure continuity of quantitative standards, including implement the NAIC Network Adequacy care for enrollees in cases where a requirements regarding wait times, Model Act, we will continue to use provider is terminated without cause. language services, telehealth, disability quantitative time-distance standards in Specifically, we proposed to require the accessibility and reasonable access our review of plans for QHP issuer, in cases where the provider is being provided at the lowest cost certification on the FFEs, and will be terminated without cause, to allow an sharing tier. Some commenters also providing details of the criteria for enrollee in active treatment to continue expressed concerns about the review in the annual Letter to Issuers. treatment until the treatment is applicability of time and distance to We are finalizing a number of policies complete or for 90 days, whichever is dental issuers and urged that other relating to network adequacy. We are shorter, at in-network cost-sharing rates. standards be used. Some commenters finalizing two provisions to address We proposed the following definition of provider transitions in the FFE and a active treatment in paragraph (e)(2): (1) 58 Final 2017 Letter to Issuers in the Federally- standard for all QHPs governing cost An ongoing course of treatment for a facilitated Marketplaces (Feb. 29, 2016). sharing that would apply in certain life-threatening condition; (2) an

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ongoing course of treatment for a serious some commenters only supporting issuer has the contracting relationship acute condition; (3) the second or third deference when the State has stronger with the provider, the issuer is in the trimester of pregnancy; or (4) an ongoing consumer protections. Justifications for best position to require providers to course of treatment for a health deferring to State provider transition provide a termination notice to the condition for which a treating physician policies included problems with issuer. or health care provider attests that conflicting State law and the associated We note that paragraph (d)(1) requires discontinuing care by that physician or burden with conflicting requirements. that the issuer make a good faith effort health care provider would worsen the In the absence of applicable State laws, to provide the required notification. We condition or interfere with anticipated some commenters recommended understand that there are certain outcomes. In relation to the proposed aligning standards to those in the NAIC situations that cannot be anticipated, definition of active treatment, we stated Network Adequacy Model Act that are and in those cases, we would expect the that an ongoing course of treatment administratively feasible or allow issuer to send the notice to the enrollee includes treatments for mental health issuers to maintain their current as soon as practically possible. Issuers and substance use disorders that fall practices. can send the notification to the enrollee within the proposed definition. For the Response: We are finalizing these electronically or by mail. In response to purposes of the active treatment proposed provider transition policies in comments, we clarify that when the definition, we proposed to interpret a § 156.230(d), but note that these provider is leaving a practice, and as a life-threatening condition as a disease or standards are not intended to, and do result will no longer belong to the condition for which likelihood of death not, preempt State provider transition issuer’s network, but other providers is probable unless the course of the notices and continuity of care rules, and from the practice remain in-network, disease or condition is interrupted; and that we would defer to a State’s paragraph (d)(1) would not require the a serious acute condition as a disease or enforcement of substantially similar or issuer to provide notice to the enrollees. condition requiring complex on-going more stringent requirements. This We believe in those cases the provider’s care which the covered person is flexibility would apply to any State that practice is better positioned to provide currently receiving, such as chooses to enact these parts of the NAIC notification to the enrollee. chemotherapy, post-operative visits, or Network Adequacy Model Act under Comment: Comments on the radiation therapy. Finally, we proposed section 6(L).59 We recognize that the appropriate definition of ‘‘regular basis’’ under paragraph (e)(2)(ii) that any NAIC Network Adequacy Model Act generally either preferred to leave the decisions made for a request for differs in certain respects from our definition to the discretion of the issuer continuity of care be subject to the requirements under § 156.230(d)(1) and or suggested that we define it to include issuer’s internal and external grievance (2); we intend to monitor States’ an enrollee that has received services and appeal processes in accordance implementation of the NAIC Network from the provider within one year. with applicable State or Federal law or Adequacy Model Act and may consider Some commenters specifically wanted regulations. We solicited comments on revisions to this policy in the future if the definitions related to primary care several issues related proposed needed. from the NAIC Network Adequacy § 156.230(e), such as the definitions of Comment: Some commenters wanted Model Act to be incorporated in the rule key terms and timeframes, when these more than 30 days’ notice, or asked that to clarify how the provisions under provisions should apply, whether the timeframes align with the NAIC paragraph (d)(1) should apply. Some exceptions should be allowed for States Network Adequacy Model Act. Some commenters wanted additional that already have requirements, whether commenters supported requiring all protections in cases of provider additional provisions should be allowed enrollees of a primary care provider to transitions, such as special enrollment for continuity of care in cases of be required to be notified. Other periods for provider terminations, or pregnancy as far as extending beyond 90 commenters stated that the notices limits on the ability of issuers to days and whether that care should should not be required if providers are terminate providers mid-year (or limited to obstetric care and whether leaving a practice with other in-network recourse for the providers in the event other provisions are needed to protect providers from that practice available. of such a termination), while other an enrollee when a provider contract is Some commenters advocated for the comments expressed concern about the terminated. development of enrollee registries difficulty in coordinating with providers We are finalizing these requirements through which enrollees can be to identify affected enrollees. Other as proposed, with certain modifications informed of changes or receive a list of commenters wanted issuers to be to better align with the NAIC Network providers being discontinued. Some required to include information in the Adequacy Model Act, including commenters expressed concern about notice about other comparable in- extending continuity of care coverage the value of notifications, and others network providers and to inform the for the second or third trimester of expressed concern about the enrollee of rights to receive continuity pregnancy through the postpartum confidentiality of provider notices. of coverage. period and codifying the definitions of Response: We are finalizing the notice Response: The purpose of life-threatening condition and serious requirements at § 156.230(d)(1) as § 156.230(d)(1) is to ensure that acute condition. Additionally, we note proposed. While our notice enrollees are notified of changes to their that these standards are not intended to, requirements are not the same as those provider network on a timely basis. At and do not, preempt State provider in the NAIC Network Adequacy Model this time, we are not extending this transition notices and continuity of care Act, we did consider these notice provision to include additional requirements, and that we intend to requirements and requirements from requirements. However, defer to a State’s enforcement of other programs in proposing notwithstanding a provider termination, substantially similar or more stringent § 156.230(d)(1). We understand that all QHP issuers are required under standards. issuers need timely notification from the § 156.230(b) to maintain a network that Comment: Many commenters provider leaving the network in order to is sufficient in number and types of supported deferring to State provider meet the 30-day timeframe, but as the providers, including providers that transition policies instead of the specialize in mental health and proposals in the proposed rule, with 59 See http://www.naic.org/store/free/MDL-74.pdf. substance abuse services, to assure that

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all services will be accessible without terms and conditions of the provider except to amend the definition to unreasonable delay. For purposes of contract, including any protections ‘‘active course of treatment’’ to align paragraph (d)(1), we will not finalize a against balance billing, if the provider with the language in the NAIC Network uniform definition of regular basis at agrees to provide care under Adequacy Model Act. This change is not this time, and will permit issuers to § 156.230(d)(2). We cannot require non- intended to alter the meaning of the implement a reasonable definition of contracted providers to accept a proposed rule. We are also finalizing, to that term. The NAIC Network Adequacy particular payment rate under align with the NAIC Network Adequacy Model Act similarly did not include a § 156.230(d)(2). Therefore, nothing Model Act, the definitions of a life- definition of regular basis. For purposes under § 156.230(d)(2) would prohibit threatening condition as a disease or of paragraph (d)(1), we note that, in balance billing for non-contracted condition for which likelihood of death alignment with the NAIC Network providers in accordance with section is probable unless the course of the Adequacy Model Act, we generally 1302(c)(3)(B) of the Affordable Care Act disease or condition is interrupted; and understand primary care to mean health and § 155.20. This means that an a serious acute condition as a disease or care services for a range of common enrollee could be balance billed for the condition requiring complex ongoing physical, mental or behavioral health services under § 156.230(d)(2), absent care which the covered person is conditions provided by a physician or another prohibition on balance billing currently receiving, such as non-physician primary care provider, in this situation, and those balance chemotherapy, radiation therapy, or and a provider of primary care to mean billing amounts would not be required post-operative visits. For the purposes a participating health care professional to count toward the plan’s annual of the active course of treatment designated by the issuer to supervise, limitation on cost sharing established at definition, an ongoing course of coordinate, or provide initial care or § 156.130. treatment includes treatments for continuing care to an enrollee, and who In response to comments, we are mental health and substance use may be required by the issuer to initiate limiting paragraph (d)(2) to cases where disorders that fall within the definition a referral for specialty care and maintain the provider is terminated without of active course of treatment. supervision of health care services cause, including non-renewals without Additionally, if the enrollee has rendered to the covered person, but that cause, and clarify that § 156.230(d)(2) successfully transitioned to a an issuer may implement reasonable does not apply in cases where the participating provider, if the benefit definitions of these terms. To identify contract is terminated or not renewed limitations of the plan are met or enrollees who see a provider who is with cause. A termination or non- exceeded, or if care is not medically terminating, we expect the issuer to renewal without cause could be necessary, § 156.230(d)(2) would no work with the provider to obtain the list initiated by either the issuer or the longer apply to the enrollee. of affected patients, use its claims data provider or could be mutual. In any of In response to comments supporting system to identify enrollees who see the these cases, enrollee continuity of care the extension of this policy to cases of affected providers, or use another should be ensured. Furthermore, we pregnancy, we are revising the reasonable method. The issuer does not clarify that if the enrollee remains in the definition of active course of treatment need to use more than one method. For same plan across plan years, to include the second or third trimester the written notice required under § 156.230(d)(2) will apply across plan of pregnancy through the postpartum paragraph (d)(1), we encourage issuers years. However, if an enrollee switches period. We are leaving the definition of to notify the enrollee of other plans, § 156.230(d)(2) would not apply, what constitutes ‘‘postpartum period’’ comparable in-network providers in the since there would not necessarily be an and the scope of related services to the enrollee’s service area, provide expectation that the same provider reasonable interpretation of the issuer. information on how an enrollee may would be available under the new plan. At § 156.230(f), which we are now access the plan’s continuity of care Comment: Some commenters sought finalizing as paragraph (e), we proposed coverage, and encourage the enrollee to clarifications or expansions of the to require, notwithstanding § 156.130(c) contact the plan with any questions. proposed definition of the course of of the subpart, that for a network to be Comment: Some commenters stated active treatment, such as changes that deemed adequate, each QHP that uses a that continuity of care should cover would require inclusion of certain provider network must count cost non-renewals and terminations without conditions or transitional coverage of sharing paid by an enrollee for an EHB cause; other commenters disagreed. drugs. While some commenters sought provided by an out-of-network provider Commenters sought clarifications clarifications on the definition of active in an in-network setting under certain regarding the cost sharing during the treatment or wanted the issuer’s medical circumstances towards the enrollee’s continuity of care period, and some director to make the determination of annual limitation on cost sharing. commenters asked us to adopt whether an enrollee was in the course Alternatively, we proposed that the plan provisions from the NAIC Network of active treatment, commenters could provide a written notice to the Adequacy Model Act, including generally supported the proposed enrollee at least 10 business days before providing that the issuer is only definition of ‘‘active treatment’’ and our the provision of the benefit that required to provide the continuity of proposal that would make the additional costs may be incurred for care if the provider agrees to accept the continuity of coverage rule subject to EHB provided by an out-of-network previously contracted in-network rate internal and external appeal processes. provider in an in-network setting, and to ensure protections against Commenters supported requiring including balance billing charges, balance billing. Some stated that failure continuity of coverage for pregnancy unless such costs are prohibited under to include such a request could increase through the post-partum period. Some State law, and that any additional premiums. commenters also sought 90 days as the charges may not count toward the in- Response: While we expect issuers to minimum transitional period, not the network annual limitation on cost negotiate with a provider for payment maximum period for continuity of care sharing. for services under § 156.230(d)(2), coverage, or urged us to adopt a longer We solicited comments on whether 10 issuers would only be responsible for or shorter period. business days’ advance notice is the paying to a provider what was Response: We are not making changes appropriate timeframe. We also sought previously being paid under the same to the definition of ‘‘active treatment’’, comment on whether issuers should be

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required to provide customized network providers or limit the financial the cost sharing towards the annual information to the consumer (including liability associated with out-of-network limitation on cost sharing. Others information on potential in-network services to consumers. Our intent in thought that the notification timeframe providers) or if a form notification establishing this policy beginning for of 10 days was arbitrary, not long would be sufficient. We proposed that the 2018 benefit year is to permit us to enough for consumers to arrange in- this policy would apply to all QHP monitor ongoing efforts by issuers and network care, or too long because prior issuers, in all Exchanges. providers to address the complex issue authorization frequently happens closer We are finalizing our proposed policy, of surprise out-of-network cost sharing to service delivery. Some commenters with four modifications. First, we at in-network facilities across all CMS requested that facilities be required to provide that this policy would only programs in a holistic manner, and notify consumers about whether or not apply to cost sharing paid by an enrollee amend our policy in the future to providers were in-network for a for an EHB provided by an out-of- accommodate progress on this issue, if consumer. Others noted that the 10 network ancillary provider in an in- warranted. days’ notice timeframe prior to the network setting. Second, we are While not a solution to all adverse service may incentivize issuers to delay shortening the timeframe from 10 financial consequences of receiving approval to utilize the notification business days to the longer of the treatment from an out-of-network exception. issuer’s prior authorization timeline provider in this situation, we believe the Commenters also provided feedback (that is, when the issuer would typically policy we are finalizing will help on the type of information that should respond to a prior authorization request provide transparency and ensure that be included in a notice—many submitted timely) or 48 hours prior to consumers receive notice of the possible suggested that issuers be required to the scheduled service. Third, we are consequences where an out-of-network include information on available finalizing this proposal so that it will ancillary provider may be seen and are network providers, information on take effect beginning for the 2018 provided some mitigation of these costs, and how a consumer could appeal benefit year. Fourth, we are making a consequences where proper, timely a determination. Other commenters minor edit for clarity. notice is not provided by the issuer. We thought the notification process was Comment: Many commenters believe that this policy provides a overly burdensome for issuers, supported HHS’s efforts to address measure of financial protection for especially if customized information surprise out-of-pocket costs for consumers against surprise out-of- was required. consumers. Other commenters network cost sharing, while maintaining Response: In response to comments, supported the proposal, but felt that it the larger part of the QHP’s cost-sharing we are modifying the 10-day timeline to did not go far enough to protect structure and avoids significant impacts account for issuers’ prior authorization consumers, and stated that HHS should on premiums. timelines. We are requiring notice from consider including a prohibition on We are making a modification to this issuers by the longer of the issuer’s prior balance billing or otherwise restricting policy to limit its application to authorization timeline (that is, when the consumer financial responsibility in ancillary providers (that is, the provider issuer would typically provide the prior these scenarios. Other commenters of a service ancillary to what is being authorization) or 48 hours. This new thought that it may be difficult for provided by the primary provider, such timeline is more in line with existing consumers to locate an in-network as anesthesiology or radiology) rather issuer prior authorization timelines and provider within this timeframe. than the services supplied by the will be less administratively Commenters also suggested expanding primary provider. In response to burdensome for QHP issuers to the proposal to include situations in comments, we were concerned that the implement, while providing consumers which an in-network provider is not proposed policy could have had the with the same time period to adjust available, when the provider directory is unintended consequence of providing their plans that they would have with not up to date, and emergency care. for reduced cost sharing for a primary respect to notification of prior Several commenters did not support provider, such as a surgeon known to be authorization. our proposal, and asked that States be out-of-network. We acknowledge We are also finalizing our proposal given the time and discretion to commenters’ concerns that as that a form notice be provided to the implement network adequacy standards. previously written, the policy could enrollee in these circumstances Others requested that HHS adopt NAIC allow for a consumer who has selected indicating that additional costs may be Network Adequacy Model Act an out-of-network provider to incurred for an EHB provided by an out- provisions instead. Other commenters deliberately seek to have the services of-network ancillary provider in an in- were concerned that the proposal may rendered in an in-network facility in network setting, including balance have unintended consequences, such as order to reduce cost sharing. We believe billing charges, unless such costs are disincentivizing providers from that this modification will address this prohibited under State law, and that any contracting with issuers in order to be concern. additional charges may not count able to balance bill consumers, or We intend to continue to monitor toward the in-network annual limitation incentivizing consumers and out-of- these situations, including issuers’ on cost sharing. While customized network providers to elect to perform timely compliance with this provision information for each consumer is procedures at an in-network facility. to consider whether further rulemaking preferable, we understand that creating Response: We are finalizing, for the is needed. Lastly, as we stated in the such a notice may be burdensome to 2018 and later benefit years, a modified proposed rule, this proposal is not QHP issuers and may delay the § 156.230(e) to count services provided intended to, and does not, preempt any notification process. Additionally, the by an out-of-network ancillary provider State laws on this topic. provider directories that QHP issuers in an in-network facility towards the in- Comment: Some commenters must provide may ease the burden on network annual limitation on cost supported the requirement that issuers the enrollee to find an appropriate in- sharing if the issuer does not provide notify consumers of the potential for network provider. Therefore, while we timely notice, with the modifications additional cost-sharing from out-of- are not requiring that customized described above. We did not propose to network providers, but did not support information be provided to the enrollee prohibit balance billing by out-of- the exception for issuers to not count in these circumstances, including

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information on available network disasters that may threaten enrollees’ sources to obtain information about providers, costs, and how a consumer continuous access to quality care. available providers in the area. We also could appeal a determination, we • Whether measuring network welcomed comments on the best way to strongly encourage QHP issuers to adequacy based on enrollee wait times make this information available to provide that information. for scheduled appointments, including consumers. We intend to implement Comment: Commenters asked if the variation in wait times depending this proposal for open enrollment for § 156.230(e), which was proposed on the type of provider, such as for the 2017 benefit year, if following § 156.230(f), would apply to QHPs with primary care or non-primary care consumer testing we determine that we tiered networks or QHPs that do not services, and whether we should add a can display this information in a provide out-of-network services. wait time standard as an option under manner useful to consumers. At this Another commenter asked for the proposed permissible State time, we plan to provide the clarification on whether this provision standards mentioned in the proposed classifications of network breadth for would apply to QHPs on and off rule, or if we should apply a broad wait each plan at the county level. These time standard across QHPs in the FFEs. classifications will be determined by Exchanges. Other commenters asked • HHS to clarify that this does not apply Whether an issuer should be calculating the percentage of providers to emergency services which are already required to survey all of its contracted in a plan’s network, compared to the covered by § 147.138(b). providers on a regular basis to total number of providers in QHP Response: We clarify that § 156.230(e) determine if a sufficient number of networks available in a county. We plan applies to QHPs, both on and off network providers are accepting new to provide additional details on this Exchanges, and to QHPs with tiered patients. methodology in the Letter to Issuers. • Whether issuers should be required networks, but it does not apply to QHPs Comment: Commenters had concerns to make available their selection and that do not cover out-of-network about Federal requirements on network tiering criteria for review and approval services. It also does not apply to resilience, such as geographic variation by HHS and the State upon request. issues. Others generally support emergency services, which are governed We also stated that we were by other Federal regulations. network resilience policies offering considering providing on recommendations, such as broad Comment: Several commenters HealthCare.gov a rating of each QHP’s standards, deferring to States if they requested that § 156.230(d) and (e) not relative network coverage. This rating or have strong standards, or Medicare apply to SADPs as the NAIC determined classification would be made available standards. that these types of standards were not to a consumer when making a plan Response: We intend to work with necessary for dental plans. The selection. We explained that such a stakeholders to consider best practices commenters stated that the structure of rating would help an enrollee select the for network resilience policies. We want SADPs and the services covered by plan that best meets his or her needs, to ensure that any standards that we SADPs are different from medical plans and that we anticipated that this consider in this area are reasonable and as dental services are scheduled well analysis would compare the breadth of operationally feasible, and take into ahead of time, the course of treatment the QHP network at the plan level as account geographical variation. does not include more serious compared to the breadth of the other Comment: Some commenters had conditions, and services are almost plan networks for plans available in the concerns about requiring providers to be uniformly provided in the dentist’s same geographic area. surveyed on whether they are accepting office. We stated that we anticipated new patients because of concerns about Response: While we agree that these analyzing the QHP network by accuracy of this reporting, the provisions are more suitable to medical calculating the number of specific associated difficulty and burden on services, § 155.1065 provides that providers that are accessible within issuers and providers, the risk of SADPs must meet QHP certification specified time and distance standards. undermining current efforts by standards, except for any certification We explained that we would then stakeholders to improve data quality, requirement that cannot be met because classify the QHP networks into three and concerns about ‘‘accepting new the SADP is an excepted benefit that categories. We stated that we were patients’’ being a poor standard for provides only a limited scope of considering performing the calculation determining network sufficiency. Other coverage. However, we also believe due based on the provider information commenters generally supported to the nature of these policies and the submitted by all QHP issuers in the requiring issuers to survey providers on services provided by SADPs that any existing network adequacy FFE QHP whether they are accepting new instances in which a SADP would need certification template. patients, as the information could be to apply these provisions would be rare. In the proposed rule, we explained used to update the provider directory. that this network breadth rating would Response: In the 2016 Payment (3) Other Comments on the Preamble to allow an enrollee to better understand Notice, we finalized requirements under § 156.230 plans’ designs, and, like other consumer § 156.230(b) that a QHP issuer must In the proposed rule, we solicited tools, could help improve plan publish an up-to-date, accurate, and comments on a number of other network satisfaction. We stated that we complete provider directory, including adequacy standards, including anticipated providing additional details information on which providers are standards included in the work being about how we would classify networks accepting new patients, the provider’s done by the NAIC’s Network Adequacy in the Letter to Issuers and in the QHP location, contact information, specialty, Model Review Subgroup. Our certification instructions, and we medical group, and any institutional solicitation of comment included: solicited comments on what types of affiliations, in a manner that is easily • Whether a QHP in an FFE should methods should be used to identify each accessible to plan enrollees, prospective have a network resilience policy for network’s breadth, what specific enrollees, the State, the Exchange, HHS disaster preparedness. Network specialties should be included in the and OPM. We also stated that all the resilience refers to the provider analysis, what sorts of adjustments required data, including information on network’s capacity to withstand and should be made to address provider whether a provider is accepting new recover from natural or man-made shortages, and other possible data patients, are critical for consumers to

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make educated decisions about their relative network breadth on issuers for multiple contracted full-time health coverage. While we believe that HealthCare.gov. We will base the rating equivalent (FTE) practitioners at a single it is important that enrollees have access information of the network data for each location, up to the number of available to providers who are willing to accept QHP that is submitted as part of the FTE practitioners reported to HHS by new patients and issuers should ensure certification process. This rating will be the ECP facility through the ECP providers are available within the made available to a consumer when petition process. We proposed to apply network, we intend to continue to making a plan selection. We are this FTE count to the numerator of an monitor this issue, including industry’s conducting consumer testing to help issuer’s percentage satisfaction of the efforts in this area, to consider whether inform how to display the rating in a general ECP standard described in further requirements are needed. way that will assist the consumer in paragraphs (a)(1) and (2) of § 156.235 Comment: Some commenters had selecting the plan that best meets his or and the alternate ECP standard concerns about issuers being required to her needs. We anticipate providing described in paragraphs (b)(1) and (2) of provide selection and tiering criteria, details about what specialties the ratings that section. We proposed that the noting the information is proprietary will include in the 2017 Final Letter to denominator of an issuer’s percentage and that greater regulatory authority Issuers and in the QHP certification satisfaction of the ECP standard would over network adequacy could have a instructions. reflect the number of available FTE chilling effect on network and product Comment: Commenters provided practitioners reported to HHS by each design. Other commenters supported comments on other network adequacy ECP facility located in the issuer’s plan such a provision. Many noted concerns issues, such as wanting additional service area. that issuers are currently only making requirements on provider directories, In the proposed rule, we stated that selection and tiering determinations on provider non-discrimination, access to our analysis of the available ECPs in costs and not quality, and oversight of specialized care, strong oversight and each of the additional ECP subcategories this criteria could prevent enforcement of network adequacy previously considered for disaggregation discrimination. standards, and standards for material (that is, children’s hospitals, rural Response: We encourage issuers to be network changes. Other commenters health clinics, freestanding cancer more transparent about selecting and wanted the proposed provisions to centers, community mental health tiering criteria. We believe that apply to all QHPs instead of QHPs in centers, and hemophilia treatment transparency of selecting and tiering FFEs only. centers) does not support further criteria would help enrollees and Response: We are not implementing disaggregation of these categories at this providers better understand how the additional network adequacy related time. We explained that there are too issuer designed its network, which provisions at this time. Our intention is few ECPs within each of these could help enrollees use the network to give States time to adopt the NAIC additional ECP categories appearing on more effectively and efficiently. Network Adequacy Model Act our ECP list to afford issuers sufficient Comment: Some commenters opposed provisions and potentially reconsider flexibility in their contracting. We stated a wait time standard, stating it is this area in the future. Therefore, we are that we may revisit this consideration in difficult to measure and assess finalizing new § 156.230(d) to apply to the future, and encouraged QHP issuers consistently across providers, all QHPs in an FFE only, and new to include in their networks these operationally and technically § 156.230(e) to apply to all QHPs. additional providers to best meet the challenging for issuers, does not take b. Essential Community Providers needs of the populations they serve. into account quality, and would be We are finalizing the provisions under (§ 156.235) problematic to apply across all FFEs § 156.235 as proposed. given State variation. Other commenters On , 2015, we proposed through Comment: We received numerous supported requiring issuers to comply a Paperwork Reduction Act (PRA) comments in support of our proposal for with wait time standards. Many notice a provider petition process to benefit year 2017 to continue crediting supported applying such a requirement update the ECP list against which issuer a health plan seeking certification to be to all QHPs or all QHPs in FFEs. compliance with the ECP standard is offered through an FFE with multiple Response: We understand that a measured. We completed this data providers at a single location counting Federal wait time standard would need collection for the 2017 benefit year and as a single ECP toward both the to take into consideration market and will provide additional opportunities available ECPs in the plan’s service area geographical variation of States. We for ECPs to submit provider data to HHS and the issuer’s satisfaction of the ECP intend to continue to monitor the use of for benefit years beyond 2017. The participation standard. Other and development of wait time degree of provider participation in this commenters urged that HHS credit standards. data collection effort has allowed HHS issuers for multiple contracted FTE Comment: Some commenters to assemble a more complete listing of practitioners at a single location. supported providing network breadth ECPs. We received many comments in information to consumers at the time of In the proposed rule, we proposed support of our proposal for QHP plan selection, and supported the that, for the 2017 QHP certification certification cycles beginning with the implementation we described. Other cycle, HHS would continue to credit a 2018 benefit year to credit issuers that commenters raised concerns about a health plan seeking certification to be qualify for the general and alternate ECP rating system, believing it might be offered through an FFE with multiple standard for multiple contracted FTE problematic because it does not factor in providers at a single location counting practitioners at a single location, up to quality and could be confusing. Some as a single ECP toward both the the number of available FTE commenters requested comprehensive available ECPs in the plan’s service area practitioners reported to HHS by the consumer testing. Some commenters and the issuer’s satisfaction of the ECP ECP facility. These commenters stated also requested that the rating participation standard. For QHP that the wide variability in the number information should include both certification cycles beginning with the of available practitioners at each ECP physicians and hospitals. 2018 benefit year, we sought comment facility and broad range of health care Response: We plan to proceed with on whether we should revise services that ECPs provide favor this providing information about each QHP’s § 156.235(a)(2)(i) and (b)(2)(i) to credit position, and urged that ECP facilities

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should not all be credited equally providers via the ECP petition for two separate facilities as 0.5 FTE at each toward an issuer’s satisfaction of the 30 purposes of the benefit year 2018 facility to ensure a more accurate count percent ECP standard. In addition, they certification cycle, HHS intends to of FTEs at each facility. Lastly, HHS has stated that many issuers contract with clarify to issuers through guidance that instructed providers to submit only one multiple unaffiliated providers that rent issuers must report on their ECP ECP petition for each facility location space in the same building and should template only the number of FTE using the facility-level National be credited for more than one ECP at practitioners at each ECP facility that Provider Identifier (NPI), rather than that location. Some of these commenters the issuer has included in its provider each individual practitioner at the stated that while they support crediting networks for its member enrollees. That facility submitting a separate ECP issuers for multiple ECPs at a given site, number must not exceed the number of petition. Therefore, HHS intends to they urged us to not rely solely on issuer available FTE practitioners reported to continue reflecting only facility-level satisfaction of the 30 percent ECP HHS by the ECP facility through the ECPs on its ECP list, although some threshold to ensure adequate access to ECP petition process. Due to the wide facilities may be composed of a solo care for low-income medically variability in the number of available practitioner beginning with the 2017 underserved individuals. practitioners at each ECP facility and benefit year ECP list. We also received comments in broad range of health care services that For the reasons stated above, we are opposition to this proposal for benefit ECPs provide, HHS believes that this finalizing our proposal to revise year 2018. Many of the commenters methodology for calculating an issuer’s § 156.235(a)(2)(i) and § 156.235(b)(2)(i) stated that issuers do not always know satisfaction of the ECP standard will to credit issuers that qualify for the how many FTE practitioners are provide a more accurate representation general or alternate ECP standard available at a specific provider facility, of the issuer’s ECP participation in its described in § 156.235 that seek and it would be burdensome for issuers provider networks. certification to be offered through an to be required to collect such provider For benefit years 2017 and beyond, FFE (or SBE–FP) for multiple contracted data. Many commenters opposed the HHS will continue to require issuers to FTE practitioners at a single location proposal due to concerns that the policy satisfy the separate ECP requirement to toward the issuer’s satisfaction of the might not ensure geographic offer a contract in good faith to at least ECP standard, beginning with the 2018 distribution of ECPs and an adequate one ECP per ECP category, where an benefit year. In addition, we are range of health care services provided ECP in that category is available, within finalizing our proposal that for the 2017 by ECPs. each county in the plan’s service area. benefit year, HHS will continue to credit A few commenters stated that FTE In addition, issuers must continue to an issuer that qualifies for the general or practitioners at a facility often fluctuate, offer a contract to all available Indian alternate ECP standard and is seeking or they divide their time among several health care providers in the plan’s certification to be offered through an facilities, and so FTEs might be an service area. In previous years, HHS FFE with multiple providers at a single unpredictable measure of an issuer’s relied in part on crediting a health plan location counting as a single ECP satisfaction of the ECP standard. with multiple providers at a single toward both the available ECPs in the Response: On , 2015, HHS location as a single ECP toward the plan’s service area and the issuer’s launched its ECP petition initiative to issuer’s satisfaction of the ECP satisfaction of the ECP participation give providers an opportunity to request participation standard to better ensure standard. to be added to our ECP list, update their geographic distribution of ECPs. For Comment: Several commenters urged provider data on our ECP list, and benefit year 2018, HHS expects to have that HHS disaggregate the providers provide missing provider data, collected the necessary ECP category- listed in the ‘‘Hospitals’’ ECP category including FTE practitioner data that specific data directly from all qualified and the ‘‘Other ECP Providers’’ category. issuers rely upon to identify qualified providers on our ECP list via the ECP These commenters stated that by ECPs for inclusion in their provider petition initiative, so that reliance on grouping together providers such as networks. The web-based ECP petition counting multiple providers at a single hemophilia treatment centers, link is available at https:// location as a single ECP will no longer community mental health centers, and data.healthcare.gov/cciio/ecp_petition. be necessary for purposes of ensuring rural health clinics into one ECP HHS anticipates that this provider data geographic distribution of ECPs. We category, HHS runs the risk that low- collection initiative will require several expect that the ECP category per county income, underserved enrollees will have months of provider outreach in order to contract offering requirement will serve inadequate access to key providers that collect the requisite FTE practitioner to better ensure geographic distribution are uniquely suited to meet their data. For benefit year 2017, we are of ECPs and an adequate range of health specialized health needs. These finalizing our proposal at care services. commenters urged that HHS modify the § 156.235(a)(2)(i) to count multiple In order to address fluctuations in ECP categories to separate the distinct providers at a single location as a single FTE practitioners at a facility, HHS entities and require contracting with ECP toward both the available ECPs in intends to keep the ECP petition each of them. Several commenters the plan’s service area and the issuer’s submission window open throughout expressed concern that children’s satisfaction of the ECP participation the year, permitting providers to report hospitals are grouped with hospitals standard. the fluctuations and for issuers to view that do not specialize in children’s For QHP certification cycles these updates in preparation for the health care services. These commenters beginning with the 2018 benefit year, following benefit year contract emphasized that children’s hospitals are we are finalizing our proposal at negotiations. For provider facilities that uniquely suited to meet the needs of § 156.235(a)(2)(i) to credit issuers for employ or contract with practitioners children with complex medical multiple contracted FTE practitioners at who divide their time among several conditions, and they urged HHS to a single location, up to the number of facilities, the ECP should divide their establish a separate ECP category for available FTE practitioners reported to FTE counts among the facilities when children’s hospitals. Some commenters HHS by the ECP facility through the completing the ECP petition. For expressed concern that HHS might be ECP petition process. As HHS collects instance, an ECP should report a underestimating the number of the number of FTE practitioners from practitioner who practices half time at providers in each of these ECP

