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Vol. 78 Wednesday, No. 39 February 27, 2013 Part II Department of Health and Human Services 45 CFR Parts 144, 147, 150, et al. Patient Protection and Affordable Care Act; Health Insurance Market Rules; Rate Review; Final Rule VerDate Mar<15>2010 15:19 Feb 26, 2013 Jkt 229001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\27FER2.SGM 27FER2 erowe on DSK2VPTVN1PROD with RULES_2 13406 Federal Register / Vol. 78, No. 39 / Wednesday, February 27, 2013 / Rules and Regulations DEPARTMENT OF HEALTH AND A. Part 144—Requirements Relating to Federal Register proposed rule entitled HUMAN SERVICES Health Insurance Coverage ‘‘Patient Protection and Affordable Care 1. Subpart A—General Provisions Act; Health Insurance Market Rules; 45 CFR Parts 144, 147, 150, 154 and B. Part 147—Health Insurance Reform Rate Review’’ (77 FR 70584). These 156 Requirements for the Group and Individual Health Insurance Markets standards apply to health insurance [CMS–9972–F] 1. Fair Health Insurance Premiums issuers offering non-grandfathered 2. State Reporting health insurance coverage both inside RIN 0938–AR40 3. Guaranteed Availability of Coverage and outside of the new competitive 4. Guaranteed Renewability of Coverage marketplaces called Affordable Patient Protection and Affordable Care C. Part 150—CMS Enforcement in Group Insurance Exchanges, or ‘‘Exchanges.’’ Act; Health Insurance Market Rules; and Individual Insurance Markets This final rule: (1) Provides that Rate Review D. Part 154—Health Insurance Issuer Rate health insurance issuers may vary the Increases: Disclosure and Review AGENCY: Department of Health and premium rate for health insurance Requirements coverage in the individual and small Human Services. 1. Subpart B—Disclosure and Review ACTION: Final rule. Provisions group markets only based on family 2. Subpart C—Effective Rate Review size, geography, and age and tobacco SUMMARY: This final rule implements Programs use within limits; (2) directs health provisions related to fair health E. Part 156—Health Insurance Issuer insurance issuers to offer coverage to insurance premiums, guaranteed Standards Under the Affordable Care and accept every employer or individual availability, guaranteed renewability, Act, Including Standards Related to who applies for coverage in the group single risk pools, and catastrophic Exchanges and individual market, subject to certain plans, consistent with title I of the 1. Subpart A—General Provisions exceptions; (3) directs health insurance Patient Protection and Affordable Care 2. Subpart B—Standards for Essential issuers to renew or continue in force Health Benefits, Actuarial Value, and Act, as amended by the Health Care and Cost Sharing coverage in the group and individual Education Reconciliation Act of 2010, F. Applicability to Special Plan Types market, subject to certain exceptions; (4) referred to collectively as the Affordable III. Modification of Effective Date of Certain codifies the requirement that issuers Care Act. The final rule clarifies the Provisions maintain a single risk pool for the approach used to enforce the applicable IV. Provisions of the Final Regulations individual market and a single risk pool requirements of the Affordable Care Act V. Collection of Information Requirements for the small group market (unless a with respect to health insurance issuers A. ICRs Regarding State Disclosures state decides to merge the markets into and group health plans that are non- B. ICRs Regarding Rate Increase Disclosure a single risk pool); and (5) outlines federal governmental plans. This final and Review standards for enrollment in catastrophic VI. Regulatory Impact Analysis rule also amends the standards for A. Summary plans for young adults and people who health insurance issuers and states B. Executive Orders cannot otherwise afford health regarding reporting, utilization, and 1. Need for Regulatory Action insurance. collection of data under the federal rate 2. Summary of Impacts Finally, this rule amends the review program, and revises the 3. Anticipated Benefits, Costs, and standards under the rate review program timeline for states to propose state- Transfers in 45 CFR part 154. The amendments specific thresholds for review and C. Regulatory Alternatives revise the timeline for states to propose approval by the Centers for Medicare & D. Regulatory Flexibility Act state-specific thresholds for review and Medicaid Services (CMS). E. Unfunded Mandates approval by CMS. The amendments also F. Federalism direct health insurance issuers to submit DATES: Effective Date. This rule is G. Congressional Review Act effective on April 29, 2013, except 45 data relating to proposed rate increases CFR 147.103 and the amendments to 45 Executive Summary: Beginning in in a standardized format specified by CFR part 154 are effective on March 29, 2014, health insurance issuers will be the Secretary of HHS (the Secretary), 2013. prohibited from denying coverage to any and modify criteria and factors for states Applicability Dates. The provisions of