[Federal Register Volume 77, Number 59 (Tuesday, March 27, 2012)]
[Rules and Regulations]
[Pages 18310-18475]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-6125]
[[Page 18309]]
Vol. 77
Tuesday,
No. 59
March 27, 2012
Part II
Department of Health and Human Services
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45 CFR Parts 155, 156, and 157
Patient Protection and Affordable Care Act; Establishment of Exchanges
and Qualified Health Plans; Exchange Standards for Employers; Final
Rule and Interim Final Rule
Federal Register / Vol. 77 , No. 59 / Tuesday, March 27, 2012 / Rules
and Regulations
[[Page 18310]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Parts 155, 156, and 157
[CMS-9989-F]
RIN 0938-AQ67
Patient Protection and Affordable Care Act; Establishment of
Exchanges and Qualified Health Plans; Exchange Standards for Employers
AGENCY: Department of Health and Human Services.
ACTION: Final rule, Interim final rule.
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SUMMARY: This final rule will implement the new Affordable Insurance
Exchanges (``Exchanges''), consistent with title I of the Patient
Protection and Affordable Care Act of 2010 as amended by the Health
Care and Education Reconciliation Act of 2010, referred to collectively
as the Affordable Care Act. The Exchanges will provide competitive
marketplaces for individuals and small employers to directly compare
available private health insurance options on the basis of price,
quality, and other factors. The Exchanges, which will become
operational by January 1, 2014, will help enhance competition in the
health insurance market, improve choice of affordable health insurance,
and give small businesses the same purchasing clout as large
businesses.
DATES: Effective Date: These regulations are effective on May 29, 2012.
Comment Date: Certain provisions of this final rule are being
issued as interim final. We will consider comments from the public on
the following provisions: Sec. Sec. 155.220(a)(3); 155.300(b);
155.302; 155.305(g); 155.310(e); 155.315(g); 155.340(d); 155.345(a);
and, 155.345(g). To be assured consideration, comments must be received
at one of the addresses provided below, no later than 5 p.m. Eastern
Standard Time (EST) on May 11, 2012.
ADDRESSES: In commenting, please refer to file code CMS-9989-F. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission. You may submit comments in one of four
ways (please choose only one of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-9989-F, P.O. Box 8010,
Baltimore, MD 21244-8010.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-9989-F, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments before the close of the comment period
to either of the following addresses: a. For delivery in Washington,
DC--Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Room 445-G, Hubert H. Humphrey Building, 200
Independence Avenue SW., Washington, DC 20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call telephone number (410) 786-9994 in advance to schedule your
arrival with one of our staff members.
FOR FURTHER INFORMATION CONTACT:
Alissa DeBoy at (301) 492-4428 for general information and matters
related to part 155.
Michelle Strollo at (301) 492-4429 for matters related to part 155
subparts D and E.
Pete Nakahata at (202) 680-9049 for matters related to part 156.
Rex Cowdry at (301) 492-4387 for matters related to part 155
subpart H and part 157.
SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments
received before the close of the comment period are available for
viewing by the public, including any personally identifiable or
confidential business information that is included in a comment. We
post all comments received before the close of the comment period on
the following Web site as soon as possible after they have been
received: http://regulations.gov. Follow the search instructions on
that Web site to view public comments.
Comments received timely will be also available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
This final rule incorporates provisions originally published as two
proposed rules, the July 15, 2011 rule titled Establishment of
Exchanges and Qualified Health Plans (``Exchange establishment proposed
rule''), and the August 17, 2011 rule titled Exchange Functions in the
Individual Market: Eligibility Determinations and Exchange Standards
for Employers (``Exchange eligibility proposed rule''). These proposed
rules are referred to collectively as the Exchange establishment and
eligibility proposed rules. While originally published as separate
rulemaking, the provisions contained in these proposed rules are
integrally linked, and together encompass the key functions of
Exchanges related to eligibility, enrollment, and plan participation
and management. In addition, several sections in this final rule are
being issued as interim final rules and we are soliciting comment on
those sections. Given the highly connected nature of these provisions,
we are combining both proposed rules and the interim final rule into a
single final rule for reader ease and consistency with the note that,
even though the final rule is shorter than the sum of the two proposed
rules, it is longer than each individually.
An updated Regulatory Impact Analysis associated with this final
rule is available at http://cciio.cms.gov under ``Regulations and
Guidance.'' A summary of the aforementioned analysis is included as
part of this final rule.
Abbreviations
Affordable Care Act--The Affordable Care Act of 2010 (which is the
collective term for the Patient Protection and Affordable Care Act
(Pub. L. 111-148) and the Health Care and Education Reconciliation Act
(Pub. L. 111-152))
BHP Basic Health Program
CAHPS Consumer Assessment of Healthcare Providers and Systems
CHIP Children's Health Insurance Program
CMS Centers for Medicare & Medicaid Services
[[Page 18311]]
DOL U.S. Department of Labor
ERISA Employee Retirement Income Security Act (29 U.S.C. section
1001, et seq.)
FEHBP Federal Employees Health Benefits Program (5 U.S.C. 8901, et
seq.)
HEDIS Healthcare Effectiveness Data and Information Set
HHS U.S. Department of Health and Human Services
HIPAA Health Insurance Portability and Accountability Act of 1996
(Pub. L. 104-191)
HMO Health Maintenance Organization
IHS Indian Health Service
IRS Internal Revenue Service
LEP Limited English Proficient
MAGI Modified Adjusted Gross Income
MEWA Multiple Employer Welfare Arrangement
NAIC National Association of Insurance Commissioners
OMB Office of Management and Budget
OPM U.S. Office of Personnel Management
PBM Pharmacy Benefit Manager
PHS Act Public Health Service Act
PRA Paperwork Reduction Act of 1985
QHP Qualified Health Plan
SHOP Small Business Health Options Program
SSA Social Security Administration
SSN Social Security Number
The Act Social Security Act
The Code Internal Revenue Code of 1986
TIN Taxpayer Identification Number
Table of Contents
I. Background
A. Legislative Overview
1. Legislative Requirements for Establishing Exchanges
2. Legislative Requirements for Related Provisions
B. Structure of the Final Rule
II. Provisions of the Proposed Regulation and Analysis of and
Responses to Public Comments
A. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
1. Subpart A--General Provisions
2. Subpart B--General Standards Related to the Establishment of
an Exchange by a State
3. Subpart C--General Functions of an Exchange
4. Subpart D--Exchange Functions in the Individual Market:
Eligibility Determinations for Exchange Participation and Insurance
Affordability Programs
5. Subpart E--Exchange Functions in the Individual Market:
Enrollment in Qualified Health Plans
6. Subpart H--Exchange Functions: Small Business Health Options
Program (SHOP)
7. Subpart K--Exchange Functions: Certification of Qualified
Health Plans
B. Part 156--Health Insurance Issuer Standards Under the
Affordable Care Act, Including Standards Related to Exchanges
1. Subpart A--General Provisions
2. Subpart C--Qualified Health Plan Minimum Certification
Standards
C. Part 157--Employer Interactions With Exchange and SHOP
Participation
1. Subpart A--General Provisions
2. Subpart C--Standards for Qualified Employers
III. Provisions of the Final Regulations
IV. Waiver of Proposed Rulemaking
V. Collection of Information Requirements
VI. Summary of Regulatory Impact Analysis
VII. Regulatory Flexibility Act
VIII. Unfunded Mandates
IX. Federalism
X. Regulations Text
Executive Summary: Beginning in 2014, individuals and small
businesses will be able to purchase private health insurance through
competitive marketplaces called Affordable Insurance Exchanges, or
``Exchanges.'' Exchanges will offer Americans competition, choice, and
clout. Insurance companies will compete for business on a level playing
field, driving down costs. Consumers will have a choice of health plans
to fit their needs, and Exchanges will give individuals and small
businesses the same purchasing clout as big businesses.
This final rule: (1) Sets forth the minimum Federal standards that
States must meet if they elect to establish and operate an Exchange,
including the standards related to individual and employer eligibility
for and enrollment in the Exchange and insurance affordability
programs; (2) outlines minimum standards that health insurance issuers
must meet to participate in an Exchange and offer qualified health
plans (QHPs); and (3) provides basic standards that employers must meet
to participate in the Small Business Health Options Program (SHOP). The
intent of this final rule is to afford States substantial discretion in
the design and operation of an Exchange, with greater standardization
provided where directed by the statute or where there are compelling
practical, efficiency or consumer protection reasons. Consistent with
the scope of the Exchange establishment and eligibility proposed rules,
this final rule does not address all of the Exchange provisions in the
Affordable Care Act; rather, more details will be provided in
forthcoming guidance and future rulemaking, where appropriate.
A portion of this rule is issued on an interim final basis. As
such, we will consider comments from the public on the following
provisions:
Sec. 155.220(a)(3)--Related to the ability of a State to
permit agents and brokers to assist qualified individuals in applying
for advance payments of the premium tax credit and cost-sharing
reductions for QHPs.
Sec. 155.300(b)--Related to Medicaid and CHIP
regulations;
Sec. 155.302--Related to options for conducting
eligibility determinations;
Sec. 155.305(g)--Related to eligibility standards for
cost-sharing reductions;
Sec. 155.310(e)--Related to timeliness standards for
Exchange eligibility determinations;
Sec. 155.315(g)--Related to verification for applicants
with special circumstances;
Sec. 155.340(d)--Related to timeliness standards for the
transmission of information for the administration of advance payments
of the premium tax credit and cost-sharing reductions; and
Sec. 155.345(a) and Sec. 155.345(g)--Related to
agreements between agencies administering insurance affordability
programs.
I. Background
A. Legislative Overview
1. Legislative Requirements for Establishing Exchanges
Section 1311(b) and section 1321(b) of the Affordable Care Act
provide that each State has the opportunity to establish an Exchange(s)
that: (1) Facilitates the purchase of insurance coverage by qualified
individuals through qualified health plans (QHPs); (2) assists
qualified employers in the enrollment of their employees in QHPs; and
(3) meets other standards specified in the Affordable Care Act.
Section 1321 of the Affordable Care Act discusses State flexibility
in the operation and enforcement of Exchanges and related policies.
Section 1311(k) specifies that Exchanges may not establish rules that
conflict with or prevent the application of regulations promulgated by
the Secretary. Section 1311(d) describes the minimum functions of an
Exchange, including the certification of QHPs.
Section 1321(c)(1) directs the Secretary to establish and operate
such Exchange within States that either: (1) Do not elect to establish
an Exchange, or (2) as determined by the Secretary on or before January
1, 2013, will not have an Exchange operable by January 1, 2014. Section
1321(a) also provides broad authority for the Secretary to establish
standards and regulations to implement the statutory standards related
to Exchanges, QHPs, and other components of title I of the Affordable
Care Act.
Section 1401 of the Affordable Care Act creates new section 36B of
the Internal Revenue Code (the Code), which provides for a premium tax
credit for eligible individuals who enroll in a QHP through an
Exchange. Section 1402 establishes provisions to reduce the cost-
sharing obligation of certain
[[Page 18312]]
eligible individuals enrolled in a QHP offered through an Exchange,
including standards for determining Indians eligible for certain
categories of cost-sharing reductions.
Under section 1411 of the Affordable Care Act, the Secretary is
directed to establish a program for determining whether an individual
meets the eligibility standards for Exchange participation, advance
payments of the premium tax credit, cost-sharing reductions, and
exemptions from the individual responsibility provision.
Sections 1412 and 1413 of the Affordable Care Act and section 1943
of the Social Security Act (the Act), as added by section 2201 of the
Affordable Care Act, contain additional provisions regarding
eligibility for advance payments of the premium tax credit and cost-
sharing reductions, as well as provisions regarding simplification and
coordination of eligibility determinations and enrollment with other
health programs.
Unless otherwise specified, the provisions in this final rule
related to the establishment of minimum functions of an Exchange are
based on the general authority of the Secretary under section
1321(a)(1) of the Affordable Care Act.
2. Legislative Requirements for Related Provisions
Subtitle K of title II of the Affordable Care Act, Protections for
American Indians and Alaska Natives, section 2901, extends special
benefits and protections to Indians including limits on cost sharing
and payer of last resort requirements for health programs operated by
the Indian Health Service (IHS), Indian tribes, tribal organizations,
and urban Indian organizations. We are finalizing special Exchange
enrollment periods and the reductions in cost sharing for Indians
authorized, respectively, by sections 1311(c)(6) and 1402(d) of the
Affordable Care Act under this authority in subparts D and E of part
155, and we expect to address others in future rulemaking.
Section 6005 of the Affordable Care Act creates new section 1150A
of the Act, which directs QHP issuers, and sponsors of certain plans
offered under part D of title XVIII of the Act to provide data on the
cost and distribution of prescription drugs covered by the plan. We are
codifying these standards under this authority in subpart C of part
156.
B. Structure of the Final Rule
The regulations outlined in this final rule are codified in the new
45 CFR parts 155, 156, and 157. Part 155 outlines the standards
relative to the establishment, operation, and minimum functionality of
Exchanges, including eligibility standards for insurance affordability
programs. Part 156 outlines the standards for health insurance issuers
with respect to participation in an Exchange, including the minimum
certification standards for QHPs. Many provisions in part 155 have
parallel provisions under part 156 because the Affordable Care Act
creates complementary responsibilities for Exchanges and QHP issuers.
Where possible, there are cross-references between parts 155 and 156 to
avoid redundancy. Part 157 establishes the participation standards for
employers in the Small Business Health Options Program (SHOP).
Subjects included in the Affordable Care Act to be addressed in
separate rulemaking include but are not limited to: (1) Standards
outlining the Exchange process for issuing certificates of exemption
from the individual responsibility policy and payment under section
1411(a)(4); (2) defining essential health benefits, actuarial value and
other benefit design standards; and (3) standards for Exchanges and QHP
issuers related to quality.
We note that the health plan standards set forth under this final
rule are, for the most part, strictly related to QHPs certified to be
offered through the Exchange and not the entire individual and small
group market. Such policies for the entire individual and small and
large group markets have been, and will continue to be, addressed in
separate rulemaking issued by HHS, and the Departments of Labor and the
Treasury.
C. Alignment With Related Rules and Published Information
The Exchange eligibility proposed rule was published in conjunction
with ``Medicaid Program; Eligibility Changes under the Affordable Care
Act of 2010--CMS-2349-P,'' which will be referred to throughout this
final rule as the ``Medicaid proposed rule'' and the proposed rule
published by the Department of the Treasury, ``Health Insurance Premium
Tax Credits--REG 131491-10,'' which will be referred to throughout this
final rule as the ``Treasury proposed rule''. This regulation includes
numerous cross-references to the Medicaid final rule, which is expected
to be finalized shortly after this final rule. The Treasury final rule
is expected to be published soon after this Exchanges final rule.
HHS published a document titled ``State Exchange Implementation
Question and Answers'' on November 29, 2011. \1\ We reference this
document throughout the preamble where the information complements
policies in this final rule.
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\1\ State Exchange Implementation Questions and Answers,
published November 29, 2011: http://cciio.cms.gov/resources/files/Files2/11282011/exchange_q_and_a.pdf.pdf.
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II. Provisions of the Proposed Regulation and Analysis and Responses to
Public Comments
The Exchange establishment and eligibility proposed rules were
published in the Federal Register on July 15, 2011 and August 17, 2011,
respectively, with comment periods ending October 31, 2011. In total,
we received approximately 24,781 comments on both proposed rules. Of
the comments received, about 23,000 were a collection of letter
campaigns related to women's services, or general public comments on
the Affordable Care Act and the government's role in healthcare, but
not specific to the proposed rules. We also received a number of
comments on essential health benefits and preventive services. We have
not addressed such comments, and others that are not directly related
to the proposed rule, because they are outside the scope of this final
rule.
Before the proposed rules, HHS also published a Request for Comment
(the RFC) on August 3, 2010 (75 FR 45584) inviting the public to
provide input regarding the rules that will govern the Exchanges. In
this final rule, we have responded to comments submitted in response to
the Exchange establishment and eligibility proposed rules and the RFC,
where relevant. These comments are not separately identified, but
instead are incorporated into each substantive section of the final
rule as appropriate. For the most part, we address issues according to
the numerical order of the regulation sections.
Comments represented a wide variety of stakeholders, including but
not limited to States, tribes, tribal organizations, health plans,
consumer groups, healthcare providers, industry experts, and members of
the public. In addition, we held consultation sessions on August 22,
2011, September 7, 2011, and September 15, 2011 to provide an overview
of the proposed rule where Tribal governments were afforded an
opportunity to ask questions and make comments. The public was reminded
to submit written comments before the close of the public comment
period that was announced in the proposed rule and we extended the
comment period by 30 days to ensure ample opportunity for comments.
[[Page 18313]]
Many commenters addressed the balance between flexibility for
States and Exchanges and standardization and predictability for
consumers nationwide. Commenters also expressed concerns about
differences between Exchange and Medicaid policies and about various
aspects of the eligibility verification and redetermination process.
While we recognize that consumers may benefit from national
standards, we continue to believe that States are best equipped to
adapt the minimum Exchange functions to their local markets and the
unique needs of their residents. Further, States already have
significant experience performing many key functions, including
oversight and enforcement of health plans, and determining eligibility
for health benefit programs. Therefore, where possible we finalized
provisions of the proposed rule that provided significant discretion
for States to go beyond the minimum standards in implementing and
designing an Exchange. We believe this approach leverages local
expertise and experience to provide a positive experience for
consumers. Since functions within an Exchange will be handled
consistently, consumers comparing plans within an Exchange will benefit
from standardization. In addition, based on comments received, we
provide States with additional options for determining eligibility
under a State-based and Federally-facilitated Exchange in this final
rule.
A. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
1. Subpart A--General Provisions
a. Basis and Scope (Sec. 155.10)
Proposed Sec. 155.10 of subpart A specified the general statutory
authority for and scope of standards proposed in part 155, which
establish minimum standards for the State option to establish an
Exchange; minimum Exchange functions; eligibility and enrollment of
qualified individuals, including for advance payments of the premium
tax credit and cost-sharing reductions; enrollment periods; minimum
SHOP functions; eligibility and enrollment of qualified employers and
employees in a SHOP; and certification of QHPs. We did not receive
specific comments on this section and are finalizing the provision as
proposed.
b. Definitions (Sec. 155.20)
Under Sec. 155.20, we set forth definitions for terms that are
used throughout part 155. For the most part, the definitions presented
in Sec. 155.20 were taken directly from the Affordable Care Act or
from existing regulations, though some new definitions were created
when necessary.
We proposed definitions or interpretations for ``Exchange,''
``advance payments of the premium tax credit,'' ``annual open
enrollment period,'' ``applicant,'' ``cost-sharing reductions,''
``initial enrollment period,'' and ``special enrollment period.'' In
addition, in the Exchange Eligibility proposed rule, we included a
definition for ``application filer.''
Comment: A few commenters suggested that the term ``applicant''
only apply to individuals seeking coverage for themselves. Another
commenter sought clarification as to whether the term applies only to
modified adjusted gross income (MAGI)-based Medicaid applicants or to
all Medicaid applicants.
Response: We have revised the definition of the term ``applicant''
to apply only to individuals who are seeking eligibility for coverage
for themselves or their family. The proposed definition included an
individual who is seeking eligibility for advance payments of the
premium tax credit and cost-sharing reductions who might not be seeking
coverage for himself or herself (for example, in a situation in which a
parent is seeking coverage only for his or her children); we have
removed these programs from the definition of applicant as part of this
clarification. Revising this definition is important to clarify that
certain provisions of subpart D (for example, verification of
citizenship and lawful presence) only apply to individuals who are
seeking coverage.
We also note that this term applies regardless of the results of an
individual's eligibility determination. Consequently, if an individual
is seeking coverage and he or she is ultimately determined eligible for
Medicaid in a non-MAGI category, he or she was still an ``applicant.''
We further clarify that the term ``applicant'' applies regardless of
whether an application was submitted directly to the Exchange, or if an
application was submitted to an agency administering an insurance
affordability program (for example, the State Medicaid or CHIP agency)
and then transmitted to the Exchange.
Comment: We received comments suggesting that the definition of
``application filer,'' described in Sec. 155.300(a), incorporate
language included in Medicaid proposed regulations at 42 CFR 435.907,
allowing that applications be completed by ``the applicant, an
authorized representative, or someone acting responsibly for the
applicant.''
Response: In the final rule, we amend the definition of
``application filer'' in proposed Sec. 155.300 to align with the
description of individuals who may submit an application according to
Sec. 155.405(c) of this final rule as well as the Medicaid final rule,
and to include: applicants; an adult who is in the applicant's
household, as defined in 42 CFR 435.603(f), or family, as defined in
section 36B(d)(1) of the Code; authorized representatives; or, if the
applicant is a minor or incapacitated, someone acting responsibly on
behalf of the applicant.
Comment: A few commenters suggested that defining ``benefit year''
as a calendar year may be confusing to some industries where such term
is not used in the same way. Others asked how this definition impacts
the calculation of deductibles and out-of-pocket limits.
Response: The term ``benefit year'' is defined only for the
purposes of this regulation and does not change the industry's use of
the term. In this final rule, as in the proposed rule, we use ``benefit
year'' to refer to the calendar year of coverage provided through the
Exchange. The calculation of deductibles and cost-sharing limits
described in section 1302(c) of the Affordable Care Act will be
addressed in future regulations.
Comment: One commenter recommended we should define ``consumer'' to
include enrollees, qualified employers, qualified individuals and
qualified employers. One commenter requested that ``person'' be more
clearly defined to be limited to individuals acting as brokers or
agents, because in some States the word ``person'' is defined to
include entities such as a company, insurer, association, or an
organization.
Response: In response to the comments, we have tried to limit the
use of the terms ``consumer'' and ``person'' to reduce ambiguity and
any confusion. When possible, we say ``individual'' when the terms
``applicant, qualified individual, or enrollee'' are not suitable. The
definition of agent or broker is inclusive of individuals, companies,
insurers, associations, organizations, and any other entity that holds
a license as an agent, broker, or insurance producer. This final rule
does not define ``person.''
Comment: Some commenters suggested that we codify the definition of
``educated health care consumer in section 1304(e) of the Affordable
Care Act.
Response: We have added this definition to Sec. 155.20.
[[Page 18314]]
Comment: Two commenters sought clarification on whether the term
``Exchange'' includes both the individual market and SHOP components of
an Exchange.
Response: The definition of ``Exchange'' includes the phrase
``makes QHPs available to qualified individuals and qualified
employers'' and thus incorporates the Exchange functions that serve
both the individual and small group markets. Governance of an
independent SHOP is addressed in Sec. 155.110(e) and unique standards
for the SHOP are outlined in subpart H of this final rule.
Comment: One commenter suggested that we define what it means for
an Exchange to ``make available'' QHPs.
Response: We believe that this regulation in its entirety defines
what it means to ``make available'' QHPs in terms of certifying QHPs,
displaying comparative QHP information, determining eligibility for
enrollment, facilitating enrollment, and providing consumer assistance.
Comment: One commenter requested that we define the term ``entities
eligible to carry out Exchange functions.''
Response: We define what entities are eligible to carry out
Exchange functions in Sec. 155.110(a) of this final rule, and believe
that a definition in Sec. 155.20 would be duplicative.
Comment: Several commenters recommended that the final rule include
a definition of ``family'' and that it be based on definitions used by
Office of Personnel Management or the Department of Labor, or as
defined under the Family and Medical Leave Act. Commenters urged the
definition to capture the diversity and variety of family structures.
Several commenters noted that a definition will promote clarity and
consistency in the implementation of proposed Sec. 156.255.
Response: For purposes of the administration of advance payments of
the premium tax credit and cost-sharing reductions, this final rule
cross-references and incorporates from section 36B of the Code the
definition of ``household income.'' That definition relies on an
identification of members of the ``family'' that is based on section
36B of the Code, which will be finalized as part of the Treasury rule.
We intend this final rule to align with the Code as implemented by the
Secretary of the Treasury's final rules. This final rule, at Sec.
155.320(c)(2)(i), provides that an application filer must provide an
attestation to the Exchange regarding the individuals that comprise his
or her household for purposes of Medicaid and CHIP eligibility (within
the meaning of 42 CFR 435.603(f)). Please refer to part 155 subpart D
for a more detailed discussion of this topic. We note that we are not
finalizing the provisions of Sec. 156.255(c).
Comment: Several commenters stated that the definition of
``qualified employer'' should include a multi-employer plan as defined
in ERISA Section 3(37), and that ``qualified employee'' should include
individuals who are participants in a multi-employer plan, not just
individuals who are employed by a qualified employer.
Response: We do not think that the law supports accepting the
commenters' suggested changes in the definitions of ``qualified
employer'' and ``qualified employee.'' Accordingly, we have not changed
the definitions in the final rule. We intend to address commenters'
concerns surround multi-employer and church plans in future guidance.
Comment: We received numerous comments regarding the types of plans
that should be considered health plans eligible for certification as
QHPs. A few commenters suggested that multiple employer welfare
arrangements (MEWAs) be allowed to offer plans through the Exchange, be
allowed to offer plans only in the SHOP and not the individual market,
and be allowed to restrict enrollment to specific industry members or
associations. A small number of commenters also suggested that Taft-
Hartley plans and church plans be available through the Exchange. Other
commenters urged HHS to ensure that all QHPs offered through the
Exchange meet the same standards to ensure a level playing field and
questioned the ability of self-insured employer groups to comply.
Response: We finalize the definition of a health plan as codified
from section 1301(b)(1) of the Affordable Care Act, and the standards
set forth for participation in an Exchange are equally applicable to
any health insurance issuer seeking certification of health plans as
QHPs. We intend to address issues related to multi-employer and church
plans in future guidance.
Comment: Many commenters recommended HHS adopt an expansive
definition of ``lawfully present'' that includes all prospective
qualified individuals. A few commenters suggested that our definition
be based on the current definition in section 214 of the Children's
Health Insurance Program Reauthorization Act (CHIPRA, Pub. L. 111-3) or
definitions proposed by the National Immigration Law Center and Asian
and Pacific Islander American Health Foundation. Several commenters
recommended that States have flexibility to continue using existing
standards for lawfully present, as long as the rules are no more
restrictive than Federal law. Many commenters recommended that we
clarify that any list of ``lawfully present'' immigration categories is
not exhaustive, as statuses and documents are constantly evolving.
Many commenters also suggested a range of additional categories to
be included in the lawfully present definitions, including individuals
whose immigration status makes them eligible to apply for an Employment
Authorization Document regardless of whether they have secured a work
permit under 8 CFR 274a.12; certain victims of trafficking who have
been granted ``continued presence''; individuals granted a stay of
removal/deportation by administrative or court order, statute, or
regulations; individuals who are lawfully present in the Commonwealth
of the Mariana Islands and American Samoa; individuals Permanently
Residing in the U.S. under Color of Law; and asylum applicants
(including pending applicants for asylum under section 208(a) of the
Immigration and Nationality Act (INA), or for withholding of removal
under section 241(b)(3) of the INA or Convention Against Torture).
Response: We maintain the definition of ``lawfully present'' as
used in the Pre-Existing Condition Insurance Plan, which is consistent
with the definition of ``lawfully present'' used in section 214 of
CHIPRA, and included in the proposed rule. HHS will consider
commenters' recommendations in developing future rulemaking on this
definition as it relates to Medicaid, CHIP, and the Exchanges.
Comment: Several commenters recommended we adopt the broad, U.S.
Census data definition for ``limited English proficient'' which is ``an
individual whose primary language is not English and who speaks English
less than very well.''
Response: In the final rule, we do not adopt a definition for the
phrase ``limited English proficient.'' We anticipate issuing future
guidance that will interpret this term and will provide best practices
and advice related to meaningful access standards for limited English
proficient individuals.
Comment: One commenter recommended that the definition for
``minimum essential coverage'' include both defined contribution and
defined benefit plans, allowing individuals to use any health care
funds to maximize their purchasing power. Another commenter suggested
that the Federal definition of ``eligible employer sponsored plan'' be
such that in
[[Page 18315]]
circumstances that an employer is not able to provide a threshold of
quality coverage, a defined contribution combined with premium tax
credits should be provided in the individual market Exchange.
Response: The definitions of ``minimum essential coverage'' and
``eligible employer sponsored plan'' are provided in section 5000A(f)
of the Code and will be interpreted in Treasury guidance. The
provisions of the Affordable Care Act that we implement through this
final rule rely on those definitions from the Code.
Comment: One commenter believes that Navigators should not be an
individual person, but rather a regulated entity/institution, noting
that awarding Navigator grants to individuals will increase the
potential for fraud and consumer protection violations.
Response: We maintain the definition for ``Navigator'' from the
proposed rule. However, we have added Navigator standards in Sec.
155.210(b) that are intended to reduce the potential for fraud and
increase consumer protection.
Comment: Regarding the definition of ``plain language,'' one
commenter recommended that all communications be provided in the
individual's primary language. Several commenters recommended that we
align with the National Institutes of Health's definition of ``plain
language,'' including standards that communications be written between
a fourth and sixth grade reading level, include non-written visuals,
and reflect the likelihood that a proportion of individuals accessing
the Exchange will not be familiar with utilizing online technologies.
Response: We maintain the definition of ``plain language'' as
codified from section 1311(e)(3)(B) of the Affordable Care Act, which
directs HHS and the Department of Labor to jointly develop and issue
guidance on best practices of plain language writing.
Comment: One comment voiced concern that the definition of
``qualified health plan'' might potentially undermine a State that
wanted to implement a standard that QHP issuers offer their QHPs
outside of an Exchange.
Response: We note that, consistent with the Affordable Care Act
provisions that address how issuers of QHPs may offer their products,
nothing in this final rule precludes a QHP issuer from offering a QHP
outside of an Exchange, which we believe leaves flexibility for States
to establish the offering of QHPs outside of the Exchange as a
condition of certification.
Comment: We received comments throughout to add the phrase ``and
stand-alone dental plans providing the pediatric dental essential
health benefit'' when referring to QHPs. One commenter requested that
we define ``stand-alone dental plan.''
Response: In general, with some exceptions as noted in new Sec.
155.1065(a)(3) of this final rule, we consider stand-alone dental plans
to be a type of ``qualified health plan,'' and therefore believe that
the addition of the suggested text is unnecessary. We believe that
Sec. 155.1065 sufficiently defines ``stand-alone dental plan'' for the
purposes of participation in an Exchange, and a definition in Sec.
155.20 would be duplicative.
Comment: We received several comments about the applicability of
Medicare Secondary Payer (MSP) rules regarding coverage of End Stage
Renal Disease (ESRD) and their applicability to QHPs as group health
plans. These comments were received within the context of several
sections, including: Sec. 155.20, which defines the terms ``health
plan'' and ``qualified health plan''; Sec. 155.705 (Functions of a
SHOP); Sec. 155.1000 (Certification Standards for QHPs); and Sec.
156.200 (QHP Participation Standards). Commenters recommended that MSP
rules regarding coverage of ESRD apply to QHPs as group health plans.
Response: We clarify that QHPs offered in the small group market
fall under the definition of a group health plan subject to MSP
provisions codified in section 1862(b)(1) of the Social Security Act.
This would result in parity between the SHOP and non-Exchange small
group market regarding the applicability of MSP rules that pertain to
ESRD coverage.
Comment: A few commenters suggested that the definition of
``State'' include the Territories.
Response: The definition of State is based on section 1304 of the
Affordable Care Act, which does not include Territories. Section 1323
of the Affordable Care Act addresses Territories in the context of
Exchanges and is not within the scope of this regulation.
Summary of Regulatory Changes
We are finalizing the definitions proposed in Sec. 155.20, with
the addition of the term ``educated healthcare consumer,'' which
references the statutory definition for such term. As discussed in
later sections, we also add a definition for ``application filer'' and
``Exchange Blueprint'' to provide more detail for the purposes of
eligibility and enrollment and approval of State-based Exchanges. We
also clarified the definition of ``applicant.'' Finally, we have
replaced the text of definitions copied from the Affordable Care Act
with a direct reference instead, including: ``eligible-employer
sponsored plan,'' ``grandfathered health plan,'' ``health plan,''
``individual market,'' ``plain language,'' and ``small group market.''
2. Subpart B--General Standards Related to the Establishment of an
Exchange
The Affordable Care Act sets forth general standards related to the
establishment of an Exchange and identifies a number of areas where
States that choose to operate an Exchange may exercise operational
discretion. This subpart sets forth approval standards for State-based
Exchanges, as well as the process by which HHS will determine whether a
State-based Exchange meets those standards.
a. Establishment of a State Exchange (Sec. 155.100)
We proposed to codify the option for States to elect to establish
an Exchange to serve qualified individuals and qualified employers,
provided that the Exchange is a governmental agency or non-profit
entity established by the State and that the governance structure of
the Exchange is consistent with Sec. 155.110. Furthermore, we
introduced the concept of a State Partnership model that would allow
States to leverage work done by other States and the Federal
Government.
Comment: Many commenters supported the general approach of State
flexibility in the Exchange establishment proposed rule, while some
urged additional flexibility and others requested more uniformity to
decrease administrative complexity. Some topics where more uniformity
was suggested include: minimum numbers of board meetings, conflict of
interest standards, stakeholder consultation, call centers outside of
normal hours, types of consumer outreach, notices, and access for
limited English proficient individuals. Several commenters urged HHS to
establish a menu of systems, functions, standard operating procedures,
educational materials, reporting formats, and other tools that States
could adopt for their Exchanges. One commenter suggested that States
that use the HHS templates should receive an accelerated review
process.
Response: Decreasing administrative complexity will assist States
in Exchange establishment. States are encouraged to make use of
materials available to them from other States and on HHS's
Collaborative Application Lifecycle Tool (CALT). HHS is also
[[Page 18316]]
developing a Web portal that will allow continued sharing of
information, business process flows, and templates to aid States in the
establishment of their Exchange.
Comment: One commenter requested clarification on proposed Sec.
155.100(a) regarding whether a State could only establish a SHOP, and
not an Exchange to serve the individual market. Other commenters urged
HHS not to allow administrative separation of the small group and
individual markets between a State-based and Federally-facilitated
Exchange.
Response: HHS will approve a State-based Exchange upon determining
that all minimum functions of an Exchange are met, which includes
providing access to QHPs to qualified individuals and to qualified
employers through a SHOP.
Comment: In relation to proposed Sec. 155.100(b), several
commenters voiced support of the option for Exchanges to be operated
through a non-profit or governmental entity. One commenter requested
clarification on what is encompassed in ``governmental.'' Some
commenters were concerned about accountability of non-profit entities
and encouraged States to establish governmental or quasi-governmental
entities. Several commenters requested clarification that stakeholders
would still need to be consulted regardless of the governance entity.
Response: The discretion afforded States outlined in section
1311(d)(1) of the Affordable Care Act is critical. We do not provide
additional clarification regarding what would be considered
``governmental'' in deference to existing State classifications. We
note that Sec. 155.130 of this final rule applies to all Exchanges.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.100 of the
proposed rule without modification.
b. Approval of a State Exchange (Sec. 155.105)
In Sec. 155.105, we proposed that the Secretary must determine by
January 1, 2013 whether a State's Exchange will be fully operational by
January 1, 2014 and outlined the proposed standards based upon which
HHS will approve a State Exchange. Please refer to the preamble of the
Exchange establishment proposed rule, at 76 FR 41870-41871, for a
detailed discussion of these standards.
Specifically, we outlined the process through which HHS will
approve a State-based Exchange. We proposed that to initiate the State
Exchange approval process, a State must submit an Exchange Plan to HHS.
We noted that we planned to issue a template outlining the components
of the Exchange Plan, subject to the notice and comment process under
the Paperwork Reduction Act. We proposed that each State receive
written approval or conditional approval of its Exchange Plan in order
to operate and to constitute an agreement between HHS and the Exchange
to adhere to the contents of the Exchange Plan. We also proposed that a
State must notify HHS and receive written approval from HHS before
significant changes are made to the Exchange Plan. We sought comment on
whether the State Plan Amendment process offered an appropriate model
for change submission and approval.
Finally, we proposed to codify the provision in the Affordable Care
Act that if a State elects not to establish an Exchange--or if the
State's Exchange is not approved--HHS must establish an Exchange in
that State, and we proposed standards of the proposed rule that would
apply to a Federally-facilitated Exchange.
Comment: Many commenters were concerned that the approval date of
January 1, 2013 for State-based Exchanges, as described in proposed
Sec. 155.100(a), will be difficult for many States to meet and
suggested that HHS allow more flexibility or issue waivers for States
that cannot meet the timeframes. One commenter suggested that HHS
approve an Exchange if a State has passed enabling legislation, or has
the necessary regulatory process for Exchange creation underway by
January 1, 2013, and can provide HHS with a detailed plan and timeline
for Exchange development. In contrast, several commenters supported the
January 1, 2013 approval deadline and requested that HHS closely
monitor and enforce the implementation timeline.
Several commenters also supported conditional approval and noted
that it could help States meet the timelines for Exchange development.
One commenter requested additional information on conditional approval,
including the latest date when HHS could revoke conditional approval
and interim deadlines and benchmarks. Another commenter did not support
conditional approval and felt it diluted Federal scrutiny, while others
expressed concern that conditional approval would result in States
beginning open enrollment late, in a diminished capacity, or in a way
that impairs HHS's ability to implement a Federally-facilitated
Exchange.
Response: We believe that in order to meet the October 1, 2013 open
enrollment date, a State-based Exchange must be approved or
conditionally approved by January 1, 2013, as called for in section
1321(c)(1)(B) of the Affordable Care Act. HHS may conditionally approve
a State-based Exchange upon demonstration that it is likely to be fully
operationally ready by October 1, 2013, which provides States with
flexibility in meeting Exchange development timelines. HHS will provide
additional details in future guidance.
Comment: One commenter suggested that proposed Sec. 155.105(b)
include additional confidentiality standards, including that an
Exchange comply with section 1411(g) of the Affordable Care Act and the
Privacy Act (5 U.S.C. 552a).
Response: HHS is committed to ensuring that security and privacy
standards are in place in an Exchange. Security and privacy standards
are addressed in Sec. 155.260 and Sec. 155.270 of this final rule. We
believe it is duplicative to include these standards in Sec.
155.105(b).
Comment: Several commenters requested that the rule regarding the
geographic area described in proposed Sec. 155.105(b)(4) be modified
to clearly indicate that where there are multiple Exchanges, with each
Exchange serving a distinct geographic area, that consumers could only
use one Exchange. Several commenters suggested that HHS establish that
the distinct geographic areas be consistent with premium rating areas
in the State as determined under section 2701(a)(2) of the PHS Act.
Response: In the preamble to the Exchange establishment proposed
rule for Sec. 155.105, we clarified that only one Exchange may operate
in each geographically distinct area and that a subsidiary Exchange
must be at least as large as a rating area. We maintain this position
in the final rule, which we believe provides States with discretion to
ensure that subsidiary Exchange service areas are consistent with
rating areas.
Comment: Several commenters requested that the proposed Exchange
Plan described in proposed Sec. 155.105(c)(1) be subject to a public
comment period before HHS approval. One commenter asked that HHS post
documents related to the proposed Exchange Plan and operational
readiness on the HHS Web site.
Response: We believe that accelerating timeframes to accommodate a
period for public comment on what we now refer to as ``Exchange
Blueprints'' would put unreasonable pressure on what is already
perceived as a tight timeline. Therefore, in order to maintain
flexibility and because of
[[Page 18317]]
timeframe concerns, the final rule does not call for a State's Exchange
Blueprint to be made public and open to comment prior to approval by
HHS.
Comment: One commenter supported the proposal that the operational
readiness assessment conducted by HHS, as described in proposed Sec.
155.105(c)(2), be coordinated with the monitoring process of the State
Establishment Grants provided under section 1311 of the Affordable Care
Act.
Response: We believe that the operational readiness assessment
should be coordinated with the grants monitoring process and are
currently developing guidance for the evaluation process.
Comment: In relation to proposed Sec. 155.105(d) and (e), several
commenters supported using a process modeled from the Medicaid and CHIP
State Plan review process for the approval of the initial Exchange and
subsequent changes, including the 90-day review timeframe and posting
of changes on the Internet, and because they believe that the process
ensures sufficient Federal oversight and transparency. In contrast,
many other commenters urged HHS to use a review plan other than the
Medicaid and CHIP model, contending that the State Plan review process
would delay State implementation while waiting for an HHS review that
could potentially take up to 180 days. The commenters suggested that
the proposed approach would be unwieldy, especially where HHS requests
for additional information from States would restart the 90-day period,
and would inhibit States from being able to effectively establish an
Exchange and respond to changing circumstances over time.
Response: We believe that initial approval of an Exchange and
approval of subsequent changes should not cause unnecessary delay in
Exchange implementation or future operations. Therefore, HHS will not
model the review of the initial proposed Exchange Plan or future
changes after the Medicaid and CHIP State Plan process. Additionally,
we have changed reference of the ``Exchange Plan'' to ``Exchange
Blueprint'' to avoid confusion with the Medicaid and CHIP review
process. Finally, we amended Sec. 155.105(e) to provide that when a
State makes a written request for approval of a significant change to
Exchange Blueprint, the change may be effective on the earlier of 60
days after HHS receipt of a completed request, or upon approval by HHS.
For good cause, HHS may extend the review period an additional 30 days
to a total of 90 days. We note that during the review period, HHS may
deny the significant change to the Exchange Blueprint.
Comment: Several commenters sought more information and provided
suggestions on the establishment and operation of the Federally-
facilitated Exchange described in proposed Sec. 155.100(f), including:
the overall structure, governance, oversight, and standards; how it
would differ from State to State; the approach to certification of QHPs
(``active purchaser'' versus ``any willing plan''); and, what the
relationship would be between a Federally-facilitated Exchange and
Partnership model. One commenter expressed concern about consumer
advocates' ability to engage in the governance and oversight of a
Federally-facilitated Exchange, while other commenters requested that
the Federally-facilitated Exchange's planning documents and updates
should be subject to public notice and comment.
Response: Information regarding the Federally-facilitated Exchange
will be provided in future guidance.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.105 of the
proposed rule, with the following modifications: in paragraph (a), we
added clarifying language regarding the timeframe for Exchange
approval, and clarified that HHS may consult with other relevant
Federal agencies to approve a State-based Exchange. Throughout Sec.
155.105, we changed ``Exchange Plan'' to ``Exchange Blueprint.'' We
included subpart D in the list of Exchange functions in paragraph
(b)(2) because we are finalizing the Exchange establishment and
eligibility rules together, and removed the policy that States agree to
perform responsibilities related to the reinsurance program because we
are not finalizing the operation of the reinsurance program in
connection with Exchange establishment. We amended paragraph (e) to
provide timeframes for the approval of significant changes to the
Exchange Blueprint.
c. Election To Operate an Exchange After 2014 (Sec. 155.106)
We proposed to give States the opportunity to seek approval to
operate an Exchange after the statutory date of January 1, 2013.
Specifically, we proposed that a State electing to operate an Exchange
after 2014 must have in effect an approved or conditionally approved
Exchange Plan at least 12 months prior to the first effective date of
coverage, or January 1 of the prior year. Further, a State must work
with HHS to develop a plan to transition from a Federally-facilitated
Exchange (including a Partnership) to a State-based Exchange.
We also proposed a process to allow a State-based Exchange to cease
its operations after January 1, 2014 and to elect to have the Federal
government establish and operate an Exchange within the State, provided
that the State notifies HHS of this determination 12 months prior to
ceasing its operations and collaborates with HHS on the development and
execution of a transition plan.
Comment: One commenter stated that the deadlines set by the
Affordable Care Act for setting up a State-based Exchange are not
realistic and that HHS should extend them.
Response: We understand the concerns regarding the deadlines for
setting up a State-based Exchange. While we do not believe authority
exists in section 1321(c) of the Affordable Care Act to alter the
January 1, 2014 Exchange implementation date, we proposed Sec. 155.106
to alleviate some of the timing pressure. We maintain that approach in
this final rule.
Comment: Numerous commenters supported the flexibility for a State
to elect to operate an Exchange after 2014, and several requested more
detail on the transition plans in proposed Sec. 155.106(a)(3).
Suggestions for the transition plan included: demonstration of consumer
input and tribal consultation; process for educating consumers about
potential changes; process for ensuring QHP issuers have sufficient
time to comply with new standards (such as a one-year grace period);
and, a plan to protect enrollees from lapses of coverage. A number of
commenters recommended a State-based Exchange starting after 2014 must
have similar or better levels of insured rates, affordability, covered
benefits, and administrative simplicity or quality of services.
Response: We believe that it is important to develop a seamless
transition plan for consumers and issuers alike, and will provide
future guidance on transition plans.
Comment: Several commenters requested clarification on the process
for transitioning to a Federally-facilitated Exchange in proposed Sec.
155.106(b) when a State terminates Exchange operations with less than
twelve months notice to HHS. One commenter urged HHS to establish an
alternative process for providing interim coverage to consumers if a
State does not provide sufficient notice.
Response: We understand concerns regarding the transition
timeframes.
[[Page 18318]]
HHS will develop an approach to transitioning Exchanges in various
circumstances when it becomes clearer what such circumstances would
entail.
Comment: One commenter requested information as to the availability
of funding options for States electing to operate an Exchange after
2014.
Response: As described in the State Exchange Implementation
Questions and Answers released by HHS on November 29, 2011,
establishment grants may be awarded through the end of 2014 for
approved and permissible establishment activities. The process of
``establishing'' an Exchange may extend beyond the first date of
operation and may include improvements and enhancements to key
functions over a limited period of time. Generally, grants can be used
to establish Exchange functions and operating systems and to test and
improve systems and processes. We have determined that a State that
does not have a fully approved State Exchange on January 1, 2013 may
continue to qualify for and receive a grant award, subject to the
Funding Opportunity Announcement (FOA) eligibility criteria.
Summary of Regulatory Changes
We are finalizing the provisions in Sec. 155.106 of the proposed
rule, with a conforming, technical change that replaced ``Exchange
Plan'' with ``Exchange Blueprint'' in paragraph (a)(2) and removed the
word initial from paragraph (a) to make the provision more broad.
d. Entities eligible to carry out Exchange functions (Sec. 155.110)
In Sec. 155.110, we proposed to codify an Exchange's authority to
contract with eligible entities, and requested comment on conflict of
interest standards. We noted that the Exchange remains responsible for
meeting all Federal rules related to contracted functions.
If the Exchange is an independent State agency or not-for-profit
entity established by the State, we proposed that its governing board
meet the standards outlined in Sec. 155.110(c)(1) through Sec.
155.110(c)(4) of the proposed rule, which included: the Exchange
accountability structure must be administered under a formal, publicly-
adopted operating charter or by-laws; the Exchange board must hold
regular public meetings; representatives of health insurance issuers,
agents, brokers, or other individuals licensed to sell health insurance
may not constitute a majority of the governing board; and, all members
of the governing board must meet conflict of interest and
qualifications standards. We invited comment on several topics related
to conflict of interest and Exchange governance.
We also proposed that the Exchange governing body ensure that a
majority of members have relevant experience in a number of areas and
invited comment on the types of representatives that could best ensure
successful Exchange operations. We solicited comment on ethics and
disclosure standards.
Additionally, we proposed to allow a State to operate its
individual market Exchange and SHOP under separate governance or
administrative structures, provided that the State coordinates and
shares relevant information between the two Exchange bodies and that it
ensures adequate resources to assist both individuals and small
employers.
Finally, we proposed that HHS retain the option to review the
accountability structure and governance principles of an Exchange and
requested comment on the appropriate frequency for these reviews.
Comment: A number of commenters requested clarification on whether
State departments of insurance would be considered eligible contracting
entities under proposed Sec. 155.110(a), citing the importance of such
expertise in the operation of an Exchange.
Response: We clarify in Sec. 155.110(a)(2) of this final rule
that, in addition to State Medicaid agencies, other State agencies that
meet the qualifications in (a)(1) would be considered eligible
contracting entities. For purposes of this final rule and Exchange
operations, we interpret the term ``incorporated'' in (a)(1)(i) to
include State agencies, such as departments of insurance, that have
been established under and are subject to State law.
Comment: Several commenters urged HHS to apply conflict of interest
standards to eligible contracting entities.
Response: We generally defer to States to establish conflict of
interest standards for eligible contracting entities beyond the
prohibition of health insurance issuers being eligible contracting
entities, as established in section 1311(f)(3) of the Affordable Care
Act and codified in Sec. 155.110(a)(1)(iii). We believe that many
States have existing conflict of interest laws, have appropriate
expertise in this area, and can support Exchanges in the development of
conflict of interest standards for such entities.
Comment: Several commenters agreed with the governance provisions
in proposed Sec. 155.110(c) and requested further guidance on
governance, while others recommended that HHS defer to States on
governance citing concerns of burden. Another commenter suggested that
all Exchanges, including an Exchange that is a State agency, needed a
governing board. One commenter requested that all Exchanges post their
policies and procedures on the Internet.
Response: We have afforded States substantial discretion regarding
governance and do not believe that the governance standards are
burdensome from an operational or systems standpoint. Additionally, to
lessen the burden on States, an Exchange may use the State's conflict
of interest standards, regulations, or laws for governance of the
Exchange. An existing State agency would already have an accountability
structure, unlike an independent agency or nonprofit entity. Therefore,
we believe that a governing board is not necessary for an existing
State agency, although we note that a State may choose to establish one
anyway. Section 155.110(d) of this final rule directs Exchanges to make
publicly available a set of guiding governance principles, which it may
do through the Internet. We also create minimum standards for consumer
representation on Exchange Boards to protect consumers and the
interests of the Exchange without adding burden on States or Exchanges.
Comment: With respect to proposed Sec. 155.110(c)(3), a few
commenters requested HHS define ``represents consumer interests'' and
``conflict of interest.'' Many commenters recommended that all Exchange
boards must have at least one consumer representative or advocate and a
formal consumer advisory committee. A few commenters recommended
increasing the threshold for voting members that do not have a conflict
of interest to something higher than a simple majority.
Response: We accept the suggestion that at least one voting member
be a consumer advocate, and have amended in Sec. 155.110(c)(3)(i) of
this final rule accordingly. We do not believe this change will
conflict with any current Exchange boards. We have also maintained the
minimum standard that a simple majority of board members not have a
conflict of interest, but a State can choose to establish an Exchange
with a higher threshold of non-conflicted board members.
Comment: Commenters suggested broadening the list of groups
identified as having a conflict of interest in proposed Sec.
155.110(c)(3)(ii) to include: health care providers; anyone with a
financial interest; anyone with a spouse or immediate family with a
conflict of interest; major vendors, subcontractors, or other financial
partners of conflicted parties; members of health trade
[[Page 18319]]
associations and providers; and, health information technology
companies. Commenters recommended that such groups be limited or
prohibited from participation in an Exchange. Other commenters
recommended that individuals with ties to the insurance industry
participate through technical panel or advisory group instead of
through board membership.
Response: As proposed, Sec. 155.110(c)(3)(ii) ensures as a minimum
standard that the groups with the most direct conflict of interest
cannot form a majority of voting members on a governing board. We
believe that further definition of conflict of interest may create
inconsistencies with State law and other existing State standards, but
note that Exchanges may expand the list or further define conflict of
interest. For example, a State may elect to prohibit any conflicted
members from serving on the board.
Comment: Several commenters suggested areas in addition to those
listed in proposed Sec. 155.110(c)(4) in which governing board members
should have experience, including: minority health; mental health;
pediatric health; consumer education or outreach; public coverage
programs; health disparities; or represent or be American Indian and
Alaska Natives. A few commenters suggested that the Exchange board
include members that reflected the cultural, ethnic and geographical
diversity of the State.
Response: Each of the suggested groups could add value to an
Exchange governance board. However, we believe that a State can
determine the expertise it believes would be most beneficial for the
needs of its community. We note that the list in Sec. 155.110(c)(4) is
a minimum; thus, States may establish governing boards standards that
include expertise in other areas, or may set up advisory committees to
achieve another mechanism for specialized input.
Comment: Regarding proposed Sec. 155.110(f), some commenters
suggested that HHS limit review of an Exchange's governance to every
three or four years, while several commenters voiced concerns about the
administrative burden of an annual review. One commenter recommended an
annual review but only for the first few years of Exchange operation.
Response: We have maintained language in the final rule but clarify
that any changes to the accountability structure and governing
principles of the Exchange will likely be reviewed under Sec.
155.105(e) of this final rule or at the discretion of HHS through a
process that may not occur annually under Sec. 155.110(f).
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.110, with
the following modifications: in paragraph (a)(1)(iii)(2), we clarified
that any State entity that meets the qualifications of paragraph (a)(1)
is an eligible contracting entity to include State departments of
insurance. We established in new paragraph (c)(3)(i) that at least one
member of the Exchange's board must include one voting member who is a
consumer representative, and renumbered proposed paragraph (c)(3)(i) as
(c)(3)(ii).
e. Non-interference with Federal Law and Non-Discrimination Standards
(Sec. 155.120)
In Sec. 155.120, we proposed that an Exchange may not establish
rules that conflict with or prevent the application of Exchange
regulations promulgated by HHS. We also proposed to codify that nothing
in title I may be construed to preempt any State law that does not
prevent the application of the provisions set forth under title I of
the Affordable Care Act. In addition, we proposed that a State must
comply with any applicable non-discrimination statutes, specifically
that a State must not operate an Exchange in such a way as to
discriminate on the basis of race, color, national origin, disability,
age, sex, gender identity, or sexual orientation.
Comment: One commenter suggested that HHS ensure that contractors
comply with the non-discrimination provisions of proposed Sec.
155.120. One commenter recommended HHS amend Sec. 155.120(c) to
explicitly name specific activities of the Exchange, including
marketing, outreach, and enrollment in the Exchange.
Response: We clarify that Sec. 155.120 applies to Exchange
contractors and believe this notion is conveyed in Sec. 155.110(b) for
contractors. We believe that Sec. 155.120 already applies to all
activities of the Exchange, and thus do not explicitly list marketing,
outreach, and enrollment.
Comment: Several commenters recommended that HHS specify that
proposed Sec. 155.120(b) functions as a floor for protection against
discrimination. The commenters stated that in the event a State law
provides additional consumer protections in an Exchange, the final rule
should make clear that such a State law will prevail over the minimum
protections codified in Federal law.
Response: We believe the proposed approach of codifying section
1321(d) of the Affordable Care Act does not preclude the application of
stronger protections in the Exchange provided by State law. Therefore,
we do not make any further changes in the regulations to make this
clarification.
Comment: A number of commenters requested that HHS provide
clarification on proposed Sec. 155.120(c)(1) and specify which
statutes would be considered ``applicable non-discrimination
statutes,'' with suggestions including the Americans with Disabilities
Act, section 504 of the Rehabilitation Act, section 1557 of the
Affordable Care Act, provider non-discrimination in accordance with
section 2706 of the PHS Act. One commenter recommended that HHS ensure
that States and Exchanges comply with existing State provider non-
discrimination laws and another recommended that we amend the Sec.
155.120(c)(1) to include consumer protection laws.
Response: We clarify that by ``applicable non-discrimination
statutes,'' we mean any statute that would apply to Exchange activities
by its clear language or as consistent with any rulemaking that has
been established in accordance with such statutes. We acknowledge that
the some non-discrimination statutes apply to specific activities and
situations, and an Exchange must comply with such statutes to the
extent its activities or circumstances would be subject to these
standards.
Comment: We received a comment on the preamble to the proposed
Sec. 155.120(c)(2). The commenter recommended that HHS delete the
phrase ``operating in such a way as to discriminate'' or revise the
nondiscrimination standard to prohibit discrimination based ``solely''
on the listed grounds.
Response: To clarify, we believe that Exchanges should not
discriminate in any way on the basis of groups listed in Sec.
155.120(c)(2). We believe that the regulatory text conveys that intent.
Comment: A number of commenters recommended HHS amend proposed
Sec. 155.120(c)(2) to add categories to the proposed list, including
Indians or individuals in the Lesbian, Gay, Bisexual, and Transgender
(LGBT) community, individuals with limited English proficiency, and
people with disabilities.
Response: We recognize the commenters' concerns but we are
maintaining the categories specified in Sec. 155.120(c) because we
believe that categories not listed in Sec. 155.120(c)(2) are already
protected by existing laws that apply to Exchanges.
Comment: A number of commenters requested that HHS provide
clarification
[[Page 18320]]
on the oversight and enforcement of the non-discrimination standards,
including recommendations for strong oversight, the establishment of a
clear complaints process, and mandatory public dissemination of an
acknowledgement by QHP issuers that they comply with the non-
discrimination standards in section 1557 of the Affordable Care Act.
Response: We acknowledge the commenters' concerns regarding the
monitoring and enforcement of the non-discrimination policies. We plan
to issue future guidance on the oversight and enforcement of the non-
discrimination standards.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.120 of the
proposed rule, with a technical change to include part 157 in paragraph
(b).
f. Stakeholder Consultation (Sec. 155.130)
Consistent with the Affordable Care Act, we proposed that Exchanges
consult with certain groups of stakeholders on an ongoing basis. The
list of stakeholders identified were the following: educated health
care consumers who are enrollees in QHP; individuals and entities with
experience in facilitating enrollment in health care coverage;
advocates for enrolling hard to reach populations; small businesses and
self employed individuals; State Medicaid and CHIP agencies; Federally-
recognized Tribes; public health experts; health care providers, large
employers; health insurance issuers; and agents and brokers. For a more
complete list of stakeholders and for a discussion of how Exchanges may
interact with tribes, please refer to page 41873 of the Exchange
establishment proposed rule.
Comment: Some commenters requested clarification on what it means
to ``regularly consult on an ongoing basis,'' as described in proposed
Sec. 155.130, and suggested that we clarify that an Exchange must
consult with stakeholders beyond establishment of the Exchange,
outlining specific processes for consultation (including public
meetings and input sessions), and specifying that Exchange activities
must be topics of consultation (including the call center, Web site,
consumer assistance functions and Navigators).
Response: We recognize that it is important to utilize various
methods of consultation to ensure the Exchange meets the diverse needs
of the State's population and seeks input on a broad set of issues.
However, we believe that States are in the best position to determine
what will be the most efficient and effective methods of stakeholder
consultation for meeting the State's unique needs and, therefore, we do
not establish additional standards in the final rule.
Comment: Many commenters recommended that HHS add additional
categories of stakeholder groups to proposed Sec. 155.130, including:
a nonprofit community organization; unions; representatives of
individuals with disabilities; minorities; advocates for individuals
with limited English proficiency; essential community providers;
employees of small businesses; stand-alone dental plans; health care
consumer advocates; experts in low income tax policy; experts in
privacy policy; and professional organizations representing specific
health care providers. Several commenters requested clarification on
what types of health insurance issuers and providers fall under the
categories for consultation. A few commenters suggested that we narrow
the list of stakeholders.
Response: We recognize that Exchange consultation with the above
groups would help the Exchange ensure it can meet the needs of the
population it serves. However, we believe that the categories proposed
in Sec. 155.130 are broad enough to encapsulate a wide variety of
stakeholders, and encourage Exchanges to consult with any other
stakeholders that will add perspective to the development of an
Exchange. Similarly, we did not accept suggestions to make the
stakeholder categories narrower and believe the minimum list proposed
will stimulate stakeholder participation. Exchanges have the
flexibility to determine what types of stakeholders would fall under
each of the categories.
Comment: Regarding proposed Sec. 155.130(a), one commenter was
concerned that including ``educated health care consumer'' as a
stakeholder unfairly excludes people of a certain education level.
Another commenter recommended that HHS delete the word ``educated''
from ``educated health care consumer'' to avoid multiple
interpretations. Numerous commenters recommended that HHS replace
``educated health care consumer'' with ``health care consumer
experienced with the system.'' One commenter suggested that the
definition of ``educated health care consumers'' take into account the
diversity in the age, background, and health status of consumer
stakeholders. A few commenters suggested that HHS expand the
stakeholder group to include consumers who are eligible or likely to
enroll in a QHP in addition to those consumers enrolled in QHPs.
Response: We note that the term ``educated health care consumer''
is defined in section 1304(e) of the Affordable Care Act to mean an
individual who is knowledgeable about the health care system, and has
background or experience in making informed decisions regarding health,
medical, and scientific matters; we have codified this definition in
Sec. 155.20 of this final rule. An Exchange can interpret and apply
the term in the way that is most appropriate for its environment
consistent with this definition.
Comment: Regarding proposed Sec. 155.130(f), commenters
recommended that the final rule prohibit States from delegating
consultation with Federally-Recognized Tribes to the governing bodies
operating the Exchange. Commenters noted that establishing Exchanges as
independent public entities would make stakeholder consultation
difficult to monitor consultation with Tribes. Several commenters
suggested that a tribal consultation policy be developed and approved
by the State, the Exchange, and tribal governments prior to the
submission of approval of an Exchange Blueprint. Some commenters also
recommended that States must utilize a process for seeking advice from
the Indian Health Service, tribal organizations, and urban Indian
organizations as outlined in section 5006(e) of the American Recovery
and Reinvestment Act. Also, one commenter requested HHS to expand the
tribal consultation standard to include any tribal organization or
inter-tribal consortium as defined in the Indian Self-Determination and
Education Assistance Act and the Indian Health Care Improvement Act.
Response: Section 1311(d)(6) of the Affordable Care Act directs the
Exchange to carry out consultation with stakeholders, and Sec.
155.130(f) codifies this provision with respect to Federally-recognized
Tribes. We note that Exchange tribal consultation reflects a
government-to-government relationship, as Exchanges would conduct
consultation on behalf of States. Future guidance will be provided to
States regarding key milestones, including tribal consultation, for
approval of a State-based Exchange. Because of the government-to-
government nature of tribal consultation, we did not include a
provision similar to section 5006(e) of the American Recovery and
Reinvestment Act in the proposed rule or in this final rule, and did
not expand the tribal consultation standard to include tribal
organizations, programs, or commissions. In the final rule,
[[Page 18321]]
Exchanges must consult with Federally-recognized Tribes; however, this
does not preclude Exchanges from engaging in discussions or consulting
with tribal and Urban Indian organizations. It should be noted that
when a tribal or Urban Indian organization is a stakeholder as defined
in Sec. 155.130--for example, the tribal or Urban Indian organization
is a health care provider--then consultation may be necessary. We
therefore encourage States to consult with tribal and Urban Indian
organizations.
Comment: Some commenters recommend that as a component to the
ongoing tribal consultation standard in proposed Sec. 155.130(f), the
Exchange should establish an ``Indian desk'' with the lead person
identified and contact information provided, and extend the authority
of CMS Native American Contacts to include facilitating and interacting
with the State Exchange governing bodies.
Response: We did not accept the suggestion that all Exchanges must
establish an ``Indian Desk.'' States have discretion to determine
appropriate approaches and mechanisms for interacting with the Tribes,
providing information to Indian Country and for meeting the needs of
American Indians/Alaska Natives, which can be determined during the
tribal consultation process. We also did not accept the suggestion
related to the CMS Native American Contacts. While we recognize that
the Native American Contacts have a critical role in working with
States and Tribes, structuring the responsibilities of CMS staff
positions is not within the scope of this final rule.
Comment: A few commenters suggested that the final rule enforce
tribal consultation by Exchanges in the planning, implementation and
operation of State-based Exchanges, and ensure adequate funding for the
technical assistance provided by tribal entities to States and
Exchanges. One commenter expressed a concern that Exchanges may not be
able to process eligibility and enrollment information regarding
American Indians/Alaska Natives unless they are included in policy and
regulation development. Some commenters strongly urge CMS to work with
Tribes to undertake a thorough education of State insurance
commissioners on issues related to Indian law, the structure of the
Indian health care delivery system, and protocols for consulting with
Tribes, since many Tribes do not have experience working with insurance
commissioners.
Response: We did not accept the suggestion for Exchanges to
obligate State grant funding for technical assistance provided by
tribal entities to States and Exchanges. We believe that the concern
regarding Exchange inclusion of American Indians and Alaska Natives in
policy development is addressed in the final rule and the Exchange
Establishment Grant, which directs Exchanges to consult with Federally-
recognized Tribes. We note that education of State health insurance
commissioners on Indian law will be addressed at the operational level
of CMS.
Comment: We received a number of comments stating that HHS should
limit the number of consultations with health insurance issuers,
agents, and brokers described in proposed Sec. 155.130(j) and (k) to
minimize any potential conflicts of interest. One commenter recommended
that consultation with a health insurance issuer be made fully
transparent, while several other commenters recommended that the
consultation only include agents and brokers that enroll qualified
individuals, employers, or employees.
Response: We understand the concerns of commenters, but also
acknowledge that health insurance issuers and agents and brokers are
likely to play a significant role in the Exchange. We encourage
Exchanges to be transparent in the consultation process. Furthermore,
in States where the Exchange is not housed in the department of
insurance, we expect there to be regular consultation between the
Exchange and the department of insurance, given the need for
coordination between the two entities.
Comment: One commenter recommended that stakeholder input should
contribute to both State-based Exchanges and Federally-facilitated
Exchanges.
Response: As indicated in Sec. 155.105(f), the stakeholder
standards of Sec. 155.130 apply to both Federally-facilitated
Exchanges and State-based Exchanges.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.130 of the
proposed rule without modification.
g. Establishment of a Regional Exchange or Subsidiary Exchange (Sec.
155.140)
In Sec. 155.140, we outlined several proposed features of regional
Exchanges, including that a regional Exchange would encompass two or
more States and could submit a single Exchange Blueprint, and the
criteria that the Secretary will use to approve such an Exchange.
Specifically, we proposed that a State may establish one or more
subsidiary Exchanges if each such Exchange serves a geographically
distinct area that is at least as large as a rating area described in
section 2701(a) of the PHS Act. We invited comment on operational or
policy concerns related to subsidiary Exchanges that cross State lines.
We also requested comment on the extent to which we should allow more
flexibility in the structure of a subsidiary Exchange.
Finally, we proposed basic standards for a regional or subsidiary
Exchange. For a complete discussion of the proposed standards, please
see pages 41873-41874 and 41914 of the Exchange establishment proposed
rule.
Comment: Regarding proposed Sec. 155.140(a), several commenters
supported the flexibility to establish regional Exchanges so that
States could share Exchange infrastructure and systems. However, other
commenters had concerns regarding the applicability of State standards
across a regional Exchange. Some were concerned about coordinating the
regulation of QHP issuers in a regional Exchange to ensure each State's
insurance standards were met, especially regarding licensure and
solvency, and others raised concerns about coordination between the
Medicaid agencies of multiple States regarding consistency of
eligibility determinations and provider payments. Other commenters were
concerned that consumer protections, including State non-discrimination
laws, minimum benefit standards, network adequacy, complaints
processes, and tribal consultation, would be potentially undermined by
a regional Exchange (particularly one that crosses non-contiguous
States). Some commenters suggested that States must provide a
compelling reason to establish a regional Exchange to help preserve
consumer protections.
Response: We acknowledge the commenters' concerns regarding
coordination across States. We note that in Sec. 155.140(c)(1), we
establish that a regional or subsidiary Exchange must meet all Exchange
standards, which would include, for example, the standard in Sec.
156.200(b)(4) that a QHP issuer be licensed and in good standing in
each State in which it offers coverage. We believe that this and other
provisions in the final rule provide some clarity on coordination. We
recognize the concerns regarding consumer protection, and HHS will take
those into account on a case-by-case basis during review of a regional
Exchange Blueprint.
[[Page 18322]]
Comment: With regard to proposed Sec. 155.140(a), one commenter
requested clarification on whether a regional Exchange would need to
cover the entirety of each State, and another requested clarification
on whether two States could share administrative resources without
sharing governance.
Response: We note that in Sec. 155.140(c)(1), a regional Exchange
would have to comply with all Exchange standards, including Sec.
155.105(b)(3), which directs a State to ensure that the entire
geographic area of a State is covered by an Exchange. A State has
flexibility in the way it meets this standard. We believe that States
are able to share administrative and operational resources to the
extent practicable, and would not be considered a regional Exchange
unless they also shared governance, consumer assistance, enrollment and
eligibility processes, QHP certification authority, and the SHOP.
Comment: Regarding proposed Sec. 155.140(b), a number of
commenters did not support the proposed rules regarding subsidiary
Exchanges out of concern for consumer protections, consumer confusion,
administrative complexity, the effect of smaller risk pools, and the
ability for subsidiary Exchanges to exacerbate adverse selection.
Commenters suggested that a State must demonstrate a compelling
justification as to how a subsidiary Exchange would be in the best
interest of consumers. Some commenters suggested that subsidiary
Exchanges should remain under centralized State governance and policy
decisions to provide some consistency across the State. A number of
commenters supported the provision in proposed Sec. 155.140(b)(2) that
ensures a subsidiary Exchange is as large as a rating area because they
believe it would prevent risk selection. Several commenters urged HHS
not to allow subsidiary Exchanges to cross State lines while others
supported the concept.
Response: We recognize the concerns of commenters related to the
consumer experience under subsidiary Exchanges, but we believe that
such Exchanges may be valuable and appropriate in some marketplaces. In
reviewing a State's Exchange Blueprint, HHS will consider how best to
protect the consumer experience.
Comment: A few commenters requested clarification on whether an
Exchange can be statewide for the individual market with several SHOPs
operated through subsidiary Exchanges. Several commenters supported the
alignment of SHOP and individual market Exchange service areas to
ensure consistency for consumers and insurers, and for a more robust
insurance market.
Response: In this final rule, we maintain the standard in Sec.
155.140(c)(2)(ii) that the service areas of a SHOP and individual
market Exchange must match.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.140 of the
proposed rule without modification.
h. Transition Process for Existing State Health Insurance Exchanges
(Sec. 155.150)
In Sec. 155.150, we proposed that, unless determined to be non-
compliant, a State operating a pre-Affordable Care Act exchange is
presumed to be in compliance with the standards set forth in this part
if: (1) The exchange was operating before January 1, 2010; and (2) the
State has insured a percentage of its population not less than the
percentage of the population projected to be covered nationally after
the implementation of the Affordable Care Act. We invited comment on
which proposed threshold should be used and on alternative data
sources. We also proposed that any State that is currently operating a
health insurance exchange that meets these criteria must work with HHS
to identify areas of non-compliance with the standards of this part.
Comment: A small number of commenters had suggestions for proposed
Sec. 155.150(a). A few commenters suggested that we use the
Congressional Budget Office estimates for projected coverage in 2016
and others recommended the Census Bureau's American Community Survey or
the Current Population Survey estimates of State coverage on January 1,
2010. A number of commenters suggested using a source that included
Urban Indian-specific data, while another commenter suggested the
coverage numbers be based on non-elderly State residents only. One
commenter raised concerns that coverage numbers are calculated
inaccurately at the State level.
Response: We have amended proposed Sec. 155.150(a)(2) to reference
the Congressional Budget Office projected coverage numbers published on
March 30, 2011. HHS will work with any State that believes it would
fall into this category to determine if its State coverage numbers were
equal to or above that threshold in January of 2010.
Comment: Several commenters suggested that proposed Sec.
155.150(b) should provide additional information, provide for an
expedited review process, make corrective action plans publicly
available, establish that determining compliance will occur by fall
2012, and otherwise remain consistent with the January 1, 2013
timeframe for Exchange approval.
Response: We believe that any State that qualifies under Sec.
155.150(a) would continue to generally meet all standards for Exchange
approval as established elsewhere in the final rule, including the
process for review and timeframes, so we do not believe it necessary to
outline standards in this section.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.150 of the
proposed rule, with the exception of specifying the database for the
projected coverage numbers upon implementation.
i. Financial support for continued operations (Sec. 155.160)
In Sec. 155.160, we proposed to codify the statutory provision
that a State ensure its Exchange has sufficient funding to support
ongoing operations beginning January 1, 2015 and develop a plan for
ensuring funds will be available. Specifically, we proposed to allow a
State Exchange to fund its ongoing operations by charging user fees or
assessments on participating issuers or by generating other forms of
funding, provided that any such assessments are announced in advance of
the plan year. We invited comment on whether the final regulation
should otherwise limit how and when user fees may be charged, and
whether such fees should be assessed on an annual basis.