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subcategories, because the ECP propose changes to the 30 percent ECP direct enrollment are discussed in this categories reflected on the benefit year standard and consider these comments final rule at the preamble to 2016 ECP list combine these providers to be outside the scope of the proposed § 155.220(c)(3). with other provider types, rather than rule. Comment: Commenters aligned their classifying them separately. One comments for web-brokers with c. Enrollment Process for Qualified commenter recommended that HHS comments for issuers, and a few Individuals (§ 156.265) require that health plans offer contracts commenters generally noted that a level to all ECPs from each of the categories Under § 156.265(b)(2), if an applicant playing field is essential to Exchange in each county that is in a health initiates enrollment directly with the stability. professional shortage area (HPSA), with QHP issuer for enrollment through the Response: Based on the comments the Health Resources and Services Exchange (direct enrollment through an received, as summarized above, we are Administration serving as a resource for issuer), the QHP issuer must redirect an finalizing the proposal to enhance the identifying those areas. In contrast, applicant directly to the Exchange Web direct enrollment process with some several health plans supported not site to complete the application and modifications, as noted below. disaggregating the ECP categories, receive an eligibility determination. We appreciate the many comments expressing concern that issuers would HHS requested comment on an option and recommendations on the direct not have sufficient flexibility in to enhance the direct enrollment enrollment proposal we received. While contracting. process, like that described in this final we believe that an enhanced direct Response: Based on our analysis of rule in the preamble to § 155.220, such enrollment process will provide a more the available ECPs in each of the that an applicant could remain on the seamless consumer experience, we agree additional ECP subcategories previously QHP issuer’s Web site to complete the with commenters that implementing the considered for disaggregation (that is, application and enroll in coverage, and proposal will be a significant children’s hospitals, rural health clinics, the QHP issuer’s Web site could obtain undertaking for HHS, web-brokers, and freestanding cancer centers, community eligibility information from the issuers, and that such an effort will mental health centers, and hemophilia Exchange in order to support the require sufficient time for operational treatment centers), we believe that too consumer in selecting and enrolling in planning and preparations, such as few ECPs appear on the ECP list to a QHP. Our intent is to have this identifying and testing the Exchange- afford issuers sufficient flexibility in information exchange occur through an approved web services under their contracting. In order to address Exchange-approved Web service to § 156.265(b) that can be used to support this concern, HHS launched its ECP provide Exchanges offering direct the enhanced direct enrollment process, Petition initiative on December 9, 2015, enrollment and QHP issuers more and ensuring privacy and security risks to give providers an opportunity to operational flexibility to expand front- are addressed and mitigated. HHS will request to be added to the ECP list, end, consumer-facing channels for not provide such an option during the update their provider data on the ECP enrollment through a more seamless individual market open enrollment list, and provide missing provider data. consumer experience. Accordingly, as period for 2017 coverage, but intends to Provider participation in this ECP in § 155.220, we proposed to revise provide the option by the open petition initiative is critical to ensure § 156.265(b)(2)(ii) to ensure that an enrollment period for 2018 coverage. that issuers are aware of a provider’s applicant who initiates enrollment We intend to supplement the framework ECP status and that accurate provider directly with the QHP issuer for we are finalizing in this rule with more data are reflected on the ECP list, enrollment through the Exchange specific guidance and requirements in including ECP category classifications. receives an eligibility determination for future rulemaking, such as specific We believe that HHS’s network coverage through the Exchange Web site guidelines for a pre-approval process adequacy standards, coupled with the or through an Exchange-approved web under § 156.265(b)(3), and requirements ECP standards, including the 30 percent service via the FFE single streamlined for privacy and security. Until then, inclusion standard and the requirement application. Comments regarding the issuers must continue to comply with that issuers offer a contract to at least enhanced direct enrollment proposal by the current direct enrollment process, one ECP in each ECP category in each web-brokers are discussed in this final through which a consumer is directed to county in the plan’s service area, afford rule in the preamble to § 155.220. We HealthCare.gov to complete the both providers and issuers sufficient sought comment on the same direct eligibility application, and all associated contracting flexibility as HHS continues enrollment options for issuers, guidance. This means direct enrollment to update the ECP list. In addition, we including whether to expand oversight, entities are not permitted at this time to continue to partner with HRSA to auditing and monitoring activities, and use non-Exchange Web sites to complete identify HPSAs for determining how to best maintain privacy and the Exchange eligibility application or provider qualification for inclusion on security standards. We also solicited automatically populate data collected the ECP list. comments on whether standards should from consumers into HealthCare.gov Comment: Several commenters urged differ for a web-broker compared to a through any non-Exchange Web site. that HHS require QHP issuers to QHP issuer. We did not receive Completion of the Exchange eligibility contract with any willing provider, comments indicating standards should application on a non-Exchange Web rather than only 30 percent of the differ for a web-broker compared to a site, or collection of data through a non- available ECPs in a plan’s service area. QHP issuer in regards to direct Exchange Web site that is then used to Some of these commenters suggested enrollment; thus, we are finalizing the complete the eligibility application will that HHS require that QHP issuers offer proposal to require effectively the same be considered a violation of the direct good faith contracts to all willing set of standards regarding direct enrollment entity’s agreement with the providers in specific ECP categories enrollment. FFEs. (that is, FQHCs, Ryan White providers, Comments on the general enhanced See preamble to § 155.220(c)(3), hemophilia treatment centers) in the direct enrollment proposal, use of the above, for a discussion of the existing plan’s service area. FFE single streamlined application, direct enrollment requirements. Response: While we appreciate the HHS approval of alternative enrollment While enhanced direct enrollment commenters’ suggestions, we did not pathway processes, and the timing of will not be available in the individual

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market open enrollment period for 2017 applicable eligibility circumstance are Exchanges, and Medicaid eligibility and coverage, we are finalizing our proposal submitted through the Exchange- enrollment via ‘‘cookies’’ or other to revise § 156.265(b)(2)(ii) to enable approved web service. New tracking tools, and would not store or issuers who use HHS-approved direct § 156.265(b)(3)(iii) requires that the use information gathered from enrollment processes to facilitate process used for consumers to complete consumers in the application process for enrollment through the FFEs to either the eligibility application on the non- marketing other products. ensure the applicant’s completion of an Exchange Web site comply with all Response: We agree that eligibility verification and enrollment applicable Exchange standards, implementing the proposal will be a through the Exchange internet Web site including Exchange notice requirements significant undertaking for HHS, and as required by § 155.405, or ensure that under § 155.230 and Exchange privacy that privacy and security risks must be the eligibility application information is and security standards related to addressed prior to implementation. We submitted for an eligibility handling PII under § 155.260(b). intend for the standards outlined in this determination through an Exchange- We also agree with commenters that section to provide a framework to approved web service. This will allow urged HHS to adopt an approval process prepare for the implementation to applicants to complete the entire to ensure that the non-Exchange Web support use of the enhanced direct Exchange application and enrollment site seeking to offer stand-alone direct enrollment option in future years. We process on the web-broker’s non- enrollment eligibility services meets all will continue to consider commenters’ Exchange Web site. We believe this applicable requirements in order to recommendations on ensuring process will grant direct enrollment protect consumers. Accordingly, we consumers are protected, and intend to entities the operational flexibility to have added § 156.265(b)(4) to outline a propose further protections in future expand front-end, consumer-facing process for HHS to verify entities meet rulemaking. all requirements of this section prior to channels for enrollment. d. Termination of Coverage or However, we also share commenters’ using a non-Exchange Web site to Enrollment for Qualified Individuals concerns that allowing this flexibility complete the Exchange eligibility (§ 156.270) without additional protections in place application. may increase the risk of imprecise, See preamble under § 155.220 for a We proposed to amend § 156.270(d) to inaccurate, or misleading eligibility discussion on the primary objective of specify that a QHP issuer must provide results. In light of those considerations these changes. a 3-month grace period to an enrollee and the accompanying comments We clarify that the requirements who, upon failing to timely pay his or received, we are adding new paragraphs related to the direct enrollment process her premiums, is receiving advance (b)(3)(i) through (iii) to clearly articulate rules are applicable to FFEs (including payments of the premium tax credit. the requirements associated with FFEs where States perform plan Because we believe that changing the completing an Exchange eligibility management functions) and SBE–FPs length of an enrollee’s grace period application on a direct enrollment only, and would not apply to SBEs that during the middle of the grace period entity’s non-Exchange Web site. These do not use the Federal platform, nor would be confusing to enrollees and requirements may be amended over alter any State-specific rules related to could result in otherwise avoidable time as implementation activities begin Medicaid eligibility. terminations for failure to pay and once experience is gained under the Comment: Commenters generally premiums, enrollees receiving APTC new process (once implemented). supported HHS conducting regular who enter a grace period for failing to Consistent with the proposal in the audits on issuers and requiring issuers timely pay premiums and who also lose proposed rule, § 156.265(b)(3)(i) to adhere regulatory standards for direct their eligibility for APTC for any reason requires all language related to enrollment activities. during the grace period would be able application questions, and the sequence Response: We agree with commenters to complete the remaining portion of the in which the questions are presented on that supported HHS conducting regular grace period as though the loss of the direct enrollment entity’s non- audits of issuers under this section to eligibility for APTC did not occur. Exchange Web site to be identical to that ensure ongoing compliance with Although the length of the grace period of the FFE Single Streamlined applicable standards and are adding would continue as though the loss of Application. We acknowledge the § 156.265(b)(5), which enables HHS to eligibility for APTC did not occur, comments requesting deviations from periodically monitor and audit entities payment of APTC would terminate the FFE single streamlined application to assess compliance with standards in through normal Exchange operations as to enhance the consumer experience, this section. a result of the loss of eligibility. The and, as we are for web-brokers, we are Comment: One commenter stated proposed amendment to § 156.270(d) finalizing language permitting such HHS should work with issuers as it also would eliminate language limiting deviations with HHS approval. We will develops new direct enrollment the 3-month grace period for enrollees only approve minor modifications that functionality, leverage existing security who are receiving APTC to only those do not change the intent or meaning of standards as much as possible, and enrollees who made a payment during the questions, decrease the probability leave sufficient time for testing and the benefit year. This would permit of accurate answers and eligibility implementation of any requirements. enrollees renewing coverage that does determinations, or affect the Other comments raised several concerns not require a binder payment who fail dependencies and structure of the about the privacy and security of to pay January premiums in full (or fail dynamic application. consumers’ personally identifiable to pay within an issuer’s premium We are also adding new information, particularly citizenship payment threshold policy, if applicable) § 156.265(b)(3)(ii), which sets out a and immigration status, and asked HHS to receive the full grace period of 3 more general requirement that any non- to clarify how these entities would months. This change would align more Exchange Web site facilitating the collect, store, and use PII. Some closely with our interpretation of the completion of an Exchange eligibility commenters wanted HHS to clarify that interaction between grace periods, application ensure that all information web-based entities will not gather and guaranteed availability and necessary for the completion of the store data beyond that necessary for the renewability, and the binder payment application related to the consumer’s Federal platform, State-based requirement, that a binder payment is

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not necessary when an enrollee enrolls, the consumer protection inherent in the same plan or product. We characterize either actively or passively, in a plan proposed rule, we are finalizing the such a re-enrollment as a renewal of within the same insurance product, and proposal as proposed. coverage, which, according to our would prevent enrollees who re-enroll Comment: One commenter requested interpretation of our rules, is treated the in the same plan or product from clarification that non-payment of a same as a regularly-billed monthly unfairly losing their right to a grace binder payment would not give rise to premium payment. Because a binder period because they do not make a a grace period under the proposed rule. payment is not required by our rules in payment for January coverage. Finally, Other commenters requested such circumstances, we do not believe clarification that, under the proposed we proposed to codify with regard to the that an enrollee receiving APTC who is grace period standards our policy rule, an enrollee is not eligible to re-enrolling, either actively or passively, described in the preamble for § 155.400 receive a 3-month grace period for non- into the same plan or product should be of this part that if an enrollee receiving payment of premium for a plan which advance payments of the premium tax is not being paid, at least in part, by denied a 3-month grace period if he or credit can satisfy the requirement to pay APTC. One commenter requested that, she does not make full payment (or a all outstanding premiums, or if the due to the complexity of creating the payment within the issuer’s premium enrollee satisfies an issuer’s premium systems operations necessary to payment threshold, if any) for January of payment threshold implemented under implement the rule, the proposed rule a benefit year. Additionally, we do not § 155.400(g), if applicable, the QHP not go into effect, until after the date it believe that this causes actuarial risk to issuer must not terminate for non- is finalized. the coverage pool or an enticement to payment of premium the enrollee’s Response: The changes to § 156.270(d) game the system any more than such enrollment through the Exchange. This do not conflict with or change the dangers would exist during any other change to the rule would reflect the binder payment rule at § 155.400(e), part of the benefit year. Because we extension of the premium threshold which states that Exchanges may, and believe that this amendment offers an policy to enrollees who are in a grace the Federally-facilitated Exchange will, important consumer protection, we are period for non-payment of premium. require payment of the first month’s finalizing the proposed rule as written. Comment: Many commenters premium to effectuate an enrollment. At the same time, we will carefully supported the proposed rule because it Likewise, the changes to the binder monitor consumer use of grace periods payment rule at § 155.400(e) do not offers an important consumer protection and make any necessary changes in eliminate the need for an enrollee to pay and reduces confusion about the length future rules or guidance. of an enrollee’s grace period if the a binder payment to effectuate coverage. enrollee had his or her APTC adjusted The rule also does not change the e. Additional Standards Specific to to $0 during the 3-month grace period existing rule that an enrollee is not SHOP (§ 156.285) for enrollees receiving APTC. Several eligible to receive a 3-month grace commenters, however, stated that the period for non-payment of premium for In § 156.285(c)(5), we proposed to proposed rule would cause providers to a plan which is not being paid, at least specify additional details about how a bear the burden of claims, subsequently in part, by APTC. Similarly, the rule QHP issuer offering a QHP through an reversed by issuers, incurred during the does not make any change to the rules FF–SHOP should reconcile enrollment second and third months of a grace related to the gain or loss of APTC. As files with the FF–SHOP. Issuers would period for enrollees receiving APTC. with the other parts of this rule, the be required to send enrollment Some, opposing the proposed rule, amendments to § 156.270(d) would be reconciliation files on at least a monthly preferred that enrollees losing their effective only after the effective date, basis according to a process and APTC during a 3-month grace period identified at the beginning of this rule. timeline established by the FF–SHOP, revert to State rules to determine the Comment: While some commenters and in a file format specified by the FF– expressed support for the codification of length of the remainder of the grace SHOP. period. Several other commenters our interpretation that our rules do not approved of the proposed rule so long require a binder payment when an We also proposed to delete as providers were guaranteed to be enrollee enrolls, either actively or § 156.285(d)(2), to be consistent with reimbursed for claims incurred during passively, in a plan within the same our interpretation of guaranteed the second and third months of the 3- insurance product (but does require a availability and guaranteed month grace period. Finally, several binder payment when a consumer renewability. We specifically proposed commenters offered suggestions relating enrolls in a new product or with a new that if a qualified employer withdraws to enhancing the requirement contained issuer), several commenters raised from a SHOP, the SHOP, not the issuer in § 156.270(d)(3) that issuers notify objections to the proposed rule’s should terminate the group’s enrollment providers of the possibility for denied amendment of § 156.270(d) to eliminate through the SHOP, and coverage might claims when an enrollee is in the language limiting the 3-month grace in many circumstances continue outside second and third months of the grace period for enrollees who are receiving the SHOP. period. APTC to only those enrollees who made Response: We recognize that the a payment during the benefit year. Some We received no comments on these proposed rule could allow for claims to commenters stated that such a change proposals. We are finalizing the be submitted and pended during the would have an adverse actuarial effect amendment to delete § 156.285(d)(2) as second and third months of a grace on the risk pool, and encourage proposed, and are finalizing the period that, absent this amendment to enrollees to neglect their premium amendment to § 156.285(c)(5) with the rule, would have been disallowed payments in favor of receiving free modifications to clarify that a general for lack of coverage if the length of the coverage during the 3-month grace requirement under this provision still enrollee’s remaining grace period had period for enrollees receiving APTC. appliesin all SHOPs and to delete the been shorter under State rules. Response: We do not interpret our word ‘‘must’’ because it is superfluous However, the proposed standard is rules to require a binder payment for re- in light of the introductory language in consistent with our current rules, and enrollment from an enrollee who is § 156.285(c). because of the importance we attach to enrolling with the same issuer in the

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f. Meaningful Difference Standard for Comment: Several commenters asked administrative expense is significant Qualified Health Plans in the Federally- that HHS consider other ways to and unnecessary. Facilitated Exchanges (§ 156.298) strengthen meaningful difference One commenter also asked HHS to reconsider the mail order and specialty At § 156.298, we proposed standards, such as by adding additional pharmacy restrictions in the 2016 final modifications to the meaningful quantitative standards. Response: We are not proposing any Payment Notice (§ 156.122(e) and (d)) difference standard for QHPs in the additional meaningful difference starting for the 2017 benefit year, and FFEs. We proposed to remove the standards at this time, but will continue instead establish less restrictive criterion in paragraph (b)(5) that to review the implementation of this methods to achieve its policy goals, for otherwise identical plans would be policy over time. example by requiring issuers and their considered meaningfully different on prescription benefit managers (PBMs) to the basis of one QHP being health g. Other Considerations establish protocols that facilitate mail savings account (HSA) eligible. We also We reminded issuers that certain order delivery to enrollees with proposed to delete ‘‘self-only’’ and other Federal civil rights laws impose transitional living situations, multiple ‘‘non-self-only’’ from paragraph (b)(6). non-discrimination requirements. addresses, or other living arrangements We further proposed to redesignate Issuers that receive Federal financial requiring non-standard delivery. The paragraph (b)(6) as paragraph (b)(5) and assistance, including in connection with commenter suggested that HHS could add the word ‘‘or’’ to paragraph (b)(4). offering a QHP on an Exchange, are require that any mandatory mail order Comment: Commenters generally subject to Title VI of the Civil Rights Act programs offered only apply to supported the removal of HSA of 1964, the Age Discrimination Act of maintenance medications and only after eligibility as a criterion for determining 1975, section 504 of the Rehabilitation a first fill of a new medication, as is meaningful difference from otherwise Act of 1973, and section 1557 of the common in the marketplace. identical plans, so long as standard key Affordable Care Act. The Office for Civil We received a comment stating that differences in how the deductible Rights (OCR), which enforces these any willing provider laws can prevent applies will be accounted for in the statutes, published a notice of proposed selective contracting between issuers existing cost sharing meaningful rulemaking on , 2015 (80 and providers as any willing provider difference standard at § 156.298(b)(1). FR 54172) on the requirements of that accepts the issuers’ terms is One commenter noted that it is section 1557. Issuers that intend to seek considered in-network. The commenter important that HHS permit an issuer to certification of one or more QHPs are stated that HHS should take into offer different QHPs that look similar in directed to that proposed rule and to account the negative impact of such terms of deductible and copayments, http://www.hhs.gov/ocr/civilrights for restrictions on innovation and avoid where one is HSA-compatible but the additional information. imposing similar regulatory other is not, because certain services We also sought comments on fostering impediments on issuers participating in may be covered without a deductible. market-driven programs that can the Exchange. Another commenter Response: We have determined that improve the management of costs and urged HHS to focus on addressing true HSA eligibility is a cost-sharing status care. We noted that innovative issuer, drivers of costs, and avoid putting all that may be assessed by examining the provider, and local programs or financial responsibility on consumers. QHP’s cost sharing, which is included at strategies may be successful in The commenter stated that consumer- paragraph (b)(1) and that the ‘‘Health promoting and managing care, based programs like reference pricing Savings Account eligibility’’ criterion is potentially resulting in better health and benefit design structures are therefore redundant. outcomes and lower rates while creating difficult for consumers to understand, Comment: Commenters also generally important differentiation opportunities particularly for those with low income supported removing the self-only and for market participants. We sought literacy. Additionally, the commenter non self-only criteria and questioned comment on ways in which we can suggested addressing utilization of more why the ‘‘child-only’’ status was facilitate such innovation, and in evidence-based care with incentives for retained. particular on whether there are providers, and the need for broader Response: We are finalizing the regulations or policies in place that we efforts on price variation. Another removal of the self-only and non self- should modify in order to foster this comment requested HHS develop tools only criteria. Self-only (that is, innovation. to allow consumers to pick plans based individual) plans do not allow any Comment: A few commenters stated on quality and cost-effectiveness, adopt dependent relationships, while non-self- that the exclusion of quality policies to increase transparency in only (that is, enrollee group or family) improvement activities in the MLR costs (public reporting on costs for plans allow at least one dependent definition (for example, drug utilization episodes), promote technology-enabled relationship type. An individual can review programs, and value-based care delivery, and adopt policies to enroll in individual and family plans. oncology management programs) deters encourage total community health. We The allowance of dependents is the only issuers from pursuing such innovative received one comment requesting that difference between two plans if they are programs. Commenters recommended HHS not require SADPs to offer plans identified as individual only or family. HHS revise the MLR numerator within its three categories (routine, These statuses alone are not indicative definition to include the costs of such basic and major), as it results in of meaningful differences among QHPs. programs. inaccurate plan representation and We will maintain the ‘‘child-only’’ A few commenters also suggested that consumer confusion. versus non-child-only status. It is HHS revisit last year’s requirements Another commenter suggested HHS permissible for QHP issuers to offer requiring issuers to cover the greater of explore options to waive the Medicaid child-only plans in which the only one drug in every USP category and rebate program, specifically the best enrollees are individuals who have not class, or the same number of price restriction, under which the attained the age of 21. We believe that prescription drugs in each category and Exchange QHP drug prices are included. such a child-only plan would be class as the EHB-benchmark, and also This sets a pricing floor and prevents meaningfully different from a non child- establishing P&T committees. PBMs from negotiating lower drug only plan. Commenters stated that the prices or manufacturer rebates.

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Response: We appreciate these Manual. We proposed in paragraph (a) noting that for issuers participating in comments and will consider them for a list of provisions with which QHP both FFE and SBE–FP States this policy future rulemaking. issuers participating in an SBE–FP enables streamlined policies across would be required to comply. These platforms and would decrease 6. Standards for Qualified Health Plan provisions relate to eligibility and operational burden for issuers, Issuers on Federally-Facilitated enrollment functions directly, or are Exchanges and State-Based Exchanges enrollees, and Exchanges. critical to enabling HHS to assess on the Federal Platform (§ 156.350) Response: As we discuss above, at compliance with eligibility and this time the Federal platform is not To make it operationally feasible for enrollment functions. For example, we able to accommodate State a State-based Exchange to rely on the would require QHP issuers to comply customization in policy or operations. Federal platform for eligibility and with the requirements regarding We are finalizing this policy as enrollment functions, issuers and plans compliance reviews of QHP issuers to proposed. However, we are confirming offered on the SBE–FP must comply the extent relating directly to applicable that there is the flexibility for a State to with rules, as interpreted and eligibility and enrollment functions. elect to use the Federal platform for implemented in policy and guidance Without this requirement, we would be certain functions for either the related to the Federal eligibility and severely limited in our ability to individual market, or the SHOP market, enrollment infrastructure. These would determine whether an issuer is or both. We are also confirming that be the same requirements related to complying with the requirements should a State elect to use the Federal eligibility and enrollment that are related directly to the Federal platform’s platform for certain functions for only applicable to QHP issuers and plans on eligibility and enrollment functions. In one market, the requirements in FFEs. For example, SBE–FP special paragraph (b), we proposed to permit § 156.350 would only apply for the enrollment periods must be these issuers to directly enroll market for which the State elects to rely administered within the guidelines of applicants in a manner that is on the Federal platform. the FFE special enrollment periods, as considered to be through the Exchange, it is not possible at this time for the under § 156.1230, just as QHP issuers on 7. Enforcement Remedies in Federally- Federal platform to accommodate State FFEs are permitted. Facilitated Exchanges (§§ 156.800, customization in policy or operations, In paragraph (c), we proposed that if 156.805, and 156.810) such as State-specific special enrollment an SBE–FP does not substantially In the proposed rule, we discussed periods, application questions, display enforce the eligibility and enrollment four proposed rule changes. First, we elements in plan compare, or data standards described in paragraph (a), proposed to revise paragraph analysis. Additionally, if the Federal then HHS may enforce against the issuer § 156.805(d) to explain fully the effect of platform is to perform eligibility and or plan using the enforcement remedies appealing a CMP. In the interest of enrollment functions, the Federal and processes described in subpart I of aligning our CMP and decertification platform would also need to provide for part 156. We also proposed that the regulations, we proposed to rename certain consumer tools (for example, administrative review process in paragraph (d) ‘‘Request for hearing.’’ We plan compare, premium estimator, subpart J of part 156 would apply to proposed to state affirmatively the second-lowest cost silver plan tool) to enforcement actions taken against QHP issuer’s right to file a request for hearing support those functions. Thus, the issuers or plans under proposed on the assessment of a CMP and we Federal platform would need SBE–FP § 156.350. Because timely compliance proposed to add language stating that QHP plan data by the dates specified in with paragraph (a) is vital to the smooth the request for hearing will suspend the the annual Letter to Issuers to provide functioning of the Federal platform and assessment of CMP until a final for adequate testing and loading of the because the Federal platform would administrative decision on the appeal. data into the various consumer tools the apply a uniform compliance and FFEs offer. Issuers must also comply enforcement regime for reasons of This was similar to language in the with certain FFE enrollment policies efficiency and speed, we believe it is decertification rule. and operations (for example, premium appropriate that HHS have this Second, we proposed to amend payment and grace period rules, authority in this circumstance. § 156.810 to present the appeal rights of effective date logic, acceptable Because this proposal would insert a QHP issuers and the impact of an appeal transaction codes, and reconciliation section applicable to SBE–FPs in more clearly. Specifically, we added rules) for the Federal platform to subpart D, which currently describes language to explain how an appeal will successfully process 834 transactions only standards for QHP issuers on the affect the effective date of a with issuers and minimize any data FFEs, we proposed to amend the title of decertification depending on whether discrepancies for reconciliation. subpart D to read Standards for the decertification is standard or Therefore, we proposed to add Qualified Health Plan Issuers on expedited. § 156.350 to address eligibility and Federally-Facilitated Exchanges and Third, we proposed to remove enrollment standards for QHP issuers State-Based Exchanges on the Federal § 156.800(c), in which we stated that participating on an SBE–FP. In Platform. sanctions will not be imposed on a QHP paragraph (a) of new § 156.350, we Comment: We received comments issuer on an FFE if it has made good proposed that QHP issuers participating stating the disadvantages of the Federal faith efforts to comply with applicable in an SBE–FP must comply with HHS platform not being able to accommodate requirements for calendar years 2014 regulations, and guidance related to the State customization. One commenter and 2015. Starting in the 2016 calendar eligibility and enrollment functions for requested clarification that if a State year and beyond, we proposed to which the State-based Exchange relies elects to use the Federal platform for impose sanctions on a QHP issuer in an on the Federal platform. For example, only the individual market or only for FFE if the issuer fails to comply with those issuers would be required to the SHOP market, the State should only applicable standards, even if the QHP comply with operational standards in be required to comply with the issuer has made good faith efforts to the Federally-facilitated Exchange and operational standards of the FFE for that comply with these requirements. We Federally-facilitated Small Business market, not both. We also received intend to use a progressive compliance Health Options Program Enrollment comments supporting this proposal, model for determining sanctions.

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Fourth, we proposed to add new bases when determining the appropriate 1, 2017 in new paragraph (a)(1). We also for decertification of a QHP to § 156.810. enforcement remedy. We believe, based proposed to add new paragraph One of the bases for decertification, on past and current compliance (a)(2)(i)(A) to specify that for plan years § 156.810(a)(5), authorizes monitoring and enforcement efforts, that beginning on or after January 1, 2017, a decertification if a QHP issuer is issuers have gained enough experience QHP issuer that contracts with a hindering the efficient and effective with the FFEs to comply fully with hospital with greater than 50 beds must operation of a Federally-facilitated participation standards. Of course, in all verify that the hospital uses a patient Exchange. We explained our intent to our enforcement actions, we will safety evaluation system as defined in interpret hindering the efficient and continue to take into account all facts 42 CFR 3.20. We proposed to require, effective operation of the FFEs to and circumstances, including the under new paragraph (a)(2)(i)(B), that include impeding displaying plans reasonable good faith action of issuers. for plan years beginning on or after properly to enrollees who purchase Comment: We received comments January 1, 2017 a QHP issuer that coverage under that plan. Where an that the expansion of bases for contracts with a hospital with greater issuer has informed HHS that it cannot decertification, especially a basis for than 50 beds must ensure that the continue to provide coverage under a decertification based on financial hospital implements a comprehensive QHP, HHS will interpret this solvency, falls under State, not Federal person-centered discharge program to information to mean that the efficient authority. One commenter expressed improve care coordination and health and effective operation of the FFE will support for the expanded bases for care quality for each patient. We noted be hindered because it will incorrectly decertification. that use of a data-driven approach, display plans on the FFE platform. In Response: We are finalizing the analytic feedback, and shared learning such a case, we proposed to take all regulation as proposed. We believe that to advance patient safety, such as necessary steps to suppress or decertify the added bases are necessary to provide working with a Patient Safety the QHP. consumers a consistent and reliable Organization (PSO), are essential to We also proposed to add a basis for coverage experience through the FFEs. implementing meaningful interventions decertification to § 156.810 to address We do not believe this constitutes any to improve patient health care quality. situations where a QHP issuer is the infringement on State authority. While We also proposed to exercise the subject of a pending or existing State State regulators do have primary authority provided to the Secretary enforcement action, including a consent authority over whether issuers may sell under section 1311(h)(2) of the order, or where HHS has reasonably coverage within the State, issuers must Affordable Care Act to establish determined that an issuer lacks the also comply with Federal requirements reasonable exceptions to the QHP issuer funds to continue providing coverage to for participation in the FFEs and avoid patient safety requirements. its consumers for the remainder of the conduct that violates Federal standards Specifically, in new paragraph (a)(2)(ii), plan year. Under its obligation to for decertification if they wish to sell for plan years beginning on or after determine that making a plan available QHPs on an FFE. When HHS reasonably January 1, 2017, QHP issuers can verify on the FFEs is in the interest of determines, in coordination with that a contracted hospital with greater qualified individuals and employers, we information received from State than 50 beds implements evidence- proposed to adopt these decertification regulators, that the issuer lacks the based initiatives to reduce all cause bases as a consumer protection measure. financial ability to provide coverage preventable harm,60 prevent hospital We invited comments from affected until the end of the coverage period, readmission, improve care coordination parties on the proposal to end the good HHS must be able to take action to and improve health care quality through faith compliance policy and on the protect FFE consumers. Any action for the collection, management and analysis proposed bases for decertification. consumers not enrolled in a QHP on an of patient safety events by a means other Comment: We received comments than reporting of such information to a requesting that we extend the good faith FFE generally remains the primary authority of the State regulator and PSO. We noted that this would allow compliance policy into 2016. Some flexibility and promote alignment for commenters only asked for an extension outside the influence of these regulations. hospitals that already engage in effective of the good faith compliance policy for national, State, public and private new 2016 requirements. Commenters 8. Quality Standards patient safety programs. also requested that we clarify that any a. Patient Safety Standards for QHP We proposed to amend the conduct occurring in 2014 and 2015 Issuers (§ 156.1110) documentation requirement for plan remain subject to the good faith years beginning on or after January 1, In the proposed rule, we proposed to compliance policy in the future. Others 2017, from the collection of the strengthen QHP patient safety standards requested that, if the policy ended, we hospital’s CMS Certification Number to at § 156.1110 in accordance with section use a progressive compliance model for materials which reflect implementation 1311(h) of the Affordable Care Act for any compliance enforcement in the of PSO activities, such as plan years beginning on or after January future. One commenter supported documentation of PSOs and hospitals 1, 2017. We noted the importance of ending the policy. working together to collect, report and Response: We are not extending alignment of the QHP issuer standards § 156.800(c) to cover calendar year 2016. with effective patient safety 60 All cause preventable harm or all adverse While there are new requirements for interventions and leveraging the events-any event during the care process that issuers in 2016, we believe that issuers successful work already being done at results in harm to a patient, regardless of cause have had sufficient time to acquaint national, regional, and local hospital (Letter from Center for Clinical Standards and Quality/Survey & Certification Group to State themselves with how to comply with systems for health care quality Survey Agency Directors regarding AHRQ Common the fundamental regulations improvement and harm reduction to Formats—Information for Hospitals and State underpinning participation in the FFEs. achieve greater impact on reducing Survey Agencies (SAs)—Comprehensive Patient We will be using a progressive patient harm. We proposed amending Safety Reporting Using AHRQ Common Formats (Mar. 15, 2013), available at https://www.cms.gov/ compliance model for compliance § 156.1110 to capture the current patient Medicare/Provider-Enrollment-and-Certification/ conduct in the future, and may evaluate safety standards that continue to apply SurveyCertificationGenInfo/Downloads/Survey- how new a particular requirement is for plan years beginning before January and-Cert-Letter-13-19.pdf).