American because of a pre-existing to have an effective rate review program. this final rule generally apply to health condition, and from charging These changes are necessary to reflect insurance coverage for plan or policy individuals and small employers higher the new market reform provisions years beginning on or after January 1, premiums based on health status or discussed above and to fulfill the 2014. The provisions of 45 CFR 147.103 gender. In addition, health insurance statutory requirement beginning in 2014 apply on March 29, 2013. The issuers will no longer be able to segment that the Secretary, in conjunction with amendments to 45 CFR part 154 apply enrollees into separate rating pools in the states, monitor premium increases of on April 1, 2013. order to charge high-risk individuals health insurance coverage offered FOR FURTHER INFORMATION CONTACT: more than low-risk individuals. These through an Exchange and outside of an Jacob Ackerman, (410) 786–1565 (or by reforms, combined with other Exchange. The provisions are also email: [email protected]), provisions in the Affordable Care Act, designed to streamline data collection concerning the health insurance market will improve the functioning of both the for issuers, states, Exchanges, and HHS. The substantive authority for these rules; Douglas Pennington, (410) 786– individual and small group markets and final rules is generally sections 2701, 1553 (or by email: [email protected]), make health insurance affordable and 2702, 2703, 2723 and 2794 of the Public concerning rate review. accessible to millions of individuals and families who currently lack affordable Health Service Act (PHS Act) and SUPPLEMENTARY INFORMATION: coverage options. sections 1302(e), 1312(c), and 1560(c) of Table of Contents The Department of Health and Human the Affordable Care Act. PHS Act Services (HHS) published proposed section 2792 authorizes rulemaking as I. Background A. Legislative Overview standards to implement the 2014 market necessary or appropriate to carry out the B. Structure of the Final Rule reform provisions of the Affordable Care provisions of title XXVII of the PHS Act, II. Provisions of the Proposed Rule and Act and to amend the federal rate including sections 2701, 2702, 2703, Analysis and Responses to Comments review program in a November 26, 2012 2723, and 2794. Section 1321(a) of the VerDate Mar<15>2010 15:19 Feb 26, 2013 Jkt 229001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 E:\FR\FM\27FER2.SGM 27FER2 erowe on DSK2VPTVN1PROD with RULES_2 Federal Register / Vol. 78, No. 39 / Wednesday, February 27, 2013 / Rules and Regulations 13407 Affordable Care Act authorizes does not establish such areas, the statute Section 2701 applies to health rulemaking with respect to sections authorizes the Secretary to establish insurance issuers offering health 1302(e), 1312(c), and 1560(c). rating areas for that state. Section insurance coverage in the individual 2701(a)(3) directs the Secretary, in and small group markets, and in the I. Background consultation with the National large group market if a state, beginning A. Legislative Overview Association of Insurance Commissioners in 2017, allows health insurance issuers The Patient Protection and Affordable (NAIC), to define permissible age bands in the large group market to offer Care Act (Pub. L. 111–148) was enacted for rating purposes. Section 2701(a)(4) qualified health plans (QHPs) in such on March 23, 2010. The Health Care and provides that, for purposes of family market through an Exchange pursuant to Education Reconciliation Act of 2010 coverage, any rating variation for age section 1312(f)(2)(B) of the Affordable 3 (Pub. L. 111–152) was enacted on March and tobacco use must be applied based Care Act. Sections 2702 and 2703 30, 2010. We refer to the two statutes on the portion of the premium apply to issuers in the individual and collectively as the ‘‘Affordable Care attributable to each family member. group (small and large) markets. These Act’’ in this final rule. Section 2702 of the PHS Act directs provisions apply to health insurance Subtitles A and C of title I of the a health insurance issuer offering health coverage in the respective markets Affordable Care Act reorganized, insurance coverage in the group or regardless of whether the coverage is a amended, and added to the provisions individual market in a state to accept QHP offered on Exchanges. Section of part A of title XXVII of the PHS Act every employer and individual in the 1255 of the Affordable Care Act relating to health insurance issuers in state that applies for the coverage, provides that sections 2701, 2702, and the group and individual markets and to subject to certain exceptions. These 2703 of the PHS Act are effective for group health plans that are non-federal exceptions allow issuers to restrict plan years (in the individual market, governmental plans.1 As relevant here, enrollment in coverage: (1) To open and policy years) beginning on or after 4 these PHS Act provisions include special enrollment periods as described January 1, 2014.