Comment: In response to proposed Sec. 155.160, several commenters
stated that an Exchange must not be approved by HHS unless a clear plan
to achieve financial sustainability has been articulated. Further,
commenters recommended that an Exchange also address the implications
of its selected fee structure with respect to adverse selection and
identify strategies to mitigate this risk.
Response: A clearly defined plan for financial sustainability is
essential to Exchange success and in Sec. 155.160(b), we codify
section 1311(d)(5)(A) of the Affordable Care Act, which establishes
that a State ensure that its Exchange has sufficient funding to support
its operations beginning January 1, 2015. As noted in the preamble to
the proposed rule, a funding plan is necessary for Exchange approval.
States should conduct an analysis of various user fee structures as
well as other financial support options before making a decision. This
analysis could include, among other factors, the potential impact on
risk selection, issuer
[[Page 18323]]
participation, consumer experience, and provider contracting. We
maintain the codification in this final rule.
Comment: With respect to proposed Sec. 155.160(b), many commenters
offered specific recommendations on how Exchanges should generate
revenue, including methods for calculating assessments, such as percent
of premium with or without a cap; per-policy fees; or establishing fees
at a specified amount. Commenters also recommended uniform notice
standards, such as 10 or 12 months in advance of the relevant plan or
benefit year, or in March of each year. A few commenters recommended
specific frequencies of collection, such as monthly.
Response: The Affordable Care Act directs Exchanges to be self-
sustaining and provides flexibility for Exchanges to generate support
for continued operation in a variety of ways, such as through user
fees. Accordingly, we do not limit Exchanges' options in the final rule
by prescribing or prohibiting certain approaches. We believe that user
fees parameters, as well as the need for other revenue-generating
strategies, may vary by State depending upon several factors such as
the number of potential enrollees and the Exchange's operational costs.
Consistent with this flexibility, we have not finalized the proposal
that the Exchange announce user fees in advance of the applicable plan
year, and instead look to Exchanges that opt to charge user fees to
establish a deadline and vehicle for such announcement, as well as the
frequency with which the Exchange will collect such fees.
Comment: Some commenters expressed support for the flexibility
provided with respect to funding for ongoing operations as specified in
proposed Sec. 155.160(b). Others recommended a centralized approach to
assessments or raised concerns about specific approaches for generating
revenue, such as a provider or general tax. A few commenters requested
that HHS provide technical assistance to States in developing
assessment structures.
Response: Exchange flexibility in funding ongoing operations is
critical, as we believe that the ability to pursue specific funding
strategies may vary by State. We encourage Exchanges to consider the
implications of various fee structures on all stakeholders before
making a selection, but note that the Exchange has discretion to set
parameters related to assessments. As we have noted previously, HHS is
committed to working with States on a variety of Exchange features,
including but not limited to financial sustainability.
Comment: In response to the reference to the definition of
``participating issuer'' in proposed Sec. 156.50, many commenters made
recommendations regarding the types of issuers that should be subject
to any assessments established by the Exchange. The majority of
commenters advocated for a broad-based approach in which all issuers
would be subject to the assessment. Fewer commenters recommended a
narrower approach or that certain plans, such as excepted benefit
plans, be excluded. Finally, several commenters requested that the
final rule clarify that Exchanges will identify the issuers subject to
any assessment.
Response: The Exchange should identify the issuers that are subject
to any user fees or other assessments, if applicable. This could
include all participating issuers, as defined in Sec. 156.50 of this
final rule, or a subset of issuers identified by the Exchange.
Similarly, an Exchange could exempt certain issuers from assessments.
We believe that Exchange discretion is important with respect to issuer
participation so that Exchanges can consider a broad range of user fee
and assessment alternatives. We anticipate that Exchanges will consider
a variety of factors, such as the projected operating costs of the
Exchange, and the number of issuers and consumers who are expected to
participate, if and when establishing a fee structure.
Comment: A few commenters expressed concern that user fees or
assessments charged in accordance with proposed Sec. 155.160 will be
shifted to consumers and providers. These commenters variously
recommended that any user fees passed on to the consumer be treated as
rate increases, that user fees be reported separately on consumer
bills, and that the final rule prohibit direct assessments on
consumers. Conversely, several commenters recommended that the Exchange
must report on user fees and other assessments; specifically, the
amount collected and how the fees were used.
Response: Any user fees or other assessments collected by the
Exchange would be reflected in issuers' premiums, consistent with
current industry practice, and would thus be considered as part of any
rate review conducted by the State. We believe that having issuers
report separately any user fees is unnecessary, as we expect that the
Exchange will announce user fees in advance of each plan year. With
respect to having Exchanges report on user fees, we recognize that
transparency is important, but defer to State flexibility to establish
a process to notify issuers and report on the assessment of user fees,
if this is the approach taken to supporting continued operations. We
encourage States to be transparent in this process.
Comment: A handful of commenters on proposed Sec. 155.160
recommended that Exchanges establish uniform user fees for issuers in
the individual Exchange and SHOP.
Response: We believe that the decision about whether to charge
uniform user fees for issuers in the individual and small group markets
is best made by the Exchange, within the context of the local market
and the Exchange operational structure. Therefore, we are not limiting
Exchange flexibility in this area.
Comment: A few commenters on proposed Sec. 155.160(b) requested
that HHS clarify the statement in the proposed rule that no Federal
funds will be available to Exchanges after 2014. A few other commenters
suggested that Exchanges secure funding from State Medicaid and CHIP
agencies to support functions performed on behalf of individuals
eligible for Medicaid and CHIP (for example, eligibility screenings and
referrals).
Response: The Affordable Care Act specifies that the State ensure
that its Exchange is self-sustaining by January 1, 2015. Further, as
noted in the Department's State Exchange Implementation Questions and
Answers released on November 29, 2011, section 1311 grant funding to
establish an Exchange will only be awarded through 2014. This funding
is available to States pursuing State-based Exchanges, or preparing to
partner with HHS on specific functions, and can be used to fund State
activities to establish Exchange functions and operating systems and to
test and improve systems and processes over time. In addition, we note
that nothing in this final rule prohibits an Exchange from executing
agreements with other State agencies to provide funding for certain
functions that also assist or support those other State agencies. As
noted in the November 29, 2011 Q&A document, HHS has provided
additional help to States to build and maintain a shared eligibility
service that allows for the Exchange, the Medicaid agency, and the CHIP
agency to share common components, technologies, and processes to
evaluate applications for insurance affordability programs. This
includes enhanced funding under Medicaid and opportunities for other
State programs to reuse the information
[[Page 18324]]
technology infrastructure without having to contribute funding for
development costs related to shared services.
Comment: Several commenters on proposed Sec. 155.160 made
recommendations with respect to how user fees or other assessments
collected by the Exchange should be incorporated into issuers' medical
loss ratios. Some commenters suggested that user fees should be treated
as administrative costs, while others recommended that user fees be
excluded from the calculation.
Response: We clarify that all calculations and reporting of user
fees must be consistent with HHS's medical loss ratio rule, published
at 45 CFR 158.
Summary of Regulatory Changes
We are finalizing the provisions in proposed Sec. 155.160, with
limited exceptions: first, in revised paragraph (b)(1), we consolidated
the description of how Exchange revenue may be generated to simplify
the regulatory language. We deleted proposed paragraph (b)(3) and
instead clarified in revised paragraph (b)(2) that no Federal grant
funding to establish an Exchange will be awarded after January 1, 2015.
Finally, we removed the proposal that an Exchange announce user fees in
advance of the plan year and instead defer to State notification
processes for assessing user fees, if applicable.
3. Subpart C--General Functions of an Exchange
Subpart C outlines the minimum functions of an Exchange, with
cross-references in some cases to more detailed standards that are
described in subsequent subparts (specifically, subparts D, E, H and
K). The minimum functions are designed to provide State flexibility.
Uniform standards are established where specified by the statute or
where there were compelling practical, efficiency or consumer
protection reasons. This subpart also outlines standards for consumer
tools and assistance, including the Internet Web site to facilitate
consumer comparison of QHPs, the Navigator program, notices, the
involvement of agents and brokers, premium payment, and privacy and
security.
a. Functions of an Exchange (Sec. 155.200)
We proposed that an Exchange must perform the minimum functions
outlined in subparts E, H, and K related to enrollment, SHOP, and QHP
certification, respectively. We also proposed that the Exchange grant
certifications of exemptions from the individual responsibility
requirement. The proposed rule established that each Exchange would
perform eligibility determinations; establish a process for appeals of
eligibility determinations; perform functions related to oversight and
financial integrity; evaluate quality improvement strategies; and
oversee implementation of enrollee satisfaction surveys, assessment and
ratings of health care quality and outcomes, information disclosures,
and data reporting. We invited comments regarding these and other
functions that should be performed by an Exchange.
Comment: Several commenters suggested that HHS establish objective
and public performance measures to determine how well an Exchange is
executing the minimum functions. Examples provided by commenters
include monitoring the percent of consumers enrolled in a QHP in a
timely fashion, or monitoring the change in premiums over time in
relation to health plans offered outside of an Exchange. Other
commenters suggested that performance should be measured against
benchmarks that change over time. The commenters further suggested that
HHS employ remedies to address any State-based Exchange that is not
performing the minimum functions adequately, particularly the
processing of applications for advance payments of the premium tax
credit and cost-sharing reductions.
Response: Ongoing compliance with regulatory standards is critical
to the effective operation of Exchanges and HHS is currently exploring
mechanisms for performance measures and oversight tools available under
section 1313 of the Affordable Care Act. We also note that the
Government Accountability Office is also directed by section 1313(b) of
the Affordable Care Act to conduct a study of Exchanges, including a
comparison of premiums inside and outside of an Exchange.
Comment: Several commenters urged HHS to clarify that the minimum
functions in proposed Sec. 155.200 are a floor and not a ceiling.
Similarly, some commenters suggested other minimum functions, including
but not limited to: coordinating with public programs and entities;
monitoring and addressing adverse selection; creating an ombudsman
office to handle complaints and appeals related to Exchange functions;
and minimizing wrongful denials of eligibility.
Response: The minimum functions presented in Sec. 155.200
represent a floor that can be exceeded by an Exchange, but we do not
believe we need to revise our proposed regulation text for that
clarification. In response to the specific functions suggested by
commenters, we believe that many of the suggested additional minimum
functions are already encompassed in the final rule. For example,
subpart D addresses coordination with other public programs and
entities as well as the accuracy of eligibility determinations. We also
note that subpart K of this part equips the Exchange with the ability
to establish certification standards that mitigate adverse selection,
while other sections of this subpart outlines various forms of consumer
support.
Comment: A number of commenters suggested that the final rule
include the standard to fulfill the United States' Trust Responsibility
to provide health care for American Indian/Alaska Native individuals
regardless of where they reside.
Response: We believe Congress has acknowledged the Federal
government's historical and unique legal relationship with Indian
tribes by providing additional benefits for American Indians and Alaska
Natives to increase access to health care coverage in rural and urban
areas. Those benefits include the waiver of cost-sharing amounts and
the special enrollment period. We believe that the provisions in this
final rule implementing these benefits will supplement the services and
benefits that are provided by the Indian Health Service.
Comment: Numerous commenters recommended standards related to the
certificates of exemption described in Sec. 155.200(b) of the proposed
rule.
Response: As noted in the preamble to the proposed rule, we intend
to address certificates of exemption and implement section
1311(d)(4)(H) and 1411 of the Affordable Care Act through future
rulemaking.
Comment: Many commenters urged HHS to provide more details on the
eligibility appeals minimum function in Sec. 155.200(d) of the
proposed rule, and several specifically commented on the need for
appeals processes to accommodate limited English proficient
individuals.
Response: As noted in the preamble to the proposed rule, we intend
to address the content and manner of appeals of individual eligibility
determinations in future rulemaking. We have removed this from the list
of minimum functions at this time. We note, however, that Sec. 155.355
provides that Exchange eligibility notices include notice of the right
to an appeal. In addition, Exchange notices must meet certain minimum
standards in Sec. 155.230. Both of these provisions are discussed in
more detail in response to comments on those specific sections.
[[Page 18325]]
Comment: Many commenters urged HHS to provide more details on the
standards for oversight and financial integrity of an Exchange in Sec.
155.200(e) of the proposed rule.
Response: Section 1313 of the Affordable Care Act describes the
steps the Secretary may take to oversee Exchanges and ensure their
financial integrity, including conducting investigations and annual
audits and partially rescinding Federal financial support from a State
in which the Exchange has engaged in serious misconduct. We may publish
regulations or other guidance in the future describing specific
parameters of this oversight.
Comment: Several commenters submitted comments in response to our
proposals in Sec. 155.200(f) supporting the use of national quality
standards, State flexibility in implementation, reporting quality
information to consumers and the evaluation of Exchanges as well as
QHPs.
Response: As noted in the preamble to the proposed rule, we intend
to address the content and manner of quality reporting under this
section in future rulemaking. In addition, the State Exchange
Implementation Questions and Answers published by HHS on November 29,
2011 discusses the implementation of the quality rating system for QHPs
at question 11.
Comment: Some commenters requested clarification on whether an
Exchange is considered a business associate under HIPAA.
Response: In response to commenters' requests for clarification
regarding Exchanges and HIPAA, we have added language to section Sec.
155.200 clarifying the relationship between Exchanges and QHP issuers,
which are HIPAA covered entities, to help States determine the
applicability of HIPAA to their Exchange. The final rule provides
States with a breadth of options for designing and implementing
Exchange functions and operations. Therefore, it is not possible to
state the applicability of the HIPAA Privacy and Security Rules to all
Exchanges. We have added Sec. 155.200(e) to clarify that an Exchange
is not acting on behalf of a QHP when the Exchange engages in the
minimum functions outlined in this final rule.
Because the Exchange, in performing functions under Sec. 155.200,
is not operating on behalf of a particular QHP issuer, but rather is
acting on its own behalf in performing statutorily-required
responsibilities to determine an individual's eligibility for
enrollment in a QHP through the Exchange, it is not a HIPAA business
associate of the QHP issuer in regard to its performance of these
functions. However, an Exchange that chooses to perform functions other
than or in addition to those in Sec. 155.200 may be a HIPAA covered
entity or business associate. For instance, a State may need to
consider whether the Exchange performs eligibility assessments for
Medicaid and CHIP, based on MAGI, or conducts eligibility
determinations for Medicaid and CHIP as described in Sec. 155.302(b).
As stated in the Exchange establishment proposed rule, each
Exchange should engage in an analysis of its functions and operations
to determine whether the Exchange is a covered entity or business
associate, based on the definitions in 45 CFR 160.103. However, we
believe that clarifying our conceptualization of the relationship
between an Exchange and QHP issuers will assist Exchanges in their
independent evaluation of the applicability of HIPAA. Please see
further discussion of privacy and security in Sec. 155.260.
Summary of Regulatory Changes
In the final rule, we made the following changes to Sec. 155.200:
we have removed the proposed paragraph (c), and instead included
eligibility determinations as a minimum function through reference to
subpart D in paragraph (a). We have also removed the proposed paragraph
(d) related to appeals of eligibility determinations. In the final
rule, paragraphs (c) and (d) now reflect the minimum functions related
to oversight/financial integrity and quality activities, respectively.
We have added a new paragraph (e) to clarify our intent that in
carrying out its responsibilities under subpart C, an Exchange would
not be considered to be operating on behalf of a QHP.
b. Partnership
In the Exchange establishment proposed rule, HHS introduced the
concept of a Partnership model in which HHS and States work together on
the operation of an Exchange. At a State grantee meeting on September
19, 2011, HHS provided additional information regarding the Partnership
model.
A Partnership Exchange would be a variation of a Federally-
facilitated Exchange. Section 1321(c) of the Affordable Care Act
establishes that if a State does not have an approved Exchange, then
HHS must establish an Exchange in that State; the statute does not
authorize divided authority or responsibility. This means that HHS
would have ultimate responsibility for and authority over the
Partnership Exchange. In a Partnership Exchange, we intend to provide
opportunities for a State to help operate the plan management function,
some consumer assistance functions, or both. For successful operation
of the Exchange in this model, we expect that States would agree under
the terms of section 1311 grants to ensure cooperation from the State's
insurance, Medicaid, and CHIP agencies to coordinate business
processes, systems, data/information, and enforcement. Under such an
arrangement, States could use section 1311 Exchange grant funding to
pay for activities related to establishment of these Exchange
functions, thereby maintaining existing relationships and allowing for
easier transitions to State-based Exchanges in future years if a State
elects to pursue Exchange approval.
Comment: Many commenters supported the goal of a Partnership, but
voiced concerns about the potentially negative implications for a
seamless consumer experience. Commenters urged HHS to ensure that
consumers would not be able to differentiate an Exchange operated by a
single entity from a Partnership Exchange. Other commenters recommended
a highly transparent process so consumers would know where to file
appeals and voice complaints and health insurance issuers would know
which standards are enforced by which entity. Some commenters raised
concerns about separating Exchange functionality at all, and urged HHS
not to sacrifice a seamless consumer experience for State flexibility.
Response: A seamless consumer experience is a cornerstone to an
effective Exchange, and we plan to structure any Partnership in such a
way that will not undermine a smooth process for individuals and
employers.
Comment: Several commenters suggested other functions for State
involvement in a Partnership instead of the plan management and
consumer assistance, in particular suggesting that States perform
Medicaid eligibility determinations. Some commenters recommended
allowing a State to retain responsibility for making Medicaid
eligibility determinations in order to avoid duplicating existing State
systems or curtailing traditional State responsibilities. A few
commenters suggested that there be a specific process to handle
disputes between HHS and Medicaid regarding Medicaid eligibility if
States retained that function in a Federally-facilitated Exchange, and
one suggested that consumers be held harmless and enrolled in coverage
during eligibility disputes. Meanwhile, other commenters urged HHS not
to bifurcate eligibility determinations
[[Page 18326]]
between Federal and State entities out of concerns about the negative
implications for the consumer experience and the complications such
bifurcation would create. A small number also suggested that a State
with a Federally-facilitated Exchange must accept Federal eligibility
determinations.
Other proposed functions for Partnership included: the certificates
of exemption described in Sec. 155.200(b), quality rating system,
enrollee satisfaction tools, determination of affordability and minimum
value of employer-sponsored coverage, or eligibility determinations for
advance payments of the premium tax credit. Other commenters suggested
areas that should specifically be retained by a State in any
circumstance, including State responsibility for overseeing licensure,
solvency, market conduct, form approval and other operations of QHPs,
overseeing licensed agents, and responding to consumer complaints.
Response: In this final rule, we address leveraging existing State
resources and expertise regarding Medicaid in subpart D. Exchange
responsibilities related to the quality rating system and enrollee
satisfaction survey will be outlined in future rulemaking. In addition,
HHS continues to explore how to leverage existing State insurance
activities in several areas, including licensure, solvency, and network
adequacy. The State Exchange Implementation Questions and Answers
published on November 29, 2011 provides additional discussion in this
area.
Comment: Some commenters suggested that we allow States to have a
variety of options under a Partnership Exchange, while other commenters
recommended that a standardized set of limited options would be the
most effective way to ensure that a Partnership does not create
significant administrative burden.
Response: We recognize that an unlimited number of options for
organization of a Federally-facilitated Exchange would be extremely
complicated to implement and operate, and believe that the options and
flexibilities HHS has laid out will balance flexibility with
administrative feasibility.
Comment: Many commenters, citing concerns about accountability,
supported the approach of the Partnership being a form of a Federally-
facilitated Exchange, while others preferred that States retain
ultimate authority in a Partnership. Some of the commenters urged HHS
to oppose any Partnership that would confuse or blur lines of authority
and responsibility. A few commenters suggested that HHS have readiness
assessments or performance metrics to measure how a State will perform,
or is performing, a function under Partnership. One commenter suggested
that HHS have no role in plan management if a State decides to operate
this function, while another voiced concerns about how HHS would
enforce certain decisions if a State is operating one or more Exchange
functions.
Response: Section 1321(c) of the Affordable Care Act does not
contemplate divided authority over an Exchange. In all organizations of
a Federally-facilitated Exchange, the Secretary will retain ultimate
responsibility and authority over operations and all inherently
governmental functions. A State wishing to enter into a Partnership
must agree to perform the function(s) within certain parameters, as
agreed upon by the State and HHS.
Comment: Some commenters urged HHS not to allow a State to operate
only an individual market or SHOP component of an Exchange through a
Partnership.
Response: We believe that splitting the SHOP through a Partnership
is not a reasonable or feasible option at this time and have not
established that as an option.
Comment: Many commenters urged HHS to consult with stakeholders
during the development of a Partnership with a given State.
Response: Section 155.105(f) clarifies that the Federally-
facilitated Exchange must follow the stakeholder consultation standards
in Sec. 155.130. The Federally-facilitated Exchange will consult with
a variety of stakeholders to ensure that the needs of the States in
which it operates are met.
Comment: A few commenters requested that Tribal governments be
eligible to participate in a Partnership.
Response: Currently, only States would be eligible to enter into a
Partnership with HHS, as States are the entities designated in the
Affordable Care Act as responsible for setting up an Exchange (see
discussion of the Exchange establishment proposed rule for more detail
(76 FR 41870). However, HHS will continue ongoing tribal consultation
to ensure that Exchanges address the needs of tribal populations.
Summary of Regulatory Changes
We did not propose regulations on Partnership and have not added
any in this final rule. Rather, further information will be provided in
the context of future guidance on the Federally-facilitated Exchange.
c. Consumer Assistance Tools and Programs of an Exchange (Sec.
155.205)
In proposed Sec. 155.205, we established that the Exchange must
provide for the operation of a consumer assistance call center that is
accessible via a toll-free telephone number, and outlined capabilities
and suggested infrastructure as well as types of information we think
will be most critical to consumer experience and informed decision-
making. The proposed rule sought comment on ways to streamline and
prevent duplication of effort by the Exchange call center and QHP
issuers' customer call centers while ensuring that consumers have a
variety of ways to learn about their coverage options and receive
assistance.
We further proposed that an Exchange must maintain an Internet Web
site that contains the following information on each available QHP: the
premium and cost sharing information; the summary of benefits under
section 2715 of the PHS Act; the identification of the QHP coverage
(``metal'') level; the results of the enrollee satisfaction survey; the
assigned quality ratings; the medical loss ratio; the transparency of
coverage measures reported to the Exchange, and the provider directory.
We noted that we were evaluating the extent to which the Exchange
Web site may satisfy the need to provide plan comparison functionality
using HealthCare.gov, and invited comment on this issue. We also
requested comment on a Web site standard that would allow applicants,
enrollees, and individuals assisting them to store and access their
personal account information and make changes.
We also proposed that the Exchange Web site be accessible to
persons with disabilities and provide meaningful access to persons with
limited English proficiency. In addition, we proposed that the Exchange
post certain QHP financial information, and that an Exchange establish
an electronic calculator to assist individuals in comparing the costs
of coverage in available QHPs after the application of any advance
payments of the premium tax credit and cost-sharing reductions. We
invited comment on the extent to which States would benefit from a
model calculator and suggestions on its design.
Finally, we proposed that the Exchange have a consumer assistance
function, and that the Exchange conduct outreach and education
activities to educate consumers about the Exchange and encourage
participation separate
[[Page 18327]]
from the implementation of a Navigator program described in Sec.
155.210.
Comment: Several commenters supported the significant flexibility
in structuring a call center provided in proposed Sec. 155.205(a).
Other commenters suggested that HHS establish more detailed standards
such as establishing key areas of competency for a call center service,
including being able to provide information about QHPs, the categories
of available assistance, and the application process. Some commenters
recommended that an Exchange call center address additional topics,
ranging from the ability to make appropriate referrals to other sources
of information, to the capacity to provide enrollment assistance to
hospitals and other providers encountering the uninsured. One commenter
said that the call center should be able to respond to online chat.
Response: We accept the recommendation of commenters that Exchange
discretion in establishing a call center should be maintained, and
therefore have not established additional standards in Sec. 155.205(a)
of the final rule. The final rule does not preclude an Exchange from
adopting additional standards or implementing the specific suggestions
from commenters to provide more robust consumer assistance.
Comment: HHS received many comments regarding an Exchange's ability
to make appropriate referrals through the call center in proposed Sec.
155.205(a). Commenters specifically recommended that Exchanges have the
capacity to refer consumers to Medicaid, Indian Health Service/Tribal/
Urban (I/T/U) providers, Navigators and assisters, oral translation
services, and family planning services. A commenter also suggested that
the call center be able to appropriately address the special issues
facing families with mixed immigration status. Several commenters asked
that the call center refer consumers who were ineligible for coverage
through the Exchange to safety net health providers and other low-cost,
non-Exchange options. Some commenters suggested that the call center be
able to appropriately refer discrimination complaints.
Response: We believe Sec. 155.205(a) addresses this issue with the
phrase ``address the needs of consumers requesting assistance.'' In the
preamble to the proposed rule, we noted that the Exchange call center
should be a conduit to services like Navigators and State consumer
programs (76 FR 41875). We maintain this expectation under this final
rule and note that Exchanges have discretion to establish more specific
standards.
Comment: Many commenters recommended that the call center be able
to provide oral communication to people with limited English
proficiency (LEP), and several suggested standards that assure service
to those with hearing disabilities.
Response: We have amended the final rule to apply the meaningful
access standards specified in the redesignated Sec. 155.205(c)(1),
(c)(2)(i), and (c)(3) to an Exchange call center. HHS will also issue
further guidance on language access and such guidance will coordinate
our accessibility standards with insurance affordability programs, and
across HHS programs, as appropriate, providing more detail regarding
literacy levels, language services and access standards.
Comment: HHS received comments about ways a call center can assure
quality service, including training on important topics, establishing
performance standards on topics like call wait times, abandonment
rates, and call return time; or modeling call center performance
standards on existing call centers, with 1-800 Medicare and the
Michigan Health Insurance Consumer Assistance Program mentioned as
positive examples. Commenters also suggested testing the call center
with consumer focus groups, developing analytics on call center service
issues, and updating an Exchange customer's account with a record of
any services provided by call center personnel.
Response: We believe that Sec. 155.205(a) as proposed outlines
general standards to address the needs of consumers and we retain this
language in the final rule. We did not propose and are not adding
specific performance standards for Exchange call centers in this final
rule, but we note that in connection with the operation of Federally-
facilitated Exchanges, we will take these specific performance
recommendations into consideration.
Comment: HHS received many comments on the need to coordinate call
center services with other entities. Several commenters recommended
that service issues handled by an Exchange call center versus those
handled by a QHP issuer call center should be clearly delineated to
avoid consumer confusion and unnecessary duplication, a topic for which
we requested comment in the proposed rule. One commenter recommended
limiting the Exchange call center services to pre-enrollment, leaving
QHP issuers to provide customer service for QHP enrollees. Another
commenter recommended a ``no wrong number'' approach to customer
service, advising that State flexibility would best foster a solution.
One commenter spoke of the need to integrate the call center with the
Exchange Web site in order to provide personal service without having
callers repeat information already entered via an online account.
Another commenter asked that HHS clarify the different roles of
eligibility workers and the call center.
Response: An Exchange must balance the need to prevent duplication
against ensuring that consumers have a variety of ways to learn about
their coverage options, an imperative supported by the flexibility in
paragraph Sec. 155.200(a). In regard to the differing roles between
eligibility workers and the call center, we believe this is an
operational issue that each Exchange must address. Thus, we are
finalizing this provision as proposed.
Comment: Related to proposed Sec. 155.200(b), many commenters
remarked that the Web site www.Healthcare.gov's ``Find Insurance
Options'' would work as a model for health plan comparison for the
Exchange, though often with the caveat that this feature should be
fully integrated into the Exchange Web site. A commenter also noted
that Healthcare.gov provides a foundation but would need changes to be
used for an Exchange. Some commenters opposed Healthcare.gov as a model
because it does not have transactional functionality or a precise
premium calculator. Another commenter urged HHS to also consider
eHealthInsurance.com and Medicare.gov as models.
Response: HHS considered comments on the appropriateness of
Healthcare.gov as a model for presenting comparative plan information,
as well as comments suggesting consulting other models such as
eHealthInsurance.com and Medicare.gov. We will take these
recommendations into account in development of the model Internet Web
site template and in future guidance.
Comment: With respect to the preamble discussion related to
proposed Sec. 155.205(b), commenters were generally supportive of the
concept that Exchange Web sites allow applicants and enrollees to store
and access their personal information in an online account or allow
eligibility and enrollment application assisters to maintain records of
an individual's application process. Some commenters raised privacy and
security concerns, and one commenter suggested applying a privacy and
security standard like that used by the Financial Industry
[[Page 18328]]
Regulatory Authority (FINRA) in its self-regulation of the securities
industry, ensuring that actions by authorized representatives are
recorded for consumer protection purposes.
Response: We believe that applicants, enrollees, and authorized
third party assisters should have access to an online personal account
with strong privacy and security protections and will consider these
comments when developing the model Internet Web site template and
guidance. We encourage Exchanges to consider the benefit of accounts,
but are not establishing account functionality as a minimum Exchange
Web site standard in this final rule.
Comment: Many commenters supported the proposal in Sec.
155.205(b)(1)(ii) that the Exchange display the summary of benefits and
coverage established in section 2715 of the PHS Act. Several noted that
the summary of benefits should be searchable, not necessitate
additional software to view, and include drug formulary information.
Response: Enrollees, consumers, and other stakeholders need access
to a variety of cost and benefit information via the Exchange Web site
to make an informed plan selection. Accordingly, we are finalizing the
provisions in paragraphs Sec. 155.205(b)(1)(i) and (ii), which direct
an Exchange Web site to display premium and cost-sharing information
and a summary of benefits and coverage for each QHP. We clarify that
paragraphs (b)(1)(i) and (b)(1)(ii) are separate standards because the
premium and cost-sharing information needs for an Exchange surpass
those included in the summary of benefits and coverage document. We
note that paragraph (b)(1)(ii) allows an Exchange the option of
collecting the summary of benefits from issuers in a manner supporting
a searchable format. The content of the summary of benefits and
coverage is outside of the scope of this final rule and refer readers
to the Summary of Benefits and Coverage and Uniform Glossary final
rule, codified at Sec. 147.200 of this title, published at 77 FR 8668
(Feb. 14, 2012).
Comment: With respect to the provider directory standard in
proposed Sec. 155.205(b)(1)(viii), a number of commenters recommended
that an Exchange provide an up-to-date consolidated provider directory
to enable consumers to see which QHPs a given provider participates in
from the Exchange Web site. A few other commenters advised HHS to
ensure that the Exchange link to a QHP's Web site provider directory
for timely and accurate information. Another commenter asked that the
final rule clarify that an online directory meets the standard in
paragraph (b)(1)(viii), and that Exchanges do not need to provide paper
provider directories.
Response: HHS considered the comments received on the Internet Web
site's display of provider directory information. To maintain maximum
flexibility for an Exchange, the final rule does not specify whether an
Exchange should collect a consolidated provider directory or link to a
QHP's Web site in order to meet the standards in paragraph
(b)(1)(viii). Additional comments on the provider directories are
addressed in Sec. 156.230.
Comment: One commenter indicated that our proposed standard in
Sec. 155.205(b)(1)(vi) to display medical loss ratio on the Exchange
Web site was inappropriate, comparing it to a manufacturer's cost to
produce. Another commenter suggested dropping the proposed MLR display
for the individual market Exchange, stating that it was too technical a
concept to be useful for consumers.
Response: Issuers already report this data under the Affordable
Care Act in accordance with section 2718 of the PHS Act, and displaying
the medical loss ratio on the Exchange Web site makes this information
accessible to consumers.
Comment: Several commenters noted that an Exchange should track
which Web site features were most used, or caused consumers difficulty,
in order to continually improve the Web site. Some of these commenters
asked that usage information be publicly disclosed.
Response: Statistics on Web site usage may be helpful for Exchange
quality assurance, and we will consider these comments when developing
best practice guidelines for Exchanges. We make no modifications in the
final rule to specifically regulate collection or dissemination of
statistics on Web site usage.
Comment: Many commenters supported the proposed Sec. 155.205(b)(2)
standards regarding meaningful access to people with disabilities and
persons with limited English proficiency, with some suggesting that HHS
further clarify that the Web site must be fully accessible, with Web
site materials and notices available in alternative formats. One
commenter noted that the Exchange calculator and other online tools
should be accessible and independently usable as much as possible for
people with disabilities. Commenters suggested that all Web site
language be at a sixth grade proficiency level. A number of commenters
suggested that the Web site be available in Spanish and one or more
languages prevalent in the Exchange service area. Many suggested that
the Web site clearly display taglines in up to 15 different languages
explaining how to access oral translation in those languages. In
contrast, one commenter requested that HHS defer to a State on
meaningful access standards because a State is best situated to
determine local needs. Finally, several commenters suggested that
meaningful access standards apply to information presented on the Web
site on premiums, premium tax credits, individual responsibility
exemptions, and the appeals process.
Response: We have made several changes in this final rule. We added
paragraph Sec. 155.205(c) to establish that communications be in plain
language to help applicants and enrollees understand the information
presented; the definition of ``plain language'' is discussed in Sec.
155.20 of this final rule. We added Sec. 155.205(c)(1) to specify that
auxiliary aids and services be provided at no cost to the individual.
Provisions on access for those with limited English proficiency are
modified in new paragraph Sec. 155.205(c)(2) to include oral
translation, written translation, and taglines in non-English languages
indicating the availability of language services. Finally, we added
paragraph (c)(3) to establish that the Exchange must inform applicants
and enrollees of the services in paragraph (1) and (2). We note that in
this final rule, at Sec. 155.230(b) and Sec. 156.250, we apply the
meaningful access standards to Exchange notices and QHP issuer notices,
respectively. We note that the standards in this section do not preempt
current guidance issued by the Office of Civil Rights.
We are not adding specific accessibility standards in this final
rule, but intend to issue such standards in future guidance, seeking
input first from States and other stakeholders about appropriate
standards. Such guidance will coordinate our accessibility standards
with insurance affordability programs, and across HHS programs, as
appropriate, providing more detail regarding literacy levels, language
services and access standards.
We retained the standard that Web sites must be accessible to
people with disabilities and encourage States to review WCAG 2.0 level
AA Web site standards, which have been considered for adoption as
Section 508 standards in the recent proposed rule issued by the
Architectural and Transportation Barriers Compliance Board (Access
Board)76 FR 76640, December 8, 2011). See also Section 5.1.3 of the
Guidance for Exchange and Medicaid Information
[[Page 18329]]
Technology (IT) Systems 1.0 published in November 2010.\2\ We intend to
publish future guidance on these standards.
---------------------------------------------------------------------------
\2\ Guidance for Exchange and Medicaid Information Technology
(IT) Systems 1.0 published in November 2010: http://cciio.cms.gov/resources/files/joint_cms_ociio_guidance.pdf.
---------------------------------------------------------------------------
Comment: With respect to the financial information described in
proposed Sec. 155.205(b)(3)(i), one commenter sought clarification on
what HHS means by licensing costs. Another commenter recommended
dropping the proposal in Sec. 155.205(b)(3)(v) that Exchanges display
losses due to waste, fraud and abuse, arguing that it would be
speculative and inflammatory. Alternatively, several other commenters
asked for more detail on Exchange reporting, and asked that HHS direct
an Exchange to include all costs, including costs incurred in making a
Medicaid eligibility determination, in the administrative cost of the
Exchange.
Response: We did not accept the recommendations to establish
additional standards and have maintained the proposed policy in the
final rule, which is redesignated as subparagraph (b)(6). Section
1311(d)(7) of the Affordable Care Act directs the Exchange Web site to
display losses due to waste, fraud and abuse. HHS will consider the
request for greater clarity on licensing costs as we develop guidance
to interpret and implement this standard.
Comment: Many commenters supported our proposal that the Exchange
Web site provide information about Navigators and other assisters in
Sec. 155.205(b)(4). Several commenters suggested that HHS explicitly
include the display of contact information for other assisters,
especially the Exchange call center. Another commenter asked that
brokers and agents only be listed if they are also Navigators. One
tribal entity remarked that consumer assistance should include services
provided by Indian Health Service/Tribal/Urban (I/T/U) organizations.
Response: We maintain the standard in redesignated Sec.
155.205(b)(3) of this final rule. Exchanges have the flexibility to
establish additional standards regarding posting information relating
to Navigators and other assisters.
Comment: Many commenters were supportive of an Exchange Web site
that facilitates a ``one-stop'' eligibility determination as described
in Sec. 155.205(b)(5) of the proposed rule. Commenters were supportive
of the Web site allowing for enrollment in coverage. Another commenter
stated that the Exchange should not be the only access point for
coverage, and that HHS should address the need for consumer assistance
for Web site-related purchasing mistakes.
Response: Exchange Web sites will not be the only access point for
an individual to apply for coverage through the Exchange. Standards for
enrollment initiated by an applicant through a non-Exchange Web site
are described in an amended Sec. 155.220 and Sec. 156.265, which
provide additional details about eligibility determinations and
protections against an applicant's personal data from being
inappropriately shared with other parties. Applications are also
described in Sec. 155.405(c) of the final rule. We have also modified
the Web site's function in enrollment in the proposed Sec.
155.205(b)(1), by clarifying in redesignated Sec. 155.205(b)(5) that
an Exchange Web site facilitates the selection of a QHP by a qualified
individual since enrollment is effectuated by the QHP issuer in a
process described in Sec. 156.265(b).
Comment: Many commenters expressed support for a Web site
calculator proposed in Sec. 155.205(c) that displays the estimated
cost of coverage after the application of any expected advance payments
of the premium tax credit and cost-sharing reductions. In general,
these commenters urged simplicity and requested no additional
calculation from the consumer. Several commenters recommended that HHS
provide a national model calculator for efficiency and consistency
across Exchanges. One commenter in particular asked that the calculator
make cost-sharing reductions available to American Indians/Alaska
Natives readily apparent. Another commenter suggested that the Web site
provide a standard way for a consumer to take less than the available
advance payment of the premium tax credit. A few other commenters
suggested that the Web site have decision support to help a consumer
see how a change in income would affect advance payments of the premium
tax credit and make a plan selection accordingly. Several commenters
suggested that the Exchange specify that an ``out-of-pocket'' estimate
be part of the Exchange calculator in order to help consumers avoid
evaluating cost by premium alone. Finally, one commenter suggested that
the calculator account for the variation in cost sharing for ``in-
network'' versus ``out-of-network'' services.
Response: We will consider these recommendations as we develop
guidance, best practices, and the model Web site template, but we are
not finalizing more specific standards for the electronic calculator in
this final rule as we are codifying the statutory provision related to
the calculator.
Comment: Commenters were generally supportive of Exchanges
providing consumer assistance as described in Sec. 155.205(d) of the
proposed rule. Many asked that an Exchange complete a consumer needs
assessment before designing its consumer assistance program. HHS
received many comments on the need to conduct outreach and education
for hard to reach populations described in proposed Sec. 155.205(e).
Many commenters remarked that assistance should be able to serve those
with disabilities or limited English proficiency, suggesting standards
for consumer assistance such as oral translation for all limited
English proficient individuals, or simply that such services be
culturally and linguistically appropriate. Some commented that consumer
assistance workers should be knowledgeable of the Indian Health System.
One commenter remarked that consumer assistance should be accessible
across multiple channels, including Web site, telephone, and in-person.
Several commenters remarked on the need for in-person assistance, with
one commenter suggesting the Internal Revenue Service's Volunteer
Income Tax Assistance Program as a model, another commenter
recommending agents and brokers for consumer assistance, and a third
suggesting that assistance be provided as much as possible by nonprofit
organizations. Others suggested that an outreach program be coordinated
with public programs because of the likely overlap in eligibility, or
with providers like Federally Qualified Health Centers and essential
community providers. Other commenters pointed to existing enrollment
campaigns for lessons learned, such as the need to build in time to
``ramp up'' an enrollment campaign.
Response: We will consider comments we received on consumer
assistance in Sec. 155.205(d) in the development of guidance. In this
final rule, we maintain this provision as proposed and believe that it
provides sufficient discretion to further develop the consumer
assistance function. We have modified Sec. 155.205(e) in this final
rule to direct Exchanges to provide education regarding insurance
affordability programs to ensure coordination with public programs. HHS
received many helpful comments on how to ensure effective consumer
[[Page 18330]]
assistance and outreach and will consider these as we develop guidance.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.205 of the
proposed rule, with the following modifications: we renumbered proposed
paragraphs (b)(3) through (b)(6) as (b)(2) to (b)(5) in the final rule.
We clarified in paragraph (b)(5) of this final rule that a qualified
individual may select a QHP on the Exchange Web site to initiate the
enrollment process, rather than completing the entirety of the
enrollment process on the Web site. We moved the standard regarding the
calculator to paragraph (b)(6) of this final rule. We redesignated
paragraph (c)(1) and clarified standards for persons with disabilities,
including the provision of auxiliary aids and services at no cost to
the individual and that Exchange Web sites must be accessible. We added
paragraph (c)(2) to outline standards for limited English proficient
persons, including that oral translation be available, written
translation be available, and that the availability of language
services be displayed with taglines written in each respective
language, and in paragraph (c)(3) that individuals must be made aware
of the availability of these services. Finally, we made several minor
technical and non-substantive changes.
d. Navigator Program Standards (Sec. 155.210)
In Sec. 155.210, we proposed Navigator program standards for both
the individual market Exchange and SHOP. We first proposed that
Exchanges must award grant funds to public or private entities or
individuals to serve as Navigators, and described the eligibility
standards for and the types of entities to which the Exchange may award
Navigator grants. We also identified the minimum duties of Navigators,
including standards for the information and services provided by
Navigators. We sought comment on how best to ensure that the
information provided by Navigators is accurate and complete and whether
HHS should identify additional standards for Navigators in future
guidance.
We further proposed that a Navigator must meet any licensing,
certification or other standards prescribed by the State or Exchange,
as appropriate, and may not have a conflict of interest during the term
as Navigator. We sought comment on whether we should propose additional
standards on Exchanges to make determinations regarding conflicts of
interest.
In addition, we proposed that the Exchange include at least two
types of Navigators from the list of eligible entities included in the
Affordable Care Act. We sought comment as to whether we should ensure
that at least one community and consumer-focused non-profit
organization be designated as a Navigator by an Exchange, or whether we
should provide that Navigator grantees reflect a cross-section of
stakeholders.
We also proposed to codify the statutory prohibitions on Navigator
conduct in the Exchange, specifically that health insurance issuers are
prohibited from serving as Navigators and that Navigators must not
receive any compensation from any health insurance issuer in connection
with the enrollment of any qualified individuals or qualified employees
in a QHP. We sought comment on this issue and whether there are ways to
manage any potential conflicts of interest that might arise.
Finally, we proposed to codify the statutory restriction that the
Exchange cannot support the Navigator program with Federal funds
received by the State for the establishment of Exchanges. For a more
detailed discussion of how this statutory prohibition applies in States
where Navigators address Medicaid and CHIP administrative functions,
please refer to the preamble of the Exchange establishment proposed
rule (76 FR 41878). We also noted that we were considering a standard
that the Navigator program be operational with services available to
consumers no later than the first day of the initial open enrollment
period.
General Standards
Comment: Regarding proposed Sec. 155.210(a), several commenters
had specific recommendations regarding the types of and content of
contractual agreements that should exist between Navigators and
Exchanges.
Response: The final rule does not specify the type of or contents
of the contractual agreements between Exchanges and Navigators, other
than codifying the statutory provision that Navigators receive grants.
Exchanges can design the grant agreements as they deem appropriate so
long as they ensure that Navigators are completing, at least, the
minimum duties outlined in Sec. 155.210(e) of the final rule.
Comment: Several commenters recommended additional standards for
Navigator programs established under proposed Sec. 155.210(a),
including a needs assessment of the population in the geographic areas
in which Navigators will serve consumers and an ongoing evaluation
system to gauge Navigator performance.
Response: While a needs assessment is likely to yield useful
information in developing the Navigator program, we do not accept the
commenters' suggestion that Navigator programs conduct such
assessments. We note that many States have already begun research on
the needs of the populations an Exchange could serve. To the extent
that needs assessments undertaken as part of Exchange establishment and
planning do not inform which types of Navigators to select and how
Navigators can best serve potential Exchange enrollees, we encourage
States to conduct them. But the final rule does not direct States to
conduct additional research. Additionally, we strongly encourage
Exchanges to implement regular reviews and assessments of their
Navigators.
Comment: A significant number of commenters expressed the
importance of mitigating Navigator conflict of interest and of ensuring
Navigator accountability. Many commenters asked that HHS issue specific
conflict of interest standards that would apply to all entities
interested in serving as Navigators, and some made specific
recommendations regarding what should be included in such standards.
Several commenters, including consumer and patient advocacy groups and
State agencies, also requested that we define ``conflict of interest''
as used in Sec. 155.210(b)(1)(iv) of the proposed rule, while another
commenter suggested that States should have the flexibility to
determine if a conflict of interest exists for Navigators.
Response: The final rule contains restrictions on Navigator conduct
that are intended to eliminate possible sources of conflicts of
interest. However, the baseline standards that we have specified will
likely not be sufficient to comprise a robust set of conflict of
interest standards in all Exchanges. As such, Sec. 155.210(b)(1) of
the final rule establishes that Exchanges develop and disseminate a set
of conflict of interest standards to ensure appropriate integrity of
Navigators. Exchanges will be best-equipped to determine what
additional conflict of interest standards are appropriate for their
markets, and we strongly urge Exchanges to develop standards that are
sufficient to help ensure that consumers receive accurate and unbiased
information at all times from all Navigators. We also clarify here that
``conflict of interest,'' as used in Sec. 155.210(c)(1)(iv) of the
final rule, means that a Navigator has a private or personal interest
sufficient to influence, or appear to influence, the objective
[[Page 18331]]
exercise of his or her official duties; for purposes of this rule, it
includes the conflict of interest standards developed by each Exchange.
We urge Exchanges to develop conflict of interest standards that
include, but are not limited to, areas such as financial
considerations; non-financial considerations; the impact of a family
member's employment or activities with other potentially conflicted
entities; Navigator disclosures regarding existing financial and non-
financial relationships with other entities; Exchange monitoring of
Navigator-based enrollment patterns; legal and financial recourses for
consumers that have been adversely affected by a Navigator with a
conflict of interest; and applicable civil and criminal penalties for
Navigators that act in a manner inconsistent with the conflict of
interest standards set forth by the Exchange. Additionally, we will be
releasing model conflict of interest standards in forthcoming guidance.
Comment: We requested comment on standards related to training in
the proposed rule and received a large number of responses on this
issue. Several commenters suggested that HHS establish minimum
standards for Navigator training, including templates for the format
and content of Navigator training materials. Some commenters suggested
that Navigators be trained to specifically serve the needs of varying
groups, including but not limited to: low-income individuals; limited
English proficient individuals; tribal organizations; individuals with
disabilities; and individuals with mental health or substance abuse
needs. Other commenters urged HHS to defer to States in relation to
Navigator training and standards beyond those established in the
proposed rule.
Response: Due in part to the sensitivity of information that will
be available to Navigators, newly added Sec. 155.210(b)(2) of the
final rule directs Exchanges to establish training standards that apply
to all persons performing Navigator duties under the terms of a
Navigator grant, including both paid and unpaid staff of entities
serving as Navigators. We plan to issue training model standards in
forthcoming guidance to supplement, not replace, the need for Navigator
applicants to demonstrate that they can carry out the minimum duties of
a Navigator as listed in Sec. 155.210(e) of the final rule. We
encourage Exchanges to conduct ongoing and recurring training for
Navigators.
Comment: One comment from a consumer advocacy organization
requested that HHS specifically indicate that the Gramm-Leach-Bliley
Act (Pub. L. 106-102) does not apply to the Navigator program as
Navigators will not be selling insurance.
Response: The Gramm-Leach-Bliley Act (GLBA) is intended to enhance
competition in the financial services industry by providing a
prudential framework for the affiliation of banks, securities firms,
insurance companies, and other financial service providers, and for
other purposes. To the extent a Navigator is not licensed to sell
insurance, we believe the GLBA would not apply. The GLBA will apply to
agents and brokers as it currently does, including agents and brokers
that choose to serve as Navigators. However, other Navigator grantees
will not be affected. Navigators must meet other training, conflict of
interest, and privacy and security standards established by the
Exchange.
Comment: We received many comments expressing support for a
standard that Navigator programs be operational with services available
to consumers no later than the first day of the initial open enrollment
period. Some commenters noted that while they support the proposed
start date, they prefer an earlier operational start date.
Response: We have not directed Navigator programs to be operational
by the first day of the initial open enrollment period. However, we
encourage Navigator programs to be operational with services available
to consumers by October 1, 2013, for State-based Exchanges that are
approved or conditionally approved by January 1, 2013, or the start of
any annual open enrollment period in subsequent years for State-based
Exchanges certified after January 1, 2013.
Entities Eligible to be a Navigator
Comment: Many commenters proposed that States, Exchanges, or HHS
should set appropriate certification or licensing standards for
Navigators. A few commenters proposed that HHS set a broad range of
certification or licensing standards that States or Exchanges could
tailor to meet their own needs, while others suggested specific
programs upon which Exchanges could model Navigator certification
standards, such as the Medicare State Health Insurance Assistance
Programs, ombudsman programs, area agencies on aging, and Promotoras, a
community health worker model that has been adopted into many Latino
communities in the United States.
Response: We understand and appreciate the concerns of commenters
that recommended certification or licensure standards for Navigators;
we have finalized in this rule a primary role for Exchanges and States
in the creation, development and enforcement of such standards. We
encourage Exchanges to set certification or licensing standards for
Navigators in accordance with the guidelines set forth in this final
rule and any State law(s) that may apply. However, without some minimum
standards, significant variability may develop that could put consumers
at a disadvantage. Therefore, HHS has added Sec. 155.210(b)(2) of the
final rule to indicate that Exchanges must develop a set of training
standards to ensure Navigator competency in the needs of underserved
and vulnerable populations, eligibility and enrollment procedures, and
the range of public programs and QHP options available through the
Exchange. Additionally, given the policy set forth in Sec.
155.210(c)(1)(v) that Navigators comply with the privacy and security
standards adopted by the Exchanges under Sec. 155.260, the training
standards must also ensure that Navigators are trained in the proper
handling of tax data and other personal information. HHS also plans to
issue additional guidance on the model standards for Navigator training
and best practices for certification or licensure standards.
Comment: A majority of commenters proposed that Navigators should
not have to hold an agent or broker license or errors and omissions
liability coverage in order to be certified or licensed as a Navigator.
Conversely, a small number of commenters suggested that Navigators hold
an agent or broker license as well as errors and omissions coverage and
that Navigators should be subject to the same licensing and education
standards established for agents and brokers.
Response: We accept the commenters' suggestion that States and
Exchanges should not be able to stipulate that Navigators hold an agent
or broker license, and we clarify that States or Exchanges are
prohibited from adopting such a standard, including errors and
omissions coverage. ``Agent or broker'' is defined in Sec. 155.20 as
``a person or entity licensed by the State as an agent, broker, or
insurance producer.'' Thus, establishing licensure standards for
Navigators would mean that all Navigators would be agents and brokers,
and would violate the standard set forth Sec. 155.210(c)(2) of the
final rule that at least two types of entities must serve as
Navigators. Additionally, we do not think that holding an agent or
broker license is necessary or sufficient to perform the duties of a
Navigator as these licenses generally do not address
[[Page 18332]]
training, among other things, about public coverage options.
Comment: Several commenters addressed the need for Navigators to
have expertise in serving American Indian/Alaska Native communities and
on the ability of Navigators to adequately address the needs of
American Indians/Alaska Natives. In addition, a few commenters
suggested we modify the language proposed in Sec. 155.210(b)(1)(iii)
such that Navigators serving tribal communities should be exempt from
any State licensing or certification standards, as well as from
conflict of interest standards.
Response: Exchanges that include one or more Federally-recognized
tribes within their geographic area must engage in regular and
meaningful consultation and collaboration with tribes in accordance
with Sec. 155.130(f) of this final rule. In section 155.210(c)(2), we
have identified Tribes, Tribal organizations, and urban Indian
organizations as eligible entities to serve as Navigators. Development
of the Navigator program should be an important element of Exchanges'
consultation with Tribal governments. The Navigator program will help
ensure that American Indians/Alaska Natives participate in Exchanges.
Comment: Commenters recommended that when the geographic area of an
Exchange includes an Indian Tribe, tribal organization, or Urban Indian
organization, that at least one of these organizations must be included
as a Navigator within this Exchange. Another commenter recommended that
HHS include directives to Navigator programs and contractors to provide
resources directly to Tribes so they can conduct Navigator tasks within
their own communities.
Response: Although Indian Tribes, tribal organizations, or Urban
Indian organizations are listed in Sec. 155.205(c)(2)(viii) as
potential Navigators, we believe that the Exchange should have
flexibility regarding the granting of Navigator awards. However, as
noted previously, development of the Navigator program should be a
critical element of an Exchange's consultation with tribal governments,
and tribal governments should have the opportunity to provide early
input on the development of the Navigator program.
Comment: Several commenters articulated the need for Navigators to
be non-discriminatory in performing their duties. Commenters
recommended that Navigators should comply with the non-discrimination
standards that apply to the Exchange as a whole.
Response: We clarify that because Navigators are third parties
under agreement (that is, the grant agreement) with the Exchange, the
non-discrimination standards that apply to Exchanges in Sec.
155.120(c) will also apply to entities seeking to become Navigators.
Comment: Regarding Sec. 155.205(b)(2), a majority of commenters
supported the provision suggested in the proposed rule to establish
that at least one of the two types of entities eligible to serve as
Navigators must be a community or consumer-focused non-profit entity
(76 FR 41877). Several commenters recommended expanding the list of
categories to include additional entities. A small number of commenters
thought States should have sole discretion over the determination of
which entities may serve as Navigators. One commenter favored allowing
States to determine the need for a Navigator program; another
recommended using licensed insurance professionals to facilitate
enrollment; and a small number stated that the standard that two types
of entities must be Navigators was unnecessary and counterproductive.
Response: We accept the commenters' suggestion that at least one
entity that serves as a Navigator should be a community or consumer-
focused non-profit, and have amended Sec. 155.210(c)(2) to convey this
policy. The categories listed in the final rule in Sec. 155.210(c)(2)
represent a broad spectrum of organizations, but are not meant to be an
exhaustive list of potential Navigators. As stated in Sec.
155.210(c)(2)(viii), other public or private entities that meet the
standards of the Navigator program may be eligible to receive a
Navigator grant. When establishing a Navigator program, Exchanges
should plan to have a sufficient number of Navigators available to
assist qualified individuals and employers from various geographic
areas and with varying needs who wish to enroll in QHPs within their
State.
Comment: One comment stated that a Navigator should never be an
individual person, but instead a verifiable and appropriately regulated
entity or institution.
Response: We believe that the standard to meet licensure and
certification standards in Sec. 155.210(c), and the prohibition
against health insurance issuers, and those who receive any
consideration directly or indirectly from any health insurance issuer
in connection with the enrollment in the Exchange, from receiving
Navigator grants in Sec. 155.210(d) will serve as sufficient
regulation against fraud by individuals or organizations who qualify to
be Navigators.
Prohibitions on Navigator Conduct
Comment: Many commenters discussed the impact that Navigator
compensation, or ``consideration'' as used in Sec. 155.210(c)(2) of
proposed rule, would have on a Navigator's obligation to provide
impartial assistance and avoid conflicts of interest. The majority of
these commenters recommended that Navigators be prohibited from
receiving compensation from health insurance issuers for enrolling
individuals in plans outside of the Exchange, while some commenters
expressed support for the compensation restrictions as proposed.
Several commenters requested that a prohibition on enrollment-based
compensation from a health issuer not prohibit Navigator programs from
utilizing Medicaid or CHIP funds for appropriate Navigator activities.
Some commenters also recommended that such a prohibition not preclude
Navigators from receiving grants from health insurance issuers for
activities unrelated to enrolling individuals in plans inside of the
Exchange. Many commenters requested clarification of the term
``consideration.''
Response: Prohibiting Navigators from receiving compensation from
health insurance issuers for enrolling individuals in health insurance
plans is an important way to mitigate potential conflict of interest,
and we have amended the final rule in Sec. 155.210(d)(4) to establish
this prohibition. Permitting Navigators to receive such compensation
would introduce a financial conflict of interest which would run
counter to the focus of the Navigator program as a consumer-centered
assistance resource. We clarify that this prohibition applies to
Navigators broadly, including staff of an entity serving as a Navigator
or entities that serve as Navigators for one Exchange while
simultaneously serving in another capacity for another Exchange.
Additionally, we clarify that this prohibition does not preclude
Navigators from receiving grants from the Exchange that are funded
through the collection of user fees.
We note that the final rule does not inherently prohibit Navigators
from receiving grants and other consideration from health insurance
issuers for activities unrelated to enrollment into health plans,
although we remain concerned that such relationships--financial and
otherwise--may present a significant conflict of interest for
Navigators. We urge Exchanges to consider the ramifications of such
[[Page 18333]]
relationships when developing conflict of interest standards for their
Navigator programs.
We also clarify that ``consideration,'' as used in Sec.
155.210(d)(4) of the final rule, should be interpreted to both mean
financial compensation--including monetary or in-kind of any type,
including grants--as well as any other type of influence a health
insurance issuer could use, including but not limited to things such as
gifts and free travel, which may result in steering individuals to
particular QHPs offered in the Exchange or plans outside of the
Exchange.
Duties of a Navigator
Comment: Many commenters supported the Navigator duties proposed in
Sec. 155.210(d), and some suggested that the duty to ``maintain
expertise in eligibility, enrollment, and program specifications''
should include knowledge about Exchanges, Medicaid, CHIP, other private
and public health insurance programs, appeals, and rules related to
cost-sharing. Other commenters recommended other specific minimum
duties for Navigators, including providing information about total plan
costs, assisting consumers with applying for advance payments of
premium tax credit and other cost-sharing reductions, and making
consumers aware of the tax implications of their enrollment decisions.
Response: The final rule maintains most of the duties set forth in
the proposed rule, except as re-assigned as Sec. 155.210(e) and
reflecting edited language in Sec. 155.210(e)(3). The change in Sec.
155.210(e)(3) is a technical correction to ensure consistency with our
clarification in Sec. 155.205(b)(7). Similarly, a Navigator
facilitating a QHP selection for a consumer initiates the enrollment
process, which is then conducted by the Exchange. Section 155.400(a)(2)
of this final rule describes the subsequent step in the enrollment
process, and directs Exchanges to transmit the QHP selection to the
appropriate QHP issuer.
We believe that Navigators should make consumers aware of the tax
implications of their enrollment decisions, and consider this to be
included in Sec. 155.210(e)(1) of the final rule. Navigators should
also provide information about the costs of coverage and assist
consumers with applying for advanced payments of the premium tax credit
and cost-sharing reductions, and we clarify that Sec. 155.210(e)(2)
and Sec. 155.210(e)(3) of the final rule are intended to include such
activities. We also clarify that such assistance could result in an
individual receiving an eligibility determination for other insurance
affordability programs. Additionally, we note that Exchanges can
establish additional minimum Navigator duties and encourage Exchanges
to determine whether additional Navigator duties may be appropriate.
Comment: A significant number of commenters recommended that
Navigators be accessible to all consumers, including those with
disabilities, and that all information provided under Sec.
155.210(d)(5) of the proposed rule by Navigators be provided orally as
well as in writing.
Response: Navigators need to be accessible to individuals with
disabilities, and redesignated Sec. 155.210(e)(5) of the final rule
establishes that Navigators must ensure accessibility and usability for
individuals with disabilities, which we believe includes accessibility
by individuals with hearing or visual impairments and using enrollment
tools, written in plain language, that are easily accessible by
consumers. We believe this provision will help ensure that Navigators
minimize obstacles to access for all potential enrollees and remain
accessible to consumers. Exchanges have the flexibility to develop
materials or to assign the responsibility to Navigators.
Comment: Many commenters expressed the need for Navigators to be
linguistically and culturally competent, as described in Sec.
155.210(d)(5) of the proposed rule, and a significant number
recommended training in this area. Commenters had numerous specific
recommendations regarding how Navigators would be able to best
accomplish this duty, and other commenters wanted additional clarity
regarding this standard. Some commenters recommended that Navigator
programs select diverse Navigators as a method of reinforcing
linguistic and cultural competence. One commenter suggested that having
a consumer's family members or friends serve as interpreters should not
be permitted to fulfill the obligation to provide culturally and
linguistic appropriate services.
Response: Redesignated Sec. 155.210(e)(5) establishes that
Navigators must provide information in a way that is culturally and
linguistically accessible to ensure that as many consumers as possible
can benefit from Navigator programs. The linguistic and cultural
accessibility standard applies broadly across the duties of a
Navigator, including public education and outreach activities. We
encourage Exchanges to undertake cultural and linguistic analysis of
the needs of the populations they intend to serve and to develop
training programs that ensure Navigators can meet the needs of such
populations. We note that we do not believe that this standard can be
met by simply having consumers' family members or friends serve as
interpreters. As previously stated, future guidance will set forth
model standards related to linguistic and cultural competency.
Comment: Regarding the duties of a Navigator outlined in Sec.
155.210(d) of the proposed rule, several commenters expressed the
importance of data and the use of information technology for Navigator
programs, including Navigator collection of data and narratives
regarding consumer experiences. Some consumers also stated that
Navigators should collaborate with other programs and entities,
including other consumer assistance programs and State governments, so
that all groups could mutually share information.
Response: The final rule does not establish that Navigators or the
Navigator program must collect data or to ensure compatibility with
existing information systems. However, Exchanges have the flexibility
to use such tools to ensure that Navigators and Exchanges are best
serving consumers.
Funding for Navigators
Comment: One commenter recommended that Navigator compensation by
an Exchange described in Sec. 155.210(e) of the proposed rule be only
in the form of block grants, while another commenter recommended that
Navigator grants include distribution on a per capita basis for
enrolling individuals in QHPs offered through the Exchange.
Response: We do not outline a specific compensation structure for
Navigators, and we maintain the proposed approach to funding in Sec.
155.210(f) of the final rule. This approach does not alter section
1311(i)(6) of the Affordable Care Act that establishes that all funds
for Navigator grants come from the operational funds of the Exchange.
We note, however, that operational funds of the Exchange may be revenue
received by the Exchange through user fees or other revenue sources, so
long as the Exchange is self-sustaining. We anticipate that there may
be public or private grants available to support certain Exchange
functions, such as education and outreach; once received for the
purposes of funding Exchange operations, these funds would be
operational funds.
[[Page 18334]]
Comment: We received numerous comments suggesting that we monitor
Navigator programs to ensure that they have sufficient funding under
proposed Sec. 155.210(e) to meet the needs of all potential enrollees,
and several commenters recommended that we issue guidance on minimum
funding levels needed to operate sustainable Navigator programs.
Response: While States and Exchanges should ensure that Navigator
programs have sufficient funds to ensure that all potential enrollees
are capable of being assisted and guided in eligibility and decision-
making for coverage in the Exchanges, we believe that minimum funding
level for Navigator program needs will vary by State and by populations
and therefore do not establish a minimum in Sec. 155.210(f) of the
final rule.
Comment: We received several comments regarding the use of Medicaid
or CHIP funds when Navigators perform administrative functions for
those programs. The majority of commenters, primarily consumer and
patient advocacy groups, were supportive of using Federal Medicaid and
CHIP funds for this purpose, while a small minority was opposed to such
an approach. One commenter recommended that Navigators not perform
Medicaid or CHIP administrative functions, stating that these
activities are the purview of the State Medicaid program.
Response: We continue to support the position that if a State
chooses to permit Navigators to perform or assist with Medicaid and
CHIP administrative functions, Medicaid or CHIP agencies may claim
Federal funding for a share of expenditures incurred for such
activities. A more detailed discussion of this position is in the
proposed rule (76 FR 41878).
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.210 of the
proposed rule, with the following modifications. In new paragraph (b),
we provide that an Exchange must develop and publicly disseminate
conflict of interest and training standards for all entities that serve
as Navigators. In paragraph (c)(1)(v), we apply the privacy and
security standards adopted by the Exchange, as established in Sec.
155.260, to Navigators. In paragraph (c)(2), we provided that at least
one entity serving as a Navigator must be a community and consumer-
focused non-profit. We clarified in paragraphs (d)(2) and (d)(3) that
subsidiaries of health insurance issuers and associations that include
members of or lobby on behalf of the insurance industry are prohibited
from serving as Navigators. In paragraph (d)(4) we clarified that
Navigators may not receive compensation from a health insurance issuer
in connection with the enrollment of individuals or employees in any
health plan, including both QHPs and non-QHPs. Finally, in paragraph
(e)(3) we clarified that Navigators must assist consumers in selecting
a QHP, thereby initiating the enrollment process.
e. Ability of States to Permit Agents and Brokers to Assist Qualified
Individuals, Qualified Employers, or Qualified Employees Enrolling in
QHPs (Sec. 155.220)
Based on comments and feedback to the proposed rule, we are
revising the rule to include paragraph (a)(3) of this section as an
interim final provision, and we are seeking comments on it.
In Sec. 155.220, we proposed to codify section 1312(e) of the
Affordable Care Act that gives States the option to permit agents or
brokers to enroll individuals and employers in QHPs. To ensure that
individuals and small groups have access to information about agents
and brokers should they wish to use one, we proposed to permit an
Exchange to display information about agents and brokers on its Web
site or in other publicly available materials. Additionally,
recognizing that an Exchange may wish to work with web-based entities
and other entities with experience in health plan enrollment, we sought
comment on the functions that such entities could perform, the
potential scope of how these entities would interact with the Exchange,
and the standards that should apply to an entity performing functions
in place of, or on behalf of, an Exchange while acknowledging and
meeting the statutory limitation that premium tax credits and cost-
sharing reductions be limited to enrollment through the Exchange. We
also sought comment on the practical implications, costs, and benefits
to an Exchange that coordinates with such entities, as well as any
implications for security or privacy of such an arrangement.
Comment: A number of commenters sought clarification on whether and
how the involvement of agents and brokers described in proposed Sec.
155.220 may serve as Navigators under Sec. 155.210. Many commenters
sought further clarification as to the distinction between the role of
agents or brokers and the role of Navigators in the Exchange.
Response: In general, the responsibilities of a Navigator differ
from the activities that an agent or broker. For example, the duties of
a Navigator described under Sec. 155.210(e) of the final rule include
providing information regarding various health programs, beyond private
health insurance plans, and providing information in a manner that is
culturally and linguistically appropriate to the needs of the
population being served by the Exchange. Moreover, any individual or
entity serving as a Navigator may not be compensated for enrolling
individuals in QHPs or health plans outside of the Exchange; as such,
an agent or broker serving as a Navigator would not be permitted to
receive compensation from a health insurance issuer for enrolling
individuals in particular health plans. That said, nothing precludes an
Exchange's Navigator program from including agents and brokers, subject
to the conditions of Sec. 155.210.
Comment: Several commenters expressed support for the proposed
Sec. 155.220(a) and the level of flexibility it affords State
Exchanges to determine the role of agents and brokers and web-based
entities in the Exchange marketplace. Several commenters specifically
expressed support for the manner in which the accompanying preamble to
the proposed rule described the Exchange as accountable for the actions
of web-based entities.
Response: We accept the recommendation that Exchanges have the
flexibility to determine the role of agents and brokers, including web-
based entities, in their marketplaces. We have retained the language in
Sec. 155.220(a), which codifies the statutory flexibility that States
may determine whether agents and brokers may enroll individuals,
employers and employees in QHPs and provide assistance to qualified
individuals applying for financial assistance.
Comment: HHS received several comments urging us to prohibit agents
and brokers, including web-based brokers, from performing eligibility
determinations.
Response: The Exchange must perform eligibility determinations,
subject to the standards and flexibility outlined in subpart D of this
final rule. We note that an individual cannot enroll in a QHP through
the Exchange, nor can a QHP issuer enroll a qualified individual in a
QHP through the Exchange, unless such individual completes the single
streamlined application to determine eligibility as described in Sec.
155.405 and is determined eligible. We have clarified in Sec.
156.265(b)(1) that that enrollment by QHP issuer may be considered
``enrollment through the Exchange'' only after the Exchange notifies
the QHP
[[Page 18335]]
issuer that the individual has received an eligibility determination,
the individual is qualified to enroll in a QHP through the Exchange,
and the Exchange transmits enrollment information to the QHP issuer
consistent with Sec. 155.400(a). In Sec. 155.220(c)(1), we also
specify that an individual can be enrolled in a QHP through the
Exchange with the assistance of an agent or broker only if the agent or
broker ensures that the individual completes the application and
eligibility verification process through the Exchange Web site. We
acknowledge and clarify that nothing in this final rule prohibits a QHP
issuer from selling QHP coverage directly or through an agent or
broker, so long as the standards of Sec. 156.255(b) are met; however,
such sales and enrollment are not ``enrollment through the Exchange''
and such enrollees are not eligible for the benefits that are tied to
enrollment through the Exchange.
Comment: With respect to proposed Sec. 155.220(a), several
commenters sought clarification of the role agents and brokers in
enrolling individuals in QHPs. Several commenters urged us to
strengthen the role of agents and brokers in the Exchange by further
clarifying their ability to participate in the Exchange marketplace.
With respect to the preamble discussion of web-based entities, several
commenters urged HHS to permit web-based entities in particular to
enroll individuals eligible for advance payments of the premium tax
credit and cost-sharing reductions in QHPs so that such individuals may
have access to the same avenues for QHP enrollment as those individuals
who do not receive financial assistance.
Response: We accept the recommendation that we provide Exchanges
with discretion to leverage the market presence of agents and brokers,
including web-based entities that are licensed by the State (web-
brokers), to draw consumers to the Exchange and to QHPs. We have
amended Sec. 155.220 to include minimum standards for the process by
which an agent or broker may help enroll an individual in a QHP in a
manner that constitutes enrollment through the Exchange. This is
intended to include traditional agents and brokers, as well as web-
brokers. This process must include the completion by the individual of
a single streamlined application to determine eligibility through the
Exchange's Web site, as described in Sec. 155.405; the transmission of
enrollment information by the Exchange to the QHP issuer to allow the
issuer to effectuate enrollment of qualified individuals in the QHP;
and any standards set forth in an agreement between the agent or broker
and the Exchange. We note that there may be various means a State may
choose to integrate agents, brokers and web-brokers consistent with the
standards described in this section for enrollment through the
Exchange. Agents and brokers may assist individuals enrolling directly
through the Exchange Web site and may serve as Navigators consistent
with standards described in Sec. 155.210. We also afford Exchanges
discretion to allow agents and brokers to use their own Web sites to
assist individuals in completing the QHP selection process, as long as
such a Web site conforms to the standards identified in Sec.
155.220(c)(3). While Exchanges that pursue this option would be able to
leverage the market presence of web-brokers in drawing consumers to the
Exchange and QHPs, we note that the Exchanges will also have to share
data and coordinate closely with such entities.