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analyze patient safety events, and existing, effective patient safety needs of their respective patient implementation of a comprehensive initiatives, including by requiring populations. person-centered hospital discharge applicable hospitals to report to PSOs, Comment: One commenter requested program to demonstrate compliance as well as providing flexibility to allow that HHS amend the proposed with the proposed requirements in compliance with § 156.1110 by regulatory language in § 156.1110(a)(2)(i); or documentation to implementing evidence-based initiatives § 156.1110(a)(2)(ii) because it would be reflect implementation of other patient other than working with a PSO. One difficult to find any single patient safety safety initiatives to reduce all cause commenter stated that the proposal initiative that addresses the reduction of preventable harm, prevent hospital outlined in § 156.1110(a)(2)(i)—to all cause preventable harm,61 readmission, improve care coordination require a QHP issuer that contracts with prevention of hospital readmission, and improve health care quality through a hospital with greater than 50 beds to improved care coordination and the collection, management and analysis verify that the hospital uses a patient improved health care quality through of patient safety events to demonstrate safety evaluation system as defined in the collection, management and analysis compliance with the reasonable 42 CFR 3.20—should be the preferred of patient safety events, as currently exception provision proposed to be option versus establishing reasonable proposed. captured in § 156.1110(a)(2)(ii). exceptions in the proposed requirement We noted that we were considering Response: We are finalizing the providing that QHP issuers must ensure in § 156.1110(a)(2)(ii). The commenter proposed requirement at that their contracted hospitals as strongly supported reporting to a patient § 156.1110(a)(2)(ii), with one described in section 1311(h) are safety evaluation system because most modification. We are modifying the standardizing reporting of patient safety PSOs collect all types of information reasonable exceptions provision to state events with the use of the Agency for from all types of health care that for plan years beginning on or after Healthcare Research and Quality organizations, unlike Hospital January 1, 2017, QHP issuers must (AHRQ) Common Formats. We also Engagement Networks (HENs) initiatives verify that their contracted hospitals noted that these proposed standards and Quality Improvement Organizations with greater than 50 beds, if not working would leverage the successful work (QIOs) commissioned work, which are with a PSO, implement an evidence- already being done at national, regional, typically focused on certain conditions based initiative, to improve health care and local hospital systems for health or topics. The commenter also stated quality through the collection, care quality improvement and harm that requiring hospital providers to management and analysis of patient reduction, and align with effective contract with a Federally-listed PSO safety events that reduces all cause patient safety interventions to achieve would decrease QHP operational burden preventable harm, prevents hospital greater impact. and expenses versus the QHP burden of readmission or improves care We are finalizing these proposals with keeping track of multiple organizations coordination. We clarify that the the following modification. We are and HEN patient safety initiatives with evidence-based initiatives described in modifying the reasonable exceptions tenuous, variable funding. this reasonable exception provision are not intended to address all aspects of provision in § 156.1110(a)(2)(ii) to state Response: We agree with the majority all-cause preventable harm, hospital that QHP issuers must verify that their of commenters and are finalizing the readmission, care coordination, and applicable contracted hospitals with proposed approach of requiring QHP greater than 50 beds, if not working with health care quality in one single issuers, for plan years beginning on or initiative. a PSO, implement an evidence-based after January 1, 2017 to verify that their initiative, to improve health care quality contracted hospitals, with more than 50 Comment: Several commenters through the collection, management and beds, have current agreements with requested that HHS recognize State- analysis of patient safety events, that PSOs, while also providing reasonable level patient safety reporting programs, reduces all cause preventable harm, such as the mandatory Patient Safety exceptions to the PSO requirement. We prevents hospital readmission or Reporting System required in believe that these requirements allow improves care coordination. We Pennsylvania, and Maine’s Sentinel for increased alignment of QHP issuer acknowledge that some of the patient Event Reporting Program. Commenters standards with effective patient safety safety activities that a hospital performs noted that these State-level reporting interventions. We agree that PSOs with a PSO may be very similar, if not programs are robust, evidence-based, collect and analyze valuable identical to, some of the activities that effective patient safety programs that information through patient safety hospitals will perform as part of the have delivered high value and improved evaluation systems to reduce harm and initiatives described in patient safety across their regions. They we believe that the requirements § 156.1110(a)(2)(ii). If a provider recommended granting such exceptions finalized in § 156.1110 for plan years undertakes activities to improve patient because reporting to a PSO or other safety and health care quality, but does beginning on or after January 1, 2017, entity would be burdensome, not do so in conjunction with a PSO, will allow for both flexibility and duplicative, and would not align with subject to the requirements of the innovation for hospitals to choose the reporting by hospitals in those States. Patient Safety and Quality Improvement most relevant patient safety initiative for their populations. We believe hospitals Act (PSQIA) and its implementing 61 All cause preventable harm or all adverse regulation, 42 CFR part 3, the patient may choose to work with a PSO as their events—any event during the care process that safety and quality information involved preferred option. We acknowledge that results in harm to a patient, regardless of cause in such initiatives would not be subject the different initiatives mentioned in (Letter from Center for Clinical Standards and the proposed rule, including HENs, Quality/Survey & Certification Group to State to the PSQIA’s privilege and Survey Agency Directors regarding AHRQ Common confidentiality protections. QIOs and PSOs, may work on focused Formats—Information for Hospitals and State Comment: Most commenters generally topic areas to reduce patient harm. Survey Agencies (SAs)—Comprehensive Patient supported our proposals and agreed Therefore, we believe that it is Safety Reporting Using AHRQ Common Formats important for hospitals and their (Mar. 15, 2013), available at https://www.cms.gov/ with strengthening QHP issuer patient Medicare/Provider-Enrollment-and-Certification/ safety standards. Commenters agreed partners to determine and engage in the SurveyCertificationGenInfo/Downloads/Survey- with HHS’s approach of aligning appropriate strategies reflecting the and-Cert-Letter-13-19.pdf).

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Response: We acknowledge that there patient safety work products and implement a mechanism for could be local, State, or national patient analyses outside of the PSO per the comprehensive hospital discharge to safety reporting programs that meet or PSQIA. Another commenter requested improve care coordination and quality exceed the patient safety standards for clarification regarding whether HHS or implement an alternative evidence- plan years beginning on or after January would collect and publish data on the based initiative. We clarify that we do 1, 2017, as outlined in § 156.1110(a)(2). patient safety evaluation system as not specify dates of activity regarding Therefore, the QHP issuer patient safety defined in 42 CFR 3.20. patient safety initiatives because we requirements are intended to be broad Response: PSO contracts with believe it is the responsibility of the and inclusive of various initiatives, such hospitals for the purpose of receiving issuer and contracted hospital to as State-level, evidence-based programs and reviewing patient safety work maintain current documentation and that improve health care quality through product (referred to as Patient Safety ensure compliance with these patient the collection, management and analysis Act contracts) do not meet the definition safety standards. of patient safety events, and that reduce of ‘‘patient safety work product’’, and Comment: Several commenters all cause preventable harm, prevent thus, are not subject to the protections supported the proposed discharge hospital readmission, or improve care and requirements in the PSO statute and planning requirements outlined in coordination. We describe, in the regulations. We do not intend to collect § 156.1110(a)(2)(i)(B) that states that a reasonable exceptions provision and publish data on the patient safety QHP issuer that contracts with a finalized at § 156.1110(a)(2)(ii), the key evaluation system nor are we generally hospital with greater than 50 beds must concepts characterizing an evidence- permitted to publish patient safety work ensure that the hospital implemented a based patient safety initiative that are product. We clarify that these QHP comprehensive person-centered consistent with the National Quality issuer patient safety requirements are discharge program to improve care Strategy and existing public and private intended to support implementation of coordination and health care quality for patient safety programs. However, we the PSQIA and would not violate the each patient. Commenters expressed do not intend to provide an exhaustive confidentiality provisions of patient that it is critical that the discharge list of initiatives, to allow for flexibility safety work product, as defined in the planning process reflect the needs of all and innovation for future advances in PSQIA. We clarify that the QHP issuer populations and sub-populations. Some patient safety. documentation requirement in commenters noted that HHS is already Comment: A few commenters § 156.1110(b)(2) is intended to direct addressing hospital discharge planning suggested amending the proposed issuers to collect basic, administrative- requirements in a separate proposed documentation requirement outlined in type information from their contracted rule, CMS 3377–P (80 FR 68125 (Nov. § 156.1110(b), and recommended hospitals, with greater than 50 beds, to 3, 2015)), which should be used to meet allowing hospitals to attest that they demonstrate compliance with the the discharge requirements in section participate in a patient safety activity to patient safety requirement for plan years 1311(h) of the Affordable Care Act and minimize the documentation beginning on or after January 1, 2017. to minimize unnecessary burden on requirement and ensure efficient, For example, we expect such QHP issuers and hospitals. consistent mechanisms for compliance information could include current Response: We acknowledge that HHS by hospitals. hospital agreements or attestations to has currently proposed implementing Response: We maintain the partner with a PSO, which we note discharge planning requirements documentation requirement as outlined would not contain patient safety work mandated in section 1899B(i) of the in § 156.1110(b) and clarify that we product. In addition, we clarify that Improving Medicare Post-Acute Care intend the requirement for plan years such information to demonstrate Transformation Act of 2014 (IMPACT beginning on or after January 1, 2017, to compliance would be submitted to an Act, Pub. L. 113–185) by modifying the be broad and inclusive of examples such Exchange, upon request by the discharge planning or discharge as hospital attestations or current Exchange per the established summary Condition of Participation agreements to partner with a PSO, HEN, requirement in § 156.1110(c). requirements for hospitals. We agree or QIO. We believe that the patient Comment: Several commenters with aligning discharge planning safety standards support a common goal requested that HHS consider that the requirements to minimize burden, and of preventing the risk of patient harm in timeframes of hospital patient safety clarify that continued collection of CMS an effective, sustainable way. We initiatives may not coincide with plan Certification Numbers (CCNs) would be believe it is important to allow for years, and that HHS allow flexibility so sufficient for issuers to comply with flexibility regarding methods of that a hospital may attest to the fact that § 156.1110(a)(2)(i)(B). We believe there complying with the new documentation it is already or will start to take part in would be no additional burden because requirements at § 156.1110(b)(2) in a patient safety activity during the QHP issuers have already been order to balance both issuer and relevant plan year or base compliance collecting this documentation since hospital burden and to accommodate a on a hospital’s previous year’s activities. January 1, 2015, for the initial phase of variety of types of patient safety One commenter urged HHS to build a the QHP issuer patient safety standards. initiatives in which hospitals may process for approving new initiatives in We are finalizing the documentation engage. We also believe that QHP the future. requirement in § 156.1110(b)(2) for plan issuers and their contracted hospitals Response: We acknowledge that years beginning on or after January 1, should have flexibility in how they timeframes of hospital patient safety 2017 and clarify that the information to comply with the documentation initiatives may not exactly align with be collected by a QHP issuer could requirement as they develop their plan years. We are finalizing the patient include CCNs to demonstrate that their contracts. safety requirement in § 156.1110(a)(2) to contracted hospitals implement Comment: One commenter did not state that for plan years beginning on or mechanisms for comprehensive person- agree with the proposed documentation after January 1, 2017, issuers must verify centered hospital discharge to improve requirement to have hospitals share that their applicable contracted care coordination and health care their PSO agreements with QHPs hospitals with greater than 50 beds use quality for each patient. We also believe because of concern of violating a patient safety evaluation system as it is important to provide flexibility to confidentiality provisions of sharing defined in 42 CFR 3.20, as well as hospitals and QHP issuers and note that

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other types of information may be CCNs and to establish quality implement an alternative national, collected to demonstrate compliance improvement strategies. State, public, or private evidence-based with comprehensive person-centered Response: We clarify that we are patient safety initiative that uses the hospital discharge if hospitals choose to finalizing requirements to transition collection, management and analysis of implement this in alternative ways, from the first phase of patient safety patient safety events to reduce all cause other than meeting Condition of standards that required, beginning on preventable harm, prevent hospital Participation requirements. January 1, 2015, QHP issuers to verify readmission, or improve care Comment: Many commenters did not that certain contracted hospitals meet coordination. We believe that there is an support mandating the use of AHRQ Medicare Hospital Conditions of adequate amount of time from the Common Formats for standardizing Participation requirements regarding a publication of this final rule for QHP reporting of patient safety events. They quality assessment and performance issuers and their contracted hospitals to stated that requiring use of Common improvement program and a discharge be able to comply with these patient Formats would stifle private sector planning process. In other words, we are safety standards for plan years innovation and investment in the finalizing the amendments to § 156.1110 beginning on or after January 1, 2017. development of PSOs, would add to begin the second phase of the patient We expect that issuers would continue burden and costs to PSO formation, and safety standards to require for plan years their efforts to prospectively identify could cause existing PSOs to voluntary beginning on January 1, 2017, QHP hospitals to contract with that meet all delist. Some commenters noted that issuers to verify that their contracted applicable Federal and State health care hospitals that already report patient hospitals with greater than 50 beds use quality and safety requirements. safety data in a standardized manner a patient safety evaluation system as Comment: One commenter requested through other reporting systems that defined in 42 CFR 3.20, and implement clarifications regarding the regulatory meet or exceed the Patient Safety and a comprehensive person-centered reference for ‘‘a comprehensive person- Quality Improvement Act requirements, discharge program to improve care centered discharge program to improve would incur undue burden as well. coordination and health care quality for care coordination and health care Commenters urged HHS to allow each patient; or implement an evidence- quality for each patient’’ and how this flexibility to PSOs and their participants based initiative, to improve health care is tracked or published. to choose the reporting format or tool quality through the collection, Response: The language being they use to submit patient safety event management and analysis of patient finalized at § 156.1110(a)(2)(i)(B) data. safety events that reduces all cause implements the patient safety standard Response: We continue to strongly preventable harm, prevents hospital captured at section 1311(h)(1)(A)(ii) of support hospital tracking of patient readmission, or improves care the Affordable Care Act, which refers to safety events using the AHRQ Common coordination by a means other than a mechanism to ensure that each patient Formats,62 which are a useful tool for a reporting of such information to or by a receives a comprehensive program for hospital regardless of what patient PSO. We clarify that the collection of hospital discharge that includes patient- safety interventions are implemented for CCNs would be sufficient under centered education and counseling, ongoing, data-driven quality assessment. § 156.1110(b)(2) for QHP issuers to comprehensive discharge planning, and We also note that use of Common document compliance with post discharge reinforcement. We do not Formats, and aligning with existing § 156.1110(a)(2)(i)(B). intend to track or publish patient safety We also note that QHP issuer HHS recommendations for hospitals,63 event data regarding hospital discharge requirements relating to quality is integral, whether a hospital chooses programs at this time. Instead, improvement strategies were established § 156.1110(b)(2) requires QHP issuers, to work with a PSO to comply with the in the 2016 Payment Notice (80 FR for plan years beginning on or after proposed requirement in 10844); therefore, comments specific to January 1, 2017, to collect and maintain § 156.1110(a)(2)(i), or implements an QHP issuer implementation and documentation to demonstrate that its alternative approach under the reporting of quality improvement contracted hospitals with greater than reasonable exception provision in strategies are out of scope of this rule. 50 beds meet the required patient safety § 156.1110(a)(2)(ii). We also remind However, we expect QHP issuers would standards. We also clarify that PSOs of their requirement to collect align and coordinate implementation of documentation to demonstrate patient safety work product in a their contracted hospital patient safety standardized manner, as set forth in 42 initiatives with their QHP quality compliance with the discharge planning CFR 3.102(b)(2)(i)(F) and (b)(2)(iii). improvement strategies if applicable. requirement (for example, the hospital’s However, we clarify that the QHP issuer Comment: Several commenters CCN) would be submitted to an patient safety standards finalized in this requested clarifications regarding the Exchange, upon request by the rule do not require the use of the timeframe for the effective date for data Exchange per the established Common Formats for patient safety collection to ensure that hospitals have requirement in § 156.1110(c). event reporting at this time. sufficient time to comply with the 9. Qualified Health Plan Issuer Comment: A few commenters standards. One commenter suggested Responsibilities provided recommendations regarding one year from the date of the final rule a. Payment and Collections Processes the requirement to collect and maintain as the effective date of data collection (§ 156.1215) since hospitals would need considerable 62 https://www.pso.ahrq.gov/common. time to implement activities to comply In the 2015 Payment Notice, HHS 63 Letter from Center for Clinical Standards and with these patient safety standards. One established a monthly payment and Quality/Survey & Certification Group to State Survey Agency Directors regarding AHRQ Common commenter requested more detail about collections cycle for insurance Formats—Information for Hospitals and State how hospitals that meet the standard affordability programs, user fees, and Survey Agencies (SAs)—Comprehensive Patient can be prospectively identified by plans, premium stabilization programs. In Safety Reporting Using AHRQ Common Formats consumers and regulators. 2017, as discussed elsewhere in this (Mar. 15, 2013), available at https://www.cms.gov/ Medicare/Provider-Enrollment-and-Certification/ Response: We believe that the document, we are finalizing our SurveyCertificationGenInfo/Downloads/Survey- majority of hospitals with greater than proposal to charge issuers in SBE–FPs and-Cert-Letter-13-19.pdf. 50 beds already partner with a PSO, or for eligibility and enrollment services a

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user fee for the benefits issuers in SBE– § 156.1220(b); and a request for review relevant methodology, or HHS’s FPs will receive as a result of the SBE– by the Administrator of CMS under mathematical error. We also clarified FP’s reliance on the Federal platform. § 156.1220(c). In light of HHS’s that the existence of an unresolved To streamline our payment and finalization of the proposal around discrepancy is not alone a sufficient collections process, we proposed that, SBE–FPs, we interpret this basis on which to request a for 2017 and later years, for purposes of administrative appeals process to also reconsideration. the netting process, the reference to FFE apply to user fee payments that we Additionally, we clarified the grounds user fees in § 156.1215(b) would be collect from SBE–FP QHP issuers that for appeals related to the risk corridors interpreted to include any fees for offer plans on an SBE–FP. program. An issuer may not file a issuers in State-based Exchanges using Under § 156.1220(a), an issuer may request for reconsideration to challenge the Federal platform. only file a request for reconsideration the standards for the risk corridors In the 2015 Payment Notice, we based on the following: A processing program, including those established in established in § 156.1215(c) that any error by HHS, HHS’s incorrect §§ 153.500 through 153.540 and in amount owed to the Federal government application of the relevant methodology, guidance issued by HHS. In addition, by an issuer and its affiliates is the basis or HHS’s mathematical error. For appeals related to data for programs for calculating a debt owed to the example, an issuer may file a request for other than risk corridors covered in Federal government. In this rulemaking, reconsideration that challenges the § 156.1220(a) cannot be grounds for risk we proposed that, for 2017 and later assessment of a default risk adjustment corridors appeals. We proposed to years, for purposes of calculating the charge if the issuer believes the default clarify that the last submission of data debt owed to the Federal government, charge was assessed because HHS to which the issuer has attested serves we would interpret the reference to FFE incorrectly applied its methodology as the notification for purposes of user fees to include any fees for issuers regarding data quantity and quality § 153.510(d). in State-based Exchanges using the standards set forth in § 153.710(f); We also proposed to shorten the Federal platform. We also sought however, the issuer may not file a deadline for filing a request for comment on whether the regulations request for reconsideration to challenge reconsideration in § 156.1220(a)(3) from should be amended to reflect these the methodology itself. We also clarify 60 to 30 calendar days. interpretations. that an issuer may not file a request for Additionally, we proposed to clarify We are adopting the interpretations of reconsideration regarding issues arising that an issuer must pay the full amount § 156.1215 we announced in the from the issuer’s failure to load owed to HHS as set forth in the proposed rule by finalizing conforming complete and accurate data to its applicable notification, even if the amendments to paragraphs (b) and (c) of dedicated distributed data environment issuer files a request for reconsideration § 156.1215. within the data submission window. under § 156.1220. Failure to pay an Comment: We received one comment Errors by the issuer are not appealable. amount owed will result in interest on these proposals requesting that HHS In line with our proposal to delete accruing after the applicable payment clarify if it intends to collect user fees § 153.710(d), we proposed to make deadline. Therefore, if an appeal is from issuers in State-based Exchanges conforming amendments to modify unsuccessful, and the issuer has not using the Federal platform beginning in § 156.1220 to remove cross-references to already remitted the charge amount 2015. the interim discrepancy reporting owed, the issuer would owe the debt Response: Our intent in this section process. Under § 156.1220(a)(4)(ii), a plus the interest, and administrative was to establish our authority to collect reconsideration relating to risk fees which accrue from delayed the user fee from SBE–FP issuers adjustment or reinsurance may only be payment. If an appeal is successful, through netting, but only once such a requested if, to the extent the issue HHS will refund the amount paid in fee has been established. As described could have been previously identified accordance with the final appeal elsewhere in this rule, HHS will begin by the issuer to HHS under the final decision. HHS is finalizing this assessing the user fee on issuers in discrepancy reporting process proposed clarification. State-based Exchanges using the Federal to be redesignated at § 153.710(d)(2), it We are finalizing our proposal to platform beginning with plan years that was so identified and remains shorten the timeframe for requesting start on or after January 1, 2017, or, at unresolved. As proposed to be reconsideration related to the risk the State’s request, collecting an redesignated, § 153.710(d)(2) states that adjustment, reinsurance and risk equivalent amount from the State. We an issuer must identify to HHS any corridors programs to 30 calendar days. are finalizing our proposal that, for discrepancies it identified in the final This final rule will become effective 60 purposes of the netting process and distributed data environment reports. days after it is published—that is, prior calculating the debt owed to the Federal We clarify that issuers may identify to the June 30 notification of risk government, we will interpret the issues during the discrepancy reporting adjustment and reinsurance amounts. reference to FFE user fees at process under newly designated Therefore, requests for reconsideration § 156.1215(b) and (c) to include any fees § 153.710(d)(2) that are not subject to related to the risk adjustment, for issuers in SBE–FPs, beginning with appeal; that is, issuers may identify reinsurance and risk corridors programs plan years that start on or after January issues that are not processing errors by for the 2015 benefit year must be made 1, 2017. HHS, HHS’s incorrect application of the within 30 calendar days of notification relevant methodology, or HHS’s of the payment or charge. However, b. Administrative Appeals (§ 156.1220) mathematical errors. We clarify that, in HHS will maintain a 60 calendar day In the 2015 Payment Notice (79 FR contrast, an issuer may only request a timeframe to request reconsideration for 13818), we established an reconsideration of unresolved issues the APTC, CSR and user fee programs. administrative appeals process for that were identified (if they could have Therefore, the request for issuers. We established a three-tiered been so identified) under the final reconsideration must be filed in appeals process: a request for discrepancy reporting process proposed accordance with the following reconsideration under § 156.1220(a); a to be redesignated at § 153.710(d)(2), if timeframes: (1) For the premium tax request for an informal hearing before a contesting a processing error by HHS, credit and cost-sharing reduction CMS hearing officer under HHS’s incorrect application of the portions of the advance payments, or

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FFE user fee charges, within 60 calendar Finalizing a shorter timeline for the promptly promotes the timely release of days after the date of the final premium stabilization programs funds, however, due to the varying reconsideration notification specifying requests for reconsideration would nature, complexity and number of the aggregate amount of such advance permit HHS to resolve administrative reconsiderations, HHS cannot set forth a payments or user fees for the applicable appeals, calculate final payments and specific deadline. HHS is committed to benefit year; (2) for a risk adjustment charges, and make payments in a providing a decision as quickly and payment or charge, including an manner consistent with the reporting efficiently as possible. assessment of risk adjustment user fees, and payment timelines for those c. Third Party Payment of Qualified within 30 calendar days of the date of programs. We agree with commenters Health Plan Premiums (§ 156.1250) the notification under § 153.310(e); (3) that there are several benefits to for a reinsurance payment, within 30 maintaining the longer 60-day We proposed to amend § 156.1250 to calendar days of the date of the timeframe for the APTC, CSR and user clarify that a Federal or State notification provided under fee programs. government program includes programs § 153.240(b)(1)(ii); (4) for a default risk Comment: One commenter asked that of the political subdivisions of the State, adjustment charge, within 30 calendar HHS pay interest to any issuer who pays namely counties and municipalities, days of the date of the notification of and then wins a request for which we referred to as local such charge; (5) for reconciliation of the reconsideration. governments. Including this cost-sharing reduction portion of the Response: If an appeal is successful, clarification in regulations will ensure advance payments, within 60 calendar HHS will issue a refund in accordance that States have the flexibility to days of the date of the notification of with the final appeal decision. distribute care and Exchange financial such payment or charge; and (6) for a Comment: A few commenters assistance to their vulnerable risk corridors payment or charge, within suggested HHS allow unresolved populations through local governments, 30 calendar days of the date of the discrepancies to be appealed even if the consistent with their statutory and notification of such payment or charge discrepancy does not fit within one of regulatory authority. for the purposes of § 153.510(d). In the the three reconsideration basis, In terms of the distinction between proposed rule, we proposed to clarify otherwise discrepancies could be programs sponsored and operated by the that the last submission of data to which identified and not resolved within the government (such as the Ryan White the issuer has attested serves as the timeframe without an opportunity for HIV/AIDS programs) and programs that notification for purposes of § 153.510(d). resolution. involve Federal grantees that receive We have since issued a public FAQ Response: Issuers cannot appeal data considerable public funding, we stating that for the purposes of the 2014 submission errors that resulted from an acknowledged that programs such as the benefit year the public notification of issuer error because it is the Ryan White HIV/AIDS program operate final estimated risk corridors payments responsibility of the issuer to submit by working with cities, States, and local, and charge amounts served as the complete and accurate data (with community-based organizations to notification for purposes of corrections to any errors) prior to the provide services in line with their § 153.510(d).64 data submission deadline. Throughout statutory authority. Sections Comment: One commenter agreed the data collection period, HHS 2604(c)(3)(F), 2612(b)(3)(F), and with the shortening the deadline to maintains a help desk, hosts user group 2651(c)(3)(F) of the PHS Act authorize request reconsideration related to risk calls and webinars to assist issuers with Ryan White HIV/AIDS program grantees adjustment to 30 days from 60 days. the identification and resolution of data and sub-grantees to use program funds Other commenters asked that HHS submission errors and to provide for premium and cost-sharing maintain the 60-day deadline. One general technical assistance. Issuers are assistance. These grantees and sub- commenter requested a 90-day timeline encouraged to review their data and the grantees must provide the assistance to request reconsideration. Some EDGE server generated reports, as well through third-party payments as they commenters asked that HHS maintain as to notify HHS of any problems as are prohibited from making payments the longer deadline due to new soon as possible so that, to the extent directly to patients. Though many Ryan processes surrounding policy based feasible, assistance can be provided to White HIV/AIDS program grantees are payments and cost-sharing reductions resolve those problems before the final State and local governments, not all are; similarly, many of the State and local and advance payments of the premium data submission deadline. Therefore, government grantees administer funds tax credit reconciliation. Another HHS will only consider requests for through sub-grantees that are not commenter requested that HHS extend reconsideration related to risk government entities. We proposed to the deadline to file a request for adjustment or reinsurance on the basis distinguish government programs from reconsideration to 120 days to allow that HHS made a processing error, government grantees such that the cost-sharing reductions and advance incorrectly applied a relevant requirement at § 156.1250 would apply payments of the premium tax credit methodology, or made a mathematical to government programs, but not adjustments due to the 3-month grace error. Additionally, HHS would necessarily to entities that are period. continue to require issuers to identify government grantees, unless specifically Response: We are finalizing our issues through the final formal authorized and funded by the Federal, proposal to shorten the timeframe for discrepancy reporting process, if the State, or local government program to requesting reconsideration related to the issue is identifiable at the time, so HHS make the payments on behalf of the risk adjustment, reinsurance and risk can work to address such issues prior to program, consistent with the corridors programs to 30 calendar days. the final risk adjustment transfers and government programs’ statutory and Conversely, HHS will maintain a 60-day reinsurance payment calculations. regulatory authority to provide premium deadline to request reconsideration for Comment: Some commenters asked and cost-sharing assistance through the APTC, CSR and user fee programs. that HHS provide a timeline for when requests for reconsideration and appeals grants and grantees. In other words, if 64 For the 2014 benefit year, we clarified this will be decided. such Federal, State, and local deadline in FAQ 14470 (Dec. 21, 2015), available Response: HHS understands that governments are authorized to at https://www.regtap.info. receiving a reconsideration decision administer their premium and cost-

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sharing assistance through grantees or Response: We are amending We are removing § 156.1250(b), the sub-grantees, the payments may not be § 156.1250(a) to remove the phrase, information collection provision, as we rejected on the grounds that they did ‘‘consistent with the program’s statutory believe it will unduly burden Indian not come directly from the government authority,’’ in order to avoid such tribes, Ryan White HIV/AIDS programs, programs. In such cases, the source of confusion. We believe that the phrase, and government programs to provide the Exchange financial assistance is the ‘‘directed by a government program to such notification to HHS. Although government program, and make payments on its behalf,’’ is HRSA collects information regarding administration or distribution of that sufficiently specific and clear. premium assistance from its Ryan White assistance through grants and grantees is Comment: Several commenters asked HIV AIDS programs and grantees, authorized under statute or regulation. that we provide a specific list of entities Indian tribes and other Federal, State, We also proposed to require entities that qualify as government programs and Local government programs may that make third party payments of from which third party payments must not currently collect or maintain this premiums under this section to notify be accepted. Several other commenters information. Further, we believe that HHS, in a format and timeline specified urged that we immediately include not- payment information from these entities in guidance. We proposed that the for-profit, charitable organizations as would be unlikely to inform the impacts notification must reflect the entity’s entities from which third party on the risk pool that may result from intent to make payments of premiums payments for QHP premiums and cost- expanding the requirement at under this section and the number of sharing must be accepted, with certain § 156.1250 to third party payments consumers for whom it intends to make guardrails intended to minimize adverse made by non-profit organizations. The payments. selection. Some of these commenters latter may make payments for a different We also proposed to clarify that while also urged that HHS provide a list of population with different health care issuers offering individual market acceptable foundation types as needs and conditions. We defer the QHPs, including SADPs, generally do referenced in HHS’s , 2014 question of acceptance of third-party not collect cost-sharing payments, they FAQ,65 which stated that the concerns payments made by non-profit are required to accept third party cost- addressed in the , 2013 organizations to future rulemaking. We sharing payments on behalf of enrollees FAQ 66 do not apply to payments from refer stakeholders to our February 7, in circumstances where the issuer or the private, not-for-profit foundations if 2014, FAQ, which clarified that the issuer’s downstream entity accepts cost- they are made on behalf of QHP concerns addressed in our November 4, sharing payments from plan enrollees. enrollees who satisfy defined criteria 2013 FAQ 67 do not apply to payments We noted that although cost-sharing that are based on financial status and do from private, not-for-profit foundations payments are generally made to not consider enrollees’ health status. if the payments are made on behalf of providers, rather than to issuers, there These commenters expressed that the QHP enrollees who satisfy defined are certain contractual circumstances in provision of a list of acceptable criteria that are based on financial status which an issuer’s non-provider foundation types is critical to ensure and do not consider enrollees’ health downstream entity engages in activities that these foundations meet the criteria status. In this situation, the FAQ stated such as the collection of cost-sharing noted in the February 7, 2014 FAQ. that HHS would expect that the payments. For example, an issuer’s Some commenters asked that we collect premium and any cost-sharing pharmacy benefits manager may collect the following information under our payments cover the entire policy year. cost-sharing payments from the issuer’s proposed information collection: Comment: Some commenters raised plan enrollees for prescription drugs. Number of consumers for whom the concerns that it would be confusing to We proposed to clarify that in such entity will be making payments (by create a requirement for issuers or their situations, the rules at § 156.1250 regarding the requirement to accept State or rating area); volume of downstream entities such as PBMs to third-party payments would apply to payments over a specified time period; accept cost sharing from third party cost sharing payments. contact information; tax ID and filing payers because there is currently no We noted that we are considering status; governance (for example, industry infrastructure in place to whether to expand the list of entities leadership, members of Board of facilitate third-party payments, from whom issuers are required to Directors, principal shareholders, etc.); including the lack of the following: accept payment under § 156.1250 to funding sources; information on Secondary payer guidelines; enrollment include not-for-profit charitable relationships with provider file sharing requirements; specific organizations in future years, subject to organizations (financial or other); and guidelines for accumulators; a certain guardrails intended to minimize information on relationships with coordination of benefits entity to collect risk pool impacts, such as limiting pharmaceutical companies (financial or and share data with issuers; a assistance to individuals not eligible for other). transaction facilitator; data exchange other minimum essential coverage and Response: We are not providing a agreements; the ability of plans to use requiring assistance until the end of the specific list of entities that qualify as common identifiers; and an National calendar year. government programs at this time, as we Council for Prescription Drug Programs Comment: Some commenters believe that the parameters established transaction process. Other commenters expressed concern that the language in § 156.1250(a) are sufficiently precise. agreed that when an issuer uses an proposed in § 156.1250(a)(3), entity, such as a PBM, to provide a ‘‘consistent with the program’s statutory 65 Third Party Payments of Premiums for benefit such as prescription drugs, that authority,’’ might be read to require Qualified Health Plans in the Marketplaces (Feb. 7, entity is required to accept third party 2014), available at http://www.cms.gov/CCIIO/ payments of cost-sharing by virtue of explicit statutory authority to make Resources/Fact-Sheets-and-FAQs/Downloads/third- premium and cost-sharing payments. party-payments-of-premiums-for-qualified-health- being a downstream entity. The commenters stated that such a plans-in-the-marketplaces-2-7-14.pdf. reading could unduly restrict the ability 66 Third Party Payments of Premiums for 67 Third Party Payments of Premiums for Qualified Health Plans in the Marketplaces (Nov. 4, Qualified Health Plans in the Marketplaces (Nov. 4, of some programs to assist clients and 2013), available at http://www.cms.gov/CCIIO/ 2013), available at http://www.cms.gov/CCIIO/ cause confusion for both programs and Resources/Fact-Sheets-and-FAQs/Downloads/third- Resources/Fact-Sheets-and-FAQs/Downloads/third- issuers. party-qa-11-04-2013.pdf. party-qa-11-04-2013.pdf.

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Response: We are finalizing our information that was incorrect when information, those errors generally do proposal, with an additional they selected that plan and may have not enable an enrollee to qualify for a clarification that while issuers offering impacted their plan selection. One special enrollment period under individual market QHPs, including commenter requested that the proposal § 155.420(d)(4). Only those plan or SADPs, generally do not collect cost- be extended to State-based Exchanges. benefit display errors that qualify an sharing payments, their downstream Other commenters supported this enrollee for a special enrollment period entities, or agents of the issuer, are requirement, but requested that it be under § 155.420(d)(4) would trigger this required to accept third party cost- limited to those plan or benefit display new noticing requirement. sharing payments made by the entities errors for which issuers are responsible Errors to provider networks or drug listed at § 156.1250(a) on behalf of QHP or in cases when issuers fail to comply formularies, whether incorrectly enrollees if the downstream entities or with the FFE’s correction procedures. displayed on the issuer’s Web site or agent routinely accept cost-sharing Response: We agree with commenters accessible through the premium payments from enrollees. We are also that issuers should notify affected estimator tool on HealthCare.gov, clarifying in response to comments, that enrollees of display errors that may have generally do not qualify an enrollee for an agent of the QHP issuer with a mail impacted plan selection and of their a special enrollment period. Therefore, order pharmacy, such as a PBM with a opportunity to select a different plan issuers are not required to notify mail order pharmacy, must accept the through the FFE. While we agree that all affected enrollees in the manner and third party cost-sharing payments affected enrollees, regardless of location, timeframe outlined in this provision, directly from the entities listed at should be notified of such errors, we although notifying enrollees of § 156.1250(a). leave it to States operating SBEs to important changes is encouraged. HHS determine the method and timeframe for notes the importance of issuers d. Other Notices (§ 156.1256) which enrollees in their Exchanges providing accurate and complete plan We proposed to add a new § 156.1256, should be notified. However, SBE–FPs information, including provider which would add a requirement for will be using the FFE eligibility and network and drug formulary issuers, in the case of a plan or benefit enrollment platform, and, as we note in information, so that consumers may display error included in the preamble to § 156.350 in this final make informed choices. QHP issuers are § 155.420(d)(4), to notify their enrollees rule, it is not possible at this time for the reminded that § 156.225(b) prohibits within 30 calendar days after the error FFEs to accommodate State them from employing marketing has been identified, if directed to do so customization in policy or operations, practices or benefit designs that will by the FFE. We believe that enrollees such as State-specific display elements have the effect of discouraging the should be made aware of any error that in plan compare. Accordingly, we are enrollment of individuals with may have impacted their QHP selection modifying the regulation text to specify significant health needs. Issuers may and enrollment and any associated that this rule would require issuers also be subject to Federal civil rights monthly or annual costs. Therefore, we offering QHPs through SBE–FPs to laws that prohibit discriminatory proposed a requirement that issuers, if comply with FFE directions to provide marketing practices and benefit designs, directed to do so by the FFE, must notice under this section. such as section 1557 of the Affordable notify their enrollees of such error, as The plan and benefit display errors Care Act. well as the availability of a special included in this noticing requirement Comment: Some commenters enrollment period, under includes information submitted by requested that that HHS provide model § 155.420(d)(4), for the enrollee to select issuers to the FFE to be displayed for notices for issuers to send to enrollees a different QHP, if desired. consumers on Plan Compare. Many in the event of a plan or benefit display We are finalizing the provisions with errors falling into this category thus far error. Other requested that issuers retain two modifications. In response to have been due to errors in plan the flexibility to draft notices to comments received, we are amending information provided by issuers and all consumers the best way that they see fit. the timeframe within which issuers errors in this category have a specific Response: HHS recognizes that must notify their affected enrollees of a impact on the information available to notifying their enrollees of a plan or plan or benefit display error and the consumers about one or more plans benefit display error is already included availability of a special enrollment provided by a particular issuer. in the business practices of many period, from 30 calendar days after the Comment: Many commenters issuers offering QHPs through the error is identified to 30 calendar days requested additional clarification of the Exchanges and, therefore, issuers have after the issuer is notified by the FFE parameters of plan or benefit display an established method of that the error has been fixed. By waiting errors under § 155.420(d)(4), including communicating such errors to their until after the error has been corrected, whether errors in provider directories or enrollees. HHS also recognizes the need issuers will be more likely to have a drug formularies, such as those newly to communicate accurate and standard complete list of affected enrollees to accessible through the premium information about the availability of a notify. In addition, by waiting until the estimator tool, are included in this new special enrollment period to consumers. error has been corrected and the plan notification requirement. Therefore, HHS will provide issuers information is properly displayed, Response: Plan or benefit display with suggested special enrollment enrollees will be able to compare their errors under § 155.420(d)(4) refer to period language that they could use in current plan to others in the service area misinformation, including errors related their existing consumer notices to when deciding whether or not to change to service areas, covered services, and satisfy the requirement that they notify plans under the special enrollment premiums, displayed incorrectly on the enrollees of their eligibility for a special period. In addition, we are clarifying Exchange Web site. For the FFEs, this enrollment period. that this rule will apply to issuers on only includes the Plan Compare section Comment: Several issuers requested SBE–FPs. of the application where a consumer that we amend the amount of time Comment: We received general may enroll in a plan. If the plan issuers have to notify affected enrollees, support from commenters for finalizing information incorrectly displayed does either by extending it from 30 to 60 this proposal, so that consumers are not have a direct bearing on coverage or calendar days or by starting the 30 informed about plan or benefit benefits, such as plan contact calendar days from the date that the

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plan or benefit display error has been 2012 technical corrections to that rule for all stakeholders if we do not modify fixed, while other commenters wanted (77 FR 28788) direct issuers to report the run-out period at this time, but to ensure that enrollees are notified of incurred claims with a 3-month run-out instead explore ways to restore the an error in a timely manner. period, and define unpaid claim earlier MLR deadlines after two of the Response: We believe that 30 calendar reserves to mean reserves and liabilities three premium stabilization programs days is sufficient time for issuers to established to account for claims that expire. Consequently, we are not notify their enrollees affected by a plan were incurred during the MLR reporting finalizing the proposed amendments to or benefit display error and is soon year but had not been paid within 3 §§ 158.103 and 158.140(a) regarding enough to minimize sustained harm to months of the end of the MLR reporting unpaid claims reserves and incurred affected enrollees. However, as year. In the proposed rule, we proposed claims, and are retaining the existing 3- discussed above, we agree that the 30 to amend the definition of unpaid month run-out period. calendar days should begin on the date claims reserves in § 158.103 and the 3. Reporting of Fraud Prevention that the issuer is notified that the error requirements for reporting incurred Expenditures has been fixed, and we are amending claims in § 158.140(a) to utilize a 6- this provision accordingly. month, rather than a 3-month run-out In the proposed rule, we invited Comment: One commenter stated that period, beginning with the 2015 comment on whether we should modify State regulators, including SBEs and reporting year. The proposed the treatment of a health insurance departments of insurance, should be amendment was intended to improve issuer’s investments in fraud prevention responsible for the identification of plan the accuracy of incurred claims amounts activities for MLR reporting purposes, and benefit display errors. in MLR calculation as well as in the risk noting that we were considering Response: We agree that, States corridors calculation under a related amending the MLR regulation to permit should play a role in identifying plan or proposed amendment to § 153.530. the counting of a health insurance benefit display errors, and we encourage Comment: We received many issuer’s investments in fraud prevention State regulators to notify the applicable comments, split equally between activities among those expenses Exchange of the error. Nothing in this supporting the change and opposing it. attributable to incurred claims. We rule prohibits a State from taking that Some commenters that opposed our asked for comments on this approach, role. We also note that issuers offering proposal requested that any extension in including whether safeguards against QHPs through an FFE must obtain State the run-out period include an extension potential abuse should be included authorization to change QHP data after to the filing deadline. Other commenters (such as an upper limit on this certification. were principally concerned that the allowance); whether we should collect fraud prevention activity expense data H. Part 158—Issuer Use of Premium MLR rebate deadline would also be as an informational item on the MLR Revenue: Reporting and Rebate extended, which they believed would Annual Reporting Form before Requirements harm consumers. One commenter also noted that a longer run-out period could amending the regulation; as well as on 1. Definitions (§ 158.103) negatively affect States’ timely review of potential alternative treatment of these In the proposed rule, we proposed to issuers’ rate filings. Additionally, many expenses for MLR reporting or rebate revise the regulatory definitions of large opponents noted that the NAIC had calculation purposes. We also asked for employer and small employer in considered a 6-month run-out period in any specific, actual data with respect to § 158.103 to cross-reference the 2010 and determined that it would not the additional incentives that would definitions of those terms in § 144.103, result in a materially more accurate result for health plan investments of this in order to ensure consistency in those MLR. The commenters stated that any sort. definitions between the MLR regulation increase in accuracy would therefore be Comment: We received numerous and the market reform requirements, outweighed by the administrative comments, with the majority opposing and to reflect the recent amendments burden required to update issuer any deviation from the current made by the Protecting Affordable processes. Further, some of these treatment of fraud prevention in MLR. Coverage for Employees Act (Pub. L. commenters noted that since two of the Opponents stated that our proposal to 114–60). three premium stabilization programs modify treatment of fraud prevention Comment: We received two comments are temporary and will expire in the expenses in MLR directly contradicts supporting this proposal. One near future, HHS could, at that time, the NAIC’s previous recommendation commenter suggested that the revert back to the MLR filing that such expenses should not be amendment not apply until the 2016 deadline, rather than maintain the allowed. These commenters noted that and later MLR reporting years. current July 31 deadline that was the NAIC had conducted extensive Response: We appreciate the adopted to accommodate the premium debate and analysis of this issue with comments regarding the definitions of stabilization programs. Commenters input from all stakeholders, and had large employer and small employer. We point out that this would allow concluded that allowing any additional also agree that although the Protecting consumers to receive rebates sooner. fraud-related costs in the MLR Affordable Coverage for Employees Act Supporters of the 6-month run-out calculation would be inappropriate. was passed in and effective as of period agreed that a longer run-out These commenters further stressed that October 2015, policies that were in period would improve the accuracy of the current rule is working as intended effect in 2015 were issued using the MLRs and rebate amounts by utilizing and that there is no evidence that a group definitions that existed prior to actual rather than estimated claims change is necessary, that fraud this Act. Therefore, we are finalizing the amounts. prevention is principally a cost- proposed definitional changes effective Response: We appreciate the containment expense that should be with the 2016 MLR reporting year. comments supporting our proposal, but part of the cost of doing business, and also acknowledge the practical that any benefit to consumers is 2. Reporting of Incurred Claims considerations raised by the indirect, or difficult or impossible to (§§ 158.103 and 158.140(a)) commenters that opposed our proposal. isolate. Several commenters requested The MLR December 1, 2010 interim We agree with those commenters that that we not proceed without additional final rule (75 FR 74864) and the May 16, suggested that it may be more beneficial data, or that we limit any allowance to

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0.5 percent of earned premium. Many (ICRs) that are subject to review by B. ICRs Regarding Submission of Risk commenters requested that HHS not OMB. A description of these provisions Corridors Data (§ 153.530) finalize the proposal until the NAIC’s is given in the following paragraphs We finalized our amendment to the recently reconvened MLR Quality with an estimate of the annual burden, risk corridors program requirements at Improvement Activities subgroup summarized in Table 11. In the § 153.530 to require issuers to true-up determines whether to support a change December 2, 2015 (80 FR 75487) claims liabilities and reserves used to in the treatment of fraud prevention proposed rule, we requested public determine the allowable costs reported expenses. In contrast, other commenters comment on each of the following for the preceding benefit year to reflect fully supported the proposal, expressing collection of information requirements. the actual claims payments made a view that allowing fraud prevention The comments and our responses to through March 31 of the year following expenses in the MLR calculation would them are discussed below. the benefit year. This policy requires provide issuers an incentive to invest in A. ICRs Regarding Student Health issuers to submit data indicating the preventing fraud, waste and abuse. Insurance Coverage (§ 147.145) difference between their incurred Some of these commenters did not liability estimated as of March 31 The final rule requires issuers of believe that we should impose any caps, following the preceding benefit year and student health insurance coverage to while one commenter suggested a cap of March 31 following the current benefit specify the AV of the coverage and the 0.3 percent of earned premium. Many of year. While we believe that issuers will metal level (or next lowest metal level) these commenters additionally did not be recording these amounts as part of the coverage would otherwise satisfy. believe that data collection prior to their normal business practices, we This information must be included in finalizing the proposal would be useful, estimate that it will take approximately any plan materials summarizing the arguing that issuers have been 1 hour for each issuer at $54.44 per hour terms of coverage. We estimate that underinvesting in fraud prevention. (according to the wage estimates there are 49 student health insurance Some supporters stated that fraud provided in the MLR notice CMS– issuers nationwide that will each need prevention has a patient safety 10418–OCN 0938–1164) to record these to provide an average of 25,612 component, while others focused on the amounts. Therefore, we estimate the notifications annually.68 We estimate monetary savings for issuers. Some overall cost burden of implementing that each student health insurance commenters further suggested that this policy will be $54.44 per issuer, for issuer will require an average of one issuers would use the money saved approximately 320 applicable risk hour for clerical staff (at a labor cost of through fraud prevention to lower corridors program issuers, for a total $33.18 per hour) to insert the AV and premiums or cost sharing, or on medical cost burden of $17,421. services. metal level information into plan Response: We note that no materials for all plans offered by the C. ICRs Regarding Submission of Rate stakeholder has provided specific data issuer, resulting in a total annual burden Filing Justification (§ 154.215) to support the notion that allowing of 1 hour and an associated cost of This final rule amends § 154.215 to fraud prevention expenses in the MLR $33.18 per issuer. There is no additional require health insurance issuers to calculation would have a positive burden to determine these values as submit a Unified Rate Review Template impact. We agree with the commenters student health insurance issuers are (URRT) for all single risk pool coverage who stated that fraud prevention is currently required to calculate a plan’s regardless of whether there is a plan principally a cost-containment activity, AV using the AV Calculator. For all 49 within a product that experiences a rate which generally is not permitted in the issuers currently providing student increase. The existing information MLR calculation. In addition, we health insurance coverage, the total collection requirement is approved appreciate the NAIC’s indication in its combined hour burden is estimated to under OMB Control Number 0938–1141. comment letter that its views regarding be 49 hours with a total combined cost This includes the URRT and inclusion of fraud prevention as an of $1,625.82 annually. This information instructions for rate filing adjustment to incurred claims have not will be included in existing plan documentation that issuers currently changed since its 2010 materials; therefore, we do not estimate use to submit rate information to HHS recommendation. We also agree that, any additional distribution costs. for rate increases of any size for single given the possibility that the treatment The final rule discontinues the risk pool coverage. We believe most of fraud prevention may be addressed outdated requirement that student issuers already report this information. during the NAIC’s review of quality health insurance issuers provide notice However, we estimate the number of improvement activities that is currently informing students that the coverage URRT submissions may increase by 1 under way, it would be premature for does not meet the annual limits percent due to this requirement. We HHS to modify the MLR regulation at requirements under section 2711 of the released information regarding revisions this time. Therefore, we are not PHS Act. This regulatory provision, by to the information collection template adopting any changes to the treatment of its own terms, no longer applies, as and instructions in accordance with the fraud prevention activities for MLR student health insurance coverage is Paperwork Reduction Act of 1995, in purposes. subject to the prohibition on annual CMS–10379, for a 60-day comment IV. Collection of Information dollar limits for policy years beginning period.69 Requirements or after January 1, 2014. Issuers will experience a reduction in burden D. ICRs Regarding Election To Operate Under the Paperwork Reduction Act related to the discontinued notices, an Exchange After 2014 (§ 155.106) of 1995, we are required to provide 30- which was previously estimated to be This final rule amends the dates for day notice in the Federal Register and 1,071 hours, with an equivalent labor application submission and approval for solicit public comment before a and mailing cost of $43,757.14 for all States seeking to operate an SBE, and collection of information requirement is student health insurance issuer (under have an approved or conditionally submitted to the Office of Management OMB Control No. 0938–1157). and Budget (OMB) for review and 69 81 FR 8498 (, 2016). Available at, approval. This final rule contains 68 Estimate based on data from Medical Loss Ratio https://s3.amazonaws.com/public- information collection requirements submissions for 2014 reporting year. inspection.federalregister.gov/2016-03474.pdf.

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approved Exchange Blueprint electronically, through HIOS or another F. ICRs Regarding Network Adequacy application and operational readiness electronic submission vehicle. For the Standards (§ 156.230(d) and (e)) assessment. We are not modifying the purpose of estimating costs and Section 156.230(d) requires that QHP documents that States already must burdens, we assume that SBEs will issuers make a good faith effort to submit as part of the required Exchange collect the same information with the provide written notice of Blueprint application. Therefore, we do same frequency, although our rule gives discontinuation of a provider 30 days not anticipate any additional impact to Exchanges the flexibility to determine prior to the effective date of the change the administrative burden associated which data to collect and the form and or otherwise as soon as practicable, to with the regulatory changes to manner of the collection. We estimate enrollees who are patients seen on a § 155.106. HHS is utilizing the existing that certified application counselor regular basis by the provider or who PRA package approved under OMB designated organizations will have a receive primary care from the provider Control Number 0938–1172 for the whose contract is being discontinued, Exchange Blueprint application. mid-level health policy analyst prepare the reports and a senior manager will irrespective of whether the contract is E. ICRs Regarding Standards for review each quarterly report. HHS being discontinued due to a termination Certified Application Counselors expects that a mid-level health policy for cause or without cause, or due to a (§ 155.225(b)(1)(iii)) analyst (at an hourly wage rate of non-renewal. This is a third-party Section 155.225(b)(1)(ii) requires $40.64) will spend 2 hours each quarter disclosure requirement. The notification certified application counselor to provide the required quarterly requirement under § 156.230(d)(1) is a designated organizations to maintain a submissions and a senior manager (at an common practice in the current market as several States, Medicare Advantage, registration process and method to track hourly wage rate of $91.31) will spend Medicaid Managed Care, and the NAIC the performance of certified application 3⁄8 hour to review the submissions. Network Adequacy Model Act have counselors. This final rule adds a new Therefore, we estimate each quarterly § 155.225(b)(1)(iii) requiring certified standards regarding enrollee notification report will require 2.375 hours and a of a provider leaving a network. As application counselor designated cost burden of $115.52 per quarter per organizations to provide the Exchange discussed in the preamble, under State organization, or 9.50 hours with a cost laws, many QHP issuers will already be with information and data regarding the (four quarterly reports) of $462.08 number and performance of the under this obligation, and therefore, our annually per certified application organization’s certified application notification requirements will apply in counselor designated organization. counselors, and the consumer assistance a more limited fashion. Additionally, they provide. Although the requirement Nationwide, we estimate there are 5,000 we incorporated SADPs into our at § 155.225(b)(1)(ii) does not specify the certified application counselor calculations, but we recognize given the type of performance information that designated organizations, resulting in an notification requirements that SADPs must be tracked, or require that the annual cost burden of $2,310,400 and may rarely need to send a notification. information be provided to the 47,500 hours for certified application We estimate that a total of 475 issuers Exchange, we expect that certified counselor designated organizations. participate in the FFE and would be application counselor designated Under § 155.225(b)(1)(iii), if an required to comply with the standard. We estimated that 5 percent of providers organizations already have a tracking Exchange requests these certified discontinue contracts per year, and that process in place to collect performance application counselor reports, the an issuer in the FFE covers 7,500 information from individual certified Exchange would also need to review the application counselors, and that National Provider Identifiers, which reports. We assume that all Exchanges means that we estimate an issuer would individual certified application will require quarterly reports and will counselors are already recording and have 375 provider discontinuations in a utilize in-house staff to review them. We submitting this required information to year. In response to comment to the assume that an employee earning a wage their organization. Therefore, we expect proposed rule, we are clarifying that our this final rule to have minimal impact that is equivalent to a mid-level GS–11 assumption is that the database manager on individual certified application employee would review quarterly report will receive notification from the counselors and on certified application submissions from certified application issuer’s contracting team that a provider counselor designated organizations. counselor designated organizations.70 contract is being discontinued. From Section 155.225(b)(1)(iii) would add a We estimate that a mid-level employee that notification, the database manager new burden of compiling the (at an hourly wage rate of $43.13) will would aggregate the claims data performance information and spend 10 minutes reviewing each associated with the provider to develop submitting it to the Exchanges. In States quarterly report for a cost burden of the list of effected enrollees with with FFEs, HHS anticipates that, approximately $7.19 per quarterly associated enrollee information for the beginning for the third quarter of report per certified application notice. This list of affected enrollees and calendar year 2017, it will collect three counselor designated organization. For associated enrollee information would performance data points each quarter all SBEs, we estimate that there are be sent to an administrative assistant to from certified application counselor 1,500 certified application counselor aggregate into a notification template to designated organizations: The number designated organizations resulting in a be sent to the enrollee. Assuming 375 of individuals who have been certified cost burden of 1,000 hours and notifications per year, we believe that by the organization; the total number of approximately $43,130 annually. Costs this task would be a routine process for consumers who received application to the FFEs are estimated separately in the administrative assistant to undertake and enrollment assistance from the the Regulatory Impact Analysis section that would need little to no oversight to organization; and of that number, the produce. As the issuer has the of this final rule. number of consumers who received discretion to define regular basis and assistance applying for and selecting a that the number of notifications are QHP, enrolling in a QHP, or applying 70 Federal wage rates are available at https:// likely to widely varying between for Medicaid or CHIP. We anticipate www.opm.gov/policy-data-oversight/pay-leave/ network and type of provider, we did that this data will be reported to FFEs salaries-wages/salary-tables/pdf/2015/GS_h.pdf. not estimate based on the number of

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individual notifications, but rather the would require FF–SHOP issuers to wage rate of $91.31), we estimated the number of provider discontinuations. submit a standard file with specific data total annual cost for a QHP issuer to be For each provider discontinuation, we elements and submit their files in a $273.93. Therefore, we estimated a total estimate that it will take a database process set out by the SHOP, at least annual burden of 1,725 hours, resulting administrator 30 minutes for data monthly. Issuers of QHPs available in an annual cost of $157,510. analysis to produce the list of affected through the SHOP are already required enrollees, at $55.37 an hour, and an under the current version of I. ICRs Regarding Other Notices administrative assistant 30 minutes to § 156.285(c)(5) to reconcile enrollment (§ 156.1256) develop the notification and send the files with the SHOP at least monthly. We are adding a new section at notification to the affected enrollees, at Therefore, we expect this policy to have § 156.1256 to require that, in the event $29.93 an hour. In response to minimal impact on SHOP issuers. of a plan or benefit display error, QHP comment, we are also clarifying these H. ICR Regarding Patient Safety issuers notify their enrollees within 30 hourly rates include 35 percent Standards (§ 156. 1110) calendar days after the issuer is adjustment for fringe benefits and informed by the FFE that the error has overhead costs. The total costs per In § 156.1110(a)(2)(i), for plan years beginning on or after January 1, 2017, a been fixed, if directed to do so by the issuer would be $15,993.75. The total FFE, both of the plan or benefit display annual costs estimate would be QHP issuer that contracts with a hospital with greater than 50 beds must error and of the opportunity to enroll in $7,597,031. Because we are already a new QHP under a special enrollment collecting information regarding verify that the hospital uses a patient safety evaluation system and period at § 155.420(d)(4), if directed to network classifications as part of the do so by the FFE. This provision would existing QHP certification process, we implements a mechanism for comprehensive person-centered hospital apply to all QHPs in the FFEs, as well do not believe that the network as all QHPs in the SBE–FPs, which classifications described in the discharge to improve care coordination and health care quality for each patient. includes 475 issuers. We anticipate that preamble will result in additional issuers will need to notify multiple information collection requirements for In § 156.1100(a)(2)(ii), we also establish reasonable exceptions to these new QHP enrollees of the same display error, and issuers. therefore estimate that one form notice In § 156.230(e), we require QHP issuer patient safety requirements would cover approximately 100 of the issuers to provide a notice to enrollees (rather than requiring reporting of such enrollees receiving such a notice. For of the possibility of out-of-network information to a Patient Safety each group of 100 form notices, we charges from an ancillary out-of- Organization). The burden estimate estimate that it would take network provider in an in-network associated with the information approximately 30 minutes for an setting prior to the benefit being collection, recordkeeping, and issuer’s mid-level health policy analyst provided, to avoid counting the out-of- disclosure requirements to demonstrate (at an hourly wage rate of $54.87) to network costs against the annual compliance with these standards amend, add SEP language provided by limitation on cost sharing. This includes the time and effort required for the FFE, and send the information. We provision applies to all QHPs, which QHP issuers to maintain and submit to estimate that approximately 4 percent of includes 575 issuers, and would start in the applicable Exchanges enrollees would receive such a notice. 2018. We estimate it would take an documentation that would include Assuming approximately 19 million issuer’s mid-level health policy analyst hospital agreements to partner with, or FFE and SBE–FP enrollees in 2017,72 we (at an hourly wage rate of $54.87) other information demonstrating a estimate QHPs in the FFEs and SBE–FPs approximately 6 minutes to create a partnership with, a Patient Safety would send approximately 760,000 total notification and send the information. Organization, a Hospital Engagement notices (4 percent of the estimated 19 In response comments, we are clarifying Network, or a Quality Improvement million FFE and SBE–FP enrollees), for the hourly rates include 35 percent Organization that demonstrate that each a total hours of 3,800, with a total cost adjustment for fringe benefits and of its contracted hospitals with greater of $208,506. overhead costs. We estimate that than 50 beds meets the patient safety approximately two notices would be standards required in § 156.1110(a)(2) Although this final rule requires sent for every 100 enrollees. Assuming for plan years beginning on or after issuers to send notices for the specified approximately 24 million enrollees in January 1, 2017. QHP issuers may not situation, sending these notices is QHPs for 2018,71 we estimate QHPs already be collecting such network already part of normal issuer business would send approximately 320,000 total provider information; therefore, we practices and issuers are already notices, for a total 21,334.40 hours, at a estimate the cost and burden to collect working with the FFE to include total cost of $1,170,619. this administrative information as language in their notices about special follows: For a total of 575 QHP issuers, enrollment periods, as applicable and G. ICR Regarding Monthly SHOP offering 15 plans as potential QHPs, we appropriate. Therefore, there will be no Enrollment Reconciliation Files estimated each issuer would require one additional information required by Submitted by Issuers (156.285(c)(5)) senior manager an average of 3 hours to issuers and no new administrative We are finalizing amendments to collect and maintain the hospital burden as a result of this final rule. In § 156.285(c)(5) to specify that issuers in agreements or other information accordance with the implementing a Federally-facilitated SHOP would necessary to demonstrate compliance as regulations of the PRA at 5 CFR send monthly enrollment reconciliation required in § 156.1110(a)(2) for their 1320.3(b)(2), we believe the burden files to the SHOP according to a process, QHPs offered on Exchanges for plan associated with this requirement would timeline and file format established by years beginning on or after January 1, be exempt as it associated with a usual the FF–SHOP. We anticipate that this 2017. For a senior manager (at an hourly and customary business practice.

71 We used the most recent CBO estimates for 72 We applied the current FFE to total Exchange cbofiles/attachments/43900-2015-03- enrollment from March 2015 available at https:// enrollment ratio to the most recent CBO estimates ACAtables.pdf. www.cbo.gov/sites/default/files/cbofiles/ for total Exchange enrollment from March 2015 attachments/43900-2015-03-ACAtables.pdf. available at https://www.cbo.gov/sites/default/files/

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TABLE 11—ANNUAL REPORTING, RECORDKEEPING AND DISCLOSURE BURDEN

Hourly Total Burden Total labor labor Regulation Section OMB Number of Responses per response annual cost of cost of Total cost Control No. respondents (hours) burden reporting reporting ($) (hours) ($) ($)

§ 147.145—AV ...... 0938–1157 49 25,612 1 49 33.18 1,625.82 1,625.82 § 153.530 ...... 0938–1164 320 1 1 320 54.44 17,421 17,421 § 155.225 (b)(1)(iii)—cer- tified application coun- selor (CAC) organiza- tions ...... 0938–1172 5,000 4 2.375 47,500 48.64 2,310,400 2,310,400 § 155.225 (b)(1)(iii)—SBE 0938–1172 1,500 4 0.167 1,000 43.13 43,130 43,130 § 156.230(d) ...... 0938–NEW 475 375 1 375 85.3 7,597,031 7,597,031 § 156.230(e) ...... 0938–NEW 575 320,000 0.1 32,000 54.87 1,170,619 1,170,619 § 156.1110 ...... 0938–1249 575 8,625 0.2 1,725 91.31 157,510 157,510 § 156.1256 ...... 0938–NEW 475 760,000 0.5 3,800 54.87 208,506 208,506

Total ...... 5,575 ...... 86,769 ...... 11,506,243 11,506,243 Note: There are no capital/maintenance costs associated with the information collection requirements contained in this rule; therefore, we have removed the associ- ated column from Table 11.

We have submitted an information Review (September 30, 1993), Executive of expanding coverage. For example, the collection request to OMB for review Order 13563 on Improving Regulation premium stabilization programs help and approval of the ICRs contained in and Regulatory Review (, prevent risk selection and decrease the this final rule. The requirements are not 2011), the Regulatory Flexibility Act risk of financial loss that health effective until approved by OMB and (RFA) (, 1980, Pub. L. 96– insurance issuers might otherwise assigned a valid OMB control number. 354), section 202 of the Unfunded expect in 2017 and Exchange financial assistance assists low- and moderate- V. Regulatory Impact Analysis Mandates Reform Act of 1995 (, 1995, Pub. L. 104–4), Executive income consumers and American A. Statement of Need Order 13132 on Federalism (, Indians/Alaska Natives in purchasing This rule sets forth standards related 1999), and the Congressional Review health insurance. The combined to the premium stabilization programs Act (5 U.S.C. 804(2)). impacts of these provisions affect the (risk adjustment, reinsurance, and risk Executive Orders 12866 and 13563 private sector, issuers, and consumers, corridors) for the 2017 benefit year, as direct agencies to assess all costs and through increased access to health care well as certain modifications to these benefits of available regulatory services including preventive services, programs that will protect issuers from alternatives and, if regulation is decreased uncompensated care, lower the potential effects of adverse selection necessary, to select regulatory premiums, establishment of the next and protect consumers from increases in approaches that maximize net benefits phase of patient safety standards, and premiums due to issuer uncertainty. (including potential economic, increased plan transparency. Through The Premium Stabilization Rule and environmental, public health and safety the reduction in financial uncertainty previous Payment Notices provided effects, distributive impacts, and for issuers and increased affordability detail on the implementation of these equity). Executive Order 13563 for consumers, these provisions are programs, including the specific emphasizes the importance of expected to increase access to affordable parameters for the 2014, 2015, and 2016 quantifying both costs and benefits, of health coverage. benefit years applicable to these reducing costs, of harmonizing rules, HHS anticipates that the provisions of programs. This rule provides additional and of promoting flexibility. A this rule will help further the standards related to essential health regulatory impact analysis (RIA) must Department’s goal of ensuring that all benefits, consumer assistance tools and be prepared for rules with economically consumers have access to quality and programs of an Exchange, Navigators, significant effects ($100 million or more affordable health care and are able to non-Navigator assistance personnel, in any 1 year). make informed choices, that Exchanges agents and brokers registered with the OMB has determined that this final operate smoothly, that premium Federally-facilitated Exchange, certified rule is ‘‘economically significant’’ stabilization programs work as application counselors, cost-sharing within the meaning of section 3(f)(1) of intended, that SHOPs are provided parameters and cost-sharing reduction Executive Order 12866, because it is flexibility, and that employers and notices, essential community providers, likely to have an annual effect of $100 consumers are protected from qualified health plans, network million in any 1 year. Accordingly, we fraudulent and criminal activities. adequacy, stand-alone dental plans, have prepared an RIA that presents the Affected entities such as QHP issuers acceptance of third-party payments by costs and benefits of this rule. would incur costs to comply with the QHP issuers, patient safety standards for Although it is difficult to assess the established provisions, including issuers of qualified health plans effects of these provisions in isolation, administrative costs related to notices, participating in Exchanges, the rate the overarching goal of the premium new patient safety requirements, and review program, the medical loss ratio stabilization, market standards, and training and recertification program, the Small Business Health Exchange-related provisions and requirements. In accordance with Options Program, and FFE user fees. policies in the Affordable Care Act is to Executive Order 12866, HHS believes make affordable health insurance that the benefits of this regulatory action B. Overall Impact available to individuals who do not justify the costs. We have examined the impacts of this have access to affordable employer- Comment: A commenter criticized the rule as required by Executive Order sponsored coverage. The provisions regulatory analysis for lacking an 12866 on Regulatory Planning and within this rule are integral to the goal adequate economic analysis. The

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commenter criticized the credibility of annual monetized costs described in notices, new patient safety the sources of the estimates and Table 12. requirements, and training and assumptions used. Additionally, the C. Impact Estimates of the Payment recertification requirements that are commenter noted that in Table 12 the Notice Provisions and Accounting Table estimated in the Collection of magnitude of cost estimates is not Information section of this final rule. labeled, and the costs associated with In accordance with OMB Circular A– The annual monetized transfers 4, Table 12 depicts an accounting the user fee to be assessed on issuers in described in Table 12 include costs statement summarizing HHS’s State-based Exchanges using the Federal associated with FFE user fees and the assessment of the benefits, costs, and platform were not included in the risk adjustment user fee paid to HHS by transfers associated with this regulatory analysis. issuers. We estimate that that the total action. cost for HHS to operate the risk Response: We previously estimated This final rule implements standards adjustment program on behalf of States the annualized impact on issuers, for programs that will have numerous for 2017 will be approximately $24 contributing entities, and States of effects, including providing consumers million and that the risk adjustment transfers and other programs in the with affordable health insurance coverage, reducing the impact of user fee would be $1.56 per enrollee per 2014, 2015 and 2016 Payment Notice year from risk adjustment issuers, which rules. Therefore, to avoid double- adverse selection, and stabilizing premiums in the individual and small is less than the anticipated $50 million counting, Table 12 contains only in benefit year 2016 for which we incremental changes incurred as a result group health insurance markets and in an Exchange. We are unable to quantify established a $1.75 per-enrollee-per-year of provisions in this rule. The results of risk adjustment user fee amount. We HHS’s internal analyses were used to certain benefits of this final rule—such as improved health outcomes and reassessed our contract costs for 2017 assess the impact of the policies of this and were able to base 2017 risk rule. For this analysis, we continue to longevity due to continuous quality improvement, improved patient safety adjustment eligible plan enrollment believe that the best available estimates and increased insurance enrollment— projections on actual 2014 risk of the impact of the Affordable Care Act and certain costs—such as the cost of adjustment enrollment. We revised our on the Federal budget, enrollment in providing additional medical services to user fee rate from the proposed amount health insurance programs, and revenue newly-enrolled individuals. The effects to reflect these considerations. Also, the collection are by the Congressional in Table 12 reflect qualitative impacts increase in FFE user fee collections is Budget Office. The CBO’s most recent and estimated direct monetary costs and the result of expected growth in updates are available at https:// transfers resulting from the provisions enrollment in the FFEs rather than an www.cbo.gov/sites/default/files/ of this final rule for health insurance increase in the user fee rate, which at cbofiles/attachments/43900-2015-03- issuers. The annualized monetized costs 3.5 percent remains the same from 2016 ACAtables.pdf. We have clarified the described in Table 12 reflect direct to 2017. Beginning in 2017, we are also units for the cost estimates in Table 12. administrative costs to health insurance charging a user fee for State-based We also note that the estimate of user issuers as a result of the finalized Exchanges using the Federal platform fees to be assessed on issuers in State- provisions, and include administrative for eligibility and enrollment services. based Exchanges using the Federal costs related to student health insurance This user fee rate would be set at 1.5 platform has been incorporated in the coverage, rate filing justification, percent for benefit year 2017.