Comment: With respect to proposed Sec. 155.220(a), many commenters
urged us to set standards around the use of agents and brokers in order
to ensure certain consumer protections. These suggestions included
having Exchanges to monitor and oversee all agents and brokers
enrolling individuals and small groups in QHPs; establishing provisions
to mitigate agents' and brokers' incentives to steer consumers to
enroll in certain QHPs or to non-QHPs; setting uniform commissions for
agents and brokers or establishing that issuers must compensate agents
and brokers the same amount for Exchange and non-Exchange plans;
prohibiting commissions for agents and brokers in the Exchange
altogether; establishing certain disclosures by agents and brokers,
including disclosure of their commission and whether or not the agent
or broker has been the subject of any sanctions; applying privacy and
confidentiality standards to agents and brokers; prohibiting Exchanges
from directing individuals or small groups to enroll only through an
agent or broker; prohibiting advertising by agents or brokers; or
prohibiting agents and brokers from the Exchange altogether.
A number of commenters also expressed concern regarding the role of
third-party web-based entities enrolling individuals in QHPs. Several
commenters emphasized that such external entities should be held to the
same standards as the Exchange; should not be permitted to perform
eligibility determinations; or should be held to certain consumer
protection standards to prevent steering.
Response: We recognize the importance of consumer protections with
respect to agents and broker interactions. We also recognize the
States' role in licensing and overseeing agents and brokers and have
allowed States to determine which standards would apply to agents and
brokers acting in the Exchange, if the State chooses to permit agents
and brokers to enroll individuals and small groups in QHPs through the
Exchange. In order to address commenters' concerns while maintaining
the State's primary role in overseeing agents and brokers, we have
added paragraph (d) to ensure that agents and brokers must comply with
an agreement with the Exchange under which the agent or broker would
comply with the Exchange's privacy and security standards that are
adopted consistent with Sec. 155.260 and Sec. 155.270. We have also
added paragraph (e) to ensure that agents and brokers comply with
applicable State law.
We also recognize that the role of web-brokers may evolve upon
implementation of Exchanges, and that Exchanges may seek to involve
web-brokers in the enrollment process using a variety of technologies.
We have set forth standards in this rule to ensure that consumers enjoy
a seamless experience with appropriate consumer protections if an
Exchange chooses to allow web-brokers to participate in Exchange
enrollment activities. In order to address commenters' particular
concerns around the role of web-based entities, we note that
eligibility determinations must be conducted by the Exchange and
enrollment information must be transmitted to the QHP issuer by the
Exchange. We have added paragraph (c)(3) to Sec. 155.220 to ensure
that Web sites used by agents or brokers to enroll individuals in a
manner that constitutes enrollment through the Exchange provide
consumers with access to the same information as they would if they
used the Exchange Web site instead. Based on several commenters'
suggestion that we address agents' and brokers' ability to steer or
incentivize consumers to enroll in certain QHPs, and commenters'
general concern about the fact that the existence of such Web sites may
confuse consumers, we have inserted standards under paragraph (c)(3) of
this section to prevent such web-brokers from providing financial
incentives and to establish that such Web sites must allow consumers to
withdraw from the web-broker's process and use the Exchange Web site
instead at any time. Furthermore, the web-brokers would also be subject
to the standards inserted
[[Page 18336]]
under paragraph (d) and (e) regarding compliance with an agreement with
the Exchange and State law, respectively.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.220 of the
proposed rule, with several modifications. In the new paragraph (a)(2),
we clarify that agents and brokers may enroll qualified individuals in
a QHP in a manner that constitutes enrollment through the Exchange. In
new paragraph (a)(3), we clarify that agents and brokers may assist
individuals in applying for advance payments of the premium tax credit
and cost-sharing reductions for QHPs. As noted elsewhere in this rule,
paragraph (a)(3) is being published as interim. We outline the
parameters of what is considered enrollment through the Exchange in the
newly added paragraph (c), including that an agent or broker must
ensure that an individual completes the eligibility verification
process through the Exchange and that the Exchange transmits enrollment
information to the QHP issuer consistent with Sec. 155.400(a). In
paragraphs (d) and (e), respectively, we establish that agents or
brokers must comply with the terms of an agreement with the Exchange as
well as applicable State laws. New paragraph (c)(3) establishes
standards that would apply for an agent or broker's Internet Web site
were to be used to assist individuals in selecting a QHP within the
framework of enrollment through the Exchange.
f. General Standards for Exchange Notices (Sec. 155.230)
In Sec. 155.230, we proposed standards for any notice sent by an
Exchange in accordance with part 155. We additionally proposed that all
applications, forms, and notices be provided in plain language, and be
written in a manner that provides meaningful access to individuals with
limited English proficiency and ensures effective communication for
people with disabilities. We sought comment on whether we should codify
specific examples of meaningful access in the final rule. We also
proposed that the Exchange annually re-evaluate the appropriateness and
usability of all applications, forms, and notices and consult with HHS
when changes are made.
Comment: Several commenters expressed support for proposed Sec.
155.230(a) that provides that any notice sent by the Exchange in
accordance with part 155 must be in writing and include the information
described in paragraphs (a)(1) through (a)(3). Many commenters further
specified that the Exchange should send a second notice, or multiple
notices, when the action taken in a notice (of eligibility
determination) will result in a termination of coverage or another
adverse action. Some commenters provided other specific recommendations
about the content, timing, and formatting of notices, particularly for
the purpose of clarity and applicability of relevant information on the
part of the consumer. For example, some commenters specified that
notices should include the relevant and appropriate range of customer
service resource contact information based on the specific individual's
location or circumstances. Some commenters suggested that HHS issue
model notices or best practices for crafting notices for States, and
commenters suggested that HHS develop templates or minimum standards of
forms and notices.
Response: We believe that notices should be in writing,
electronically whenever possible, and we are taking specific content,
timing, and format-related recommendations we received from commenters
into consideration as we move forward with development of model
Exchange-issued notices. While Sec. 155.230(a)(1) through (a)(3)
outline some specific content standards for notices, we plan to issue
model notices. In addition to the content specific standards described
under Sec. 155.230(a), we expect that notices will also include the
date on which the notice is sent. In Sec. 155.230(a)(3) we add that a
notice must include the reason for the intended action.
Comment: Several commenters recommended that applicants and
enrollees should be able to specify their preferred method of
communication for notices, including the option to receive duplicative
notices, and that electronic notices should fulfill the Exchanges'
obligation to provide notices in writing in accordance with Sec.
155.230(a). A few commenters requested clarification concerning whether
Medicaid/CHIP will provide future guidance on the use of electronic
communications.
Response: In the final rule, we do not make changes to address the
use of electronic notices. In coordination with Medicaid and CHIP, we
will address standards related to electronic notices and coordination
of notices between the Exchange, Medicaid, and CHIP in future
rulemaking. We note that our goal is to allow for electronic notices
wherever practical. Future rulemaking in coordination with Medicaid and
CHIP will also increase our ability to align standards across programs.
Comment: One commenter recommended that HHS consider whether it is
necessary to set a specific timeline or clarify how quickly
applications and notices must be processed by the Exchange. Another
commenter suggested that the language for Sec. 155.230 be expanded to
refer to ``applications, forms, notices and any other documents sent by
an Exchange.''
Response: We have not included general timeliness standards in
Sec. 155.230 of this final rule, as we did not propose them. However,
subpart D contains timeliness standards related to eligibility
determinations as interim final rules. In addition, as we develop model
notices and future guidance, we will consider both notice timeliness
standards and the applicability of Sec. 155.230 to other documents
issued by the Exchange.
Comment: A few commenters recommended that HHS remove ``if
applicable'' from proposed Sec. 155.230(a)(2) that reads: ``An
explanation of appeal rights, if applicable.''
Response: Section 155.230 applies to all notices in accordance with
part 155. However, in some cases, a notice of appeal rights is not
relevant. For example, the notice of the annual open enrollment period
in accordance with Sec. 155.410(d) does not provide information
specific to an individual and is not appealable. In contrast, the
Exchange must include the notice of the right to appeal and
instructions regarding how to file an appeal in any determination
notice issued to the applicant in accordance with Sec. 155.310(g),
Sec. 155.330(e), or Sec. 155.335(h) of subpart D. We intend to
address appeal rights and procedures in future rulemaking.
Comment: A majority of commenters supported the approach described
in Sec. 155.230(b) of the proposed rule, while others suggested that
HHS add more detail to accessibility standards. Many commenters
recommended that we provide specific standards and thresholds for
translation of written information, and be understandable to limited
English proficient populations. One common suggested threshold was to
provide written translations where 5 percent or 500 limited English
proficient individuals reside in the State or Exchange service area,
whichever is less. Many commenters also recommended we add specific
standards with respect to oral interpretation, including at no cost to
the individual, and informing individuals how to access these services
through use of ``taglines'' in at least 15 languages. A few commenters
asked for
[[Page 18337]]
flexibility for States in developing language services standards as
States' populations and needs differ, and one commenter expressed
concern that a specific, uniform standard could pose an unreasonable
burden.
Response: In response to these comments, we have modified our
proposed regulation at Sec. 155.230(b) to cross-reference the
accessibility, readability, and translation and oral interpretation
standards outlined in Sec. 155.205(c). We plan to put forth guidelines
relating to these standards in upcoming guidance.
Comment: Many commenters noted the importance of health literacy
and the need to provide information that is readable and
understandable. A few commenters suggested that the reading level of
informational materials should be not greater than the 6th grade
reading level.
Response: We recognize the importance of health literacy and
significance of providing readable and understandable information. We
will take these comments into consideration as we develop guidance that
sets more specific standards and thresholds for readability, and as we
develop joint guidance with the Department of Labor related to ``plain
language.'' However, we have decided not to add specific reading level
standards in the final rule.
Comment: While some commenters expressed support for the proposed
Sec. 155.230(c) that the Exchange review notices on an annual basis,
other commenters were concerned about the burdensome and costly nature
of an annual review. Some commenters instead suggested that such a
review occur every three years or ``periodically.'' Several commenters
recommended that Exchanges have flexibility in how they implement
provision of notices and provided specific examples (that is,
flexibility in content), while one commenter advised that Federal
standards should provide a floor for notices but not diminish stronger
standards that the State may have for notices. Commenters who supported
an annual review also suggested that Exchanges seek consumer and
stakeholder input as notices are developed and changes to notices are
made. Some commenters also expressed support for or sought
clarification related to how a State must consult with HHS when changes
are made to notices, particularly regarding the scope of such a
consultation. A few commenters suggested that notices should be
reviewed annually as a part of the recertification process.
Response: In Sec. 155.230(c) of the final rule, we revise the
language from the proposed rule to provide that the Exchange must re-
evaluate the appropriateness and usability of applications, forms, and
notices without specifying the interval at which such review must
occur. Due to commenters' concerns about the feasibility and burden of
an annual review and the request for flexibility regarding notices
implementation, we removed the standard that this review must occur on
an annual basis. We anticipate that the model notices developed by HHS
will help to ensure that Exchanges include the appropriate content for
their notices and reduce administrative burden and cost to Exchanges.
We will consider the feasibility of reviewing notices, and notably any
proposed changes made to notices, and will consider stakeholder input,
particularly Exchanges and State Medicaid programs, as the model
notices are developed.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.230 of the
proposed rule, with several modifications: we clarify in paragraph (b)
that applications, forms and notices must comply with the readability
and accessibility standards established in Sec. 155.205(c) for the
Exchange Internet Web site. In paragraph (c), we removed the proposed
provision that the Exchange must re-evaluate applications, forms, and
notices on an annual basis and also removed that the Exchange must
consult with HHS when changes are made. In Sec. 155.230(a)(3), we add
that a notice must include the reason for the intended action.
g. Payment of Premiums (Sec. 155.240)
In Sec. 155.240, we proposed that Exchanges must always allow an
individual, at his or her option, to pay the premium directly to the
QHP issuer. In addition, we proposed that an Exchange may permit Indian
tribes, tribal organizations and urban Indian organizations to pay the
QHP premiums on behalf of qualified individuals, subject to the terms
and conditions determined by the Exchange. We solicited comment on how
such an approach might work in an Exchange. We also invited comment on
how to distinguish between individuals eligible for assistance under
the Affordable Care Act and those who are not in light of the different
definitions of ``Indian'' that apply for other Exchange provisions.
With respect to the operation of a SHOP, we proposed that an Exchange
must accept payment of an aggregate premium by a qualified employer.
Finally, we proposed that an Exchange may facilitate electronic
collection and payment of premiums. We sought comment concerning
Exchange flexibility in establishing the premium payment process and
what Federal regulatory standards would be appropriate to ensure
fiduciary accountability when an Exchange collects premiums.
Comment: One commenter suggested that QHP issuers report to an
Exchange if an individual pays the issuer directly under the option
described in Sec. 155.240(a).
Response: We believe that this information will be transmitted from
a QHP issuer and an Exchange through the process of effectuating
enrollment through the Exchange and through the process to initiate
advance payments of the premium tax credit and cost-sharing reductions.
We outline reporting standards related to enrollment and notification
if an individual stops payment in Sec. 155.400, Sec. 155.430, and
Sec. 156.270.
Comment: One commenter suggested that issuers should be responsible
for collecting premiums directly from individuals, as described in
proposed Sec. 155.240(a), but that the Exchange should be permitted to
garnish wages or undertake other legal means to collect unpaid premiums
owed to QHP issuers.
Response: We clarify that nothing in the final rule imposes a
responsibility on Exchanges to pursue unpaid premiums on behalf of a
QHP issuer. We do not believe the Exchange should take on debt
collection responsibilities for issuers.
Comment: With regard to proposed Sec. 155.240(a), one commenter
suggested that a possible interpretation of section 1312(b) of the
Affordable Care Act is that payment facilitation by an Exchange could
be considered direct payment by the individual to the QHP issuer.
Response: We interpret section 1312(b) of the Affordable Care Act
to mean that individuals always have the option to pay a QHP issuer
directly, and therefore, we maintain this policy as proposed.
Comment: In response to Sec. 155.240(b) of the proposed rule,
several commenters recommended that Exchanges must allow Indian tribes,
tribal organizations, and urban Indian organizations to pay the
unsubsidized portion of QHP premiums on behalf of enrollees. Some
commenters noted that Indian tribes have a right to use Federal funds
to pay insurance premiums on behalf of their members and a sovereign
right to use their own funds for that purpose. Other commenters
recommended that the Exchange accepts aggregated payments from
employers so
[[Page 18338]]
it should also accept aggregated payments from tribes, tribal
organizations, and urban Indian organizations. A few commenters
recommended that HHS eliminate the qualifier, ``subject to the terms
and conditions determined by the Exchange,'' in the final rule.
Response: We did not accept the recommendation that Exchanges must
permit Indian tribes, tribal organizations and urban Indian
organizations to pay premiums on behalf of enrollees. Premium
aggregation is a unique function of the SHOP Exchange, and is not
identified as a function of the individual market Exchange. However, we
recognize that some Exchanges may wish to work with tribal governments
to facilitate payment on behalf of enrollees, including aggregated
payment. We encourage Exchanges to include this option as part of its
consultation with tribal governments. This rule does not prohibit a QHP
issuer from accepting third-party payments of premiums from tribal
governments, tribal organizations, or urban Indian organizations for
enrollees through the Exchange.
Comment: Many commenters supported the option for an Exchange to
act as a premium facilitator or aggregator for the individual market,
as permitted under Sec. 155.240(d). Several commenters suggested
strengthening the standard by establishing that Exchanges must have the
capacity to facilitate payments in the individual market citing
benefits such as ease for consumer, consistent source of payments for
QHP issuers, program integrity, and provision of real-time enrollment
and payment data for Exchange monitoring. Others suggested a standard
that Exchanges set a default payment, and suggested that Exchanges
provide multiple avenues for payment including premium facilitation,
direct to issuer, in person, online, by phone, by mail, and through
cash, debit, credit, check, or automatic electronic transfers. One
commenter suggested that the Exchange Blueprint address how complexity
added by multiple payment options would be mitigated and another
commenter recommended that an individual select the payment methodology
at the time of enrollment for that benefit year.
Response: Premium aggregation has potential benefits for
individuals, but we also do not think that there are sufficient
disadvantages in having individuals pay QHP issuers directly to warrant
establishing premium aggregation as a minimum standard. We believe that
the final rule balances the potential benefits of premium collection in
the individual market with State flexibility. We encourage all
Exchanges to provide consumers with multiple payment options that
facilitate enrollment and avoid creating payment processes that create
barriers. We note that Exchanges have the flexibility to create a
default payment mechanism through the Exchange, and to direct
individuals to select a payment option for a year at the time of
enrollment.
Comment: Several commenters oppose proposed Sec. 155.240(d) that
allows for an Exchange to facilitate the collection and payment of
premiums for the individual market. Commenters were concerned with
several areas including cost, the timeliness of payments getting from
consumers to the issue, and the additional complexity in the case of
errors.
Response: We believe that premium aggregation may add value to an
Exchange for consumers through ease of payment and to QHP issuers
through having a single source of payment. Without premium aggregation
in the small group market, a single entity would have to pay a variety
of QHP issuers to administer its group health plan. However, the burden
for paying premiums directly to QHP issuers is much less for
individuals and families who are likely to be enrolled in a single QHP.
Thus, premium aggregation is a minimum function of a SHOP, while it is
optional for the individual market. We note that because an Exchange
will need to establish premium aggregation functionality for a SHOP, it
may be able to offer this option to individuals without additional up-
front costs.
Comment: One commenter suggested that proposed Sec. 155.240(d) ban
paperwork for financial transactions and, instead, call for the use of
electronic methods exclusively to lower administrative costs and allow
quick feedback between Exchanges, qualified individuals, qualified
employers, and QHP issuers.
Response: We believe that electronic payment methods have many
benefits, and encourage Exchanges to use them where possible, but also
acknowledge that electronic payment methods may not always be optimal
for all consumers and may not be possible for all Exchanges. Therefore,
it is not a minimum standard in this final rule.
Comment: Most commenters supported the proposed Sec. 155.240(e) to
adopt electronic means of collecting premium payments by individuals
and employers, and the accompanying application of the privacy and
standards outlined in Sec. 155.260 and Sec. 155.270. One commenter
recommended deleting the cross reference to Sec. 155.260, because this
section related to privacy and security, not electronic transaction
standards.
Response: We have maintained the cross-reference to Sec. 155.260
in this final rule. Section 155.240(e) is meant to establish compliance
with both electronic transactions standards in Sec. 155.270 and
privacy and security provisions of Sec. 155.260. Because personally
identifiable information may be exchanged in the process of premium
payment, we believe the protections for collection, use and disclosure
of information contained in standard transactions for premium payments
are as vital as the format of these transactions.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.240 with the
exception of the removal of proposed paragraph (c), as we believe that
payment of premiums by qualified employers is sufficiently addressed in
Sec. 155.705. The other paragraphs have been re-numbered accordingly
in the final rule.
h. Privacy and Security of Information (Sec. 155.260)
In proposed Sec. 155.260, we addressed the privacy and security
standards Exchanges must establish and follow. Specifically, we
proposed that the Exchange apply appropriate security and privacy
protections when collecting, using, disclosing or disposing of any
personally identifiable information. In addition, we proposed that an
Exchange apply these standards on contractors or sub-contractors
through contracts or agreements with the Exchange.
We defined personally identifiable information (PII) and proposed
prohibiting the collection, use, or disclosure of PII by the Exchanges
unless: (1) required or permitted by Sec. 155.260 of this subpart or
other applicable law, and (2) the collection, use, or disclosure is
made in accordance with subpart E of this part, Sec. 155.200(c) of
this subpart and section 1942 of the Act. We invited comment as to
whether and how we should restrict the method of disposal in this
section.
We also proposed that the security standards of the Exchange be
consistent with HIPAA security rules described at 45 CFR 164.306,
164.308, 164.310, 164.312, and 164.314. We solicited comment on the
aptness of adopting the HIPAA Privacy Rule's standards for Exchanges.
Alternatively, we proposed to provide States with the flexibility to
create a more appropriate and tailored standard, given the varied types
of
[[Page 18339]]
information to which the Exchange would have access. We noted that we
were considering directing each Exchange to adopt privacy policies that
conform to the Fair Information Practice Principles (FIPPs), and sought
comment on the appropriateness of FIPPs in this context and the best
means to integrate FIPPs into the privacy policies and operating
procedures of individual Exchanges. We listed examples of FIPPs-based
principles derived from the Nationwide Privacy and Security Framework
for the Electronic Exchange of Individually Identifiable Health
Information, which is a model developed by the Office of the National
Coordinator for Health IT. These are not purely FIPPs principles, but
examples of how they may be used to develop robust privacy and security
standards.
We also proposed that security policies and procedures must be in
writing and available to the Secretary of HHS, and must identify any
applicable laws that the Exchange will need to follow. In addition, we
proposed that any data matching arrangements between the Exchange and
agencies that administer Medicaid and CHIP for the exchange of
eligibility information be consistent with all applicable laws. We also
proposed that return information is kept confidential under section
6103 of the Code.
Finally, we proposed that any person that knowingly and willfully
uses or discloses personally identifiable information inappropriately
would be subject to a civil money penalty of not more than $25,000 per
disclosure and any other applicable penalties that may be prescribed by
law.
Comment: Many commenters recommended that HHS set a national
minimum standard for use and disclosure of personally identifiable
information (PII) under proposed Sec. 155.260(b) rather than allow
each Exchange flexibility to develop and implement standards customized
to its operations. One commenter stated that HHS should harmonize State
and Federal laws for the development and operation of information
technology systems across all States. Commenters suggested adopting
different existing privacy and/or security standards alone or in
various combinations, including the Fair Information Practice
Principles (FIPPs) model adopted by the Office of the National
Coordinator for Health Information Technology, HIPAA Privacy, HIPAA
Security, the Privacy Act, Medicaid standards at section 1902(a)(7) of
the Act, the confidentiality and disclosure provisions of the
Department of Homeland Security's Systematic Alien Verification for
Entitlements (SAVE) program (42 U.S.C. 1320b-7), the HITECH Act, and
the Gramm-Leach-Bliley Act (GLBA).
Response: We recognize that there should be robust minimum privacy
and security standards to ensure the confidentiality and integrity of
PII created, collected, used, or disclosed by an Exchange. We also
accept the comment that each Exchange will need to consider any State
and Federal laws governing individuals' privacy and security rights for
the geographic area(s) in which it operates in order to ensure PII is
protected against any reasonably anticipated uses or disclosures that
are not permitted or required by law. We acknowledge the current
variance among States' laws governing privacy and security, but believe
that eliminating this variance would, in many cases, apply Federal
standards to existing State privacy and security frameworks. This would
be prohibitively expensive for many States, and could be detrimental to
the goal of maintaining the confidentiality of PII. In addition,
multiple security frameworks increase the complexity of the
technological environment--if a State must follow two different
frameworks, there is an increased risk of applying the wrong security
controls to the Exchange. Finally, but equally important, we recognize
the need for flexibility in the implementation of these standards in
order to minimize implementation costs. The imposition of uniform
standards would increase costs related to re-training staff, engaging
contractors, investing in additional physical and technological
infrastructure, and other tasks related to implementation of the new
standards. We believe it would increase the complexity of State
operations, with associated risks and costs, without providing
meaningful improvements to the protection of PII.
In the final rule, we do not establish a single, baseline standard.
We direct an Exchange to put in place safeguards that ensure a set of
critical security outcomes, and we present a framework within which an
Exchange must create its privacy and security policies and protocols.
We specify that an Exchange establish and implement privacy and
security standards that are consistent with the FIPPs-based principles
identified in the ``Nationwide Privacy and Security Framework for
Electronic Exchange of Individually Identifiable Health Information,''
the model adopted by the Office of the National Coordinator for Health
Information Technology.\3\ In addition to these FIPPs-based principles,
Sec. 155.260(a)(4) of this final rule directs Exchanges to establish
and implement operational, technical, administrative, and physical
safeguards that will ensure a set of defined privacy and security
outcomes. We believe the standards in this final rule will minimize
burden by allowing HHS and the States to leverage existing security
infrastructure and allow Exchanges to tailor their privacy and security
approaches to the types of information Exchanges will create, collect,
use, and disclose, while providing a baseline set of standards and
critical outcomes upon which all States must base their privacy and
security policies and protocols.
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\3\ Nationwide Privacy and Security Framework for Electronic
Exchange of Individually Identifiable Health Information: http://healthit.hhs.gov/portal/server.pt/community/healthit_hhs_gov_privacy_security_framework/1173.
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We plan to release guidance to assist States in developing and
implementing privacy and security policies and protocols that fulfill
the standards of this section. In addition, HHS will assist States in
the development of policies and protocols as part of the reviews and
technical assistance provided to grantees under the section 1311(a) of
the Affordable Care Act.
Comment: A large group of commenters requested that HHS codify
sections 1411(g), 1413(c)(2), and 1414(a) of the Affordable Care Act.
Several commenters recommended amending the language in proposed Sec.
155.260(b)(1)(i) to explicitly establish that, based on section 1411(g)
of the Affordable Care Act, information may not be created, collected,
used, or disclosed unless ``strictly necessary.'' One commenter
recommended that we remove the reference to ``other applicable law''
and replace it with specific references to sections 1411(g) and 1557 of
the Affordable Care Act, sections 1942 and 1137 of the Act, and the
Privacy Act of 1974.
Response: We believe that privacy and security of PII is of utmost
importance. Accordingly, in the final rule, we have made major changes
to the Exchange privacy and security standards, both to give more
specific guidance to States as they implement the Exchange program, and
to ensure confidentiality for individuals who may interact with
Exchanges. As stated in the preamble to the proposed rule, we looked to
sections 1411(g), 1413(c)(2), and 1414(a) of the Affordable Care Act as
the basis for many of the provisions in the proposed regulatory text.
First, we removed proposed paragraph (a), which defined personally
identifiable information in the context of the Exchange program. This
is a broadly
[[Page 18340]]
used term across Federal agencies, and has been defined in the Office
of Management and Budget Memorandum M-07-16. In order to reduce
duplicative guidance or potentially conflicting regulatory language, we
have removed this portion of the proposed rule, and point to the
aforementioned memorandum as the source of this definition.
Paragraph (a)(1) of the final rule specifically addresses PII that
is created or collected for the purposes of determining eligibility for
enrollment in a QHP, determining eligibility for other insurance
affordability programs, or determining eligibility for exemptions from
the individual responsibility provisions in section 5000A of the Code.
This paragraph limits the purposes for which the Exchange can use this
information to those outlined in Sec. 155.200 of this subpart.
Paragraph (a)(2) is broader in scope than paragraph (a)(1), and
includes all information collected for the purposes of carrying out
Exchange minimum functions described in Sec. 155.200. This paragraph
prohibits the creation, collection, use or disclosure of PII unless the
manner in which the Exchange does so is consistent with the privacy and
security standards outlined in Sec. 155.260(a).
Paragraphs (a)(3) through (a)(4) outline the privacy and security
principles and critical outcomes, and set expectations for development
of privacy and security protocols by Exchanges, and new paragraph
(a)(5) specifies that the Exchange must monitor, periodically assess,
and update the security controls and related system risks to ensure the
continued effectiveness of those controls. We also inserted the
provision from section 1413(c)(1) of the Affordable Care Act that an
Exchange must develop and utilize secure electronic interfaces when
sharing PII in Sec. 155.260(a)(6).
We are not amending the final rule to codify section 1414(a) of the
Affordable Care Act, because it falls under the jurisdiction of the
Department of the Treasury. We are not codifying section 1557 of the
Affordable Care Act because it is outside the scope of this rule. We
are not codifying section 1137 of the Act, which includes standards for
States' income and eligibility verification systems, in this final rule
because it does not impose any additional privacy or security
standards. In addition, section 1413(c)(3) of the Affordable Care Act
simply directs that an Exchange can only determine eligibility on the
basis of reliable, third party data, which is outside the scope of this
section. We note that while the final rule does not propose to codify
these listed provisions, Exchanges will need to comply with applicable
laws that are outside the scope of this rulemaking.
Comment: A number of commenters requested clarification regarding
HIPAA and Exchanges. One commenter requested that HHS declare that
HIPAA applies to all Exchanges, but many commenters discouraged the use
of this standard. A few commenters specifically requested that HHS not
use HIPAA as the privacy standard. One commenter stated that applying
HIPAA Privacy to non-HIPAA entities might permit broader collection,
use, and disclosure of data than was intended by Congress in statutory
limits set forth in section 1411(g) of the Affordable Care Act. Another
commenter added that HIPAA lacks controls associated with new
technologies.
Response: We believe HIPAA is not broad enough to adequately
protect the various types of PII that will be created, collected, used,
and disclosed by Exchanges and individuals or entities who have access
to information created, collected, used, and disclosed by Exchanges. We
recognize that there will be aspects of Exchanges, as health insurance
marketplaces, that will not be reached by the HIPAA regulations
governing health plans, certain providers, and clearinghouses (that is,
``HIPAA covered entities''). In clarifying these points, however, it is
important to recognize that the privacy and security standards that are
adopted in this rule do not obviate the need for HIPAA covered entities
to meet the HIPAA Privacy and Security Rules' standards. The Exchange
sections of the Affordable Care Act did not alter the applicability of
HIPAA to HIPAA covered entities.
To avoid any further confusion on this point, we believe that it is
advisable to remove any specific regulatory references to HIPAA in
proposed Sec. 155.260(b), which we have redesignated as Sec.
155.260(a) of this final rule. We replaced such references with the
standards outlined in the first response in this section. We believe
that the privacy and security standards in the final rule are analogs
of the HIPAA policies in the proposed rule, with similar standards and
restrictions. As stated in the preamble discussion to Sec. 155.260 in
the proposed rule, each State will need to conduct an analysis of its
operations and functions to determine its HIPAA status based on the
definitions in 45 CFR 160.103, and, when applicable, meet any and all
obligations under those regulations in addition to any Exchange
standards. For instance, a State may need to consider whether the
Exchange performs eligibility assessments for Medicaid and CHIP, based
on MAGI, or conducts eligibility determinations for Medicaid and CHIP
as described in Sec. 155.302(b).
We have inserted language in Sec. 155.200 of the final rule that
will clarify the relationship between an Exchange and a QHP--as noted
therein, nothing in this final rule should be construed to create a
relationship between an Exchange and a QHP whereby an Exchange performs
functions on behalf of a QHP. Further, we intend to release guidance
that will assist States in determining the applicability of HIPAA and
other Federal laws to Exchanges.
Comment: Several commenters suggested that HHS encourage States to
apply privacy and security standards that are stricter than the minimum
standard set forth by HHS regulations. Others asked that HHS make clear
in the final rule that, even if an Exchange is covered by a single
standard, it will continue to be subject to additional rules set by HHS
and the States. Commenters asserted that State law regarding privacy
and security should remain applicable. One commenter stated that HHS
should provide States with the flexibility to enact more stringent
standards based on those States' determination of the most appropriate
standard.
Response: We accept commenters' suggestion that States retain the
discretion to apply more stringent standards than the minimum privacy
and security standards imposed by this section. Nothing in this final
rule prevents or otherwise impairs the applicability of more stringent
State law. Equally, we note that nothing in this final rule obviates
the need to meet any other applicable Federal privacy and security
laws.
Comment: One commenter asserted that HHS does not have the
authority to require Exchanges to provide access to its data protection
policies and procedures to HHS. The commenter requested that HHS
provide an explanation of why it wants or needs access to an Exchange's
data protection policies and procedures and what it plans to do with
that information. The commenter also stated that HHS has no enforcement
authority over State-based Exchanges and therefore may not take
``action'' against an Exchange with data protection policies and
procedures the Secretary deems ``inadequate.'' In contrast, several
commenters supported the provision in the proposed rule that Exchanges
develop policies and procedures regarding the use, disclosure, and
disposal of PII. Many
[[Page 18341]]
commenters asked that these policies and procedures be available to the
public, and that HHS ensure that Exchanges engage stakeholders,
including consumers, in the development of these policies and allow for
public comment prior to submission to the Secretary. A few commenters
asserted that these policies and procedures be part of the written
Exchange Blueprint, in accordance with Sec. 155.105 of the proposed
rule, or another similar document that is available to the public.
Response: The Secretary has broad authority under section 1321(a)
of the Affordable Care Act to issue appropriate regulations and
standards with respect to the operation of Exchanges. Due to the
private nature of the information provided to Exchanges, we believe
that a process that allows the Secretary to ensure continued compliance
with the privacy and security standards of Sec. 155.260 is not only
appropriate, but necessary. According to section 1321(c) of the
Affordable Care Act, the Secretary has the authority to determine
whether a State Exchange meets the requisite standards to operate. If
the Exchange fails to meet these standards, the Secretary may establish
and operate a Federally-facilitated Exchange in that State.
In addition, the Affordable Care Act also gives HHS an audit
enforcement mechanism under section 1313. We believe the Secretary has
broad authority to ensure the submission of these policies in
accordance with 1313(a)(3) of the Affordable Care Act. This information
is necessary to ensure the integrity of the Exchange and its related
activities and to protect confidential consumer information. However,
Exchanges do not have to release these policies and protocols to the
public because this disclosure might reveal information that could
damage the State's ability to maintain the integrity and security of
its systems. Finally, while we have not included the privacy and
security policies and protocols in the Exchange Blueprint, we believe
we have the authority to do so if deemed appropriate by the Secretary.
Comment: Many commenters recommended that the privacy and security
standards in proposed Sec. 155.260 apply to application assisters,
Navigators, contractors, other individuals who have access to PII
gathered from individuals or available through an Exchange. One
commenter asserted that the final rule should clearly affirm the
obligation of these parties to abide by all Federal confidentiality and
privacy laws.
Response: Individuals who have agreements with an Exchange that can
collect, use, or disclose PII as part of their Exchange-related
activities should comply with the final rule's privacy and security
standards. However, we do not believe the Affordable Care Act grants
the Secretary the authority to regulate all individuals and entities
directly. Such authority is limited to the Exchange, who can impose
these standards on individuals and entities that enter into agreements
with the Exchange, such as contractors, agents, and brokers, and HHS
grantees, such as Navigators. We have added Sec. 155.260(b) of the
final rule, which ensures that Exchanges impose privacy and security
standards that are the same or more stringent than the privacy and
security standards in Sec. 155.260(a) as a condition of the agreement
with other individuals or entities that will receive information
through the Exchange.
Comment: Several commenters asked that HHS provide notice to
individuals who share PII with an Exchange. Commenters also asked that
HHS direct Exchanges to notify individuals of their privacy rights and
note why the information is being collected prior to asking individuals
to submit PII. One commenter said HHS should not share protected health
information (PHI) without written consent before each disclosure.
Response: We believe the FIPPs-based principles in the final rule
ensure that an Exchange will make individuals aware of the purpose of
any information collection as well as the privacy policies that affect
individuals and their PII. We have added language to new section Sec.
155.260(a)(3)(iv) that an Exchange must develop privacy and security
policies and protocols that are consistent with the FIPPs-based
principle of ``Individual Choice,'' which states that individuals
should be provided a reasonable opportunity and capability to make
informed decisions about the collection, use, and disclosure of their
personally identifiable information. In addition, in new Sec.
155.260(a)(3)(iii), we establish that an Exchange's policies and
protocols must be consistent with the principle of ``Openness and
Transparency,'' which states that there should be openness and
transparency about policies, procedures, and technologies that directly
affect individuals and/or their personally identifiable health
information. In addition, if a State determines that its Exchange is a
HIPAA covered entity or business associate, as defined in 45 CFR
160.103, that Exchange must adhere to any applicable HIPAA privacy and
security standards, including those regarding the protection of
protected health information (PHI). The final rule addresses only
personally identifiable information, as defined in Sec. 155.260(a) and
does not modify HIPAA.
Comment: A handful of commenters stated that Exchanges should
obtain specific authorization from individuals prior to using any PII
for marketing purposes. Some commenters requested that HHS prohibit
Exchanges from sharing any information for marketing or fundraising
purposes altogether. One commenter stated that HHS should specifically
prohibit Exchanges from selling data, or allowing access to PII
collected for Exchange purposes for data mining. Another commenter
stated that HHS should specifically prohibit any secondary uses of PII
that are not specifically authorized.
Response: Section 155.260(a) does not permit the use or disclosure
of PII for marketing or fundraising purposes. The final rule clarifies
that PII collected for those purposes of determining eligibility for
enrollment in a QHP, determining eligibility for other insurance
affordability programs, or determining eligibility for exemptions from
the individual responsibility provisions in section 5000A of the Code,
can only be used to the extent such information is necessary to carry
out minimum functions in Sec. 155.200 of this subpart.
Comment: Two commenters stated that HHS should be able to collect
demographic information on a voluntary basis through the Exchange.
Commenters believe that collection of demographic information would
help to provide essential health information on vulnerable or
underserved populations, facilitate tailored outreach and aid in
enrollment activities, and provide input in the development of
prevention and health care programming that address disparities.
Response: Section 1411(g) of the Affordable Care Act does not
prohibit the collection of demographic data. We respond to this issue
in greater depth in the preamble to Sec. 155.405, which addresses the
single, streamlined application.
Comment: Several commenters requested that HHS specify in the final
rule that Social Security numbers should be collected for limited
purposes. These commenters stated that Social Security numbers should
be shared only for the purposes of determining eligibility for advance
payments of the premium tax credit and cost-sharing reductions. Two
commenters stated that Social Security numbers should be shared only
for the purpose of identification of an individual.
[[Page 18342]]
Response: Sections 1411(b) and (c) of the Affordable Care Act give
the Secretary the authority to ensure that applicants for enrollment in
a QHP offered through an Exchange provide a Social Security number so
that an Exchange can perform the requisite eligibility determination.
While we believe that an individual's Social Security number should be
collected and used for limited purposes, the use of an individual's
Social Security number is essential to complete functions beyond
identification--for example, the verifications described in sections
1411(c), (d), and (e) of the Affordable Care Act.
Comment: One commenter stated that HHS should establish criteria
for the collection and retention of information when a consumer is a
survivor or victim of domestic violence based on policies of child
support collection programs.
Response: We do not believe that the final rule should contain the
specific data collection for vulnerable populations for purposes other
than those defined in the statute.
Comment: Two commenters asked that HHS ensure that Exchanges
promptly notify potentially affected enrollees in the event of a data
breach or unauthorized access to PII. One commenter suggested that HHS
ensure that an Exchange conducts an investigation and hold the
breaching party accountable, both legally and financially, for
notification and investigation following the breach or unauthorized
access.
Response: We do not plan to include the specific notification
procedures in the final rule. Consistent with this approach, we do not
include specific policies for investigation of data breaches in this
final rule. We do, however, plan to release guidance that addresses
breach procedures.
Comment: One commenter requested that the final rule include
privacy and security standards for storage, retention, and response to
legal and civil matters. Another commenter stated that HHS should not
retain PII longer than is necessary to carry out an authorized Exchange
function.
Response: While the rule does not specifically mention storage,
retention, or response to legal and civil matters, we believe that the
final rule adequately addresses privacy and security standards for all
potential uses of data, including storage and retention. We therefore
do not include these elements in the final rule. We expect privacy and
security standards developed by the Exchange will address the storage
of information when it is not in use. Also, the Exchange policies and
protocols must apply to all requests for information from outside
sources, including governmental bodies, the courts, or law enforcement
officials. We also believe that Exchanges should not retain PII longer
than necessary. Retention times for Federally-facilitated Exchanges
will be approved by the National Archives and Records Administration.
As these retention times have not yet been issued for these Exchanges,
and as we believe that a single standard for retention should apply to
all Exchanges, we plan to release guidance on this topic at a later
date.
Comment: One commenter asserted that HHS should not create one
central location for personal information. The commenter challenged the
government's ability to protect personal information.
Response: This comment regarding the storage of personal
information is operational in nature and outside the scope of this
rule. We plan to release guidance describing the approach for
collection and storage of PII. We believe that the privacy and security
standards in the final rule are sufficiently robust to protect the
types of PII that will be created, collected, used, and disclosed by
Exchanges.
Comment: A few commenters suggested that HHS should define the
operational solutions for Exchange policies and protocols for privacy
and security. One commenter said that Exchanges should create usage
logs that are subject to audit to ensure the data are being accessed
appropriately and only for business purposes. Another commenter stated
that HHS should implement procedures related to identity theft to
address cases where an applicant or enrollee reports that someone has
fraudulently submitted information in his or her name. One commenter
recommended that HHS collect data in a manner that allows for de-
identification so that data can be made available for other purposes,
such as research and analysis.
Response: We believe that having policies and protocols to protect
against identify theft and fraudulent enrollment is critical. However,
setting operational solutions for complying with regulatory standards
in this section is outside the scope of the rule. HHS will release
guidance identifying potential operational solutions for storing and
tracking data, identifying and preventing fraudulent submissions to the
Exchange, and de-identifying data.
Comment: A number of commenters recommended that HHS address the
issue of authentication of individuals who access PII through the
Exchange. One commenter asserted that HHS should ensure that Exchanges
authenticate all entities and individuals interacting with the
Exchanges. Commenters also cautioned HHS to develop authentication
procedures that are minimally burdensome and do not discourage or
prevent lawful consumer access to the Exchange. One commenter stated
that authentication procedures should be proportionate to the risks
associated with the corresponding activities. This commenter also
stated that authentication procedures should leverage commercially
available database sources, a method currently in use by States to
authenticate identity.
Response: Exchanges will need robust authentication procedures that
are effective, efficient, and minimally burdensome for both States and
individuals. We have added language to the final rule that Exchanges
must implement safeguards to ensure that personally identifiable
information is disclosed only to those authorized to receive or view
it. In addition, we expanded the scope of the privacy and security
standards by stating explicitly that these standards must apply, as a
condition of contract or agreement with an Exchange, to individuals or
entities, including but not limited to Navigators, agents, and brokers,
that: (1) gain access to personally identifiable information submitted
to an Exchange; or (2) create, collect, use or disclose personally
identifiable information gathered directly from applicants, qualified
individuals, or enrollees while that individual or entity is performing
the functions outlined in the agreement with the Exchange.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.260 of the
proposed rule regarding privacy standards, with the following
modifications: in an effort to prevent confusion and duplication in
terminology, we removed paragraph (a), which defined personally
identifiable information (PII) in the context of the Exchange program.
This is a term used broadly by all Federal agencies, and the term is
defined in a 2007 OMB Memorandum, which we point to in the preceding
preamble discussion.
We redesignated proposed paragraph (b) as new paragraph (a). In
paragraph (a)(1) of the final rule, we added that, where the Exchange
creates or collects personally identifiable information for the
purposes of determining eligibility for enrollment in a QHP,
determining eligibility for other insurance affordability programs, as
defined in Sec. 155.20; determining eligibility for enrollment in a
qualified health plan; determining eligibility for other
[[Page 18343]]
insurance affordability programs, as defined in 155.20; or determining
eligibility for the exemptions from individual responsibility
provisions described in section 5000A of the Code, the Exchange may
only use or disclose such personally identifiable information only to
the extent such information is necessary to carry out the functions
described in Sec. 155.200 of this subpart. This paragraph limits the
purposes for which the Exchange can use this information to those
outlined in Sec. 155.200 of this subpart. Paragraph (a)(2) is broader
in scope than the type of PII described in (a)(1), and includes all
personally identifiable information collected for the purposes of
carrying out Exchange minimum functions described in Sec. 155.200.
This paragraph prohibits the creation, collection, use or disclosure of
PII unless the manner in which the Exchange does so is consistent with
the privacy and security standards outlined in Sec. 155.260. In the
final rule, we removed the provision from proposed paragraph (b)(2) for
Exchanges to establish and follow operational, administrative, physical
and technical security standards that, if carried out by a HIPAA
covered entity would meet the standards at 45 CFR 164.306, 164.308,
164.310, 164.312 and 164.314. In its place we clarify that the Exchange
must not create, collect, use or disclose PII unless the manner in
which they do so is consistent with the standards of Sec. 155.260. In
new sections (a)(3)(i) through (viii), we outlined the principles that
an Exchange must use in the development of its privacy and security
standards. These include individual access; correction; openness and
transparency; individual choice; collection, use, and disclosure
limitations; data quality and integrity; safeguards; and
accountability.
As described in new text added to (a)(4)(i) through (vi), an
Exchange must establish and implement a set of operational, technical,
administrative and physical safeguards that ensure the confidentiality,
integrity, and availability of PII created, collected, used, and
disclosed by the Exchange; that personally identifiable information is
only used by or disclosed to those authorized to receive or view it;
return information, as such term is defined by section 6103(b)(2) of
the Code, is kept confidential under section 6103 of the Code;
personally identifiable information is protected against any reasonably
anticipated threats or hazards to the confidentiality, integrity, and
availability of such information; and personally identifiable
information is protected against any reasonably anticipated uses or
disclosures of such information that are not permitted or established
by law.
New paragraph (a)(5) directs the Exchange to monitor, periodically
assess, and update the security controls and related system risks to
ensure the continued effectiveness of the controls. In new paragraph
(a)(6), we added a standard that the Exchange develop and utilize
secure electronic interfaces when sharing personally identifiable
information electronically.
In new paragraph (b), we added that, except for tax return
information, when creation, collection, use, or disclosure is not
otherwise required by law, an Exchange must establish the same or more
stringent privacy and security standards (as those in Sec. 155.260(a))
as a condition of contract or agreement with individuals or entities,
such as Navigators, agents, and brokers, that gain access to personally
identifiable information submitted to an Exchange; or create, collect,
use or disclose personally identifiable information gathered directly
from applicants, qualified individuals, or enrollees while that
individual or entity is performing the functions outlined in the
agreement with the Exchange.
New paragraph (c) directs the Exchange to ensure its workforce
complies with the policies and procedures developed and implemented by
the Exchange to comply with this section.
In new paragraph (e), we added language to clarify that the
standards for data matching and sharing between the Exchanges and
Medicaid, CHIP, and BHP, where applicable, are triggered when these
entities share PII. In addition, we added paragraph (e)(1) through
(e)(4), which state that data matching or sharing agreements must: meet
any applicable requirements described in this section; meet any
applicable requirements described in sections 1413(c)(1) and (c)(2) of
the Affordable Care Act; be equal to or more stringent that the
requirements for Medicaid programs under section 1942 of the Act; and,
for those matching agreements that meet the definition of ``matching
program'' under 5 U.S.C. 552a(a)(8), comply with 5 U.S.C. 552a(o).
In paragraph (g), we added that the civil penalty applies to each
instance of knowing and willful improper use or disclosure of
information. We redesignated proposed paragraph (b)(4) as new paragraph
(d), and redesignated proposed paragraph (d) as new paragraph (f).
i. Use of standards and protocols for electronic transactions (Sec.
155.270)
In Sec. 155.270 of the proposed rule, we proposed that the
Exchange apply the HIPAA administrative simplification standards
adopted by the Secretary in accordance with 45 CFR parts 160 and 162
when the Exchange performs electronic transactions with a covered
entity. In addition, we proposed to codify the Health Information
Technology (HIT) enrollment standards and protocols that were developed
in accordance with section 3021 of the PHS Act, which was added by
section 1561 of the Affordable Care Act, and that were adopted by the
Secretary.\4\ Specifically, we proposed that these aforementioned
standards and protocols be incorporated within Exchange information
technology systems.
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Comment: HHS received several comments supporting our proposal to
apply HIPAA administrative simplification standards, including the use
of national standards and protocols for electronic transactions in
Sec. 155.270. However, one commenter expressed concern about the
potential for gaps in the 005010 standard adopted by the Secretary in
accordance with HIPAA. Another commenter, who supported the application
of the administration simplification standards, added that HHS should
apply any new transaction standards or protocols developed to
supplement the HIPAA transactions consistently across all State-based
Exchanges to promote administrative simplification among QHP issuers
and eligibility services integrated with Exchanges.
Response: HIPAA administrative simplification standards are the
appropriate standards for transactions that occur between the Exchange
and covered entities, such as issuers, to continue the promotion of
uniformity in administration and information interoperability of the
Exchange activities as part of the larger health insurance industry. If
Exchanges choose to implement standards in addition to those
established in 45 CFR parts 160 and 162, they will continue to be in
compliance with the final rule. As we work with Exchanges in connection
with the information reporting standards for enrollment purposes to QHP
issuers and/or Medicaid and CHIP agencies, we will be mindful of the
potential for gaps in the 005010 standard adopted by the Secretary in
accordance with HIPAA and will fully adhere to privacy and security
standards in Sec. 155.260 and Sec. 155.270.
[[Page 18344]]
Comment: One commenter recommended that ``operating rules'' be
included in the phrase ``the Exchange must use standards,
implementation specifications, and code sets adopted by DHHS'' in Sec.
155.270(a), noting that proposed Sec. 155.240(e) contains language
that an Exchange must use ``the standards and operating rules
referenced in Sec. 155.260 and Sec. 155.270'' when conducting
electronic transactions with QHPs involving premium payments or
electronic fund transfers.
Response: We accept the commenter's recommendation to add the
phrase ``operating rules'' to the proposed regulation text. In the
final rule, we amended Sec. 155.270(a) to include the term ``operating
rules'' to address communications involving Exchanges that are subject
to HIPAA administrative simplification.
Comment: Several commenters supported Sec. 155.270(b) of the
proposed rule, which directs an Exchange to incorporate standards
developed by the Secretary in accordance with section 1561 of the
Affordable Care Act, which amends the PHS Act and directs HHS to
develop interoperable and secure standards and protocols for electronic
enrollment transactions in consultation with the HIT Policy and HIT
Standards committees. However, some commenters expressed concern about
the ongoing usefulness of the committees' recommendations. Two
commenters stated that the recommendations of those committees are now
outdated. Another stated that a weakness in the cited HIT enrollment
standards and protocols is the fact that these standards are not
applicable to web services. Commenters noted that these standards and
protocols facilitate the transfer of consumer eligibility, enrollment,
and disenrollment information, but do not fill the need for standards
that would apply to web services versions of HIPAA transactions. One
commenter said it is critical that Exchanges design electronic data
formatting and transmission standards that are uniform, easily
implemented by QHP issuers, and leverage electronic data formatting and
transmission standards that are already in use by health insurance
carriers. Commenters also suggested that HHS recommend that Exchanges
use specific data exchange formats and transmission standards such as
those already established under the Health Insurance Portability and
Accountability Act of 1996 and by CMS (for example, the 834 Enrollment,
Online Enrollment Center (OEC) file format, and Health Plan Management
System (HPMS) reporting).
Response: It will be important to leverage electronic data
formatting and transmission standards that are already in use. However,
we also believe that adhering to the broad standards and protocols
developed by the Secretary, in collaboration with the HIT Policy and
Standards committees, in accordance with section 3021 of the PHS Act,
will provide standardization while allowing for the flexibility to
leverage existing standards. We plan to issue guidance to help States
determine appropriate transmission standards and data exchange formats
for their Exchanges. We will also be consulting with the HIT Policy and
HIT Standards committees at regular intervals to update the cited HIT
enrollment standards and protocols to be more applicable to web
services and to incorporate updates from Exchange electronic data
formatting and transmission standards to broader standardization
efforts. We also note that Sec. 155.270 controls only how the Exchange
sends information electronically to HIPAA covered entities. Section
Sec. 155.260 addresses privacy and security standards.
Comment: A few commenters expressed concern about the privacy and
security of information being shared via electronic transactions in
accordance with proposed Sec. 155.270. Some commenters requested that
this section reference the limitations on use and disclosure in Sec.
155.260 of this subpart, which sets privacy and security standards for
Exchanges. These commenters also recommended codifying section
1413(c)(1) of the Affordable Care Act, which directs States to develop
secure interfaces for electronic data sharing. Another group of
commenters expressed concern that co-mingling of data used for
different purposes would create threats to the privacy of PII. These
commenters requested that HHS ensure that Exchanges maintain a division
between information that is stored and information that is used for
eligibility determinations and redeterminations, with strict standards
for disclosure or release of stored data.
Response: We believe the commenter's suggestion to include a
regulatory citation to Sec. 155.260 would be redundant because the
privacy and security standards and protections in Sec. 155.260 will
apply to all transactions in which data are created, used, collected,
stored, or disposed of by Exchanges. We also note that section 1413(c)
of the Affordable Care Act is codified in section Sec. 155.260(b)(3)
and Sec. 155.260(c). In addition, we note that the privacy and
security standards cited in Sec. 155.260 apply to both stored
information and information used for eligibility determinations and
redeterminations. Finally, while we acknowledge that stored data and
data in active use warrant different privacy and security protocols, we
believe that the privacy and security standards in Sec. 155.260 direct
Exchanges to have safeguards in place to prevent improper use,
collection, or disclosure of information, whether the data are at rest
or in transit. We therefore do not think it is necessary to address
this distinction in our final regulation.
Comment: One commenter recommended that HHS adopt an operating rule
that would apply to web services versions of the HIPAA transactions.
This commenter encouraged HHS to consider the CORE Phase II rules,
which have significant industry support, and to develop new standards
that are not addressed in the CORE Phase II rules.
Response: It is important for HHS to adopt a standard for web-based
transactions; however, detailed discussion on the adoption of such
standards is outside the scope of this final rule. In this final
regulation, we maintain the policy that Exchanges must apply and follow
HIPAA standard transactions when engaging in electronic exchanges of
information with Covered Entities.
Comment: One commenter requested clarification about whether it was
in the intention of HHS to ensure that all electronic transactions with
covered entities be consistent with the standards of 45 CFR parts 160
and 162. The commenter stated that this would direct all Medicaid
agencies and issuers to use only standard transactions when conducting
electronic transactions with Exchanges. Further, if it is the intent of
HHS to permit, rather than require, these entities to conduct standard
transactions with Exchanges, the commenter expressed that proposed
Sec. 155.270(a) should be rewritten to state this clearly. In
addition, this commenter requested that HHS clarify whether Exchanges
must conduct standard transactions with non-covered entities, such as
employers and banks or their respective agents that request to do so.
This clarification would ensure that employers and others that are now
conducting (or may in the future conduct) such standard transactions as
eligibility for a health plan, enrollment or disenrollment in a health
plan, or health plan premium payments may be assured they can do so as
standard transactions with exchanges.
Response: It is the intention of HHS to require, rather than to
permit, adherence to the standards,
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implementation specifications, and code sets adopted by the Secretary
in 45 CFR parts 160 and 162, but only to the extent that the Exchange
is performing electronic transactions with a covered entity. It is not
the intention of HHS to establish standardized HIPAA transactions when
Exchanges perform electronic transactions with non-covered entities,
such as employers or banks. However, the Exchange has the flexibility
to choose to use those standards, even if they are not minimum
standards.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.270 of the
proposed rule, with the following modification: in paragraph (a), we
added a provision for Exchanges to use the operating rules adopted by
the Secretary in 45 CFR parts 160 and 162.
4. Subpart D--Exchange Functions in the Individual Market: Eligibility
Determinations for Exchange Participation and Insurance Affordability
Programs
In this subpart, we proposed standards that the Exchange will use
to determine eligibility for Exchange participation and insurance
affordability programs. In the proposed rule and in this final rule, we
organized the standards as follows: eligibility standards, eligibility
determination process, and applicant information verification process.
a. Definitions and General Standards for Eligibility Determinations
(Sec. 155.300)
In Sec. 155.300, we proposed definitions for this subpart.
Virtually all of the definitions proposed in this section were taken
from other proposed regulations, including the Exchange establishment
proposed rule which was published prior to the Exchange eligibility
proposed rule. Specifically, in this section, we proposed definitions
or interpretations for ``adoption taxpayer identification number,''
``applicable Medicaid modified adjusted gross income (MAGI)-based
income standard,'' ``applicable CHIP modified adjusted gross income
(MAGI)-based income standard,'' ``application filer,'' ``Federal
Poverty Level,'' ``Indian,'' ``insurance affordability programs,''
``minimum value,'' ``non-citizen,'' ``primary taxpayer,'' ``State CHIP
Agency,'' ``State Medicaid Agency,'' and ``tax dependent.'' We also
proposed rules related to the applicability of Medicaid and CHIP rules
and the acceptance of attestations.
Comment: A few commenters discussed the use of the term ``MAGI'' in
the proposed rule. A commenter recommended referencing the term ``MAGI-
based standard for Medicaid and CHIP,'' as defined in the Medicaid
proposed rule, and the term ``MAGI,'' as defined in the Treasury
proposed rule. One commenter also asked that the differences in the use
of MAGI for Medicaid eligibility, such as income exemptions described
in the Medicaid proposed rule, be specified in Sec. 155.300.
Response: We recognize the need to reference the definitions of
``MAGI'' and ``MAGI-based income'' in Sec. 155.300(a), and in this
final rule include a reference to MAGI, as defined in 36B(d)(2)(B) of
the Code, and MAGI-based income, as defined in 42 CFR 435.603(e). To
clarify, we use ``MAGI'' with respect to household income for advance
payments of the premium tax credit and cost-sharing reductions, and
``MAGI-based income'' with respect to household income for Medicaid and
CHIP. We note that to further clarify this, we have added cross-
references whenever ``household income'' is used throughout this
subpart to specify whether it is in reference to household income for
purposes of advance payments of the premium tax credit and cost-sharing
reductions, as defined in section 36B(d)(2) of the Code, or household
income for purposes of Medicaid and CHIP, as defined in 42 CFR
435.603(d).
Comment: We received a number of comments regarding the definition
of Federal Poverty Level (FPL), as proposed in Sec. 155.300(a). The
definition, as proposed, specified that the FPL table used for
eligibility for advance payments of the premium tax credit and cost-
sharing reductions for a coverage year must be the table published as
of the first day of Exchange open enrollment for the coverage year;
commenters recommended that this definition be aligned with the
definition of FPL used for Medicaid and CHIP eligibility, which uses
the FPL table available at the time of an eligibility determination.
Response: We acknowledge the commenters' concerns. However, section
36B(d)(3) of the Code, as added by section 1401(a) of the Affordable
Care Act, clearly defines the FPL table that must be used for
eligibility determinations for advance payments of the premium tax
credit and cost-sharing reductions in such a way that it is distinct
from the FPL table that is used for Medicaid and CHIP eligibility
during much of the year. Therefore, HHS will maintain the proposed
definition of FPL in the final rule. To the definition of ``Federal
poverty level'', we also included ``or FPL''; throughout the final rule
we also remove references to Treasury regulations when using the term
FPL since the term is defined in this section using the same definition
as in section 36B of the Code.
Comment: We received many comments asking HHS to define
``incarcerated, other than pending the disposition of charges'' in
proposed Sec. 155.300. Several commenters also recommended that such a
definition be similar to the definition of ``inmate of a public
institution,'' as used by the Medicaid program (42 CFR 435.1010).
Response: We acknowledge commenters' suggestion that we further
define the term ``incarcerated, other than pending the disposition of
charges,'' as used in Sec. 155.305(a)(2), and we intend to clarify
this term in future guidance. We note that 42 CFR 435.1010 defines the
term ``inmate of a public institution'', which is broader than the term
``incarcerated'' as used in this part; therefore, we do not have the
authority or reason to adopt the broader definition, as the term
``incarcerated'' is used in the statute.
Comment: Commenters asked that we amend our definitions of ``State
Medicaid Agency'' and ``State CHIP Agency'' to explicitly include those
offices that administer them in the U.S. Territories.
Response: We acknowledge the suggestion, but are maintaining the
proposed definitions in the final rule. These definitions reference
Medicaid and CHIP regulations, which address Territories separately.
Furthermore, the definition of ``State'' as included in section 1304(d)
of the Affordable Care Act does not include Territories, and since this
final rule implements only certain provisions of Title I of the
Affordable Care Act that relate to States and Exchanges, we do not
include Territories in these definitions.
Comment: We received several comments providing alternative
interpretations of the definition of ``Indian'' than that which was
included in the Exchange establishment and eligibility proposed rules.
Some commenters suggested our definition is too narrow and inconsistent
with Federal law. One commenter recommended that Indian be defined as a
person who is a member of an Indian tribe or any person who is a member
of an Indian tribe as defined in subsection (d) of the Indian Health
Care Improvement Act (IHCIA), not limited to only Federally-recognized
tribes. Other commenters stated that they believed that HHS's
interpretation is not supported by the plain language of section 4 of
IHCIA or section 4(d) of the Indian Self-Determination and
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Education Assistance Act (ISDEAA) and believe that it is contrary to
general principles of Indian law. Several commenters recommend that at
a minimum HHS recognize that the definitions under the ISDEAA and IHCIA
are operationally the same. Several commenters recommend that this rule
align its definition with the Medicaid/CHIP definition found in 42 CFR
447.50.
Response: Since the Affordable Care Act statutory provisions
identifying the specific benefits available to Indians incorporate
section 4 of the IHCIA (for purposes of the special enrollment period
described in Sec. 155.420(d)(8)) and section 4(d) of the ISDEAA (for
purposes of the cost-sharing provisions described in Sec. 155.300(a)
and (b)) for the definition of Indian, we are unable to adopt the
Medicaid/CHIP definition under 42 CFR 447.50. Therefore, we maintain
our proposed definition in this final rule. However, since both the
ISDEAA and IHCIA operationally mean the same thing, there is uniformity
among the definition of Indian for purposes of the Exchange-related
benefits described in this final rule. We accept that the definitions
of ``Indian'' as provided under section 4(d) of ISDEAA (codified at 25
U.S.C. 450 et seq.) and section 4 of IHCIA (codified at 25 U.S.C. 1603)
operationally mean the same thing: an individual who is a member of an
Indian tribe. In their definitions of an ``Indian tribe,'' both of
these acts have nearly identical language that refers to a number of
Indian entities (tribes, bands, nations, or other organized groups or
communities) that are included in this definition on the basis that
they are ``recognized as eligible for the special programs and services
provided by the United States to Indians because of their status as
Indians.''
Comment: One commenter asked that we clarify that the use of
``attestation'' does not prohibit the Exchange from obtaining
electronic data and then asking an applicant to validate it, with the
goal of increasing the efficiency and accuracy of the eligibility
process.
Response: A key principle in our approach to the eligibility
process is to streamline this verification process and maximize the use
of electronic data. In many cases, we anticipate that the dynamic,
electronic application process will take the approach that is
recommended by the commenter. In other cases, it will be necessary to
obtain information prior to verifying it. In general, the language of
the final rule does not mandate a specific sequencing of activities,
and is designed to allow flexibility within standards to ensure that
the eligibility process can evolve to align with changes in technology
and the availability of authoritative data. We also note that we will
be providing a model application, which will include sequencing for the
various steps needed in the eligibility process. Consequently, we are
maintaining the language from the proposed rule. We look forward to
working closely with States to achieve our shared goal of a streamlined
eligibility process, including through the many areas in which we are
providing flexibility to allow for continuous quality improvement in
access to affordable health insurance.
We note that we have removed the language that specified that
additional individuals, including a parent, caretaker or someone acting
responsibly on behalf of such an individual, could provide
attestations. The definition of application filer, which is now located
in Sec. 155.20, includes references to all individuals who may provide
attestations; applicants, authorized representatives, and if the
applicant is a minor or incapacitated, someone acting responsibly on
behalf of the applicant. We have also replaced all references in this
subpart regarding application filers providing attestations with
references to applicants providing attestations, since the language in
Sec. 155.300(c) provides overarching clarification that attestations
for applicants can be provided by application filers.
Comment: We received comment regarding our definition of primary
taxpayer. A commenter expressed concern that an individual may not know
his future filing status.
Response: While this final rule revises the term ``primary
taxpayer'' to ``tax filer,'' to incorporate both spouses in a situation
in which a married couple is filing jointly, we keep the proposed
definition with minor revisions. Section 36B of the Code governs
eligibility for the premium tax credit and advance payments of the
premium tax credit, and specifies that it is based on the annual
household income for a tax family for the year for which coverage is
requested, which necessitates an understanding of an applicant's
expected tax household for such year. We acknowledge challenges in
communicating with individuals during the application process,
including regarding tax filing status, and intend to work closely with
stakeholders to develop effective communication strategies and tools.
Summary of Regulatory Changes
We are finalizing the definitions proposed in Sec. 155.300 of the
proposed rule, with the following modifications:
We removed the definition of ``application filer,'' and moved the
definition to Sec. 155.20, as a definition applicable for all of part
155; we address this change in comment response for Sec. 155.20. In
the definition of ``applicable CHIP MAGI-based income standard,'' we
changed the reference from 42 CFR 457.05(a) to 42 CFR 457.310(b)(1) to
align with the Medicaid final rule. For the definition of ``minimum
value'', we clarified that the definition is used to describe coverage
in an eligible employer-sponsored plan, and that minimum value means
that an eligible employer-sponsored plan meets the standards with
respect to coverage of the total allowed costs of benefits set forth in
section 36B(c)(2)(C)(ii) of the Code. We added language to the
definition of ``State Medicaid agency'' to clarify that the State
Medicaid agency may be established or designated by the State in
accordance with Medicaid regulations. For the definition of ``insurance
affordability program'' we cross-referenced 42 CFR 435.4, but clarify
that those programs included in this definition are the State Medicaid
program under Title XIX of the Act, CHIP under Title XXI of the Act,
the BHP under section 1331 of the Affordable Care Act, advance payments
of the premium tax credit under section 36B of the Code, and cost-
sharing reductions under section 1402 of the Affordable Care Act.
As further explained in response to comments later in Sec.
155.305, we also changed the definition of ``primary taxpayer'' to
``tax filer,'' which reflects that the role includes either spouse in a
joint-filing situation, and changed the term throughout the subpart.
Within the definition, we also added ``or a married couple,'' to
clarify that a tax filer may be an individual or a married couple, and
deleted subparagraph (1)(iv), which included language clarifying that a
primary taxpayer could be either spouse in a married couple, as this
language is now redundant. In paragraph (a), we added a definition for
``modified adjusted gross income'' and a definition of ``MAGI-based
income.'' We also change the rule described in paragraph (b) to clarify
that the Medicaid and CHIP regulations referred to in this subpart will
be implemented in accordance with the policies and procedures as
applied by the State Medicaid or State CHIP agency or as approved by
the agency in the agreement described in 155.435(a). In response to
comments, we also added new paragraph (d), which describes a rule for
the Exchange when determining whether information is ``reasonably
compatible''; this clarification is
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discussed in more detail in Sec. 155.315 comment response.
We also made technical changes to this section. In paragraph (c),
we changed the reference to Sec. 155.310(e)(2)(ii) to Sec.
155.310(d)(2)(ii). For the definition of ``applicable Medicaid MAGI-
based income standard,'' we changed the reference to 42 CFR
435.1200(c)(3) to 42 CFR 435.1200(b)(2).
Lastly, throughout this subpart, we have removed cross-references
to the Treasury proposed rule and replaced them with cross-references
to the applicable language in section 36B of the Code, as added by
section 1401(a) of the Affordable Care Act, as the Treasury proposed
rule will not be finalized as of the publication of this rule. Upon
publication of the Treasury final rule, we intend to replace the
statutory references with the appropriate regulatory references.
b. Options for conducting eligibility determinations (Sec. 155.302)
Based on comments and feedback to the proposed rule, we are
revising the rule to include this section as an interim final
provision, and we are seeking comments on it.
Comment: We received a number of comments expressing support for a
policy in which eligibility processes were integrated across the
Exchange, Medicaid, and CHIP in order to ensure a seamless experience
for consumers. Commenters further stressed the importance of a single
entity conducting all eligibility determinations. We also received
comments asking that States be permitted to rely on the Federal
government for certain eligibility functions, and that State Medicaid
and CHIP agencies be permitted to exercise final control over
eligibility determinations for Medicaid and CHIP based on applications
submitted to the Exchange, particularly when the State does not operate
an Exchange. In particular, commenters asked that the Federal
government offer to perform eligibility determinations for advance
payments of the premium tax credit and cost-sharing reductions, based
on an argument that this is not a current part of State processes,
should be uniform across States, and is connected to the advance
payment of premium tax credits with Federal funds. Another commenter
suggested that rather than have the Federal government assume
responsibility for an entire eligibility function, we should isolate
certain components of the eligibility function.
Response: While a fully-integrated eligibility process will best
achieve a seamless experience for applicants, we adopt the suggestion
of the commenters who requested more flexibility for States regarding
Medicaid and CHIP eligibility determinations. With appropriate
standards, this approach could both maintain the seamless consumer
experience while allowing States to design the eligibility process to
best match their current systems and capacity. Accordingly, while the
majority of subpart D continues to refer to all functions being carried
out by the Exchange, in new Sec. 155.302 of this final rule, we
specify that the Exchange may fulfill these provisions through
different options or combinations of options, subject to standards
described in Sec. 155.302(d). The standards in Sec. 155.302(d) are
intended to ensure that this approach to eligibility determinations
still affords applicants a seamless path to enrollment in coverage and
that it does not increase administrative burden and costs; we use
certain performance standards identified in paragraphs (b), (c) and (d)
and the agreements among the relevant agencies to achieve this. We
clarify that these options are separate and distinct from the ``State
Partnership'' model described in the preamble of Sec. 155.200 of this
final rule. We intend to provide further guidance on the implementation
of these options, including the roles and responsibilities of the
various parties, in the future.
First, in Sec. 155.302(a), we clarify that the Exchange may
fulfill its minimum functions under this subpart by either executing
all eligibility functions, directly or through contracting arrangements
described in Sec. 155.110(a), or through one or both of the approaches
identified in paragraphs (b) and (c) when other entities determine the
eligibility of applicants for insurance affordability programs.
Second, in Sec. 155.302(b), we identify that the Exchange may
conduct an assessment of eligibility for Medicaid and CHIP rather than
an eligibility determination for Medicaid and CHIP. Such an arrangement
is permissible provided that the Exchange makes such an assessment
based on the applicable Medicaid and CHIP MAGI-based income standards
and citizenship and immigration status, using verification rules and
procedures consistent with Medicaid and CHIP regulations, without
regard to how such standards are implemented by the State Medicaid and
CHIP agencies. That is, the assessment must follow verification rules
and procedures that could be adopted by a State Medicaid or CHIP
agency, although the use of this option is not contingent on the State
Medicaid or CHIP agency doing so.
In paragraph (b)(2), we provide that notices and other activities
that must be conducted in connection with an eligibility determination
for Medicaid or CHIP are conducted by the Exchange consistent with the
standards identified in this subpart or by the applicable State
Medicaid or State CHIP agency consistent with applicable law.
In paragraph (b)(3), we outline the procedures the Exchange must
follow when, based on the assessment conducted consistent with the
standards in paragraph (b)(1), the Exchange finds an applicant
potentially eligible for Medicaid or CHIP. We note that ``potentially
eligible'' does not mean that the individual's income, as determined by
the Exchange, necessarily is at or below the applicable Medicaid or
CHIP MAGI-based income standard. We would expect in the interagency
agreements between the State Medicaid and CHIP agencies and the
Exchange, the Exchange's determination of which applications will be
transferred for further action by the Medicaid and CHIP agencies will
depend in part on the extent to which their verification procedures are
consistent with those followed by the State Medicaid and CHIP agencies.
The Exchange would transmit such an individual's information to the
State Medicaid or CHIP agency in accordance with paragraph (b)(3) for
additional processing, although the Exchange would consider him or her
as ineligible for Medicaid or CHIP for purposes of eligibility for
advance payments of the premium tax credit and cost-sharing reductions
until the State Medicaid or CHIP agency notified the Exchange that the
individual was eligible for Medicaid or CHIP. We will work with
Exchanges to establish a reasonable application of the term
``potentially eligible'' taking into account an Exchange's assessment
procedures.
In paragraph (b)(4), we describe the procedures that the Exchange
must follow when, based on an assessment conducted in accordance with
paragraph (b)(1), the Exchange finds that an applicant is not
potentially eligible for Medicaid or CHIP based on the applicable
Medicaid and CHIP MAGI-based income standards. The Exchange must
consider such an applicant as ineligible for Medicaid or CHIP for
purposes of determining eligibility for advance payments of the premium
tax credit and cost-sharing reductions, and notify the applicant and
provide him or her with the opportunity to withdraw his or her
application for Medicaid and CHIP. To the extent that an applicant
withdraws his or her application for Medicaid and CHIP (for example, if
he
[[Page 18348]]
or she is approved for advance payments based in part on an assessment
that he or she is not potentially eligible for Medicaid and CHIP), the
applicant would not receive a formal approval or denial of Medicaid and
CHIP; the alternative is for the applicant to request that the Exchange
transmit the application to the State Medicaid and CHIP agency for
additional processing.