TABLE 12—ACCOUNTING TABLE

Benefits: Qualitative: • Increased enrollment in the individual market leading to improved access to health care for the previously uninsured, especially individ- uals with medical conditions, which will result in improved health and protection from the risk of catastrophic medical expenditures. • Continuous quality improvement among QHP issuers to reduce patient harm and improve health outcomes at lower costs. • More informed Exchange QHP certification decisions. • Increased coverage options for small businesses and employees with minimal adverse selection.

Costs Estimate Year Discount Period dollar rate covered percent

Annualized Monetized ($millions/year) ...... $11.67 2016 7 2016–2020 $11.67 2016 3 2016–2020

Quantitative: • Costs reflect administrative costs incurred by issuers and States to comply with provisions in this final rule.

Transfers Estimate Year Discount Period dollar rate covered percent

Annualized Monetized ($millions/year) ...... $25.89 2016 7 2016–2020 $25.86 2016 3 2016–2020

• Transfers reflect a decrease in annual cost of risk adjustment user fees (the total risk adjustment user fee amount for 2016 was $50 million and $24 million for 2017), which are transfers from health insurance issuers to the Federal government. Transfers also reflect an increase of $30 million in 2017 and $65million in future years, in the amount of user fees collected from State-based Exchanges that use the Federal platform for eligibility and enrollment which are transfers from issuers to the Federal government. • Unquantified: Lower premium rates in the individual market due to the improved risk profile of the insured, competition, and pooling.

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This RIA expands upon the impact through 2020, with the additional, In addition to utilizing CBO analyses of previous rules and utilizes societal effects of this rule discussed in projections, HHS conducted an internal the Congressional Budget Office’s (CBO) this RIA. We do not expect the analysis of the effects of its regulations analysis of the Affordable Care Act’s provisions of this final rule to on enrollment and premiums. Based on impact on Federal spending, revenue significantly alter CBO’s estimates of the these internal analyses, we anticipate collection, and insurance enrollment. budget impact of the premium that the quantitative effects of the The temporary risk corridors program stabilization programs that are described provisions in this rule are consistent and the transitional reinsurance in Table 13. We note that transfers with our previous estimates in the 2016 program end after the 2016 benefit year. associated with the risk adjustment and Payment Notice for the impacts Therefore, the costs associated with reinsurance programs were previously associated with the advance payments those programs are not included in estimated in the Premium Stabilization of cost-sharing reductions and premium Tables 12 or 13 for fiscal years 2019– Rule; therefore, to avoid double- tax credits, the premium stabilization 2020. Table 13 summarizes the effects of counting, we do not include them in the the risk adjustment program on the accounting statement for this rule (Table programs, and FFE user fee Federal budget from fiscal years 2016 12). requirements.

TABLE 13—ESTIMATED FEDERAL GOVERNMENT OUTLAYS AND RECEIPTS FOR THE RISK ADJUSTMENT, REINSURANCE, AND RISK CORRIDORS PROGRAMS FROM FISCAL YEAR 2016–2020, IN BILLIONS OF DOLLARS

Year 2016 2017 2018 2019 2020 2016–2020

Risk Adjustment, Reinsurance, and Risk Corridors Program Payments ...... 16.5 19.5 13 15 16 80 Risk Adjustment, Reinsurance, and Risk Corridors Program Collections* ...... 15.5 18.5 13 15 16 78 Note 1: Risk adjustment program payments and receipts lag by one quarter. Receipt will fully offset payments over time. Note 2: The CBO score reflects an additional $2 million in collections in FY 2015 that are outlayed in the FY 2016–FY 2020 timeframe. CBO does not expect a shortfall in these programs. Source: Congressional Budget Office. Insurance Coverage Provisions of the Affordable Care Act—CBO’s March 2015 Baseline Table https:// www.cbo.gov/sites/default/files/cbofiles/attachments/43900-2015-03-ACAtables.pdf.

1. Fair Health Insurance Premiums nationwide that offer student health reassessment of both contract costs to insurance coverage and approximately support the risk adjustment program in The final rule permits a rating area to 1.4 million students and dependents 2017 and the expected member month be identified for a small employer that enrolled in such plans.73 enrollment in risk adjustment covered is within the service area of an issuer’s QHPs. network plan, for purposes of rating 3. Risk Adjustment 4. Risk Corridors based on geography where the The risk adjustment program is a employer’s principal business address is permanent program created by the The Federally operated temporary risk not within that service area. This will Affordable Care Act that transfers funds corridors program ends in benefit year ensure that the network plan can be from lower risk, non-grandfathered 2016 as required by statute. Because risk appropriately rated for sale to the group plans to higher risk, non-grandfathered corridors charges are collected in the policyholder, benefitting both issuers plans in the individual and small group year following the applicable benefit and employers. markets, inside and outside the year, and risk corridors payments lag 2. Student Health Insurance Coverage Exchanges. We established standards for receipt of collections by one quarter, we the administration of the risk estimate that risk corridors transfers will The final rule eliminates the adjustment program, in subparts D and continue through fiscal year 2018. In requirement that issuers of student G of part 45 of the CFR. this rule, we establish that for the 2015 health insurance coverage provide A State approved or conditionally and 2016 benefit years, the issuer must coverage comprised of the specific metal approved by the Secretary to operate an true up claims liabilities and reserves levels, and instead requires that student Exchange may establish a risk used to determine the allowable costs health insurance coverage provide at adjustment program, or have HHS do so reported for the preceding benefit year least 60 percent AV. The final rule also on its behalf. As described in the 2014, to reflect the actual claims payments requires issuers of student health 2015, and 2016 Payment Notices, if HHS made through March 31 of the year insurance coverage to specify in any operates risk adjustment on behalf of a following the benefit year. This plan materials summarizing the terms of State, it will fund its risk adjustment amendment provides for a more coverage the AV of the coverage and the program operations by assessing a risk accurate risk corridors calculation by metal level (or next lowest metal level) adjustment user fee on issuers of risk substituting actual experience in place the coverage would otherwise satisfy. adjustment covered plans. For the 2017 of estimates. Some issuers overestimate This will provide flexibility for benefit year, we estimate that the total their claims and liabilities, while others institutions of higher education to offer cost for HHS to operate the risk underestimate them. Based on the 2014 student health insurance plans that are adjustment program on behalf of States MLR and risk corridors data, we more generous than the standard metal for 2017 will be approximately $24 estimate that this amendment will result levels, while providing students with million, and that the risk adjustment in a combined total reduction in risk information that allows them to user fee would be $1.56 per enrollee per corridors payments or increase in risk compare the generosity of student year. This user fee reflects our corridors charges for some issuers; and health insurance coverage with other a combined total increase in risk available coverage options. This will 73 Source: Data from Medical Loss Ratio corridors payments or decrease in risk affect an estimated 49 issuers submissions for 2014 reporting year. corridors charges for other issuers. HHS

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continues to implement the risk § 155.215. The changes include ensuring Exchanges regarding the number and corridors program in a budget neutral consumers have access to skilled performance of their certified manner such that payments are made assistance with Exchange-related issues application counselors and the from collections that are received. If beyond applying for and enrolling in consumer assistance they provide, upon collections are insufficient to fund coverage. Such post enrollment and request, in a form and manner specified payment obligations, HHS will apply a other assistance includes assisting by the Exchange. Under pro rata reduction to risk corridors consumers with applying for § 155.225(b)(1)(iii), if an Exchange payments to issuers for the benefit year. exemptions from the individual shared requests these certified application Because of uncertainty in the amount of responsibility payment that are granted counselor reports, the Exchange would collections that will be received for through the Exchange, with also need to review them. We assume payment for the 2015 benefit year, we understanding the process of filing that all Exchanges will require quarterly are unable to estimate the magnitude of Exchange appeals, and with reports and will utilize in-house staff to the net impact of the modification in the understanding basic concepts and rights review them. We assume that an final rule, but believe that it will reduce related to health coverage and how to employee earning a wage that is the overall amount of risk corridors use it. The final rule also requires equivalent to a mid-level GS–11 transfers for the 2015 benefit year. Navigators to provide targeted employee would review quarterly report assistance to serve underserved or 5. Rate Review submissions from certified application vulnerable populations, as identified by counselor designated organizations.74 In § 154.215, we amend the criteria for each Exchange. In addition, the final We estimate that a mid-level employee submission of the Unified Rate Review rule specifies that any individual or (at an hourly wage rate of $43.13) will Template for single risk pool coverage to entity carrying out consumer assistance spend 10 minutes reviewing each HHS. We expect URRT submissions functions under § 155.205(d) and (e) or quarterly report for a cost burden of may increase by 1 percent. We have § 155.210 must complete training prior approximately $7.19 per quarterly revised the information collection to performing any assister duties, report per certified application currently approved under OMB Control including conducting outreach and counselor designated organization. We Number 0938–1141 to clarify education activities. estimate the costs of this requirement instructions related to completing the The final rule’s amendments to for State Exchanges in the Collection of template for single risk pool coverage. §§ 155.205(d) and 155.215(b)(1)(i) Information Requirements section of 6. Additional Required Benefits related to completing training for this final rule. For the FFEs, we estimate Navigators and non-Navigator assistance there are 3,500 certified application In § 155.170, we amended the personnel apply only to the timing of requirement for coverage of benefits in counselor designated organizations, the training and do not have any impact resulting in a total annual burden for addition to the essential health benefits. on the training itself. Therefore, they do Specifically, we are rewording FFEs of 2,333 hours, at a cost of not affect the burden or cost for entities $100,660. § 155.170(a)(2) to make clear that a already subject to training requirements. benefit required by the State through Because under existing § 155.215(b)(2), 9. SHOP action taking place on or before Navigators in FFEs must already be The SHOP facilitates the enrollment December 31, 2011 is considered an trained on the tax implications of of eligible employees of eligible small EHB and one required by the State enrollment decisions, the individual employers into small group health through action taking place after responsibility to have health coverage, insurance plans. A qualitative analysis December 31, 2011 is considered in eligibility appeals, and rights and of the costs and benefits of establishing addition to EHB. As we see this as a processes for QHP appeals and a SHOP was included in the RIA clarification, we do not anticipate an grievances, we expect our amendments published in conjunction with the additional burden on States or issuers. to § 155.210(b)(2)(v) through (ix) to have Exchange Establishment Rule.75 Section At § 155.170(a)(3), we currently require minimal impact on FFE training. If any 155.735(d)(2)(iii), added in this rule, the Exchange to identify which SBEs do not already provide training on requires the FF–SHOPs to send additional State-required benefits, if these topics, we expect they would qualified employees a notice notifying any, are in excess of EHB. We amended incur minimal costs in developing and them in advance of a child dependent’s paragraph (a)(3) to designate the State, implementing this training. Our final loss of eligibility for dependent child rather than the Exchange, as the entity rule requiring Navigators to provide coverage under their plan because of that identifies which State-required targeted assistance to underserved or age. The notice will be sent 90 days in benefits are not EHB. Because vulnerable populations will have an advance of the date when the dependent Exchanges have been relying upon State increased benefit for consumers, enrollee would lose eligibility for departments of insurance in especially hard to reach populations. dependent child coverage. We estimate determining what constitutes an All costs associated with reaching these the FF–SHOPs will spend roughly 35 essential health benefit, we do not consumers in FFEs are considered hours annually, per State, to prepare the anticipate any additional burden to allowable costs that would be covered notice, for a total cost of $1,775, per States because of this modification, but by the Navigator grants for the FFEs and State, to design and implement the simply a shift in burden from one State that may be drawn down as the grantee notices under § 155.735(d)(2)(iii). We agency to another. incurs such costs. Additionally, estimate that there will be § 155.210(b)(2)(i) already requires 7. Standards for Navigators and certain approximately 32 States operating under Navigators in all Exchanges to receive Non-Navigator Assistance Personnel the FF–SHOPs and all will be subject to training on the needs of underserved this requirement. Therefore, we estimate This final rule amends some of the and vulnerable populations. standards for consumer assistance functions under § 155.205(d) and (e), as 8. Certified Application Counselors 74 Federal wage rates are available at https:// www.opm.gov/policy-data-oversight/pay-leave/ well as for the activities of Navigators This final rule requires certified salaries-wages/salary-tables/pdf/2015/GS_h.pdf. under § 155.210, and non-Navigator application counselor organizations to 75 Available at http://cciio.cms.gov/resources/ assistance personnel subject to submit data and information to the files/Files2/03162012/hie3r-ria-032012.pdf.

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a total annual cost of $58,575 for the 11. User Fees the permissible de minimis limit and FF–SHOPs as a result of this To support the operation of FFEs, we the change in annual limitation on cost requirement. require in § 156.50(c) that a sharing does not fully accommodate changed calculations established by an 10. Standardized Options participating issuer offering a plan through an FFE must remit a user fee to updated AV Calculator, we In assessing the burden associated HHS each month equal to the product acknowledge that plans likely engage in with implementing standardized of the monthly user fee rate specified in significant analysis in order to establish options, as described in § 156.20, we the annual HHS notice of benefit and new cost-sharing structures. We do not assessed the potential impact on payment parameters for the applicable anticipate that our policy providing us premiums established by QHP issuers in benefit year and the monthly premium with additional flexibility in updating the FFEs. We anticipate that an issuer charged by the issuer for each policy the AV Calculator will substantially will price a standardized option based under the plan where enrollment is change the number of plans for which on how similar or different the through an FFE. In this final rule, for the new cost-sharing structures must be calculated each year—it is our intent to standardized option is to the issuer’s 2017 benefit year, we finalize a monthly continue to provide annual updates to current shelf (plan offerings). Because of FFE user fee rate equal to 3.5 percent of the AV Calculator. the large variation across the country, the monthly premium. For a State-based we expect that how standardized Exchange using the Federal platform, 13. Network Adequacy we finalize a user fee rate equal to 1.5 options will be priced will vary by In § 156.230(e), we are finalizing our percent of the monthly premium. For issuer and by State. We do not proposal to require QHPs in the FFEs to the accounting statement of this rule, we anticipate that it will significantly affect count certain out-of-network cost have reduced the incremental increase 2017 plan premiums. We expect that sharing towards the in-network annual in the user fee collected for the first year issuers will offer standardized options limitation on cost sharing for enrollees by one-half, after which we estimate $30 at a given metal level if the standardized who receive EHB from an out-of- million in the amount of user fees options are similar to their existing network ancillary provider at an in- collected from State-based Exchanges plans and can be priced competitively. network setting, with modifications. that use the Federal platform for 2017 The premium impact on issuers’ non- The premium impact will vary based on and $65 million for years after 2017. For standard plan offerings is difficult to existing State laws. We received no the user fee charges assessed on issuers estimate. Among the six State comments on this estimate. in the FFE, we have previously received Exchanges that standardized plans and a waiver to OMB Circular No. A–25R, 14. Provisions Related to Cost Sharing required standardized options to be which requires that the user fee charge The Affordable Care Act provides for offered by QHP issuers in 2014, two be sufficient to recover the full cost to (California and New York) that the reduction or elimination of cost the Federal government of providing the sharing for certain eligible individuals attempted to conduct premium impact special benefit. Similarly, for this year, analysis found that introduction of the enrolled in QHPs offered through the for the user fee charges assessed on Exchanges. This assistance will help requirement on issuers to offer issuers in the FFE and State-based standardized options was associated many low- and moderate-income Exchanges using the Federal platform, individuals and families obtain health with a negligible or downward impact we have sought an exception to OMB on premiums. However, these SBEs insurance—for many people, cost Circular No. A–25R, which requires that sharing is a barrier to obtaining needed found it was difficult to isolate the the user fee charge be sufficient to health care.76 effects of plan standardization on recover the full cost to the Federal We set forth in this rule the premiums given the many changes that government of providing the special reductions in the maximum annual occurred in the insurance market in benefit. This exception ensures that the limitation on cost sharing for silver plan 2014 (including the uptake in FFE can support many of the goals of variations. Consistent with our analysis individual market enrollment, the the Affordable Care Act, including in previous Payment Notices, we movement to narrow networks, and improving the health of the population, developed three model silver level active purchasing and rate negotiation reducing health care costs, and QHPs and analyzed the impact on their in California). providing access to health coverage as AVs of the reductions described in the advanced by § 156.50(d). Again, we note that there is a great Affordable Care Act to the estimated deal of uncertainty in how this policy 12. Actuarial Value 2017 maximum annual limitation on will affect Exchanges due to several In response to comments, we are cost sharing for self only coverage considerations: ($7,150). We do not believe these • clarifying that we take into While we standardize cost-sharing consideration stakeholder feedback on changes will result in a significant on key essential health benefits, there needed changes. One commenter asked economic impact. Therefore, we do not are a wide range of other benefit design for the basis on which we concluded believe the provisions related to cost- parameters that we will not standardize. that the cost sharing changes that might sharing reductions in this rule will have It is not clear how this differentiation be required by a change to the AV an impact on the program established by will manifest among plans or affect calculator would likely be minor. We and described in the 2015 and 2016 consumer choice. note that because of the de minimis Payment Notices. • There is also wide geographic range established at § 156.140, many 76 variation in health care markets, plans do not require significant changes Brook, Robert H., John E. Ware, William H. Rogers, Emmett B. Keeler, Allyson Ross Davies, including with respect to prices, plan to cost-sharing structure each year Cathy D. Sherbourne, George A. Goldberg, Kathleen designs, and provider networks. As beyond those permitted by the statute N. Lohr, Patricia Camp and Joseph P. Newhouse. such, we anticipate that the take-up of (such as for changes to the annual The Effect of Coinsurance on the Health of Adults: standardized options and their impacts limitation on cost sharing). However, Results from the RAND Health Insurance Experiment. Santa Monica, CA: RAND Corporation, on consumers will vary in different where significant changes are required, 1984. Available at http://www.rand.org/pubs/ locations across the country. for example when a plan has reached reports/R3055.

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We also finalize the premium meaningful difference in 2015 and none this proposal on the risk corridors adjustment percentage for the 2017 are offered for 2016 Open Enrollment, program elsewhere in this RIA. Because benefit year. Section 156.130(e) meaning that there will be limited risk corridors payments and charges are provides that the premium adjustment impact on removing these criteria. As a component of the MLR and rebate percentage is the percentage (if any) by such, we estimate that the impact of this calculation, the impact of this which the average per capita premium change is negligible. amendment on risk corridors payments for health insurance coverage for the and charges may in turn affect MLR 17. Patient Safety Standards preceding calendar year exceeds such rebates to consumers. While, as noted average per capita premium for health The next phase of patient safety previously, we are unable to estimate insurance for 2013. The annual standards requires QHP issuers the magnitude of the net impact of this premium adjustment percentage sets the participating in Exchanges to track modification on risk corridors transfers, rate of increase for three parameters hospital participation with PSOs or and consequently on MLR rebates, we detailed in the Affordable Care Act: the other evidence-based patient safety believe that this amendment would annual limitation on cost sharing initiatives. We believe this new increase rebate payments from issuers to (defined at § 156.130(a)), the required requirement to verify that hospitals use consumers. contribution percentage by individuals a patient safety evaluation tool and D. Regulatory Alternatives Considered for minimum essential coverage the implement a comprehensive person- Secretary may use to determine centered hospital discharge program In developing the policies contained eligibility for hardship exemptions would encourage continuous quality in this final rule, we considered under section 5000A of the Code, and improvement among QHP issuers by numerous alternatives to the presented the assessable payments under sections strengthening system-wide efforts to proposals. Below we discuss the key 4980H(a) and 4980H(b). We believe that reduce patient harm in a measurable regulatory alternatives that we the 2017 premium adjustment way, improve health outcomes at lower considered. percentage of 13.25256291 percent is costs, allow for flexibility and Regarding the open enrollment well within the parameters used in the innovation in patient safety periods for 2017 and beyond, we modeling of the Affordable Care Act, interventions and practices, and considered gradually shifting the end of and we do not expect that these encourage meaningful health care the open enrollment period earlier. provisions will have a substantial, if quality improvements. We discuss the However, we believe keeping the open any, effect on CBO’s March 2016 administrative costs associated with enrollment period the same for benefit baseline estimates of the budget impact. submitting this information in the years 2017 and 2018 as it was for 2016 Collection of Information section of this and then moving to a December 15 end 15. Stand-Alone Dental Plans final rule. date simplifies messaging to consumers, In § 156.150, we are increasing the while achieving our ultimate goal of annual limitation on cost sharing for 18. Acceptance of Certain Third Party shifting the open enrollment period so stand-alone dental plans being certified Payments that it ends prior to the start of the by the Exchanges. We believe that the On , 2014, we published in benefit year. benefit of increasing the annual limit on the Federal Register an interim final Regarding the 2017 required cost sharing is that issuers would be rule (IFR) with comment period titled, contribution percentage, which able to offer consumers SADPs that Patient Protection and Affordable Care establishes the threshold for spending provide preventive care without any Act; Third Party Payment of Qualified on minimum essential coverage cost sharing, similar to what is generally Health Plan Premiums (79 FR 15240). In required for an affordability exemption offered by SADPs in the large group § 156.1250, we finalize this rule to from the individual shared market. We received several comments require individual market QHPs and responsibility requirement, we noting that preventive care without any SADPs to accept premium payments considered continuing to use the per cost sharing would be easier to achieve made by certain third parties. This rule capita gross domestic product as the with a high annual limitation on cost describes the circumstances in which measure of income growth. However, a sharing. We have established that individual market QHPs and SADPs new measure of income growth, per increasing the annual limitation on cost must accept payments made by Ryan capita personal income, became sharing over time will decrease the White HIV/AIDS program; Federal and available for the first time last year as likelihood of premium increases. State government programs that provide part of the National Health premium and cost sharing support for Expenditure’s projections, and includes 16. Meaningful Difference specific individuals; and Indian tribes, not only participation in production but In § 156.298, we remove the health tribal organizations, and urban Indian also transfer payments. We believe that savings account eligibility and the organizations. We do not believe these this broader measure of personal income individual coverage or enrollment group actions would impose any significant more accurately reflects individual coverage criteria as options for meeting new costs on issuers because we assume income than GDP per capita. the meaningful difference standard. As that most issuers already accept such For SBE–FP model provisions at we believe the health savings account payments under our interim final rule. § 155.200(f), we considered a number of eligibility criterion to overlap with cost- alternatives. We considered not sharing criterion (that is, we believe that 19. Medical Loss Ratio codifying the SBE–FP model, and a plan that meets the meaningful This final rule amends the risk winding down use of the Federal difference standard for health savings corridors program requirements at platform by SBEs. In this alternative, account eligibility would also meet the § 153.530 to require issuers to true-up SBEs currently utilizing these services standard under the cost-sharing the claims liabilities and reserves used would have had to find a way to criterion), we do not believe that to determine the 2014 and 2015 perform all required Exchange eligibility removing this criterion will have any allowable costs to reflect the actual and enrollment functions themselves, impact on issuers. Additionally, our claims payments made through March including the implementation of an records indicate that no other than self- 31, 2016 and March 31, 2017, Exchange technology platform, or else only coverage plans were reviewed for respectively. We discuss the impact of convert to FFEs. We finalized the

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proposal without significant change finalization, we made revisions to this percent as its measure of significant because we believe that it is technically rule to give States more opportunity to economic impact on a substantial feasible and will permit a number of implement the NAIC Network Adequacy number of small entities. SBEs to access the Federal government’s Model Act. For example, we elected not In this rule, we set forth standards for greater economies of scale. We also to finalize our policy requiring each the risk adjustment, reinsurance, and considered a more customized option, State with an FFE to establish a risk corridors programs, which are under which an SBE would be minimum quantitative network intended to stabilize premiums as permitted to select from a menu of adequacy threshold this year, and stated insurance market reforms are Federal services. While we are we would closely monitor States’ efforts implemented and Exchanges facilitate considering providing more flexibility to implement the provisions of the increased enrollment. Because we to SBE–FPs in the future, at this point NAIC Network Adequacy Model Act. believe that insurance firms offering we do not have the operational ability In § 156.1110, we considered comprehensive health insurance to permit that level of customization. maintaining the current approach of policies generally exceed the size Finally, we considered alternatives aligning with Medicare hospital thresholds for small entities established under which issuers and other delegated Conditions of Participation standards by the SBA, we do not believe that an and downstream entities in States with and not establishing further regulations initial regulatory flexibility analysis is SBE–FPs would not be required to meet at this time for QHP issuers to collect required for such firms. FFE standards, or HHS would not information, such as hospital For purposes of the RFA, we expect participate in enforcement against participation agreements with PSOs, to the following types of entities to be issuers violating those FFE rules. We comply with new patient safety affected by this rule: believe that applying Federal standards standards for plan years beginning on or • Health insurance issuers. • to issuers and their downstream entities after January 1, 2017. However, we Group health plans. for SBE–FPs helps promote consistent decided to adopt this next phase in this We believe that health insurance minimum standards associated with final rule because we believe that issuers and group health plans would be HealthCare.gov. strengthening patient safety standards classified under the North American For employer choice in the FF– and aligning with current, effective Industry Classification System code SHOPs, we considered offering an patient safety interventions will achieve 524114 (Direct Health and Medical additional employer choice option that greater impact for consumers, in terms Insurance Carriers). According to SBA would permit an employer to select an of health care quality improvement and size standards, entities with average actuarial value level of coverage, after harm reduction, resulting in higher annual receipts of $38.5 million or less which employees could choose from quality QHPs being offered in the would be considered small entities for plans available at that level and at the Exchanges. Additionally, we considered these North American Industry level above it. Recognizing that small an approach that did not include Classification System codes. Issuers group market dynamics differ by State, establishing reasonable exceptions to could possibly be classified in 621491 we decided to seek comment on, but not the requirements for a QHP issuer that (HMO Medical Centers) and, if this is finalize this option at this time. We also contracts with a hospital with greater the case, the SBA size standard would considered requiring all SHOPs to offer than 50 beds to utilize a patient safety be $32.5 million or less. the additional employer choice options evaluation system and implement a Based on data from MLR annual we proposed, but instead generally mechanism for comprehensive person- report submissions for the 2014 MLR opted to maintain State-based SHOPs’ centered hospital discharges, as reporting year, approximately 118 out of flexibility under the current regulations, described in section 1311(h)(1) of the 525 issuers of health insurance coverage so that States can decide whether Affordable Care Act. However, we nationwide had total premium revenue implementing additional employer determined that it is important to of $38.5 million or less. This estimate choice options would be in the best support national patient safety efforts, may overstate the actual number of interest of small group market promote evidence-based patient safety small health insurance companies that consumers in their State. interventions and allow for flexibility, may be affected, since almost 80 percent We considered requiring QHP issuers innovation, and minimal burden for of these small companies belong to to offer standardized options as a issuers and hospitals. larger holding groups, and many if not condition of participation in the FFEs. all of these small companies are likely However, we believe that markets and E. Regulatory Flexibility Act to have non-health lines of business that Exchanges may be at different stages of The Regulatory Flexibility Act, (5 would result in their revenues readiness for standardized options, and U.S.C. 601, et seq.), requires agencies to exceeding $38.5 million. Based on data that the cost-sharing structure that HHS prepare an initial regulatory flexibility from the 2014 MLR and risk corridors specifies may not be well tailored for all analysis to describe the impact of the annual report submissions, 20 of these States. Similarly, we believe that some rule on small entities, unless the head 118 potentially small entities had risk issuers may have difficulty offering of the agency can certify that the rule corridors payments or charges for the standardized options in the short run will not have a significant economic 2014 benefit year. Only one of these because of operational constraints. impact on a substantial number of small entities is estimated to experience a Since releasing the proposed rule, the entities. The RFA generally defines a decrease in its risk corridors payment NAIC has adopted the NAIC Network ‘‘small entity’’ as (1) a proprietary firm under the provisions in Adequacy Model Act.77 We applaud meeting the size standards of the Small § 153.530(b)(2)(iv), with no impact on NAIC’s work on the Model Act and Business Administration (SBA), (2) a its rebate liability. Therefore, we do not appreciate the extensive efforts of the not-for-profit organization that is not expect the provisions of this rule to Network Adequacy Model Review dominant in its field, or (3) a small affect a substantial number of small Subgroup members, as well as the government jurisdiction with a health insurance issuers or group health participating stakeholders. As a result of population of less than 50,000. States plans. the NAIC Network Adequacy Model Act and individuals are not included in the Among the policies established by definition of small entity. HHS uses a this rule are policies that could increase 77 http://www.naic.org/store/free/MDL-74.pdf. change in revenues of more than 3 to 5 the choice of QHPs available to small

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groups participating in an FF–SHOP, requirement costs on State and local 45 CFR Part 153 and policies imposing requirements, governments, this regulation has Administrative practice and including information collection Federalism implications due to direct procedure, Health care, Health requirements, on Navigators, non- effects on the distribution of power and insurance, Health records, Organization Navigator assistance personnel, and responsibilities among the State and and functions (Government agencies), certified application counselor Federal governments relating to Reporting and recordkeeping organizations. We believe that the determining standards relating to health requirements. effects on small employers participating insurance that is offered in the in an FF–SHOP are difficult to quantify, individual and small group markets. For 45 CFR Part 154 but will not result in substantial example, in this final rule we have Administrative practice and additional burden, since they will established a number of policies relating procedure, Claims, Health care, Health simply permit certain small employers to network adequacy and continuity of insurance, Penalties, Reporting and greater choice in the QHPs they may care for QHPs on FFEs. States have recordkeeping requirements. make available. The burden estimates traditionally played a major role in 45 CFR Part 155 for Navigators, non-Navigator assistance regulating these aspects of health personnel, and certified application insurance, when offered off the Administrative practice and counselor organizations are described Exchange. procedure, Health care, Health elsewhere in the ICR and RIA sections insurance, Reporting and recordkeeping In compliance with the requirement of this final rule. requirements, State and local of Executive Order 13132 that agencies governments F. Unfunded Mandates examine closely any policies that may Section 202 of the Unfunded have Federalism implications or limit 45 CFR Part 156 Mandates Reform Act of 1995 (UMRA) the policy making discretion of the Administrative practice and requires that agencies assess anticipated States, HHS has engaged in efforts to procedure, Advertising, American costs and benefits and take certain other consult with and work cooperatively Indian/Alaska Natives, Conflict of actions before issuing a rule that with affected States, including interest, Consumer protection, Cost- includes any Federal mandate that may participating in conference calls with sharing reductions, Grant programs— result in expenditures in any 1 year by and attending conferences of the health, Grants administration, Health a State, local, or Tribal governments, in National Association of Insurance care, Health insurance, Health the aggregate, or by the private sector, of Commissioners, and consulting with maintenance organization (HMO), $100 million in 1995 dollars, updated State insurance officials on an Health records, Hospitals, Individuals annually for inflation. Currently that individual basis. Following review of with disabilities, Loan programs— threshold is approximately $144 comments from State insurance officials health, Medicaid, Organization and million. Although we have not been and the NAIC, we have made substantial functions (Government agencies), Public able to quantify all costs, the combined changes to our network adequacy assistance programs, Reporting and administrative cost and user fee impact policies in this final rule. recordkeeping requirements, State and on State, local, or Tribal governments Throughout the process of developing local governments, Sunshine Act, and the private sector may be above the the proposed and final rule, HHS has Technical assistance, Women, Youth. threshold. Earlier portions of this RIA attempted to balance the States’ constitute our UMRA analysis. 45 CFR Part 158 interests in regulating health insurance Administrative practice and G. Federalism issuers, and Congress’ intent to provide procedure, Claims, Health care, Health access to Affordable Insurance Executive Order 13132 establishes insurance, Penalties, Reporting and Exchanges for consumers in every State. certain requirements that an agency recordkeeping requirements. By doing so, it is HHS’s view that we must meet when it promulgates a final For the reasons set forth in the rule that imposes substantial direct have complied with the requirements of Executive Order 13132. preamble, the Department of Health and costs on State and local governments, Human Services amends 45 CFR parts preempts State law, or otherwise has H. Congressional Review Act 144, 147, 153, 154, 155, 156, and 158 as Federalism implications. Because States set forth below. have flexibility in designing their This rule is subject to the Exchange and Exchange-related Congressional Review Act provisions of PART 144—REQUIREMENTS programs, State decisions will the Small Business Regulatory RELATING TO HEALTH INSURANCE ultimately influence both administrative Enforcement Fairness Act of 1996 (5 COVERAGE expenses and overall premiums. States U.S.C. 801, et seq.), which specifies that are not required to establish an before a rule can take effect, the Federal ■ 1. The authority citation for part 144 Exchange or risk adjustment or agency promulgating the rule shall continues to read as follows: reinsurance program. For States electing submit to each House of the Congress Authority: Secs. 2701 through 2763, 2791, to operate an Exchange, risk adjustment and to the Comptroller General a report and 2792 of the Public Health Service Act, or reinsurance program, much of the containing a copy of the rule along with 42 U.S.C. 300gg through 300gg–63, 300gg–91, initial cost of creating these programs other specified information, and has and 300gg–92. was funded by Exchange Planning and been transmitted to Congress and the ■ 2. Section 144.103 is amended by Establishment Grants. After Comptroller General for review. revising paragraph (1) of the definition establishment, Exchanges will be List of Subjects of ‘‘Excepted benefits’’ and revising the financially self-sustaining, with revenue definitions of ‘‘Large employer’’ and sources at the discretion of the State. 45 CFR Parts 144 and 147 ‘‘Small employer’’ to read as follows: Current State Exchanges may charge user fees to issuers. Health care, Health insurance, § 144.103 Definitions. In HHS’s view, while this rule would Reporting and recordkeeping * * * * * not impose substantial direct requirements. Excepted benefits ***