As noted above, in addition to providing the applicant with the
opportunity to withdraw his or her application for Medicaid and CHIP,
in paragraph (b)(4)(i)(B), the Exchange must notify and provide the
applicant with the opportunity to request a full determination of
eligibility for Medicaid and CHIP by the applicable State Medicaid and
CHIP agencies. For an applicant who requests a full Medicaid and CHIP
determination, the Exchange must transmit all information as provided
as part of the application, update, or renewal that initiated the
assessment and any information obtained or verified by the Exchange to
the State Medicaid and CHIP agency. The Exchange must also consider
such an applicant as ineligible for Medicaid or CHIP for purposes of
determining eligibility for advance payments of the premium tax credit
and cost-sharing reductions until the State Medicaid or CHIP agency
notifies the Exchange that the applicant has been determined eligible
for Medicaid or CHIP.
The arrangement under paragraph (b) would also provide that the
Exchange must adhere to the eligibility determination made by the
Medicaid or CHIP agency, and that the Exchange and the applicable State
Medicaid and CHIP agencies enter into an agreement specifying their
respective responsibilities in connection with eligibility
determinations for Medicaid and CHIP. We expect that these agreements
will establish the responsibilities across the parties, and we will
work with States to help develop such agreements. We note that we
include rules related to assessments of eligibility for Medicaid and
CHIP in paragraph (b)(1), to reinforce this concept. The standards and
responsibilities of the Exchange, which we include for this agreement,
complement the standards in 42 CFR 435.1200(d) of the Medicaid final
rule. In accordance with these standards, we expect that when an
assessment is conducted by the Exchange and transmitted to the State
Medicaid or CHIP agency, and the Exchange is providing advance payments
pending an eligibility determination for Medicaid and CHIP, the
Exchange will receive a notification of the final determination of
eligibility for Medicaid and CHIP made by the receiving agency.
Together, these standards aim to avoid the duplication of requests for
information from applicants and verification of information, and ensure
timely eligibility determinations despite the `hand-offs' to different
agencies or entities. Furthermore, we believe the inclusion of the
functions and the standards for the agreements described in Sec.
155.302 are consistent with our goal of ensuring a seamless eligibility
process. We also note that while defining what constitutes eligibility
for minimum essential coverage for purposes of eligibility for advance
payments of the premium tax credit and cost-sharing reductions is
outside the scope of this regulation, we clarify that our understanding
is that if the Exchange conducts an assessment in accordance with
paragraph (b) of this section and does not find that an applicant is
eligible for Medicaid and CHIP, such finding is sufficient to meet the
eligibility criteria specified in Sec. 155.305(f)(1)(ii)(B) with
respect to Medicaid and CHIP.
Third, in Sec. 155.302(c) of the final rule, we describe that the
Exchange must implement a determination of eligibility for advance
payments of the premium tax credit and cost-sharing reductions made by
HHS. We also describe that such an arrangement must provide that all
verifications, notices, and other activities conducted in connection
with determining eligibility for advance payments of the premium tax
credit and cost-sharing reductions are conducted by either the Exchange
in accordance with all of the applicable standards described in this
subpart or by HHS in accordance with the agreement between HHS and the
Exchange. We also direct that the Exchange transmit all applicant
information and other information obtained or verified by the Exchange
to HHS. The Exchange would then adhere to HHS's determination for
advance payments of the premium tax credit and cost-sharing reductions.
The Exchange and HHS would also need to enter into an agreement
specifying their respective responsibilities in connection with
eligibility determinations for advance payments of the premium tax
credit and cost-sharing reductions. As with the option described in
Sec. 155.302(b), we include particular standards and responsibilities
which are designed to eliminate duplicative requests for information
from applicants and ensure timely eligibility determinations.
In Sec. 155.302(d) we outline the standards to which the Exchange
must adhere when assessments of eligibility for Medicaid and CHIP based
on MAGI and eligibility determinations for advance payments of the
premium tax credit and cost-sharing reductions are made in accordance
with paragraphs (b) and (c); such standards include that all
eligibility processes are streamlined and coordinated across applicable
agencies, that such arrangement does not increase administrative costs
and burden on applicants, enrollees, beneficiaries, or application
filers, or increase delay, and that applicable requirements under part
155 and section 6103 of the Code are met.
Lastly, we note that all of the above configuration options will
necessitate coordination between the Exchange, HHS, and the State
Medicaid and CHIP agency. We will work closely with States to develop
operational solutions that will result in a high-quality eligibility
process, which in turn will result in achievement of our shared
coverage goals and a sustainable Exchange.
Summary of Regulatory Changes
We are finalizing the following provisions at Sec. 155.302 and
requesting comment. In paragraph (a), we provided that the Exchange may
choose to satisfy the standards of subpart D directly or through
contracting arrangements, or through one or a combination of options
described in paragraphs (b) and (c), subject to additional standards
outlined in paragraph (d).
If the Medicaid or CHIP agency retains final control of eligibility
determinations for Medicaid and CHIP, in paragraph (b), we described
that notwithstanding the standards of this subpart the Exchange may
conduct assessments of eligibility for Medicaid and CHIP based on MAGI
rather than the eligibility determinations for Medicaid and CHIP
provided that: the Exchange makes such an assessment based on the
applicable Medicaid and CHIP MAGI-based income standards and
citizenship and immigration status, using verification rules and
procedures consistent with 42 CFR parts 435 and 457, without regard to
how such standards are implemented by the State Medicaid and CHIP
agencies; notices and other activities conducted in connection with an
eligibility determination for Medicaid or CHIP are performed by the
Exchange consistent with the standards identified in this subpart or
the State Medicaid or CHIP agency consistent with applicable law; when
the Exchange assesses an individual as potentially eligible for
Medicaid or CHIP, the Exchange transmits all information provided as a
part of the application, update, or
[[Page 18349]]
renewal that initiated the assessment, and any information obtained or
verified by the Exchange to the State Medicaid or CHIP agency via
secure electronic interface; when the Exchange finds an individual not
potentially eligible for Medicaid and CHIP, the Exchange considers the
applicant as ineligible for Medicaid and CHIP for purposes of
determining eligibility for advance payments of the premium tax credit
and cost-sharing reductions and must notify such applicant, and provide
him or her with the opportunity to either withdraw his or her
application for Medicaid and CHIP or request a full determination of
eligibility for Medicaid or CHIP by the State Medicaid and CHIP
agencies. When an applicant requests a full determination of
eligibility for Medicaid and CHIP, the Exchange must transmit all
information obtained or verified by the Exchange to the State Medicaid
and CHIP agencies promptly and without undue delay and consider such an
applicant as ineligible for Medicaid and CHIP for purposes of
determining eligibility for advance payments of the premium tax credit
and cost-sharing reductions until the State Medicaid or CHIP agency
notifies the Exchange that the applicant is eligible for Medicaid or
CHIP. Furthermore, under the arrangement described in paragraph (b),
the Exchange must adhere to the eligibility determination for Medicaid
or CHIP made by the State Medicaid or CHIP agency, and the Exchange and
the State Medicaid and CHIP agencies must enter into an agreement
specifying their respective responsibilities in connection with
eligibility determinations for Medicaid and CHIP. We note that in such
an arrangement if the Exchange the State Medicaid and CHIP agencies are
using the same information technology infrastructure formal
transmissions may not be needed.
In paragraph (c), we establish that notwithstanding the standards
of this subpart the Exchange may implement a determination of
eligibility for advance payments of the premium tax credit and cost-
sharing reductions made by HHS. Under such option we provide: that
verifications, notices, and other activities necessary in connection
with an eligibility determination for advance payments of the premium
tax credit and cost-sharing reductions are performed by the Exchange in
accordance with the standards identified in this subpart or by HHS, in
accordance with the agreement between the Exchange and HHS; the
Exchange transmits all information provided as a part of the
application, update, or renewal that initiated the eligibility
determination, and any information obtained or verified by the
Exchange, to HHS via secure electronic interface, promptly and without
undue delay; the Exchange adheres to the eligibility determination for
advance payments of the premium tax credit and cost-sharing reductions
made by HHS; and the Exchange and HHS enter into an agreement
specifying their respective responsibilities in connection with
eligibility determinations for advance payments of the premium tax
credit and cost-sharing reductions.
In paragraph (d), we outline the standards to which assessments and
eligibility determinations described in paragraph (b) and (c) must
adhere, including that eligibility processes are streamlined and
coordinated across insurance affordability programs; such arrangement
does not increase administrative costs and burdens on individuals or
increase delay; and any applicable standards under Sec. 155.260 or
Sec. 155.270, Sec. 155.315(i), and section 6103 of the Code with
respect to the confidentiality, disclosure, maintenance, or use of
information will be met. All such changes adopted for this section of
the final rule are described in responses to comments for Sec.
155.302.
c. Eligibility Standards (Sec. 155.305)
Based on comments and feedback to the proposed rule, we are
revising the rule to include paragraph (g) of this section as an
interim final provision, and we are seeking comments on it.
In Sec. 155.305, we proposed to codify the eligibility standards
for enrollment in a QHP and for insurance affordability programs.
Specifically, we proposed that the Exchange determine an applicant
eligible for enrollment in a QHP if he or she meets the basic standards
for enrollment in a QHP outlined in the Affordable Care Act, including
that the individual must be a citizen, national, or a non-citizen who
is lawfully present, not incarcerated, and be reasonably expected to
remain so for the entire period for which enrollment is sought. We
solicited comments regarding the language that an individual be
``reasonably expected,'' for the entire period for which enrollment is
sought, to be a citizen, national, or non-citizen lawfully present, and
on how this policy can be implemented in a way that is straightforward
for individuals to understand and for the Exchange to implement.
We also proposed that in order to be eligible to enroll in a QHP,
an individual must intend to reside in the State in the service area of
the Exchange. We clarified that this residency standard is designed to
apply to all Exchanges, including regional and subsidiary Exchanges. In
general, we proposed to align the Exchange residency standard with the
Medicaid residency standards proposed in 42 CFR 435.403 of the Medicaid
proposed rule (76 FR 51148). We clarified that this residency standard
does not require an individual to intend to reside for the entire
benefit year. We also proposed that the Exchange follow additional
Medicaid residency standards (which were proposed in the August 17,
2011 Medicaid rule at 42 CFR 435.403) and the policy of the State
Medicaid or CHIP agency to the extent that an individual is
specifically described in that section and not under paragraphs
(a)(3)(i) or (ii).
We proposed that for a spouse or a tax dependent who resides
outside the service area of the tax filer's Exchange, the spouse or tax
dependent will be permitted to either: (1) enroll in a QHP through the
Exchange that services the area in which he or she resides or intends
to reside; or (2) enroll in a QHP through the Exchange that services
the area in which his or her tax filer intends to reside or resides, as
applicable. We also solicited comment on any standards regarding in-
network adequacy for out-of-State dependents that we should consider in
a different section of the proposed rule. We also noted that HHS
intends to allow State Medicaid agencies to continue to have State-
specific rules with respect to residency for students under the
Medicaid program, and solicited comments on whether different residency
rules should be maintained for enrollment in a QHP or whether a unified
approach should be adopted.
We proposed that the Exchange determine an applicant eligible for
an enrollment period if he or she meets the criteria for an enrollment
period, as specified in Sec. 155.410 and Sec. 155.420. We also
proposed that the Exchange determine applicants' eligibility for
Medicaid and CHIP. Specifically, we proposed that the Exchange
determine eligibility for Medicaid based on categories utilizing the
applicable Medicaid MAGI-based income standard, and that the Exchange
determine eligibility for CHIP if an applicant meets the standards of
42 CFR 457.310 through 457.320 and has a household income within the
applicable CHIP MAGI-based income standard. Additionally, we proposed
to codify that if a BHP is operating in the service area of the
Exchange, the Exchange will determine an applicant's eligibility for
[[Page 18350]]
the BHP, using the statutory criteria for eligibility.
We also proposed that the Exchange determine eligibility for
advance payments of the premium tax credit based on eligibility
standards proposed in paragraph (f)(1) and (f)(2), and that the
Exchange may provide advance payments of the premium tax credit only
for an applicant who is enrolled in a QHP through the Exchange.
Additionally, we clarified that the Exchange must determine a tax filer
ineligible to receive advance payments of the premium tax credit if HHS
notifies the Exchange that the tax filer or his or her spouse received
advance payments for a prior year for which tax data would be utilized
for income verification and did not comply with the requirement to file
a tax return and reconcile the advance payments of the premium tax
credit for such year. In the event the Exchange determines that a tax
filer is eligible to receive advance payments of the premium tax
credit, we proposed that the Exchange calculate advance payments of the
premium tax credit in accordance with 26 CFR 1.36B-3 of the Treasury
proposed rule (76 FR 50931).
We also proposed that the Exchange require an application filer to
provide the social security number (SSN) of the tax filer if an
application filer attests that the tax filer has a SSN and filed a tax
return for the year for which tax data would be utilized for
verification of household income and family size. We solicited comments
on how the Exchange can maximize the accuracy of the initial
eligibility determination and establish a robust process for
individuals to report changes in income to alleviate stakeholder
concerns about income fluctuations during the year that may result in
large reconciliation payments.
Finally, we proposed that the Exchange must determine applicants
eligible for cost-sharing reductions based on eligibility standards
described in paragraph (g), and we note that special eligibility
standards for cost-sharing reductions based on Indian status are
described in Sec. 155.350 of this subpart. Specifically, we clarified
in the proposed rule that an individual with household income that
exceeds 250 percent of the FPL who is not an Indian is not eligible for
cost-sharing reductions. We codified the statute such that an applicant
must be enrolled in a QHP in the silver level of coverage in order to
receive cost-sharing reductions. Lastly, we proposed three eligibility
categories for cost-sharing reductions, and proposed that the Exchange
transmit information about an enrollee's category to his or her QHP
issuer in order to enable the QHP issuer to provide the correct level
of reductions.
Comments: We received comments regarding the provision in proposed
Sec. 155.305(a)(1) which states that an individual must be
``reasonably expected'' to be a citizen, national, or a non-citizen who
is lawfully present for the entire period for which enrollment is
sought. One commenter recommended that the final rule remove the
``reasonably expected'' standard as it would limit non-citizens'
eligibility to enroll in a QHP.
Response: The final rule maintains the ``reasonably expected''
standard in accordance with section 1312(f)(3) of the Affordable Care
Act. We do not interpret this provision to mean that an applicant must
be lawfully present for an entire coverage year; rather, we anticipate
that the verification process will address whether an applicant's
lawful presence is time-limited, and if so, the Exchange will determine
his or her eligibility for the period of time for which his or her
lawful presence has been verified. We anticipate providing future
guidance on this topic, with a focus on minimizing administrative
complexity and burden.
Comment: We received a number of comments related to and in support
of the eligibility standard in proposed Sec. 155.305(a)(2) that in
order to be eligible for enrollment in a QHP, an individual must not be
incarcerated, with the exception of incarceration pending the
disposition of charges. Several commenters expressed concerns and
provided recommendations about how to coordinate and promote continuity
of care for individuals who will be transitioning from incarceration,
and some commenters expressed this concern in regard to specific
populations of incarcerated individuals. One commenter recommended that
prisoners should be able to apply for coverage through the Exchange in
advance of their release so that coverage can be effective on their
release date, while another commenter noted that we should provide that
Exchanges must accept applications in the event they are submitted on
behalf of an inmate of a correctional facility. Also, one commenter
suggested that prisoners should not be held responsible for reporting
changes if they become incarcerated, and prisoners should not be held
liable for repayment of advance payments of the premium tax credit for
which they would be liable if they are receiving them and then become
incarcerated.
Response: In Sec. 155.305(a)(2) of the proposed rule, we codified
section 1312(f)(1)(B) of the Affordable Care Act, which specifies that
in order to be eligible for enrollment in a QHP, an individual must not
be incarcerated, other than incarceration pending the disposition of
charges. HHS will consider commenters' recommendations related to
promoting continuity of care for individuals leaving incarceration in
future guidance. Since the Exchange will accept applications and make
eligibility determinations throughout the year, an inmate would not be
precluded from applying for coverage through the Exchange in an effort
to coordinate an effective date of coverage with his or her release
date. We also note that Sec. 155.420(d)(7) provides a special
enrollment period (``A qualified individual or enrollee who gains
access to new QHPs as a result of a permanent move'') which covers
individuals who are released from incarceration.
The final rule maintains the provision specifying that an enrollee
must report any change with respect to the eligibility standards in
Sec. 155.305, which includes when an enrollee becomes incarcerated,
other than incarceration pending the disposition of charges, as it is
important for the Exchange to be able to discontinue the enrollment and
recompute any advance payments or cost-sharing reductions to account
for the change in eligibility. As with other changes that affect
eligibility for enrollment in a QHP, not reporting such a change so
that advance payments of the premium tax credit can be adjusted
accordingly exposes a tax filer to the risk of repayment of advance
payments of premium tax credits at tax filing.
In addition, we note that we clarify in Sec. 155.330(b)(4) of the
final rule that an application filer may report a change on behalf of
an enrollee, which, for example, allows a member of an enrollee's
household to report the enrollee's incarceration. Also, in Sec.
155.330(d)(2) of this final rule, we allow for flexibility for
Exchanges to periodically check trusted data sources, provided that the
data matching program meets certain standards; this provision could
allow an Exchange to engage in data matching on incarceration to
provide an additional avenue to capture changes.
Comment: We received a number of comments related to the residency
standards for enrollment in a QHP, described in proposed Sec.
155.320(a)(3). Several commenters recommended that the residency
standards across the Exchange, Medicaid and CHIP be aligned and uniform
so as to limit States' discretion in precluding certain transient
populations from having continuous coverage throughout the
[[Page 18351]]
year. Several commenters recommended that we align with the Medicaid
``intent to reside'' standard, and include the two provisions from the
residency standard as proposed in the Medicaid proposed rule at 42 CFR
435.403(h)(1)(ii). One commenter suggested that we add the following
alternative as a means of satisfying the residency standard: ``Has
entered the State with a job commitment (whether or not he or she is
currently employed).'' A few commenters recommended that we should
adopt a more stringent residency standard than included in the Medicaid
proposed rule.
Response: We intend to align the residency standards with those of
the Medicaid regulations; therefore, we are revising Sec.
155.305(a)(3) in this final rule in response to commenters'
recommendations that we align residency standards with Medicaid and
CHIP and in consideration of changes made from the Medicaid proposed
rule to the Medicaid final rule. For example, in Sec.
155.305(a)(3)(i)(B), this final rule provides that an applicant age 21
and over also meets the residency standard if he or she has entered the
service area of the Exchange with a job commitment or seeking
employment (whether or not the applicant is currently employed). This
provision was included in the Medicaid proposed rule and is included in
the Medicaid final rule; we include it here to provide consistency
between these rules. We add language throughout Sec. 155.305(a)(3) to
clarify that individuals must be ``living'' in the service area of the
Exchange in addition to the prior standards, to clarify that an
individual must be physically present in the service area of the
Exchange in order to be eligible for enrollment in a QHP through that
Exchange. We note, however, that this does not preclude an individual
from submitting an application and receiving an eligibility
determination in advance of relocating to a new State; in such a
situation, his or her eligibility will not be effective until he or she
is ``living'' in the new State. We have also restructured paragraph
(a)(3)(i) and (ii) for clarity, and have added specific references to
the Medicaid final rule.
Comment: We received a number of comments related to the proposal
in Sec. 155.305(a)(3)(iv) related to residency standards for family
members who meet the applicable residency standard for a different
Exchange service area than of one or both of the tax filers. While
several commenters supported the provision in the proposed rule that
dependents and spouses may enroll in a QHP offered through the Exchange
in the service area where they reside or through the Exchange serving
the area where a tax filer meets the applicable residency standard (or
in the case of a spouse who is married filing jointly, another tax
filer meets the applicable residency standard), several commenters
opposed this provision. If this policy is maintained, one commenter
recommended that HHS develop a system for Exchanges to easily apportion
premium tax credits among family members. Several commenters expressed
concern that a person who purchases coverage from a QHP offered through
the Exchange where he or she does not live would likely encounter
difficulties in finding care as well as significant additional costs
from the use of out-of-network providers. In addition, the QHP issuer
would be limited in its ability to facilitate use of the highest
quality and most efficient providers and coordinate care across
providers and settings. Commenters encouraged HHS to consider limiting
this option. Several commenters recommended that HHS establish an
electronic mechanism for Exchanges to communicate with each other, as
well as sought clarification about how the Exchanges will coordinate
tax credits for members of the same tax household purchasing coverage
in QHPs through different Exchanges and other specific operational
details around verification and the eligibility process. One commenter
noted that this would be a simpler process if a tax filer could
purchase coverage for a dependent or spouse in the other State's
Exchange through the tax filer's Exchange via a link or web portal.
Response: We maintain the residency standard in Sec.
155.305(a)(3)(iv) of the final rule with limited modifications. All of
the modifications result from a change in our terminology from
``primary taxpayer'' to ``tax filer'' in an effort to reduce confusion
that could be associated with the term ``primary taxpayer,'' notably
since primary taxpayer generally refers to the first name on the tax
return of two individuals who are married, but both individuals are tax
filers and there is no significance to which is the primary taxpayer
for purposes of the premium tax credit (this change has been made
throughout the final rule). The remaining changes are to clarify that
any member of a tax household that has members in multiple Exchange
service areas may enroll in a QHP through any of the Exchanges for
which one of the household's tax filers meets the applicable residency
standard; the exception to this standard is that when both tax filers
enroll in a QHP through the same Exchange, the tax filers' dependents
may choose either the Exchange through which the tax filers are
enrolled or an Exchange for which the dependents meet the applicable
residency standard in paragraphs (a)(3)(i)-(iii). Taken together, we
expect that these residency standards will ensure that enrollees in
QHPs through the Exchange have appropriate access to services.
Regarding comments suggesting that Exchanges should be able to
apportion premium tax credits among family members, we will provide
additional information in the future in coordination with the IRS. We
note that the apportionment of advance payments will need to occur when
a single tax household is covered by more than one QHP. Regarding
comments we received related to network adequacy, a more detailed
response is provided in Sec. 156.230 of this final rule. We also note
that multi-State plans certified by and under contract with the
Director of the Office of Personnel Management may provide another
option in such scenarios. In response to comments recommending that we
create an electronic mechanism by which Exchanges can communicate with
each other and other operational details of the eligibility process,
HHS is considering commenters' recommendations regarding how best to
coordinate cross-Exchange activities.
Comment: A few commenters strongly supported limiting enrollment to
a single open enrollment period per year.
Response: The language in Sec. 155.305(b) of the proposed rule
specified that the Exchange determine an applicant eligible for an
enrollment period in accordance with the provisions regarding
enrollment periods in Sec. 155.410 and Sec. 155.420.
Comment: A number of commenters expressed overall support for the
Exchange conducting Medicaid and CHIP eligibility determinations, and
some suggested that the regulation be amended to include a standard
that an Exchange determine eligibility for Medicaid on any basis of
eligibility offered in that State (such as optional eligibility
categories and categories that do not use the MAGI standard). Some
commenters expressed support for uniformity and standardization around
eligibility and enrollment in general. Several commenters recommended
that HHS provide that the Exchange must collect information related to
non-MAGI eligibility to ensure that applicants can truly avail
themselves of a ``no wrong door'' application process for Medicaid. A
few commenters supported the clarification that eligibility for
emergency Medicaid services does not
[[Page 18352]]
count as Medicaid eligibility for purposes of eligibility for premium
tax credit and cost-sharing reductions through the Exchange. Another
recommended that there should be an emphasis on child-only plans
through the Exchange for those children who are not eligible for
Medicaid.
Response: Sections 155.345(b) and (d) of the final rule specify
that the Exchange must assess information provided by an applicant who
is not eligible for Medicaid based on standards specified in Sec.
155.305(c) to determine whether he or she is potentially eligible for
Medicaid in a category that does not use the MAGI standard, and refer
any potentially eligible individuals to the Medicaid agency for an
eligibility determination. In addition, Sec. 155.345(c) of the final
rule specifies that the Exchange must provide an opportunity for an
applicant to request a full Medicaid eligibility determination based on
factors not considered in Sec. 155.305(c). We believe that this
proposal creates a streamlined eligibility process for the vast
majority of applicants, while also allowing applicants who may be
eligible for a category that does not use the MAGI standard to access a
more streamlined process than is available today, without requiring the
Exchange to accommodate all of the complexity associated with the
categories of Medicaid that were not modified by the Affordable Care
Act.
In order to maintain a single, streamlined application, and in
accordance with section 1413(b)(2) of the Affordable Care Act,
applicants will not be asked for more information than is needed for
the Exchange to make an eligibility determination for insurance
affordability programs based on MAGI, apart from collecting basic
information to assess individuals for potential Medicaid eligibility on
a non-MAGI basis, for example a single triggering question. Applicants
will always have the opportunity to request a full determination of
eligibility for Medicaid. We also note that we know that several States
are considering leveraging a single Exchange/Medicaid/CHIP technology
platform in future years to also accommodate non-MAGI Medicaid
applicants, which is permitted under the statute and final rule. In
response to commenters requesting clarification about whether
eligibility for Medicaid coverage that is limited to emergency services
counts as minimum essential coverage for purposes of eligibility for
advance payments of the premium tax credit and cost-sharing reductions,
this determination is subject to other rulemaking. We note, however,
that individuals who are not lawfully present, are not eligible for
enrollment in a QHP, let alone for enrollment in a QHP that is
supported by advance payments and cost-sharing reductions. We also note
that immigration status is not a factor for emergency Medicaid
eligibility. In this final rule, we also revise Sec. 155.305(c) to
streamline references to Medicaid citizenship and immigration status
and residency eligibility standards, and align with the Medicaid MAGI-
based assessment described under 42 CFR 435.911(c)(1). Lastly,
regarding child-only plans, we note that the Exchange will inform an
applicant of all of the QHPs for which he or she is eligible, including
any child-only plans.
Comment: We received a range of comments related to performance
measurement and oversight tools related to eligibility and enrollment.
One commenter recommended a modification of Federal audit tools to
ensure that States are evaluated based on the number of eligible people
they correctly enroll for coverage. Some commenters recommended that
QHP issuers should not be held responsible for any errors that the
Exchange may make in the eligibility determination process, while some
commenters sought clarification of an Exchange's liability for
inaccurate eligibility determinations. Other commenters requested State
flexibility when operational challenges impede a seamless eligibility
and enrollment process (including, for example, transitioning enrollees
from one insurance affordability program to another).
Response: We plan to regulate in the future on oversight tools and
performance measurements in future rulemaking and guidance. We will
consider commenters' recommendations regarding oversight tools and
performance measurement as we develop future guidance on this topic.
Comment: Several commenters strongly supported the Exchange sharing
common eligibility standards with Medicaid, CHIP, and the BHP, and
determining eligibility for the BHP. Several commenters suggested that
the Exchange should conduct eligibility determinations for other
programs that are not related to health insurance coverage, such as the
Supplemental Nutrition Assistance Program and the National School Lunch
Program. Other commenters stated that individuals who are served by
those programs should also be enrolled in the appropriate health care
program if they are not already enrolled. At least one commenter
recommended that those applying for unemployment insurance also be
directed towards health benefits for which they might be eligible.
Response: In the final rule, we do not require the level of
integration between the Exchange and other human services programs that
some commenters recommended. This would not preclude a State from
leveraging the technology platform and supporting infrastructure for
insurance affordability programs for other health and human services
programs in the future, provided that privacy and security standards
(and applicable cost allocation rules) are met, particularly regarding
the use and disclosure of information provided to the Exchange by
applicants and Federal agencies. To this end, on August 10, 2011 and
January 23, 2012, CMS, the Administration for Children and Families
(ACF), and the Food and Nutrition Service (FNS) issued joint letters
providing guidance on the limited exception to cost allocation
guidelines which allows Federally-funded human services programs to
benefit from Medicaid, CHIP, and Exchange technology investments.
Comment: We received a number of comments related to eligibility
standards for advance payments of the premium tax credit, in particular
regarding compliance with the filing requirement described in proposed
Sec. 155.305(f)(4). Some commenters recommended that the final rule
clarify that if a tax filer is determined eligible for advance payments
of the premium tax credit but opts not to take advance payments, his or
her ability to file for the credit at the end of the tax year is not
affected; commenters also asked whether such a scenario would adversely
affect his or her eligibility for cost-sharing reductions. One
commenter requested clarification regarding the length of time for
which a taxpayer would be deemed ineligible for advance payment of
premium tax credit following a failure to file a tax return. Some
commenters suggested States should have the flexibility to discontinue
eligibility for advance payments of the premium tax credit and Medicaid
if Federal tax filings are not current.
Response: We clarify that when a tax filer is determined eligible
for advance payments of the premium tax credit but opts to not have
advance payments made on his or her behalf, the tax filer may still
claim the premium tax credit on his or her tax return; further, such
action does not adversely affect his or her eligibility for cost-
sharing reductions. Regarding Sec. 155.305(f)(4), we note that the
language of the proposed rule, which we maintain in the final rule,
specifies that the
[[Page 18353]]
Exchange may not determine a tax filer eligible for advance payments if
advance payments of the premium tax credit were made on behalf of the
tax filer, or either spouse if the tax filer is a married couple, for a
year for which tax data would be utilized for verification of household
income and family size, and the tax filer or his or her spouse did not
comply with the requirement to file an income tax return for that year
as required by 26 U.S.C. 6011, 6012, and implementing regulations and
reconcile the advance payments of the premium tax credit for that
period.
We also note that a tax filer faced with this bar to eligibility
may be able to regain eligibility by filing a tax return and
reconciling the advance payments of the premium tax credit. Lastly, we
do not have authority to discontinue Medicaid eligibility based on a
failure to file a tax return. In the final rule, we also make a
correction to the eligibility criteria for advance payments of the
premium tax credit at Sec. 155.305(f)(1)(ii) to align with the
statutory requirement in section 36B(c)(1)(A) of the Code; the Exchange
must generally determine that the tax filer is expected to have a
household income of greater than or equal to 100 percent of the FPL.
Comment: We received several comments requesting clarification as
to how eligibility will be determined for specific household
composition scenarios. One comment, for example, asked for
clarification regarding situations in States that recognize same-sex
marriages or civil unions.
Response: In Sec. 155.305(f) in this final rule, we use a number
of cross-references to section 36B of the Code which governs the
premium tax credit; these rules are the same rules that are used to
determine eligibility for advance payments of the premium tax credit.
Consequently, we refer commenters to those rules for details regarding
family and family size. Similarly, in Sec. 155.305(c) and (d), we use
a number of cross-references to 42 CFR parts 435 and 457, which contain
the Medicaid and CHIP rules for household composition; we refer
commenters to those rules for details regarding these provisions.
Comment: We received a comment asking that we address the issue of
deeming a sponsor's income to non-citizen applicants for Federal means
tested public benefits; specifically, the commenter asked whether that
policy is applicable to calculation of annual household income for
purposes of determining eligibility for advance payments of the premium
tax credit and cost-sharing reductions. The same commenter suggested
that for applicants who are determined ineligible for Medicaid as a
result of accounting for sponsor income and whose annual household
income is below 100 percent FPL, we should apply the special rule
described in Sec. 155.305(f)(2) that would allow such applicants to be
determined eligible for advance payments of the premium tax credits.
Response: We intend to work closely with Treasury to address the
applicability of sponsor deeming in the calculation of annual household
income for purposes of determining eligibility for advance payments of
the premium tax credit and cost-sharing reductions through future
rulemaking or guidance. Such rulemaking or guidance will also address
the relationship between sponsor deeming and the special rule described
in Sec. 155.305(f)(2).
Comment: Several commenters expressed concern about the
affordability of coverage for low-income individuals, notably lawfully
present immigrants who are eligible for advance payments of the premium
tax credit but ineligible for Medicaid. Some commenters requested
clarification that lawfully present non-citizens with incomes below 100
percent FPL could be determined eligible for cost-sharing reductions in
the 100 to 150 percent FPL eligibility category.
Response: In response to comments received regarding lawfully
present non-citizens with incomes below 100 percent FPL and eligibility
for cost-sharing reductions, we are clarifying in Sec.
155.305(g)(2)(i) of the final rule that an individual who is eligible
for advance payments of the premium tax credit under Sec.
155.305(f)(2) (non-citizens who are lawfully present and are ineligible
for Medicaid) fall within the 100 to 150 percent FPL eligibility
category for purposes of determining eligibility for cost-sharing
reductions. We also correct Sec. 155.305(f)(1)(i) to provide that an
applicant who expects to have a household income of greater than or
equal to 100 percent FPL may be determined eligible for advance
payments of the premium tax credit; this is a technical correction to
comply with section 36B(c)(1)(A) of the Code.
Comment: Several commenters suggested we clarify the relationship
between advance payments of the premium tax credit and other forms of
coverage, such as CHIP or Medicare, for determining eligibility as well
as for the calculation of the premium tax credit.
Response: We note that comments of this nature are outside the
scope of this rule and are within the jurisdiction of the Secretary of
the Treasury.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.305 of the
proposed rule, with several modifications: we added language throughout
Sec. 155.305(a)(3) of the final rule to clarify that individuals must
be ``living'' in the service area of the Exchange in addition to the
prior standards. In addition, in Sec. 155.305(a)(3)(i)(B), we include
in the final rule that an applicant age 21 and over also meets the
residency standard if he or she has entered the service area of the
Exchange with a job commitment or seeking employment (whether or not
currently employed). We have also restructured paragraph (a)(3)(i) and
(ii) for clarity, and have added specific references to the Medicaid
final rule. In paragraph (c)(1), we also added a standard that the
Exchange must determine an applicant eligible for Medicaid if he or she
meets the non-financial eligibility criteria for Medicaid for
populations whose eligibility is based on MAGI (that is, citizenship or
immigration status, residency, etc.), as certified by the Medicaid
agency at 435.1200(b)(2), and added a cross-reference to 42 CFR
435.603(d) for household income, in addition to the other criteria
described under this paragraph. In paragraph (d), we added a cross-
reference to 42 CFR 435.603(d) for household income.
In paragraph (f)(1)(i), we have changed ``at least 100 percent'' to
``greater than or equal to 100 percent'' to align with statutory
language. In paragraph (f)(1)(ii)(B), we codified the exception for
coverage in the individual market. In paragraph (f)(4), we have added,
``or either spouse if the tax filer is a married couple,'' and
clarified that applicable Treasury provisions requires a tax filer on
whose behalf advance payments are made to both file an income tax
return, and as a part of that return, to reconcile the advance payments
made.
We have combined and restructured paragraphs (g) and (h) of the
proposed rule into paragraphs (g)(1) and (g)(2) of the final rule. In
paragraph (g)(2)(i) we have added a provision to implement section
1402(b) of the Affordable Care Act, which provides a special rule for
non-citizens who are lawfully present; this revision clarifies that
individuals who are expected to have a household income of less than
100 percent of the FPL for the benefit year for which coverage is
requested and who are also eligible for advance payments of the premium
tax credit under paragraph (f)(2) are eligible for cost-sharing
reductions.
[[Page 18354]]
In paragraph (g)(3), we have added language implementing section
1402 of the Affordable Care Act, which provides cost-sharing reductions
at a policy level, in situations where multiple tax households are
covered by a single policy. In this paragraph, we specify a hierarchy
of available cost-sharing provisions, and explain that when multiple
tax households are covered on a single policy, the Exchange will apply
only the first category of cost-sharing reductions listed in this
paragraph. The categories are listed such that the lowest level of
cost-sharing reductions will be provided to the combined households. We
note that the tax households are always free to purchase separate
policies, and in doing so, receive the benefit of all cost-sharing
provisions for which they are eligible.
Lastly, in paragraph (g)(4) we added language to clarify that
household income for the purposes of eligibility for cost-sharing
reductions is defined in accordance with section 36B(d)(2) of the Code,
which is the same definition used for advance payments of the premium
tax credit. We also clarified that the time period for measuring income
for cost-sharing reductions is the same as for advance payments of the
premium tax credit.
We also made technical changes to the final rule. In Sec.
155.305(c), we changed the reference to 42 CFR 435.1200(c)(1) to 42 CFR
435.1200(b)(2), and throughout the section, as in the rest of the
subpart, we replaced language regarding application filers providing
attestations with references to applicants providing attestations,
since the language in Sec. 155.300(c) provides overarching
clarification that attestations for applicants can be provided by
application filers.
d. Eligibility Determination Process (Sec. 155.310)
Based on comments and feedback to the proposed rule, we are
revising the rule to include paragraph (e) of this section as an
interim final provision, and we are seeking comments on it.
In Sec. 155.310, we proposed the process by which the Exchange
will determine an individual's eligibility for enrollment in a QHP
through the Exchange and for insurance affordability programs.
Specifically, we proposed that the Exchange must accept applications
from individuals in the form and manner described in Sec. 155.405, and
included standards around the collection of information from non-
applicants. We also proposed that the Exchange permit an individual to
decline an eligibility determination for insurance affordability
programs. In addition, we proposed that the Exchange accept an
application and make an eligibility determination for an applicant
seeking an eligibility determination at any point in time during a
benefit year. After the Exchange has collected and verified all
necessary data, we proposed that the Exchange conduct an eligibility
determination in accordance with the standards described in Sec.
155.305 of this part.
We also proposed that the Exchange allow an applicant who is
determined eligible for advance payments of the premium tax credit to
accept less than the expected annual amount of advance payments
authorized. We clarified that the Exchange may provide advance payments
on behalf of a tax filer only if the tax filer first attests that he or
she will meet the tax-related provisions discussed in the definition of
tax filer, including that he or she will claim a personal exemption
deduction on his or her tax return for the applicants identified as
members of his or her tax family.
We also proposed that if the Exchange determines an applicant is
eligible for Medicaid or CHIP, the Exchange will notify the State
Medicaid or CHIP agency and transmit relevant information, including
information from the application and the results of verifications, to
the relevant agency promptly and without undue delay. We also proposed
that effective dates for enrollment in a QHP through the Exchange,
advance payments of the premium tax credit and cost-sharing reductions
be implemented in accordance with the dates specified in Sec.
155.410(c) and (f) and Sec. 155.420(b).
We proposed that the Exchange provide an applicant with a timely,
written notice of his or her eligibility determination, including the
applicant's eligibility for insurance affordability programs, as
appropriate. We also proposed that when the Exchange determines an
applicant is eligible to receive advance payments of the premium tax
credit or cost-sharing reductions based, in part, on a finding that the
applicant's employer does not provide minimum essential coverage,
provides coverage that is not affordable, or provides coverage that
does not meet the minimum value standard, the Exchange must notify the
employer and identify the employee.
Finally, we proposed rules regarding the duration of an eligibility
determination for an applicant who is determined eligible for
enrollment in a QHP but does not select a QHP within his or her
enrollment period in accordance with subpart E of this part. We
solicited comments on whether a new determination should be conducted
after a specific period of time has passed and whether the application
process should begin anew in some or all situations.
Comment: We received a few comments recommending the adoption of a
timeliness standard within which the Exchange would need to complete an
eligibility determination. Most of these commenters recommended
requiring that the Exchange adhere to the Medicaid timeliness standard
as outlined in 42 CFR 435.911(a)(2), which provides that the Medicaid
agency must establish a standard for determining an individual's
eligibility and informing the individual of his or her eligibility
determination that does not exceed 45 days.
Response: We recognize that there is a need for a timeliness
standard for Exchange eligibility determinations. We add paragraph (e)
which states that the Exchange must conduct an eligibility
determination promptly and without undue delay. We also include that
the Exchange must assess the timeliness of eligibility determinations
based on the period from the date of application or transfer from an
agency administering an insurance affordability program to the date the
Exchange notifies the applicant of its decision or the date the
Exchange transfers the application to another agency administering an
insurance affordability program, when applicable. We intend to further
interpret this timeliness standard in future guidance in coordination
with standards established for the Medicaid and CHIP programs.
We note that we think it is reasonable that the majority of
eligibility determinations will be completed in a very short period of
time and encourage the Exchange to continuously monitor and identify
ways to shorten the time it takes to process an application and notify
an applicant of his or her eligibility determination. We plan to work
closely with States to establish a more detailed understanding of the
timing needed for an eligibility determination as well as how the
length of time needed can be reduced, and will provide future guidance
on timeliness standards.
Comment: We received a substantial number of comments in support of
our proposed policy, as described in Sec. 155.310(a)(2), that the
Exchange may not require an individual who is not seeking coverage for
himself or herself to provide a SSN except as provided in proposed
Sec. 155.305(f)(6) (when he or she is the tax filer and the
application filer attests that the tax filer has a SSN and has filed a
tax return for the year
[[Page 18355]]
for which the tax data would be utilized for verification of household
and family size). While the majority of commenters supported the policy
on the collection of SSNs, as proposed in Sec. 155.310(a)(2) and Sec.
155.305(f)(6), a few commenters suggested adding language to reinforce
the applicability of guidance on the collection of SSNs issued on
September 21, 2000 by CMS (then HCFA), the Administration of Children
and Families, and the Food and Nutrition Service (the `Tri-Agency
guidance'); others asked that we cross-reference the companion
provision in the Medicaid proposed regulation (42 CFR 435.907(e)(1)).
Response: First, in new Sec. 155.310(a)(3)(i), we have clarified
that the Exchange must collect a SSN from an applicant who has a SSN.
We have also moved the proposed provision in Sec. 155.310(a)(2) to
Sec. 155.310(a)(3)(ii). We clarify that this provision only provides
that the Exchange must collect SSNs from a non-applicant if he or she
is the tax filer, has a SSN, and has filed a tax return for the year
for which tax data would be utilized. We believe this provision is
necessary given the standards for determining eligibility for advance
payments of the premium tax credit and cost-sharing reductions, as
described in sections 1402(f)(3), 1411(b)(3) and 1412(b) of the
Affordable Care Act, which provide that the most recent tax data
available be the basis for determining eligibility for these benefits
to the extent such tax data is available.
In addition, we note that section 36B(d)(2)(A)(ii)(II) of the Code
specifies that household income for purposes of premium tax credits
includes the MAGI of any individuals who have a filing requirement. As
previously noted, a SSN must be used to obtain tax data from the IRS,
and the IRS will not provide the tax data of a dependent who had a
filing requirement without the dependent's SSN. As noted above, while
the Exchange will require an individual who is seeking coverage for
himself or herself who has a SSN to provide it, the Exchange will only
require an individual who is not seeking coverage for himself or
herself to provide a SSN if he or she is a tax filer who meets the
standard described in paragraph (f)(6). That is, in the limited number
of cases in which a dependent is not seeking coverage for himself or
herself, the Exchange will not require such a dependent to provide his
or her SSN, although the dependent may provide it on a voluntary basis.
However, we believe that Sec. 155.305(f)(6), as proposed, is
permissible under section 1412, given that a) whether a dependent has a
filing requirement may change frequently, resulting in a change in
circumstances that allows the Exchange to use an alternate verification
process; and b) we believe that it will be challenging for an applicant
to determine whether a dependent was or will be required to file
(versus a voluntary filing). Further, we do not believe that it is
appropriate to add a provision to require the Exchange to collect the
SSN for every dependent who is not seeking coverage for himself or
herself, regardless of whether he or she had a filing requirement,
because this would go beyond what is needed to obtain tax data for
those who had a requirement to file. As such, we maintain this
provision in the final rule. To the extent that a dependent who is not
seeking coverage for himself or herself has income that needs to be
considered for purposes of determining eligibility for advance payments
of the premium tax credit and cost-sharing reductions, the Exchange
will verify it through an alternate verification process.
We believe that these provisions also comply with the statutory
standards contained in section 1411(g)(1) of the Affordable Care Act,
which specifies that the Exchange must not require an applicant to
provide information beyond what is necessary to support the eligibility
and enrollment process. Given the statutory standards, we believe these
are the appropriate application of the Tri-Agency guidance. We intend
to continue to review these issues in the context of all insurance
affordability programs and to develop a single, streamlined application
that accommodates these policy and eligibility differences.
In addition, we have added Sec. 155.315(b), which clarifies that
in accordance with section 1411 of the Affordable Care Act, the
Exchange will transmit SSNs to HHS for validation with SSA. This is
separate from the provision regarding citizenship verification, and
only serves to ensure that SSNs provided to the Exchange can be used
for subsequent transactions, including for verification of family size
and household income with IRS. We clarify that in accordance with
section 1411(e)(3) of the Affordable Care Act, which governs
inconsistencies regarding SSNs, to the extent that the Exchange is
unable to validate a SSN, the Exchange will follow the inconsistency
procedures specified in Sec. 155.315(f).
Comment: We received a number of comments in support of our
proposed policy to allow applicants to opt out of an eligibility
determination for insurance affordability programs but to not allow
applicants to choose among a subset of insurance affordability programs
in proposed Sec. 155.310(b). Only one commenter did not support the
provision to allow individuals to opt out of screening for insurance
affordability programs, citing that it is more important to provide a
uniform eligibility determination for all applicants to increase the
likelihood that individuals have access to affordable coverage options.
One commenter also suggested that the final rule provide certain
exceptions to the provision barring individuals from selecting among
insurance affordability programs.
Response: We believe it is important to preserve the option for an
applicant to bypass the examination of his or her household income and
other information that may result in a lengthier eligibility process,
and allow him or her to enroll directly in a QHP without financial
assistance if he or she so chooses. Therefore, in the final rule, we
are maintaining the provision in Sec. 155.310(b) with some
clarification; the Exchange must permit an applicant to request only an
eligibility determination for enrollment in a QHP through the Exchange,
but that the Exchange may not permit an applicant to request an
eligibility determination for less than all insurance affordability
programs. We expect that an Exchange could implement this provision by
allowing an applicant to opt-out of an eligibility determination for
all insurance affordability programs.
We also maintain that an applicant may not choose between insurance
affordability programs since section 36B(c)(2)(B) of the Code specifies
that a tax filer is ineligible for advance payments of the premium tax
credit for any applicant who is eligible for other minimum essential
coverage.
Comment: A number of commenters, particularly consumer groups,
noted support for the provision in proposed Sec. 155.310(d)(2), which
would allow an enrollee to accept less than the full amount of advance
payments of the premium tax credit for which he or she is determined
eligible; however, the majority of these commenters recommended that
HHS complement this provision with a standard that the Exchange must
provide detailed consumer education and tools regarding the premium tax
credit and reconciliation. We also received a number of comments which
raised concerns that individuals may not fully understand the
responsibilities associated with receiving advance payments of the
premium tax credit; such commenters recommended that HHS provide more
detail concerning
[[Page 18356]]
what information will be provided to consumers about reconciliation.
Response: We amended the final rule in Sec. 155.310(d)(2)(ii) to
state that the Exchange may authorize advance payments of the premium
tax credit on behalf of a tax filer only if the Exchange obtains
certain attestations regarding advance payments of the premium tax
credit from a tax filer. We intend to provide further guidance
regarding the additional attestations that may be asked of individuals,
which may include an attestation from a tax filer acknowledging that he
or she understands the potential impact of reconciliation.
Comment: We received a number of comments regarding the standards
for Exchanges to notify the State Medicaid or CHIP agency upon
determining an applicant eligible for Medicaid or CHIP and transmit
relevant information promptly and without undue delay described in
proposed Sec. 155.310(d)(3). Commenters recommended that HHS provide a
timeliness standard that is more specific than ``promptly and without
undue delay,'' and suggested adding language to provide the Exchange
must transmit the relevant information ``within no more than 24
hours.''
A few commenters also recommended aligning with Medicaid language
to clarify that ``relevant information'' transmitted to Medicaid or
CHIP agencies include ``the electronic account containing the finding
of Medicaid or CHIP eligibility, all information provided on the
application, and any information obtained or verified by the Exchange
in making such a finding.''
Response: We considered the recommendation to adopt a specific time
standard for the transmittal of information between the Exchange and
State Medicaid or CHIP agencies; however, we believe that the
timeliness standard in the regulation text at paragraph (e) provides
the necessary flexibility to accommodate technological advances. We
anticipate that we will interpret and clarify this standard in
guidance. Furthermore, this standard is aligned with the Medicaid
standard described in 42 CFR 435.911(c)(1); CMS also plans to issue
guidance to clarify this standard.
We also considered comments asking HHS to specify the meaning of
``relevant information.'' We recognize that clarification is necessary,
and in the final rule, replace the phrase ``relevant information'' in
Sec. 155.310(d)(3), with ``all information necessary to effectuate
coverage in Medicaid or CHIP.'' Although this is not the identical
language used in Medicaid regulations, we believe it is the appropriate
standard to adequately address the concern raised by the commenter.
Comment: We received a variety of comments related to the
notification of eligibility determination, described in proposed Sec.
155.310(g). Several commenters asked that we amend the language in this
provision to provide that such a notice must be ``written,'' as we
specified in the proposed rule governing general notice standards in
Sec. 155.230(a). One commenter suggested adding language to allow
applicants or enrollees to choose to have notices sent to other
parties, such as application assisters or authorized representatives;
another recommended adding a notice to individuals when an application
is incomplete.
Response: Because paragraph Sec. 155.230(a) of the proposed rule
specifies that notices issued by the Exchange must be ``written,'' this
general notice standard would apply to the notification of eligibility
determination, which we clarify in Sec. 155.310(g) in this final rule.
We will further address notices and the roles of application assisters
and authorized representatives in future rulemaking and guidance.
Comment: We received a large number of comments on proposed Sec.
155.310(g) regarding the content and scope of employer notices of an
employee's eligibility for advance payments of the premium tax credit
and cost-sharing reductions. These commenters suggested that HHS limit
employer notices to a subset of employers to provide greater privacy
protections for consumers. Most commenters stated that the employer
should be notified of an employee's receipt of advanced payment of the
premium tax credit or cost-sharing reductions only if this
determination might trigger an employer responsibility payment. Some
commenters asserted that the appropriate trigger for an employer to
receive notification is if the employer has 50 or more full time
equivalent employees and the employer has full-time employees that
receive advanced payment of the premium tax credit or cost-sharing
reductions through the Exchange. One commenter said that only employers
that offer unaffordable coverage should receive a notification and
employers that offer no coverage should not receive any employee
information.
Response: While we recognize that the employer responsibility
provisions of section 4980H of the Code apply only to employers with 50
or more full-time equivalent employees, section 1411(e)(4)(B)(iii) of
the Affordable Care Act imposes the obligation to provide the notice
regardless of the size of the employer. Therefore, we are not limiting
the scope of the notice standard in this final rule to a subset of
employers. We anticipate that HHS may provide additional guidance
regarding how the content of the notice can be structured so as to
minimize potential employer confusion associated with whether a
determination will have implications under section 4980H of the Code.
Further, we are aware that employer contact information may not
always be available, because a person fails to provide it, or provides
incorrect information, or that person changed employers, or a host of
other reasons. We will work with Exchanges and employers on this to
develop a solution for situations in which the Exchange does not have a
seamless way to reach the correct employer for the purposes of
delivering the notice.
Comment: Other commenters raised additional privacy concerns
regarding the content of notices sent to employers under proposed Sec.
155.310(g). Several commenters suggested that the Exchange provide the
employer with the minimum amount information necessary to evaluate
liability for the employer responsibility payment. One commenter
suggested that the Exchange should only transmit information necessary
under law--the employee name and taxpayer identification number. This
commenter stressed that the regulation should specify that the taxpayer
identification number (TIN) should be used, and not the SSN, in
accordance with section 1311(d)(4)(I)) of the Affordable Care Act. One
commenter suggested that even the employee name should not be
disclosed. Finally, a few commenters noted that HHS should be sensitive
to the fact that some employees do not want their employers to know
their household income.
Response: For the purposes of the employer notice under section
1411(e)(4)(B)(iii) of the Affordable Care Act, we believe that only the
minimum necessary personally identifiable information should be
released to an employer. The Affordable Care Act provides that the
Exchange must notify an employer that his or her employee has been
determined eligible for advance payments of the premium tax credit and
that the employer may appeal such eligibility determination. The
proposed rule provided only that the notice identify the employee.
However, based on sections 1411(e)(4)(B)(iii), 1411(e)(4)(C), and
1411(f)(2)(B) of the Affordable Care Act, our final regulation provides
that if an enrollee is eligible for
[[Page 18357]]
a premium tax credit or cost-sharing reductions because that enrollee's
employer does not provide minimum essential coverage through an
eligible employer-sponsored plan, or that the employer provides
coverage but it is not affordable or does not meet minimum value, the
Exchange must notify the employer, identifying the employee, relating
the opportunity to appeal, indicating that the employee has been
determined eligible for advance payments of the premium tax credit, and
indicating that the employer may be liable for a shared responsibility
payment under section 4980H of the Code if the employer has 50 or more
full-time workers. We note that we do not expect the Exchange to relay
to the employer the exact reason for which the applicant was determined
eligible, or to provide any tax return information to the employer.
Rather, the notice should indicate the list (above) of potential
reasons for the determination. We have amended the final rule,
redesignating proposed section (g) as section (h) and adding sections
(h)(2) and (h)(3) to Sec. 155.310 to clarify these standards.
The notice will not disclose an enrollee's household income or any
other taxpayer information, except the enrollee's name or other
personal identifier. We anticipate that additional guidance regarding
the content of the notification will be released in the future.
Comment: One commenter expressed concern about potential HIPAA
violations that may occur if an applicant provides the wrong employer
contact information, and an incorrect employer receives the
notification, with respect to the notices sent in accordance with
proposed Sec. 155.310(g).
Response: To the extent the Exchange is not a HIPAA covered entity
or business associate, the Exchange would be subject only to the
privacy and security standards of 155.260. If a State has determined
that its Exchange is a HIPAA covered entity or business associate, to
the extent the Exchange was merely acting on incorrect information
provided to the Exchange by an applicant, there would be no HIPAA
violation. In addition, we do not expect that the notice will result in
a violation of applicable privacy and security standards in this
section. We acknowledge that the notices outlined under this section
will contain personally identifiable information, such as the name of
enrollees. However, we think any inadvertent disclosure would be
mitigated by the fact that only minimal information about the
individual will be included in the employer notice; thus, we do not
believe that this standard poses a substantial threat to individual
privacy. In addition, we plan to disseminate guidance to Exchanges on
practices designed to minimize the instances of individuals or entities
other than the enrollee's actual employer receiving the notice.
Comment: A number of commenters asked that Exchanges inform
employers that retaliation based on the notices sent in accordance with
Sec. 155.310(g) is prohibited and that evidence of retaliation could
subject the employer to a penalty.
Response: We note that section 1558 of the Affordable Care Act,
which amends the Fair Labor Standards Act and is within the
jurisdiction of the Department of Labor, includes a prohibition on an
employer discharging or discriminating against an employee because the
employee has received a premium tax credit or cost-sharing reductions.
Because of this statutory provision, we do not believe additional
standards are necessary in this final rule.
Comment: One commenter suggested that IRS, and not HHS, effectuate
the notice described in Sec. 155.310(h) because (1) IRS has
information about employers subject to free rider assessments, and (2)
IRS maintains a database of employer contacts for the transmission of
sensitive personal information. Another commenter suggested that
reporting to employers should be consolidated and centralized into a
Federal process, with information provided on a monthly or quarterly
basis.
Response: Section 1411(e)(4)(B)(iii) provides that this notice must
be provided to employers by Exchanges in connection with certain
eligibility determinations. It is not within the discretion of the
Secretary to shift responsibility for provision of this notice to the
IRS. We do support reducing reporting burden by consolidating and
streamlining reporting, if feasible. In addition, we plan to issue
guidance to help Exchanges develop an operational strategy for
reporting.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.310 of the
proposed rule, with a few modifications. In paragraph (b), we clarified
that the choice of an applicant is whether to allow the Exchange to
determine his or her eligibility for insurance affordability programs.
In paragraph (d)(2)(ii), we added language specifying that attestations
from the tax filer will be attestations regarding advance payments of
the premium tax credits. In paragraph (d)(3), we removed the reference
to ``relevant'' information and further clarified that the Exchange
must transmit all information from the records of the Exchange promptly
and without undue delay to such agency that is necessary for the State
Medicaid or CHIP agency to provide the applicant with coverage. In
paragraph (e), we adopted a provision which provides that the Exchange
must conduct eligibility determinations promptly and without undue
delay.
In paragraph (f), we clarified in the header that the effective
dates outlined are effective dates for eligibility, and not for
coverage. Consistent with changes we discuss in Sec. 155.420, we also
added language in paragraphs (f)(1) and (f)(2) to differentiate between
effective dates for initial eligibility determinations, which will be
implemented in accordance with Sec. 155.410(c) and (f) and Sec.
155.420(b), as applicable, and effective dates for redeterminations,
which will be implemented in accordance with the dates specified in
Sec. 155.330(f) and 155.335(i), as applicable. In paragraph (g), we
added language to specify that the notice of eligibility determination
must be written, consistent with other notice standards. We
redesignated proposed paragraph (g) as new paragraph (h). In new
paragraph (h), we added three additional standards, in accordance with
section 1411(e)(4) of the Affordable Care Act, for the content of the
notice to employers. In addition to identifying the employee, the
notice must indicate that the employee has been determined eligible for
advance payments of the premium tax credit; that, if the employer has
50 or more full-time employees, the employer may be liable for the
payment assessed under section 4980H of the Code; and that the employer
has the right to appeal the determination.
Also included in this final rule are several technical corrections
from the proposed text. In paragraph (a)(1), we removed the reference
to 45 CFR and changed the phrase to ``specified in Sec. 155.405 of
this chapter.'' In paragraph (b), we added the words ``insurance
affordability'' before ``programs'' as a clarification.
e. Verification Process Related to Eligibility for Enrollment in a QHP
(Sec. 155.315)
Based on comments and feedback to the proposed rule, we are
revising the rule to include paragraph (g) of this section as an
interim final provision, and we are seeking comments on it.
In Sec. 155.315, we proposed the general standard that the
Exchange must verify or obtain information to determine that an
applicant is eligible for enrollment in
[[Page 18358]]
a QHP, unless a request for modification is granted in accordance with
proposed paragraph (f) of this section.
To verify whether an applicant for coverage through the Exchange is
a citizen, national, or otherwise lawfully present individual in
accordance with section 1312(f)(3) of the Affordable Care Act, we
proposed to codify the role of the Secretary (through HHS) as an
intermediary between the Exchange and other Federal officials,
specifically the Social Security Administration and the Department of
Homeland Security. In the case of an inconsistency related to
citizenship, status as a national, or lawful presence, we proposed that
the time period for the resolution is 90 days from the date on which
the notice of inconsistency is received. We also clarified that the
date on which the notice is received means 5 days after the date on the
notice, unless the applicant shows that he or she did not receive the
notice within the 5 day period.
We also proposed that the Exchange verify an applicant's residency
by accepting an applicant's attestation without further verification or
following the procedures of the State Medicaid or CHIP agency, if such
agency examines electronic data sources for all applicants. We also
proposed that the Exchange may examine data sources regarding residency
to the extent that information provided by an applicant regarding
residency is not reasonably compatible with other information provided
by the applicant or in the records of the Exchange. In addition, we
proposed that a document that provides evidence of immigration status
may not be used alone to determine State residency. We also proposed
that the Exchange verify an applicant's attestation that he or she is
not incarcerated. We solicited comment as to what electronic data
sources are available and should be authorized by HHS for Exchange
purposes, including whether access to such data sources should be
provided as a Federally-managed service like citizenship and
immigration status information from SSA and DHS.
Further, we proposed that when an individual attests to information
and such attestation is inconsistent with other data in the records of
the Exchange, the Exchange must make a reasonable effort to identify
and resolve the issues. If the Exchange is unable to resolve the
inconsistencies, we proposed that the Exchange notify the applicant of
the inconsistency. After providing this notice, we proposed that the
Exchange provide 90 days from the date on which the notice is sent for
the applicant to resolve the issues, either with the Exchange or with
the agency or office that maintains the data source that is
inconsistent with the attestation. We also proposed that the period
during which an applicant may resolve the inconsistency may be extended
by the Exchange if the applicant can provide evidence that a good faith
effort has been made to obtain additional documentation.
We further proposed that the Exchange allow an individual who is
otherwise eligible for enrollment in a QHP, advance payments of the
premium tax credit or cost-sharing reductions to receive such coverage
and financial assistance during the resolution period, provided that
the tax filer attests to the Exchange that he or she understands that
any advance payments of the premium tax credit received during the
resolution period are subject to reconciliation. We also proposed that
if after the conclusion of the resolution period, the Exchange is
unable to verify the applicant's attestation, the Exchange must
determine the applicant's eligibility based on the information
available from the data sources specified in this subpart and notify
the applicant of such determination. We clarified that the Exchange
must make effective this eligibility determination no earlier than 10
days after and no later than 30 days after the date on which such
notice is sent.
Finally, we also proposed that HHS may approve an Exchange
Blueprint to change the methods used to collect and verify information,
within certain standards. We also proposed that the Exchange must not
require an applicant to provide information beyond the minimum
necessary to support eligibility and enrollment processes.
Comment: We received a few comments asking that we establish
standards for the collection, use and safeguarding of data used to
verify applicant information, as described throughout proposed Sec.
155.315. We received a few comments suggesting that we incorporate
specific safeguards and protections for information used in the
verification of citizenship and immigration status, proposed in Sec.
155.315(b). Commenters suggested including language stating that
information related to the verification of citizenship and immigration
status be used only for purpose of verifying eligibility for enrollment
in a QHP and that pending such verification, coverage should not be
delayed, denied, reduced or terminated.
Response: We address the privacy and security of information and
the specific standards and protocols for the transmission of data in
Sec. 155.260 and Sec. 155.270 of this final rule and note that these
provisions apply to the transactions described throughout subpart D,
including Sec. 155.315. Language in Sec. 155.260 provides that
information must provided to or obtained by the Exchange for the
purposes of determining eligibility for enrollment in a QHP, advance
payments of the premium tax credit, and cost-sharing reductions, under
sections 1411(b) through (e) of the Affordable Care Act, or exemptions
from the individual responsibility provisions in section 5000A of the
Code, may only be used to carry out those minimum functions of the
Exchange described in Sec. 155.200; we believe this language addresses
these concerns and establishes appropriate safeguards.
Regarding comments asking that coverage not be delayed, denied,
reduced or terminated, pending verification of citizenship and
immigration status, we addressed these concerns in Sec. 155.315(f),
which allows an applicant to enroll in coverage with financial
assistance pending such verification. We also amend Sec. 155.315(c) in
order to be consistent throughout this subpart and clarify that an
applicant and not an application filer receives the notice of
inconsistency.
Comment: A number of comments addressed the process for resolving
inconsistencies between applicant information and data obtained by the
Exchange, as proposed in Sec. 155.315(e). Commenters requested that we
provide details on the types of documentation that the Exchange may use
to verify applicant information; specifically, commenters asked for
details on documents that the Exchange will be permitted to use in
verifying citizenship and immigration status. Other commenters asked
that we clarify the ways in which individuals will be able to submit
documentation to the Exchange when attempting to resolve such
inconsistencies. Furthermore, in response to the Medicaid eligibility
proposed rule, HHS received a number of comments requesting adoption of
an exception for agencies administering insurance affordability
programs to accept attestations alone from certain applicants, who are
part of at-risk populations and who may not have access to necessary
documentation to resolve inconsistencies.
Response: While we acknowledge commenters' requests for details
regarding documentation used during the inconsistency process, we
believe that this level of specificity is most appropriate for
guidance. Therefore, we maintain that the applicant may ``present
satisfactory evidence'' in
[[Page 18359]]
Sec. 155.315(f)(2)(ii) of the final rule. We intend to issue future
guidance with details on documents which may be used to support
verification, in coordination with Medicaid and CHIP and in accordance
with the statutory standard for the Exchange to follow the procedures
specified in section 1902(ee) of the Act.
We accept commenters' suggestions that we specify the ways in which
an applicant will be able to submit documentation to the Exchange;
accordingly, we adopt language in the final rule at Sec.
155.315(f)(2)(ii) that the Exchange must provide the applicant with the
opportunity to present satisfactory documentary evidence via the
channels available for the submission of an application, as described
in Sec. 155.405, except for by telephone.
We also proposed a provision in Sec. 155.315(g) to provide a case-
by-case exception for applicants for whom documentation does not exist
or is not reasonably available. We proposed this language to account
for situations which documentation cannot be obtained, and to achieve
consistency with the Medicaid program; examples of individuals for whom
this provision may apply include homeless individuals, victims of
domestic violence or natural disasters, and sporadic earners. We
believe that adding this provision is permissible within the
Secretary's statutory authority to change verification methods as
provided under sections 1411(c)(4) and 1321(a)(1) of the Affordable
Care Act. We note also that if at the conclusion of the 90 day period,
the Exchange is unable to verify the applicant's attestation and the
data from the data sources specified in Sec. 155.315 are unavailable,
the Exchange must notify that applicant that the Exchange finds the
applicant ineligible for the eligibility standard in question. In Sec.
155.320(c)(3)(vi)(F), we also describe the procedures for the Exchange
to discontinue advance payments and cost-sharing reductions in the
event that the applicant's attestation is not verified by the
conclusion of the 90 day period.
We also make several changes throughout verification provisions of
the final rule at Sec. 155.315 and Sec. 155.320 where information is
found by the Exchange to be not reasonably compatible with an
applicant's attestation and where the inconsistency process is
triggered; we change the language in a number of places to state that
the Exchange ``must,'' rather than ``may,'' examine electronic data
sources or supporting documentation, when applicable. The proposed rule
did not consistently require that the Exchange examine other data
sources or documentary evidence for all verification processes.
Comment: We received several comments regarding our use throughout
Sec. 155.315 of the term ``reasonably compatible.'' Many commenters
asked that we define the term and provided a number of suggested
definitions; one common approach to clarifying the term was to provide
the Exchange must only consider material differences between an
attestation and available electronic data as not reasonably compatible.
Response: We believe that the common approach suggested by
commenters is a sensible one, and in Sec. 155.300(d) of this final
rule, provide that the Exchange must consider information to be
reasonably compatible with an applicant's attestation if the difference
or discrepancy does not have an impact on the eligibility of the
applicant, including the amount of advance payments of the premium tax
credit or category of cost-sharing reductions. This provision would
provide, for example, that if an individual attested to one address
within an Exchange service area, but Exchange-obtained data
demonstrated a different address within the same Exchange service area,
he or she must be considered to meet the residency eligibility
standard. We note that while we provide this clarification in the final
rule, Exchanges may still exercise flexibility in defining what is
considered reasonably compatible. We expect that definitions will vary
depending on the types of information subject to verification, and that
States will use this flexibility to enhance the eligibility process. We
intend to provide future guidance on this issue. We also clarify that
to the extent that income information provided by an application filer
and income information obtained through electronic data sources both
indicate that the applicant is eligible for Medicaid or CHIP, such
information must be considered reasonably compatible; this provision
aligns with the provision of the Medicaid eligibility final rule at 42
CFR 435.952(c)(1). We also clarify that this rule does not mean that an
applicant's attestation regarding annual household income must be
identical to that of the tax return information in order to be
considered reasonably compatible. The standard for household income is
discussed in more detail in Sec. 155.320.
Comment: We received a few comments which asked that we explicitly
state that an applicant has the ability to access and amend the data
used to determine his or her eligibility.
Response: Section 155.330 of the proposed rule allowed an enrollee
to report changes affecting his or her eligibility to the Exchange,
which must then be verified by the Exchange. We maintain this provision
in this final rule. We anticipate that the Exchange will make the
information used in an eligibility determination available to the
applicant and enrollee, including through a web-based self-service tool
with appropriate safeguards. In addition, we direct the commenter to
the final rule at Sec. 155.260(b)(3)(i), which provides the Exchange
must incorporate a principle of individual access to personally
identifiable information as part of the Exchange's privacy and security
policies and procedures.
Comment: We received comments asking that we specify the content of
the eligibility determination notice provided to applicants, which is
described in proposed Sec. 155.315(e)(2)(i). Commenters also suggested
certain content standards for such a notice, including clear procedures
for the inconsistency process.
Response: As noted in the notice of proposed rulemaking, we intend
to provide content and timing standards for notices in future
rulemaking and guidance. We have made a minor edit to the final rule at
Sec. 155.315(f)(2)(i) to clarify that this notice is sent to the
applicant by the Exchange.
Comment: We received a number of comments regarding the process to
resolve inconsistencies, as described in proposed Sec. 155.315(b)(3)
and (e). A few comments asked that the inconsistency periods described
in proposed Sec. 155.315(b)(3) and (e) begin when the application is
submitted, not when the notice of inconsistency is sent or received by
the applicant. Other commenters asked that we align inconsistency
periods for the Exchange with the inconsistency period described in
section 1902(ee) of the Act.
Response: Section 1411(e)(3) of the Affordable Care Act states that
for inconsistencies related to citizenship and immigration status, the
Exchange must follow procedures described in section 1902(ee) of the
Act. Section 1902(ee) provides that the applicant must be given a
period of 90 days from the date of the receipt of the notice to present
satisfactory documentation. Because such a receipt date is difficult to
pinpoint, we have adopted language specifying that the date on which
the notice is received is 5 days from the date the notice is sent,
unless the applicant demonstrates that he or she did not receive the
notice within the 5 day period. This standard is also utilized by the
SSA. Alternatively, for
[[Page 18360]]
inconsistencies not related to citizenship and immigration status,
section 1411(e)(4)(A)(ii)(II) of the Affordable Care Act provides that
the 90 day period must begin on the date on which the notice is sent to
the applicant. Due to these statutory standards, we are unable to
change the point at which the inconsistency period is triggered, and
unable to further align the provision in proposed Sec. 155.315(e) with
the process described in section 1902(ee) of the Act. Therefore, we
maintain the provisions in Sec. 155.315(c)(3) and (f) in the final
rule.
We neglected to include the statutory language found in section
1411(e)(4)(A)(i) of the Affordable Care Act which provides that the
Exchange must address ``typographical or clerical errors'' in order to
address causes of inconsistencies, prior to accepting documentation or
other evidence from the applicant; we adopt this language in the final
rule at Sec. 155.315(f)(1).
Comment: We received a number of comments which expressed concern
over the potential for increased liability for QHP issuers as
applicants are provided coverage during the inconsistency period
described in proposed Sec. 155.315(e). We also received comments
suggesting that issuers should not be required to enroll, nor continue
enrollment of, individuals for whom the Exchange is still verifying
eligibility during the resolution period.
Response: The standard to determine eligibility based on the
information on the application (that is, an individual's attestation)
during the inconsistency period is specified in section 1411(e)(3) and
(e)(4) of the Affordable Care Act. We note that this final rule does
not prohibit QHPs from requiring premium payment prior to providing
coverage. We also expect that the Exchange and an applicant's selected
QHP issuer will provide notice to an applicant to ensure that the
enrollee is aware of liability for premium payment.
Comment: One commenter suggested that the Exchange be given more
flexibility to decrease the length of the inconsistency period.
Response: The period of time during which an applicant is permitted
to provide documentation in order to resolve an inconsistency is
specified in sections 1411(e)(3) and 1411(e)(4)(A)(ii)(II) of the
Affordable Care Act; therefore, we maintain provisions Sec.
155.315(c)(3) and (f)(2)(ii) the final rule.
Comment: A few commenters asked that we explicitly allow certain
application assisters, Navigators, and application filers to help
applicants navigate the inconsistency process, described in proposed
Sec. 155.315(e).
Response: As described in Sec. 155.210, part of the duties of a
Navigator will be to educate the consumer, facilitate enrollment, and
assist with any part of the application process. We also anticipate
that agents and brokers will provide such assistance. In addition, we
expect that application assisters who are not Navigators, agents, or
brokers will provide support for consumers during the application
process, and we anticipate providing additional guidance regarding this
role, including on appropriate privacy and security protections.
Comment: We received a number of comments on proposed Sec.
155.315(e)(3), in which we proposed that the Exchange may extend the
inconsistency period if the applicant demonstrates a good faith effort
to obtain the documentation. Commenters asked that the Exchange must
provide such an extension.
Response: We adopted the provision regarding the extension of the
inconsistency period in order to align with Medicaid guidance, which
provides States the flexibility to allow a good faith extension.
Therefore, we are maintaining the proposed text in the final rule.
Comment: We received a comment asking that we include timeliness
standards for processing inconsistencies.
Response: We adopt a timeliness standard of ``promptly and without
undue delay'' for eligibility determinations made by the Exchange in
the final rule at Sec. 155.310(e), but intend to provide future
guidance about best practices for an Exchange to make the best use of
the 90 day inconsistency period.
Comment: We received a number of comments on proposed Sec.
155.315(g), in which we proposed that the Exchange may not require the
applicant to provide information beyond the minimum necessary to
support the eligibility and enrollment process. Commenters asked us to
define ``minimum necessary''; others suggested that we include language
describing how HHS will conduct oversight to ensure compliance with
this provision.
Response: We acknowledge the importance of oversight to ensure
compliance with the provision described in Sec. 155.315(g) of the
proposed rule, which is finalized in Sec. 155.315(i), and intend to
provide additional detail regarding oversight in future rulemaking and
guidance. HHS will also consider this in the context of evaluating
alternate applications developed by States, as described in Sec.
155.405(b), and will continue to work with States on the issue of
information collection.
Comment: We received a number of comments related to the proposed
process for verification of citizenship and immigration status,
described in proposed Sec. 155.315(b). A few commenters found the
process unclear, and asked for more information regarding the
verification process for other individuals listed on the application,
such as spouses and tax dependents.
We also received a number of comments related to the services that
will be provided by a Federally-managed data services hub to support
verification of citizenship and immigration status. Several comments
recommended that we utilize the DHS Systematic Alien Verification for
Entitlements (SAVE) system to verify immigration status. Comments on
the proposed rule asked for information on the impact of services
available through the Federally-managed data services hub on existing
State agency connections with Federal data sources used for
verification of citizenship and immigration status. Commenters
recommended that Exchanges not use ``E-verify'' to verify immigration
status and others asked that we provide details on the format of data
provided to the State agency or Exchange. We also received comments
asking whether it would be legally permissible for the Exchange to
transmit information to DHS, via HHS, when an individual has attested
to being a citizen. Another commenter asked how the Exchange will know
whether an individual has documentation at the point of application
that can be verified through DHS, as described in the provision
proposed at Sec. 155.315(b)(2).
Response: Section 1312(f)(3) of the Affordable Care Act, as
codified in Sec. 155.305(a)(1) in this final rule, states that an
individual may only enroll in a QHP through the Exchange if he or she
is a citizen, national, or a non-citizen who is lawfully present, and
is reasonably expected to be so for the entire period for which
enrollment is sought. Because citizenship, status as a national, or
lawful presence is an eligibility standard for any applicant seeking
coverage through the Exchange for him or herself, the verification
process described in Sec. 155.315(c) applies to each applicant,
regardless of whether he or she is a tax filer or dependent.
While we do not specify a level of operational detail in the final
rule that includes the specific services or data
[[Page 18361]]
formats which will be used in supporting verification, we are working
closely with our Federal partners to develop and provide details on the
verification services provided by the Federally-managed data services
hub; we expect to provide such details in guidance. However, we believe
that the final rule supports the use of SAVE. We also note that we do
not intend to use the E-verify service, as it is designed for employers
to check the work authorization of employees, rather than to verify
eligibility for benefits. Regarding existing State connections used in
verification, we anticipate that Medicaid agencies, CHIP agencies, and
Exchanges will leverage the Federally-managed data services hub for
connections to SSA and DHS to support verification of citizenship and
immigration status.
With regard to the Exchange transmitting information to DHS via
HHS, when an individual has attested to being a citizen, section
1411(c)(2) of the Affordable Care Act specifies that in such cases when
an individual who attests that he or she is a citizen but for whom
citizenship cannot be verified through SSA, the Secretary of HHS shall
submit to DHS the applicant's information and other identifying
information for verification of immigration status. Based on this
statutory standard, we maintain Sec. 155.315(b)(2) in the final rule
as Sec. 155.315(c)(2).
Lastly, we intend to work with DHS to provide Exchanges with the
information needed to identify whether an applicant can likely be
matched through DHS. DHS has existing verification relationships with
many State Medicaid and CHIP agencies, as well as other Federal, State,
and Local government entities, which means that many States will
already be familiar with this information.
Comment: We received several comments recommending the inclusion of
language in proposed Sec. 155.315(b) describing the verification
process as to whether an applicant is ``reasonably expected'' to be
lawfully present for the entire period for which enrollment is sought.
The ``reasonably expected'' standard is part of the standard for
determining whether an applicant is a citizen, national or non-citizen
who is lawfully present, which is described in Sec. 155.305(a)(1).
Commenters' specific recommendations for such a verification process
varied. One requested that as long as an applicant's residency is
verified, that he or she be considered reasonably expected to be
lawfully present for the entire period for which enrollment is sought.
Others suggested that self-attestation alone be used in verification.
Response: In the final rule, we address our interpretation of the
term ``reasonably expected'' in Sec. 155.305. We intend to provide
additional interpretation of this standard, including how it applies in
specific scenarios, in future guidance.
Comment: We received a few comments asking that we specify in
regulation that an applicant is permitted to provide his or her A-
number for verification of immigration status through the records of
DHS.
Response: In Sec. 155.315(b), we proposed that for purposes of
verifying citizenship and immigration status through the records of
DHS, the Exchange must transmit information from the applicant's
documentation and other identifying information to HHS. We intend the
phrase ``information from the applicant's documentation and other
identifying information'' to encompass information such as A-numbers;
therefore, we maintain the provision in the final rule. This approach
incorporates other types of identifying information (for example, I-94
numbers) that are used by DHS, as well as preserves the intent and
applicable of this regulation if DHS changes its process in the future.
Comment: We received a number of comments regarding the connections
between the Exchange and Federal data sources needed to support
verification of applicant information. Comments expressed concern that
each Exchange would need to develop separate data sharing arrangements
and interfaces with Federal agencies maintaining information for use in
verification. Comments responding to the proposed rule, which
identified HHS as a conduit for information transmitted between the
Exchange and Federal agencies, asked that we specifically refer to the
Federally-managed data services hub, or electronic service, throughout
Sec. 155.315, rather than refer to HHS as the entity through which
data will be transmitted.
Response: Acknowledging comments to the RFC and specific direction
from section 1411(c) of the Affordable Care Act, we proposed that HHS
would be the entity through which information would be transmitted to
and from Exchanges and Federal data sources to support the verification
process. In the final rule, we maintain HHS' role in supporting
verification. However, in order to remain flexible to the technology
used to transmit such data, we do not specifically mention in the final
rule the ``electronic service'' or ``data services hub''. Instead, the
final rule focuses on HHS' role as the entity which will facilitate the
transfer of information, rather than how such information will be
transferred. We anticipate that as technological advances are made,
there may be changes in the procedures used by HHS to receive
information from the Exchange and to communicate with other Federal
agencies involved in the verification process.
Comment: We received a number of comments on the process for
verification of residency, proposed in Sec. 155.315(c). A significant
number of commenters asked that self-attestation of residency be
accepted without further verification. A smaller number of commenters
recommended always allowing the Exchange to verify residency through
electronic data sources, not only when the State Medicaid or CHIP
agency operating in the State of the Exchange opts to examine such data
sources.
Response: We are redesignating proposed Sec. 155.315(c) as Sec.
155.315(d), and amending it to state that an Exchange may accept an
attestation of residency from an applicant or examine electronic data
sources which have been approved by HHS. This flexibility would allow
an Exchange, should it choose, to align with the verification
procedures of the State Medicaid or CHIP agency. Such alignment may
facilitate integration across insurance affordability programs and
result in a more streamlined process. We amend Sec. 155.315(d)(3), as
well as equivalent provisions throughout this subpart, to specify that
if the Exchange finds that information provided by an applicant is not
reasonably compatible, it must examine any information available
through other electronic data sources. The proposed rule was
inconsistent, and used, ``may,'' instead of, ``must,'' in this
paragraph and in several other areas. This change was made to create
consistency throughout the subpart, and because the rationale for the
reasonably compatible concept, as described in the proposed rule, is
that it is a threshold for when additional verification (for example,
examining other electronic data sources) is necessary to complete the
verification process. For example, in the event the Exchange accepts
self-attestation without further verification, in accordance with
paragraph (d)(1), and such attestation is found to be not reasonably
compatible with other information provided by the individual or in the
records of the Exchange, the Exchange would continue the verification
process by examining available electronic data sources in order to
verify the attestation. If the Exchange is still unable to complete the
[[Page 18362]]
verification after examining information in electronic data sources,
the Exchange would then follow procedures to resolve the inconsistency,
in accordance with Sec. 155.315(f). As discussed in the proposed rule,
examining data sources, when available, prior to moving through the
inconsistency process will help minimize the need to request paper
documentation from applicants, and the burden for Exchanges to process
such documentation.
Comment: We received a few comments regarding the provision in
proposed Sec. 155.315(c)(4) in which we propose that a document that
provides evidence of immigration status may not be used alone to
determine State residency. A commenter requested that we remove the
word ``alone'' from this phrase. Another asked that we allow the
Exchange to use documentation of immigration status to positively
verify residency.
Response: We are removing the word ``alone'' from Sec.
155.315(d)(4) in the final rule because we do not intend for documents
that provide evidence of immigration status to be used to determine
State residency either alone or together with other documentation. We
have also amended the phrase to allow the Exchange to positively verify
residency using immigration documentation, which aligns with Medicaid
regulations.
Comment: We received a number of comments regarding the
verification of incarceration status, as proposed in Sec. 155.315(d).
Several commenters recommended that self-attestation of incarceration
be accepted without further verification. Others believed that
information or an attestation regarding incarceration should never be
requested of an applicant, since such a request may be a deterrent to
consumers applying for coverage through the Exchange. A smaller number
of commenters questioned the availability of recent, accurate data with
which Exchanges may verify incarceration status. One commenter stated
that by not defining ``release date,'' incarceration status will be
difficult to verify.
Response: We acknowledge that there are challenges regarding the
availability of electronic data on incarceration. However, we believe
it is important for the Exchange to utilize any such data sources that
are available and have been approved by HHS for this purpose, and, at
the very least, accept self-attestations of incarceration status since
such status is a statutory standard for eligibility to enroll in a QHP.
In addition, we believe that this attestation can be collected with
minimal burden on an applicant, and we expect that it will be paired
with a clear explanation as to why the information is being requested.
We believe that allowing for verification of incarceration status
through paper documentation would increase administrative burden on the
Exchange and applicants, and for these reasons, allow for the
examination of paper documentation only in the event that the
applicant's self-attestation is not reasonably compatible with other
information provided by the individual or information in the records of
the Exchange. For greater detail about the definition of incarceration,
please see comment response for Sec. 155.300.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.315 of the
proposed rule, with the following modifications. We added paragraph
(b), which clarifies that the Exchange will validate SSNs that are
provided by individuals. In paragraph (c)(3), we changed the word
``shows'' to ``demonstrates'' in referring to what the applicant must
do if the if he or she did not receive the notice within the 5 day
period; this change was made to more accurately describe the obligation
of the applicant. In paragraph (d)(1) and (2), we allowed the Exchange
may choose whether it accepts an attestation from applicants regarding
residency without further verification or examines electronic data
sources for all applicants, and we clarify that the standard for
approval of electronic data sources for verification of residency will
be based on whether such sources are sufficiently current and accurate,
and minimize administrative costs and burdens.
In paragraph (d)(3), we clarify that by referring to data sources,
we mean those data sources that are available to the Exchange and that
have been approved by HHS for this purpose. In paragraph (d)(3), we
remove the reference to ``a document that provides'' before
``evidence'' so as not to limit the acceptable types of such evidence.
We also remove the word ``alone'' in order to clarify that the Exchange
may not use evidence of immigration status alone or together with other
evidence to determine State residency. In paragraph (d)(3), we also
change the term ``may'' to ``must'' to specify that if the applicant's
attestation is not reasonably compatible with information in the
records of the Exchange, the Exchange must examine available, approved
data sources in order to verify the attestation. We also change the
phrase in paragraph (d)(4) to state that evidence of immigration status
may not be used to determine that an applicant is not resident of the
Exchange service area.
We clarified in paragraph (f) that an inconsistency may result when
electronic data is necessary for verification but is not available. We
also included in paragraph (f)(1), ``including through typographical or
other clerical errors'' to describe the causes of inconsistency. In
paragraph (f)(2)(i), we changed ``notify'' to ``provide notice to the
applicant regarding'' in order to clarify the Exchange's notice
standard. Also, we added language to paragraph (f)(2)(ii) to specify
that all channels described in Sec. 155.405(c) of this part are
acceptable for the submission of documentation to resolve
inconsistencies, except for by telephone. In paragraph (f)(5)(i), we
specify that the Exchange must determine the applicant's eligibility
based on the information available unless such applicant qualifies for
the exception provided under paragraph (g). We also add, on an interim
final basis, paragraph (g), which provides a case-by-case approach to
resolving inconsistencies for applicants for whom documentation does
not exist or is not reasonably available.
We also made technical corrections. We redesignated paragraphs (b)
through (g) as paragraphs (c) through (i). In paragraph (a), we changed
the reference to paragraph (e) to paragraph (g). In paragraph (d), we
changed ``by'' to ``as follows,'' and changed verb tenses in (d)(1) and
(d)(2). In paragraph (f)(3), we corrected the reference to paragraph
(f)(3) and changed it to (f)(2)(ii). In paragraph (f)(5)(ii), we
changed the word ``implement'' to ``effectuate.'' We also add, on an
interim final basis, paragraph (g) to provide a case-by-case exception
for applicants for whom documentation does not exist or is not
reasonably available.
In paragraph (h), we changed the word ``plan'' to ``Blueprint.''
Throughout the section, as in the rest of the subpart, we replaced
language regarding application filers providing attestations with
references to applicants providing attestations, since the language in
Sec. 155.300(c) provides overarching clarification that attestations
for applicants can be provided by application filers.
f. Verification process related to eligibility for insurance
affordability programs (Sec. 155.320)
In Sec. 155.320, we proposed that the Exchange verify information
in accordance with this section only for an applicant who is requesting
an eligibility determination for insurance affordability programs.
[[Page 18363]]
We proposed standards related to the verification of eligibility
for minimum essential coverage other than through an eligible employer-
sponsored plan.
We also proposed standards for the verification of household income
and family and family/household size and solicited comments regarding
how best to ensure a streamlined eligibility process given underlying
differences between the Treasury proposed rule and the Medicaid
proposed rule. We proposed standards for the Exchange to obtain tax
return data for individuals whose income is counted in calculating a
tax filer's household income, and to obtain MAGI-based income for all
individuals whose income is counted in calculating a tax filer's
household income, in accordance with 26 CFR 1.36B-1(e), or an
applicant's household income, in accordance with 42 CFR 435.603(d).
We proposed the verification process for income and household size
for Medicaid and CHIP and solicited comments as to how this process
could work most smoothly for both electronic and paper applications. We
proposed that the Exchange must verify household size by obtaining an
attestation from the application filer and accepting the attestation
without further verification unless the attestation is not reasonably
compatible with other information in the records of the Exchange. We
also proposed the process for the Exchange to verify MAGI-based
household income by referring to the procedures described in Medicaid
proposed regulations at 42 CFR 435.948 and 42 CFR 435.952 and CHIP
regulations at 42 CFR 457.380. We solicited comments as to how the
Exchange process and the Medicaid and CHIP processes can be streamlined
to ensure consistency and maximize the portion of eligibility
determinations that can be completed in a single session.
Similar to Medicaid and CHIP, we proposed that for advance payments
of the premium tax credit and cost-sharing reductions, the Exchange
direct an application filer to attest to the specific individuals who
comprise an applicant's family for advance payments of the premium tax
credit and cost-sharing reductions, and that the Exchange accept an
application filer's attestation of family size without further
verification, unless the attestation and any other information in the
records of the Exchange are not reasonably compatible. We further
proposed the basic verification process for annual household income. We
proposed that the Exchange compute, in accordance with specific rules
for Medicaid and CHIP and specific rules for eligibility for advance
payments of premium tax credits and cost-sharing reductions, annual
household income for the family defined by the application filer and
that the application filer validate this information by attesting
whether it represents an accurate projection of the family's household
income for the benefit year for which coverage is requested. We
proposed that if tax data are unavailable, or if an application filer
attests that the Exchange's computation based on available tax data
does not represent an accurate projection of the family's household
income for the benefit year for which coverage is requested, the
Exchange direct the application filer to attest to the family's
projected household income. We proposed that if such an attestation is
not reasonably compatible with the data obtained by the Exchange or if
the data is unavailable, the Exchange must follow procedures for the
alternate verification process. We also proposed that the Exchange use
an alternate process for determining income for purposes of advance
payments of the premium tax credit and cost-sharing reductions for tax
filers in certain situations. We proposed that in situations in which
an application filer attests that a tax filer's annual household income
has increased or is reasonably expected to increase from the
information obtained from his or her tax return, the Exchange accept
the application filer's attestation without further verification, with
limited exceptions. We also proposed to codify the minimum standards
for circumstances under which an application filer who is attesting to
a decrease in income for a tax filer, or is attesting to income because
tax return data is unavailable, may utilize an alternate income
verification process that includes annualized data from MAGI-based
income sources and other electronic data sources approved by HHS. We
solicited comment on what situations should justify use of the
alternate process.
We also proposed the verification process the Exchange must follow
for a tax filer whose annual household income decreases by a certain
amount. We proposed that if the Exchange requests additional
documentation to resolve an inconsistency and the application filer has
not responded to a request for additional information from the Exchange
within a 90 day period and data sources indicate that an applicant in
the tax filer's family is eligible for Medicaid or CHIP, the Exchange
may not provide the applicant with eligibility for advance payments of
the premium tax credit or cost-sharing reductions. We proposed that if
at the end of the 90 day period the Exchange is unable to verify the
application filer's attestation, the Exchange must determine the
applicant's eligibility based on available data, in accordance with the
process proposed in Sec. 155.310(g) and Sec. 155.330(f). In addition
to the above standards, we proposed that the Exchange provide education
and assistance to an application filer regarding the verification
process for income and family/household size and solicited comments on
strategies that the Exchange can employ to ensure that application
filers understand the validation process and provide well-informed
validations and attestations.
For other situations in which the Exchange remains unable to verify
an application filer's attestation, we proposed that the Exchange
determine eligibility for advance payments of the premium tax credit
and cost-sharing reductions for tax filers who do not meet the criteria
for the alternate income verification process based on the tax filer's
tax data. We also proposed that if an application filer does not
respond to a request for additional information from the Exchange and
data sources described in paragraph (c)(1) indicate that an applicant
in the primary tax filer's family is eligible for Medicaid or CHIP, the
Exchange will not provide the applicant with eligibility for advance
payments of the premium tax credit or cost-sharing reductions based on
the application.
We proposed that the Exchange verify whether an applicant who
requested an eligibility determination for advance payments of the
premium tax credit or cost-sharing reductions is enrolled in an
eligible employer-sponsored plan by accepting his or her attestation
without further verification, except in cases in which information is
not reasonably compatible with other data provided by the applicant or
in the records of the Exchange. We solicited comments as to whether the
Exchange could assume that an applicant would understand whether or not
he or she is enrolled in an eligible employer-sponsored plan, and
therefore rely upon applicant attestation in this area. We proposed
that the Exchange may request additional information regarding whether
an applicant is enrolled in an eligible employer-sponsored plan if an
applicant's attestation is where an applicant's information is not
reasonably compatible with other information provided by the applicant
or in the records of the Exchange. We solicited comments regarding the
best
[[Page 18364]]
data sources for this element of the process.
In addition, we proposed that the Exchange must request from an
applicant who requests an eligibility determination for advance
payments of the premium tax credit or cost-sharing reductions to attest
to his or her eligibility for qualifying coverage in an eligible
employer-sponsored plan. We further proposed that the Exchange verify
this information. We solicited comments regarding how the Exchange may
handle a situation in which it is unable to gain access to
authoritative information regarding an applicant's eligibility for
qualifying coverage in an eligible employer-sponsored plan. We invited
comment on the timing and reporting of information needed to verify
whether an employed applicant is eligible for qualifying coverage in an
eligible employer-sponsored plan, and the best methods for facilitating
interaction among Exchanges for this purpose. Specifically, we
solicited comment regarding two specific methods for the submission and
collection of information regarding eligibility for qualifying coverage
in an eligible employer-sponsored plan--the employee template and the
employer central database.
Comment: Many commenters questioned the criteria for using the
alternative verification process to verify household income; in
particular, commenters argued against the standard proposed Sec.
155.320(c)(3)(iv) that limits the ability of the Exchange to follow the
alternative verification process to situations in which tax data is not
available, family size or filing status has changed or is reasonably
expected to change, an applicant has filed for unemployment benefits,
or when an application filer attests that the tax filer's annual
household income has decreased or is reasonably expected to decrease
from tax data obtained by the Exchange by 20 percent or more. Comments
focused on the 20 percent threshold, which commenters believed was too
high, particularly given the relatively low incomes of the population
likely to request an eligibility determination for financial
assistance, and would thus result in a substantial group of tax filers
being unable to obtain advance payments of the premium tax credit
commensurate with their household income, regardless of whether they
were able to substantiate a lower income. Commenters supported a
percentage threshold lower than 20 percent or a different measure
altogether.
Response: We recognize that utilizing the 20 percent minimum would
result in a substantial number of tax filers who are unable to afford
coverage due to significant changes in income and that we should modify
our proposed rule so that an eligibility determination matches, as
closely as possible, a tax filer's true circumstances. We note that
section 1412(b)(2) of the Affordable Care Act describes that the
Secretary must provide procedures for making eligibility determinations
for advance payments of the premium tax credit, ``in cases where
information included with an application demonstrates substantial
changes in income * * * or other significant changes affecting
eligibility''. The statute outlines a minimum set of circumstances that
meet this standard; we interpret the statutory 20 percent or more
decrease as congressional direction that any decrease of that magnitude
must trigger an alternate verification process, but not to limit the
Secretary's discretion to identify other significant changes in income
that trigger an alternate verification process. We codified this
provision in the proposed rule at Sec. 155.320(c)(3)(iv), along with
the other minimum standards, and solicited comments as to whether this
was an appropriate standard, or whether we should establish a different
threshold.
Based on an analysis performed by the Secretary,\5\ a family of
four with household income of 200 percent of the FPL ($47,018 using
projected 2014 figures) is projected to have a total premium, after
advance payments, of $247 per month. A five percent decrease in income
from $47,018 is $44,667 (190 percent of the FPL), would correspond to a
total premium, after advance payments, of $217 per month, for a total
difference in premium of around $360 per year. In addition, while
advance payments are sensitive to every dollar of income, cost-sharing
reductions are not; consequently, even very small changes that move a
person across a threshold (150 percent FPL, 200 percent FPL, or 250
percent FPL) can be very significant. For example, based on the same
figures cited above, the difference in cost-sharing between a family at
190 percent FPL and a family at 200 percent FPL is $1,000 per year, due
to the change in eligibility for cost-sharing reductions at 200 percent
FPL. The difference is $2,000 around 250 percent FPL, which is the
upper limit for cost-sharing reductions based solely on household
income. We believe that these are significant changes, which will be
critical to recognize in order to ensure that eligible individuals can
afford coverage.
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\5\ http://www.healthcare.gov/law/resources/reports/premiums01282011a.pdf.
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Therefore, in this final rule, we specify that the Exchange must
use information other than tax data to verify income in cases in which
an applicant attests that a change has occurred or is reasonably
expected to occur, and as such, a tax filer's annual household income
has decreased or is reasonably expected to decrease from his or her tax
data. As noted above, we believe that any change in household income
constitutes a change in circumstances that meets the ``significant
changes affecting eligibility'' standard identified in section
1412(b)(2) of the Affordable Care Act, given the sensitivity of the
advance payment formula and the potential for large variations in cost-
sharing reductions with small shifts in income. This approach to
implementing section 1412(b)(2) is further reinforced by the fact that
requiring the Exchange to conduct an individualized analysis as to
whether each tax filer's circumstances constitute a ``significant
change'' in accordance with the statute would place a substantial
administrative burden on the Exchange; to conduct such case-by-case
analyses, the Exchange would need to apply different procedures to
subgroups of tax filers, specifically around cost-sharing reduction
thresholds. Overall, we believe that using this standard will increase
the accuracy of income verification, the accuracy of eligibility
determinations, and the equity of the process for tax filers without
significantly increasing the administrative burden on the Exchange.
We also make a change to another criterion for the alternate
verification process described in Sec. 155.320(c)(3)(iv)(B); we
include that when an applicant attests that members of the tax filer's
family have changed or are reasonably expected to change, he or she
qualifies for an alternate verification process. We add this provision
in order to account for a situation in which the family members are
different but the number of family members remains the same.
In Sec. 155.320(c)(3)(v), we describe the alternate verification
process for decreases in household income or situations in which tax
data are unavailable. We move the language from Sec.
155.320(c)(3)(ii)(C) of the proposed rule, which specified that the
Exchange accept an applicant's attestation of projected annual
household income, unless it was not reasonably compatible with tax
data, to this section, and replace ``reasonably compatible'' with a
standard of a decrease of ten percent or less from the tax data. We
redesignate
[[Page 18365]]
Sec. 155.320(c)(3)(v) of the proposed rule as Sec. 155.320(c)(3)(vi),
which specifies the verification process for larger decreases and
situations in which tax data are unavailable. Taken together, these
revisions address commenters' concerns regarding inequities in the
proposed verification process by ensuring that there are procedures
under which a tax filer can obtain advance payments of the premium tax
credit commensurate with their household income when changes have
occurred or are reasonably expected to occur, regardless of the size of
any such changes.
Comment: We received many comments recommending that HHS further
define the term ``reasonably compatible'', as used throughout proposed
Sec. 155.320(c) as the standard for assessing whether verification can
be considered complete, or if additional information is necessary.
Commenters suggested various approaches to establishing a more detailed
standard, including, in the case of income, the use of an acceptable
percentage of deviation between the amount reflected by the data and an
application filer's attestation. Others recommended that the Exchange
should consider an application filer's attestation to income reasonably
compatible with electronic data even if there is a difference in the
data and an application filer's attestation, as long as the difference
does not significantly impact eligibility. Some commenters recommended
that Exchanges maximize the use of self-attestation without further
verification, which would speak to setting the ``reasonably
compatible'' threshold at a higher level. Other commenters requested
that HHS establish a standard that allows for flexibility in
implementation, and a few commenters recommended removing the
``reasonably compatible'' standard altogether. A few commenters
recommended providing that the Exchange must always request additional
evidence with the goal of achieving a more accurate projection of
income or family size.
Response: When assessing comments recommending that HHS define the
``reasonably compatible'' standard proposed in Sec. 155.320(c), we
weighed our desire for Exchange flexibility with the goal of providing
greater consistency in income verification for applicants across
Exchanges and a more streamlined process, in order to reduce burden for
applicants and Exchanges. However, based on the comments received, we
recognize that there is a need to define a specific threshold within
which the Exchange would accept an applicant's attestation regarding
projected annual household income, as opposed to engaging in a more
burdensome process. Accordingly, as discussed in the previous response,
the final rule specifies that the Exchange will accept an applicant's
attestation to projected annual household income without further
verification if it is no more than ten percent below his or her tax
data. We believe that using this threshold will result in eligibility
determinations that are accurate while limiting the administrative
burden associated with completing additional verification processes for
smaller decreases in income. We believe that this is particularly
important given the age of available tax return information at the
point of open enrollment, as well as the volatility in income among
households that are likely to request an eligibility determination for
insurance affordability programs. In particular, we believe that it is
critical to focus the limited resources of Exchanges on ensuring that
larger changes are subjected to additional scrutiny.
In addition, we clarify that the process proposed in Sec.
155.320(c)(3)(i) for verification of family size for purposes of
eligibility for advance payments of the premium tax credit and cost-
sharing reductions follows the process specified in section 1411 of the
Affordable Care Act, which specifies that the Secretary verify family
size with the Secretary of the Treasury, and then implement alternative
procedures to the extent that a change has occurred or tax data are
unavailable.
First, in paragraph (c)(1)(i)(A), the Exchange will request tax
return data including data regarding family size. In paragraph
(c)(3)(i)(A), we specify that an applicant will attest to the
individuals that comprise an applicant's family for advance payments of
the premium tax credit and cost-sharing reductions. We add paragraph
(c)(3)(i)(B) to clarify that if an applicant attests that tax data
represents an accurate projection of a tax filer's family size for the
benefit year for which coverage is requested (that is, that no change
has occurred or is reasonably expected to occur), the Exchange must use
the family size information from the tax data to determine the tax
filer's eligibility for advance payments of the premium tax credit and
cost-sharing reductions. And in paragraph (c)(3)(i)(C), we specify that
if tax data are unavailable, or an applicant attests that a change has
occurred or is reasonably expected to occur, and as such, it does not
represent an accurate projection of a tax filer's family size for the
benefit year for which coverage is requested, the Exchange must accept
his or her attestation to family size without further verification,
unless it is not reasonably compatible with other information provided
by the applicant or in the records of the Exchange.
In paragraph (c)(3)(i)(C), we clarify that the assessment of
reasonable compatibility is not with respect to the tax data, as
paragraph (c)(3)(i)(C) is designed to address situations in which it is
already clear that tax data are unavailable or not representative. We
then maintain the provisions from the proposed rule specifying that if
information regarding family size is not reasonably compatible, the
Exchange must first utilize data obtained through other electronic data
sources, and if that is unsuccessful, follow the inconsistency process
in Sec. 155.315(f).
Comment: We received comments suggesting that HHS clarify aspects
of the income verification process in proposed Sec. 155.320; in
particular, commenters asked that the final rule specify the sequencing
of the process, so that a clear order for the execution of steps for
Medicaid, CHIP, and advance payments of the premium tax credit and
cost-sharing reductions is established. Commenters also asked that HHS
allow Exchanges greater flexibility around the use of electronic data
to verify household income. For example, one commenter recommended that
in the event an applicant's current income data places them well below
the income level for eligibility for advance payments of the premium
tax credit or cost-sharing reductions, the Exchange not be required to
also obtain the applicant's tax return data. Others questioned the
overall usefulness of available tax return data given its age, and
asked that Exchanges be permitted to look only at available current
income data sources to verify household income for all insurance
affordability programs.
Response: We acknowledge commenters' desire to further streamline
and simplify the eligibility and enrollment process by avoiding
unnecessary steps to verify applicant information. Sections 1402(f)(3),
1411(b)(3) and 1412(b)(1) of the Affordable Care Act provide that data
from the most recent tax return information available must be the basis
for determining eligibility for advance payments of the premium tax
credit and cost-sharing reductions to the extent such tax data is
available. HHS is working closely with Treasury and IRS to ensure that
such data is readily accessible by the Exchange, to assist in
facilitating the completion of an eligibility determination in a
single, online session. We believe that the regulation is not the place
to lay out
[[Page 18366]]
detailed, sequenced steps for verifying household income. As such, in
Sec. 155.320(c)(3)(ii), we have made changes to allow the Exchange
flexibility when sequencing the verification of annual household
income; we altered the text such that the Exchange may present the
applicant with his or her projected annual household income computed
from the tax return information prior to requiring an attestation from
the applicant or, in the alternative, to allow the Exchange to take an
attestation from the applicant regarding a tax filer's projected annual
household income and then verify whether the attestation is supported
by the tax return information described in Sec. 155.320(c)(3)(i).
Overall, we intend for the regulation to be neutral with regard to the
sequencing of operations, and will provide such operational details
through guidance.
Comment: Commenters asked HHS to clarify whether, when verifying
annual household income as described in proposed Sec. 155.320, the
Exchange must rely on a tax filer's attestation to make a final
determination of household income when the attestation and tax data are
reasonably compatible, or whether the Exchange must rely on tax data.
Response: We acknowledge commenters' concerns that the proposed
regulation text at Sec. 155.320(c)(3)(ii) does not clearly describe
the process the Exchange must follow in the event that the applicant
attests that the income in the tax data represents an accurate
projection of the household's projected annual household income. In
this final rule, we include a provision in Sec. 155.320(c)(3)(ii)(B)
which describes that, in this situation, the Exchange must determine
the tax filer's eligibility for advance payments of the premium tax
credit and cost-sharing reductions based on the income data from his or
her tax return.
Comment: A few commenters asked for clarification as to when it is
appropriate to accept self-attestation of income. We also received
comments asking for clarification on our use of self-attestations
throughout the verification processes described in Sec. 155.315 and
Sec. 155.320.
Response: The Exchange may accept an applicant's attestation of her
or her projected annual household income in a number of instances
during the income verification process; however, it is important to
note, that for purposes of verification of income for determining
eligibility for advance payments of the premium tax credit and cost-
sharing reductions, the Exchange will never accept such an attestation
without attempting to acquire tax data.Those instances in which the
Exchange may accept an attestation without further verification when an
application attests that as a result of a change or an expected change,
a tax filer's income has increased, by any amount, above the projected
annual household income calculated by the Exchange based on tax data,
as described in Sec. 155.320(c)(3)(iii); and when an applicant attests
that as a result of a change or an expected change, a tax filer's
projected annual household income has decreased or is reasonably
expected to decrease from the projected annual household income
calculated based on tax data by ten percent or less, as described in
Sec. 155.320(c)(3)(v).
In response to comments regarding the use of self-attestation in
the verification process, the processes described are designed to
confirm information to the extent necessary to provide eligibility. In
situations in which the Exchange uses self-attestation without further
verification as the basis of eligibility, we have determined that this
approach yields valid data and does not pose unacceptable levels of
risk. We believe that this approach is particularly important in order
to promote a seamless, real-time experience for as many applicants as
possible. It is also important to note that strong program integrity
protections will be in place and that all attestations will be provided
under penalty of perjury.
Comment: We received comments asking which procedures the Exchange
must follow when an individual's unverified income meets the Medicaid
or CHIP income threshold.
Response: As indicated in Sec. 155.320(c)(2)(ii) of the proposed
rule, if an individual's unverified current income meets the Medicaid
or CHIP income threshold, the Exchange would verify his or her
household income in accordance with Medicaid or CHIP rules specified in
42 CFR 435.948 and 42 CFR 435.952. Similarly, if an individual attests
to income in the Medicaid or CHIP eligibility range, the Exchange would
need to follow the procedures outlined in 42 CFR 435.948 and 42 CFR
435.952, since such individual would not be eligible for the
alternative verification process, as indicated in Sec.
155.320(c)(3)(iv). We maintain these provisions in this final rule.
Comment: We received several comments requesting greater
integration and alignment in standards and processes for verifying
family/household size and household income across insurance
affordability programs. Some asked for States to be given flexibility
to align standards across insurance affordability programs. Commenters
also recommended specific changes facilitating a closer alignment of
the rules for determining family/household size and household income
between Medicaid, CHIP and advance payments of the premium tax credit
and cost-sharing reductions. Some recommended full integration,
utilizing identical standards across insurance affordability programs.
Response: Throughout Sec. 155.320(c), the standards for
verification of family size and income for determining eligibility for
advance payments of the premium tax credit and cost-sharing reductions
closely follow the rules set forth in sections 1411 and 1412 of the
Affordable Care Act and section 36B of the Code. We sought to align as
closely as possible with the standards established for Medicaid and
CHIP, but given statutory standards, we were limited in the degree of
alignment we could achieve.
With respect to family/household income and household size, we note
that Medicaid/CHIP and advance payments both start with the family size
and income counting rules in section 36B of the Code. From there, there
are three key differences in how income must be measured in Medicaid/
CHIP and for advance payments and cost-sharing reductions. First, as
noted in the proposed rule, section 1902(e)(14)(H) of the Social
Security Act, as added by section 2002 of the Affordable Care Act,
specifies that Medicaid eligibility will continue to be based on
``point-in-time'', or current monthly income, while eligibility for
advance payments of the premium tax credit and cost-sharing reductions
is based on annual income. This is reflected in 42 CFR 435.603(h)(1).
Second, 42 CFR 435.603(b) and (f) specifies that in certain situations,
Medicaid and CHIP follow different household composition rules from
those in section 36B of the Code, which then lead to counting income
for a different group than would be counted for advance payments of the
premium tax credit and cost-sharing reductions. These situations are
discussed in detail in the preamble associated with 42 CFR 435.603.
Third, 42 CFR 435.603(e) specifies that there are some exceptions
to the use of the income counting rules of section 36B of the Code for
purposes of eligibility for Medicaid and CHIP. These include special
treatment for lump sum payments, scholarships, awards, or fellowship
grants used for educational purposes and not for living expenses, and
certain types of American Indian and Alaska Native income.
[[Page 18367]]
Aside from the different time standard, in the majority of cases,
the rules for counting household income and household/family size are
the same across insurance affordability programs. In addition, we note
that 42 CFR 435.603(i) specifies that in a situation in which an
applicant is over the income threshold for Medicaid, but is under the
income threshold for advance payments of the premium tax credit, the
Medicaid agency will determine Medicaid eligibility using section 36B
rules, which would likely result in Medicaid eligibility in most
situations. We have also added an additional provision in Sec.
155.345(e), which is discussed in the comment and response associated
with that section.
Lastly, we note that throughout subpart D, we use ``household
size'' for purposes of Medicaid and CHIP, in order to align with
Medicaid and CHIP regulations, and ``family size'' for purposes of
advance payments of the premium tax credit and cost-sharing reductions,
in order to align with Treasury regulations. To clarify this, we added
Sec. 155.320(c)(3)(viii), which specifies that for purposes of advance
payments of the premium tax credit and cost-sharing reductions,
``family size'' means family size as defined in section 36B(d)(1) of
the Code.
Comment: We received a number of comments related to current income
sources to be used by the Exchange in verifying household income.
Commenters asked us to define those current income sources that the
Exchange will use in the process proposed in Sec. 155.320(c)(1)(ii).
Others asked whether current income information would be available via
the Federally-managed data services hub.
Response: Under Sec. 155.320(c)(1)(ii) of the proposed and this
final rule, the Exchange must obtain the most current income data from
those data sources described in existing Medicaid regulations at 42 CFR
435.948(a). In order to access this current income data, we anticipate
that the Exchange will leverage State Medicaid and CHIP agencies'
existing relationships with current income sources, but we are also
exploring the potential for supporting connections to sources of
current income data through the data services hub.
Comment: Several commenters had specific questions related to
services available to support the income verification process through
the data services hub. Specifically, commenters asked which data
elements from the tax return would be available from the IRS via the
data services hub, and recommended that individual data elements (for
example, wages, profit and loss from business, deductions) would be
more useful in verifying household income than a single MAGI data
element.
Response: We are working to identify those services which will be
available to Exchanges to support the income verification process and
will provide further detail in future guidance. We note that the
section 6103(l)(21) of the Code identifies general categories of tax
data that will be available for purposes of determining eligibility in
insurance affordability programs. In addition, these categories are
discussed in the response to question 8 in HHS' November 29, 2011
document titled ``State Exchange Implementation Questions and
Answers''.\6\
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\6\ http://cciio.cms.gov/resources/files/Files2/11282011/exchange_q_and_a.pdf.pdf.
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Comment: We received comments related to the treatment of American
Indian and Alaska Native income. Some asked whether current State
arrangements around the treatment of such income will be allowed to
stand under the Exchange; others asked that the exemption for American
Indian and Alaska Native income be referenced in the Exchange final
rule and that materials be available to consumers so they can
understand the availability of such exemptions.
Response: In Sec. 155.320(c)(1)(ii) of the proposed rule, we
reference 42 CFR 435.603(d) for purposes of income eligibility for
Medicaid, which incorporates the applicable income exemptions for
American Indians and Alaska Natives described under 42 CFR
435.603(e)(3). This regulatory reference addresses the treatment of
these exemptions and the future of existing arrangements with regard to
American Indian and Alaska Native income with respect to Medicaid. We
note that these income exemptions do not apply when verifying annual
household income for advance payments of the premium tax credit and
cost-sharing reductions, because the Affordable Care Act establishes
specific definitions of ``household income'' and ``MAGI'' to use for
determining eligibility for these benefits. Because of the statutory
limits on the definition of household income for advance payment of
premium tax credits and cost-sharing reductions, this final rule
maintains the proposal to follow the rules described in section 36B of
the Code.
Comment: We received a comment recommending that HHS clarify that,
for purposes of obtaining data regarding MAGI-based income for purposes
of Medicaid and CHIP eligibility, the Exchange will initially request
data from data sources described in 42 CFR 435.948(a), not from the
applicant.
Response: The specific sequencing of the process for collecting and
verifying relevant information is subject to future operational
analysis, and that we anticipate providing future guidance on this
topic, including through the model electronic application.
Comment: We received a number of comments related to proposed Sec.
155.320(c)(4), which provides that the Exchange must provide education
and assistance to an application filer regarding the family/household
size and household income verification process. Several commenters
suggested specific standards for the format and content of consumer
education and assistance materials. Some commenters asked that a
Federal standard for such materials be developed for Exchanges, and
others advised that HHS encourage Exchanges to provide information
specific to the alternative income verification process to ensure a
smooth verification process.
Response: There are several provisions throughout this final rule
which provides that the Exchange must provide consumer tools and
education related to the eligibility and enrollment process, in
addition to the standard described in Sec. 155.320(c)(4), including a
calculator and other tools, described in Sec. 155.205, and information
regarding advance payments of the premium tax credit, described in
Sec. 155.310(d)(2)(iii). We expect to issue future guidance on this
topic.
Comment: We received comments asking if the Exchange would have
access to all child support data; and if so, suggesting that the
Exchange must abide by specific data safeguards.
Response: The Exchange would not be required to have access to
child support data for purposes of verifying annual household income.
Regardless, for data collected by the Exchange, privacy and security
protections, described in Sec. 155.260 of this final rule, and
standards for electronic transactions, described in Sec. 155.270 of
this final rule, would also apply.
Comment: Several commenters supported the proposal in Sec.
155.320(d) for the Exchange to utilize self-attestation by the employee
to verify enrollment in an eligible employer-sponsored plan. One
commenter stated that HHS should give States the flexibility to use
self-attestation or to use other methods of verification.
Response: We accept these comments and maintain this provision in
the final rule. Section 1411(d) gives authority to the Secretary to
determine the appropriate means to verify certain
[[Page 18368]]
information that the applicant must submit in accordance with section
1411(b)(4). We note that Sec. 155.315(h) of this subpart allows State
flexibility, subject to approval by HHS, based on a finding that the
alternative approach meets certain standards described in that section.
Comment: Several commenters asserted that individuals enrolled in
continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act (COBRA) or in an eligible employer-sponsored plan
should have the opportunity to be conditionally determined eligible for
advance payments of the premium tax credit and cost-sharing reductions,
subject to termination prior to enrollment in a QHP. These commenters
reasoned that individuals should not be forced into uninsured status in
order to obtain a determination of eligibility for tax credits and risk
remaining uninsured if they are found ineligible and the enrollment
period for electing COBRA or coverage in an eligible employer-sponsored
plan passes.
Response: Section 36B(c)(2)(C)(iii) of the Code states that an
individual who is enrolled in an eligible employer-sponsored plan is
not eligible for advance payments of the premium tax credit; because of
the statutory prohibition on providing cost-sharing reductions for any
month that is not a month for which the enrollee is eligible for
premium tax credits, this bar also applies to eligibility for cost-
sharing reductions. However, while an individual must terminate
coverage in his or her employer-sponsored plan prior to the period for
which he or she actually receives advance payments of the premium tax
credit and/or cost-sharing reductions, we clarify that the individual
need not terminate coverage to receive an eligibility determination
that he or she is eligible to receive these payments and reductions.
Accordingly, we have amended the language in Sec. 155.320(d)(1) of
this final rule to clarify that an attestation regarding enrollment in
qualifying coverage in an eligible employer-sponsored plan should be
based on the applicant's reasonable expectation of enrollment in the
benefit year for which coverage is requested.
Comment: One commenter noted that the language in proposed Sec.
155.320(d) seems to indicate that the decision whether or not the
Exchange must verify beyond an applicant's attestation regarding
enrollment in an eligible employer-sponsored plan is within the
discretion of an Exchange, and requested clarification regarding
whether this was an intentional wording.
Response: We have amended the regulatory text to reflect the
standard that an Exchange must verify an applicant's attestation using
electronic data sources to the extent that an applicant's attestation
is not reasonably compatible with other information provided by the
applicant or in the records of the Exchange.
This change is consistent with equivalent amendments made in this
subpart, and provides that, if the Exchange finds that information
provided by an applicant is not reasonably compatible, it must examine
any information available through electronic data sources. As discussed
in the proposed rule, examining data sources, when available, will help
minimize the need to request paper documentation from applicants, and
the burden for Exchanges to process such documentation. A more detailed
explanation of the change from ``may'' to ``must'' can be found in the
comment and response to Sec. 155.315. We also plan to release guidance
for States regarding electronic data sources to support this
verification.
Comment: Commenters suggested a variety of operational solutions
for carrying out the verification of an applicant's eligibility for
and/or enrollment in an eligible employer-sponsored plan. These
comments were largely in response to the accompanying preamble
discussion regarding the two potential data sources an Exchange may use
to support this verification--the employer/employee template and the
central database. Several commenters expressed support for or against
the template and central database options. A large group consisting of
consumer advocacy groups, a labor union and a think tank expressed
support for the standard template option. Each of these commenters
added that employees should not be required to provide information
regarding minimum value because this information is not readily
accessible to employees. One commenter requested that HHS provide that
employers must submit information regarding eligibility for and
enrollment in employer-sponsored plans to Exchanges on an annual basis.
One commenter said HHS should provide States with the option to develop
algorithms to determine who can be expected to have access to
qualifying coverage in an eligible employer-sponsored plan using the
size of the applicant's employer and industry type instead of creating
a new database. Commenters also supported the goal of leveraging
existing data sources for the purposes of verifying eligibility for
qualifying coverage in an eligible employer-sponsored plan. One
commenter said that HHS should give States the flexibility to verify
eligibility for qualifying coverage in an eligible employer-sponsored
plan using already-existing data. One commenter stated that HHS should
have employee W-2 forms available as a verification source.
Response: We continue to consult with the Departments of Labor and
Treasury regarding the optimal solution for gathering information for
the purposes of verification of eligibility for qualifying coverage in
an eligible employer-sponsored plan and will issue guidance on this
topic. Both the template and database options we described in the
proposed rule are being considered as operational solutions. We are
also considering ways in which an individual could gather information
from his or her employer for the purposes of this verification. A
combination of these methods could provide the most accurate and
reliable results, while gathering information from both of the relevant
information sources--employees and employers. We are also considering
additional options in which employees seeking coverage could provide
other sources of documentation from his or her employer that could
verify eligibility. We plan to issue guidance outlining one or more
possible methods for comment that will help guide the collection of
information necessary to verify eligibility for qualifying coverage in
an eligible employer-sponsored plan. However, it should be noted that
any database option may rely on voluntary submission of information
regarding employee eligibility for qualifying employer-sponsored
coverage by employers. Further, HHS acknowledges that building the
functionality required to collect and retain information regarding
employer-sponsored insurance coverage will be time and resource-
intensive, and is therefore is considering options for an interim
approach for verification of eligibility for qualifying coverage in an
eligible employer-sponsored plan. We plan to describe these interim
options in forthcoming guidance. We also note that it is anticipated
that initial guidance under 6103(l)(21) of the Code will not provide
for sharing the contents of an applicant's Form W-2 with the Exchange.
Comment: Some commenters said the Federal government should perform
verification of eligibility for qualifying coverage in an eligible
employer-sponsored plan as a service to States. These commenters cited
limitations on
[[Page 18369]]
the ability of States to perform this verification. One commenter said
that States with no individual income tax, specifically, would have
difficulty making affordability determinations.
Response: In the State Exchange Implementation Questions and
Answers released on November 29, 2011, we indicated that we are
exploring how the Federal government could manage services for
verification of employer-sponsored minimum essential coverage. We note,
though, that we do not believe that the absence of an individual State
income tax return poses an obstacle to computing affordability, since
the income verification process in Sec. 155.320(c)(3) of this final
rule does not require the use of State income tax information.
Comment: One commenter stated that, in the case of an inconsistency
between an applicant's attestation and internal Exchange records, the
burden to produce further documentation should be on the employee, not
the employer.
Response: We believe our proposed regulation followed the
commenter's recommendation because the employee is the applicant.
Section 155.315(f)(2)(ii) of this final rule describes that an
applicant must provide further documentation if the applicant's
attestation is inconsistent with other information sources.
Comment: One commenter requested that HHS must establish two
distinct processes for the determination of eligibility for advance
payments of the premium tax credit by Exchanges under proposed Sec.
155.320 and for the assessment of employer penalties by the Treasury.
Response: The statute makes clear that the two processes are
distinct. Under sections 1411 and 1412 of the Affordable Care Act, the
Exchange will make eligibility determinations for advance payments of
the premium tax credit and cost-sharing reductions, notify employers
that a payment may be assessed and that the employer has a right to
appeal to the Exchange, and provide information to the Treasury. The
assessment of shared responsibility payments under section 4980H of the
Code is within the jurisdiction of the Treasury.
Comment: One commenter concurred with the language of Sec. 155.320
of the Exchange Eligibility proposed rule, which provides that the
Exchange must verify information for only those applicants seeking
eligibility determinations for insurance affordability programs in
order to minimize multiple employer interactions with the Exchange.
Response: Verification of eligibility for qualifying coverage in an
eligible employer-sponsored plan is necessary only when indicated as
necessary in accordance with the statute. An Exchange is not required
to verify eligibility for qualifying coverage in an eligible employer-
sponsored plan for an applicant who did not request an eligibility
determination for all insurance affordability programs.
Comment: One commenter asserted that HHS should declare that all
employer-sponsored insurance offered to American Indians and Alaska
Natives fails the affordability and minimum value standards. The
commenter reasoned that information regarding affordability and minimum
value will be difficult for this type of applicant to provide. In
addition, the commenter stated that if an individual is eligible to
receive services through the Indian Health Service (IHS), including
eligibility for services from an IHS facility, or for services from a
tribe or tribal organization, or Urban Indian Organization, the
Exchange should not attempt to verify an attestation regarding
eligibility for qualifying coverage in an eligible employer-sponsored
plan because this population is exempt from the standard to maintain
minimum essential coverage.
Response: While we recognize that certain data elements requested
from applicants for the purposes of this verification may be
challenging to obtain, we believe that a wholesale exception for
American Indians and Alaska Natives is not warranted or permissible
under the statute, and are not providing for such an exception in this
final rule.
Comment: One commenter requested clarification on the issue of
full-time employment and its relationship to eligibility for qualifying
coverage in an eligible employer-sponsored plan. Specifically, the
commenter asked whether full-time status will be requested during the
verification process, whether the Exchange will consider it when making
eligibility determinations for advance payments of the premium tax
credit, and whether the affordability test depends on whether the
applicant is a full-time employee. In addition, the commenter requested
clarification regarding notification and how an Exchange should manage
eligibility determinations for applicants with multiple employers.
Response: Section 1411(b)(4)(B) of the Affordable Care Act
specifies that an applicant must provide information including,
``whether the enrollee or individual is a full-time employee.'' With
that said, the affordability test and the determination of whether an
applicant is eligible to receive advance payments of the premium tax
credit and/or cost-sharing reductions is not dependent on the full-time
status of the employee. Rather, this information is relevant for
Treasury's determination as to whether a shared responsibility payment
under section 4980H of the Code applies to an employer. Also, we note
that in the case of an applicant who has more than one employer, the
Exchange will evaluate information from existing data sources regarding
all of the applicant's employers to determine eligibility for
qualifying coverage in an eligible employer-sponsored plan.
Comment: One commenter requested clarification regarding whether
the Exchange will use tax data to ensure affordability of coverage for
employees under proposed Sec. 155.320. The commenters asked whether
the employer may use wage data, instead of household income data, in
its affordability determination.
Response: The Exchange will use the projected annual household
income verified through the process described in Sec. 155.320(c)(3) of
this final rule to compute the affordability of available coverage
through an eligible employer-sponsored plan. The question of whether an
employer may use wage data in determining whether its offered coverage
meets affordability criteria is beyond the scope of this rule, and is
within the authority of the Department of the Treasury. In September
2011, the Department of the Treasury released IRS Notice 2011-73 (2011-
40 I.R.B. 474) requesting comments on a potential safe harbor
permitting employers to use an employee's W-2 wages in determining the
affordability of employer-sponsored minimum essential coverage for
purpose of the employer shared responsibility provisions under Code
section 4980H. In February 2012, the Department of the Treasury
released Notice 2012-17 (issued jointly with HHS and the Department of
Labor) confirming that it intends to issue proposed regulations or
other guidance providing for this safe harbor.\7\
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\7\ Frequently Asked Questions from Employers Regarding
Automatic Enrollment, Employer Shared Responsibility, and Waiting
Periods. February 9, 2012: http://www.dol.gov/ebsa/newsroom/tr12-01.html.
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Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.320 of the
proposed rule, with the following modifications. In paragraph
(c)(2)(i)(A), we adopted new language to describe the verification of
household size for
[[Page 18370]]
Medicaid and CHIP, in order to align with the Medicaid Eligibility
final rule. We redesignated paragraph (c)(3)(i)(B) as paragraph
(c)(3)(i)(C), and added paragraph (c)(3)(i)(B), which clarifies that if
an applicant attests that tax data represents an accurate projection of
a tax filer's family size for the benefit year for which coverage is
requested, the Exchange must use the family size information from the
tax data to determine the tax filer's eligibility for advance payments
of the premium tax credit and cost-sharing reductions. We also added
paragraphs (c)(3)(i)(C) and (D), which clarifies that this paragraph
applies when tax data are unavailable or when a change has occurred or
is reasonably expected to occur such that the data does not represent
an accurate projection of family size; and clarifies that the
assessment of reasonable compatibility is with respect to data other
than that from the tax return.
We also make a technical change to Sec. 155.320(c)(2)(i)(B) to
state that the Exchange ``must,'' rather than ``may,'' examine
electronic data sources if information is found to be not reasonably
compatible. This change was made in order to align with verification of
other applicant information, and so that in the event the Exchange
accepts an applicant's attestation without further verification but
such attestation is not reasonably compatible with other information
provided by the application filer or contained in the records of the
Exchange, the Exchange must examine available data sources to verify
the attestation. If the information in the data sources cannot be used
to verify the attestation, the Exchange must request additional
documentation in accordance with Medicaid regulations at 42 CFR
435.952. This change was also made in order to align with changes made
to the Medicaid regulations regarding verification of household size.
We redesignated paragraph (c)(3)(ii)(B) as paragraph (c)(3)(ii)(C),
and removed the phrase ``is requested and accept the application
filer's attestation without further verification, except as provided in
paragraph (c)(3)(ii)(C) of this section'' in order to clarify that the
Exchange must proceed in accordance with the procedures in paragraph
(c)(3)(ii)(C) after receiving such an attestation.
We also added paragraph (c)(3)(ii)(B), which provides that the
Exchange must request the applicant to attest regarding his or her
projected annual household income. We have also added paragraph
(c)(3)(ii)(C) which clarifies that if an applicant's attestation
indicates that the tax data represents an accurate projection of a
family's household income for the benefit year for which coverage is
requested, the Exchange must use the household income information from
the tax data to determine his or her eligibility for advance payments
of the premium tax credit and cost-sharing reductions. In paragraph
(c)(3)(iii)(B), we changed the term ``may'' to ``must'' to specify that
if the Exchange finds that information provided by an applicant is not
reasonably compatible, it must examine any information available
through other electronic data sources. In paragraph (c)(3)(iv)(A), we
replaced the phrase ``this is as a result of an individual not being
required to file'' with ``an individual was not required to file.'' In
paragraph (c)(3)(iv)(B), we added that the alternate verification
process is also available for a tax filer whose family composition has
changed or is reasonably expected to change; we also added the phrase
``or members of the tax filer's family have changed or are reasonably
expected to change.'' In paragraph (c)(3)(iv)(C), we removed, ``by more
than 20 percent,'' and clarified that this criterion is based on an
applicant's attestation that a change has occurred or is reasonably
expected to occur. We added a paragraph (c)(3)(iv)(D) to allow a tax
filer to qualify for the alternative verification process if the
applicant attests that the tax filer's filing status has changed or is
reasonably expected to change for the benefit year for which the
applicants in his or her family are requesting coverage. Omitting this
provision from the proposed rule was an oversight; this basis for use
of an alternate income determination process is authorized in section
1412(b)(2) of the Affordable Care Act.
We removed proposed paragraph (c)(3)(vi); given changes made to
this section of the regulation, this paragraph was no longer necessary.
We redesignated proposed paragraph (c)(3)(v) as paragraph (c)(3)(vi),
and added a new paragraph (c)(3)(v). In paragraph (c)(3)(v) of the
final rule, we specified that if a tax filer qualifies for an alternate
verification process and the applicant's attestation to projected
annual household income is no more than ten percent below the annual
household income computed from tax data, the Exchange must accept his
or her attestation without further verification. In revised paragraph
(c)(3)(vi), we specified that the process in proposed paragraph
(c)(3)(vi) applies if a tax filer qualifies for an alternate
verification process and the applicant's attestation to projected
annual household income is greater than ten percent below the annual
household income computed from tax data, or if tax data are
unavailable.
In paragraph (c)(3)(vi)(C), we clarified a reference to Sec.
155.315(f) to include paragraphs (f)(1)-(4), which includes the 90 day
period during which an individual may either present satisfactory
documentary evidence or otherwise resolve the inconsistency. We also
added paragraph (c)(3)(vi)(F), to describe that if, at the end of the
90 day period the Exchange is unable to verify the applicant's
attestation and the tax data described in (c)(3)(ii)(A) is unavailable,
the Exchange must notify that applicant and discontinue the advance
payments and cost-sharing reductions. We added this paragraph in order
to explicitly describe the procedures the Exchange must follow when
there is no data on which to rely at the conclusion of the 90 day
period.
We also added paragraphs (c)(3)(vii) and (c)(3)(viii), which
clarify that the terms ``household income'' and ``family size'' in
paragraph (c)(3) mean household income as specified in section
36B(d)(2) of the Code, and family size as specified in section
36B(d)(1) of the Code, respectively. To clarify the process for
verifying eligibility for qualifying coverage in an eligible employer-
sponsored plan tracks, we amended paragraph (d)(1) to state that the
Exchange must also verify whether an applicant reasonably expects to be
enrolled in an eligible employer-sponsored plan for the benefit year
for which coverage is requested. We amended paragraph (d)(2) by
changing ``may'' to ``must'', which provides that an Exchange must
obtain data from electronic data sources to verify an applicant's
attestation that he or she is not enrolled in an eligible employer-
sponsored plan when an applicant's attestation is not reasonably
compatible with other information provided by the applicant or in the
records of the Exchange. We also added the word ``electronic'' in
paragraph (d)(2) to create consistency with equivalent provisions in
the subpart.
We made several technical corrections. In paragraph (a)(2), we also
changed the reference in Sec. 155.315 from paragraph (e) to (h). In
paragraphs (c)(3)(i)(C) and (c)(3)(ii)(C), we clarified that when an
applicant attests that tax return data is not representative of family
size or household income for the benefit year for which coverage is
requested, it is as a result of a change in circumstances, which aligns
with section 1412 of the Affordable Care Act. In paragraph
(c)(3)(iii)(A), we added ``in accordance with paragraph (c)(3)(ii)(B).
Proposed paragraph (c)(3)(iv)(D) was
[[Page 18371]]
redesignated as paragraph (c)(3)(iv)(E). In paragraph (c)(3)(vi)(E), we
renumbered the reference to Sec. 155.310(f) to Sec. 155.310(g), and
the reference to Sec. 155.330(e)(1) through (e)(2) to Sec.
155.330(f). Throughout paragraph (c)(3), we changed references to
ensure that the paragraph consistently referred to the tax filer for
verification of household income for purposes of advance payments of
the premium tax credit and cost-sharing reductions, in order to align
with the eligibility standards. We made several changes to paragraph
(f) to align with the Medicaid final rule. In paragraph (c)(2)(i)(A),
we changed references to the Medicaid Eligibility final rule to account
for renumbering. We also added the reference to 42 CFR 435.945 to
paragraph (c)(2)(ii). Throughout the section, as in the rest of the
subpart, we replaced language regarding application filers providing
attestations with references to applicants providing attestations,
since the language in Sec. 155.300(c) provides overarching
clarification that attestations for applicants can be provided by
application filers.
g. Eligibility Redetermination During a Benefit Year (Sec. 155.330)
In Sec. 155.330, we outlined procedures for redeterminations
during a benefit year. We proposed to rely primarily on the enrollee to
provide the Exchange with updated information during the benefit year,
and solicited comments as to whether there should be an ongoing role
for Exchange-initiated data matching beyond what was proposed in the
proposed rule. We also solicited comments on whether the Exchange
should offer an enrollee an option to be periodically reminded to
report any changes that have occurred.
We proposed that the Exchange redetermine the eligibility of an
enrollee in a QHP during the benefit year in two situations: first, if
an enrollee reports updated information and the Exchange verifies it;
and second, if the Exchange identifies updated information through
limited data matching to identify individuals who have died or gained
eligibility for a public health insurance program.
We also proposed that an individual who enrolls in a QHP with or
without advance payments of the premium tax credit or cost-sharing
reductions must report any changes to the Exchange with respect to the
eligibility standards specified in Sec. 155.305 within 30 days of such
change. Additionally, we proposed that the Exchange use the
verification procedures at the point of initial application for any
changes reported by an individual prior to using the self-reported data
in an eligibility determination. We solicited comments on whether to
allow the Exchange to limit those changes on which an individual must
report, to changes in income of a certain magnitude. We noted that this
provision would have no effect on whether an individual was liable for
repayment of excess advance payments of the premium tax credit at
reconciliation.
We also proposed that the Exchange periodically examine certain
data sources that are used to support the initial eligibility process
to identify death and eligibility determinations for Medicare,
Medicaid, CHIP, or the BHP, if applicable. We proposed to generally
limit proactive examination to these pieces of information because of
the reliability of these data sources and because the identified
information provides clear-cut indications of ineligibility for
enrollment in a QHP and advance payments of the premium tax credit and
cost-sharing reductions.
We further proposed to allow the Exchange to make additional
efforts to identify and act on changes that may affect an enrollee's
eligibility to enroll in a QHP to the extent that HHS approves a plan
to modify the process.\8\ We indicated that such approval would be
granted if HHS finds that a modification would reduce the
administrative costs and burdens on individuals while maintaining
accuracy and minimizing delay, that such changes would not undermine
coordination with Medicaid and CHIP, and that any applicable provisions
related to the confidentiality, disclosure, maintenance, or use of
information will be met.
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\8\ This provision is proposed in the Exchange proposed rule at
76 FR 41866 (July 15, 2011) and is addressed in this final rule at
Sec. 155.330(d)(2).
---------------------------------------------------------------------------
We solicited comments regarding whether and how we should approach
additional data matching, whether the Exchange should modify an
enrollee's eligibility based on electronic data in the event that he or
she did not respond to a notice regarding the updated information, and
whether there are other procedures that could support the goals of the
redetermination process for changes during the benefit year.
To the extent that the Exchange verifies updated information
reported by an enrollee or identifies updated information through data
matching, we proposed that the Exchange determine the enrollee's
eligibility and provide an eligibility notice in accordance with the
process described in Sec. 155.305 and Sec. 155.310, respectively.
Additionally, we proposed that changes resulting from a redetermination
during the benefit year be effective for the first day of the month
following the notice of eligibility determination, and proposed to
allow for an exception, subject to the authorization of HHS, in which
the Exchange could establish a ``cut-off date'' for changes resulting
from a redetermination during the coverage year. We solicited comment
as to whether this should or should not necessitate an authorization
from HHS, and if there should be a uniform timeframe across all
Exchanges. In addition, we solicited comment as to whether this is the
appropriate policy for the effective date for changes.
Finally, we proposed that if the eligibility determination results
in an individual being ineligible to continue his or her enrollment in
a QHP through the Exchange, the Exchange maintain his or her
eligibility for enrollment in a QHP through the Exchange for a full
month after the month in which the determination notice is sent.
However, as soon as eligibility for insurance affordability materially
changes, we proposed that the Exchange discontinue advance payments of
the premium tax credit and cost-sharing reductions in accordance with
the effective dates specified in paragraphs (e)(1) and (e)(2). We
solicited comment on this topic, as well as on approaches to ensuring
that transitions between insurance affordability programs do not create
coverage gaps for individuals.
Comment: We received a number of comments regarding
redeterminations conducted during the benefit year, as proposed in
Sec. 155.330. While several commenters were supportive of the
opportunity for an enrollee to have his or her eligibility redetermined
prior to the annual redetermination, other commenters suggested that we
limit or eliminate eligibility redeterminations during the benefit year
in order to limit movement for enrollees between different insurance
affordability programs and QHPs.
Response: We feel it is important for the Exchange to accept and
identify changes to help ensure that an enrollee's eligibility reflects
his or her true circumstances, which will help minimize repayment of
excess advance payments at reconciliation when income increases,
increase the affordability of coverage when income decreases, and
improve program integrity. Therefore, we maintain in the final rule the
opportunity for eligibility redeterminations during the benefit year.
Comment: Of those entities that commented on the process for
handling
[[Page 18372]]
changes during the benefit year described in proposed Sec. 155.330, a
number suggested limiting the scope of changes on which enrollees must
report; these commenters stated that requiring reporting of any and all
changes potentially impacting eligibility would substantially increase
the administrative burden on both the Exchange and on enrollees. Many
commenters recommended clarifying that an enrollee in a QHP who is not
receiving advance payments of the premium tax credit or cost-sharing
reductions would not be required to report changes in their household
income or access to minimum essential coverage, as these are not
considered when financial assistance is not present. Other commenters
suggested limiting the reporting of changes in income; some recommended
that enrollees be allowed and encouraged, but never required, to report
changes in income, while others were in favor of a establishing a
threshold for the reporting of income changes. Generally, those
commenters who suggested limiting the changes that individuals must
report also suggested that enrollees should be encouraged but not
required to report all other changes impacting eligibility, such as
changes in income and family size.
Response: In response to commenters' suggestions, we have altered
Sec. 155.330 in this final rule regarding the policy of reporting of
changes during the benefit year. First, we clarify that the Exchange
may not require an enrollee who did not request an eligibility
determination for insurance affordability programs to report changes
related to eligibility for insurance affordability programs, including
changes in income or access to minimum essential coverage. We clarify
that we mean an enrollee who, as of his or her most recent interaction
with the Exchange, has not requested an eligibility determination for
insurance affordability programs. In response to comments regarding
which changes an enrollee must report, we amended the regulation text
in the final rule to reflect different standards for changes related to
income. As a result, we maintain that an individual must report a
change related to eligibility for enrollment in a QHP through the
Exchange (that is a change in residence, incarceration or citizenship
and lawful presence) within 30 days of such change; however, we allow
the Exchange to establish a reasonable threshold below which an
individual is not required to report a change in income. We believe
that allowing the Exchange to limit the changes the enrollee must
report will reduce confusion for enrollees and administrative burden on
the Exchange, while still ensuring that significant changes are
captured. With that said, we clarify that this provision does not allow
the Exchange to not process changes in income that are reported by
enrollees, regardless of whether they meet the threshold.
Comment: In response to our request for comment in this area, we
received comments asking that Exchanges periodically remind individuals
to report changes impacting their eligibility. We also received
comments recommending that the Exchange provide education regarding
what changes must be reported and how the reporting of changes may
impact reconciliation.
Response: We have added a provision at paragraph Sec.
155.330(c)(2) of this final rule specifying that the Exchange must
provide periodic electronic notifications regarding the standards for
reporting changes to an enrollee who has elected to receive electronic
notifications, unless he or she has declined to receive such periodic
electronic notifications. We believe this will complement the provision
allowing Exchanges to limit those changes in income an enrollee must
report, by helping ensure that consumers are informed of the impact and
importance of reporting any change to the Exchange during the benefit
year. In addition, we believe that electronic communications will be
minimally burdensome for the Exchange and for enrollees. Exchanges can
determine the timing and frequency of such notices.
Comment: A large number of commenters supported our policy proposed
at Sec. 155.330(c) directing Exchanges to periodically initiate
limited data matches to identify changes in enrollees' eligibility. A
few commenters asked that we preserve Exchange flexibility to expand
the scope of data matches and others asked that we provide that
Exchanges must expand data matches to include income and other data;
these commenters noted that such an expansion would help decrease the
burden on enrollees to report changes and to decrease inaccuracy when
enrollees fail to report. However, some commenters were against any
Exchange-initiated data matches, including the proposal to allow
Exchanges flexibility to expand the scope of data matches with HHS
approval. These commenters stated that such data matches would increase
movement between programs for enrollees; they also believe that
enrollees are in the best position to report changes impacting their
eligibility.
Response: While we acknowledge commenters' calls for Exchange
flexibility to expand data matching, we believe that allowing for
unlimited data matching without the application of specific standards
would be undesirable. Therefore, in the final rule, we maintain the
flexibility provision we proposed in the paragraph redesignated in this
final rule as Sec. 155.330(d)(2), with one change: we do not require
HHS approval to expand data matching, but provide that the Exchange
must adhere to specific standards. We also adopt new procedures in this
final rule around the verification of data obtained through such
expanded data matches, which is explained in more detail in comment
response below. Together, these changes will reduce burden for the
Exchange and allow the Exchange to take steps to increase the accuracy
of eligibility determinations as technology and data sources evolve;
furthermore, the Exchange must ensure that such data matches would
reduce administrative costs and burdens on individuals, maintain
accuracy, minimize delay and would not undermine coordination with
Medicaid and CHIP.
Comment: We received a number of comments on the provision proposed
in Sec. 155.330(d), related to the verification process and enrollee
notification following the Exchange identifying a change that affects
eligibility. As noted previously, some commenters objected to any
Exchange-initiated data matching; these concerns were based in part on
discomfort with the Exchange making changes to an enrollee's
eligibility in cases in which the enrollee did not respond to a notice
regarding the change. Some suggested that the Exchange verify changes
reported or identified through data matching in accordance with the
standards proposed in Sec. 155.315 and Sec. 155.320. Several
commenters suggested that enrollees be given advance notice of changes
identified through data matching and that they be able to affirm all
changes prior to the Exchange using the new information. A number of
commenters recommended that the notice proposed in Sec. 155.330(d)
contain a right to appeal.
Response: For changes in eligibility identified by the Exchange
through data matching, the procedures for notifying the enrollee should
be more clearly outlined in the final rule. Therefore, in Sec.
155.330(e)(2) of this final rule we provide that for changes identified
through data-matching that do not impact household income, family size,
or family composition, the Exchange must notify the enrollee of the new
data and his or her projected eligibility determination, and allow the
enrollee
[[Page 18373]]
30 days to notify the Exchange if the information is inaccurate. If the
enrollee responds that the information is inaccurate, the Exchange must
proceed with the inconsistency process described in Sec. 155.315(f);
if the enrollee responds that the information is accurate or does not
respond, the Exchange must redetermine the enrollee's eligibility based
on the verified data obtained through the data matching process.