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(1) Group market provisions in 45 (A) In the individual market, using distinction between or among groups of CFR part 146, subpart D, is defined in the primary policyholder’s address. students (or dependents of students) 45 CFR 146.145(b); and (B) In the small group market, using who form the risk pool is based on a * * * * * the group policyholder’s principal bona fide school-related classification Large employer means, in connection business address. For purposes of this and not based on a health factor (as with a group health plan with respect to paragraph (a)(1)(ii)(B), principal described in § 146.121 of this a calendar year and a plan year, an business address means the principal subchapter). However, student health employer who employed an average of business address registered with the insurance rates must reflect the claims at least 51 employees on business days State or, if a principal business address experience of individuals who comprise during the preceding calendar year and is not registered with the State, or is the risk pool, and any adjustments to who employs at least 1 employee on the registered solely for purposes of service rates within a risk pool must be first day of the plan year. A State may of process and is not a substantial actuarially justified. elect to define large employer by worksite for the policyholder’s business, * * * * * substituting ‘‘101 employees’’ for ‘‘51 the business address within the State employees.’’ In the case of an employer where the greatest number of employees PART 153—STANDARDS RELATED TO that was not in existence throughout the of such policyholder works. If, for a REINSURANCE, RISK CORRIDORS, preceding calendar year, the network plan, the group policyholder’s AND RISK ADJUSTMENT UNDER THE determination of whether the employer principal business address is not within AFFORDABLE CARE ACT is a large employer is based on the the service area of such plan, and the policyholder has employees who live, ■ 6. The authority citation for part 153 average number of employees that it is continues to read as follows: reasonably expected the employer will reside, or work within the service area, employ on business days in the current the principal business address for Authority: Secs. 1311, 1321, 1341–1343, purposes of the network plan is the Pub. L. 111–148, 24 Stat. 119. calendar year. business address within the plan’s ■ * * * * * 7. Section 153.405 is amended by service area where the greatest number revising paragraph (i) to read as follows: Small employer means, in connection of employees work as of the beginning with a group health plan with respect to of the plan year. If there is no such § 153.405 Calculation of reinsurance a calendar year and a plan year, an business address, the rating area for contributions. employer who employed an average of purposes of the network plan is the * * * * * at least 1 but not more than 50 rating area that reflects where the (i) Audits. HHS or its designee may employees on business days during the greatest number of employees within audit a contributing entity to assess its preceding calendar year and who the plan’s service area live or reside as compliance with the requirements of employs at least 1 employee on the first of the beginning of the plan year. this subpart. A contributing entity that day of the plan year. A State may elect * * * * * uses a third party administrator, to define small employer by substituting ■ administrative services-only contractor, ‘‘100 employees’’ for ‘‘50 employees.’’ In 5. Section 147.145 is amended by revising paragraphs (b)(2) and (3) and or other third party to assist with its the case of an employer that was not in obligations under this subpart must existence throughout the preceding removing paragraphs (d) and (e) to read as follows: ensure that the third party calendar year, the determination of administrator, administrative services- whether the employer is a small § 147.145 Student health insurance only contractor, or other third party employer is based on the average coverage. cooperates with any audit under this number of employees that it is * * * * * section. reasonably expected the employer will (b) * * * ■ 8. Section 153.510 is amended by employ on business days in the current (2) Levels of coverage. The adding paragraph (g) to read as follows: calendar year. requirement to provide a specific level * * * * * of coverage described in section 1302(d) § 153.510 Risk corridors establishment of the Affordable Care Act does not and payment methodology. PART 147—HEALTH INSURANCE apply to student health insurance * * * * * REFORM REQUIREMENTS FOR THE coverage for policy years beginning on (g) Adjustment to risk corridors GROUP AND INDIVIDUAL HEALTH or after July 1, 2016. However, the payments and charges. If an issuer INSURANCE MARKETS benefits provided by such coverage reported a certified estimate of 2014 must provide at least 60 percent cost-sharing reductions on its 2014 MLR ■ 3. The authority citation for part 147 actuarial value, as calculated in and Risk Corridors Annual Reporting continues to read as follows: accordance with § 156.135 of this Form that is lower than the actual value Authority: Secs 2701 through 2763, 2791, subchapter. The issuer must specify in of cost-sharing reductions calculated and 2792 of the Public Health Service Act (42 any plan materials summarizing the under § 156.430(c) of this subchapter for U.S.C. 300gg through 300gg–63, 300gg–91, terms of the coverage the actuarial value the 2014 benefit year, HHS will make an and 300gg–92), as amended. and level of coverage (or next lowest adjustment to the amount of the issuer’s ■ 4. Section 147.102 is amended by level of coverage) the coverage would 2015 benefit year risk corridors payment revising paragraph (a)(1)(ii) to read as otherwise satisfy under § 156.140 of this or charge measured by the full follows: subchapter. difference between the certified estimate (3) Single risk pool. Student health of 2014 cost-sharing reductions reported § 147.102 Fair health insurance premiums. insurance coverage is not subject to the and the actual value of cost-sharing (a) * * * requirements of section 1312(c) of the reductions provided as calculated under (1) * * * Affordable Care Act. A health insurance § 156.430(c) for the 2014 benefit year. (ii) Rating area, as established in issuer that offers student health ■ 9. Section 153.530 is amended by accordance with paragraph (b) of this insurance coverage may establish one or revising paragraphs (b)(2)(ii) and (iii) section. For purposes of this paragraph more separate risk pools for an and adding paragraph (b)(2)(iv) to read (a), rating area is determined— institution of higher education, if the as follows:

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§ 153.530 Risk corridors data apply the applicable methodology to (2) An issuer must report during the requirements. calculate the risk adjustment payment current MLR and risk corridors * * * * * transfer amount for the risk adjustment reporting year any adjustment made or (b) * * * covered plan in a timely or appropriate approved by HHS for any risk (2) * * * fashion, then HHS will assess a default adjustment payment or charge, (ii) Any reinsurance payments risk adjustment charge under including an assessment of risk received by the issuer for the non- § 153.740(b). If an issuer of a adjustment user fees; any reinsurance grandfathered health plans under the reinsurance eligible plan fails to provide payment; any cost-sharing reduction transitional reinsurance program data sufficient for HHS to calculate payment or charge; or any risk corridors established under subpart C of this part; reinsurance payments, the issuer will payment or charge before August 15, or (iii) A cost-sharing reduction amount forfeit reinsurance payments for claims the next applicable business day, of the equal to the amount of cost-sharing it fails to submit. current MLR and risk corridors reductions for the benefit year as (1) Data quantity. An issuer of a risk reporting year unless instructed calculated under § 156.430(c) of this adjustment covered plan or a otherwise by HHS. An issuer must subchapter, to the extent not reimbursed reinsurance-eligible plan must provide, report any adjustment made or to the provider furnishing the item or in a format and on a timeline specified approved by HHS for any risk service. by HHS, data on its total enrollment and adjustment payment or charge, (iv) For the 2015 and 2016 benefit claims counts by market, which HHS including an assessment of risk years, any difference between— may use in evaluating whether the adjustment user fees; any reinsurance (A) The sum of unpaid claims issuer provided access in the dedicated payment; any cost-sharing reduction reserves and claims incurred but not distributed data environment to a payment or charge; or any risk corridors reported, as set forth in §§ 158.103 and sufficient quantity of data to meet payment or charge where such 158.140(a)(2) and (3) of this subchapter, reinsurance and risk adjustment data adjustment has not been accounted for that were reported on the MLR and Risk requirements. in a prior MLR and Risk Corridor Corridors Annual Reporting Form for (2) Data quality. If, following the Annual Reporting Form, in the MLR and the year preceding the benefit year; and deadline for submission of data Risk Corridors Annual Reporting Form (B) The actual claims incurred during specified in § 153.730, HHS identifies for the following reporting year. the year preceding the benefit year and an outlier that would cause the data that (3) In cases where HHS reasonably paid between March 31 of the benefit a risk adjustment covered plan or a determines that the reporting year and March 31 of the year following reinsurance-eligible plan made available instructions in paragraph (g)(1) or (2) of the benefit year. through a dedicated distributed data this section would lead to unfair or * * * * * environment to fail HHS’s data quality misleading financial reporting, issuers ■ 10. Section 153.710 is amended by— thresholds, the issuer may, within 10 must correct their data submissions in a ■ a. Removing paragraph (d). calendar days of receiving notification form and manner to be specified by ■ b. Redesignating paragraphs (e) and (f) of the outlier, submit an explanation of HHS. as paragraphs (d) and (e), respectively. the outlier for HHS to consider in PART 154—HEALTH INSURANCE ■ c. Revising newly redesignated determining whether the issuer met the ISSUER RATE INCREASES: paragraph (e). reinsurance and risk adjustment data DISCLOSURE AND REVIEW ■ d. Adding paragraph (f). requirements. REQUIREMENTS ■ e. Adding paragraph (g) introductory (g) Risk corridors and MLR reporting. text and revising paragraphs (g)(1) Except as provided in paragraph (g)(3) ■ 11. The authority citation for part 154 introductory text, (g)(1)(iii) and (iv), and of this section: continues to read as follows: (g)(2). (1) Notwithstanding any discrepancy ■ f. Adding paragraph (g)(3). report made under paragraph (d)(2) of Authority: Section 2794 of the Public The revisions and additions read as this section, or any request for Health Service Act (42 U.S.C. 300gg–94). reconsideration under § 156.1220(a) of follows: ■ this subchapter with respect to any risk 12. Section 154.200 is amended by § 153.710 Data requirements. adjustment payment or charge, revising paragraph (c)(2) to read as follows: * * * * * including an assessment of risk (e) Unresolved discrepancies. If a adjustment user fees; reinsurance § 154.200 Rate increases subject to discrepancy first identified in a final payment; cost-sharing reduction review. dedicated distributed data environment payment or charge; or risk corridors * * * * * payment or charge, unless the dispute report in accordance with paragraph (c) * * * (d)(2) of this section remains unresolved has been resolved, an issuer must (2) For rates filed for single risk pool after the issuance of the notification of report, for purposes of the risk corridors coverage beginning on or after January risk adjustment payments and charges and MLR programs: 1, 2017, the average increase, including or reinsurance payments under * * * * * premium rating factors described in § 153.310(e) or § 153.240(b)(1)(ii), (iii) A cost-sharing reduction amount § 147.102 of this subchapter, for all respectively, an issuer of a risk equal to the actual amount of cost- enrollees weighted by premium volume adjustment covered plan or reinsurance- sharing reductions for the benefit year for any plan within the product meets eligible plan may make a request for as calculated under § 156.430(c) of this or exceeds the applicable threshold. reconsideration regarding such subchapter, to the extent not reimbursed discrepancy under the process set forth to the provider furnishing the item or * * * * * in § 156.1220(a) of this subchapter. service; and ■ 13. Section 154.215 is amended by (f) Evaluation of dedicated distributed (iv) For medical loss ratio reporting revising paragraphs (a) and (b) data. If an issuer of a risk adjustment only, the risk corridors payment to be introductory text and removing and covered plan fails to provide sufficient made or charge assessed by HHS under reserving paragraph (c) to read as required data, such that HHS cannot § 153.510. follows:

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§ 154.215 Submission of rate filing PART 155—EXCHANGE Small employer means, in connection justification. ESTABLISHMENT STANDARDS AND with a group health plan with respect to (a) A health insurance issuer must OTHER RELATED STANDARDS a calendar year and a plan year, an submit to CMS and to the applicable UNDER THE AFFORDABLE CARE ACT employer who employed an average of at least one but not more than 50 State (if the State accepts such ■ 16. The authority citation for part 155 employees on business days during the submissions) the information specified continues to read as follows: preceding calendar year and who below on a form and in a manner employs at least one employee on the prescribed by the Secretary. Authority: Title I of the Affordable Care Act, sections 1301, 1302, 1303, 1304, 1311, first day of the plan year. In the case of (1) For all single risk pool products, 1312, 1313, 1321, 1322, 1331, 1332, 1334, an employer that was not in existence including new and discontinuing 1402, 1411, 1412, 1413, Pub. L. 111–148, 124 throughout the preceding calendar year, products, the Unified Rate Review Stat. 119 (42 U.S.C. 18021–18024, 18031– the determination of whether the Template, as described in paragraph (d) 18033, 18041–18042, 18051, 18054, 18071, employer is a small employer is based and 18081–18083). of this section; on the average number of employees ■ 17. Section 155.20 is amended by— that it is reasonably expected the (2) For each single risk pool product ■ a. Revising paragraph (2) in the that includes a plan that is subject to a employer will employ on business days definition of ‘‘Applicant’’. in the current calendar year. A State rate increase, regardless of the size of ■ b. Adding the definitions of ‘‘Federal may elect to define small employer by the increase, the unified rate review platform agreement’’ and ‘‘Standardized substituting ‘‘100 employees’’ for ‘‘50 template and actuarial memorandum, as option’’ in alphabetical order. employees.’’ The number of employees ■ described in paragraph (f) of this c. Revising the definitions of ‘‘Large must be determined using the method section; employer’’ and ‘‘Small employer’’. set forth in section 4980H(c)(2) of the (3) For each single risk pool product The addition and revisions read as Code. follows: that includes a plan with a rate increase * * * * * that is subject to review under § 155.20 Definitions. Standardized option means a QHP § 154.210, all parts of the Rate Filing * * * * * with a standardized cost-sharing Justification, as described in paragraph Applicant *** structure specified by HHS in (b) of this section (2) For SHOP: rulemaking and that is offered for sale (b) A Rate Filing Justification includes (i) An employer seeking eligibility to through an individual market Exchange. one or more of the following: purchase coverage through the SHOP; or * * * * * (ii) An employer, employee, or a ■ * * * * * 18. Section 155.106 is amended by— former employee seeking eligibility for ■ a. Revising paragraphs (a) ■ 14. Section 154.220 is amended by enrollment in a QHP through the SHOP introductory text, (a)(2) and (3), and (b) revising the introductory text and for himself or herself and, if the introductory text. paragraphs (b) introductory text and qualified employer offers dependent ■ b. Adding paragraphs (a)(4) and (5) (b)(1) to read as follows: coverage through the SHOP, seeking and (c). eligibility to enroll his or her The revisions and additions read as § 154.220 Timing of providing the rate dependents in a QHP through the follows: filing justification. SHOP. § 155.106 Election to operate an Exchange A health insurance issuer must * * * * * after 2014. Federal platform agreement means an submit applicable sections of the Rate (a) Election to operate an Exchange. agreement between a State Exchange Filing Justification for all single risk Except as provided in paragraph (c) of and HHS under which a State Exchange pool coverage in the individual or small this section, a State electing to seek agrees to rely on the Federal platform to group market, as follows: approval of its Exchange must: carry out select Exchange functions. * * * * * * * * * * * * * * * (2) Submit an Exchange Blueprint (b) For coverage effective on or after Large employer means, in connection application for HHS approval at least 15 January 1, 2017, by the earlier of the with a group health plan with respect to months prior to the date on which the following: a calendar year and a plan year, an Exchange proposes to begin open employer who employed an average of (1) The date by which the State enrollment as a State Exchange; requires submission of a rate filing; or at least 51 employees on business days (3) Have in effect an approved, or during the preceding calendar year and * * * * * conditionally approved, Exchange who employs at least 1 employee on the Blueprint and operational readiness ■ 15. Section 154.230 is amended by first day of the plan year. In the case of assessment at least 14 months prior to revising paragraph (c)(2)(i) to read as an employer that was not in existence the date on which the Exchange follows: throughout the preceding calendar year, proposes to begin open enrollment as a the determination of whether the § 154.230 Submission and posting of Final State Exchange; employer is a large employer is based on (4) Develop a plan jointly with HHS Justifications for unreasonable rate the average number of employees that it increases. to facilitate the transition to a State is reasonably expected the employer Exchange; and * * * * * will employ on business days in the (5) If the open enrollment period for (c) * * * current calendar year. A State may elect the year the State intends to begin to define large employer by substituting (2) * * * operating an SBE has not been ‘‘101 employees’’ for ‘‘51 employees.’’ established, this deadline must be (i) The information made available to The number of employees must be calculated based on the date open the public by CMS and described in determined using the method set forth enrollment began or will begin in the § 154.215(h). in section 4980H(c)(2) of the Code. year in which the State is submitting the * * * * * * * * * * Blueprint application.

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(b) Transition process for State ■ 20. Section 155.200 is amended by ■ a. Revising paragraphs (a), (b)(1) Exchanges that cease operations. If a revising paragraph (a) and adding introductory text, and (d)(1). State intends to cease operation of its paragraph (f) to read as follows: ■ b. Adding paragraph (b)(7). Exchange, HHS will operate the The addition and revisions read as Exchange on behalf of the State. § 155.200 Functions of an Exchange. follows: Therefore, a State that intends to cease (a) General requirements. An Exchange must perform the functions § 155.205 Consumer assistance tools and operations of its Exchange must: programs of an Exchange. * * * * * described in this subpart and in subparts D, E, F, G, H, K, M, and O of (a) Call center. The Exchange must (c) Process for State Exchanges that provide for operation of a toll-free call seek to utilize the Federal platform for this part unless the State is approved to operate only a SHOP by HHS under center that addresses the needs of select functions. A State seeking consumers requesting assistance and approval as a State Exchange utilizing § 155.100(a)(2), in which case the Exchange operated by the State must meets the requirements outlined in the Federal platform to support select paragraphs (c)(1), (c)(2)(i), and (c)(3) of functions through a Federal platform perform the functions described in subpart H of this part and all applicable this section, unless it enters into a agreement under § 155.200(f) must: Federal platform agreement through (1) If the State Exchange does not provisions of other subparts referenced which it relies on HHS to carry out call have a conditionally approved Exchange in that subpart. In a State that is center functions, in which case the Blueprint application, submit one for approved to operate only a SHOP, the Exchange must provide at a minimum a HHS approval at least 3 months prior to individual market Exchange operated by toll-free telephone hotline to respond to the date on which the Exchange HHS in that State will perform the requests for assistance and proposes to begin open enrollment as an functions described in this subpart and appropriately directs consumers to SBE–FP; in subparts D, E, F, G, K, M, and O of Federal platform services to apply for, (2) If the State Exchange has a this part. * * * * * and enroll in, Exchange coverage. conditionally approved Exchange (b) * * * (f) Requirements for State Exchanges Blueprint application, submit any (1) Provides standardized comparative on the Federal platform. (1) A State that significant changes to that application information on each available QHP, receives approval or conditional for HHS approval, in accordance with which may include differential display approval to operate a State Exchange on § 155.105(e), at least 3 months prior to of standardized options on consumer- the Federal platform under § 155.106(c) the date on which the Exchange facing plan comparison and shopping may meet its obligations under proposes to begin open enrollment as an tools, and at a minimum includes: SBE–FP; paragraph (a) of this section by relying (3) Have in effect an approved, or on Federal services that the Federal * * * * * conditionally approved, Exchange government agrees to provide under a (7) A State-based Exchange on the Blueprint and operational readiness Federal platform agreement. Federal platform must at a minimum assessment at least 2 months prior to the (2) A State Exchange on the Federal maintain an informational Internet Web date on which the Exchange proposes to platform must establish and oversee site that includes the capability to direct begin open enrollment as an SBE–FP, in requirements for its issuers that are no consumers to Federal platform services accordance with HHS rules, as a State less strict than the following to apply for, and enroll in, Exchange Exchange utilizing the Federal platform; requirements that are applied to coverage. (4) Prior to approval, or conditional Federally-facilitated Exchange issuers: * * * * * approval, of the Exchange Blueprint, (i) Data submission requirements (d) * * * execute a Federal platform agreement under § 156.122(d)(2) of this subchapter; (1) The Exchange must have a for utilizing the Federal platform for (ii) Network adequacy standards consumer assistance function that meets select functions; and under § 156.230 of this subchapter; the standards in paragraph (c) of this (5) Coordinate with HHS on a (iii) Essential community providers section, including the Navigator transition plan to be developed jointly standards under § 156.235 of this program described in § 155.210. Any between HHS and the State. subchapter; individual providing such consumer ■ 19. Section 155.170 is amended by (iv) Meaningful difference standards assistance must be trained regarding revising paragraphs (a)(2) and (3) and under § 156.298 of this subchapter; QHP options, insurance affordability (c)(2)(iii) to read as follows: (v) Changes of ownership of issuers programs, eligibility, and benefits rules requirements under § 156.330 of this and regulations governing all insurance § 155.170 Additional required benefits. subchapter; affordability programs operated in the (a) * * * (vi) QHP issuer compliance and State, as implemented in the State, prior (2) A benefit required by State action compliance of delegated or downstream to providing such assistance or the taking place on or before December 31, entities requirements under outreach and education activities 2011 is considered an EHB. A benefit § 156.340(a)(4) of this subchapter; and specified in paragraph (e) of this required by State action taking place on (vii) Casework requirements under section. or after January 1, 2012, other than for § 156.1010 of this subchapter. * * * * * purposes of compliance with Federal (3) If a State is not substantially ■ 22. Section 155.210 is amended by— requirements, is considered in addition enforcing any requirement listed under ■ a. Revising paragraphs (b)(2)(iii) and to the essential health benefits. § 155.200(f)(2) with respect to a QHP (iv). (3) The State will identify which issuer or plan in a State-based Exchange ■ b. Adding paragraphs (b)(2)(v) through State-required benefits are in addition to on the Federal platform, HHS may (ix). the EHB. enforce that requirement directly against ■ c. Revising paragraphs (d)(6) and * * * * * the issuer or plan by means of plan (e)(6)(i). (c) * * * suppression under § 156.815 of this ■ d. In paragraph (e)(7), removing the (2) * * * subchapter. period at the end of the paragraph and (iii) Reported to the State. ■ 21. Section 155.205 is amended by— adding a semicolon in its place.

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■ e. Adding paragraphs (e)(8) and (9). and promotional items that market or (iii) The Exchange-related The revisions and additions read as promote the products or services of a components of the premium tax credit follows: third party, but does not include the reconciliation process, and reimbursement of legitimate expenses understanding the availability of IRS § 155.210 Navigator program standards. incurred by a consumer in an effort to resources on this process; * * * * * receive Exchange application assistance, (iv) Understanding basic concepts and (b) * * * such as travel or postage expenses. rights related to health coverage and (2) * * * how to use it; and (iii) The range of QHP options and * * * * * (e) * * * (v) Referrals to licensed tax advisers, insurance affordability programs; (6) * * * tax preparers, or other resources for (iv) The privacy and security (i) Are informed, prior to receiving assistance with tax preparation and tax standards applicable under § 155.260; assistance, of the functions and advice related to consumer questions (v) In an Exchange that requires responsibilities of Navigators, including about the Exchange application and Navigators to provide the assistance that Navigators are not acting as tax enrollment process, exemptions from specified in paragraph (e)(9)(i) of this advisers or attorneys when providing the requirement to maintain minimum section, the process of filing Exchange assistance as Navigators and cannot essential coverage and from the eligibility appeals; provide tax or legal advice within their individual shared responsibility (vi) In an Exchange that requires capacity as Navigators; payment, and premium tax credit Navigators to provide the assistance reconciliations. specified in paragraph (e)(9)(ii) of this * * * * * section, general concepts regarding (8) Provide targeted assistance to * * * * * exemptions from the requirement to serve underserved or vulnerable ■ 23. Section 155.215 is amended by maintain minimum essential coverage populations, as identified by the revising paragraphs (b)(1)(i) and (g)(1) to and from the individual shared Exchange, within the Exchange service read as follows: responsibility payment, including the area. (i) In a Federally-facilitated Exchange, § 155.215 Standards applicable to application process for exemptions this paragraph (e)(8) will apply Navigators and Non-Navigator Assistance granted through the Exchange, and IRS beginning with the Navigator grant Personnel carrying out consumer assistance functions under §§ 155.205(d) resources on exemptions; application process for Navigator grants (vii) In an Exchange that requires and (e) and 155.210 in a Federally-facilitated awarded in 2018. The Federally- Navigators to provide the assistance Exchange and to Non-Navigator Assistance facilitated Exchange will identify specified in paragraph (e)(9)(iii) of this Personnel funded through an Exchange populations as vulnerable or section, the Exchange-related Establishment Grant. underserved that are disproportionately components of the premium tax credit * * * * * without access to coverage or care, or reconciliation process and IRS resources (b) * * * that are at a greater risk for poor health (1) * * * on this process; outcomes, in the funding opportunity (viii) In an Exchange that requires (i) Obtain certification by the announcement for its Navigator grants, Navigators to provide the assistance Exchange prior to carrying out any and applicants for those grants will have specified in paragraph (e)(9)(iv) of this consumer assistance functions or an opportunity to propose additional section, basic concepts and rights outreach and education activities under vulnerable or underserved populations related to health coverage and how to § 155.205(d) and (e) or § 155.210; in their applications for the Federally- * * * * * use it; and facilitated Exchange’s approval. (ix) In an Exchange that requires (g) * * * (ii) [Reserved] (1) Are informed, prior to receiving Navigators to provide the assistance (9) The Exchange may require or specified in paragraph (e)(9)(v) of this assistance, of the functions and authorize Navigators to provide responsibilities of non-Navigator section, providing referrals to licensed information and assistance with any of tax advisers, tax preparers, or other assistance personnel, including that the following topics. In Federally- non-Navigator assistance personnel are resources for assistance with tax facilitated Exchanges, Navigators are preparation and tax advice related to not acting as tax advisers or attorneys authorized to provide information and when providing assistance as non- consumer questions about the Exchange assistance with any of the following application and enrollment process, Navigator assistance personnel and topics and will be required to provide cannot provide tax or legal advice exemptions from the requirement to information and assistance with all of within their capacity as non-Navigator maintain minimum essential coverage the following topics under Navigator assistance personnel; and from the individual shared grants awarded in 2018 or any later responsibility payment, and premium year. * * * * * tax credit reconciliations. (i) Understanding the process of filing ■ 24. Section 155.220 is amended by— * * * * * Exchange eligibility appeals; ■ a. Revising paragraph (c)(1) and (3), (d) * * * (ii) Understanding and applying for (f)(4), (g)(2)(ii), and (g)(3) and (4); (6) Provide to an applicant or exemptions from the individual shared ■ b. Adding new paragraphs (c)(4)(i)(F), potential enrollee gifts of any value as responsibility payment that are granted (c)(5), (g)(5) and (6), (j), (k), and (l). an inducement for enrollment. The through the Exchange, understanding The revisions and additions read as value of gifts provided to applicants and the availability of exemptions from the follows: potential enrollees for purposes other requirement to maintain minimum § 155.220 Ability of States to permit agents than as an inducement for enrollment essential coverage and from the and brokers to assist qualified individuals, must not exceed nominal value, either individual shared responsibility qualified employers, or qualified employees individually or in the aggregate, when payment that are claimed through the enrolling in QHPs. provided to that individual during a tax filing process and how to claim * * * * * single encounter. For purposes of this them, and understanding the (c) * * * paragraph (d)(6), the term gifts includes availability of IRS resources on this (1) The agent or broker ensures the gift items, gift cards, cash cards, cash, topic; applicant’s completion of an eligibility

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verification and enrollment application (4) * * * employee in coverage in a manner that through the Exchange Internet Web site (i) * * * constitutes enrollment through a as described in § 155.405, or ensures (F) When an Internet Web site of an Federally-facilitated Exchange, or be that the eligibility application agent or broker is used to complete the permitted to assist individuals in information is submitted for an Exchange eligibility application, obtain applying for advance payments of the eligibility determination through the HHS approval verifying that all premium tax credit and cost-sharing Exchange-approved Web service subject requirements in this section are met. reductions for QHPs. The agent’s or to meeting the requirements in * * * * * broker’s agreement with the Exchange paragraphs (c)(3)(ii) and (c)(4)(i)(F) of (5) HHS or its designee may under § 155.260(b)(2) will also be this section; periodically monitor and audit an agent terminated through the process set forth * * * * * or broker under this subpart to assess its in that agreement. The agent or broker (3)(i) When an Internet Web site of the compliance with the applicable must continue to protect any personally agent or broker is used to complete the requirements of this section. identifiable information accessed during QHP selection, at a minimum the * * * * * the term of either of these agreements Internet Web site must: (f) * * * with the Federally-facilitated (A) Disclose and display all QHP (4) When the agreement between the Exchanges. information provided by the Exchange agent or broker and the Exchange under (5) Fraud or abusive conduct— (i)(A) If HHS reasonably suspects that or directly by QHP issuers consistent paragraph (d) of this section is an agent or broker may have may have with the requirements of § 155.205(b)(1) terminated under paragraph (f) of this engaged in fraud, or in abusive conduct and (c), and to the extent that not all section, the agent or broker will no that may cause imminent or ongoing information required under longer be registered with the Federally- § 155.205(b)(1) is displayed on the agent consumer harm using personally facilitated Exchanges, or be permitted to identifiable information of an Exchange or broker’s Internet Web site for a QHP, assist with or facilitate enrollment of prominently display a standardized enrollee or applicant or in connection qualified individuals, qualified with an Exchange enrollment or disclaimer provided by HHS stating that employers or qualified employees in information required under application, HHS may temporarily coverage in a manner that constitutes suspend the agent’s or broker’s § 155.205(b)(1) for the QHP is available enrollment through a Federally- agreements required under paragraph on the Exchange Web site, and provide facilitated Exchange, or be permitted to (d) of this section and under a Web link to the Exchange Web site; assist individuals in applying for § 155.260(b) for up to 90 calendar days. (B) Provide consumers the ability to advance payments of the premium tax view all QHPs offered through the Suspension will be effective on the date credit and cost-sharing reductions for of the notice that HHS sends to the Exchange; QHPs. The agent’s or broker’s agreement (C) Not provide financial incentives, agent or broker advising of the with the Exchange under § 155.260(b) suspension of the agreements. such as rebates or giveaways; will also be terminated through the (D) Display all QHP data provided by (B) The agent or broker may submit termination without cause process set evidence in a form and manner to be the Exchange; forth in that agreement. The agent or (E) Maintain audit trails and records specified by HHS, to rebut the allegation broker must continue to protect any in an electronic format for a minimum during this 90-day period. If the agent personally identifiable information of ten years; or broker submits such evidence during (F) Provide consumers with the ability accessed during the term of either of the suspension period, HHS will review to withdraw from the process and use these agreements with the Federally- the evidence and make a determination the Exchange Web site described in facilitated Exchanges. whether to lift the suspension within 30 (g) * * * § 155.205(b) instead at any time; and days of receipt of such evidence. If the (G) For the Federally-facilitated (2) * * * rebuttal evidence does not persuade (ii) Any term or condition of the Exchange, prominently display a HHS to lift the suspension, or if the agreement with the Federally-facilitated standardized disclaimer provided by agent or broker fails to submit rebuttal Exchanges required under paragraph (d) HHS, and provide a Web link to the evidence during the suspension period, of this section, or any term or condition Exchange Web site. HHS may terminate the agent’s or (ii) When an Internet Web site of an of the agreement with the Federally- broker’s agreements required under agent or broker is used to complete the facilitated Exchange required under paragraph (d) of this section and under Exchange eligibility application, at a § 155.260(b); § 155.260(b) for cause under paragraph minimum, the Internet Web site must: * * * * * (g)(5)(ii) of this section. (A) Comply with the requirements in (3) HHS will notify the agent or broker (ii) If there is a finding or paragraph (c)(3)(i) of this section; of the specific finding of noncompliance determination by a Federal or State (B) Use exactly the same eligibility or pattern of noncompliance made entity that an agent or broker engaged in application language as appears in the under paragraph (g)(1) of this section, fraud, or abusive conduct that may FFE Single Streamlined Application and after 30 days from the date of the result in imminent or ongoing consumer required in § 155.405, unless HHS notice, may terminate the agreement for harm, using personally identifiable approves a deviation; cause if the matter is not resolved to the information of Exchange enrollees or (C) Ensure that all necessary satisfaction of HHS. applicants or in connection with an information for the consumer’s (4) After the period in paragraph (g)(3) Exchange enrollment or application, applicable eligibility circumstances are of this section has elapsed and the HHS will terminate the agent’s or submitted through the Exchange- agreement under paragraph (d) of this broker’s agreements required under approved web service; and section is terminated, the agent or paragraph (d) of this section and under (D) Ensure that the process used for broker will no longer be registered with § 155.260(b) for cause. The termination consumers to complete the eligibility the Federally-facilitated Exchanges, or will be effective starting on the date of application complies with all applicable be permitted to assist with or facilitate the notice that HHS sends to the agent Exchange standards, including enrollment of a qualified individual, or broker advising of the termination of §§ 155.230 and 155.260(b). qualified employer, or qualified the agreements.