For changes to household income, family size and family composition
identified through data matching, we provide in Sec. 155.330(e)(3) of
this final rule that the Exchange must notify the enrollee of the new
data and his or her projected eligibility determination (including the
amount of advance payments of the premium tax credit and the level of
cost-sharing reductions), and allow the enrollee 30 days to respond to
the notice. If the enrollee does respond confirming the information
obtained by the Exchange or responds by providing more up to date
information, the Exchange must redetermine the enrollee's eligibility
based on the data obtained through the data matching process or by
verifying the updated information provided by the enrollee. However, if
the enrollee does not respond, the Exchange must maintain the
enrollee's eligibility without considering the new information. Because
data related to income, family size and family composition has the
potential to impact both the amount of financial assistance received by
the enrollee and his or her tax liability at reconciliation, we believe
the procedures for acting on such information should be different from
the procedures for acting on data that do not have an impact on income
and family size, and that enrollees must actively confirm such changes.
We also note that the Exchange must notify the enrollee of the
determination made as a result of a redetermination conducted during
the benefit year, as indicated in (e)(1)(ii), and that such notice will
include the right to appeal, in accordance with Sec. 155.355(a).
Comment: Several commenters suggested clarification of our policies
related to effective dates, as proposed in Sec. 155.330(d). A number
of commenters suggested that we align effective dates across part 155;
among those suggestions was one to align the effective dates for
redeterminations with effective dates for coverage under special
enrollment periods, as described in Sec. 155.420. Further, we received
comments which suggested that we establish a uniform cut-off date.
Response: We recognize the need for greater alignment between the
effective dates for redeterminations of eligibility with effective
dates for coverage, as described in Sec. 155.420 of this final rule.
As such, in the final rule, we provide in Sec. 155.330(f) of this
final rule that changes resulting from redeterminations during the
benefit year must be implemented for the first day of the month
following the date of the redetermination notice; however, we allow the
Exchange to establish a cut-off date after which redeterminations would
be implemented in the following month, as long as the cut-off date is
no earlier than the date established under Sec. 155.420(b)(1), (which
is the 15th of the month) in order to effectuate coverage on the first
of the following month. We believe that allowing the Exchange to
establish such a cut-off date aligning with the cut-off date for
coverage effective dates will facilitate administrative efficiency for
the Exchange, if it chooses to align. Regarding comments requesting a
uniform cut-off date, we wish to maintain Exchange flexibility to
establish such a cut-off date, which is the same approach taken in
subpart E, and so do not change the policy reflected in Sec.
155.330(f)(2) in this final rule. In the paragraph newly designated as
Sec. 155.310(f) in this final rule, we also include the effective
dates of eligibility for redeterminations, since these were
inadvertently not included in the proposed rule. We also clarify that
when we state that the effective date is the date on which the Exchange
must implement an eligibility determination, we mean the date on which
the applicant's eligibility, for example his or her advance payments of
the premium tax credit or cost-sharing reduction, is or can be applied
to the cost of his or her coverage.
Comment: We received a number of comments regarding the policy
proposed in Sec. 155.330(e)(3), which provides that the Exchange must
extend an enrollee's eligibility for enrollment in a QHP for a full
month, without advance payments of the premium tax credit or cost-
sharing reductions, following a notice of redetermination terminating
his or her eligibility for enrollment. Several commenters expressed
concern regarding this provision citing a potential for liability to
issuers when enrollees neglected to or were unable to pay premiums
without financial assistance. Some commenters suggested that
individuals must pay premiums in order to receive such coverage, or
that the redetermination notice clearly indicate when coverage will be
terminated and that the enrollee will be liable for premiums not paid.
Others asked that we make clear that an enrollee may always choose to
terminate his or her enrollment in a QHP sooner than the termination
date included in paragraph (e)(3).
Response: We acknowledge commenters concerns regarding the
potential for QHP liability during the available extension of coverage
described in proposed Sec. 155.330(e)(3), redesignated as Sec.
155.330(f)(3). We will take into consideration such comments when
developing the notice of eligibility determination sent to an enrollee
when he or she loses advance payments of the premium tax credit after
redetermination and ensure that an enrollee is aware of their
responsibility to pay for his or her premium. Furthermore, the
provision Sec. 155.430(d)(3) of this final rule, which allows the
enrollee to maintain eligibility for enrollment in a QHP without
advance payments or cost-sharing reductions until the last day of the
month following the notice of termination of coverage is sent, also
makes clear that an enrollee may terminate his or her enrollment sooner
than such date. We also clarify that the final rule does not provide
that an enrollee must pay a premium if he or she does terminate
coverage sooner than the date described in Sec. 155.430(d)(3), but we
acknowledge that this provision would not prevent an issuer from
seeking out premiums owed.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.330 of the
proposed rule, with several modifications: we specified in paragraph
(b)(1), that an enrollee must report any change with respect to the
eligibility standard specified in Sec. 155.305 within 30 days of such
change; however, we added in paragraph (b)(1) exceptions to this
standard as described in new paragraphs (b)(2) and (b)(3). In new
paragraph (b)(2), we provide that individuals who did request an
eligibility determination for all insurance affordability programs must
not be required to report changes related to eligibility for insurance
affordability programs. In new paragraph (b)(3), we specified that for
changes in income, the Exchange may establish a reasonable threshold
for such changes below which enrollees are not required to report.
Also, in new paragraph (b)(4), we added that the Exchange must allow an
enrollee, or an application filer on behalf of the enrollee, to report
a change via all channels available for the
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submission of an application, which are described in Sec. 155.405(c).
We also created new paragraph (c), which describes the standards
for the Exchange to verify changes reported by enrollees. We moved
proposed paragraph (b)(2) and redesignated it as paragraph (c)(1) and
added paragraph (c)(2), which describes that the Exchange must provide
enrollees with periodic notifications regarding standards for reporting
changes and the opportunity to report any change, to the extent the
enrollee has elected to receive electronic notifications and has not
opted out of periodic notifications regarding change reporting.
In new paragraph (d)(2), we added the opportunity for the Exchange
to make additional efforts to identify and act on changes related to
eligibility for insurance affordability programs, in addition to
eligibility for enrollment in a QHP as previously proposed. We also
removed the language that provided the Exchange with flexibility to
conduct data matching during the benefit year, contingent upon HHS
approval of a change to the Exchange Blueprint and instead included
that this flexibility is subject to compliance with specific standards,
including that such efforts would reduce the administrative costs and
burdens on individuals while maintaining accuracy and minimizing delay,
that it would not undermine coordination with Medicaid and CHIP, and
that applicable standards under Sec. 155.260, Sec. 155.270, Sec.
155.315(i) of this section, and section 6103 of the Code with respect
to the confidentiality, disclosure, maintenance, or use of such
information will be met. We also add that such efforts must comply with
the newly designated paragraphs (e)(2) and (3).
In newly designated paragraph (e), we added paragraphs (e)(2) and
(e)(3) to describe the procedures for redeterminations that Exchanges
must follow upon identifying new information through data matching. In
newly designated paragraph (e)(2), we specified that for all changes
identified by the Exchange that are not related to income, family size
and family composition, the Exchange must notify the enrollee of his or
her projected eligibility determination and allow the enrollee 30 days
from the date of the notice to inform the Exchange that such
information is inaccurate. If the information is inaccurate, the
Exchange must follow procedures related to resolving inconsistencies
described in Sec. 155.315(f). If the enrollee does not respond within
the 30 day period, the Exchange must redetermine his or her eligibility
using the new information. In newly designated paragraph (e)(3), we
specify that for changes identified by the Exchange that are related to
income, family size and family composition, the Exchange must notify
the enrollee of his or her projected eligibility determination and
allow the enrollee 30 days from the date of the notice to respond to
the notice. If the enrollee responds within the 30 day period, the
Exchange must redetermine his or her eligibility in accordance with the
procedures for redetermining enrollee-reported data. If the enrollee
does not respond within the 30 day period, we specified that the
Exchange must maintain the enrollee's eligibility determination without
the updated information.
In newly designated paragraph (f), we amended the provisions
related to effective dates for redeterminations made in accordance with
this section. In newly designated paragraph (f)(1), we clarified the
exceptions to the provision regarding effective dates for implementing
changes resulting from a redetermination. In newly designated paragraph
(f)(2), we added that while an Exchange may determine a reasonable
point in a month after which a change captured through a
redetermination will not be effective until the first day of the month
after the month specified in newly designated paragraph (f)(1). We
clarify that such reasonable point must be no earlier than the cut-off
date described in Sec. 155.420(b)(1) of this part. In newly designated
paragraph (f)(3), we also added a new reference to the effective dates
described in subpart E to accommodate for renumbering.
We renumbered several paragraphs in this section to accommodate
changes to the final rule. Also, in paragraph (d), which was previously
designated as paragraph (c), we changed the title to ``periodic
examination of data sources.''
h. Annual Eligibility Redetermination (Sec. 155.335)
In Sec. 155.330, we proposed that the Exchange redetermine the
eligibility of an enrollee in a QHP during a benefit year if it
receives and verifies new information reported by an enrollee or
identifies updated information through data matching. We solicited
comments on whether the redetermination based on changes reported or
identified during the year should satisfy the annual redetermination as
well, and if so, whether this should be a Federal standard or an
Exchange option. We also solicited comment on how the interaction
between Exchange eligibility and updated tax data can be streamlined,
and at what point annual redeterminations should occur. Finally, we
solicited comment regarding whether and how we should approach data
matching related to redeterminations, and whether there were
alternatives that could support the goals of this process.
We also proposed that the Exchange provide an enrollee with an
annual redetermination notice and identified specific data elements
that should be contained in the notice and solicited comment regarding
the contents of the notice. In addition, we proposed that the Exchange
direct an individual to report any changes relative to the information
listed on the redetermination notice within 30 days of the date of the
notice, and specified that the Exchange must verify any changes
reported by the individual in response to the notice using the same
verification procedures used at the point of initial application,
including the provisions regarding inconsistencies.
We also proposed that an enrollee must sign and return the
redetermination notice. We solicited comment on policy and operational
strategies to improve the accuracy of redeterminations. We also
solicited comment as to what steps the Exchange could take to ensure
that redetermination minimizes burden on individuals, QHPs, and the
Exchange without increasing inaccuracies.
After the conclusion of the 30 day notice period, we proposed that
the Exchange determine an enrollee's eligibility based on the
information provided to the enrollee in the redetermination notice,
along with any information that an enrollee has provided in response to
such notice that the Exchange has verified; notify the enrollee; and,
if applicable, notify the enrollee's employer. If an enrollee does not
sign and return the notice, we proposed that the Exchange redetermine
an enrollee's eligibility based on the information provided in the
notice. In addition, we proposed that to the extent that the Exchange
is unable to verify a change reported by an enrollee as of the close of
the 30 day period, the Exchange redetermine the enrollee's eligibility
as soon as possible after completing verification.
We solicited comment as to whether the effective dates for changes
made as a result of an annual redetermination should be different from
the effective dates for changes made as a result of a redetermination
that occurs during the coverage year.
Finally, we proposed that if an enrollee remains eligible for
coverage in a QHP upon annual redetermination, the enrollee will remain
in the QHP selected the previous year unless the
[[Page 18375]]
enrollee takes action to select a new QHP or terminate coverage.
Comment: A number of commenters supported the provision in proposed
Sec. 155.335(a) to conduct eligibility redeterminations on an annual
basis. Many commenters highlighted that this would avoid administrative
burden, costs, and loss of eligibility. Several commenters suggested
that HHS not provide for more frequent redeterminations.
Response: In the final rule, we maintain the standard in Sec.
155.335(a) to redetermine eligibility on an annual basis. We address
redeterminations during the coverage year in our responses to Sec.
155.330.
Comment: The majority of commenters recommended that the timing of
annual redetermination as described in proposed Sec. 155.335 align
with the annual open enrollment period as specified in Sec. 155.410.
Some commenters suggested combining the annual open enrollment notice
with the annual redetermination notice. Many commenters recommended
that the annual redetermination notice be distributed prior to the
start of the annual open enrollment period. One commenter suggested
sending the annual redetermination notice no later than 45 days prior
to annual open enrollment. Another commenter recommended that HHS
provide that Exchanges must send annual redetermination notices to
enrollees no later than June 15th of each year. Commenters also
suggested giving Exchanges flexibility to determine the best way to
conduct redeterminations.
Response: In response to the large number of comments we received
on this topic, we have set a timing standard in Sec. 155.335(d) of
this final rule for annual redetermination to align with annual open
enrollment. In Sec. 155.335(d)(1), we provide that the Exchange must
provide the annual redetermination notice and the notice of annual open
enrollment in a single, coordinated notice for the 2015 and 2016
benefit year. We believe this will reduce confusion among consumers and
reduce administrative burden. In Sec. 155.410(d), we specify that the
notice of annual open enrollment will be provided no earlier than
September 1 and no later than September 30. We expect that as the
program matures, States may have a better understanding of the best
time to release the annual redetermination notice, and therefore in
Sec. 155.335(d)(2) of this final rule, starting with annual
redeterminations for coverage effective on January 1, 2017, we provide
flexibility for Exchanges to adjust the timing and coordination of the
redetermination notice in future years. The Exchange may exercise this
flexibility to provide separate notices, provided that the timing of
the redetermination notice is no earlier than the date of the notice of
annual open enrollment specified in 155.410(d) and allows a reasonable
amount of time for the enrollee to review the notice, provide a timely
response, and for the Exchange to implement any changes in coverage
elected during the annual open enrollment period; this is to ensure
that the enrollee has adequate time to review available plans and
change plans, if applicable.
Comment: We solicited comment regarding whether a redetermination
during the benefit year should satisfy the annual redetermination
standard. Several commenters opposed this concept. One commenter
recommended that allowing a redetermination of eligibility during the
coverage year to serve as a household's annual redetermination should
be a State option. Several commenters recommended that HHS should not
give Exchanges the flexibility to conduct redeterminations on a rolling
basis. Commenters suggested that annual redetermination should occur at
a consistent point in the year for all individuals when new tax data
becomes available, regardless if eligibility was redetermined during
the coverage year.
Response: We decided not to allow redeterminations during the
benefit year to satisfy the annual redetermination for an enrollee. Due
to the fixed coverage period and a set annual open enrollment period,
we believe allowing for a rolling annual redetermination would create a
situation where the Exchange may redetermine an enrollee's eligibility
but the enrollee would not be able to switch plans because they would
not qualify for an enrollment period. Additionally, we believe that
because the annual redetermination relies on tax data which is updated
at a specific time each year, rolling annual redetermination would add
unnecessary complexity to the streamlined redetermination process.
Finally, we also believe that this approach will increase the
predictability of Exchange staffing and other resource needs.
Comment: Some commenters suggested HHS clarify that enrollees do
not have to submit a new application to complete the annual
redetermination process. Several commenters recommended that an
individual's information from initial enrollment should be retained and
used during the redetermination process. Accordingly, commenters
suggested that an enrollee should never have to re-enter any
information during the annual redetermination process that has not
changed. A few commenters specified that States should use an ``ex
parte'' redetermination process, in which the Exchange attempts to
redetermine the enrollee's eligibility using information from external
data sources; under such a process, the Exchange only contacts the
enrollee if additional information is needed. Commenters also suggested
that Exchanges and States should use a ``passive'' redetermination
process, through which an enrollee notifies the Exchange that he or she
agrees with the information included in a redetermination notice by not
responding. Several commenters suggested that pre-populated forms or
applications be used for annual redeterminations. Many commenters
expressed support for the proactive role of the Exchange in obtaining
data from external data sources to assist in annual redetermination.
Response: We have maintained the provisions in Sec. 155.335(c) of
this final rule that outline information to be presented on the annual
redetermination notice. We believe this will increase retention rates
by helping to minimize the risk of individuals losing coverage when
they remain eligible. We also believe this process will reduce
administrative burden on the Exchange by reducing the steps necessary
to redetermine eligibility. Furthermore, we add language to paragraph
(c)(3) providing that the notice of annual redetermination must include
eligibility for Medicaid, CHIP or BHP, if applicable, since the updated
tax return information and data regarding MAGI-based income may
indicate eligibility for Medicaid, CHIP or BHP, in addition to
eligibility for advance payments of the premium tax credit and cost-
sharing reductions.
Comment: Several commenters recommended specific information for
the content of the annual redetermination notice as specified in
proposed Sec. 155.335(c). Items suggested include the date the
redetermination will become effective, procedures to correct errors in
data obtained or used in the enrollee's most recent eligibility
determination, including the 30 day requirement to report changes
specified in Sec. 155.335(e), or where individuals may obtain
additional information or assistance, including the Exchange Web site,
call center, Navigators and other consumer assistance tools. One
commenter felt that notices regarding annual redeterminations may be
confusing to many consumers. Some commenters recommended that notices
comply with standards in Sec. 155.230 to
[[Page 18376]]
ensure meaningful access for limited English proficient enrollees.
Others recommended that annual redetermination notices include
information about rights to appeal.
Response: We provide general standards for all notices from the
Exchange in Sec. 155.230, which include accessibility and readability
standards outlined in Sec. 155.205(b)(2) and (b)(3). We intend to
provide further interpretation regarding issuance of the annual
redetermination notice in future guidance which may include a model of
the annual redetermination notice and detail on content.
In response to comments, we would also like to clarify the
differences between the notices outlined in Sec. 155.335(c) and Sec.
155.310(g) of this final rule. The redetermination notice in Sec.
155.335(c) is the pre-populated form which includes the enrollee's
updated information, including--in the case of an enrollee who allowed
the Exchange to determine his or her eligibility for insurance
affordability programs--updated tax return information and updated
current income information. In accordance with Sec. 155.335(e), this
notice will be signed and returned by each enrollee to confirm
information is up-to-date. After information on this notice has been
verified and a final eligibility determination has been made, the
Exchange will send a second notice described in Sec. 155.310(g), as
finalized in this rule, to notify the enrollee of the final eligibility
determination for the upcoming benefit year.
Comment: Many commenters recommended that the final rule should
specify that enrollees can report changes through the same channels
available for the submission of an application (online, by phone, by
mail, in person), as specified in proposed Sec. 155.405.
Response: In 155.335(e)(2) of this final rule, we clarify that an
enrollee or an application filer, on behalf of the enrollee, may report
a change online, by phone, by mail, or in person. We identify these
channels for an enrollee to provide additional information based on
section 1413(b) of the Affordable Care Act and Sec. 155.405, which
identify how an applicant may submit an application. As the annual
redetermination will be functionally the same as a new application for
the next benefit year, the use of the same procedures is appropriate.
We have also added this provision to Sec. 155.330(b)(4), to allow an
enrollee, or application filer on the enrollee's behalf, to report
changes via the channels described in Sec. 155.405.
Comment: Some commenters supported the standard set forth in the
proposed rule that the verification processes related to changes
reported as a part of the annual redetermination process specified in
proposed Sec. 155.335(e) be consistent with the processes specified in
proposed Sec. 155.315 and Sec. 155.320. Many commenters suggested HHS
specify timeframes by which the Exchange must verify changes reported
by the enrollee in response to the annual redetermination notice. One
commenter suggested a time period of 10 days by which to conduct the
verification. Another commenter believed States should have the
flexibility to be able to determine any time constraints or
verification processes related to changes reported in response to the
annual redeterminations.
Response: We support the standard to use the same verification
processes for initial applications and for annual redeterminations. We
believe that the timeliness standards for verification should be
consistent with the standards Sec. 155.310(e); we intend to provide
more guidance on the interpretation of the timeliness standard.
Additionally, we would like to clarify that in order to conduct a
redetermination as outlined in Sec. 155.335, the Exchange must obtain
an authorization from an enrollee to request his or her tax data. We
anticipate that this authorization will be obtained during the initial
application process, and that such authorization could be accomplished,
for example, by allowing enrollees a chance to opt out of authorizing
the use of tax data. An enrollee must provide an authorization for the
Exchange to obtain tax data for annual redeterminations only if he or
she chooses to allow the Exchange to determine his or her eligibility
for insurance affordability programs. We also clarify that without such
authorization, the Exchange will be unable to access tax return
information and, subsequently, conduct an eligibility redetermination
for insurance affordability programs.
The Secretary of Treasury will allow an individual to authorize the
release of his or her tax data for use by the Exchange in verification
of household income for a period of up to five years. In 155.335(k), we
specify that the Exchange must have authorization from an enrollee in
order to obtain his or her updated tax return information for purposes
of conducting an annual redetermination. We specify that the Exchange
may obtain this tax return information for a period of no more than
five years, based on a single authorization. The Exchange must allow
the individual to decline a five-year authorization or to authorize the
Exchange to obtain tax return data for annual redetermination for a
period of less than five years. We also specify that the Exchange must
allow an individual to discontinue, change, or renew the authorization
at any time. We expect that an enrollee will have an opportunity to
reauthorize the Exchange to obtain tax return data whenever he or she
reports changes, at annual redetermination, and in the course of other
interactions with the Exchange. We believe this process will be
minimally burdensome on the individual and on the Exchange.
In 155.335(l), we clarify that to the extent that an enrollee has
requested an eligibility determination for all insurance affordability
programs and has not authorized the request of tax data, the Exchange
will redetermine the enrollee's eligibility for enrollment in a QHP,
but must notify the enrollee that the Exchange will not proceed with
the redetermination process until such authorization has been obtained
or the enrollee discontinues his or her request for an eligibility
determination for insurance affordability programs.
We also clarify that for purposes of providing updated data
described in Sec. 155.335(b), we expect that the Exchange will obtain
the updated information for enrollees who, as of their most recent
interaction with the Exchange, has requested an eligibility
determination for all insurance affordability programs; as such, for an
enrollee who requested an eligibility determination for insurance
affordability programs but who was determined ineligible for advance
payments of the premium tax credits or cost-sharing reductions, the
Exchange would obtain updated information at annual redetermination, to
the extent that the applicable authorization was in place.
Comment: We received a large number of comments expressing concern
over the requirement for enrollees to sign and return the annual
redetermination notice when no changes have occurred, as specified in
proposed Sec. 155.335(f)(1). Commenters suggested the sign and return
requirement was an unnecessary burden on consumers and Exchanges, since
the Exchange is instructed to redetermine eligibility using the
information on the notice even if the notice is not returned. A few
commenters highlighted the current practice in Medicaid where annual
redeterminations are completed without a signature required from the
enrollee.
Response: While signing and returning the redetermination notice
[[Page 18377]]
will add an additional step in the redetermination process, due to the
financial responsibility imposed on an individual accepting an advance
payment of the premium tax credit as part of the reconciliation
process, we believe it is important to collect a signature from an
enrollee as a means of ensuring that he or she accepts this
responsibility.
Comment: Several commenters supported proposed Sec. 155.335(e),
which provided that an enrollee correct any erroneous information on
the redetermination notice and report changes to the information on the
annual redetermination notice within 30 days. A few commenters urged
HHS to consider extending the period enrollees are given to return the
notice with reported changes consistent with the language in the
Medicaid proposed rule, which provides States with the authority to
increase this time period to more than 30 days.
Response: In the final rule, we maintain the standard of 30 days
for an individual to report changes and believe this standard provides
a reasonable amount of time for individuals to review the annual
redetermination notice and submit changes as appropriate.
Comment: Commenters recommended adopting the effective dates
outlined for the annual open enrollment periods in proposed Sec.
155.410(f) as the effective dates for annual redeterminations, except
for enrollees who become eligible for Medicaid as a result of an annual
redetermination. In those cases, commenter recommended that Medicaid
eligibility and coverage be effective on the first day of the month in
which the eligibility determination is made.
Response: In Sec. 155.335(i) of the final rule, we have modified
the language in the regulation text to clarify that the effective date
for the annual redetermination will be the first day of the coverage
year following the year in which the Exchange provided the annual
redetermination notice in Sec. 155.335(c) or on the first day of the
month following the eligibility notice to the enrollee in accordance
with Sec. 155.330(f), whichever is later. The latter part of this
clarification addresses situations in which the eligibility
determination is made by the Exchange in the benefit year for which the
applicant is seeking coverage. The effective dates for annual
redetermination should not be confused with the dates by which the
Exchange must make a QHP selection effective during the annual open
enrollment period as specified in Sec. 155.410(f). Regarding
commenters suggestions for the effective dates for individual
determined eligible for Medicaid at annual redetermination, we clarify
that coverage effective dates for Medicaid eligibility are governed by
those standards found in Medicaid regulations at 42 CFR 435.915. In
accordance with Sec. 155.310(d)(3), the Exchange must transmit
enrollee information promptly and without undue delay to the State
Medicaid or CHIP agency so that he or she may be enrolled in Medicaid
or CHIP. We note that in accordance with section 36B(c)(2) of the Code,
eligibility for premium tax credits (including the advance payments)
and cost-sharing reductions will terminate when an individual is
eligible for minimum essential coverage, including Medicaid and CHIP
coverage.
Comment: Several commenters supported the provision specified in
proposed Sec. 155.335(i) to allow an enrollee who remains eligible for
enrollment in a QHP upon annual redetermination to remain in his or her
QHP without the need to re-select it. One commenter suggested the
provision aligns with the goal of a simple and consumer-friendly
Exchange. Another commenter emphasized that no enrollee should be
removed from coverage until the enrollee has been given notice of an
eligibility determination and the right to appeal.
Response: We are finalizing without change the provision to allow
an enrollee who remains eligible for enrollment in a QHP upon annual
redetermination to remain in his or her QHP without the need to re-
select it. We believe this provision will minimize disruptions in
coverage for eligible enrollees and administrative burden for the
Exchange, QHP issuers, and enrollees. We also clarify that references
to termination in this provision only relate to termination initiated
by the enrollee, which we believe addresses the commenter's concern
about notices and appeals.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.335 of the
proposed rule, with the following modifications: in paragraph (a), we
noted that annual redeterminations are limited based on the new
language in paragraph (l) of this section. In paragraph (b), we
clarified that in the case of an enrollee who has requested an
eligibility determination for all insurance affordability programs in
accordance with Sec. 155.310(b) of this subpart, the Exchange must
request updated tax return information, if the enrollee has authorized
the request of such tax return information. In paragraph (c), we added
that the notice must also include an enrollee's projected eligibility
determination, including eligibility for insurance affordability
programs. In paragraph (d), we clarified the timing of the annual
redetermination. For coverage effective January 1, 2015 and January 1,
2016, the Exchange must satisfy the notice provisions of paragraph (c)
of this section and Sec. 155.410(d) of this part through a single,
coordinated notice. In paragraph (d)(2), we provided that for coverage
effective January 1, 2017, the Exchange may send the annual
redetermination notice separately from the notice of annual open
enrollment, provided that certain restrictions on the timing of such
notices are met.
In paragraph (e) of this section we clarified that the Exchange
must allow an enrollee or an application filer, on the enrollee's
behalf, to report changes via the channels available for the submission
of an application, as described in Sec. 155.405(c) of this part. We
also added to paragraph (g)(1), that an application filer may sign and
return the annual redetermination notice on an enrollee's behalf. In
paragraph (i), we modified the standard for effective dates of annual
redetermination to clarify that the Exchange must ensure that the
annual redetermination is effective on the first day of the coverage
year following the year in which the Exchange provided the notice in
paragraph (c) of this section or in accordance with the rules specified
in Sec. 155.330(f), regarding effective dates, whichever is later. In
new paragraph (k), we added language to specify that the Exchange must
have authorization from an enrollee in order to obtain updated tax
return information for purposes of conducting an annual
redetermination. We also describe that any single authorization will
extend for a period of no more than five years, and that an individual
may authorize the Exchange to obtain tax data for a period of less than
five years, or not at all. We also provide that the enrollee must be
able to discontinue, change or renew an authorization at any time. In
new paragraph (l), we added language to specify that to the extent that
an enrollee who has requested an eligibility determination for
insurance affordability programs in accordance with Sec. 155.310(b)
has not authorized the request of data described in paragraph (b), the
Exchange must notify the enrollee in accordance with the timing
described in paragraph (d), and not proceed with the redetermination
process described in paragraphs (c) and (e) through (j) until such
authorization has been obtained or the enrollee discontinues his or her
request for an
[[Page 18378]]
eligibility determination for insurance affordability programs in
accordance with Sec. 155.310(b).
We also made a few technical corrections to this section including
renumbering paragraphs (d) through (k) to account for additional
regulation text and updated cross-references based on similar
renumbering in other parts of this final rule. In paragraph (e)(1) we
clarified that the reference to a notice is referring to the notice in
paragraph (c) of this section. We also clarified that changes reported
at annual redetermination must be verified according to the processes
specified in Sec. 155.315 and Sec. 155.320. Finally, we clarified
that the verification referred to in paragraph (h)(2) of this section
is the same verification specified in paragraph (f) of this section.
i. Administration of Advance Payments of the Premium Tax Credit and
Cost-Sharing Reductions (Sec. 155.340)
In Sec. 155.340, we proposed reporting provisions for the Exchange
related to advance payments of the premium tax credit and cost-sharing
reductions. We proposed that in the event of a determination of an
individual's eligibility or ineligibility for advance payments of the
premium tax credit or cost-sharing reductions, including a change in
the level of advance payments of the premium tax credit or cost-sharing
reductions for which he or she is eligible, the Exchange provide
information to the issuer of the QHP selected by the individual or in
which the individual is enrolled.
We also proposed that the Exchange provide eligibility and
enrollment information to HHS to enable HHS to begin, end, or adjust
advance payments of the premium tax credit and cost-sharing reductions.
We solicited comment on whether the information could be used by HHS to
support any reporting necessary for monitoring, evaluation, and program
integrity. We solicited comment as to how this interaction can work as
smoothly as possible and the scope of information that should be
transmitted among the relevant agencies.
We further proposed that the information transmitted to issuers
include the information necessary to enable the issuer of the QHP to
implement or discontinue the implementation, or modify the level of an
individual's advance payment of the premium tax credit or cost-sharing
reductions.
We proposed to codify the reporting rules in sections
1311(d)(4)(I)(ii) through (iii) and 1311 (d)(4)(J), which support the
employer responsibility provisions of the Affordable Care Act. We
proposed that when the Exchange determines that an applicant is
eligible to receive advance payments of the premium tax credit based in
part on a finding that his or her employer does not provide minimum
essential coverage, or provides minimum essential coverage that is
unaffordable as described in 26 CFR 1.36B-2(c)(3)(v) of the Treasury
proposed rule, or does not meet the minimum value standard, as
described in 26 CFR 1.36B-2(c)(3)(vi) of the Treasury proposed rule,
the Exchange will provide this information to the Secretary of the
Treasury. We proposed that the Exchange transmit such applicant's name
and SSN to HHS, which will transmit it to the Secretary of the
Treasury.
In the event that an enrollee for whom advance payments of the
premium tax credit are made or who is receiving cost-sharing reductions
notifies the Exchange that he or she has changed employers, we proposed
that the Exchange transmit the enrollee's name and SSN to HHS, which
will transmit it to the Treasury. We also proposed that in the event an
enrollee for whom advance payments of the premium tax credit are made
or who is receiving cost-sharing reductions terminates coverage in a
QHP through the Exchange during a benefit year, the Exchange transmit
his or her name and SSN and the effective date of the termination of
coverage to HHS, which will transmit it to the Treasury. We proposed
that the Exchange will also transmit his or her name and the effective
date of the termination of coverage to his or her employer. Finally, we
proposed that the Exchange must comply with the standards related to
reconciliation of the advance payments of the premium tax credit
specified in section 36B(f)(3) of the Code and 26 CFR 1.36B-5 regarding
reporting to the IRS and to taxpayers.
Comment: We received a number of comments asking that we clarify
how advance payments of the premium tax credit will be administered.
Many comments suggested the use of electronic funds transfers, as well
as electronic communications that are compatible with existing issuer
infrastructure. Several commenters noted the importance of transparency
and flexibility in establishing the standards regarding administration
of the advance payment of the premium tax credit and cost-sharing
reductions. Commenters suggested the need for further guidance on this
topic.
Response: In Sec. 155.340 of this final rule, we provide general
standards for the exchange of information necessary for administration
of advance payments of the premium tax credit and cost-sharing
reductions, as well as to support the employer responsibility and
reconciliation provisions of the Affordable Care Act. We anticipate
providing more operational and procedural detail about these processes
in future guidance.
Comment: Several commenters recommended that the proposed Sec.
155.340(a) include a specific timeliness standard for the Exchange to
transmit information to facilitate the administration of advance
payments of the premium tax credit and cost-sharing reductions to the
applicable QHP and HHS. Commenters recommended that the timeliness
standard reflect the ``real-time'' expectation, but to provide for
exceptions in instances when systems are not functioning properly. Some
commenters suggested that the regulation specify that all transactions
be completed within one business day from the initiating event (for
example, the completion of an eligibility determination).
Response: In paragraph (d), we adopt, on an interim final basis, a
timeliness standard that the Exchange must perform actions outlined in
Sec. 155.340(a) to enable advance payment of premium tax credits and
cost-sharing reductions ``promptly and without undue delay.'' We also
adopt this standard for transmission of information described in Sec.
155.340(b). We intend to interpret this standard in future guidance.
Comment: Several commenters raised various privacy concerns in
response to proposed Sec. 155.340(b)(2) and Sec. 155.340(b)(3)(i)
prescribing that the Exchange transmit information to HHS when an
enrollee changes employers and in the event that an individual for whom
advance payments of the premium tax credit are made or who is receiving
cost-sharing reductions terminates coverage from a QHP through the
Exchange during a benefit year. Some commenters raised concerns over
the amount of burden placed on Exchanges to provide this information to
HHS and the Secretary of Treasury. A large number of commenters
suggested that the information provided be limited to a minimum amount
of information, only name and taxpayer ID number. Many commenters
recommended striking, ``Social Security number,'' and replacing it
with, ``taxpayer identification number.''
Response: We codified the transactions specified in Sec.
155.340(b)(2) and Sec. 155.340(b)(3)(i) from section 1311(d)(4)(I) of
the Affordable Care Act, which specifies that they include name and
taxpayer identification number. Accordingly, we have replaced, ``Social
[[Page 18379]]
Security number,'' with ``taxpayer identification number.'' We note
that we have limited the information to be sent to HHS and to the
Secretary of Treasury to be the information that is explicitly
mentioned in section 1311(d)(4)(I). In addition, like all other
activities related to personally identifiable information, the
transactions specified in this section are subject to the privacy and
security protections specified in Sec. 155.260 of this final rule.
Regarding concerns of burden on the Exchange, in addition to this being
a statutory standard, we believe that this will largely be an automated
process and that the submission of information to HHS and the Secretary
of Treasury will not be overly burdensome.
Comment: A number of commenters sought more guidance on how cost-
sharing reductions will be implemented and monitored. Commenters
suggested HHS provide flexibility and transparency in establishing
standards related to cost-sharing reductions.
Response: In Sec. 155.340 of this final rule, we specify that the
Exchange will transmit information about an enrollee's eligibility to
his or her QHP issuer in order to enable the QHP issuer to provide the
correct level of cost-sharing reductions. We intend to provide future
guidance on this issue and identify what we interpret to be the
minimally necessary information for this purpose.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.340 of the
proposed rule, with the following modifications: in Sec. 155.340(a) we
replaced the terms applicant and enrollee with tax filer in connection
with advance payments of premium tax credits because the tax filer is
the eligible person for that benefit; we have retained the use of the
terms applicant and enrollee in connection with cost-sharing reductions
because that statute does not limit eligibility for that benefit to tax
filers or tax payers. In Sec. 155.340(a)(2), we clarified that the
Exchange must notify and transmit information necessary to enable the
issuer of the QHP to implement, discontinue the implementation, or
modify the level of an individual's advance payments of the premium tax
credit or cost-sharing reductions, as applicable. In Sec.
155.340(b)(2) and (b)(3)(i) of this section, we removed the standard
that the Exchange transmit the enrollee's SSN and replaced it with
taxpayer identification number. We also replaced the term
``disenrolls'' with ``terminates coverage'' to align with language used
in Sec. 155.430 of this part. We note that coverage terminations by
the Exchange are limited to enrollment through the Exchange. For a more
detailed discussion, please see the comment and response for Sec.
155.430. We also add in paragraph (d) a timeliness standard for the
transmissions of information described in paragraphs (a) and (b).
j. Coordination with Medicaid, CHIP, the Basic Health Program, and the
Pre-Existing Condition Insurance Plan (Sec. 155.345)
Based on comments and feedback to the proposed rule, we are
revising the proposed rule to include paragraphs (a) and (g) of this
section, and we are seeking comments on these provisions.
In Sec. 155.345, we proposed standards for coordination across
insurance affordability programs in order to implement a streamlined,
simplified system for eligibility determinations and enrollment as part
of the implementation of section 1413 of the Affordable Care Act. In
this section, we also proposed standards for coordination between the
Exchange and the Pre-Existing Condition Insurance Plan (PCIP),
established in accordance with section 1101 of the Affordable Care Act.
Specifically, we proposed that the Exchange enter into agreements
with the State Medicaid or CHIP agencies as necessary to fulfill the
Exchange responsibilities identified in this subpart. We proposed that
as part of the eligibility determination process, the Exchange
determine an applicant's eligibility for Medicaid and CHIP, in
accordance with standards described in Sec. 155.305 of this subpart,
notify the State agency administering Medicaid or CHIP of that
determination, and transmit relevant information necessary for the
timely enrollment of the eligible individual into coverage. Upon making
a determination of eligibility for Medicaid or CHIP, we indicated that
the Exchange must also notify the applicant of the determination. We
suggested that the Exchange may also facilitate delivery system and
health plan selection for Medicaid and CHIP and solicited comments
regarding whether and how this integration of delivery system selection
could best work for the Exchange, Medicaid, and CHIP.
We also proposed that the Exchange perform a ``screen and refer''
function for those applicants who may be eligible for Medicaid in a
MAGI-exempt category or an applicant that is potentially eligible for
Medicaid based on factors not otherwise considered in this subpart. We
proposed that the Exchange transmit eligibility information related to
such application to the applicable State agencies promptly and without
undue delay. In addition, we proposed that the Exchange provide advance
payments of the premium tax credit and cost-sharing reductions to an
individual who is found to be otherwise eligible while the agency
administering Medicaid completes a more detailed determination.
We also noted, based on our interpretation of proposed Treasury
Sec. 1.36B-2(c)(2) published on the same day in the Federal Register,
that an applicant who is referred to the Medicaid agency for additional
screening and is enrolled in a QHP receiving advance payments of the
premium tax credit in the interim would not be liable to repay advance
payments if he or she is ultimately determined eligible for Medicaid
and for any period of retroactive eligibility.
We proposed that the Exchange provide an opportunity for an
applicant who is not automatically referred to the State Medicaid
agency for an eligibility determination to request a full screening of
eligibility for Medicaid by such agency. We proposed that to the extent
that an applicant requests such a determination, the Exchange will
transmit the applicant's information to the State Medicaid agency
promptly and without undue delay.
We also proposed that the Exchange work with the agencies
administering Medicaid and CHIP to establish procedures through which
an application that is submitted directly to an agency administering
Medicaid or CHIP initiates an eligibility determination for enrollment
in a QHP, advance payments of the premium tax credit, and cost-sharing
reductions. In addition, we proposed that the Exchange utilize a
secure, electronic interface for the exchange of data for the purpose
of determining eligibility, including verifying whether an applicant
requesting an eligibility determination for advance payments of the
premium tax credit and cost-sharing reductions has been determined
eligible for Medicaid or CHIP, and other functions specified under this
subpart. We also proposed that the Exchange utilize any model
agreements established by HHS for the purpose of sharing data as
described in this section. We solicited comment as to the content of
these model agreements.
Finally, we proposed to develop procedures for the transition of
PCIP enrollees to coverage in QHPs offered through the Exchanges to
ensure that PCIP enrollees do not experience a lapse in coverage. We
solicited comment on additional responsibilities that should be
assigned to an Exchange as part of this process, such as providing
[[Page 18380]]
dedicated customer service staff for PCIP enrollees or actions that may
accelerate or further streamline eligibility determinations for PCIP
enrollees.
Comment: A large number of commenters supported a streamlined and
coordinated eligibility determination process for all insurance
affordability programs. A number of commenters also supported close
alignment of policies between the Exchange and other insurance
affordability programs to facilitate this streamlining and
coordination. Commenters supported the standard specified in proposed
Sec. 155.345(a) that the Exchange enter into agreements with Medicaid
and CHIP agencies. A few commenters suggested that language be added to
regulation text to ensure that the Exchange eligibility determinations
for Medicaid and CHIP comply with State plans and interpretive policies
and procedures of the State agency or agencies administering the
Medicaid or CHIP programs.
Response: We believe that agreements between the Exchange and other
insurance affordability programs are important for ensuring such
alignment and coordination across programs. We also note that in Sec.
155.300(b) of this final rule, we specify that, in general, references
to Medicaid and CHIP regulations in this subpart refer to those
regulations as implemented in accordance with policies and procedures
as applied by the State Medicaid or State CHIP agency or as approved by
the State Medicaid or State CHIP agency. With that said, we have also
added new Sec. 155.302 in this final rule that describes in greater
detail the options available for configuring responsibilities related
to eligibility determinations, which clarifies that there is an option
under which the Exchange does not make Medicaid or CHIP eligibility
determinations but is considered to be compliant with this final rule;
in such situations, the State Medicaid and CHIP agencies exercise final
control over eligibility determinations for Medicaid and CHIP for
applications submitted to the Exchange.
Additionally, we further clarify standards for coordination in
Sec. 155.345(a) of this final rule to align with those outlined in the
Medicaid final rule. Such standards are set to provide a clear
delineation of responsibilities of each program to minimize burden on
individuals, ensure prompt determinations of eligibility, enroll
eligible individuals into the program promptly and without undue delay,
and ensure compliance with the standards set forth in subpart D. We
encourage States to work closely across the Exchange, Medicaid, and
CHIP to simplify and streamline eligibility processes to maximize
efficiency and minimize administrative costs. In addition, in response
to comments regarding coordinating policies across insurance
affordability programs to avoid negative outcomes for consumers, we
have added new 155.345(f), which provides a special rule for the
limited number of situations in which a tax filer's household income,
as defined in section 36B(d)(2) of the Code, is less than 100 percent
of the FPL for the benefit year for which coverage is requested, the
Exchange determines that the tax filer is not eligible for advance
payments of the premium tax credit based on Sec. 155.305(f)(2), and
one or more applicants in the tax filer's household has been determined
ineligible for Medicaid and CHIP based on income. This provision
describes that the Exchange must provide information and explanation to
the applicant and tax filer in such situations; we clarify that this
language is new text, but that it is a means to address gaps in
eligibility rules and procedures. This provision will only have an
impact after the Medicaid rule in 42 CFR 435.603(i) is applied, which
specifies that the Medicaid agency will determine Medicaid eligibility
using section 36B rules, which should result in Medicaid eligibility in
most cases. As such, we believe that the provision in paragraph (f)
will be used in a very limited set of cases, but will ensure
individuals are not affected by gaps in eligibility rules.
Comment: Several commenters highlighted the importance of
coordinating eligibility and enrollment for individuals who are
determined eligible for Medicaid based on factors other than MAGI, for
example those qualifying based on disability status. Many commenters to
the proposed rule expressed concern that the Exchange standards in
proposed Sec. 155.345(b) through (d), which relate to those
individuals potentially eligible for Medicaid based on factors not
otherwise mentioned in this subpart were overly vague. Commenters
requested that HHS provide further details and guidance on the ``basic
screening'' standard specified in proposed paragraph Sec.
155.345(b)(1). Several commenters urged HHS to strengthen the standard
and others suggested the Exchange should ask a question or a set of
questions to assess whether a person is eligible for Medicaid on a non-
MAGI basis. Some commenters suggested striking a balance between
gathering relevant information and not overburdening applicants with
unnecessary questions. A few commenters suggested that States implement
oversight mechanisms and protections to ensure that each applicant is
directed to the most comprehensive benefits package to which he or she
is entitled.
Response: We clarified that the Exchange must assess the
information provided by the applicant on his or her application to
determine whether he or she is potentially eligible for Medicaid based
on factors not otherwise considered in this subpart. We believe the
term ``screening'' may have been misleading as the intention of the
provision was to simply check the application for an indication that an
applicant may be potentially eligible for Medicaid based on factors not
otherwise considered, such as disability or age. We appreciate
commenters' concerns that the Exchange only gather relevant information
and not overburden applicants, and we believe that this approach will
meet these standards.
Comment: Many commenters raised concerns that individuals may be
unaware of coverage that may be available to them and suggested that
HHS clarify how an individual who is not found eligible for Medicaid
based on MAGI will be notified of the opportunity to request a full
eligibility determination for Medicaid. One commenter suggested that we
provide example scenarios in the final rule to show when an applicant
may be determined ineligible in a screening but eligible after a full
screening. Another commenter suggested the basic screening on factors
other than MAGI could be confused as an eligibility determination. Some
commenters suggested amending language in proposed Sec. 155.345(c)
such that the Exchange must notify applicants of the Medicaid programs
that may be available to them so the applicant can request an
appropriate determination of Medicaid eligibility from the State
agency.
Response: To address this concern, in Sec. 155.345(b) of this
final rule, we specify that the Exchange will assess the information
provided by the applicant on his or her application to determine
whether he or she is potentially eligible for Medicaid based on factors
other than MAGI. While not every individual who is potentially eligible
for Medicaid based on non-MAGI factors will be identified through the
assessment in Sec. 155.345(b), we believe that this provision will
help identify a substantial portion of those individuals.
[[Page 18381]]
We also clarify in Sec. 155.345(c) of this final rule that the
Exchange will notify an applicant of his or her opportunity to request
a full determination of eligibility for Medicaid and provide the
applicant such opportunity. We anticipate that Exchanges will work with
State Medicaid agencies to craft notice text that reflects the options
available in specific States for Medicaid eligibility based on factors
other than MAGI. We have added to paragraph Sec. 155.345(d) that the
Exchange must notify the applicant during the application process that
his or her application has been transmitted to the State Medicaid
agency. We anticipate that such notices will be the subject of future
guidance.
Comment: Many commenters highlighted the importance of seamless
transmissions between coverage programs. Some commenters suggested
clarifying, ``promptly and without undue delay,'' and adding language
providing that the Exchange must transmit the relevant information
within 24 hours. A few commenters suggested that HHS establish
standards for the State Medicaid agency to follow up on referrals it
receives from the Exchange.
Response: We believe it would be more appropriate to interpret such
a standard in guidance, which will allow it to evolve with technology
and supporting business processes.
Comment: A few commenters also recommended aligning with Medicaid
language to clarify that relevant information transmitted to Medicaid
or CHIP agencies includes the electronic account containing the finding
of Medicaid or CHIP eligibility, all information provided on the
application, and any information obtained or verified by the Exchange
in making such a finding.
Response: We adopt the following standard to implement such a
standard: the Exchange must transmit all information provided on the
application and any information obtained or verified by, the Exchange
to the State Medicaid agency. As discussed in more detail above, this
Exchange final rule does not use the term ``electronic account'' but we
believe that the scope of our standard appropriately aligns with the
language in the Medicaid final rule on this point.
Comment: The majority of commenters supported the standard to
provide advance payments of the premium tax credit to individuals
seeking a determination of Medicaid eligibility on a basis other than
MAGI until the State Medicaid agency notifies the Exchange that the
applicant is eligible for Medicaid. Commenters highlighted that this
standard encourages applicants to obtain the most comprehensive
coverage for which they are eligible. Commenters also noted this
standard is vital to ensuring that consumers have access to continuous
health coverage while they navigate the eligibility and enrollment
process in their State. One commenter recommended that applicants be
able to waive enrollment in a QHP while awaiting a Medicaid/CHIP
determination.
Response: We maintain this provision in the final rule. We clarify
that this provision applies both when an applicant has not been
determined eligible for Medicaid based on MAGI and either is referred
by the Exchange to the State Medicaid agency based on screening, or
requests a full Medicaid eligibility determination. We also clarify
that an applicant is never required to enroll in a QHP while a full
Medicaid determination is underway; the Exchange must provide
eligibility, but it is the choice of the applicant whether to actually
select a QHP. We also clarify that this provision would apply only to
the extent that the responsibility to conduct a determination for
Medicaid eligibility on bases other than MAGI has not been delegated to
the Exchange, through an agreement between the Exchange and the State
Medicaid agency.
Comment: A few commenters said that the proposed process in Sec.
155.345(d) for applications submitted directly to Medicaid, CHIP, or
BHP was vague and should be clarified to specify that such agencies
will screen applicants to determine whether they are eligible for
enrollment in a QHP with or without advance payments of the premium tax
credit and cost-sharing reductions, and then ``enroll'' eligible
applicants. Many commenters supported the provisions in proposed Sec.
155.345(d) that specified that an Exchange may not be required to
duplicate any eligibility or verification findings that have already
been made by agencies administering Medicaid, CHIP, or the BHP, where
applicable. A few commenters suggested that language be added to
clarify that Exchanges are not permitted, not simply ``not required,''
to duplicate eligibility and verification findings made by the Medicaid
or CHIP agency.
Response: In Sec. 155.345(g) of this final rule, we clarify our
intention to maintain a streamlined eligibility determination process
for consumers. Consistent with the Medicaid final rule, we add
standards for how agencies administering Medicaid, CHIP, and BHP will
transmit an application to the Exchange and how the Exchange will take
the necessary steps to process such applications. We note that the
Medicaid final rule provides additional information regarding the
responsibilities of the Medicaid agency with regards to applications
submitted directly to Medicaid. In Sec. 155.345(g)(2), we clarify that
the Exchange must not duplicate any eligibility and verification
findings already made by the transmitting agency, to the extent such
findings are made in accordance with this subpart and in Sec.
155.345(g)(3). We also clarify that the Exchange must not request
information or documentation from the individual already provided to
Medicaid, CHIP, or BHP that was included in the transmission to the
Exchange. Additionally, in Sec. 155.345(g)(6) of this final rule, we
specify that the Exchange must provide for following a streamlined
process for eligibility determinations regardless of the agency that
initially received an application. This provision is intended to ensure
that an application that is submitted to a State Medicaid or CHIP
agency follows the same processes for a complete MAGI-based
determination of eligibility to enroll in a QHP, advance payments of
the premium tax credit, and cost-sharing reductions.
Comment: Commenters supported the provisions in proposed Sec.
155.345(e) to use of a secure electronic interface to transmit data
among the various agencies responsible for determining eligibility for
the insurance affordability programs.
Response: We maintain these provisions in the final rule. In
addition to these standards, we have also further specified standards
for data sharing in Sec. 155.260 in this final rule. More information
can be found in the responses to comments found in that section.
Comment: Several commenters requested guidance or standards in
proposed Sec. 155.345(i) regarding the transition of Pre-existing
Condition Insurance Plan (PCIP) enrollees into the Exchange, and many
commenters provided specific suggestions as to what this guidance
should consider. Some specific recommendations provided include that
the Exchange should develop an agreement with PCIP; the Exchange and
PCIP should coordinate to develop a letter informing PCIP enrollees of
what they need to do to transition to the Exchange; customer service
resources should be dedicated and trained to assist these enrollees to
transition smoothly; and others provided recommendations regarding
outreach, education, and information that should be provided to PCIP
enrollees, frequently citing provider
[[Page 18382]]
directories as an example of information that needs to be clearly
provided to PCIP enrollees. Some commenters recommended that
information be transferred between the PCIP and Exchange programs to
reduce the need for the Exchange to request duplicative information
from PCIP enrollees and to ease their transition into the Exchange.
Several commenters emphasized that flexibility be given to States
to accommodate the transition of PCIP enrollees due to concerns related
to the influx of large numbers of high-risk people. Some of these
commenters recommended that HHS consider allowing the Exchange to
transition PCIP enrollees into 2014 and years beyond. One commenter
recommended that the Federal government should not assign specific
responsibilities to State-operated Exchanges relating to transitioning
PCIP enrollees into Exchanges, while another commenter suggested that
HHS evaluate mechanisms to ensure that a distribution of enrollees is
balanced among QHPs in the Exchange.
Response: We will consider these comments as we develop future
guidance to support a smooth transition of PCIP enrollees into the
Exchange that minimizes disruption in the insurance marketplace to the
greatest extent possible, while also ensuring that this population has
access to affordable, high-quality health insurance.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.345 of the
proposed rule, with several modifications: in Sec. 155.345(a), we
clarified that the Exchange must provide HHS with copies of any
agreements made with other agencies administering insurance
affordability programs upon request. We clarified that agreements must
include a clear delineation of the responsibilities of each program to
minimize burden on individuals, ensure prompt determinations of
eligibility and enrollment, including redeterminations, and ensure
compliance with paragraphs (c), (d), (e), and (g) of this section. We
also modified language in Sec. 155.345(b) to specify that for an
applicant who is not eligible for Medicaid based on the standards
specified in Sec. 155.305 of this subpart, the Exchange must assess
the information provided on the application to determine whether he or
she is potentially eligible for Medicaid based on factors included in
the streamlined application, but not otherwise considered in this
subpart.
In Sec. 155.345(c) of this final rule, we added that the Exchange
must provide, and notify an applicant of, the opportunity to request a
full determination of eligibility for Medicaid. We also add that the
Exchange must provide notification and opportunity for a full
determination of eligibility for Medicaid when making a determination
in accordance with Sec. 155.330 and Sec. 155. 335. We modified
language in Sec. 155.345(d) to specify that if the Exchange identifies
an applicant as potentially eligible for Medicaid or an applicant
requests a full determination for Medicaid, the Exchange must transmit
all information provided on the application and any information
obtained or verified by the Exchange to the State Medicaid agency
promptly and without undue delay.
In addition, we clarified language in Sec. 155.345(e) to provide
that if an applicant potentially eligible for Medicaid is otherwise
eligible for advance payments of the premium tax credit and cost-
sharing reductions, the Exchange must provide the applicant with such
advance payments of the premium tax credit or cost-sharing reductions
until Medicaid notifies the Exchange that the applicant is eligible for
Medicaid. We amended Sec. 155.345(f) to add a special rule to address
situations in which a tax filer's household income is below 100 percent
of the FPL for the benefit year for which coverage is requested, the
tax filer is not eligible for advance payments of the premium tax
credit based on Sec. 155.305(f)(2), and one or more applicants in the
tax filer's household is ineligible for Medicaid and CHIP based on
income, in which case the Exchange must provide the income information
used in the Medicaid and CHIP determination to the applicant, and then
repeat the verification process. We modified Sec. 155.345(g)(1) to
include the standards set forth in the Medicaid final rule and outline
that the Exchange must--(1) Accept, via secure electronic interface,
all information provided on the application and any information
obtained or verified by, the agency administering Medicaid, CHIP, or
the BHP, if a BHP is operating in the service area of the Exchange, for
the individual, and not require submission of another application; (2)
not duplicate any eligibility and verification findings already made by
the transmitting agency, to the extent such findings are made in
accordance with this subpart; (3) not request information or
documentation from the individual already provided to another insurance
affordability program; (4) promptly and without undue delay determine
eligibility of the individual for enrollment in a QHP, advance payments
of the premium tax credit and cost-sharing reductions, in accordance
with this subpart; and (5) provide for following a streamlined process
for eligibility determinations regardless of the agency that initially
received an application. Additionally, we renumbered paragraphs (c)
through (i) to account for the changes described above.
We also made two technical corrections. First, we amended the
phrase ``providing advance payments of the premium tax credit'' to
``providing eligibility for advance payments of the premium tax
credit''. Second, we changed, ``Pre-Existing Condition Insurance
Program'' to ``Pre-Existing Condition Insurance Plan'' to match the
actual name of the plan.
k. Special Eligibility Standards and Process for Indians (Sec.
155.350)
In accordance with section 1402(d)(1) of the Affordable Care Act,
in Sec. 155.350(a), we proposed that the Exchange determine
eligibility for cost-sharing reductions for an applicant who is an
Indian if he or she meets the standards related to eligibility for
enrollment in a QHP and has household income that does not exceed 300
percent of the FPL. We also proposed to clarify that the Exchange may
only provide cost-sharing reductions to an individual who is an Indian
if he or she is enrolled in a QHP. In addition, in Sec. 155.350(b) we
provided that the Exchange must determine an applicant eligible for the
special Indian cost-sharing rule in accordance with section 1402(d)(2)
of the Affordable Care Act if he or she is an Indian, without requiring
the applicant to request an eligibility determination that provides for
collection or verification of income.
We further proposed a two-phase process by which the Exchange must
verify an individual's attestation that he or she is an Indian for
purposes of determining whether he or she qualifies for these cost-
sharing rules. In paragraph (c)(1), we proposed that the Exchange must
verify an applicant's attestation that he or she is an Indian if an
applicant submits satisfactory documentation to support their
attestation of citizenship or lawful presence in accordance with Sec.
155.315(e). In paragraph (c)(2), we proposed that the Exchange must
rely on any available electronic data sources that have been authorized
by HHS. Lastly, if the process under (c)(1) does not occur or data
sources are unavailable, the individual is not represented in the
source, or the source is not reasonably compatible with the applicant's
attestation, we proposed that
[[Page 18383]]
the Exchange follow the standard inconsistency procedures under Sec.
155.315(e). We solicited comment on the availability and usability of
electronic data sources, as well as best practices for accepting and
verifying documentation related to Indian status.
Comment: One commenter sought clarification about proposed Sec.
155.350(b), which codifies section 1402(d)(2) of the Affordable Care
Act. The commenter noted that this section appears to apply only to
those services received at the IHS, and the commenter asked if it also
applies to referrals to outside specialists, etc. The commenter further
suggested that the proposed regulations appear to go beyond what the
statute asks and recommends that the special cost-sharing provisions be
limited to those services furnished through Indian Health Providers.
Response: Our intent is to adhere to the statute. In accordance
with section 1402(d)(2) of the Affordable Care Act, the cost-sharing
rule described in Sec. 155.350(b) of this final rule is limited to
only an item or service furnished directly by the Indian Health
Service, an Indian Tribe, Tribal Organization, or Urban Indian
Organization or through referral under contract health services.
Comment: Several commenters generally requested that all applicants
and potential applicants be given notice that there may be benefits and
protections that apply if the applicant is an Indian. One commenter
recommended that determining Indian status should be a one-time
occurrence, and the commenter further requested that any data matching
system used to identify eligible American Indians or Alaska Natives
should only provide information essential to establish whether an
individual is an Indian in order to protect the privacy of the
individual from unwarranted intrusions. The commenter acknowledged that
there will be cases in which further verification is necessary or where
there is a gap in information available through data matching, and that
there should be other vehicles by which an individual can establish
qualifications for benefits and protections as an American Indian or
Alaska Native. Another commenter suggested that any reasonable
documentation be accepted, and lists a number of potential documents
that would satisfy this policy. One commenter recommended that Indians
with tribal enrollment cards should be able to submit their tribal
enrollment number on their application.
Response: We anticipate that verification of Indian status for
purposes of determining eligibility for Exchange-related benefits will
only be a one-time occurrence for applicants. Additionally, the
utilization of any electronic data sources for purposes of verification
of Indian status will be subject to the privacy and security standards
outlined in Sec. 155.260 and Sec. 155.270 of this final rule, as is
the case for all data acquired and used by the Exchange in the
eligibility determination process. Lastly, under Sec. 155.350(c)(3) of
this final rule, we reference section 1903(x)(3)(B)(v) of the Act for
standards for acceptable documentation, which includes documents issued
by Federally-recognized tribes. These standards for acceptable
documentation provide uniformity in process for applicants claiming
Indian status.
Comment: A few commenters recommended that the Exchange accept
self-attestation for verification of Indian status, stating that self-
attestation should be sufficient if the application questions are
framed in a way that can be used to determine eligibility. One
commenter suggested that verification of Indian status only be
conducted when there are inconsistencies that cannot be resolved
through simple explanation and attestation by the individual, or if
there is some indication of fraud on the part of the individual, and
further recommended that if electronic data sources are utilized to
verify Indian status, that the only appropriate data source is the
registration database used by Indian Tribe, Tribal Organization, or
Urban Indian Organization programs.
Response: We are maintaining the verification process described
under Sec. 155.350 in this final rule. This verification is tied to a
full exemption from cost-sharing, which could involve a substantial
expenditure for the Federal government; consequently, we are specifying
a more stringent process for verification though we note that Sec.
155.315(h) allows the Exchange flexibility to modify this and other
verification processes with HHS approval. In addition, we note that the
documentation process described under Sec. 155.350(c)(3) is similar to
the documentation process utilized by the IHS when determining
eligibility for American Indians/Alaska Natives who seek services at
IHS facilities. The standard for Exchanges is slightly different from
the standard for such services, however, which means that the
registration database for Indian Tribe, Tribal Organization, or Urban
Indian Organization programs may not be a one-to-one match. With that
in mind, we are working closely with the IHS and intend to work with
States and tribes to determine whether and how electronic data can
support this process.
Comment: Several commenters recommended that American Indians be
determined eligible for advance payments of the premium tax credit and
cost-sharing reductions through the Exchange even if they have access
to qualifying coverage in an eligible employer-sponsored plan, notably
because cost-sharing may be more costly for the employer-sponsored plan
in comparison to that for a QHP through the Exchange given the special
cost-sharing benefits provided for Indians under section 1402(d) of the
Affordable Care Act. Other commenters recommended that American Indians
under 300 percent of the FPL should be exempt from both cost-sharing
and premiums for QHPs through the Exchange.
Response: The comment regarding eligibility for advance payments of
the premium tax credit and cost-sharing reductions based on eligibility
for qualifying coverage in an eligible employer-sponsored plan is
addressed in responses associated with Sec. 155.320(e). Additionally,
in accordance with section 1302(c)(3) of the Affordable Care Act, the
definition of ``cost-sharing'' as provided does not include premiums;
therefore, HHS does not interpret this statutory provision to say that
the special cost-sharing benefits provided to Indians under section
1402 of the Affordable Care Act includes an exemption from premiums for
a QHP through the Exchange. Nothing in this final rule impacts an
Indian's ability to access IHS facilities at no cost-sharing.
Summary of Regulatory Changes
For the reasons described in the proposed rule and considering the
comments received, we are finalizing the provisions proposed in Sec.
155.350 of the proposed rule, with the following modifications: In
paragraph (a)(1)(i), we clarify that in accordance with section
1402(f)(2) of the Affordable Care Act, an applicant must be eligible
for advance payments of the premium tax credit in order to receive
cost-sharing reductions based in part on household income. In paragraph
(a)(1)(ii), we add a citation to clarify that for purposes of cost-
sharing reductions under paragraph (a)(1), household income is defined
in section 36B(d)(2) of the Code and FPL is defined in section
36B(d)(3) of the Code.
l. Right to Appeal (Sec. 155.355)
In Sec. 155.355, we proposed that an individual may appeal any
eligibility determination or redetermination made by the Exchange,
including determinations of eligibility for enrollment in a QHP,
advance payments of the premium tax credit, and cost-
[[Page 18384]]
sharing reductions. We noted that we intend to propose the details of
the individual eligibility appeals processes, including standards for
the Federal appeals process, in future rulemaking.
Comment: We received a number of comments in support of our
proposal that the Exchange must provide a notice of the right to appeal
and instructions on how to file an appeal of any aspect of an
eligibility determination in accordance with proposed Sec. 155.310(g),
Sec. 155.330(d), or Sec. 155.335(g). However, several commenters
recommended that we provide greater detail around the appeals process
in the final rule, including specific standards for the notice,
coordination or integration with the Medicaid and CHIP appeals
processes, and alignment of standards with Medicaid.
Response: We acknowledge the importance of providing greater detail
regarding the appeals process, and will do so in future rulemaking.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.355 of the
proposed rule, with the following technical modifications: In paragraph
(a), we added ``eligibility'' to describe the determination notice. We
also edited the references to other sections of subpart D to account
for renumbering.
5. Subpart E--Exchange Functions in the Individual Market: Enrollment
in Qualified Health Plans
In subpart E, we outline the initial, annual, and special
enrollment periods as well as the enrollment process and the
termination of coverage process.
a. Enrollment of Qualified Individuals into QHPs (Sec. 155.400)
In Sec. 155.400, we proposed that the Exchange must: (1) Accept a
QHP selection from an applicant who is determined eligible for
enrollment in a QHP; (2) notify the issuer of the applicant's selected
QHP; and (3) transmit information necessary to enable the QHP issuer to
enroll the applicant. We also proposed that the Exchange send QHP
issuers enrollment information on a timely basis, and sought comment as
to whether we should establish a specific frequency for enrollment
transactions, such as in real time or daily, in our final rule.
Finally, to ensure that the Exchange and QHP issuers have identical
plan enrollment records, we proposed that the Exchange maintain records
of enrollment, submit enrollment information to HHS, and reconcile the
enrollment files with the QHP issuers no less than monthly.
Comment: With respect to proposed Sec. 155.400(a), several
commenters recommended adding the limitation that the Exchange transmit
``only'' information necessary to effectuate enrollment. Commenters
further recommended HHS identify the information that Exchanges should
transmit to QHP issuers.
Response: We outline the limitations for information the Exchange
may collect, use or receive in Sec. 155.260 of this final rule, which
addresses privacy and security of information. Across all functions,
the Exchange will only acquire, maintain, and disclose information that
is necessary for Exchange operations. Specific data elements for
transmission to QHP issuers will be identified at a later date.
Comment: One commenter recommended allowing Exchanges to contract
with safety net providers to conduct enrollment activities, similar to
the activities they perform for Medicaid.
Response: In general, the Exchange has discretion to contract with
an eligible contracting entity to perform Exchange functions on its
behalf, as outlined in Sec. 155.110 of this final rule. Furthermore,
Sec. 155.210(c)(2)(viii) of this final rule allows for ``other public
or private entities that meet the standards of this section,'' to serve
as Navigators, including ``State or local human service agencies.''
Comment: One commenter encouraged the Exchanges to initiate what it
referred to as a preliminary ``pipeline'' reporting under proposed
Sec. 155.400(a), so that QHP issuers would have a sense of the
enrollment volume they might expect over the next month, particularly
during, and leading up to open enrollment periods.
Response: Exchanges have the flexibility to notify QHP issuers of
the number of individuals who have received eligibility determinations
for coverage through the Exchange, as well as to work with QHP issuers
to define other operational communications that would streamline
administration. We do not believe it is necessary or within statutory
authority for Exchanges to share any personally identifiable
information with QHPs about individuals who have not selected the QHP
issuer's offering.
Comment: Several commenters noted that the success of health reform
hinges on individuals' ability to easily enroll in, and retain
coverage. They generally recommended instituting enrollment processes
that do not overburden individuals with paperwork and documentation.
Response: We believe the streamlined application discussed in Sec.
155.405 and the Internet Web site discussed in Sec. 155.205 of this
final rule will help to achieve a streamlined process for all
applicants. In addition, in Sec. 155.315(g) of this final rule, we
codify a provision of the Affordable Care Act that specifies that an
applicant does not have to provide information beyond the minimum
necessary to support the eligibility and enrollment process.
Comment: One commenter recommended that QHP issuers be responsible
for the enrollment of participants in the Exchange in accordance with
proposed Sec. 155.400(a), since they currently facilitate the
enrollment process, and will continue to do so for products outside of
the Exchange.
Response: Prior to enrollment by the QHP issuer, the Exchange will
need to transmit enrollment information to the QHP issuer because the
individual must have an eligibility determination for coverage, and, if
interested, for advance payments of the premium tax credit and cost-
sharing reductions. Furthermore, the Exchange must report enrollment
information to HHS in order to initiate advance payments of the premium
tax credit and cost-sharing reductions. Once enrollment information has
been provided by the Exchange, the QHP issuer is ultimately responsible
for effectuating enrollment.
Comment: One commenter noted that the proposed provision in Sec.
155.400(a)(2) for the Exchange to transmit information necessary to
enable the QHP issuer to enroll the applicant, appears to be
inconsistent with the proposed Sec. 155.205(b)(6), now redesignated in
this final rule as Sec. 155.205(b)(5), which established that the
Exchange Web site must have the capacity to allow enrollment. The
commenter asked HHS to clarify whether these are intended as
alternatives.
Response: We have clarified language in this final rule at Sec.
155.205(b)(5) to ensure that the Exchange Web site allows consumers to
make a QHP selection, thereby initiating the enrollment process.
Section 155.400(a)(2) of this final rule describes the subsequent step
in the enrollment process, and establishes that Exchanges must transmit
the QHP selection to the appropriate QHP issuer.
Comments: Many commenters requested clarification on the definition
of a ``timely'' transmittal of enrollment information from the Exchange
to QHP issuers, as discussed in proposed Sec. 155.400(b)(1). Some
suggested specifying ``daily,'' ``real-time,'' or leaving the
definition to State flexibility.
[[Page 18385]]
Response: In this final rule, we have modified the regulatory text
in Sec. 155.400(b)(1) to be consistent with Sec. 155.340(d), which
states that Exchanges must send eligibility information to both QHP
issuers and to HHS promptly and without undue delay. We expect
Exchanges will send each QHP issuer an automated file of applicable
eligibility and enrollment transactions, and simply include HHS on the
transmission. HHS will issue future guidance outlining standards and
timing for these transmissions. We further expect Exchanges to use the
monthly reconciliation standards outlined in Sec. 155.400(c) and Sec.
155.400(d) to ensure consistency in enrollment records.
Comment: A few health insurance issuers cautioned that the QHP
issuer's acknowledgement of the receipt of an enrollment transaction
under proposed Sec. 155.400(b)(2) is not a confirmation that the
information is complete. The commenters stated that it should be the
responsibility of the Exchange to ensure that the eligibility and
enrollment information being sent to the QHP issuer is complete and
accurate. One commenter recommended a strong file validation protocol,
so that any incomplete or conflicting records were identified prior to
submission.
Response: The intent of the acknowledgement standard in Sec.
155.400(b)(2) is to ensure that QHP issuers accept responsibility for
completing an individual's enrollment. We expect Exchanges will
establish a process by which the QHP issuer signifies that it has
received complete and accurate enrollment information, and if it does
not, promptly notifies the Exchange that the information is
insufficient to complete enrollment.
Comment: One commenter recommended that QHP issuers acknowledge the
receipt of eligibility and enrollment information, as described in
proposed Sec. 155.400(b)(2), to both the Exchange and the applicant,
while one health insurance issuer recommended that State laws govern
communication between QHP issuers and enrollees.
Response: We clarify in part 156 the information that QHP issuers
must provide to enrollees. As finalized in Sec. 156.260(b), the QHP
issuer must provide notice of the effective date of coverage and must
provide new enrollees an enrollment information package as an
acknowledgement of enrollment as described in Sec. 156.265(e).
However, we note that Exchanges may apply additional rules to ensure an
optimal consumer experience, such as notifying the applicant that the
Exchange has transmitted enrollment information to the QHP issuer.
Comments: Several commenters requested clarification on reporting
standards under proposed Sec. 155.400(c), including timing, format,
and content. Some commenters requested that the HHS reporting standard
be omitted. One State agency recommended that State regulators have
unfettered access to all data sets used for and by Exchanges.
Response: As noted above, HHS plans to provide guidance on timing,
format, and content of the enrollment information transmissions
required under Sec. 155.400 of this final rule. We have removed the
standard in proposed Sec. 155.400(c) for Exchanges to submit
enrollment information to HHS on a monthly basis, because Sec.
155.400(b)(2) of this final rule directs Exchanges to send eligibility
and enrollment information to HHS ``promptly and without undue delay.''
With respect to the comment on the ability of State regulators to have
access to all data collected and used by Exchanges, we note that data
sets that contain personally identifiable information, and that are
used by an Exchange while the Exchange is fulfilling its
responsibilities in accordance with Sec. 155.200(c), may only be
disclosed if such disclosure is consistent with Sec. 155.260.
Disclosures for other purposes must be consistent with applicable
Federal and State laws.
Comment: For the reporting and reconciliation standards outlined in
proposed Sec. 155.400(c) and Sec. 155.400(d), one commenter requested
clarification to ensure that Exchanges may collect monthly enrollment
and termination data directly from insurers. The commenter sought to
eliminate the need for the Exchange to collect this information on a
case by case basis, compile it, and then reconcile it with issuers; all
activities that the commenter stated are not feasible under a free
market model where the Exchange Web site may not be tracking an
individual's coverage choices.
Response: Per subpart D of both the proposed and final rules, the
Exchange must make a determination of an individual's eligibility in
order for a person to enroll in a QHP through the Exchange. In
addition, per Sec. 155.340(a), the Exchange must know which QHP a
qualified individual has selected in order to make any advance payments
of the premium tax credit. We do not believe that collection of
enrollment data from issuers on a monthly basis would be sufficient to
meet these standards, and therefore maintain the policy in Sec.
155.400 of this final rule.
Comment: Most commenters supported a minimum monthly reconciliation
under Sec. 155.400(d), as long as Exchanges retained flexibility to
reconcile more frequently. One health insurance issuer recommended
reconciling only the cases with changes on a more frequent basis, while
reconciling the full case load on a quarterly basis.
Response: In this final rule, we maintain the requirement in Sec.
155.400(d) for monthly reconciliation, and require Exchanges to
reconcile enrollment information with HHS in addition to QHP issuers.
Exchanges have flexibility to reconcile some or all cases more
frequently. We expect that Exchanges will work to minimize enrollment
discrepancies, to automate reconciliation where possible, and to
streamline any manual reconciliation activities that remain necessary.
Summary of Regulatory Changes
We are finalizing the standards proposed in Sec. 155.400 of the
proposed rule with the following modifications: In Sec. 155.400(b)
regarding the timing of data exchanges, we specify in the final rule
that the Exchange must send enrollment information to both QHP issuers
and HHS promptly and without undue delay. In Sec. 155.400(c) we remove
the standard that Exchanges submit enrollment information to HHS on a
monthly basis. In Sec. 155.400(d), we establish that Exchanges must
reconcile enrollment information with both QHP issuers and HHS no less
than on a monthly basis. We also made a few non-substantive edits to
streamline the regulatory text.
b. Single Streamlined Application (Sec. 155.405)
In Sec. 155.405, we proposed to codify that a QHP issuer must use
the single streamlined application for qualified individuals and
employers to enroll in QHPs through the Exchange. We also offered
States the option to develop an alternative application, subject to
approval by HHS. We sought comment regarding whether we should
establish that applicants do not have to answer questions that are not
pertinent to the eligibility and enrollment process.
We further proposed that the Exchange must accept applications from
multiple sources including the applicant, an authorized representative
(as defined by State law), or someone acting responsibly for the
applicant; and that an individual must be able to file an application
online, by telephone, by mail, or in person. We solicited comment on
whether an individual must be able to file an application in person.
[[Page 18386]]
Comment: A handful of commenters urged that the application
described in proposed Sec. 155.405(a) enable eligibility
determinations for other human services programs such as the
Supplemental Nutritional Assistance Program (SNAP) and Temporary
Assistance for Needy Families (TANF) in addition to Medicaid, CHIP, and
BHP.
Response: In this final rule, we are only establishing that the
application support eligibility for Exchange coverage and insurance
affordability programs. With that said, States can decide to use HHS-
approved alternative applications that include human services programs.
Comment: Some commenters suggested that all States should use the
HHS-created application and requested that we strike proposed Sec.
155.405(b) from this section, which pertains to alternative
applications. Issuers were concerned that they could be subjected to
too much variation in Exchange applications. Other commenters supported
our proposal to give States flexibility to create an alternative
application should they desire.
Response: Section 1413(b)(1)(B) of the Affordable Care Act directs
HHS to allow a State to develop and use its application, subject to
compliance with standards. We do not believe that variations in
applications will place a burden on QHP issuers since the necessary
enrollment information will be consistent across Exchanges. In
addition, we reiterate our position in the proposed rule that the
single streamlined application has been developed to meet the
requirement for a uniform enrollment form, as set forth in section
1311(c)(1)(F) of the Affordable Care Act. We further clarify that the
single streamlined application, or an HHS-approved Exchange alternative
application, must be used for enrollment in a QHP through the Exchange
only. Per Sec. 156.265 of the final rule, a QHP can satisfy the
standard regarding use of the single streamlined application by
directing the individual to file the single streamlined application
with the Exchange, or ensuring the applicant received an eligibility
determination for coverage through the Exchange through the Exchange
Internet Web site.
Comment: Numerous commenters urged HHS to add language to proposed
Sec. 155.405 stating that the standard single streamlined application
should not include questions that are not pertinent to the eligibility
and enrollment process. Other commenters wanted to ensure that the
application will collect demographic information beyond what is
established in the statute.
Response: The Exchange eligibility proposed rule and this final
rule at Sec. 155.315(g) prohibit Exchanges from requiring information
beyond the minimum necessary to support eligibility determinations for
the Exchange and insurance affordability programs. This provision
limits the application to information that is pertinent to the
eligibility and enrollment process.
Comment: Numerous commenters expressed support for allowing an
applicant to file an application in person, as described in the
preamble to Sec. 155.405 in the proposed rule. A handful of commenters
also urged HHS to go further and establish that Exchanges must allow
individuals to submit, change, or renew coverage at numerous locations,
including social service offices, welfare offices, community-based
organizations, and any other pathway that accepts applications for
government health benefit programs. Some commenters expressed concern
that the proposed regulation did not ensure effective communication for
individuals with disabilities because it did not provide for assistance
when filing an application in person. Other commenters suggested that
HHS establish that Exchanges must provide in-person assistance in a
number of different locations throughout States.
Response: We are maintaining the standard that applicants should be
able to file an application for an eligibility determination through
the Exchange and other insurance affordability programs in person. We
have added to regulation text in Sec. 155.405(c)(2)(iv) to establish
that the facilities where someone files an application in person comply
with the Americans with Disabilities Act. However, Exchanges have the
flexibility to determine the venues at which applicants may file in
person, which will allow Exchanges to configure staffing to meet the
specific characteristics of each State. We encourage Exchanges to
consider allowing enrollees to submit changes or complete the annual
redetermination process at an in-person location. We are not, however,
amending this in the final rule.
Comment: A handful of commenters suggested that an Exchange could
fulfill the standard to accept applications in person in accordance
with proposed Sec. 155.405(c)(2) through its Navigator program. These
commenters stated that in-person assistance may be burdensome for the
States, but Navigators are a natural venue for such assistance.
Response: An Exchange has flexibility in how it structures it
Navigator program and may use such a program to meet the standard for
in-person application filing and to provide assistance to individuals
applying for coverage through the Exchange.
Comment: Some commenters requested that the application provide
meaningful access for individuals who are LEP, provide effective
communication for individuals with disabilities, and also that the
application be translated into a number of different languages. Some
commenters recommended the application be translated into no fewer than
15 languages.
Response: We address meaningful access issues and concerns in Sec.
155.205(c) as well as in Sec. 155.230(b) of this final rule.
Additional guidance issued at a later date will coordinate our
accessibility standards with insurance affordability programs, and
across HHS programs, as appropriate, providing more detail regarding
literacy levels, language services, and access standards.
Comment: A significant number of commenters asked for clarification
on who can qualify as an authorized representative to file an
application on behalf of an applicant under proposed Sec.
155.405(c)(1) and, in particular, on what HHS meant by ``someone acting
responsibly for the applicant'' and how this role is different from an
authorized representative. Other commenters asked for more details on
the privacy standards that will be applied to authorized
representatives and others assisting with the application process.
Additionally, commenters thought that the final rule should specify
that a Navigator cannot apply on behalf of the individual without the
signed consent of an individual or an individual's parent, guardian,
court-designated representative, or legally-approved family member.
Response: We expect to provide future guidance regarding who may
serve as an authorized representative; we intend for this to track
against who can serve as an authorized representative under Medicaid.
We also note that a single application may have both an application
filer and an authorized representative. In paragraph Sec. 155.405(c)
of this final rule, we state that an ``application filer'' may file the
application, and we have added a corresponding definition in Sec.
155.20 in this final rule that notes that an application filer includes
authorized representatives as well as someone acting responsibly for
the applicant, if
[[Page 18387]]
the applicant is a minor or incapacitated. This change clarifies
situations when someone acting responsibly for the applicant might file
an application. In addition, the privacy and security standards
addressed in Sec. 155.260 apply to any person or entity that views or
receives personally identifiable information from or on behalf of an
applicant through the Exchange. Therefore, we believe that these
standards will ensure appropriate privacy standards for authorized
representatives and others assisting applicants. Further, the
application process will include an authentication process. HHS expects
to issue future guidance on the authentication process to verify an
individual's identity. In addition, we expect that application
assisters who are not Navigators, agents, or brokers will provide
support for consumers during the application process, and we anticipate
providing additional guidance regarding this role, including on
appropriate privacy and security protections.
Comment: Several commenters asked for clarification regarding
whether mobile devices could be used to apply for coverage under
proposed Sec. 155.405(c)(2). Many of these commenters recommended that
the final rule establish that the single streamlined application must
be available through mobile devices or mobile applications.
Response: In this final rule, Exchanges must only provide an online
application at this time (see Sec. 155.405(c)(2)(i)). Although it may
be beneficial for applicants to be able to complete the application and
the plan selection process using a mobile device, Exchanges do not have
to provide this functionality given the short implementation timeframe.
Summary of Regulatory Changes
We are finalizing the definitions proposed in Sec. 155.405 of the
proposed rule, with a few small modifications: We changed the final
rule in Sec. 155.405(b) from ``request'' to ``collect'' for
consistency with other parts of the final rule. We replaced (c)(1)(i)
through (c)(1)(iii) of the proposed rule with (c)(1) ``application
filer,'' which incorporates the previous categories included in the
proposed rule. In paragraph (c)(2), we have made minor clarifying
edits. We codified the standard that an individual may file an
application for coverage in person and clarified that reasonable
accommodations must be made for individuals with disabilities.
c. Initial and Annual Open Enrollment Periods (Sec. 155.410)
In Sec. 155.410, we proposed that the Exchange adhere to specified
initial and annual open enrollment periods and indicated that qualified
individuals and enrollees may begin or change coverage in a QHP at such
times. We sought comment on the duration of the initial open enrollment
period, which we proposed to be from October 1, 2013 to February 28,
2014. We also requested comment on the proposed annual open enrollment
period (October 15 to December 7 of each year) and whether we should
consider an alternative annual enrollment period from November 1
through December 15 of each year.
We also proposed standards for effective dates based on the date
when an individual's QHP selection is received. To coordinate coverage
in a QHP with the advance payments of the premium tax credit, we
proposed that coverage in a QHP may only begin on the first of the
month. We sought comment as to whether we should consider twice monthly
or flexible effective dates of coverage for individuals who forgo
advance payment of the premium tax credit for the first partial month
or who are not eligible for advance payments of the premium tax credit.
We also proposed that the Exchange must send written notification
to enrollees about the annual open enrollment period and sought comment
on whether we should codify specific elements that must be included in
the notification and timing of the notification. We further proposed
that the Exchange must ensure coverage is effective as of the first day
of the following benefit year for a qualified individual who has made a
QHP selection during the annual open enrollment period.
Finally, we sought comment on whether Exchanges should
automatically enroll individuals who received advance payments of the
premium tax credit and then have coverage terminated from a QHP because
the QHP is no longer offered, if such individual does not make a new
QHP selection. We also sought comment on whether we should allow for
automatic enrollment of individuals in specific circumstances, such as
mergers between issuers or when one QHP offered through a specific
issuer is no longer offered, but there are other options available to
the individual through the same issuer. Lastly, we sought comment as to
how far such automatic enrollment should extend if we were to allow it.
Comment: Several commenters expressed concern about adverse
selection with respect to the enrollment periods in proposed Sec.
155.410 and Sec. 155.420. The commenters supported limited enrollment
periods and opposed any flexibility for States to implement longer or
more frequent enrollment periods.
Response: In both the proposed and final rules, we have attempted
to balance the risk of adverse selection with the need to ensure that
consumers have adequate opportunity to enroll in QHPs through an
Exchange. We believe that the enrollment periods described in Sec.
155.410 and Sec. 155.420 of this final rule achieve that balance. As
we describe later in this section, we believe that additional time is
needed for the initial enrollment period, given that Exchanges are a
new coverage option under the Affordable Care Act, and significant
education and outreach will be needed to make individuals aware of this
coverage opportunity.
Comment: Several commenters requested more State flexibility with
respect to the enrollment periods identified under proposed Sec.
155.410 and Sec. 155.420. The commenters recommended States have
flexibility to set their own enrollment periods and effective dates,
especially those States already operating Exchanges. A few commenters
requested State flexibility to extend enrollment periods, particularly
for vulnerable populations.
Response: Section 1311(c)(6) of the Affordable Care Act
specifically directs the Secretary to provide for initial, annual and
special enrollment periods. In both the proposed and final rule, we
have tried to provide State flexibility while adhering to our
responsibility under the statute to establish the enrollment periods
identified under section 1311(c). Therefore, we have proposed and
finalized in this rule the minimum uniform enrollment periods across
all Exchanges, including a special enrollment period for individuals
experiencing an exceptional circumstance.
Comment: Almost all commenters supported the proposed start date of
October 1, 2013 under proposed Sec. 155.410(b) for the initial open
enrollment period. One State agency believed it was unrealistic to
expect Exchanges to be operational prior to January 1, 2014, given the
systems development challenges ahead. A few commenters requested
flexibility to begin enrollment, or a ``pre-qualification'' period
before October 1, 2013. Commenters recommended an
[[Page 18388]]
initial open enrollment period lasting as few as two months and as long
as three years. The majority of commenters recommended a six-month
initial open enrollment period, ending on March 31, 2014, one month
later than in the proposed rule. Most commenters suggested that the
longer initial open enrollment period would allow more time for
individuals and families to learn about their coverage options, and
more time for them to select a QHP. Finally, commenters recommended
that individuals who enroll during the initial open enrollment period
be permitted to change plans at least once without penalty during the
Exchanges' first year of operation.
Response: In this final rule, we maintain the start date of October
1, 2013 for the start of the initial open enrollment period. Although
coverage will not be effective until January 1, 2014, we believe that
individuals and families need time to explore their coverage options
and QHPs need time to process plan selections. We have extended the
initial open enrollment period by one month--from February 28, 2014 to
March 31, 2014. HHS's experience with the initial open enrollment
period for Medicare's Prescription Drug Benefit Program supports an
extended period. We have not extended the initial open enrollment
period past March 31 in order to limit the risk of adverse selection,
as expressed by commenters.
Comment: Several commenters recommended a robust outreach campaign
prior to the initial open enrollment period. One group recommended that
health insurance issuers notify all individual market subscribers about
their potential eligibility for financial assistance through an
Exchange under this section.
Response: We encourage Exchanges to leverage existing resources in
their marketing efforts, including working with issuers to determine
how they can participate most effectively. Section 155.205(e) of this
final rule directs Exchanges to conduct outreach and education
activities to educate consumers about the Exchange and to encourage
participation.
Comments: Several commenters representing State agencies and health
insurance issuers expressed concern about effective dates proposed in
Sec. 155.410(c). The commenters asserted that the specified minimum of
eight days between plan selection and coverage effective date was too
short, and that they needed as many as 30 days to make coverage
effective. Commenters recommended that we ensure there is sufficient
lag time between QHP selection and effective dates.
Response: Based on the commenters' recommendation to allow more
time between QHP selection and effective dates, we have modified the
proposed QHP selection cutoff date in this final rule from the 22nd to
the 15th of the month. As described in more detail below, we have also
provided flexibility for Exchanges to work with QHP issuers to make
coverage effective more quickly.
Comment: Many commenters, namely consumer and patient advocates,
were concerned that the proposed effective dates under Sec. 155.410(c)
and Sec. 155.410(f) would lead to coverage gaps for individuals losing
coverage mid-month. The commenters offered alternative effective dates,
including twice monthly, continuous, and retroactive. Many commenters
responded positively to our solicitation for comments on whether to
allow mid-month or flexible effective dates for qualified individuals
willing to forgo advance payments of the premium tax credit until the
1st of the following month, or who are ineligible for such payments.
Others requested that coverage be guaranteed for the 1st of the month
for all qualified individuals, even when they select a QHP on the last
day of the previous month. Finally, a few commenters recommended
printable, temporary insurance cards that individuals could use until
the enrollment process was completed.
Response: We recognize the need to minimize coverage gaps,
especially for vulnerable populations. However, the suggested
alternatives could have negative consequences for Exchanges and QHP
issuers, by increasing costs and administrative burden. Because the
initial open enrollment period will be the Exchanges' first experience
with enrollment, and many newly-eligible individuals will be seeking to
enroll at the same time, we believe it is important to maintain
administrative processes consistent with health insurance issuers'
experience, while at the same time including flexibility for
improvement as Exchanges and QHP issuers enhance their capabilities.
In response to commenters' concerns, we have added two new options
for earlier initial open enrollment period effective dates in Sec.
155.410(c)(2) of this final rule. We have also added the same options
for special enrollment period effective dates in Sec. 155.420(b)(3) of
this final rule. An Exchange may adopt one or both options, provided
that it demonstrate to HHS that all of the participating QHP issuers
agree to effectuate coverage in a timeframe shorter than discussed in
Sec. 155.410(c)(1)(ii) through Sec. 155.410(c)(1)(iii). We include
this qualification because QHP issuers may need to implement
administrative changes to accommodate the modified effective dates. We
note that individuals seeking the earlier effective date described in
Sec. 155.410(c)(2)(i)(B) must waive the benefit of advance payments of
the premium tax credit and cost-sharing reductions if coverage is
effectuated mid-month. However, individuals do not have to accept this
earlier effective date. As an example, if all QHP issuers in State X
agree that they can effectuate coverage eight days after QHP selection,
and individual A makes a QHP selection on January 17th, 2014, the
issuer may effectuate the coverage on January 25th, provided that the
individual is willing to forgo advance payment of the premium tax
credit for the seven days of coverage in January.
Comment: In response to our request for comment in the preamble of
proposed Sec. 155.410(d) on whether we should set a standard for the
timing of the annual open enrollment notice, most commenters supported
a standard for the Exchange to send a notice of annual open enrollment
30 days prior to the start of enrollment, though one patient advocacy
organization recommended 60 days' notice.
Response: We have added a standard in this final rule in Sec.
155.410(d) that the Exchange send the notice no earlier than September
1st, and no later than September 30th of each year, in preparation for
an October 15th annual open enrollment. Because subpart D of this final
rule directs the annual redetermination notice to be combined with the
annual open enrollment notice, we have allowed a 30 day window for
States to produce and mail the combined notice. We believe that 60 days
is too far in advance of annual open enrollment for enrollees to
remember to take action.
Comment: Many commenters representing patient and consumer advocacy
groups recommended that proposed Sec. 155.410(d) establish an
additional notice to be sent 30 days before the end of the annual open
enrollment period to enrollees who had not yet selected a QHP. Some
commenters recommended the use of social media and mass media to
increase awareness of annual open enrollment.
Response: We note that Exchanges may send additional notices and
conduct outreach to assist consumers with enrollment, but we do not
establish such notices as a minimum standard.
Comment: A few commenters recommended that HHS provide a
[[Page 18389]]
model annual open enrollment notice and a process for deviating from
that notice. Suggestions for the notice's content included: meaningful
access standards, information about how to access brokers and
application assisters, an explanation of the once-a-year nature of an
annual enrollment period, the implications of going uninsured, and the
criteria for qualifying for a special enrollment period. Several
commenters recommended that the notice of annual eligibility
redetermination described in proposed Sec. 155.335(c) be combined with
the notice of annual open enrollment described in Sec. 155.410(d),
into a single, streamlined notice.
Response: HHS intends to provide Exchanges with a model notice in
future guidance. The model will consider the content recommended above.
In response to commenters' recommendation to combine and streamline
notices, we have added timing standards to the notice of annual
redetermination notice in Sec. 155.335(d) of this final rule.
Comment: One commenter noted that health insurance issuers already
send a notice of annual open enrollment. The commenter stated that if
Exchanges did the same, as described in proposed Sec. 155.410(d), it
would be duplicative and unnecessarily burdensome for Exchanges.
Response: While it is possible that an Exchange or a State
insurance regulator might direct health insurance issuers to send a
notice of annual open enrollment, HHS is not imposing such a standard.
We therefore do not believe Sec. 155.410(d) is duplicative, and we
maintain it in the final rule. Issuers may continue to send such
notices at their discretion.
Comment: Several commenters, namely health insurance issuers,
recommended a shorter annual open enrollment period under proposed
Sec. 155.410(e), lasting between 30 and 45 days, to discourage adverse
selection. Conversely, several other commenters recommend extending the
annual open enrollment period until at least December 15th (for a total
of at least 60 days), to give individuals and families more time to
explore their coverage options. One commenter recommended quarterly
instead of annual open enrollment periods, to increase opportunities
for consumers to enroll. Commenters recommended annual open enrollment
periods lasting between 30 and 90 days, with several recommending
continuous open enrollment.
Response: As noted above, the rule seeks to balance flexibility for
consumers with the need to limit adverse selection. The 53-day length
of the annual open enrollment period balances these competing
interests, and gives individuals and families ample time to explore
coverage options. Therefore we maintain the annual open enrollment
start and end dates in Sec. 155.410(e) of this final rule.
Comment: One health insurance issuer suggested limiting an
enrollee's QHP selection during annual open enrollment in proposed
Sec. 155.410(e) to only one metal level higher. For example, the
commenter believed that enrollees should not be permitted to move from
a bronze level QHP to a gold or platinum level QHP. In response to a
similar proposal in Sec. 155.420(f) of the proposed rule to limit
movement between QHPs during special enrollment periods, most
commenters, with the exception of a few health insurance issuers,
either objected to the provision outright, or recommended additional
exceptions to allow movement between QHPs. One commenter noted that
because the special enrollment periods were generally not tied to
changes in an individual's health status, they did not pose a risk of
adverse selection.
Response: We have removed Sec. 155.420(f) from the final rule. We
do not believe it is appropriate to limit enrollee movement between
QHPs during the annual open enrollment period in Sec. 155.410(e), and
we have not added the restriction requested by the commenter.
Comment: With respect to the proposed annual open enrollment period
under Sec. 155.410(e), many commenters were concerned that its overlap
with the open enrollment periods for SHOP, Medicare and other Federal
programs would create an unmanageable administrative workload at the
end of each year. Some commenters suggested moving the Exchange's open
enrollment until after the first of the year to better align it with
tax filing season and with many employers' annual open enrollment
periods. Others recommended staggered, individual-specific open
enrollment periods. For example, periods could be linked to birthdays,
to spread out enrollment over the course of the year. Others
recommended that the annual open enrollment period reflect the current
enrollment practices in the individual and small-group market, and at
the least, align inside and outside the Exchange. Some commenters
representing senior citizens supported the alignment with Medicare.
Response: We recognize that the annual open enrollment period
overlaps with that of other Federal programs. However, we believe that
the alternatives suggested by commenters would lead to undesirable
outcomes. For instance, aligning the annual open enrollment period with
the tax season would mean that the coverage year and the tax year no
longer align, and in the first year consumers could have more than 12
months of coverage before receiving an opportunity to change QHPs.
Further, the updated tax return information may not yet be available
via the data services hub. We believe that a rolling open enrollment
period, with individual-specific dates would add complexity for
families and increase risk selection. It would also eliminate the
ability to conduct a single enrollment campaign when consumers could
take action. We therefore maintain the proposed open enrollment period
in Sec. 155.410(e) of this final rule. With respect to the comment on
aligning the enrollment period inside and outside the Exchange, we
clarify that this rule only sets standards for Exchanges.
Comment: In response to our request for comment on the issue of
auto-enrollment, several State agencies supported the rule's lack of
auto-enrollment standards, because they perceived it as permitting
flexibility. A few commenters explicitly opposed auto-enrollment. The
remainder of the commenters supported the option for Exchanges to auto-
enroll individuals who become unintentionally uninsured, but they
expressed concerns over limiting an individual's right to choose his or
her own QHP. Most commenters recommended that an Exchange send multiple
notices to individuals facing potential auto-enrollment, and provide a
30- to 90-day period for individuals to change QHPs after being auto-
enrolled.
Response: We have established flexibility for the Exchange to auto-
enroll qualified individuals when the Exchange demonstrates to HHS that
it has good cause to do so under Sec. 155.410(g) of this final rule.
We expect to issue guidance outlining generally the circumstances under
which HHS will approve Exchange auto-enrollment. HHS will also monitor
auto-enrollment practices across Exchanges for appropriateness and
effectiveness.
Comment: A few commenters stressed that any QHP into which
qualified individuals are auto-enrolled must meet women's reproductive
needs, as well as the need for local providers. The commenters
recommended that the QHP in which an individual is auto-enrolled
resemble any previous QHP coverage the qualified individual had.
Response: All QHPs must offer the essential health benefits
established
[[Page 18390]]
under section 1302(b) of the Affordable Care Act, which includes
coverage of maternity and newborn care. Also, all QHPs must comply with
Exchange network adequacy standards that ensure a sufficient number and
type of providers to assure that all services will be accessible
without unreasonable delay, per Sec. 156.230. HHS will consider other
commenter suggestions in developing guidance for Sec. 155.410(g) of
this final rule.
Summary of Regulatory Changes
We are finalizing the definitions proposed in Sec. 155.410 of the
proposed rule, with the following modifications: in Sec. 155.410(b),
we extended the end date of the initial enrollment period from February
28, 2014 to March 31, 2014. In Sec. 155.410(c)(2), we modified the
initial enrollment period effective date such that a QHP selection must
be received by the Exchange by the 15th of the month to secure an
effective date of the first day of the following month. We also
provided Exchanges flexibility to effectuate coverage more quickly if
all QHP issuers offering coverage through the Exchange agree with the
earlier dates, but noted that advance payments of the premium tax
credit and cost-sharing reductions cannot begin until the first of the
month. We further specified in Sec. 155.410(d) that the Exchange must
send the notice of annual open enrollment no earlier than September
1st, and no later than September 30th of each year. Finally, in Sec.
155.410(g) we added an option for Exchanges to automatically enroll
qualified individuals at such time and in such manner as HHS may
specify, and subject to the Exchange demonstrating to HHS that it has
good cause to perform such automatic enrollments.
d. Special Enrollment Periods (Sec. 155.420)
In Sec. 155.420, we proposed that the Exchange must allow a
qualified individual or enrollee to enroll in a QHP or change from one
QHP to another outside of the annual open enrollment period if such
individual qualifies for a special enrollment period. We proposed
special enrollment period effective dates that generally followed the
proposed initial enrollment period effective dates in Sec. 155.410.
For each special enrollment period we proposed a standard length of
60 days from the date of the triggering event, unless the regulation
specified otherwise. We requested comment on whether special enrollment
periods, particularly those described in paragraphs Sec.
155.420(d)(4), Sec. 155.420(d)(6), and Sec. 155.420(d)(7), should
have an alternate trigger or start date. The special enrollment periods
we proposed were triggered by the following events:
A qualified individual and any dependents losing other
minimum essential coverage. We provided several examples of loss of
coverage, and we sought comment on our proposal to limit this special
enrollment period to the loss of minimum essential coverage, rather
than loss of any coverage.
A qualified individual gaining or becoming a dependent
through marriage, birth, adoption, or placement for adoption. We
solicited comment on whether States might consider expanding the
special enrollment period to include gaining dependents through other
life events.
An individual, not previously lawfully present, gaining
status as a citizen, national, or lawfully present individual in the
U.S.
Consistent with the Medicare Prescription Drug Program, a
qualified individual experiencing an error in enrollment.
An individual enrolled in a QHP adequately demonstrating
to the Exchange that the QHP in which he or she is enrolled
substantially violated a material provision of its contract.
An individual becoming newly eligible or newly ineligible
for advance payments of the premium tax credit or experiencing a change
in eligibility for cost-sharing reductions.
New QHPs offered through the Exchange becoming available
to a qualified individual or enrollee as a result of a permanent move.
The individual is an Indian, as defined by the Indian
Health Care Improvement Act. We solicited comment on the potential
implications on the process for verifying Indian status for purposes of
this special enrollment period.
A qualified individual or enrollee meeting other
exceptional circumstances, as determined by the Exchange or HHS.
Similar to section 9801 of the Code, we proposed that loss of coverage
does not include failure to pay premiums on a timely basis, including
COBRA premiums prior to expiration of COBRA coverage. We also proposed
that loss of coverage not include situations allowing for a rescission
as specified in 45 CFR 147.128.
We proposed that the Exchange allow an existing enrollee who
qualifies for a special enrollment period to only change plans within
the same metal level of coverage, as defined by section 1302(d) of the
Affordable Care Act. We proposed a single exception for new eligibility
for advance payments of the premium tax credit or change in eligibility
for cost-sharing reductions. We requested comment as to whether we
should provide an exception for catastrophic plan enrollees who become
pregnant.
Comment: Several commenters sought clarification on the types of
documents needed to qualify for a special enrollment period, as
described in proposed Sec. 155.420(a). Some requested that the same
verifications used for determining eligibility for coverage also be
used to verify eligibility for a special enrollment period. Others,
namely State agencies, requested State flexibility for determining
special enrollment period eligibility.
Response: Exchanges must verify information outlined in Sec.
155.315 of the rule in order to make an eligibility determination,
which includes a determination of eligibility for enrollment periods,
per Sec. 155.305(b). Exchanges will be able to determine eligibility
for most special enrollment periods using the information available
through verifications outlined in Sec. 155.315. However, given that
the eligibility criteria for some of the special enrollment periods in
Sec. 155.420 do not directly align with the criteria to establish
eligibility for coverage through the Exchange or insurance
affordability programs in Sec. 155.315, we expect Exchanges will use
other verification standards and processes to determine eligibility for
those particular special enrollment periods.
Comment: Several commenters recommended adding standards for
Exchanges, QHP issuers and employers to notify an individual about his
or her potential eligibility for a special enrollment period under
proposed Sec. 155.420(a). For example, commenters recommended that
employers include a notice about employees' potential eligibility for a
special enrollment period with any health benefit change materials, or
that QHP issuers notify enrollees who report a change in address.
Response: HHS will issue guidance pertaining to notices that may
include information on special enrollment periods. We expect that
Exchanges will include information about all enrollment periods both on
their Web site and other informational resources.
Comment: Many commenters expressed general concerns about adverse
selection. The commenters requested that individuals be limited to only
one special enrollment period per month, and recommended limiting
individuals' movement between QHPs
[[Page 18391]]
during some or all special enrollment periods.
Response: While we recognize the need to limit the risk of adverse
selection, we do not believe it is necessary to limit special
enrollment periods, given the nature of the types of special enrollment
periods. We received similar comments on the issue of limiting
enrollees' movement between QHPs during open and special enrollment
periods, and have responded to them in preamble for Sec. 155.410(e)
and Sec. 155.420(f), respectively.
Comment: A few commenters suggested that the special enrollment
periods described in this section be aligned more closely with HIPAA
rules for consistency inside and outside the Exchange. A few other
commenters instead recommended aligning the special enrollment periods
more closely with Medicare's special enrollment periods.
Response: Section 1311(c)(6) of the Affordable Care Act establishes
that Exchange special enrollment periods follow those specified in
section 9801 of the Code (the HIPAA special enrollment periods) and
reflect those available under part D of title XVIII of the Act. The
final rule balances these two parameters by adopting relevant
provisions from each. In response to comments requesting closer
alignment with HIPAA rules, we have added regulatory text to Sec.
155.420(b)(2) to ensure first-of-the-month effective dates for
qualified individuals who gain or become dependents through marriage,
and for qualified individuals who lose minimum essential coverage. We
have also aligned more closely with HIPAA rules by clarifying what is
included under loss of minimum essential coverage in Sec. 155.420(e).
Comment: Many commenters made suggestions for effective dates under
Sec. 155.420(b) similar to those made for the proposed Sec.
155.410(c) and Sec. 155.410(f) on effective dates during the initial
and annual open enrollment periods.
Response: With the exception of the cases noted above in Sec.
155.420(b)(2), we have modified the special enrollment period effective
dates in proposed Sec. 155.420(b) to align with initial enrollment
period effective dates in Sec. 155.410(c) of this final rule. Our
reasoning follows the same logic for both sections of the rule.
Comment: Several commenters recommended 30-day special enrollment
periods, under proposed Sec. 155.420(c), consistent with the HIPAA
standard, while several others supported the proposed 60-day periods,
consistent with several special enrollment periods under the Medicare
Prescription Drug Benefit Program. Several commenters recommended
extending the periods for as long as 120 days, particularly for
vulnerable populations.
Response: Regarding the length of Exchange special enrollment
periods outlined in Sec. 155.420(c) of the final rule, our experience
with the Medicare Prescription Drug Benefit Program informs our
decision to adopt the 60-day window, which generally conforms with
several special enrollment periods in the Medicare Prescription Drug
Benefit Manual that extend for two months beyond the month of a
triggering event. We believe that this approach will give consumers the
time they need to explore their coverage options through the Exchange,
following a change in life circumstances. We have not extended the
length of the enrollment period due to concerns about adverse
selection. Exchanges may grant special enrollment periods in advance of
a triggering event, so long as the effective date of coverage does not
occur before the triggering event, and so long as there is no overlap
in coverage for which the individual receives advance payments of the
premium tax credit or cost-sharing reductions while enrolled in other
minimum essential coverage.
Comment: Several commenters, namely health insurance issuers, asked
HHS not to add any additional special enrollment periods to those
listed in proposed Sec. 155.420(d). Several other commenters
recommended additions to the rule, including special enrollment periods
for certain changes in plan provider networks, exhaustion of the COBRA
disability extension, denial of services due to a provider's moral or
religious opposition, and pregnancy.
Response: The Affordable Care Act establishes that Exchange special
enrollment periods follow those specified in section 9801 of the Code
and part D of title XVIII of the Act. The additional special enrollment
periods suggested by commenters are not specified in the Code, nor are
they similar enough to those available under the Act for HHS to include
them in the final rule. Therefore the final rule implements the statute
without additions. We note, however, that the special enrollment period
for exceptional circumstances in Sec. 155.420(d)(9) of this final rule
provides an additional opportunity for enrollment when unforeseen
circumstances arise.
Comment: Regarding proposed Sec. 155.420(d)(1), for individuals
losing minimum essential coverage, many commenters sought clarification
about what coverage it included. Several commenters questioned whether
an individual would be eligible for this special enrollment period if
offered COBRA, and how the policy related to proposed Sec. 155.420(e)
and the Treasury proposed rule. Many commenters also sought assurance
that loss of coverage included loss of coverage through Medicaid, CHIP
and the BHP. One health insurance issuer recommended that loss of
Medicaid or CHIP only be included if it is the result of a reported
change in household income to an Exchange that disqualifies the
individual or family from Medicaid or CHIP. A few health insurance
issuers supported the language in proposed Sec. 155.420(d)(1)
specifying loss of ``minimum essential coverage,'' as opposed to any
coverage, because it limits adverse selection by prohibiting
individuals from dropping their substandard coverage when they became
sick or injured. A few other commenters recommended Exchange
flexibility to offer special enrollment periods to individuals losing
non-minimum essential coverage.
Response: The Exchange establishment proposed rule preamble
provides several examples of loss of coverage, including loss of
Medicaid and CHIP, in accordance with section 9801(f)(3) of the Code.
The examples remain accurate for this final rule. We have further
clarified Sec. 155.420(e) in this final rule by specifying that loss
of coverage includes those circumstances described in 26 CFR 54.9801-
6(a)(3)(i) through (iii). This clarification aligns the special
enrollment more closely with section 9801 of the Code. An individual
could lose eligibility for Medicaid or CHIP as a result of a reported
change in household income, or as a result of other circumstances.
Qualified individuals are eligible for the loss of minimum
essential coverage special enrollment period described in Sec.
155.420(d)(1), even if offered COBRA. The Treasury proposed rule
defines COBRA coverage as minimum essential coverage only if the
individual enrolls in such coverage. Therefore, if an individual elects
and enrolls in COBRA, he or she cannot qualify for this special
enrollment period until exhausting COBRA, as described in Sec.
155.420(e), but if the individual does not elect COBRA, he or she may
take advantage of the Exchange special enrollment period. Regarding the
recommendation to allow Exchanges to offer this special enrollment
period to individuals losing non-minimum essential coverage, we have
not adopted this policy in
[[Page 18392]]
deference to the status the statute gives to minimum essential
coverage.
Comment: Regarding the special enrollment period for individuals
gaining or becoming a dependent as described in proposed Sec.
155.420(d)(2), many commenters made arguments for either limiting or
for expanding the list of life events through which an individual
becomes or gains a dependent. Several commenters recommended adding
domestic partners, partners joined in civil unions, or dependents
gained through guardianship. Several other commenters recommended that
State law determine the types of dependents allowed.
Response: For the same reasons as described above, we do not find
legal grounds for expanding the definition of dependents for the
purpose of the special enrollment period described in Sec.
155.420(d)(2). Therefore, we retain this provision in this final rule
without modification.
Comment: Regarding the special enrollment period for individuals
becoming lawfully present, outlined in proposed Sec. 155.420(d)(3),
several commenters questioned whether an individual moving from one
lawfully present category to another would be granted this special
enrollment period if it affected his or her eligibility for certain
types of coverage.
Response: To qualify for coverage without advance payments of the
premium tax credit or cost-sharing reductions through an Exchange under
the special enrollment period described in both the proposed and final
rule at Sec. 155.420(d)(3), the individual cannot have been previously
lawfully present.
Comment: Regarding the special enrollment periods for errors in
enrollment, and for contract violations, outlined in proposed Sec.
155.420(d)(4) and Sec. 155.420(d)(5) respectively, several commenters
sought clarification on the kinds of events that would trigger them,
and how individuals would demonstrate such events. A few health
insurance issuers recommended appeals processes, either in conjunction
with, or instead of these special enrollment periods. They recommended
various limitations on the special enrollment period for errors in
enrollment, and one commenter recommended that it be removed from the
rule all together. Several other commenters sought clarification as to
which entities are considered ``agents of the Exchange or HHS,'' and
recommended that at least QHPs be included as such agents.
Response: The special enrollment periods in Sec. 155.420(d)(4) and
Sec. 155.420(d)(5) of this final rule are generally consistent with
those offered under the Medicare Prescription Drug Program, as noted
above. We expect Exchanges to develop guidance and standard operating
procedures for considering requests for this special enrollment period.
We encourage Exchanges to do so in consultation with health insurance
issuers and other stakeholders. HHS may also provide future guidance to
help Exchanges in operationalizing this special enrollment period.
Comment: Regarding the special enrollment period for individuals
newly eligible or ineligible for advance payments of the premium tax
credit, outlined in proposed Sec. 155.420(d)(6), a couple of
commenters sought clarification as to whether an individual newly
released from incarceration would qualify for the special enrollment
period, even if he or she did not qualify for advance payments of the
premium tax credit or did not experience a change in cost-sharing
reductions.
Response: Qualified individuals newly released from incarceration
are eligible for the special enrollment period afforded to individuals
who gain access to a new QHP as a result of a permanent move, as
outlined in Sec. 155.420(d)(7) of this final rule and as described
further below.
Comment: A couple of commenters recommended that the special
enrollment period for individuals newly eligible or ineligible for
advance payments of the premium tax credit, outlined in proposed Sec.
155.420(d)(6), clarify that individuals may not qualify for this
special enrollment period if they become eligible for an increase or
decrease in their existing advance payments of the premium tax credit.
Conversely, one commenter responding to HHS' request for comment
recommended that this kind of special enrollment period be offered to
all individuals who experience a change in income resulting in
recalculation of their advance payments of the premium tax credit.
Response: The final rule specifies that individuals may only
qualify for this special enrollment period in Sec. 155.420(d)(6) if
they are newly eligible or ineligible for advance payments of the
premium tax credit, and we do not believe clarification is necessary,
as requested by the commenter. That said, if an individual experiences
a change in his or her existing payments of the premium tax credit in
tandem with a change in level of cost-sharing reductions, the
individual could qualify for this special enrollment period.
Comment: One commenter recommended dividing the special enrollment
period in proposed Sec. 155.420(d)(6) into two distinct periods--one
for individuals gaining eligibility for advance payments of the premium
tax credit or experiencing a change in cost-sharing reductions, and a
second for individuals whose employer-sponsored coverage ceases to meet
affordability or minimum value standards.
Response: While we have not added a special enrollment period
specifically for individuals whose employer-sponsored coverage ceases
to meet affordability or minimum value standards, as recommended by the
commenter, we clarify in Sec. 155.420(e) that loss of minimum
essential coverage includes those circumstances described in 26 CFR
54.9801-6(a)(3)(i) through (iii). We believe that between the special
enrollment periods offered for loss of minimum essential coverage in
Sec. 155.420(d)(1) and for employer-sponsored coverage becoming
unaffordable in Sec. 155.420(d)(6), individuals will have ample
opportunities to enroll in coverage through the Exchange.
Comment: Regarding the special enrollment period for permanent
moves, outlined in proposed Sec. 155.420(d)(7), one health insurance
issuer recommended that the provision be revised so that it would only
be a triggering event if an enrollee moves permanently outside the
service area of his or her existing QHP. Several health insurance
issuers also recommended that individuals who move across State lines
receive an eligibility determination from the Exchange in their new
State.
Response: The special enrollment period in Sec. 155.420(d)(7) is
similar to the special enrollment period under part D of title XVIII of
the Act, as directed by section 1311(c)(6) of the Affordable Care Act.
Both are intended to afford individuals the full range of plan options
when they relocate. Individuals moving to a new State should receive an
eligibility determination from their new State's Exchange. Qualified
individuals are responsible for reporting a permanent move.
Comment: Several commenters recommended that a special enrollment
period be triggered by the date of a permanent move described in Sec.
155.420(d)(7), while others recommended it be triggered by the date the
individual reports the move to the Exchange, with a time-limited time
window in which to report it. In cases where an individual's
eligibility for employer-sponsored coverage terminates or changes, in
response to proposed Sec. 155.420(d)(1) and (d)(6) respectively,
several commenters recommended that the period be
[[Page 18393]]
triggered by the date the employee learns of the termination or change.
Other commenters recommended that it be triggered by the actual date of
the termination of or change in coverage. In cases where an individual
becomes newly eligible for advance payments of the premium tax credit
or experiences a change in cost-sharing reductions, in response to
proposed Sec. 155.420(d)(6), several commenters recommended that the
period be triggered by the date the individual experienced a change in
circumstances, while others recommended it be triggered by the date of
the Exchange's official eligibility determination. Several other
commenters recommended less structured approaches, such as leaving the
trigger up to the consumer with the change in circumstances, or
allowing the particular circumstances to dictate the trigger. Many
commenters also recommended that individuals be permitted to seek
special enrollment periods in advance of a known triggering event.
Response: We expect to issue guidance to help Exchanges determine
how to define the triggering events and consider the recommendations
received. We believe it is critical to establish a balance between
minimizing gaps in coverage and the need to avoid coverage overlaps
when premium tax credits are involved. Exchanges may grant special
enrollment periods in advance of a triggering event, so long as the
effective date of coverage does not occur before the triggering event,
and so long as there is no overlap in coverage for which the individual
receives advance payments of the premium tax credit or cost-sharing
reductions while enrolled in other minimum essential coverage.
Comment: Regarding the special enrollment period for Indians,
outlined in proposed Sec. 155.420(d)(8), some commenters expressed
support, while others either opposed it or recommended that States have
flexibility to adopt their own special Indian provisions. Many
commenters sought further clarification on how the Exchange would
verify an individual's status as an Indian. Some disagreed with the
definition of Indian outlined by HHS in proposed Sec. 155.420(d)(8),
and some provided a detailed legal analysis to support their position.
Others recommended allowing special enrollment periods more frequently
than once per month in cases where any QHP network excludes Indian
Health Service, tribal, or urban Indian providers or when a QHP drops
such providers from its network.
Response: Consistent with the proposed rule, HHS is codifying the
special monthly enrollment period for Indians in accordance with
section 1311(c)(6)(D) of the Affordable Care Act. Sections 155.300 and
155.350(c) of this final rule address comments submitted regarding the
definition of Indian and verification of an individual's status as an
Indian as it relates to eligibility for cost-sharing reductions. The
same verification rules apply to eligibility for this special
enrollment period. As stated above, we do not believe that there is
legal flexibility to include additional special enrollment periods.
Comment: Regarding the special enrollment period for individuals
with exceptional circumstances, outlined in proposed Sec.
155.420(d)(9), many commenters supported the broad language, while
several others recommended more specificity. A few commenters
recommended that States, not HHS, determine the exceptional
circumstances.
Response: We have modified the language in Sec. 155.420(d)(9) to
permit individuals to request a special enrollment period by
demonstrating to their Exchange that they meet exceptional
circumstances. The modified language establishes that individuals must
demonstrate such circumstances in accordance with guidelines issued by
HHS. Consistent with examples outlined in the proposed rule preamble,
HHS's guidance for this special enrollment period will outline
circumstances when HHS may grant special enrollment periods directly,
such as in cases of natural disasters.
Comment: A few commenters supported the exclusion from special
enrollment periods when individuals failed to pay their premiums on a
timely basis, outlined in proposed Sec. 155.420(e), while several
other commenters explicitly opposed this provision. Several commenters
only opposed the exclusion for individuals who failed to pay their
COBRA premium on a timely basis, noting that many people are likely to
elect COBRA without realizing that there are more affordable coverage
options through the Exchange.
Response: The limitation described in Sec. 155.420(e) reflects
similar limitations in both section 9801 of the Code, and part D of
title XVIII, as directed by section 1311(c)(6) of the Affordable Care
Act. As stated in the response to comments on Sec. 155.420(d)(1) (for
individuals losing minimum essential coverage) individuals are free to
decline COBRA and instead enroll in a QHP through the Exchange. We have
also added clarification to Sec. 155.420(e) to indicate which
circumstances are included under loss of minimum essential coverage.
Comment: While a few health insurance issuers supported the limits
on special enrollment periods outlined in proposed Sec. 155.420(f),
most commenters either opposed the provision outright, or recommended
additional exceptions, such as exceptions for pregnant women, or for
the special enrollment periods described in proposed Sec.
155.420(d)(2), Sec. 155.420(d)(4), Sec. 155.420(d)(5), and Sec.
155.420(d)(8). One commenter noted that because the special enrollment
periods were generally not tied to changes in an individual's health
status, they did not pose a risk of adverse selection.
Response: We have removed Sec. 155.420(f) from the final rule
because special enrollment periods are generally not tied to changes in
an individual's health status, and are unlikely to increase the
potential for adverse selection. Just as qualified individuals are free
to move between metal levels during the initial and annual open
enrollment periods, they are also free to do so during special
enrollment periods.
Summary of Regulatory Changes
We are finalizing the standards proposed in Sec. 155.420 of the
proposed rule, with several modifications: in Sec. 155.420(b) related
to effective dates, we modified the special enrollment period effective
dates such that a QHP selection must be received by the Exchange by the
15th of the month to secure an effective date of the first day of the
following month. We provided Exchanges flexibility to effectuate
coverage more quickly by demonstrating to HHS that all QHP issuers
offering coverage through the Exchange agree with the earlier dates,
but noted that advance payments of the premium tax credit and cost-
sharing reductions cannot begin until the first of the month. This
limitation on advance payments of the premium tax credit and cost-
sharing reductions also applies to individuals enrolling mid-month as a
result of birth, adoption or placement for adoption. As an exception to
the effective dates above, we specified in Sec. 155.420(b)(2)(ii) that
in the case of marriage or in the case where a qualified individual
loses minimum essential coverage, the Exchange must always ensure
coverage is effective on the first day of the following month,
consistent with HIPAA rules. We clarify that to qualify for the special
enrollment period under Sec. 155.420(d)(9) individuals must
demonstrate their exceptional circumstances to the Exchange, in
accordance with guidelines issued by HHS. In Sec. 155.420(e) we
clarify that loss of coverage includes those
[[Page 18394]]
circumstances described in 26 CFR 54.9801-6(a)(3)(i) through (iii).
Finally, we remove the restrictions in Sec. 155.420(f) that had
previously prohibited individuals from moving between metal levels
during special enrollment periods.
e. Termination of Coverage (Sec. 155.430)
We proposed that the Exchange must permit an enrollee to terminate
his or her coverage in a QHP with appropriate notice to the Exchange or
the QHP. We proposed that the Exchange may initiate termination of an
enrollee's coverage in a QHP, and must permit a QHP issuer to terminate
such coverage under a specific list of circumstances: the enrollee is
no longer eligible for coverage; the enrollee obtains other minimum
essential coverage; payment of premiums cease; the enrollee's coverage
is rescinded in accordance with Sec. 147.128 of this title; the
enrollee's QHP is terminated or decertified; or the enrollee changes
from one plan to another during the annual open enrollment or a special
enrollment period in accordance with sections Sec. 155.410 and Sec.
155.420.
We also proposed that the Exchange establish maintenance of records
procedures for termination of coverage, track the number of individuals
for whom coverage has been terminated and submit that information to
HHS promptly and without undue delay, establish terms for reasonable
accommodations for individuals with mental or cognitive conditions, and
retain records in order to facilitate audit functions.
Additionally, we proposed that in the case of a termination
requested by an enrollee, the last day of coverage for an enrollee is
the termination date specified by the enrollee, provided that the
Exchange and QHP receive reasonable notice. We proposed that if the
Exchange or the QHP do not receive reasonable notice, the last day of
coverage is the first day after a reasonable amount of time has passed.
We proposed that in the case of a termination by the Exchange or a QHP
as a result of an enrollee obtaining new minimum essential coverage,
the last day of coverage is the day before the effective date of the
new coverage. We solicited comments regarding how Exchanges can work
with QHP issuers to implement this proposal. We also proposed standards
for termination effective dates in the case of a termination by the
Exchange or a QHP as a result of an enrollee changing QHPs. Finally, we
proposed that for individuals not covered by the previous termination
effective dates, the last day of coverage would be either the
fourteenth or the last day of the month, depending on when termination
of coverage was initiated.
Comment: A handful of commenters asked us to clarify what length of
time would qualify as ``reasonable notice,'' as referenced in the
proposed rule in Sec. 155.430(b)(1). Some commenters suggested 24
hours while others suggested 30 days. The most common suggestion was 14
days. Other commenters requested that the final rule specify the
methods consumers may use to notify their intent to terminate coverage.
Response: In this final rule, we clarify in Sec. 155.430(d)(1)
that ``reasonable notice'' is defined as 14 days from the requested
date of termination. We want to ensure that individuals who have access
to other coverage sources do not need to maintain Exchange coverage
longer than necessary. In Sec. 155.430(d)(2)(ii) of the final rule, we
further state that the date of termination of coverage is 14 days from
the request if the enrollee does not give reasonable notice to
terminate coverage. We also note in Sec. 155.430(d)(2)(iii) that
coverage may be terminated in fewer than 14 days, per the request of
the individual, if his or her QHP issuer is able to effectuate
terminations more quickly. We do not specify how an individual will
notify the Exchange that they wish to terminate coverage; rather, we
leave this up to States to define how such transmissions may be
received. This is in part because a request for termination may be
received through either the Exchange or the QHP, and also because we
wish to allow maximum flexibility to Exchanges.
Comment: Several commenters requested clarification regarding how
the grace period for non-payment of premiums would work for individuals
receiving advance payments of the premium tax credit and whether these
policies differ for those who are not.
Response: We clarify in Sec. 155.430(b)(2)(ii)(A) and (B) of this
final rule that the grace periods for non-payment of premiums are not
the same for individuals receiving advance payments of the premium tax
credit and other enrollees. The 90-day grace period for non-payment of
premiums for individuals receiving advance payments of the premium tax
credit is addressed in Sec. 156.270(d). In Sec. 155.430(d)(5) of the
final rule, we clarify that the last day of coverage for individuals
not receiving advance payments of the premium tax credit should be
consistent with existing State laws regarding grace periods for non-
payment.
Comment: One commenter suggested that Exchanges be allowed to
designate either the Exchange or the QHP to receive termination
notifications in order to reduce duplication. A few commenters did not
support the proposed standard in Sec. 155.430(c) that QHP issuers
report termination of coverage data to HHS because of privacy concerns.
Response: We did not accept the commenter's recommendation.
Regardless of which entity the enrollee contacts to terminate coverage,
the Exchange and QHP issuers will need to notify the other entity of
the enrollee's coverage status to keep updated enrollment records. In
addition, HHS needs to know when coverage is terminated to stop advance
payments of the premium tax credit. As such, we maintain the reporting
standards in Sec. 155.430(c) in this final rule.
Comment: A few commenters asked that language in proposed Sec.
155.430(c)(3), which directs QHP issuers to make reasonable
accommodations when terminating coverage for individuals with mental or
cognitive conditions, be broadened to include all individuals with
disabilities, not just individuals with mental or cognitive
disabilities.
Response: We broaden the final rule in Sec. 155.430(c)(3) to state
that reasonable accommodations must be undertaken when terminating
coverage for individuals with disabilities as defined by the Americans
with Disabilities Act.
Comment: A handful of commenters thought that provisions of section
2703 of the PHS Act were in conflict with the termination provisions
contained in the Exchange establishment proposed rule in Sec.
155.430(d)(2) because the proposed rule outlined dates of termination
when an enrollee gains other minimum essential coverage. Commenters
interpreted this to mean that an individual must terminate his or her
Exchange coverage and said that issuers cannot terminate an
individual's coverage because they gain access to other minimum
essential coverage.
Response: We removed language indicating that a QHP must terminate
an enrollee's coverage should they gain access to other minimum
essential coverage in the final rule. Therefore, we do not believe
there is a conflict with section 2703 of the PHS Act. We note, however,
that the enrollee would no longer be eligible for advance payments of
the premium tax credit or cost-sharing reductions if they have access
to other minimum essential coverage.
Comment: Several commenters requested that CMS put in place
[[Page 18395]]
``safeguards'' so as to minimize or eliminate coverage gaps for
individuals who become newly eligible for Medicaid, CHIP, or the BHP.
Other commenters requested that individuals not have their Exchange
coverage terminated when they become eligible but do not enroll in
Medicare. Many other commenters recommended that the final rule state
that individuals cannot be automatically terminated from Exchange
coverage should they be found eligible for Medicaid, CHIP, or the BHP.
Response: In order to address these concerns, we have added Sec.
155.430(d)(2)(iv) to the final rule to specify that if an individual
enrolls in Medicaid, CHIP, or the BHP and wishes to terminate his or
her Exchange coverage, then the last day of Exchange coverage is the
day before such other coverage begins. We note that neither the
proposed nor the final rule state that individuals will automatically
be terminated from Exchange coverage should they be found eligible for
Medicare. We also note that we remove proposed Sec. 155.430(d)(4) from
this final rule because the provisions are no longer necessary given
the termination dates outlined in Sec. 155.430(d)(1-6) of the final
rule.
Comment: Some commenters requested that the Exchange establish a
broad definition of ``minimum essential coverage,'' as well as
flexibility in terms of when coverage is terminated because an enrollee
gains access to other minimum essential coverage.
Response: We do not define minimum essential coverage in this final
rule as this definition is included in section 5000A(f) of the Code.
Individuals do not have to terminate coverage and QHP issuers must not
terminate coverage when an individual becomes enrolled in other minimum
essential coverage unless such individual requests a termination. In
Sec. 155.430(d)(2) of this final rule, we clarify that the last day of
coverage when an enrollee gains access to other minimum essential
coverage is the date requested by the enrollee, should they give
reasonable notice unless the QHP issuer can effectuate the termination
earlier, or, the day before new coverage begins if the enrollee becomes
eligible for Medicaid, CHIP, or the Basic Health Program. Individuals
and QHP issuers do not have to terminate coverage when an individual
becomes enrolled in other minimum essential coverage. However, if an
individual is eligible for or enrolled in other minimum essential
coverage, such individual may no longer be included in the coverage
family, as indicated in Sec. 155.305(f)(1)(B) and can no longer
receive advance payments of the premium tax credit or cost-sharing
reductions.
Comment: A few commenters asked that HHS track reasons for
termination of coverage.
Response: Additional details regarding data that must be submitted
to HHS will be addressed in future guidance.
Comment: Several commenters noted that the proposed termination
effective date in Sec. 155.430(d)(3) was inaccurate as it was
prospective, when rescission is by definition retrospective.
Response: We removed Sec. 155.430(d)(3) in the final rule to
eliminate a date of termination for a rescission in accordance with
Sec. 147.128. The termination of coverage date will vary based on the
situation.
Summary of Regulatory Changes
We are finalizing the definitions proposed in Sec. 155.430 of the
proposed rule, with the following modifications: we clarified paragraph
(b)(1) to specify that an enrollee must be permitted to terminate his
or her coverage, including as a result of obtaining other minimum
essential coverage. In new paragraph (b)(2)(A), we clarified that
enrollees receiving advance payments of the premium tax credit will be
terminated from coverage when the grace period described in Sec.
156.270 is exhausted. In Sec. 155.430(c)(2) we clarified that the
Exchange must transmit data on terminations to QHP issuers and HHS
promptly and without undue delay. We also broadened the regulation text
in Sec. 155.430(c)(3) regarding individuals with disabilities to state
that QHP issuers must create standards to accommodate all individuals
with disabilities when terminating such individuals' coverage, and
defined individuals with disabilities as those groups identified under
the Americans with Disabilities Act. In addition, in paragraph Sec.
155.430(d)(1) we defined ``reasonable notice'' given by the enrollee to
the Exchange or QHP issuer to terminate coverage as 14 days.
In paragraph Sec. 155.430(d)(2), we described the last day of
coverage as the date specified by the enrollee; fourteen days after the
termination date requested by the enrollee, if the enrollee does not
provide reasonable notice; or fewer than 14 days if the individual's
QHP issuer is able to terminate coverage more quickly. Paragraph (d)(3)
was added to clarify that for an enrollee who is no longer eligible for
coverage through the Exchange, the last day of coverage is the last day
of the month following the month in which notice described by Sec.
155.330(e) is sent by the QHP. We noted in new paragraph (d)(4) that
for an enrollee receiving advance payments of the premium tax credit,
the last day of coverage will be the last day of the first month of the
grace period. In paragraph (d)(5) we noted that the last day of
coverage for non-payment of premiums for enrollees not receiving
advance payment of the premium tax credit is in accordance with State
law.
6. Subpart H--Exchange Functions: Small Business Health Options Program
(SHOP)
The Affordable Care Act directs each State that chooses to operate
an Exchange to establish insurance options for small businesses through
a Small Business Health Options Program (SHOP). States that choose to
operate an Exchange may also merge SHOP with the individual market
Exchange.
a. Standards for the Establishment of a SHOP (Sec. 155.700)
In Sec. 155.700, we proposed the general standard that an Exchange
must provide for the establishment of a SHOP that meets the standards
of this subpart.
Comment: Some commenters requested that, in the case of a State
that establishes either a SHOP or an Exchange serving the individual
market, but not both, the Secretary certify this as an Exchange in
accordance with the Affordable Care Act.
Response: Section 1311(b) of the Affordable Care Act envisions an
Exchange that both facilitates the purchase of QHPs and provides for
the establishment of a SHOP. We interpret this to mean that a State
that fails to fulfill both standards has not established an Exchange in
accordance with the Affordable Care Act.
Comment: Some commenters proposed that the SHOP may want to fulfill
additional functions outside the scope of the proposed rule in order to
offer employers a streamlined experience when managing their employee
benefits. These commenters proposed that the SHOP sell other types of
insurance, administer COBRA on behalf of participating employers,
administer flexible spending accounts, assist small employers in
setting up Section 125 plans, and oversee wellness programs.
Response: Section 155.1000(b) directs the Exchanges to only offer
health plans that have been certified as QHPs. We will take these
comments into account as we consider future guidance on the offering of
other products on the Exchange.
Comment: One commenter requested that we clarify the meaning of
``coordination'' and sharing of
[[Page 18396]]
information between the Exchange and the SHOP as described in the
preamble to the proposed rule.
Response: As discussed in the proposed rule, there are many
economies of scale that may arise from integrated Exchange and SHOP
establishment. We believe that there are natural opportunities for the
Exchange and the SHOP to benefit from shared data sources and
coordinated activities.
Comment: One commenter discussed the possible use of health
reimbursement arrangements from multiple employers as a means of
purchasing coverage through the SHOP, aggregating premium contributions
from multiple employers to support the employee's purchase of a QHP.
Response: The possible use of different forms of health
reimbursement arrangement to purchase coverage through the Exchange or
the SHOP is beyond the scope of this final rule, and will be addressed
in future guidance.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.700 of the
proposed rule, with one modification: in new paragraph (b), we added a
definition of ``group participation rule.''
b. Functions of a SHOP (Sec. 155.705)
In Sec. 155.705, we proposed the minimum functions of a SHOP. The
SHOP must carry out all the functions of an Exchange described in this
subpart and in subparts C, E, and K of this part, except for standards
related to individual eligibility determinations, enrollment standards
related to qualified individuals, standards related to the premium tax
credit calculator, standards related to exemptions from the individual
coverage requirement, and standards related to the payment of premiums
by individuals, Indian tribes, tribal organizations, and urban tribal
organizations.
We also proposed that a SHOP must adhere to additional enrollment
and eligibility standards described in Sec. 155.710, Sec. 155.715,
Sec. 155.720, Sec. 155.725, and Sec. 155.730. In addition, the SHOP
must at a minimum facilitate the special enrollment periods described
in Sec. 156.285(b)(2). Specifically, we proposed that all of the
special enrollment periods that apply to individual market coverage in
the Exchange also apply in the SHOP, with the exception of special
enrollment periods associated with a change in citizenship status or
lawful presence or eligibility for advance payments of the premium tax
credit or cost-sharing reductions. We noted that the proposed rule did
not eliminate any special enrollment periods established by other laws
(including, but not limited to, HIPAA (Pub. L. 104-191)). We also
clarified that the two exceptions described above also apply to
qualified employees in a SHOP. We invited comment on special enrollment
periods for the SHOP and how they might differ from those that would
apply to the Exchange for the individual market.
We proposed that a qualified employer may choose a level of
coverage under section 1302(b) of the Affordable Care Act, within which
a qualified employee may choose an available plan at that level of
coverage. We also provided flexibility for a SHOP to choose additional
ways for qualified employers to offer one or more plans to their
employees and listed several potential options. We sought comment on
our proposed approach, which established a standard for employee choice
within a level of cost sharing while providing SHOPs the option to
offer broader employee choices among plans of different levels of cost
sharing.
We also invited comment on whether QHPs offered in the SHOP should
waive application of minimum participation rules at the level of the
QHP or issuer; whether a minimum participation rule applied at the SHOP
level is desirable; and if so, how the rate should be calculated, what
the rate should be, and whether the minimum participation rate should
be established in Federal regulation.
To simplify the administration of health benefits among small
employers, we proposed that the SHOP allow qualified employers to
receive a single monthly bill for all QHPs in which their employees are
enrolled and to pay a single monthly amount to the SHOP. We further
proposed that the SHOP collect from employers offering multiple
coverage options a single cumulative premium payment.
We proposed three unique criteria for certification for a SHOP:
rate setting and premium payment standards; enrollment period
standards; and enrollment process standards. Specifically, we proposed
that the SHOP direct all QHP issuers to make any changes to rates at a
uniform interval that is either monthly, quarterly, or annually. As
described in Sec. 155.725, we proposed to permit rolling enrollment in
a SHOP, which allows qualified employers to purchase coverage in QHPs
at any point during the year. We invited comment on whether we should
allow a more permissive or restrictive timeframe than monthly,
quarterly, or annually. We also invited comment on what rates should be
used to determine premiums during the plan year.
We also proposed that if a State merges the individual and small
group risk pools, the Exchange may only offer QHPs to employers and
employees that meet the deductibles set forth in section 1302(c)(2)(A)
of the Affordable Care Act. If a State does not merge the individual
and small group risk pools, we proposed that a SHOP may only make small
group QHPs available to qualified employees.
Finally, we proposed to codify the statutory option for States to
allow insurers in the large group market to sell large group products
to large groups through the SHOP beginning in 2017.
Comment: We received several comments regarding the proposed
exclusion of a premium calculator from the minimum functions for the
SHOP in proposed Sec. 155.705(a)(3). Some commenters requested that a
premium calculator be included, arguing that it assists employers in
estimating their total costs. Other commenters noted that instead of
providing individuals with an estimation of their cost of coverage
after any applicable tax credits or cost sharing reductions, a premium
calculator in the SHOP may show employees their premiums after any
applicable employer contributions.
Response: We believe that a premium calculator will assist
employees in determining their cost of coverage after any applicable
employer contribution at little to no additional burden on SHOPs or
employers. Therefore, we have added new Sec. 155.705(b)(11) in this
final rule to clarify that a SHOP must provide a premium calculator to
qualified employers. To support States in developing a premium
calculator for the SHOP, HHS will provide model computer code.
Comment: In response to the proposed Sec. 155.705(b)(1), which
stated that a SHOP must facilitate the special enrollment periods
described in Sec. 156.285(b)(2), many commenters expressed concern
about the preamble discussion regarding a lack of a special enrollment
period in SHOP based on change in immigration or citizenship status.
These commenters recommended that, rather than clarifying that a SHOP
would not need to offer a special enrollment period based on a change
in immigration or citizenship status, HHS should clarify that special
enrollment periods in SHOP should be based on whether an individual is
newly hired by a ``qualified'' employer or whether an individual
becomes a newly eligible ``qualified employee.'' Further, commenters
recommended that HHS clarify that new hires or newly eligible qualified
employees should not need a
[[Page 18397]]
special enrollment period because the qualified employers should allow
them to enroll at any time during the plan year.
Response: We have modified the language in Sec. 155.725(g) and
Sec. 156.285(b) in this final rule to clarify the provision of an
enrollment period for an employee who becomes a ``qualified employee''
rather than just new hires. We believe this clarification more
accurately reflects the intent that enrollment periods will be provided
to those who become qualified employees outside of the initial or
annual open enrollment period, such as employees who have, for example,
completed an employer's waiting period for benefits, changed from part
time to full time status, or are newly hired.
Comment: We received numerous comments in response to proposed
Sec. 155.705(b)(2) and (3) on the employee and employer choice
provisions. Many commenters supported additional employee choice
options, such as offering plans across cost-sharing levels. Other
commenters supported more limited employee choice options, often
expressing concern that allowing employee choice across cost-sharing
levels and even within a cost-sharing level would result in substantial
risk selection. Some commenters supported broad employer choice to
offer either a wider or narrower range of employee choices, including
offering a single QHP. Several commenters suggested that the Affordable
Care Act directs the SHOP to give employers the option to offer a
single QHP. One commenter suggested initially implementing a pure
employer choice model with no employee choice. A few commenters
suggested adding a defined contribution model to the list of additional
choice options from the preamble to the proposed rule.
Response: We believe the proposed rule appropriately balances the
employee choice standards of the Affordable Care Act with flexibility
for SHOPs to allow employers greater choice in their plan offering
options. Under this model, employees will likely have more plan choice
than they currently have in the small group market, where traditionally
an employer offers only one plan to its employees.\9\ However, nothing
in the Affordable Care Act limits a SHOP's ability to offer an employer
additional options, including choice across cost-sharing levels. We
believe that States and SHOPs are best positioned to strike the proper
balance among competing priorities: flexibility, meaningful consumer
choice, and protection of the market against risk selection. Thus, we
have retained the proposed wording of Sec. 155.705(b)(2) and (b)(3) in
the final rule.
---------------------------------------------------------------------------
\9\ Exhibit 4.2: Among Firms Offering Health Benefits,
Percentage of Covered Workers in Firms Offering One, Two, or Three
or More Plan Types, by Firm Size, 2011, Employer Health Benefits
2011 Annual Survey. Kaiser Family Foundation.
---------------------------------------------------------------------------
We also note specifically that the SHOP may allow employers to
offer only one plan to its employees. We believe this is supported by
section 1312 of the Affordable Care Act, which defines a ``qualified
employer'' as a small employer that elects to make all full-time
employees eligible for one or more QHPs offered in the small group
market through the Exchange. However, we do not believe that this
definition establishes that the SHOP must give employers the option to
offer only a single plan.
With regard to the comments on defined contribution, we note that
the method through which an employer offers QHPs to its employees is
independent of how the employer chooses to contribute toward the
premium cost of coverage.
Comment: One commenter expressed concern that allowing employers to
enroll their qualified employees into a single QHP may trigger the
application of ERISA, and that the Affordable Care Act was intended to
supersede ERISA and provide stronger Federal and State protections to
consumers.
Response: Issues on the application of ERISA are within the purview
of Department of Labor. In this rule, we clarify that a SHOP may permit
employers to offer employees a single QHP.
Comment: One commenter on proposed Sec. 155.705 requested that HHS
clarify whether the employer or the SHOP will be responsible for
maintaining records on employee QHP selections, and further expressed
concern that the employer would be unable to monitor its employees' QHP
selections.
Response: As described in Sec. 155.705(b)(4)(i) of this final
rule, the SHOP is responsible for providing each qualified employer
with a bill listing the employees enrolled under that employer, the QHP
each employee is enrolled in, and the cost of the QHP.
Comment: We received several comments regarding the proposed Sec.
155.705(b)(4), which stated that a SHOP must provide a ``single bill''
to qualified employers and aggregate premium payments from employers.
Many commenters supported this proposal, noting that it was essential
to the effective operation of providing employees with a choice of QHP
and should ease the burden on small employers of administering group
health benefits. Some commenters recommended that the single bill list
for each employee the portion of the premium the employee is
responsible for and the portion of the premium for which the employer
is responsible, while others suggested that the SHOP assist employers
in calculating an average premium for its employees. In contrast, other
commenters suggested that premium aggregation should not be a minimum
function of the SHOP or should be optional for employers not providing
their employees with a choice of QHP. Some commenters noted that health
plans currently provide their own the billing services and that a
standard on the SHOP to aggregate premiums may add to the
administrative cost of selling QHPs through the SHOP.
Response: We believe that premium aggregation dramatically
decreases the burden on an employer of participating in the SHOP by
permitting the employer to write a single check for the total premium
amount due. We do not believe that SHOP premium aggregation will
increase the administrative burden on issuers who already perform
billing services, because such issuers will no longer have to submit,
track, and support a large number of paper bills to individual
employers. Further, we believe that the process of resolving
discrepancies will be simplified, since the issuer only needs to
reconcile with one entity--the SHOP.
Additionally, we believe that bills provided by the SHOP should
contain in addition to the total amount due by the employer, the
portion of each employee's premium for which the employer is
responsible and the portion for which the employee is responsible, and
have revised paragraph Sec. 155.705(b)(4)(i) of this final rule to
reflect this clarification. We note that this information may be
collected on the SHOP single employer application. The SHOP may also
include an average premium on the billing statement to assist employers
in smoothing premium costs between employees.
Comment: Some commenters responding to proposed Sec. 155.705
requested clarification regarding procedures for dispute resolution for
potential scenarios where the SHOP failed to remit payment to QHP
issuers in a timely manner or failed to collect the correct amount from
employers. One commenter recommended that proposed Sec. 155.720(d)
allow a grace period for employees and employers for making premium
payments based on evidence of a ``good faith'' effort.
[[Page 18398]]
Response: Because States vary dramatically in statutory and
regulatory standards related to non-payment or late payment of
premiums, we do not believe a Federal uniform standard and process
could effectively prevent such errors. Instead, we encourage SHOPs to
create standard operating procedures regarding the payment and
remittance of premiums. We also recommend that SHOPs standardize grace
periods across QHPs. Because proper oversight of the flow of funds is
essential, we direct the SHOP to maintain records and evidence of
standard accounting procedures in order to allow for effective auditing
of the premium aggregation service.