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(iii) During the suspension period (iii) Obtain the consent of the ■ c. Adding new paragraph (b)(6). under paragraph (g)(5)(i) of this section individual, employer, or employee prior The revisions and addition read as and following termination of the to assisting with or facilitating follows: agreements under paragraph (g)(5)(i)(B) enrollment through a Federally- or (g)(5)(ii) of this section, the agent or facilitated Exchange, or assisting the § 155.222 Standards for HHS-approved vendors of Federally-facilitated Exchange broker will not be registered with the individual in applying for advance training for agents and brokers. Federally-facilitated Exchanges, or be payments of the premium tax credit and (a) * * * permitted to assist with or facilitate cost-sharing reductions for QHPs; (1) A vendor must be approved by enrollment of qualified individuals, (iv) Protect consumer personally HHS, in a form and manner to be qualified employers, or qualified identifiable information according to determined by HHS, to have its training employees in coverage in a manner that § 155.260(b)(3) and the agreement program recognized for agents and constitutes enrollment through a described in § 155.260(b)(2); and brokers assisting with or facilitating Federally-facilitated Exchange, or be (v) Comply with all applicable enrollment in individual market or permitted to assist individuals in Federal and State laws and regulations. SHOP coverage through the Federally- applying for advance payments of the (3) If an agent or broker fails to facilitated Exchanges consistent with premium tax credit and cost-sharing provide correct information, he or she § 155.220. reductions for QHPs. The agent or will nonetheless be deemed in (2) As part of the training program, broker must continue to protect any compliance with paragraphs (j)(2)(i) and the vendor must require agents and personally identifiable information (ii) of this section if HHS determines brokers to provide identifying accessed during the term of either of that there was a reasonable cause for the information and successfully complete these agreements with a Federally- failure to provide correct information the required curriculum. facilitated Exchange. and that the agent or broker acted in (6) The State department of insurance good faith. * * * * * or equivalent State agent or broker (k) Penalties other than termination of (b) * * * licensing authority will be notified by the agreement with the Federally- (1) Submit a complete and accurate HHS in cases of suspensions or facilitated Exchanges. (1) If HHS application by the deadline established terminations effectuated under this determines that an agent or broker has by HHS, which includes demonstration paragraph (g). failed to comply with the requirements of prior experience with successfully conducting online training, as well as * * * * * of this section, in addition to any other (j) Federally-facilitated Exchange available remedies, that agent or providing technical support to a large standards of conduct. (1) An agent or broker— customer base. broker that assists with or facilitates (i) May be denied the right to enter (2) Adhere to HHS specifications for enrollment of qualified individuals, into agreements with the Federally- content, format, and delivery of training, qualified employers, or qualified facilitated Exchanges in future years; which includes offering continuing employees, in coverage in a manner that and education units (CEUs) for at least five constitutes enrollment through a (ii) May be subject to civil money States in which a Federally-facilitated Federally-facilitated Exchange, or assists penalties as described in § 155.285. Exchange or State-Based Exchange using individuals in applying for advance (2) HHS will notify the agent or broker a Federal platform is operating. payments of the premium tax credit and of the proposed imposition of penalties (3) Collect, store, and share with HHS cost-sharing reductions for QHPs sold under paragraph (k)(1)(i) of this section training completion data from agent and through a Federally-facilitated and, after 30 calendar days from the broker users of the vendor’s training in Exchange, must— date of the notice, may impose the a manner, format, and frequency (i) Have executed the required penalty if the agent or broker has not specified by HHS, and protect all data agreement under paragraph requested a reconsideration under from agent and broker users of the § 155.260(b); paragraph (h) of this section. The vendor’s training in accordance with (ii) Be registered with the Federally- proposed imposition of penalties under applicable privacy and security facilitated Exchanges under paragraph paragraph (k)(1)(ii) of this section will requirements. (d)(1) of this section; and follow the process outlined under (4) Execute an agreement with HHS, (iii) Comply with the standards of § 155.285. in a form and manner to be determined conduct in paragraph (j)(2) of this (l) Application to State-Based by HHS, which requires the vendor to section. Exchanges using a Federal platform. An comply with applicable HHS guidelines (2) Standards of conduct. An agent or broker who enrolls qualified for implementing the training and individual or entity described in individuals, qualified employers, or interfacing with HHS data systems, and paragraph (j)(1) of this section must— qualified employees in coverage in a the use of all data collected. (i) Provide consumers with correct manner that constitutes enrollment (5) Permit any individual who holds information, without omission of through an State-Based Exchange using a valid State license or equivalent State material fact, regarding the Federally- a Federal platform, or assists individual authority to sell health insurance facilitated Exchanges, QHPs offered market consumers with submission of products to access the vendor’s training. through the Federally-facilitated applications for advance payments of (6) Provide technical support to agent Exchanges, and insurance affordability the premium tax credit and cost-sharing and broker users of the vendor’s training programs, and refrain from marketing or reductions through an State-Based as specified by HHS. conduct that is misleading or coercive, Exchange using a Federal platform must * * * * * or discriminates based on race, color, comply with all applicable Federally- (d) Monitoring. HHS may periodically national origin, disability, age, sex, facilitated Exchange standards in this monitor and audit vendors approved gender identity, or sexual orientation; section. under this subpart, and their records (ii) Provide the Federally-facilitated ■ 25. Section 155.222 is amended by— related to the training functions Exchanges with correct information ■ a. Revising the section heading. described in this section, to ensure under section 1411(b) of the Affordable ■ b. Revising paragraphs (a)(1) and (2), ongoing compliance with the standards Care Act; (b)(1) through (5), and (d). in paragraph (b) of this section. If HHS

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determines that an HHS-approved gift items, gift cards, cash cards, cash, under which HHS carries out eligibility vendor is not in compliance with the and promotional items that market or determinations and other requirements standards required in paragraph (b) of promote the products or services of a contained within this subpart; or this section, the vendor may be removed third party, but does not include the * * * * * from the approved list described in reimbursement of legitimate expenses ■ 30. Section 155.310 is amended by paragraph (c) of this section and may be incurred by a consumer in an effort to revising paragraphs (h) introductory text required by HHS to cease performing receive Exchange application assistance, and (h)(2) to read as follows: the training functions described under such as travel or postage expenses; this subpart. * * * * * § 155.310 Eligibility process. * * * * * ■ 27. Section 155.260 is amended by * * * * * ■ 26. Section 155.225 is amended by revising paragraph (a)(1) introductory (h) Notice of an employee’s receipt of adding paragraph (b)(1)(iii) and revising text to read as follows: advance payments of the premium tax paragraphs (f)(1) and (g)(4) to read as credit and cost-sharing reductions to an follows: § 155.260 Privacy and security of employer. The Exchange must notify an personally identifiable information. employer that an employee has been § 155.225 Certified application counselors. (a) * * * determined eligible for advance * * * * * (1) Where the Exchange creates or payments of the premium tax credit and (b) * * * collects personally identifiable cost-sharing reductions and has enrolled (1) * * * information for the purposes of in a qualified health plan through the (iii) Provides data and information to determining eligibility for enrollment in Exchange within a reasonable timeframe the Exchange regarding the number and a qualified health plan; determining following a determination that the performance of its certified application eligibility for other insurance employee is eligible for advance counselors and regarding the consumer affordability programs, as defined in payments of the premium tax credit and assistance provided by its certified § 155.300; or determining eligibility for cost-sharing reductions in accordance application counselors, upon request, in exemptions from the individual shared with § 155.305(g) or § 155.350(a) and the form and manner specified by the responsibility provisions in section enrollment by the employee in a Exchange. Beginning for the third 5000A of the Code, the Exchange may qualified health plan through the quarter of calendar year 2017, in a only use or disclose such personally Exchange. Such notice must: Federally-facilitated Exchange, identifiable information to the extent * * * * * organizations designated by the such information is necessary: (2) Indicate that the employee has Exchange must submit quarterly reports * * * * * been determined eligible advance that include, at a minimum, data ■ 28. Section 155.280 is amended by payments of the premium tax credit and regarding the number of individuals revising paragraph (a) to read as follows: cost-sharing reductions and has enrolled who have been certified by the in a qualified health plan through the organization; the total number of § 155.280 Oversight and monitoring of Exchange; consumers who received application privacy and security requirements. * * * * * and enrollment assistance from the (a) General. HHS will oversee and ■ organization; and of that number, the monitor the Federally-facilitated 31. Section 155.320 is amended by number of consumers who received Exchanges, State-based Exchanges on revising paragraphs (c)(3)(vi) assistance in applying for and selecting the Federal platform, and non-Exchange introductory text and (d)(3) and adding a QHP, enrolling in a QHP, or applying entities required to comply with the paragraph (d)(4) to read as follows: for Medicaid or CHIP. privacy and security standards § 155.320 Verification process related to * * * * * established and implemented by a eligibility for insurance affordability (f) * * * Federally-facilitated Exchange pursuant programs. (1) Are informed, prior to receiving to § 155.260 for compliance with those * * * * * assistance, of the functions and standards. HHS will oversee and (c) * * * responsibilities of certified application monitor State Exchanges for compliance (3) * * * counselors, including that certified with the standards State Exchanges (vi) Alternate verification process for application counselors are not acting as establish and implement pursuant to decreases in annual household income tax advisers or attorneys when § 155.260. State Exchanges will oversee estimates and for situations in which providing assistance as certified and monitor non-Exchange entities tax return data is unavailable. If a tax application counselors and cannot required to comply with the privacy and filer qualifies for an alternate provide tax or legal advice within their security standards established and verification process based on the capacity as certified application implemented by a State Exchange in requirements specified in paragraph counselors; accordance to § 155.260. (c)(3)(iv) of this section and the * * * * * * * * * * applicant’s attestation to projected (g) * * * ■ 29. Section 155.302 is amended by annual household income, as described (4) Provide to an applicant or revising paragraph (a)(1) to read as in paragraph (c)(3)(ii)(B) of this section, potential enrollee gifts of any value as follows: is more than a reasonable threshold an inducement for enrollment. The below the annual household income value of gifts provided to applicants and § 155.302 Options for conducting eligibility computed in accordance with paragraph potential enrollees for purposes other determinations. (c)(3)(ii)(A) of this section, or if data than as an inducement for enrollment (a) * * * described in paragraph (c)(1)(i) of this must not exceed nominal value, either (1) Directly, through contracting section is unavailable, the Exchange individually or in the aggregate, when arrangements in accordance with must attempt to verify the applicant’s provided to that individual during a § 155.110(a), or as a State-based attestation of the tax filer’s projected single encounter. For purposes of this Exchange on the Federal platform annual household income by following paragraph (g)(4), the term gifts includes through a Federal platform agreement the procedures specified in paragraph

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(c)(3)(vi)(A) through (G) of this section. eligible for qualifying coverage in an § 155.335 Annual eligibility For the purposes of this paragraph eligible employer-sponsored plan for the redetermination. (c)(3)(vi), a reasonable threshold is benefit year for which coverage is * * * * * established by the Exchange in guidance requested; (j) Re-enrollment. If an enrollee and approved by HHS, but must not be (B) Proceed with all other elements of remains eligible for enrollment in a QHP less than 10 percent, and can also the eligibility determination using the through the Exchange upon annual include a threshold dollar amount. The applicant’s attestation, and provide redetermination and— Exchange’s threshold is subject to eligibility for enrollment in a QHP to the (1) The product under which the QHP approval by HHS. extent that an applicant is otherwise in which he or she is enrolled remains * * * * * qualified; available through the Exchange for (d) * * * (C) Ensure that advance payments of renewal, consistent with § 147.106 of the premium tax credit and cost-sharing (3) Verification procedures. (i) If an this subchapter, such enrollee will have reductions are provided on behalf of an applicant’s attestation is not reasonably his or her enrollment through the applicant who is otherwise qualified for compatible with the information Exchange in a QHP under that product such payments and reductions, as obtained by the Exchange as specified in renewed, unless he or she terminates described in § 155.305, if the tax filer paragraphs (d)(2)(i) through (iii) of this coverage, including termination of attests to the Exchange that he or she section, other information provided by coverage in connection with voluntarily understands that any advance payments the application filer, or other selecting a different QHP, in accordance of the premium tax credit paid on his or information in the records of the with § 155.430. The Exchange will her behalf are subject to reconciliation; ensure that re-enrollment in coverage Exchange, the Exchange must follow the (D) Make reasonable attempts to under this paragraph (j)(1) occurs under procedures specified in § 155.315(f). contact any employer identified on the the same product (except as provided in (ii) Except as specified in paragraph application for the applicant and the paragraph (j)(1)(iii)(A) of this section) in (d)(3)(i) or (d)(4)(i) of this section, the members of his or her household, as which the enrollee was enrolled, as Exchange must accept an applicant’s defined in 26 CFR 1.36B–1(d), to verify follows: attestation regarding the verification whether the applicant is enrolled in an specified in paragraph (d) of this section eligible employer-sponsored plan or is (i) The enrollee’s coverage will be without further verification. eligible for qualifying coverage in an renewed in the same plan as the (4) Alternate procedures. For any eligible employer-sponsored plan for the enrollee’s current QHP, unless the benefit year for which it does not benefit year for which coverage is current QHP is not available through the reasonably expect to obtain sufficient requested; Exchange. verification data as described in (E) If the Exchange receives any (ii) If the enrollee’s current QHP is not paragraphs (d)(2)(i) through (iii) of this information from an employer relevant available through the Exchange, the section, the Exchange must follow the to the applicant’s enrollment in an enrollee’s coverage will be renewed in procedures specified in paragraph eligible employer-sponsored plan or a QHP at the same metal level as the (d)(4)(i) of this section or, for benefit eligibility for qualifying coverage in an enrollee’s current QHP within the same years 2016 and 2017, the Exchange may eligible employer-sponsored plan, the product. follow the procedures specified in Exchange must determine the (iii) If the enrollee’s current QHP is paragraph (d)(4)(ii) of this section. For applicant’s eligibility based on such not available through the Exchange and purposes of this paragraph (d)(4), the information and in accordance with the the enrollee’s product no longer Exchange reasonably expects to obtain effective dates specified in § 155.330(f), includes a QHP at the same metal level sufficient verification data for any and if such information changes his or as the enrollee’s current QHP and— benefit year when, for the benefit year, her eligibility determination, notify the (A) The enrollee’s current QHP is a the Exchange is able to obtain data applicant and his or her employer or silver level plan, the enrollee will be re- about enrollment in and eligibility for employers of such determination in enrolled in a silver level QHP under a qualifying coverage in an eligible accordance with the notice different product offered by the same employer-sponsored plan from at least requirements specified in § 155.310(g) QHP issuer that is most similar to the one electronic data source that is and (h); enrollee’s current product. If no such available to the Exchange and that has (F) If, after a period of 90 days from silver level QHP is available for been approved by HHS, based on the date on which the notice described enrollment through the Exchange, the evidence showing that the data source is in paragraph (d)(4)(i)(A) of this section enrollee’s coverage will be renewed in sufficiently current, accurate, and is sent to the applicant, the Exchange is a QHP that is one metal level higher or minimizes administrative burden, as unable to obtain the necessary lower than the enrollee’s current QHP described under paragraph (d)(2)(i) of information from an employer, the under the same product; this section. Exchange must determine the (B) The enrollee’s current QHP is not (i) Select a statistically significant applicant’s eligibility based on his or a silver level plan, the enrollee’s random sample of applicants for whom her attestation regarding coverage coverage will be renewed in a QHP that the Exchange does not have any of the provided by that employer. is one metal level higher or lower than information specified in paragraphs (G) To carry out the process described the enrollee’s current QHP under the (d)(2)(i) through (iii) of this section in paragraph (d)(4)(i) of this section, the same product; or and— Exchange must only disclose an (iv) If the enrollee’s current QHP is (A) Provide notice to the applicant individual’s information to an employer not available through the Exchange and indicating that the Exchange will be to the extent necessary for the employer the enrollee’s product no longer contacting any employer identified on to identify the employee. includes a QHP that is at the same metal the application for the applicant and the (ii) Establish an alternative process level as, or one metal level higher or members of his or her household, as approved by HHS. lower than the enrollee’s current QHP, defined in 26 CFR 1.36B–1(d), to verify * * * * * the enrollee’s coverage will be renewed whether the applicant is enrolled in an ■ 32. Section 155.335 is amended by in any other QHP offered under the eligible employer-sponsored plan or is revising paragraph (j) to read as follows: product in which the enrollee’s current

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QHP is offered in which the enrollee is (e) Premium payment. Exchanges (1) Effectuate an enrollment based on eligible to enroll. may, and the Federally-facilitated payment of the binder payment under (2) No plans under the product under Exchange will, require payment of a paragraph (e) of this section. which the QHP in which he or she is binder payment to effectuate an (2) Avoid triggering a grace period for enrolled are available through the enrollment or to add coverage non-payment of premium, as described Exchange for renewal, consistent with retroactively to an already effectuated by § 156.270(d) of this subchapter or a § 147.106 of this subchapter, such enrollment. Exchanges may, and the grace period governed by State rules. enrollee may be enrolled in a QHP Federally-facilitated Exchange will, (3) Avoid terminating the enrollment under a different product offered by the establish a standard policy for setting for non-payment of premium as, same QHP issuer, to the extent premium payment deadlines: described by §§ 156.270(g) of this permitted by applicable State law, (1) In a Federally-facilitated subchapter and 155.430(b)(2)(ii)(A) and unless he or she terminates coverage, Exchange: (B). including termination of coverage in (i) For prospective coverage to be (h) Requirements. A State Exchange connection with voluntarily selecting a effectuated under regular coverage may rely on HHS to carry out the different QHP, in accordance with effective dates, as provided for in requirements of this section and other § 155.430. The Exchange will ensure §§ 155.410(f) and 155.420(b)(1), the requirements contained within this that re-enrollment in coverage under binder payment must consist of the first subpart through a Federal platform this paragraph (j)(2) occurs as follows: month’s premium, and the deadline for agreement. (i) The enrollee will be re-enrolled in making the binder payment must be no ■ 34. Section 155.410 is amended by a QHP at the same metal level as the earlier than the coverage effective date, revising paragraphs (e)(2) and (f)(2) and enrollee’s current QHP in the product and no later than 30 calendar days from adding paragraphs (e)(3) to read as offered by the same issuer that is the the coverage effective date. follows: most similar to the enrollee’s current (ii) For prospective coverage to be product; § 155.410 Initial and annual open effectuated under special effective dates, (ii) If the issuer does not offer another enrollment periods. as provided for in § 155.420(b)(2), the QHP at the same metal level as the binder payment must consist of the first * * * * * enrollee’s current QHP, the enrollee will month’s premium, and the deadline for (e) * * * be re-enrolled in a QHP that is one making the binder payment must be no (2) For the benefit years beginning on metal level higher or lower than the earlier than the coverage effective date January 1, 2016, on January 1, 2017, and enrollee’s current QHP in the product and no later than 30 calendar days from on January 1, 2018, the annual open offered by the same issuer through the the date the issuer receives the enrollment period begins on November Exchange that is the most similar to the enrollment transaction or the coverage 1 of the calendar year preceding the enrollee’s current product; or effective date, whichever is later. benefit year, and extends through (iii) If the issuer does not offer another January 31 of the benefit year. QHP through the Exchange at the same (iii) For coverage to be effectuated under retroactive effective dates, as (3) For the benefit years beginning on metal level as, or one metal level higher January 1, 2019 and beyond, the annual or lower than the enrollee’s current provided for in § 155.420(b)(2), the binder payment must consist of the open enrollment period begins on QHP, the enrollee will be re-enrolled in November 1 and extends through any other QHP offered by the same premium due for all months of retroactive coverage through the first December 15 of the calendar year issuer in which the enrollee is eligible preceding the benefit year. to enroll. prospective month of coverage, and the deadline for making the binder payment (f) * * * (3) No QHPs from the same issuer are (2) For benefit years beginning on or available through the Exchange, the must be no earlier than 30 calendar days from the date the issuer receives the after January 1, 2016, the Exchange must enrollee may be enrolled through the ensure that coverage is effective— Exchange in a QHP issued by a different enrollment transaction. If only the premium for one month of coverage is (i) January 1, for QHP selections issuer, to the extent permitted by received by the Exchange on or before applicable State law, unless he or she paid, only prospective coverage should be effectuated, in accordance with December 15 of the calendar year terminates coverage, including preceding the benefit year. termination of coverage in connection regular effective dates. (2) [Reserved] (ii) February 1, for QHP selections with voluntarily selecting a different received by the Exchange from QHP, in accordance with § 155.430. The * * * * * December 16 of the calendar year Exchange will ensure that re-enrollment (g) Premium payment threshold. preceding the benefit year through in coverage under this paragraph (j)(3) Exchanges may, and the Federally- January 15 of the benefit year. occurs as follows: facilitated Exchange will, allow issuers (iii) March 1, for QHP selections (i) As directed by the applicable State to implement, a premium payment received by the Exchange from January regulatory authority; or threshold policy under which issuers 16 through January 31 of the benefit (ii) If the applicable State regulatory can consider enrollees to have paid all year. authority declines to provide direction, amounts due if the enrollees pay an * * * * * in a similar QHP from a different issuer, amount sufficient to maintain a as determined by the Exchange. percentage of total premium paid out of ■ 35. Section 155.430 is amended by— * * * * * the total premium owed equal to or ■ a. Adding paragraph (b)(1)(iv). ■ ■ 33. Section 155.400 is amended by greater than a level prescribed by the b. Revising paragraphs (b)(2)(ii)(A). ■ revising paragraph (e) and adding issuer, provided that the level is c. Redesignating paragraph (b)(2)(vi) paragraphs (g) and (h) to read as follows: reasonable and that the level and the as paragraph (b)(2)(vii). policy are applied in a uniform manner ■ d. Adding paragraphs (b)(2)(vi) and § 155.400 Enrollment of qualified to all enrollees. If an applicant or (d)(9), (10), (11), and (12). individuals into QHPs. enrollee satisfies the premium payment The additions and revision read as * * * * * threshold policy, the issuer may: follows:

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§ 155.430 Termination of Exchange termination date will be no sooner than § 155.510 Appeals coordination. enrollment or coverage. 14 days after the date that the enrollee (a) * * * * * * * * can demonstrate he or she contacted the (1) Minimize burden on appellants, (b) * * * Exchange to terminate his or her including not asking the appellant to (1) * * * coverage or enrollment through the provide duplicative information or (iv) The Exchange must permit an Exchange, unless the issuer agrees to an documentation that he or she already enrollee to retroactively terminate or earlier effective date as set forth in provided to an agency administering an cancel his or her coverage or enrollment paragraph (d)(2)(iii) of this section. insurance affordability program or in a QHP in the following (10) In case of a retroactive eligibility appeals process, unless the circumstances: cancellation or termination in appeals entity, Exchange, or agency (A) The enrollee demonstrates to the accordance with paragraph (b)(1)(iv)(B) does not have access to the information Exchange that he or she attempted to or (C) of this section, the cancellation or documentation and cannot terminate his or her coverage or date or termination date will be the reasonably obtain it, and such enrollment in a QHP and experienced a original coverage effective date or a later information is necessary to properly technical error that did not allow the date, as determined appropriate by the adjudicate an appeal; enrollee to terminate his or her coverage Exchange, based on the circumstances * * * * * or enrollment through the Exchange, of the cancellation or termination. ■ 38. Section 155.520 is amended by and requests retroactive termination (11) In the case of cancellation in adding paragraph (d)(2)(i)(D) to read as within 60 days after he or she accordance with paragraph (b)(2)(vi) of follows: discovered the technical error. this section, the Exchange may cancel (B) The enrollee demonstrates to the the enrollee’s enrollment upon its § 155.520 Appeal requests. Exchange that his or her enrollment in determination that the enrollment was * * * * * a QHP through the Exchange was performed without the enrollee’s (d) * * * unintentional, inadvertent, or erroneous knowledge or consent and following (2) * * * and was the result of the error or (i) * * * reasonable notice to the enrollee (where (D) That, in the event the appeal misconduct of an officer, employee, or possible). The termination date will be agent of the Exchange or HHS, its request is not valid due to failure to the original coverage effective date. submit by the date determined under instrumentalities, or a non-Exchange (12) In the case of retroactive entity providing enrollment assistance paragraph (b) or (c) of this section, as cancellations or terminations in applicable, the appeal request may be or conducting enrollment activities. accordance with paragraphs Such enrollee must request cancellation considered valid if the applicant or (b)(1)(iv)(A), (B) and (C) of this section, enrollee sufficiently demonstrates within 60 days of discovering the such terminations or cancellations for unintentional, inadvertent, or erroneous within a reasonable timeframe the preceding coverage year must be determined by the appeals entity that enrollment. For purposes of this initiated within a timeframe established paragraph (b)(1)(iv)(B), misconduct failure to timely submit was due to by the Exchange based on a balance of exceptional circumstances and should includes the failure to comply with operational needs and consumer not preclude the appeal. applicable standards under this part, protection. This timeframe will not * * * * * part 156 of this subchapter, or other apply to cases adjudicated through the ■ applicable Federal or State requirements appeals process. 39. Section 155.530 is amended by revising paragraph (a)(4) to read as as determined by the Exchange. * * * * * (C) The enrollee demonstrates to the follows: ■ 36. Section 155.505 is amended by Exchange that he or she was enrolled in § 155.530 Dismissals. a QHP without his or her knowledge or adding paragraphs (b)(1)(iii) and (b)(5) (a) * * * consent by any third party, including and revising paragraph (b)(4) to read as follows: (4) Dies while the appeal is pending, third parties who have no connection except if the executor, administrator, or with the Exchange, and requests § 155.505 General eligibility appeals other duly authorized representative of cancellation within 60 days of requirements. the estate requests to continue the discovering of the enrollment. * * * * * appeal. (2) * * * (b) * * * (ii) * * * * * * * * (A) The exhaustion of the 3-month (1) * * * ■ 40. Section 155.535 is amended by grace period, as described in (iii) A determination of eligibility for revising paragraphs (a) introductory text § 156.270(d) and (g) of this subchapter, an enrollment period, made in and (b) to read as follows: accordance with § 155.305(b); required for enrollees, who when first § 155.535 Informal resolution and hearing failing to timely pay premiums, are * * * * * requirements. (4) A denial of a request to vacate receiving advance payments of the (a) Informal resolution. The HHS premium tax credit. dismissal made by a State Exchange appeals process will provide an * * * * * appeals entity in accordance with opportunity for informal resolution and (vi) The enrollee was enrolled in a § 155.530(d)(2), made under paragraph a hearing in accordance with the QHP without his or her knowledge or (c)(2)(i) of this section; and requirements of this section. A State consent by a third party, including by a (5) An appeal decision issued by a Exchange appeals entity may also third party with no connection with the State Exchange appeals entity in provide an informal resolution process Exchange. accordance with § 155.545(b), consistent prior to a hearing. Any information with § 155.520(c). * * * * * resolution process must meet the (d) * * * * * * * * following requirements: (9) In case of a retroactive termination ■ 37. Section 155.510 is amended by * * * * * in accordance with paragraph revising paragraph (a)(1) to read as (b) Notice of hearing. When a hearing (b)(1)(iv)(A) of this section, the follows: is scheduled, the appeals entity must

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send written notice to the appellant and applicable, in accordance with the standard described in § 156.145 of this the appellant’s authorized standards specified in § 155.305; or subchapter. representative, if any, of the date, time, (2) Notify the employee of the (iii) For an individual who is eligible and location or format of the hearing no requirement to report changes in to purchase coverage under an eligible later than 15 days prior to the hearing eligibility as described in employer-sponsored plan, the Exchange date unless— § 155.330(b)(1). determines the required contribution for (1) The appellant requests an earlier * * * * * coverage such that— hearing date; or ■ 43. Section 155.605 is amended by— (A) An individual who uses tobacco is (2) A hearing date sooner than 15 days ■ a. In paragraph (b), removing the treated as not earning any premium is necessary to process an expedited reference ‘‘paragraphs (c)(2), (f)(2), and incentive related to participation in a appeal, as described in § 155.540(a), and (g) of this section’’ and adding in its wellness program designed to prevent or the appeals entity has contacted the place the reference ‘‘paragraphs (c)(2) reduce tobacco use that is offered by an appellant to schedule a hearing on a and (d) of this section’’; eligible employer-sponsored plan; mutually agreed upon date, time, and ■ b. Removing paragraphs (d), (e), and (B) Wellness incentives offered by an location or format. (f); eligible employer-sponsored plan that * * * * * ■ c. Redesignating paragraph (g) as do not relate to tobacco use are treated ■ 41. Section 155.545 is amended by paragraph (d); as not earned; revising paragraphs (b)(1) and (c)(1)(i) ■ d. Revising newly redesignated (C) In the case of an employee who is and (ii) to read as follows: paragraph (d); and eligible to purchase coverage under an ■ e. Adding paragraph (e). eligible employer-sponsored plan § 155.545 Appeal decisions. The revision and addition read as sponsored by the employee’s employer, * * * * * follows: the required contribution is the portion (b) * * * § 155.605 Eligibility standards for of the annual premium that the (1) Must issue written notice of the exemptions. employee would pay (whether through appeal decision to the appellant within salary reduction or otherwise) for the * * * * * 90 days of the date an appeal request lowest cost self-only coverage. (d) Hardship—(1) General. The under § 155.520(b) or (c) is received, as (D) In the case of an individual who administratively feasible. Exchange must grant a hardship exemption to an applicant eligible for an is eligible to purchase coverage under * * * * * exemption for at least the month before, an eligible employer-sponsored plan as (c) * * * the month or months during which, and a member of the employee’s family, as (1) * * * the month after a specific event or defined in 26 CFR 1.36B–1(d), the (i) Prospectively, on the first day of circumstance, if the Exchange required contribution is the portion of the month following the date of the determines that: the annual premium that the employee notice of appeal decision, or consistent (i) He or she experienced financial or would pay (whether through salary with § 155.330(f)(2), (3), (4), or (5), if domestic circumstances, including an reduction or otherwise) for the lowest applicable; or unexpected natural or human-caused cost family coverage that would cover (ii) Retroactively, to the coverage event, such that he or she had a the employee and all other individuals effective date the appellant did receive significant, unexpected increase in who are included in the employee’s or would have received if the appellant essential expenses that prevented him family who have not otherwise been had enrolled in coverage under the or her from obtaining coverage under a granted an exemption through the incorrect eligibility determination that qualified health plan; Exchange. is the subject of the appeal, at the option (ii) The expense of purchasing a (iv) For an individual who is of the appellant. qualified health plan would have ineligible to purchase coverage under an * * * * * caused him or her to experience serious eligible employer-sponsored plan, the ■ 42. Section 155.555 is amended by deprivation of food, shelter, clothing or Exchange determines the required revising paragraphs (e)(1) introductory other necessities; or contribution for coverage in accordance text and (l) to read as follows: (iii) He or she has experienced other with section 5000A(e)(1)(B)(ii) of the circumstances that prevented him or her Code, inclusive of all members of the § 155.555 Employer appeals process. from obtaining coverage under a family, as defined in 26 CFR 1.36B–1(d), * * * * * qualified health plan. who have not otherwise been granted an (e) * * * (2) Lack of affordable coverage based exemption through the Exchange and (1) Upon receipt of a valid appeal on projected income. The Exchange who are not treated as eligible to request under this section, or upon must determine an applicant eligible for purchase coverage under an eligible receipt of the notice under paragraph an exemption for a month or months employer-sponsored plan, in accordance (d)(1)(iii) of this section, the Exchange during which he or she, or another with paragraph (d)(4)(ii) of this section; must promptly transmit via secure individual the applicant attests will be and electronic interface to the appeals included in the applicant’s family, as (v) The applicant applies for this entity— defined in 26 CFR 1.36B–1(d), is unable exemption prior to the last date on * * * * * to afford coverage in accordance with which he or she could enroll in a QHP (l) Implementation of the appeal the standards specified in section through the Exchange for the month or decision. After receipt of the notice 5000A(e)(1) of the Code, provided that— months of a calendar year for which the under paragraph (k)(3) of this section, if (i) Eligibility for this exemption is exemption is requested. the appeal decision affects the based on projected annual household (vi) The Exchange must make an employee’s eligibility, the Exchange income; exemption in this category available must promptly: (ii) An eligible employer-sponsored prospectively, and provide it for all (1) Redetermine the employee’s plan is only considered under remaining months in a coverage year, eligibility and the eligibility of the paragraphs (d)(4)(iii) and (iv) of this notwithstanding any change in an employee’s household members, if section if it meets the minimum value individual’s circumstances.

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(3) Ineligible for Medicaid based on a application for an exemption that is ■ 46. Section 155.625 is amended by State’s decision not to expand. The available retrospectively for months for revising paragraphs (a)(2) and (b) and Exchange must determine an applicant such calendar year, and must provide adding paragraph (c) to read as follows: eligible for an exemption for a calendar information to individuals regarding year if he or she would be determined how to claim an exemption through the § 155.625 Options for conducting eligibility determinations for exemptions. ineligible for Medicaid for one or more tax filing process. months during the benefit year solely as (a) * * * * * * * * (2) By use of the HHS service under a result of a State not implementing (k) Incomplete application. (1) If an paragraph (b) of this section. section 2001(a) of the Affordable Care applicant submits an application that Act. (b) Use of HHS service. does not include sufficient information Notwithstanding the requirements of (e) Eligibility for an exemption for the Exchange to conduct a through the IRS. Hardship exemptions this subpart, the Exchange may adopt an determination for eligibility of an exemption eligibility determination in this paragraph (e) can be claimed on exemption the Exchange must— a Federal income tax return without made by HHS. (i) Provide notice to the applicant (c) Administration of hardship obtaining an exemption certificate indicating that information necessary to number. The IRS may allow an exemption based on affordability. States complete an eligibility determination is may choose to administer the hardship individual to claim the hardship missing, specifying the missing exemptions described in this paragraph exemption under § 155.605(d)(2) only information, and providing instructions and delegate to HHS all other exemption (e) without requiring an exemption on how to provide the missing certificate number from the Exchange. determinations generally administered information; and by HHS. (1) Filing threshold. The IRS may (ii) Provide the applicant with a allow an applicant to claim an ■ 47. Section 155.705 is amended by— period of no less than 30 and no more ■ exemption specified in HHS Guidance than 90 days, in the reasonable a. Adding paragraphs (b)(3)(viii), (ix), published , 2014, entitled, discretion of the Exchange, from the and (x). ■ b. In paragraph (b)(4)(ii)(B), removing ‘‘Shared Responsibility Guidance— date on which the notice described in the semicolon and adding a colon in its Filing Threshold Hardship Exemption,’’ paragraph (k)(1) of this section is sent to place. and in IRS Notice 2014–76, section B the applicant to provide the information ■ c. Adding paragraphs (b)(4)(ii)(B)(1) (see https://www.cms.gov/cciio/). needed to complete the application to and (2). (2) Self-only coverage in an eligible the Exchange; and ■ d. Revising paragraphs (b)(4)(ii)(C)(2) employer-sponsored plan. The IRS may (iii) Not proceed with the applicant’s allow an applicant to claim an and (b)(11)(ii)(A), (B), (C), and (D). eligibility determination during the ■ e. Removing paragraph (b)(11)(ii)(E). exemption specified in HHS Guidance period described in paragraph (k)(2) of published , 2014, entitled, The revisions and additions read as this section. follows: ‘‘Guidance on Hardship Exemptions for (2) If the Exchange does not receive Persons Meeting Certain Criteria,’’ and the requested information within the § 155.705 Functions of a SHOP. in IRS Notice 2014–76, section A (see time allotted in paragraph (k)(1)(ii) of * * * * * https://www.cms.gov/cciio/). this section, the Exchange must notify (3) Eligible for services through an (b) * * * the applicant in writing that the Indian health care provider. The IRS (3) * * * Exchange cannot process the may allow an applicant to claim the (viii) For plan years beginning on or application and provide appeal rights to exemption specified in HHS Guidance after January 1, 2017, a Federally- the applicant. published September 18, 2014, entitled, facilitated SHOP will provide a ‘‘Shared Responsibility Guidance— ■ 45. Section 155.615 is amended by— qualified employer a choice of at least ■ Exemption for Individuals Eligible for a. Removing paragraphs (c), (d), and the two methods to make QHPs Services through an Indian Health Care (e). available to qualified employees and ■ Provider,’’ and in IRS Notice 2014–76, b. Redesignating paragraphs (f), (g), their dependents described in section E (see https://www.cms.gov/ (h), (i), (j), and (k) as paragraphs (c), (d), paragraphs (b)(3)(viii)(A) and (B) of this cciio/). (e), (f), (g), and (h), respectively. section, and may also provide a (4) Ineligible for Medicaid based on a ■ c. Revising the paragraph heading for qualified employer with a choice of a State’s decision not to expand. The IRS newly redesignated paragraph (c) and third method to make QHPs available to may allow an applicant to claim the paragraph (c)(1). qualified employees and their exemption specified in HHS Guidance ■ d. Removing and reserving newly dependents as described in paragraph published November 21, 2014, entitled, redesignated paragraph (c)(3). (b)(3)(viii)(C) of this section. ‘‘Guidance on Hardship Exemptions for The revision and addition read as (A) The employer may choose a level Persons Meeting Certain Criteria,’’ and follows: of coverage as described in paragraph (b)(2) of this section; in IRS Notice 2014–76, section F (see § 155.615 Verification process related to https://www.cms.gov/cciio/). (B) The employer may choose a single eligibility for exemptions. QHP; or ■ 44. Section 155.610 is amended by * * * * * (C) The employer may offer its revising paragraph (h)(1) and adding (c) Verification related to exemption qualified employees a choice of all paragraph (k) to read as follows: for hardship—(1) In general. For any QHPs offered through a Federally- § 155.610 Eligibility process for applicant who requests an exemption facilitated SHOP by a single issuer exemptions. based on hardship, except for the across all available levels of coverage, as * * * * * hardship exemptions described in described in section 1302(d)(1) of the (h) * * * § 155.605(d)(1)(i) and (iv), the Exchange Affordable Care Act and implemented (1) Except for the exemptions must verify whether he or she has in § 156.140(b) of this subchapter. A described in § 155.605(c) and (d), after experienced the hardship to which he or State with a Federally-facilitated SHOP December 31 of a given calendar year, she is attesting. may recommend that the Federally- the Exchange may decline to accept an * * * * * facilitated SHOP not make this

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additional option available in that State, application deadline, by a date to be offered by the employer as described in by submitting a letter to HHS in advance established by HHS. paragraphs (b)(2) and (3) of this section of the annual QHP certification (4) * * * to serve as a reference plan on which application deadline, by a date to be (ii) * * * contributions will be based, and then established by HHS. The State’s letter (B) * * * will define a percentage contribution must describe and justify the State’s (1) In a Federally-facilitated SHOP, toward premiums under the reference recommendation, based on the payment for the group’s first month of plan; the resulting contribution amounts anticipated impact this additional coverage must be received by the under the reference plan will be applied option would have on the small group premium aggregation services vendor on toward any plan in which a qualified market and consumers. or before the 20th day of the month employee or, if applicable, any (ix) For plan years beginning on or prior to the month that coverage begins. dependent of a qualified employee, is after January 1, 2017, a Federally- (2) In a Federally-facilitated SHOP, enrolled, up to the lesser of the facilitated SHOP will provide a when coverage is effectuated contribution amount or the total amount qualified employer a choice of at least retroactively, payment for the first of any premium for the selected plan the two methods to make stand-alone month’s coverage and all months of the before application of a tobacco dental plans available to qualified retroactive coverage must be received surcharge, if applicable. The employer’s employees and their dependents and processed no later than 30 days contribution is calculated based on an described in paragraphs (b)(3)(ix)(A) after the event that triggers the enrollee’s premium before any and (B) of this section, and may also eligibility for retroactive coverage. If applicable tobacco surcharge, based on provide a qualified employer with a payment is received on or before the the total premium owed for the enrollee, choice of a third method to make stand- 20th day of a month, coverage will be is applied. alone dental plans available to qualified effectuated upon the first day of the (C) The employer will define a employees and their dependents as following month retroactive to the percentage contribution toward described in paragraph (b)(3)(ix)(C) of effective date of coverage. If payment is premiums for employee-only coverage this section. received after the 20th day of a month, and, if dependent coverage is offered, a (A) The employer may choose to make coverage will be effectuated upon the percentage contribution toward available a single stand-alone dental first day of the second following month premiums for dependent coverage. To plan; retroactive to the effective date of the extent permitted by other applicable law, for plan years beginning on or after (B) The employer may choose to make coverage, provided that the payment January 1, 2015, a Federally-facilitated available all stand-alone dental plans includes the premium for the SHOP may permit an employer to define offered through a Federally-facilitated intervening month. a different percentage contribution for SHOP at a level of coverage as described (C) * * * full-time employees from the percentage in § 156.150(b)(2) of this subchapter; or (2) The number of days for which coverage is being provided in the month contribution it defines for non-full-time (C) The employer may offer its employees, and it may permit an qualified employees a choice of all described in paragraph (b)(4)(ii)(C)(1) of this section. employer to define a different stand-alone dental plans offered through percentage contribution for dependent a Federally-facilitated SHOP by a single * * * * * coverage for full-time employees from issuer across all available levels of (11) * * * the percentage contribution it defines coverage, as described in § 156.150(b)(2) (ii) * * * for dependent coverage for non-full-time of this subchapter. A State with a (A) When the employer offers a single employees. Federally-facilitated SHOP may plan to qualified employees, the (D) A Federally-facilitated SHOP may recommend that the Federally- employer must use a fixed contribution permit employers to base contributions facilitated SHOP not make this methodology under which the employer on a calculated composite premium for additional option available in that State, contributes a fixed percentage of the employees, for adult dependents, and by submitting a letter to HHS in advance plan’s premium for each qualified for dependents below age 21. of the annual QHP certification employee and, if applicable, for each * * * * * application deadline, by a date to be dependent of a qualified employee. The ■ 48. Section 155.715 is amended by established by HHS. The State’s letter employer’s contribution is calculated revising paragraph (g)(1) to read as must describe and justify the State’s based on an enrollee’s premium before follows: recommendation, based on the any applicable tobacco surcharge, based anticipated impact this additional on the total premium owed for the § 155.715 Eligibility determination process option would have on the small group enrollee, is applied. for SHOP. market and consumers. (B) When the employer offers a choice * * * * * (x) States operating a State-based of plans to qualified employees, the (g) * * * Exchange utilizing the Federal platform employer may use a fixed contribution (1) Each QHP terminates the for SHOP enrollment functions will methodology or a reference plan enrollment through the SHOP of the have the same employer choice models contribution methodology. Under the employer’s enrollees enrolled in a QHP available as States with a Federally- fixed contribution methodology, the through the SHOP; and facilitated SHOP, except that a State employer contributes a fixed percentage * * * * * with a State-based Exchange utilizing of the premiums for each qualified ■ 49. Section 155.725 is amended by the Federal platform for SHOP employee and, if applicable, for each revising paragraphs (c), (e), (h)(2), (i)(1) enrollment functions may decide dependent of a qualified employee, introductory text, and (j)(2)(i) to read as against offering the employer choice across all plans in which any qualified follows: models specified in paragraphs employee, and, if applicable, any (b)(3)(viii)(C) and (b)(3)(ix)(C) of this dependent of a qualified employee, is § 155.725 Enrollment periods under SHOP. section in that State, provided that the enrolled. Under the reference plan * * * * * State notifies HHS of that decision in contribution methodology, the employer (c) Annual employer election period. advance of the annual QHP certification will select a plan from among the plans The SHOP must provide qualified

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employers with a standard election (d)(1)(ii)), or experiences an event (l) * * * period prior to the completion of the described in § 155.420(d)(2), (4), (5), (7), (3) Be effective as follows: employer’s plan year and before the (8), or (9); (i) If an employer is found eligible annual employee open enrollment * * * * * under the decision, then at the period, in which the qualified employer ■ 50. Section 155.735 is amended by employer’s option, the effective date of may change its participation in the revising paragraph (c)(2) introductory coverage or enrollment through the SHOP for the next plan year, text and paragraph (d)(2) to read as SHOP under the decision can either be including— follows: made retroactive to the effective date of (1) The method by which the coverage or enrollment through the qualified employer makes QHPs § 155.735 Termination of SHOP enrollment SHOP that the employer would have available to qualified employees or coverage. had if the employer had been correctly pursuant to § 155.705(b)(2) and (3); * * * * * determined eligible, or prospective to (2) The employer contribution (c) * * * the first day of the month following the towards the premium cost of coverage; (2) In an FF–SHOP, for premium date of the notice of the appeal decision. (3) The level of coverage offered to payments other than payments for the (ii) For employee appeal decisions qualified employees as described in first month of coverage— only, if an employee is found eligible § 155.705(b)(2) and (3); and * * * * * under the decision, then at the (4) The QHP or QHPs offered to (d) * * * employee’s option, the effective date of qualified employees in accordance with (2) In the FF–SHOP, termination is coverage or enrollment through the § 155.705. effective: SHOP under the decision can either be * * * * * (i) In the case of a termination in made effective retroactive to the (e) Annual employee open enrollment accordance with paragraphs (d)(1)(i), effective date of coverage or enrollment period. (1) The SHOP must establish a (ii), (iii), and (v) of this section, through the SHOP that the employee standardized annual open enrollment termination is effective on the last day would have had if the employee had period for qualified employees prior to of the month in which the Federally- been correctly determined eligible, or the completion of the applicable facilitated SHOP receives notice of the prospective to the first day of the month qualified employer’s plan year and after event described in paragraph (d)(1)(i), following the date of the notice of the that employer’s annual election period. (ii), (iii), or (v) of this section. appeal decision. (2) Qualified employers in a (ii) In the case of a termination in (iii) If the employer or employee is Federally-facilitated SHOP must accordance with paragraph (d)(1)(iv) of found ineligible under the decision, provide qualified employees with an this section, the last day of coverage in then the appeal decision is effective as an enrollee’s prior QHP is the day before annual open enrollment period of at of the date of the notice of the appeal the effective date of coverage in his or least one week. decision. her new QHP, including for any * * * * * * * * * * (h) * * * retroactive enrollments effectuated (2) For a group enrollment received by under § 155.725(j)(5). PART 156—HEALTH INSURANCE (iii) The FF–SHOP will send qualified the Federally-facilitated SHOP from a ISSUER STANDARDS UNDER THE employees a notice notifying them in qualified employer at the time of an AFFORDABLE CARE ACT, INCLUDING advance of a child dependent’s loss of initial group enrollment or renewal: STANDARDS RELATED TO eligibility for dependent child coverage (i) Between the first and fifteenth day EXCHANGES of any month, the Federally-facilitated under their plan because of age. The SHOP must ensure a coverage effective notice will be sent 90 days in advance ■ 52. The authority citation for part 156 date of the first day of the following of the date when the dependent enrollee continues to read as follows: month unless the employer opts for a would lose eligibility for dependent Authority: Title I of the Affordable Care later effective date within a quarter for child coverage. The enrollee will also receive a separate termination notice Act, sections 1301–1304, 1311–1313, 1321– which small group market rates are 1322, 1324, 1334, 1342–1343, 1401–1402, available. when coverage is terminated, under Pub. L. 111–148, 124 Stat. 119 (42 U.S.C. (ii) Between the 16th and last day of § 155.735(g). 18021–18024, 18031–18032, 18041–18042, any month, the Federally-facilitated * * * * * 18044, 18054, 18061, 18063, 18071, 18082, SHOP must ensure a coverage effective ■ 51. Section 155.740 is amended by 26 U.S.C. 36B, and 31 U.S.C. 9701). date of the first day of the second revising paragraphs (c)(2), (d)(2), and ■ 53. Section 156.50 amended by following month unless the employer (l)(3) to read as follows: revising paragraph (c) to read as follows: opts for a later effective date within a quarter for which small group market § 155.740 SHOP employer and employee § 156.50 Financial support. rates are available. eligibility appeals requirements. * * * * * (i) * * * * * * * * (c) Requirement for Federally- (1) If a qualified employee enrolled in (c) * * * facilitated Exchange user fee. (1) To a QHP through the SHOP remains (2) A failure by the SHOP to provide support the functions of Federally- eligible for enrollment through the a timely eligibility determination or a facilitated Exchanges, a participating SHOP in coverage offered by the same timely notice of an eligibility issuer offering a plan through a qualified employer, the SHOP may determination in accordance with Federally-facilitated Exchange must provide for a process under which the § 155.715(e). remit a user fee to HHS each month, in employee will remain in the QHP (d) * * * the timeframe and manner established selected the previous year, unless— (2) A failure by the SHOP to provide by HHS, equal to the product of the * * * * * a timely eligibility determination or a monthly user fee rate specified in the (j) * * * timely notice of an eligibility annual HHS notice of benefit and (2) * * * determination in accordance with payment parameters for Federally- (i) Experiences an event described in § 155.715(f). facilitated Exchanges for the applicable § 155.420(d)(1) (other than paragraph * * * * * benefit year and the monthly premium

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charged by the issuer for each policy ■ 56. Section 156.122 is amended by Labor’s Bureau of Labor Statistics under the plan where enrollment is adding paragraph (c)(4) to read as Consumer Price Index specific to dental through a Federally-facilitated follows: services. Exchange. (d) Increments of cost sharing § 156.122 Prescription drug benefit. (2) To support the functions of State- increases. Any increase in the annual based Exchanges on the Federal * * * * * dollar limits described in paragraph (c) * * * platform, unless the State-based (a)(1) of this section that does not result (4) Application of coverage appeals Exchange and HHS agree on an in a multiple of 25 dollars will be laws. (i) A State may determine that a alternative mechanism to collect the rounded down, to the next lowest health plan in the State satisfies the funds, a participating issuer offering a multiple of 25 dollars. requirements of this paragraph (c) if the plan through a State-based Exchange ■ 59. Section 156.230 is amended by health plan has a process to allow an that elects to utilize the Federal adding paragraphs (d) and (e) to read as enrollee to request and gain access to Exchange platform for certain Exchange follows: clinically appropriate drugs not functions described in § 155.200 of this otherwise covered by the health plan § 156.230 Network adequacy standards. subchapter, as specified in a Federal that is compliant with the State’s platform agreement, must remit a user * * * * * applicable coverage appeals laws and fee to HHS, in the timeframe and (d) Provider transitions. A QHP issuer regulations that are at least as stringent manner established by HHS, equal to in a Federally-facilitated Exchange as the requirements of this paragraph (c) the product of the sum of the monthly must— and include: (1) Make a good faith effort to provide user fee rate specified in the annual (A) An internal review; written notice of discontinuation of a HHS notice of benefit and payment (B) An external review; provider 30 days prior to the effective parameters for State-based Exchanges (C) The ability to expedite the date of the change or otherwise as soon that use the Federal platform for the reviews; and as practicable, to enrollees who are applicable benefit year plus, if a written (D) Timeframes that are the same or patients seen on a regular basis by the request is made by a State, any shorter than the timeframes under provider or who receive primary care additional user fee rate that HHS will paragraphs (c)(1)(ii) and (c)(2)(iii) of this from the provider whose contract is collect on behalf of the State-based section. being discontinued, irrespective of Exchange, multiplied by the monthly * * * * * whether the contract is being premium charged by the issuer for each ■ discontinued due to a termination for policy under the plan where enrollment 57. Section 156.135 is amended by cause or without cause, or due to a non- is through the State-based Exchange on revising paragraph (g) to read as follows: renewal; the Federal platform. § 156.135 AV calculation for determining (2) In cases where a provider is * * * * * level of coverage. terminated without cause, allow an ■ 54. Section 156.80 is amended by * * * * * enrollee in an active course of treatment revising paragraph (d)(3)(ii) to read as (g) Updates to the AV Calculator. to continue treatment until the follows: HHS will update the AV Calculator treatment is complete or for 90 days, annually for material changes that may whichever is shorter, at in-network cost- § 156.80 Single risk pool. include costs, plan designs, the standard sharing rates. * * * * * population, developments in the (i) For the purposes of paragraph (d) * * * function and operation of the AV (d)(2) of this section, active course of Calculator and other actuarially relevant treatment means: (3) * * * factors. (A) An ongoing course of treatment (ii) A health insurance issuer in the ■ 58. Section 156.150 is amended by for a life-threatening condition, defined small group market (not including a adding paragraphs (a)(1) and (2), (c), and as a disease or condition for which merged market) may establish index (d) to read as follows: likelihood of death is probable unless rates and make the marketwide the course of the disease or condition is adjustments under paragraph (d)(1) of § 156.150 Application to stand-alone interrupted; this section, and make the plan-level dental plans inside the Exchange. (B) An ongoing course of treatment for adjustments under paragraph (d)(2) of (a) * * * a serious acute condition, defined as a this section, no more frequently than (1) For plan years beginning after disease or condition requiring complex quarterly. Any changes to rates must 2017, for one covered child—the dollar ongoing care which the covered person have effective dates of January 1, April limit applicable to a stand-alone dental is currently receiving, such as 1, July 1, or October 1. Such rates may plan for one covered child specified in chemotherapy, radiation therapy, or only apply to coverage issued or this paragraph (a) increased by the post-operative visits; renewed on or after the rate effective percent increase of the consumer price (C) The second or third trimester of date and will apply for the entire plan index for dental services for the year 2 pregnancy, through the postpartum year of the group health plan. years prior to the applicable plan year period; or * * * * * over the consumer price index for (D) An ongoing course of treatment for dental services for 2016. a health condition for which a treating ■ 55. Section 156.115 is amended by (2) For plan years after 2017, for two physician or health care provider attests revising paragraph (a)(5) introductory or more covered children—twice the that discontinuing care by that text to read as follows: dollar limit for one child described in physician or health care provider would § 156.115 Provision of EHB. paragraph (a)(1) of this section. worsen the condition or interfere with * * * * * anticipated outcomes. (a) * * * (c) Consumer price index for dental (ii) Any QHP issuer decision made for (5) With respect to habilitative services defined. The consumer price a request for continuity of care under services and devices— index for dental services is a sub- paragraph (d)(2) of this section must be * * * * * component of the U.S. Department of subject to the health benefit plan’s

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internal and external grievance and population falls below 200 percent of application through the issuer’s Internet appeal processes in accordance with the Federal Poverty Line satisfies a Web site. applicable State or Federal law or minimum percentage, specified by HHS, (5) HHS or its designee may regulations. of available essential community periodically monitor and audit an agent, (e) Out-of-network cost sharing. provider in the plan’s service area. For broker, or issuer to assess its compliance Beginning for the 2018 and later benefit plan years beginning prior to January 1, with the applicable requirements of this years, for a network to be deemed 2018, multiple providers at a single section. adequate, each QHP that uses a provider location will count as a single essential * * * * * network must: community provider toward both the ■ (1) Notwithstanding § 156.130(c), available essential community providers 62. Section 156.270 is amended by count the cost sharing paid by an in the plan’s service area and the revising paragraphs (d) introductory text enrollee for an essential health benefit issuer’s satisfaction of the essential and (g) to read as follows: provided by an out-of-network ancillary community provider participation § 156.270 Termination of coverage or provider in an in-network setting standard. For plan years beginning on or enrollment for qualified individuals. towards the enrollee’s annual limitation after January 1, 2018, multiple * * * * * contracted or employed full-time on cost sharing; or (d) Grace period for recipients of (2) Provide a written notice to the equivalent practitioners at a single location will count toward both the advance payments of the premium tax enrollee by the longer of when the credit. A QHP issuer must provide a issuer would typically respond to a available essential community providers in the plan’s service area and the grace period of 3 months for an enrollee, prior authorization request timely who when failing to timely pay submitted, or 48 hours before the satisfaction of the essential community provider participation standard; and premiums, is receiving advance provision of the benefit, that additional payments of the premium tax credit. costs may be incurred for an essential * * * * * During the grace period, the QHP issuer health benefit provided by an out-of- ■ 61. Section 156.265 is amended by must: network ancillary provider in an in- revising paragraph (b)(2)(ii) and adding * * * * * network setting, including balance paragraphs (b)(3) through (5) to read as billing charges, unless such costs are follows: (g) Exhaustion of grace period. If an prohibited under State law, and that any enrollee receiving advance payments of additional charges may not count § 156.265 Enrollment process for qualified the premium tax credit exhausts the 3- toward the in-network annual limitation individuals. month grace period in paragraph (d) of on cost sharing. * * * * * this section without paying all outstanding premiums, subject to a ■ 60. Section 156.235 is amended by (b) * * * (2) * * * premium payment threshold revising paragraphs (a)(2)(i) and (b)(2)(i) (ii) Ensure the applicant’s completion implemented under § 155.400(g) of this to read as follows: of an eligibility verification and subchapter, if applicable, the QHP § 156.235 Essential community providers. enrollment application through the issuer must terminate the enrollee’s (a) * * * Exchange Internet Web site as described enrollment through the Exchange on the (2) * * * in § 155.405, or ensure that the effective date described in (i) The network includes as eligibility application information is § 155.430(d)(4) of this subchapter, participating practitioners at least a submitted for an eligibility provided that the QHP issuer meets the minimum percentage, as specified by determination through the Exchange- notice requirement specified in HHS, of available essential community approved Web service subject to paragraph (b) of this section. providers in each plan’s service area. meeting the requirements in paragraph * * * * * For plan years beginning prior to (b)(3) through (5) of this section; (3) When an Internet Web site of an ■ 63. Section 156.285 is amended by January 1, 2018, multiple providers at a issuer is used to complete the Exchange revising paragraph (c)(5) and removing single location will count as a single eligibility application outlined in this and reserving paragraph (d)(2) to read as essential community provider toward section, at a minimum, the Internet Web follows: both the available essential community site must: providers in the plan’s service area and § 156.285 Additional standards specific to (i) Use exactly the same eligibility SHOP. the issuer’s satisfaction of the essential application language as appears in the * * * * * community provider participation FFE Single Streamlined Application standard. For plan years beginning on or required in § 155.405 of this subchapter, (c) * * * after January 1, 2018, multiple unless HHS approves a deviation; (5) Send enrollment reconciliation contracted or employed full-time (ii) Ensure that all necessary files on at least a monthly basis, and, in equivalent practitioners at a single information for the consumer’s a Federally-facilitated SHOP, according location will count toward both the applicable eligibility circumstances are to a process, timeline, and file format available essential community providers submitted through the Exchange- established by the Federally-facilitated in the plan’s service area and the approved Web service; and SHOP; issuer’s satisfaction of the essential (iii) Ensure that the process used for * * * * * community provider participation consumers to complete the eligibility ■ 64. Section 156.298 is amended by— standard; and application complies with all applicable ■ a. Revising paragraph (b)(4). * * * * * Exchange standards, including ■ (b) * * * §§ 155.230 and 155.260(b) of this b. Removing paragraph (b)(5). (2) * * * subchapter. ■ c. Redesignating paragraph (b)(6) as (i) The number of its providers that (4) An issuer must obtain HHS paragraph (b)(5). are located in Health Professional approval that the requirements of this ■ d. Revising newly redesignated Shortage Areas or five-digit zip codes in section have been met prior to paragraph (b)(5). which 30 percent or more of the completing an applicant’s eligibility The revisions read as follows:

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§ 156.298 Meaningful difference standard money penalty under this section by removing paragraph (d) to read as for Qualified Health Plans in the Federally- filing a request for hearing under an follows: facilitated Exchanges. applicable administrative hearing * * * * * process. § 156.1110 Establishment of patient safety standards for QHP issuers. (b) * * * (2) If an issuer files a request for (4) Plan type; or hearing under this paragraph (d), the (a) Patient safety standards. A QHP (5) Child-only versus non Child-only assessment of a civil money penalty will issuer that contracts with a hospital plan offerings. not occur prior to the issuance of the with greater than 50 beds must verify * * * * * final administrative decision in the that the hospital, as defined in section ■ 65. The heading of subpart D is appeal. 1861(e) of the Act: revised to read as follows: (1) For plan years beginning before * * * * * January 1, 2017, is Medicare-certified or ■ 68. Section 156.810 is amended by Subpart D—Standards for Qualified has been issued a Medicaid-only CMS revising paragraphs (a)(12) and (13) and Health Plan Issuers on Federally- Certification Number (CCN) and is (e) and adding paragraphs (a)(14) and Facilitated Exchanges and State-Based subject to the Medicare Hospital (15) to read as follows: Exchanges on the Federal Platform Conditions of Participation § 156.810 Bases and process for requirements for— ■ 66. Section 156.350 is added to read decertification of a QHP offered by an (i) A quality assessment and as follows: issuer through a Federally-facilitated performance improvement program as Exchange. specified in 42 CFR 482.21; and § 156.350 Eligibility and enrollment (ii) Discharge planning as specified in standards for Qualified Health Plan issuers (a) * * * on State-based Exchanges on the Federal (12) The QHP issuer substantially fails 42 CFR 482.43. platform. to meet the requirements related to the (2) For plan years beginning on or after January 1, 2017— (a) In order to participate in a State- cases forwarded to QHP issuers under (i)(A) Utilizes a patient safety based Exchange on the Federal platform, subpart K of this part; evaluation system as defined in 42 CFR a QHP issuer must comply with HHS (13) The QHP issuer substantially fails 3.20; and regulations, and guidance pertaining to to meet the requirements related to the (B) Implements a mechanism for issuer eligibility and enrollment offering of a QHP under subpart M of comprehensive person-centered hospital functions as if the issuer were an issuer this part; discharge to improve care coordination of a QHP on a Federally-facilitated (14) The QHP issuer offering the QHP and health care quality for each patient; Exchange. These requirements is the subject of a pending, ongoing, or final State regulatory or enforcement or include— (ii) Implements an evidence-based (1) Section 156.285(a)(4)(ii) regarding action or determination that relates to initiative, to improve health care quality the premiums for plans offered on the the issuer offering QHPs in the through the collection, management and SHOP; Federally-facilitated Exchanges; or (2) Section 156.285(c)(8)(iii) regarding (15) HHS reasonably believes that the analysis of patient safety events that enrollment process for SHOP; and QHP issuer lacks the financial viability reduces all cause preventable harm, (3) Section 156.715 regarding to provide coverage under its QHPs prevents hospital readmission, or compliance reviews of QHP issuers, to until the end of the plan year. improves care coordination. (3) A QHP issuer must ensure that the extent relating directly to applicable * * * * * eligibility and enrollment functions. each of its QHPs meets the patient safety (e) Request for hearing. An issuer may standards in accordance with this (b) HHS will permit issuers of QHPs appeal the decertification of a QHP in each State-based Exchange on the section. offered by that issuer under paragraph (b) Documentation. A QHP issuer Federal platform to directly enroll (c) or (d) of this section by filing a applicants in a manner that is must collect: request for hearing under an applicable (1) For plan years beginning before considered to be through the Exchange, administrative hearing process. as if the issuers were issuers of QHPs on January 1, 2017, the CCN from each of (1) If an issuer files a request for its contracted hospitals with greater Federally-facilitated Exchanges under hearing under this paragraph (e): § 156.1230(a), to the extent permitted by than 50 beds, to demonstrate that those (i) If the decertification is under hospitals meet patient safety standards applicable State law. paragraph (b)(1) of this section, the (c) If the State-based Exchange on the required in paragraph (a)(1) of this decertification will not take effect prior Federal platform does not substantially section; and to the issuance of the final enforce a requirement in paragraph (a) (2) For plan years beginning on or administrative decision in the appeal, of this section against the issuer or plan, after January 1, 2017, information, from notwithstanding the effective date then HHS may do so, in accordance each of its contracted hospitals with specified in paragraph (b)(1) of this with the enforcement remedies in greater than 50 beds, to demonstrate that section. subpart I of this part, subject to the those hospitals meet patient safety (ii) If the decertification is under administrative review process in standards required in paragraph (a)(2) of paragraph (b)(2) of this section, the subpart J of this part. this section. decertification will be effective on the ■ * * * * * 67. Section 156.805 is amended by date specified in the notice of ■ 70. Section 156.1215 is amended by revising paragraph (d) to read as decertification, but the certification of revising paragraphs (b) and (c) to read follows: the QHP may be reinstated immediately as follows: § 156.805 Bases and process for imposing upon issuance of a final administrative civil money penalties in Federally-facilitated decision that the QHP should not be § 156.1215 Payment and collections Exchanges. decertified. processes. * * * * * (2) [Reserved] * * * * * (d) Request for hearing. (1) An issuer ■ 69. Section 156.1110 is amended by (b) Netting of payments and charges may appeal the assessment of a civil revising paragraphs (a) and (b) and for later years. As part of its payment

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and collections process, HHS may net (ii) For a risk adjustment payment or grantee directed by a government payments owed to issuers and their charge, including an assessment of risk program to make payments on its behalf. affiliates operating under the same tax adjustment user fees, within 30 calendar ■ 73. Section 156.1256 is added to read identification number against amounts days of the date of the notification as follows: due to the Federal or State governments under § 153.310(e) of this subchapter; from the issuers and their affiliates (iii) For a reinsurance payment, § 156.1256 Other notices. under the same taxpayer identification within 30 calendar days of the date of number for advance payments of the the notification under § 153.240(b)(1)(ii) As directed by the FFE, a health premium tax credit, advance payments of this subchapter; insurance issuer that is offering QHP of and reconciliation of cost-sharing (iv) For a default risk adjustment coverage through an FFE or an SBE–FP reductions, payment of Federally- charge, within 30 calendar days of the must notify its enrollees of material plan facilitated Exchange user fees, payment date of the notification of the default or benefit display errors and the of any fees for State-based Exchanges risk adjustment charge; enrollees’ eligibility for a special utilizing the Federal platform, and risk (v) For reconciliation of cost-sharing enrollment period, included in adjustment, reinsurance, and risk reductions, within 60 calendar days of § 155.420(d)(4) of this subchapter, corridors payments and charges. the date of the notification of the cost- within 30 calendar days after being (c) Determination of debt. Any sharing reduction reconciliation notified by the FFE that the error has amount owed to the Federal government payment or charge; and been fixed, if directed to do so by the by an issuer and its affiliates for (vi) For a risk corridors payment or FFE. charge, within 30 calendar days of the advance payments of the premium tax PART 158—ISSUER USE OF PREMIUM credit, advance payments of and date of the notification under § 153.510(d) of this subchapter. REVENUE: REPORTING AND REBATE reconciliation of cost-sharing (4) * * * REQUIREMENTS reductions, Federally-facilitated (ii) Notwithstanding paragraph (a)(1) Exchange user fees, including any fees of this section, a reconsideration with ■ 74. The authority citation for part 158 for State-based Exchanges utilizing the respect to a processing error by HHS, continues to read as follows: Federal platform, risk adjustment, HHS’s incorrect application of the Authority: Section 2718 of the Public reinsurance, and risk corridors, after relevant methodology, or HHS’s HHS nets amounts owed by the Federal Health Service Act (42 U.S.C. 300gg–18), as mathematical error may be requested amended. government under these programs, is a only if, to the extent the issue could determination of a debt. have been previously identified by the ■ 75. Section 158.103 is amended by ■ 71. Section 156.1220 is amended by issuer to HHS under § 153.710(d)(2) of revising the definitions of ‘‘Large revising paragraphs (a)(3) and (a)(4)(ii) this subchapter, it was so identified and Employer’’ and ‘‘Small Employer’’ to to read as follows: remains unresolved. read as follows: § 156.1220 Administrative appeals. * * * * * § 158.103 Definitions. ■ 72. Section 156.1250 is revised to read (a) * * * * * * * * (3) Time for filing a request for as follows: Large Employer has the meaning reconsideration. The request for § 156.1250 Acceptance of certain third given the term in § 144.103 of this reconsideration must be filed in party payments. subchapter. accordance with the following Issuers offering individual market * * * * * timeframes: QHPs, including stand-alone dental (i) For advance payments of the plans, and their downstream entities, Small Employer has the meaning premium tax credit, advance payments must accept premium and cost-sharing given the term in § 144.103 of this of cost-sharing reductions, Federally- payments for the QHPs from the subchapter. facilitated Exchange user fee charges, or following third-party entities from plan * * * * * State-based Exchanges utilizing the enrollees (in the case of a downstream Dated: , 2016. Federal platform fees, within 60 entity, to the extent the entity routinely Andrew M. Slavitt, calendar days after the date of the final collects premiums or cost sharing): reconsideration notification specifying (a) A Ryan White HIV/AIDS Program Acting Administrator, Centers for Medicare & Medicaid Services. the aggregate amount of advance under title XXVI of the Public Health payments of the premium tax credit, Service Act; Dated: , 2016. advance payments of cost-sharing (b) An Indian tribe, tribal Sylvia M. Burwell, reductions, Federally-facilitated organization, or urban Indian Secretary, Department of Health and Human Exchange user fees, and State-based organization; and Services. Exchanges utilizing the Federal platform (c) A local, State, or Federal [FR Doc. 2016–04439 Filed 2–29–16; 4:15 pm] fees for the applicable benefit year; government program, including a BILLING CODE 4150–01–P

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