Comment: Commenters generally supported the option for a State to
merge the individual and small group markets subject to the provisions
of proposed Sec. 155.705(b)(7).While commenters had a variety of views
on the advisability of merging the markets, most commenters agreed
that, if a State merges the markets, QHPs offered to small employers in
the merged market must meet the maximum deductible provision in section
1302(c) of the Affordable Care Act. One commenter said that QHPs in a
merged market should not be subject to a maximum deductible, and
another commenter stated that there should be no restrictions on the
deductible in the small group market.
Response: We do not believe that the statute allows issuers who
participate in a merged market to be exempted from offering small
businesses the maximum deductible in the Affordable Care Act;
therefore, we are finalizing Sec. 155.705(b)(7) as proposed.
Comment: Commenters expressed concern that limiting employees to
small group market QHPs rather than in any QHP that meets the maximum
deductible provision in section 1302(c) of the Affordable Care Act may
make it more difficult to achieve portability of coverage across
employment situations, including periods of unemployment and self-
employment, and may complicate the aggregation of employer
contributions from different employers. The commenters asked that the
standard be changed or removed in the final rule.
Response: While we understand the concern about portability between
small group and individual market products, section 1311(b)(1)(B) of
the Affordable Care Act clearly states that the SHOP is ``designed to
assist qualified employers in the State who are small employers in
facilitating the enrollment of their employees in QHPs offered in the
small group market in the State.'' We have therefore retained the
language in Sec. 155.705(b)(8) in this final rule.
Comment: Several commenters expressed concerns about the
possibility of adverse selection and other market disruptions that
might result from a State's choice to allow large group market issuers
to offer QHPs in the large group market through the SHOP. Two
commenters specifically expressed concern about an automatic SHOP
expansion to the large group market. Several commenters recommended
that States not expand the SHOP; one commenter suggested that HHS delay
the expansion; and one commenter asked that HHS create safeguards to
prevent adverse selection. Finally, one commenter asked that we
interpret section 1312(f)(2)(b) of the Affordable Care Act to allow
States the latitude to expand the SHOP earlier than 2017.
Response: Section 2701(a)(5) of the PHS Act provides that if the
State exercises the option of offering large group market QHPs in the
SHOP, the rating rules in section 2701 that apply to the small group
market will also apply to all coverage offered in that State's large
group market, except for self-insured group health plans. A State must
specifically elect the expansion. We also do not believe that we have
the authority to delay--or to allow earlier implementation of--the
State's ability to make this election. Accordingly, we are not
modifying the final rule to provide for any such modifications.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.705 of the
proposed rule, with the following modifications: in paragraph
(b)(4)(i), we clarified the data elements that must be included in the
monthly bill sent by the SHOP. In new paragraph (b)(4)(iii), we added a
standard for the SHOP to maintain books, records, documents, and other
evidence of accounting procedures and practices of the premium
aggregation program for each benefit year for at least 10 years, to
conform to the standards for the individual Exchange. We also clarified
in paragraph (b)(5) that the SHOP must ensure that each QHP meets the
certification standards in Sec. 156.285. In new paragraphs (b)(10) and
(11), we noted that the SHOP may authorize minimum participation
standards on certain conditions, and established that the SHOP must
develop a premium calculator to assist qualified employers and
employees. Finally, we made several technical clarifications and
modifications.
c. Eligibility Standards for SHOP (Sec. 155.710)
In Sec. 155.710, we proposed the eligibility standards for
qualified employers and qualified employees seeking to purchase
coverage through a SHOP, and proposed to codify the general standard
that the SHOP make QHPs available to qualified employers. Specifically,
we proposed that the SHOP ensure that an entity is a small employer, or
an employer with no fewer than one employee and no more than 100
employees, unless a State elects to limit enrollment in the small group
market to employers with no more than 50 employees until January 1,
2016.
We also proposed to define ``employer,'' ``small employer,'' and
``large employer'' based on the PHS Act, and to adopt the PHS Act
methodology for counting employees, where employees are counted equally
regardless of their status as a part time employee or full time
employee. Noting that States use a variety of methods to determine
employer size for purposes of determining eligibility for the small
group market, we solicited comment on this approach.
We further proposed that the SHOP must ensure a qualified employer
provides an offer of coverage through a SHOP to all of its full-time
employees, and that the employer can elect to cover all employees
through the SHOP serving the employer's principal business address or
by providing coverage to each eligible employee through the SHOP
serving the employee's primary worksite. In cases where the employer
elects to cover all employees through the SHOPs serving their
worksites, we proposed that a SHOP must accept the application of such
an employer, subject to any minimum participation rules authorized by
the SHOP. In addition, we proposed to allow an employer participating
in the SHOP to continue its participation if the number of workers
employed fluctuates after the employer's initial eligibility
determination. We also clarified that only an employee who receives an
offer of coverage through the SHOP from a qualified employer may be a
qualified employee.
Comment: Many commenters addressed the question of whether
businesses consisting entirely of sole proprietors, 2 percent S-
corporation shareholders, and their family members, with no common law
employees, should be eligible to purchase coverage through a SHOP.
Several commenters were in favor of either including sole proprietors
in the definition of eligible employer or allowing States to decide
whether to expand their definition of a small group to encompass sole
proprietors, stating that this would be analogous to the HIPAA
interpretation that States could extend HIPAA protections to more
[[Page 18399]]
employers. Other commenters suggested deferring to State definitions of
small group to avoid confusion and minimize possible differences
between the SHOP and the outside market.
Many commenters supported allowing sole proprietors to choose
either Exchange individual market or SHOP coverage. Some commenters
suggested deferring to State law to allow those States to continue
offering small group coverage to sole proprietors. Many other
commenters supported the proposed rule's exclusion of sole proprietors
from the small group market, noting that the current rationale for
allowing sole proprietors to purchase in the small group market--to
provide access to a guaranteed issue product with modified community
rating--will not be relevant in 2014 because of individual market
reforms. Several of these commenters suggested that the final rule make
clear that sole proprietors are eligible for coverage in the Exchange.
Two commenters suggested using the COBRA standard to determine the
number of employees, which would also exclude sole proprietors. Other
commenters who supported the rule as proposed suggested that allowing
sole proprietors and S-corporation owners a choice between markets
would create possible adverse risk selection.
Response: The Affordable Care Act and the proposed rule base their
definitions of ``employer,'' ``employee,'' ``small employer,'' and
``large employer'' on the definitions in the Public Health Service Act
(PHS Act). Section 2791 of the PHS Act incorporates by reference the
definition of employee in section 3(6) of ERISA. Further, section 2791
provides that an employer is defined by reference to section 3(5) of
ERISA. To be an employer eligible to purchase coverage through the
SHOP, the employer must employ at least one common law employee. Under
29 CFR 2510.3-3, an employee would not include a sole proprietor or the
sole proprietor's spouse.
We find no authority to interpret what constitutes a group health
plan differently than set forth in the proposed rule. And, we note that
even though both markets will have guaranteed issue and similar rating
rules, enrollment of individuals is limited to the annual open
enrollment period while enrollment of groups can occur throughout the
year. We have therefore retained the definitions in proposed Sec.
155.20, and our interpretation of what constitutes a group health plan.
Comment: A number of commenters addressed the issue of how
employees should be counted in determining employer size. Commenters
noted that States use different methods to calculate employer group
size when determining small group market eligibility. Several
commenters noted that there are also different Federal methods for
determining employer size for different purposes, and that these
differing methods may be confusing to small employers. While some
commenters supported the proposed approach, to count all full-time and
part-time employees, other commenters suggested specific alternatives,
including but not limited to a full-time equivalent method like that
used in section 4980H of the Code, as added by section 1513 of the
Affordable Care Act, to determine whether an employer is a large
employer; the full-time equivalent method used to determine whether
Federal COBRA continuation of coverage standards apply; or counting
full-time employees only. Finally, a number of commenters suggested
that each Exchange defer to the applicable State's method of
determining group size or transitioning from current State methods of
counting employees to a Federal method.
Response: CMS has previously issued guidance on determining
employer size that includes part-time employees in the count.\10\ For
example, the method described in the preamble to the proposed rule
would count part-time employees as full employees. A second method
proposed in a 2004 proposed rule issued by the Department of the
Treasury, the Department of Labor, and HHS, in which the number of
full-time equivalent employees is determined.\11\ Because of the range
of comments received to the proposed rule and because the method of
counting employees has implications that extend beyond the operation of
the SHOP, we are not finalizing at this time a rule for determining
employer size. We are considering future rulemaking to address the
method of determining employer size for purposes of deciding whether an
employer is a small employer or a large employer.
---------------------------------------------------------------------------
\10\ HCFA Insurance Standards Bulletin Series No. 99-03
(September 1999), posted online at https://www.cms.gov/HealthInsReformforConsume/downloads/HIPAA-99-03.pdf.
\11\ Notice of Proposed Rulemaking for Health Coverage
Portability: Tolling Certain Time Periods and Interaction with the
Family and Medical Leave Act Under HIPAA Titles I and IV, 69 CFR
78000-78825.
---------------------------------------------------------------------------
Comment: Several commenters suggested that the proposed rule
articulate the method of determining whether a small employer is
subject to or exempt from the shared responsibility standards, since
that determination is different from the determination of eligibility
for participation in the SHOP.
Response: Formal guidance about the method of determining whether a
small employer is subject to the shared responsibility provisions is
outside the scope of this final rule.
Comment: Several commenters supported the flexibility of the
employer and employee eligibility standards in proposed Sec. 155.710,
including allowing employers with worksites in the service areas of
multiple SHOPs to offer coverage to their employees through the SHOP
serving the employees' worksites. Some commenters requested
clarification regarding the coordination of information necessary for
the effective implementation of such an eligibility standard. Other
commenters requested clarification of how employer groups can calculate
premiums in a way that mitigates the effects of age rating in instances
where workers obtain coverage through more than one Exchange. Finally,
one commenter recommended that employee eligibility be limited to the
State in which the employer's headquarters is located.
Response: We recognize the benefits of allowing employers in
multiple States flexibility regarding the SHOPs in which they may opt
to enroll. We believe this eligibility standard does not establish a
significant level of coordination between SHOPs, though nothing in this
section would preclude a SHOP from establishing processes or standard
operating procedures to coordinate across service areas. Employers
electing to participate in multiple SHOPs must meet the eligibility
standards of each SHOP in which they wish to participate and prior to
2017 may not employ more than 100 employees in total in accordance with
section 1312(f)(2) of the Affordable Care Act. We acknowledge, however,
that standards related to the calculation of premiums in the small
group market may vary from State to State in a manner that does not
allow differences in cost due to age or location to be spread easily
among all employees across State lines.
Comment: One commenter objected to the proposed Sec.
155.710(b)(2), which stated that the SHOP must ensure that a qualified
employer provides an offer of coverage through the SHOP to all full-
time employees because it places an administrative burden on the SHOP
and would be difficult to enforce. Other commenters suggested that a
multi-employer plan should be able to offer
[[Page 18400]]
coverage to its participants through the SHOP only to the employees of
a participating small employer covered under a collective bargaining
agreement.
Response: Our eligibility process allows the SHOP to accept an
attestation by an employer that it will offer coverage to all of its
full-time employees, minimizing the commenter's concern about burden.
Multiemployer plans that qualify as QHPs may offer coverage in SHOP
but, like other QHPs, must follow rules applicable to QHPs.
Additionally, we intend to address commenters' concerns surrounding
multi-employer plans in future guidance.
Comment: One commenter suggested that additional guidance might be
needed with regard to multi-employer plans purchasing coverage through
the SHOP, particularly with regard to determining the work site,
establishing eligibility and enrollment procedures, billing and premium
collection, and other administrative procedures.
Response: Multiemployer plans can play a role as an aggregator of
premium contributions, and an arranger of coverage, and intend to
address commenters' concerns in future guidance.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.710 of the
proposed rule without substantive modification.
d. Eligibility Determination Process for SHOP (Sec. 155.715)
In Sec. 155.715, we proposed that a SHOP determine eligibility
consistent with the standards described in Sec. 155.710. Specifically,
we proposed that a SHOP must verify either through the attestation of
the employer or through additional methods developed by the SHOP, that
a qualified employer has fulfilled all of the standards specified in
Sec. 155.710, including that the employer is a small employer, it is
offering coverage through the SHOP to all full-time employees, as well
as verifying that at least one employee works in the SHOP's service
area.
Consistent with the statutory directive for HHS to provide a
single, streamlined application form, we also proposed that the SHOP
use only two application forms: one for qualified employers and one for
qualified employees. We further proposed that for the purpose of
determining eligibility in the SHOP, the SHOP may use the information
attested to by the employer or employee on the application but must, at
a minimum, verify that an individual attempting to enter the SHOP as an
employee is listed on the qualified employer's roster of employees to
whom coverage is offered. We also proposed that the SHOP have processes
to resolve occasions when the SHOP has a reason to doubt the
information provided through the employer and employee applications. In
addition, similar to the individual market Exchange standards, we
proposed that the SHOP notify an employer or employee seeking coverage
of the SHOP's eligibility determination and the employer or employee's
right to appeal.
Finally, we proposed that if a qualified employer ceases to
purchase any coverage through the SHOP, the SHOP must ensure that: (1)
each QHP terminates the coverage of the employer's qualified employees
enrolled in QHPs through the SHOP; and (2) each of the employer's
qualified employees enrolled in a QHP through the SHOP is notified of
the employer's withdrawal and its termination of coverage prior to such
withdrawal and termination. We solicited comments on whether this
notification must inform the employee about his or her eligibility for
a special enrollment period in the Exchange and about the process of
being determined eligible for insurance affordability programs.
Comment: We received several comments regarding the eligibility
determination process for employees proposed in Sec. 155.715. Some
commenters opposed the processes for individual employee verification,
stating that the process may increase the administrative burden on
businesses. Others suggested that the SHOP should not verify employee
eligibility and questioned the Secretary's authority for such
verifications. Commenters recommended that any SHOP eligibility process
conform to the standards of sections 1411(g) and 1411(h) of the
Affordable Care Act. Some additionally proposed an alternative process
whereby employers applying for coverage in a SHOP present a list of
qualified employees with reference to associated Employment
Identification Numbers (EIN) in order to prevent employer and employees
applicants from gaming the eligibility process. Commenters additionally
recommended that the final rule prohibit the SHOP from collecting
information for verification of citizenship status or eligibility for
the advance payment of the premium tax credit, as described in sections
1411(b)(2) or 1411(c) of the Affordable Care Act.
Response: We note that in accordance with Sec. 155.705(a), SHOPs
must comply with the standards of part 155 subpart C including the
privacy and security standards of Sec. 155.260 and Sec. 155.270.
These sections implement section 1411(g) of the Affordable Care Act.
The employee eligibility process as proposed would direct the SHOP
to verify only that an employee applying for coverage through the SHOP
is a qualified employee--an employee offered coverage by a qualified
employer. We believe that such verification is necessary to ensure the
effective operation of the SHOP and the prevention of abuse. An
employee applying to the SHOP for coverage may easily be both verified
and determined to be a qualified employee by the SHOP solely on the
list of qualified employees provided to the SHOP by the employer.
Because citizenship verification is the responsibility of the
employer at the time of hiring, we have added language in this final
rule to clarify that the SHOP will not perform re-verification of
citizenship status.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.715 of the
proposed rule, with the following modifications: in new paragraph
(c)(3), we clarified that a SHOP may only collect the minimum
information necessary to verify the information provided in an
application. In new paragraph (c)(4) we reiterated that the SHOP may
not perform individual eligibility determinations as described in
sections 1411(b)(2) or 1411(c) of the Affordable Care Act. In paragraph
(d)(1)(iv)(A), we established that the SHOP must mention an employer's
right to appeal in any notice of denial of eligibility. In paragraph
(g)(2), we specified that the SHOP must ensure that any employees
affected by a qualified employer's withdrawal from the SHOP are
notified and receive information about other coverage options. Finally,
we made several changes throughout this section to improve the
precision of the language used.
e. Enrollment of Employees Into QHPs Under SHOP (Sec. 155.720)
In Sec. 155.720, we proposed that the SHOP establish a uniform
enrollment timeline and process, standardized to a plan year, for all
employers and QHPs in the SHOP. In addition, we proposed that the SHOP
must ensure that qualified employees who select a QHP are notified of
the effective date of coverage, whether such notice is executed by the
QHP or by the SHOP.
We also proposed that information maintained by the SHOP must
include records of qualified employer participation and qualified
employee enrollment, and that reconciliation of enrollment information
with QHPs
[[Page 18401]]
occur at least monthly. We invited comments on whether we should
establish target dates or guidelines so that multi-State qualified
employers are subject to consistent rules.
Finally, we proposed that if a qualified employee voluntarily
terminates coverage from a QHP, the SHOP must notify the individual's
employer.
Comment: Several commenters suggested that proposed Sec.
155.720(a) clarify the duties of the SHOP and QHP issuers when
facilitating employee enrollment into QHPs.
Response: Section 155.705 directs a SHOP to carry out the minimum
functions in other subparts of the part. Consistent with the proposed
rule, Sec. 155.720(c)(2) of the final rule directs a SHOP to fulfill
the standards of Sec. 155.400, which establishes standards related to
enrollment of individuals into QHPs.
Comment: One commenter requested clarification that QHP issuers do
not have to participate in both the SHOP and individual Exchanges.
Response: Nothing in this part establishes that an issuer must
participate in both the SHOP and the individual Exchange. However, we
note that Exchanges may wish to establish such participation in both
markets as a condition of certification.
Comment: One commenter to this section recommended automatic
enrollment of employees into new QHPs when there are mergers between
QHP issuers or when one QHP offered by a specific QHP issuer is no
longer offered, but there are other options available to the individual
through the same QHP issuer.
Response: We believe that States may wish to take variable
approaches to managing the enrollment; and therefore, we are not
establishing a standard to offer automatic enrollment in this final
rule.
Comment: Several commenters to proposed Sec. 155.720(b)
recommended that the final rule afford States further flexibility with
respect to enrollment timelines. A few commenters suggested that the
SHOP base its timelines on eligibility rules for enrollment on the
current market practices. A few commenters recommended that the final
rule exclude any target dates and guidelines in Sec. 155.720, while
another commenter recommended that the rule establish basic guidelines
and leave the selection of exact dates to the SHOP. Yet another
commenter expressed concern that the proposed rule did not provide
sufficient flexibility for industries that typically begin coverage on
October 1 and recommended that SHOPs be permitted to provide special
group enrollment for those groups or amend the rule to afford States
greater flexibility to address those circumstances. Conversely, another
commenter proposed that Sec. 155.720 include target dates and
guidelines so that multi-State employers are subject to consistent
rules. One commenter supported similar enrollment processes and
timelines across QHPs to allow qualified employees the greatest
opportunity to select preferred plans and ease administrative burden
for multi-State employers.
Response: We believe that Sec. 155.720 provides adequate
flexibility for a State to develop its process in a way that is most
suitable to local situations. Thus, we have not included specific dates
in the section and have allowed States flexibility to address specific
needs or concerns, including current market environment and special
industries.
Comment: Two commenters responding to this section and Sec.
155.725 recommended that HHS develop a transaction standard with
respect to collected enrollment information.
Response: We plan to provide guidance on the timing, format, and
content of the enrollment information transmissions to QHP issuers.
Comment: Several commenters suggested proposed Sec. 155.720(e)
specify how SHOPs can ensure that QHPs provide notices to employees of
effective coverage dates. One commenter supported the policy that SHOPs
be held accountable for employees receiving notices of effective dates
of coverage. One commenter recommended that QHPs transmit confirmation
of enrollment to the SHOP, and another urged HHS not to add a standard
that the SHOP must send a duplicate notification to the enrollee.
Response: SHOPs must be able to enforce the notification standard;
we believe that Sec. 155.720 provides a State with the flexibility to
establish its SHOP enrollment timeline, procedures, and enforcement
mechanisms that work best for the particular State. The QHP should be
responsible for sending notification; we have clarified in Sec.
155.720(e) of this final rule that a QHP, and not the SHOP, must send
the notification.
Comment: In response to proposed Sec. 155.720(f) and (g), one
commenter opposed the policy for the SHOP to reconcile information and
keep records, noting that it is unclear under the Affordable Care Act
why SHOP should maintain records.
Response: The reconciliation of information and the retention of
records of participants and participant information by the SHOP is a
necessary standard for the smooth operation of the SHOP and effective
oversight of the SHOP.
Comment: Several commenters to proposed Sec. 155.720(g) supported
the idea of reconciliation of enrollment information but disagreed on
the frequency and on who should determine the frequency. One
recommended that this paragraph establish monthly reconciliation and
that SHOPs allow QHPs to query a SHOP at any time for information on
qualified employers and employees. A few commenters recommended
flexibility for States to establish reporting and auditing standards.
Response: We recognize the need for periodic reconciliation of
enrollment information between the SHOP and the QHPs. However, States
should have the flexibility to determine how often such reconciliation
is necessary, provided that reconciliation is completed no less
frequently than once per month. Therefore, we are not adding a more
specific standard in the final rule.
Comment: In response to the standards in proposed Sec. 155.720(h)
related to termination of a qualified employee, some commenters
recommended allowing SHOPs to ensure that disenrollment requests from
current employees to come through the employer because such a process
would ensure the employer receives notification and is able to
communicate to the employee the potential consequences of
disenrollment. One commenter recommended that an employee who ends
employment should consult with the employer regarding available
coverage options after employment ends. Another commenter recommended
the notification standard be placed on the QHP issuer and not on the
SHOP.
Response: We believe that Sec. 155.720(h) of this final rule
ensures that an employer will receive appropriate notification while
preserving an employee's ability to terminate coverage without the
added step of consulting with the employer or creating an additional
administrative burden on the employer. We believe that the notification
standard should remain with the SHOP and that the associated
administrative burden will be minimal.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.720 of the
proposed rule, with the following modification: in paragraph (f), we
clarified that SHOPs must retain records for ten years, which is
changed from the proposed seven years. We added new paragraph (i),
[[Page 18402]]
which directs the SHOP to report to the IRS employer participation and
employee enrollment information for tax administration purposes.
Finally, we made a few technical modifications to streamline the
regulation text.
f. Enrollment Periods Under SHOP (Sec. 155.725)
In Sec. 155.725, we proposed that the SHOP adhere to the start of
the initial open enrollment period for the Exchange, which is October
1, 2013 for coverage effective January 1, 2014, and ensure that QHP
issuers adhere to coverage effective dates in accordance with Sec.
156.260. We noted that the initial open enrollment date represents the
first date employers may begin participating in the SHOP. In addition,
to align enrollment processes between the SHOP and the small group
market, we proposed a rolling enrollment process in the SHOP whereby
qualified employers may begin participating in the SHOP at any time
during the year.
We invited comment on two provisions related to SHOP enrollment:
that qualified employers may enroll or change plans once per year or
during an applicable special enrollment period; and that an employer's
plan may not align with the calendar year.
We also proposed an annual employer election period in advance of
the annual open enrollment period, during which time a qualified
employer could modify the employer contribution towards the premium
cost of coverage and the plans it intended to offer to employees during
the next plan year. We noted that this annual election period may be
specific to each qualified employer and therefore must occur at a fixed
point in the plan year, not at a fixed point during the calendar year.
In addition, we proposed that the SHOP must notify participating
employers that their annual election period is approaching, and
solicited comment on this standard and whether we should establish that
the notice be sent at a specified interval (for example, 30 days before
the relevant election period).
We solicited comment on our proposal that the SHOP establish an
annual employee open enrollment period for qualified employees, to
occur at a fixed point during the plan year, during which the employee
would have the option to renew or change coverage. We proposed that a
qualified employee who is hired outside of the initial or annual open
enrollment period would have a specified window set by the SHOP to seek
coverage in a QHP beginning on the first day of employment. We also
proposed that the SHOP establish effective dates of coverage for
qualified employees consistent with Sec. 155.720. Finally, we proposed
that if an enrollee remains eligible for coverage in a QHP through the
SHOP, the individual will remain in the QHP selected during the
previous plan year with limited exceptions, in which case the
individual would be disenrolled at the end of the coverage year. We
invited comments on our approach to differentiating individual and
small group market enrollment and the proposed structure for initial,
rolling, and annual open enrollment through the SHOP.
Comment: In response to proposed Sec. 155.725(a), some commenters
opposed aligning the enrollment periods in Sec. 155.725 with the
individual Exchange and recommended that SHOP enrollment should be
aligned with other group markets.
Response: In Sec. 155.725(a), we align the SHOP initial open
enrollment period with an individual Exchange for the first opportunity
when coverage may be purchased through the SHOP. Under Sec.
155.725(b), we establish rolling enrollment in the SHOP, which we
believe is consistent with current practice in the small group market
where plan years do not necessarily correspond to calendar years. We
have retained these provisions in the final rule.
Comment: In response to the standards in proposed Sec.
155.725(a)(2), one commenter requested clarification that effective
dates depend on the completion of eligibility and enrollment standards,
and recommend that such standards must be met by December 7, 2013 to
secure a coverage effective date of January 1, 2014.
Response: A SHOP must permit an individual to enroll in a QHP only
after a qualified employee has been determined eligible and has
completed any enrollment standards. We believe that the standards in
Sec. 155.410 of this final rule provide sufficient time for QHP
issuers to effectuate enrollment.
Comment: A few commenters on this section recommended adding a
standard that SHOPs develop a plan to encourage maximum enrollment
during the initial open enrollment period, noting concerns about
adverse selection if certain employers wait to enroll until health care
needs make it more advantageous. One commenter recommended allowing
employers to pro-rate their initial year of participation and then
begin their next plan year on January 1st of the following year to
minimize public confusion and aid implementation.
Response: We believe that States have the flexibility under the
rule to best assess their local market environment and to develop plans
to encourage enrollment and discourage adverse selection.
Comment: Many commenters on proposed Sec. 155.725(e) recommended
that the annual employee open enrollment period last at least 30 days.
Some commenters recommended that open enrollment should be standardized
for all QHPs. Several supported a notification period for employees
before the annual enrollment period. One commenter recommended the
employer, and not the SHOP, decide the open enrollment period, and a
few commenters recommended the Federal government defer to States to
establish open enrollment periods.
Response: We have added language to Sec. 155.725(e) of this final
rule establishing a standardized open enrollment period of at least 30
days. We note that States will have the flexibility to establish open
enrollment periods based on the specific market landscape of the State,
and believe that Sec. 155.725 provides that flexibility. We further
believe that employees should receive a notification in advance of the
open enrollment period and have added a standard in new Sec.
155.725(f) that the SHOP provide notification to qualified employees of
the open enrollment period in advance of the period.
Comment: Several commenters on proposed Sec. 155.725(d) supported
the policy that the SHOP must notify the employer in advance of the
annual employer election period. A few supported a notification period
of 30 days or at least 30 days, one requested flexibility in
determining when employers must be notified, and one recommended that
the notification period align with the outside market to prevent
additional administrative burden on QHPs. Conversely, one commenter
opposed a notification standard for the SHOP, stating that this
function is currently handled by health insurance issuers.
Response: We believe that the SHOP should provide notification of
the open enrollment period but do not believe that we should prescribe
specific timing for the notification. We believe that Sec. 155.725 of
the proposed rule provides the SHOP with the requested flexibility for
notification timing. Finally, we note that the SHOP is the appropriate
entity to notify employers because a single employer could have
employees enrolled in QHPs across several issuers. Therefore, we are
not changing this standard in the final rule.
Comment: A few commenters on proposed Sec. 155.725(c) recommended
that the annual employer election
[[Page 18403]]
period last at least 30 days. One commenter recommended that an
employer must submit an application to participate in SHOP at least 120
days prior to the start of the plan year.
Response: We recognize the importance of an annual employer
election period of at least 30 days and have added language to Sec.
155.725(c) to that effect. However, we note that States have the
flexibility to establish longer annual employer election periods if
they so choose.
Comment: In response to proposed Sec. 155.725(h), one commenter
requested clarification on the auto-enrollment process where a QHP
ceases to exist and an individual does not select another QHP.
Response: Auto-enrollment in the SHOP is only applicable per
redesignated Sec. 155.725(i) of this final rule in situations in which
a qualified employee enrolled in a QHP through the SHOP remains
eligible for coverage. In such cases, the employee will remain in the
QHP selected during the previous year unless the qualified employee
terminates coverage, enrolls in another QHP, or the QHP is no longer
available. We note that if a QHP ceases to exist, resulting in a loss
of minimum essential coverage for the enrollee, the enrollee will be
eligible for a special enrollment period per Sec. 155.725(a)(3). We
also note that under Sec. 156.290(b), a QHP issuer that does not seek
recertification with the Exchange for a QHP must provide written notice
to each enrollee. However, in these cases where an enrollee's former
QHP is no longer available, there is no auto-enrollment standard in the
SHOP should the individual not select another QHP during a special
enrollment period or open enrollment period.
Comment: Many commenters offered feedback on the proposed Sec.
155.725(g), which stated that the SHOP must establish effective dates
of coverage for enrollees in the SHOP. A few commenters requested that
the final rule clarify the SHOP's obligation to establish coverage
effective dates. One commenter recommended that coverage take effect on
the first day of the month following the date of enrollment for
enrollment transactions completed by the 20th of the month. In cases
where enrollment is completed after the 20th, the commenter recommended
that coverage take effect on the first day of the month that follows
the next month. In contrast, some commenters disagreed with the policy
that SHOPs must establish effective dates of coverage, noting that
employers and carriers currently perform this function.
Response: Per redesignated Sec. 155.725(h) of this final rule, the
SHOP must establish coverage effective dates consistent with Sec.
155.720. We believe that a single policy of effective dates in the SHOP
ensures consistency and note that we proposed using the same effective
dates as the individual Exchange for the initial enrollment period in
order to increase the administrative simplicity for Exchanges and
issuers. We believe the Sec. 155.410 standards provide sufficient time
for processing enrollment information before the effective date of
coverage. Therefore, we are finalizing redesignated Sec. 155.725(h),
as proposed. We further note that a SHOP must not only establish
effective dates but must also ensure notification of the effective
dates in accordance with Sec. 155.720.
Comment: Some commenters to Sec. 155.725 recommended that
employees receive advance notice if the QHP in which they are enrolled
will no longer be offered through the SHOP for the upcoming plan year.
Another commenter recommended that employees in this circumstance
receive advance notice of other affordable options, including insurance
affordability programs.
Response: We note that Sec. 156.285(d)(1)(ii) of this final rule
directs any QHP issuer that chooses not to renew its participation in
the SHOP to notify affected enrollees and qualified employers. We
believe that this notification standard, combined with the annual open
enrollment period, provides sufficient opportunity for enrollees to
review their coverage options and make a new plan selection. Therefore,
we are not adding a notification standard in this section.
Comment: Several commenters on proposed Sec. 155.725(f) supported
the policy that SHOPs provide coverage to any new employees hired
outside of the initial or annual open enrollment period and that SHOPs
be able to make that coverage available on the employee's first day of
employment. One commenter recommended a predetermined, regulated length
of time for the enrollment period. One commenter expressed concern with
the limited ability to amend an employee's coverage and recommended
that employees have an opportunity to state a case for needing to
change coverage similar to special enrollment rules. One commenter
suggested that there should be a special enrollment period if an
employer reduces its contribution. Other commenters questioned how this
standard relates to probationary periods, specifically the Affordable
Care Act provision that permits group plans to impose waiting periods
of no more than 90 days for coverage of new employees.
Response: In general, we recognize the importance of providing
coverage to new employees hired outside of the initial or annual open
enrollment. Thus, we have clarified in redesignated Sec. 155.725(g) of
this final rule to assure that the SHOP provides an employee who
becomes a qualified employee a period to seek coverage that would be
effective on the first day of becoming a qualified employee rather than
on the first day of employment. This revision refines the standard to
encompass not only new employees, but also situations where an employee
moves from part to full time status or completes a waiting period. In
the case of a waiting period, an employee could become a qualified
employee under Sec. 155.710(e) when the qualified employer makes an
offer of coverage after the waiting period is over. It still retains
the ability for a new and qualified employee to seek coverage on the
first day of employment. States will be able to set a time for this
period under Sec. 155.720. We believe that Sec. 155.725 does not
preclude a State from creating special enrollment periods in addition
to the ones established by the rule.
Comment: One commenter on proposed Sec. 155.725(h) recommended
that because eligibility of a qualified employee to enroll in a QHP
through the SHOP is available on the basis of employment by a qualified
employer, the employer should be responsible for renewing its
employees' coverage at the end of a plan year.
Response: We believe that Sec. 155.725(c) adequately addresses
that concern by specifically establishing that a SHOP must provide
qualified employers with an annual election period in which a qualified
employer may change its participation in the SHOP for the next year,
including the method it makes QHPs available to qualified employees,
the level of employer contribution, the level of coverage offered, and
the QHP or plans offered. Therefore, we are finalizing this provision
as proposed.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.725 of the
proposed rule, with the following modifications: in new paragraph
(a)(3) we clarified that a SHOP must provide the special enrollment
periods described in Sec. 155.420, with the exception of those
described in paragraphs (d)(3) and (6) of that section. We provided in
paragraph (c) that the SHOP must allow qualified employers a period of
no less than 30 days to alter plan selections prior to the
[[Page 18404]]
open enrollment period. We established in paragraph (e) that the annual
employee open enrollment period must be standardized, and must be at
least 30 days. In new paragraph (f), we direct the SHOP to provide
notification to a qualified employee of the annual open enrollment
period. In redesignated paragraph (g) we clarified that the SHOP must
offer an enrollment period to newly qualified employees. Finally, we
redesignated proposed paragraphs (f), (g), and (h) as paragraphs (g),
(h), and (i), respectively, and made several minor changes throughout
this section to make the regulation text more precise and to add
clarity.
g. Application Standards for SHOP (Sec. 155.730)
In 155.730, we outlined the proposed application-related standards
for participation in the SHOP. Specifically, we proposed that the SHOP
use a single employer application and the information the application
should collect (that is, employer name and address, number of
employees, employer identification number, list of qualified employees
and SSNs). We sought comment on what, if any, other employer
information SHOPs should collect via the employer application.
Similarly, we proposed that the SHOP must use a single employee
application for each employee to collect eligibility information and
QHP selection. We noted that a SHOP may modify or reduce the individual
Exchange application for SHOP applicants, if desired and subject to
approval by the Secretary. We also proposed that a SHOP may also use a
model single employer application and model single employee application
created by HHS or an alternative application approved by HHS. Finally,
we proposed that the SHOP must allow employers and employees to submit
their eligibility and enrollment information consistent with Sec.
155.405(c).
Comment: We received several comments regarding the preamble
discussion in the proposed rule that the SHOP should not make
eligibility determinations for Medicaid or CHIP. Many commenters
recommended that the final rule outline a role for the SHOP in
providing information about these programs.
Response: There are a number of ways that employees can learn about
insurance affordability programs. We do not think that the application
for SHOP is the most effective venue for providing this information.
Comment: We received several comments related to the limitations on
the information that may be collected on SHOP applications in
accordance with proposed Sec. 155.730(a). Some commenters requested
that the final rule not impose any limitations on the information that
the SHOP may request of employees, noting that such restrictions could
limit how well the SHOP can serve qualified employers and qualified
employees. Other commenters supported the proposed rule's focus on a
simple application standard and limiting the information collected to
information necessary to facilitate applications, eligibility
determinations, and enrollment.
Response: We believe that limiting the collection of information on
the application to data relevant for eligibility determinations,
enrollment, and reporting by the SHOP or by QHP issuers balances the
need to minimize the burden placed on applicants with the information
needs of the SHOP and QHP issuers. Therefore, we are finalizing the
provisions of Sec. 155.730(a) as proposed.
Comment: One commenter suggested that the application collect the
NAIC code of each employer applying to the SHOP under proposed Sec.
155.730(a).
Response: We do not believe that it is essential for the SHOP
application to collect each employer's NAIC code, since it is beyond
what is minimally necessary for the purpose of the SHOP.
Comment: Some commenters were strongly opposed to the standard that
the SHOP collect the social security number (SSN) of employees on the
employer application in accordance with proposed Sec. 155.730(a)(4).
These commenters stated that effective alternate methods of
authenticating employees exist, recommended that this standard be
removed from the final rule.
Response: While employees may be effectively authenticated without
the employer providing employee SSN on the employer application,
employee taxpayer identification numbers (most commonly an employee's
SSN) are needed for QHP issuers to comply with the standards of section
1502 of the Affordable Care Act. Although we retain the employees'
names and taxpayer identification numbers as elements of the employer
application, we have clarified in Sec. 155.715(c)(4), that the SHOP
may not re-verify the citizenship status of the employee or make a
determination of eligibility for an advance payments of the premium tax
credit. We note that employees already provide their Social Security
number to employers for a variety of purposes and this information is
disclosed by the employer to both State and Federal agencies of for
such purposes as unemployment insurance and tax purposes.
Comment: Some commenters requested that the SHOP be permitted to
adopt an alternative employer or employee application without obtaining
formal approval from HHS, as proposed in Sec. 155.730(e), in order to
prevent the delay in the adoption of such applications. Other
commenters agreed with the proposed policy that HHS approve any
alternative application to ensure it meets the standards of this
section.
Response: The HHS review of any proposed alternative application is
intended to ensure that it conforms to the standards proposed in this
section. Therefore, we are maintaining the standard under Sec.
155.730(e), as proposed.
Summary of Regulatory Changes
We are finalizing the definitions proposed in Sec. 155.730 of the
proposed rule, with two modifications. In paragraph (e) we clarified
that a SHOP may develop and submit for HHS approval an alternative
application for employers and employees. Additionally, in new paragraph
(g) we provide for additional safeguards to address commenters concern
regarding the collection and use of dependent information for purposes
other than processing enrollment in a QHP and made several minor
changes throughout this section to make the regulation text more
precise and to add clarity.
7. Subpart K--Exchange Functions: Certification of Qualified Health
Plans
This subpart codifies section 1311(d)(4)(A) of the Affordable Care
Act, which establishes that Exchanges, at a minimum, implement
procedures for the certification, recertification, and decertification
of health plans as QHPs, consistent with guidelines developed by HHS.
This subpart also clarifies the Exchanges' responsibility related to
the inclusion in the Exchange of certain multi-State plans. We note
that as States establish Exchanges, each State has choices related to
certification of QHPs for the Exchange through the piece of
legislation, executive order, or charter that creates the Exchange.
Alternatively, the Exchange itself may be able to exercise discretion
under existing State and Federal law.
a. Certification Standards for QHPs (Sec. 155.1000)
In Sec. 155.1000, we proposed the overall responsibilities of an
Exchange to certify QHPs. We proposed that QHPs must have in effect a
certification issued or recognized by the Exchange as QHPs
[[Page 18405]]
and that an Exchange may only make available as a QHP a health plan
that has in effect a certification issued or recognized by the Exchange
as a QHP. We proposed to define a multi-State plan as a plan under
contract with OPM to offer a multi-State plan that offers a benefits
package that is uniform in each State and consists of the benefit
design standards described in section 1302 of the Affordable Care Act;
meets all standards for QHPs; and meets Federal rating standards in
accordance with section 2701 of the PHS Act, or a State's more
restrictive rating standards, if applicable.
We proposed that an Exchange may certify a QHP if the QHP meets
minimum certification standards described in subpart C of part 156 and
if the Exchange determines the QHP is in the interest of qualified
individuals and qualified employers in the State. We noted than an
Exchange could adopt an ``any qualified plan'' certification, engage in
selective certification, or negotiate with plans on a case-by-case
basis; the proposal also permitted an Exchange to establish additional
certification criteria.
Comment: A few commenters requested that HHS redefine a multi-State
plan in proposed Sec. 155.1000(a) as a plan that is described under
section 1334 of the Affordable Care Act to ensure continuous alignment
between this final rule and forthcoming regulations on multi-State
plans promulgated by the U.S. Office of Personnel Management (OPM).
Response: We believe the commenters' approach would better align
this final rule with forthcoming regulations on multi-State plans.
Therefore, we are revising the regulation text in final Sec. 155.1000
to reference section 1334 of the Affordable Care Act. The final rule in
this subpart has been revised throughout to acknowledge the role of OPM
in certifying multi-State plans.
Comment: Several commenters requested additional information on how
the Office of Personnel Management will administer multi-State plans.
Commenters proposed specific recommendations, including that OPM deem
existing health plans that operate in multiple States as multi-State
plans, or that multi-State plans include protections for certain types
of benefits (for example, benefits related to end-stage renal disease).
Response: The standards and processes related to multi-State plans
will be addressed in forthcoming regulations implementing section 1334
of the Affordable Care Act promulgated by OPM. These issues are outside
the scope of this final rule, which only addresses multi-State plans in
connection with Exchange obligations to recognize multi-State plans as
certified by OPM.
Comment: Several commenters requested that HHS clarify the language
in proposed Sec. 155.1000(c)(2) permitting an Exchange to certify a
QHP if the Exchange determines that such QHP is in the interest of
qualified individuals and qualified employers.
Response: We interpret Sec. 155.1000(c)(2), as proposed and as
finalized, as providing an Exchange with broad discretion to certify
health plans that otherwise meet the QHP certification standards
specified in part 156 in a way that best meets the needs of local
consumers and businesses. We refer commenters to pages 41891 and 41892
of the Exchange establishment proposed rule for a more comprehensive
discussion of the strategies an Exchange could use to apply the
``interest'' test, including consideration of the reasonableness of the
expected costs supporting the QHP's premium and cost-sharing structure,
past performance of the QHP issuer, quality improvement activities,
enhancements of provider networks, the QHP service area, or past rate
increases.
Comment: A few commenters requested that HHS clarify the meaning of
the exclusions in proposed Sec. 155.1000(c)(2)(i) through (iii), which
place certain limits on an Exchange's ability to exercise the
``interest'' test described in proposed Sec. 155.1000(c)(2).
Response: As proposed and as finalized, Sec. 155.1000(c)(2)(i)-
(iii) codifies sections 1311(e)(1)(B)(i)-(iii) of the Affordable Care
Act, which limits an Exchange's ability to apply the ``interest'' test
in certifying qualified QHPs. Specifically, we clarify that an Exchange
cannot exclude an otherwise eligible QHP on the sole basis that it is a
fee-for-service plan, through the use of premium price controls, or
because the QHP covers treatments or services necessary to prevent
patient deaths that the Exchange determines are inappropriate or too
costly.
Comment: One commenter requested that the final rule clarify that
any certification standards or processes developed in accordance with
this section apply uniformly to any subsidiary Exchanges. Another
commenter requested that a QHP issuer be permitted to operate
statewide, even where subsidiary Exchanges cover smaller service areas.
Response: There may be multiple compelling and appropriate reasons
for a State to create additional standards, or to take a different
approach to certification, in different market regions. For example, a
State may wish to employ different contracting strategies in a highly
competitive, urban service area versus a rural service area. Further,
we believe that the definition of an Exchange in Sec. 155.20 and the
authority to have a regional or subsidiary Exchange provided in Sec.
155.140 establish that a subsidiary or regional Exchange not only must
meet all Exchange responsibilities, but also have the same authority
and discretion as an Exchange that serves an entire State. Therefore,
we are not establishing uniform standards for subsidiary Exchanges
within a State; we note, however, that HHS must review and approve
subsidiary Exchanges. We expect that States will consider the
implications of developing subsidiary Exchanges, including the
potential effects on issuer participation in the State.
Comment: One commenter generally expressed concern about aligning
market rules and consumer protections inside and outside of the
Exchange.
Response: We note that nothing in the final rule limits a State's
ability to adjust market and other rules outside of the Exchange to
better align with the rules and protections that exist within the
Exchange.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.1000 of the
proposed rule, with the following modification: we revised the
definition of a multi-State plan in paragraph (a) to mean a QHP that is
offered in accordance with section 1334 of the Affordable Care Act, to
ensure ongoing consistency with forthcoming regulations implementing
this section. In paragraph (b), we amended the provision to clarify the
language.
b. Certification Process for QHPs (Sec. 155.1010)
In Sec. 155.1010, we proposed that the Exchange establish
procedures for the certification of QHPs that are consistent with the
certification criteria outlined in Sec. 155.1000(c). We also proposed
that a multi-State plan offered through OPM be deemed certified by an
Exchange and noted that multi-State plans will need to meet all the
standards for a QHP, as determined by OPM. To ensure consumers have a
robust selection of QHPs during the open enrollment period, we further
proposed that the Exchange complete the certification of QHPs prior to
the open enrollment periods established in Sec. 155.410. Finally, we
proposed that the Exchange monitor QHP issuers for demonstration
[[Page 18406]]
of ongoing compliance with certification standards.
Comment: In response to proposed Sec. 155.1010(a) on QHP
certification, a number of commenters expressed support for Exchange
flexibility in designing the certification process. Conversely, several
commenters recommended a uniform, national set of certification
standards and processes and proposed specific features, such as that
the certification process consider past premium increases, an issuer's
medical loss ratio, quality information, or provider payment standards.
Several commenters requested that the final rule provide additional
detail on the certification standards that Exchanges will use to
evaluate QHPs.
Response: We recognize the importance of ensuring a basic set of
uniform consumer protections across all Exchange markets through the
setting of minimum certification standards for QHP issuers. We believe
that States are best positioned to adapt and expand on these standards
to meet the needs of consumers served by the Exchange, given local
market conditions. Therefore, while Exchanges have discretion to
identify certification standards above and beyond those provided for in
the final rule, including the features suggested by commenters, we are
not specifying additional elements in this final rule.
Comment: Many commenters expressed support for a specific
contracting model the Exchange could adopt in accordance with proposed
Sec. 155.1010(a); of these, approximately half endorsed an ``any
willing plan'' approach, in which the Exchange would contract with all
QHPs that meet the relevant certification criteria. The other half of
the commenters favored more proactive forms of ``active purchasing,''
including selective contracting with QHPs.
Response: As we noted in the preamble to the Exchange establishment
proposed rule, we believe that an Exchange's certification approach may
vary based upon market conditions and the needs of consumers in the
service area. Accordingly, in this final rule, we offer flexibility to
Exchanges on several elements of the certification process, including
the contracting model, so that Exchanges can appropriately adjust to
local market conditions and consumer needs. An Exchange could adopt its
contracting approach from a variety of contracting strategies,
including an any-qualified plan approach, a selective contracting model
based on predetermined criteria, or direct negotiation with all or a
subset of QHPs. Therefore, we are not prescribing a specific
contracting model in this final rule.
Comment: Many commenters expressed support for the provisions in
Sec. 155.1010(b) of the proposed rule related to the deemed
certification of multi-State plans and emphasized the importance of
creating a level playing field for all QHPs within an Exchange. Several
commenters recommended that the final rule clarify that multi-State
plans and CO-OPs will be treated identically to other plans; for
example, multi-State plans and CO-OPs would comply with any additional
certification criteria established by an Exchange, and could be
excluded in States that selectively contract.
Response: The final rule establishing the CO-OP program, ``Patient
Protection and Affordable Care Act; Establishment of Consumer Operated
and Oriented Plan (CO-OP) Program,'' published at 76 FR 77392 (December
13, 2011) directs CO-OPs to comply with all standards generally
applicable to QHP issuers. We anticipate that specific standards for
multi-State plans will be described in future rulemaking by OPM in
accordance with section 1334 of the Affordable Care Act.
We note that the Affordable Care Act specifically provides a
deeming process for multi-State plans and CO-OPs. Based on this fact,
we do not believe these plans can be excluded from participation,
including in Exchanges that adopt selective certification approaches.
Comment: Several commenters supported flexibility for States to
establish a certification timeline for QHPs, as provided in proposed
Sec. 155.1010(c). In contrast, some commenters recommended that the
final rule specify a certification timeline or suggested specific times
by which health plans must be certified as QHPs, such as 10 months
prior to the beginning of the relevant open enrollment period.
Response: In developing the certification timeframe, an Exchange
may need to consider market conditions in the State, including the
potential for participation by new QHP issuers. As a result, we are not
establishing a specific deadline by which an Exchange must complete
certification, other than that certification must be completed prior to
the open enrollment period for those QHPs that will be made available
during open enrollment. We have revised the regulation text by
replacing the proposal that all QHPs must be certified before the
beginning of the relevant open enrollment period with a standard that
all QHPs offered during an open enrollment period must be certified
before the beginning of such period. We encourage Exchanges to certify
QHPs before the open enrollment period to the extent possible, and to
consider the needs of consumers, issuers, and other stakeholders when
establishing certification timelines.
Comment: Multiple commenters requested clarification as to how
Exchanges will continually monitor compliance with certification
standards as described in proposed Sec. 155.1010(d). Several
commenters offered specific recommendations related to ongoing
monitoring, including that HHS establish a national complaint tracking
database; that QHPs demonstrate compliance rather than placing the
burden of proof on Exchanges; that HHS establish penalties for non-
compliance; and that Exchanges consider network adequacy and provider
payment practices.
Response: The Exchange is generally responsible for monitoring
ongoing QHP compliance with certification standards. There are existing
and variable mechanisms for monitoring health plan performance;
therefore, we believe Exchanges are best positioned to develop a
process and infrastructure for monitoring QHP performance in the
Exchange. This could include coordination with State departments of
insurance, reviews of health plan performance, and other approaches. We
note that the final rule gives Exchanges the express authority to
decertify a QHP at any time for non-compliance with certification
standards, including the discretion to establish sanctions for non-
compliance.
Comment: Several commenters requested that the final rule clarify
whether a multi-State plan may cover non-excepted abortion services if
its service area includes one or more States where coverage of such
services is prohibited by State law.
Response: Specific standards for multi-State plans will be
described in future rulemaking published by OPM in accordance with
section 1334 of the Affordable Care Act.
Comment: A few commenters requested that Exchanges be permitted to
contract with other State agencies, such as the State department of
insurance, to certify, recertify, and decertify QHPs for participation
in the Exchange.
Response: Exchanges may enter into agreements with eligible
entities in accordance with Sec. 155.110, including other State
agencies, to perform Exchange functions such as QHP certification. The
Exchange is responsible for establishing processes for QHP
certification, recertification,
[[Page 18407]]
and decertification. The Exchange may choose to carry out these
functions by contracting with the State department of insurance or
another appropriate entity, but must retain ultimate accountability for
the certification and review of QHPs in accordance with Sec. 155.110.
Comment: A few commenters addressed the certification processes for
the individual Exchange and SHOP under proposed Sec. 155.1010(a).
While some commenters recommended that the certification process be
identical for both Exchanges, others supported two distinct processes
in States where the individual Exchange and SHOP are separately
administered.
Response: The administrative structure of the individual Exchange
and SHOP may vary by State. Further, the final rule offers significant
flexibility to Exchanges in designing the certification process and
does not prescribe a particular approach. Therefore, the final rule
neither prescribes a single, uniform process nor two complementary
processes for certification.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.1010 of the
proposed rule, with the following modifications: we redesignated
proposed paragraphs (c) and (d) as final paragraphs (a)(1) and (a)(2)
to clarify that the certification timeline and the direction for
Exchanges to monitor QHPs for ongoing compliance are considered part of
the certification process. In paragraph (a)(1), we added language to
increase flexibility for an Exchange to certify a QHP during the
benefit year by replacing the proposal that all QHPs must be certified
before the beginning of the relevant open enrollment period with a
standard that all QHPs offered during an open enrollment period must be
certified before the beginning of such period. We revised the language
in paragraph (b) to clarify that both multi-State plans and CO-OPs must
be recognized by the Exchange as certified (we have previously
finalized that Exchanges must recognize CO-OP QHPs in 45 CFR
156.520(e)(1), published at 76 FR 77414).
c. QHP Issuer Rate and Benefit Information (Sec. 155.1020)
In Sec. 155.1020, we proposed that Exchanges must receive a QHP
issuer's justification for a rate increase prior to the implementation
of such an increase, and ensure that the QHP issuer posts the
justification on its Web site. Specifically, we proposed to codify the
statutory direction in section 1311(e)(2) of the Affordable Care Act
that an Exchange consider the following factors related to health plan
rates when determining whether to certify QHPs: (1) The justification
of a rate increase prior to the implementation of the increase; (2) the
recommendations provided to the Exchange by the State under section
2794(b)(1)(B) of the PHS Act; and (3) any excess rate growth outside
the Exchange as compared to the rate of growth inside the Exchange,
including information reported by the States. We also solicited comment
on how to best align section 2794 of the PHS Act and section 1311(e)(2)
of the Affordable Care Act with respect to review of rates. Finally, we
proposed that the Exchange must, at least annually, receive from QHP
issuers information on rates, covered benefits, and cost sharing for
each QHP, in a form and manner specified by HHS.
Comment: Many commenters expressed support for the standard in
proposed Sec. 155.1020(a) that an Exchange ensure that any rate
increase justification is prominently posted on the QHP issuer's Web
site. Several commenters requested clarification of the meaning of
``prominently'' posted or made specific recommendations that, for
example, the Exchange Web site link to the justification on the
issuer's Web site, that the Exchange Web site separately post the
justification, or that the Exchange Web site include a pop-up
``warning'' to enrollees who select a QHP for which there was a recent
rate increase.
Response: In the final rule, we have amended Sec. 155.1020(a) to
direct the Exchange to provide access to the rate increase
justification posted on the issuer's Web site. We believe that this
additional standard would provide greater transparency, and make it
easier for consumers to access information about rate increases when
considering QHPs. We note that nothing in this final rule would
preclude an Exchange from separately posting an issuer's justification
or otherwise informing consumers about rate increase justifications, as
suggested by commenters.
Comment: A few commenters recommended that the final rule specify
that the Exchange must collect rate justifications in accordance with
proposed Sec. 155.1020(a) in a timely manner.
Response: The Exchange must collect rate justifications in advance
of the annual certification or recertification process, so that the
Exchange can meaningfully consider the information when determining
whether to make a QHP available through the Exchange. This is implicit
in the operation of Sec. 155.1010 and Sec. 155.1020. However,
recognizing that Exchanges may establish different timelines for
certification and recertification within the parameters described in
Sec. 155.1010, we do not establish a separate uniform date for the
collection of such justifications in the final rule.
Comment: One commenter requested that HHS clarify that any
discussion of the State Insurance Commissioner or State department of
insurance in the preamble to the proposed rule encompasses any relevant
State regulator.
Response: While the statute gives the Exchange this authority, we
believe that that the intent of Sec. 155.1020 is that the Exchange
consider recommendations from the State agency or official responsible
for complying with section 2794(b) of the PHS Act.
Comment: Many commenters suggested ways Exchanges could consider
rate increase justifications under proposed Sec. 155.1020(b). Some
commenters favored a rigorous rate review process that would go beyond
the functions currently performed by State regulators, such as by
collecting additional information from QHP issuers implementing rate
increases (for example, evidence of efforts to control costs through
value-based benefit designs).
In contrast, several other commenters recommended that the final
rule reaffirm the traditional role of States in reviewing rates.
Commenters further urged HHS to minimize the potential for duplication
and inconsistency by encouraging the Exchange to leverage a State's
program under section 2794 of the PHS Act to review rates. One
commenter requested that the final rule clarify that an Exchange's
ability to act in response to a rate increase would be limited to
deciding whether to make a QHP available through the Exchange.
Response: We encourage the Exchange to leverage existing State rate
review processes to the extent appropriate. As we highlighted in the
preamble to the proposed rule, such coordination could include posting
or adopting the same format used for rate justifications submitted to
the State. However, we note that in some cases an Exchange may engage
in more in-depth consideration of QHP issuers' justifications when
determining whether to make a QHP available on the Exchange. As a
result, we do not limit the ability of Exchanges to conduct additional
reviews of rate increase justifications, although we recommend that
Exchanges consider the administrative burden on issuers associated with
any such reviews. We
[[Page 18408]]
note that an Exchange's consideration of rate increases is limited to
whether a QHP should be made available on the Exchange.
Comment: In response to the provision in proposed Sec. 155.1020(b)
that an Exchange consider rate increases, many commenters requested
that HHS clarify how the Exchange must incorporate such review into the
QHP certification process. A few commenters recommended that excessive
rate increases be considered cause for refusal of certification or
decertification. Conversely, one commenter recommended that Exchanges
initially not consider rate increases in the certification of QHPs, and
that in later years the level or review would be proportional to the
size of the rate increase. Finally, a few commenters requested that the
final rule clarify how HHS will oversee Exchange review of rate
increases.
Response: An Exchange may choose from a variety of approaches with
respect to QHP issuer rate increases. For example, an Exchange may
exercise the discretion provided in Sec. 155.1000(c)(2) by opting to
not make available QHPs implementing rate increases that the Exchange
determines are not sufficiently justified. Other Exchanges may choose
to rely more heavily on the process and determinations made by the
applicable State regulator. Therefore, we are not prescribing a
specific process or standard that the Exchange must follow in its
consideration of rate increase justifications in this final rule.
Comment: One commenter requested that the final rule clarify the
applicability of the provisions in this section to multi-State plans.
Response: Standards and processes related to multi-State plans will
be addressed in future rulemaking by OPM in accordance with section
1334 of the Affordable Care Act. Because OPM will administer contracts
with multi-State plans, we anticipate that OPM may collect certain
data, including rate and benefit data, from multi-State plans. To avoid
duplicate reporting and minimize administrative burden, we have amended
proposed Sec. 155.1020(b) and (c) to clarify that OPM will provide a
process for rate increase consideration of multi-State plans and a
process for multi-State plans to submit rate and benefit information,
respectively.
Comment: Two commenters requested the meaning of the standard in
proposed Sec. 155.1020(b)(1)(iii) that an Exchange consider any excess
of rate growth outside versus inside the Exchange. One commenter
requested clarification of whether HHS will establish a uniform,
national limit on rate increases. Another commenter requested that HHS
clarify the meaning of premium price controls. One commenter
recommended that the final rule discourage or prohibit the Exchanges
from holding down rates and creating ``spillover'' increases outside
the Exchange or in other States, for multi-State plans. Finally, one
commenter recommended that the rate review function inside and outside
of the Exchange be combined.
Response: As indicated in the preamble to the proposed rule, we
encourage Exchanges to work closely with State departments of insurance
when considering issuer rate increases. With respect to Sec.
155.1020(b)(1)(iii), we note that an Exchange should consider the rate
of growth in rates for similar products that are offered outside versus
inside the Exchange, which may help the Exchange in its consideration
of rate increase justifications.
The term premium price controls is not defined in section 1311(e)
of the Affordable Care Act, which this provision implements. We note
that review of rate information in accordance with this section is the
responsibility of the Exchange; therefore, we are not defining the term
``premium price controls'' or setting a national limit in this final
rule.
Comment: A few commenters requested that the final rule clarify the
content and timing of reporting of the rate and benefit information
described in proposed Sec. 155.1020(c). One commenter recommended that
the information be reported twice per year. Several commenters urged
HHS to direct the Exchange also collect information on benefit
exclusions.
Response: We intend to clarify the format and content of data
submission in accordance with this section in future guidance. Because
the purpose of the collected information is to support the QHP
certification process, the timing is implicit in the operation of this
provision in conjunction with Sec. 155.1010(a). We note that we
interpret Sec. 155.1020(c)(1) to direct Exchanges to collect rate
information for pediatric dental benefits offered in accordance with
section 1302(b)(1)(J) of the Affordable Care Act, and for any benefits
in excess of the other benefits offered under section 1302(b) of the
Affordable Care Act. Exchanges will need to be able to identify such
information to support the administration of advance payments of the
premium tax credit.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.1020 of the
proposed rule, with a few exceptions. In paragraph (a), we added that
the Exchange must provide access to rate justification information on
its Internet Web site. We also clarified throughout this section that
the U.S. Office of Personnel Management will determine the process by
which OPM will consider rate increases and by which multi-State plans
submit rate and benefit information to the Exchange.
d. Transparency in Coverage (Sec. 155.1040)
In Sec. 155.1040, we proposed how section 1311(e)(3) would be
implemented: that Exchanges direct health plans seeking certification
as QHPs to submit transparency information outlined in Sec. 156.220 to
the Exchange, HHS, and other entities. We also proposed to direct the
Exchange to monitor the use of plain language by QHP issuers when
making available QHP transparency data, consistent with guidance
developed jointly by the Secretary of HHS and the Secretary of Labor.
In addition, we proposed that the Exchange direct QHP issuers to make
cost-sharing information available to enrollees.
Comment: With respect to proposed Sec. 155.1040(a), several
commenters recommended that Exchanges serve as data aggregators for
transparency information. One commenter requested that Exchanges be
permitted to contract with other entities to collect and analyze
transparency data.
Response: While we believe some Exchanges may wish to aggregate
transparency data across QHPs to facilitate the comparison of plans,
other Exchanges may prefer not to take on this function, and others may
contract with another entity to collect and analyze transparency data
consistent with Sec. 155.110. Regardless, by law, we note that the
Exchange must condition certification of a QHP on its submission of
such transparency data in accordance with Sec. 156.220.
Comment: A few commenters recommended that HHS consult with
consumers and other stakeholders in developing plain language guidance
in accordance with proposed Sec. 155.1040(b). Other commenters
suggested specific elements to include (for example, translation
services). One commenter recommended that QHP issuers be permitted to
attest to the use of plain language to reduce the administrative burden
on the Exchange.
Response: We note that ``plain language'' is defined in Sec.
155.20. HHS and the Department of Labor will jointly develop and issue
guidance on best practices of plain language writing, and
[[Page 18409]]
will inform the public about the process for developing such guidance.
Comment: Several commenters recommended that the Exchange Web site
inform consumers of their ability to request cost-sharing information
from QHP issuers in accordance with proposed Sec. 155.1040(c) of this
section.
Response: We will consider including sample language to this effect
in the Exchange Web site template.
Comment: Multiple commenters requested that HHS clarify the
oversight and enforcement process for data reporting in accordance with
proposed Sec. 155.1040(a), including by specifying any sanctions that
the Exchange may impose on QHP issuers for failure to report the data.
One commenter specifically recommended that QHP issuers be directed to
prepare compliance reports addressing transparency data and consumer
inquiries regarding cost sharing.
Response: We expect that each Exchange will develop a compliance
and enforcement approach that will apply to this and other
certification standards.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.1040 of the
proposed rule, with the following modification: in paragraph (a) we
clarified that the U.S. Office of Personnel Management will determine
the process through which multi-State plans submit transparency data.
e. Accreditation Timeline (Sec. 155.1045)
In Sec. 155.1045, we proposed that the Exchange establish the time
period within which any QHP issuer that is not already accredited must
become accredited following certification of a QHP. This provision is
consistent with Sec. 156.275, in which we proposed that all QHP
issuers must be accredited with respect to their QHPs within the
timeframe established by the Exchange.
Comment: We received many comments in response to our proposed
standard to allow Exchanges to determine a uniform period following
certification by which QHP issuers must be accredited. A number of
commenters agreed with our proposal that the States should be given
flexibility to determine this timeline. Several other commenters
disagreed with our proposal to allow Exchanges to set the timeline for
accreditation for QHPs and requested that HHS establish a Federal
timeline for accreditation that all Exchanges must follow. Several
commenters suggested appropriate accreditation timelines for HHS to
establish. Another commenter suggested that allowing QHP certification
without accreditation runs counter to the intent of the law and State
autonomy in determining the accreditation timeline fails to offer
adequate consumer protection.
Response: We maintain our regulation text as stated in the proposed
rule. We believe that this proposal is consistent with our efforts to
ensure that Exchanges have the discretion to implement QHP issuer
standards that best meet the needs of their Exchange enrollees. To draw
new issuers to the Exchange, we note that an Exchange may want to
provide issuers with additional time beyond initial certification to
become accredited. Section 1311(c)(1)(D)(ii) of the Affordable Care Act
clearly provides for the Exchange to establish the timeframe.
Comment: We received a single comment to our proposed provision in
Sec. 155.1045 requesting that plans be allowed to select their own
accrediting entity. We also received a comment suggesting criteria that
the Secretary should use to recognize accrediting entities.
Response: We expect to engage in future rulemaking to adopt a
process and criteria for the recognition of accrediting entities.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.1045 of the
proposed rule with the clarification that the Office of Personnel
Management will establish the accreditation period for multi-State
plans as part of the certification of those plans.
f. Establishment of Exchange Network Adequacy Standards (Sec.
155.1050)
To ensure that Exchange network adequacy standards are appropriate
for QHP issuers and reflect local patterns of care, we proposed in
Sec. 155.1050 that each Exchange ensure that enrollees of QHPs have a
sufficient choice of providers. We discussed, in preamble, different
measures of network adequacy and solicited comment on whether the final
rule should set Federal minimum network adequacy standards or direct
the Exchanges to set specific types of standards, including additional
qualitative or quantitative standards. We also requested comment on an
additional standard that the Exchange ensure that QHPs' provider
networks provide sufficient access to care for all enrollees, including
those in medically underserved areas.
Comment: A few commenters requested that HHS clarify how the
network adequacy standards will be monitored and enforced. Commenters
recommended that the Exchange report on oversight of network adequacy,
or use specific tactics to monitor network adequacy (for example,
secret shopper events, monitoring of appointment wait times).
Response: Many States direct health insurance issuers to evaluate
the adequacy of their provider networks on an ongoing basis and monitor
network adequacy in their traditional role of regulating health
insurance. We encourage Exchanges to coordinate with State departments
of insurance in monitoring QHP networks for sufficient access, and this
final rule provides Exchanges with discretion to establish their own
monitoring procedures to assure ongoing compliance. We anticipate that
Exchanges will identify a variety of tools and strategies to monitor
QHP compliance with all certification standards, including standards
related to network adequacy. Accordingly, we are not prescribing
specific oversight and enforcement strategies in this final rule.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.1050 of the
proposed rule, except that we are revising the regulation text to
clarify that an Exchange must ensure that each QHP complies with
network adequacy standards established in accordance with Sec.
156.230.We are reorganizing the regulation text for increased clarity
and flow by moving the network adequacy standard to Sec. 156.230. In
addition, the regulation text is revised to clarify that the U.S.
Office of Personnel Management will ensure compliance with network
adequacy standards for multi-State plans as part of the certification
of those plans. Finally, for reasons described in Sec. 156.230, we
clarified that a QHP issuer may not be prohibited from contracting with
any essential community provider. For a complete discussion of the
comments on network adequacy standards, please refer to Sec. 156.230.
g. Service Area of a QHP (Sec. 155.1055)
In Sec. 155.1055, we proposed that Exchanges have a process to
establish or evaluate the service areas of QHPs to determine whether
the following criteria are met: (1) the service area covers a minimum
geographical area that meets certain conditions, and (2) has been
established without regard to racial, ethnic, language, health status-
related factors listed in section 2705(a) of the PHS Act, or other
factors that exclude specific high utilizing, high cost, or medically-
underserved populations.
Comment: Many commenters supported the service area standard in
[[Page 18410]]
proposed Sec. 155.1055(a). However, several commenters recommended
alternative standards, such as that all QHPs must serve the entire
Exchange service area, the entire State, areas smaller than a county,
or contiguous areas. Some commenters suggested that HHS refrain from
requiring QHPs to offer coverage Statewide to ensure that local health
plans may participate, while others encouraged Exchanges to align
standards with market-wide standards.
Response: Under the proposed and final rule policy, Exchanges have
the ability to establish or evaluate QHP service areas in such a way
that would allow for participation by local health plans, provided that
such standard is established without regard to the factors listed in
Sec. 155.1055(b). We recommend that Exchanges consider aligning QHP
service areas with rating areas established by the State in accordance
with section 2701(a)(2) of the PHS Act. To the extent QHPs operate
within such uniform service areas, this policy would facilitate
consumers' ability to compare premiums of QHPs, promoting competition
within the Exchange market. Furthermore, aligning QHP service areas
with rating areas may simplify consumer understanding and Exchange
administration of eligibility determinations for premium tax credits,
which may be complex if QHP service areas are highly individualized.
Comment: Several commenters expressed concern that allowing
Exchanges to set unique service area standards would conflict with
existing State standards that are meant to prevent against
discriminatory service areas.
Response: We acknowledge that some States already have in place
service area standards that protect against red-lining and other
``cherry-picking'' practices where the issuer only offers plans to
geographic areas that are expected to have lower risk. We believe that
Sec. 155.1055 of this final rule provides a sufficiently broad
standard such that an Exchange operating in a State with equally or
more protective service area standards that prevent discrimination
could use those standards for QHP issuers as well. To the extent that
the broad standard here is more protective than existing State law,
however, the Exchange must apply this regulatory standard to QHPs.
Comment: One commenter requested examples of the ``necessary'' or
``nondiscriminatory'' standards in proposed Sec. 155.1055(b). Another
commenter suggested that the Medicare Advantage precedent would be
useful in determining whether service of part of a county would fall
under necessary or non-discriminatory standards. Two commenters
suggested that HHS specifically incorporate the parameters relating to
a small geographic service area contained in the Medicare manual.
Response: We believe that the Medicare Advantage ``county integrity
rule'' described in 42 CFR 422.2 (defining service area) is a useful
resource for evaluating service areas, and we noted in the preamble to
the proposed rule that the service area standard in Sec. 155.1055
mirrors the standard established by Medicare Advantage (76 FR 41866, at
41894 (July 15, 2011)). While we believe that the standards set forth
by Medicare Advantage guidance provide examples of how to apply this
standard, we note that States have discretion to interpret ``necessary,
non-discriminatory, and in the best interest of qualified individuals
and qualified employers.'' For example, if a State has an existing
service area standard that ensures service areas are not discriminatory
and are in the best of the consumer, then the Exchange could decide to
establish its service areas to be the same as the existing State
standard. However, this provision provides authority for an Exchange to
set stricter QHP standards if it observes service areas that
specifically exclude certain areas.
Comment: A number of commenters requested clarification on the
difference between a service area and a rating area.
Response: A rating area, as described in Sec. 156.255(a) and
section 2701(a)(2) of the PHS Act, is a geographic area established by
a State that provides boundaries by which issuers can adjust premiums
in accordance with section 2701(a)(1)(A)(ii) of the PHS Act. In
contrast, a service area is the geographic area in which an individual
must reside or be employed (in accordance with standards outlined in
Sec. 155.305 and Sec. 155.710) in order to enroll in a given QHP. As
noted previously, we recommend that Exchanges consider aligning QHP
service areas with rating areas to foster competition, promote consumer
understanding, and reduce administrative complexity.
Comment: One commenter recommended that HHS encourage States to
establish service areas in accordance with proposed Sec. 155.1055 as
soon as possible using county or other existing area boundaries, noting
that new regional boundaries will increase administrative and
logistical complexity of assembling a provider network.
Response: QHP issuers will need to understand QHP standards as
early as practicable, and we encourage Exchanges to be transparent and
clear about standards as far in advance of QHP certification as
possible. As noted above, Exchanges do not need to establish new
service area boundaries if existing service areas are not
discriminatory.
Comment: Several commenters voiced concern about the lack of an
overarching standard that Exchanges ensure a sufficient number of
health plans in all geographic areas of an Exchange.
Response: In general, we clarify that the expectation of Sec.
155.105(b)(3) is that, to the extent possible, an Exchange must ensure
that QHPs are available throughout the entire State. We encourage
Exchanges to establish or negotiate service areas with QHP issuers to
ensure that residents living in the Exchange service area have access
to QHPs.
Comment: A few commenters suggested that the final rule
specifically establish that service areas of QHPs cannot be drawn to
avoid dividing Tribal communities and reservations, or former
reservations, into different service areas.
Response: We note that Sec. 155.1055(b) establishes that QHP
service areas be established in a non-discriminatory manner. We
encourage the Exchange to consider the impact of QHP service areas on
Tribal communities when evaluating or developing service areas and to
initiate Tribal consultation in connection with these issues.
Comment: A few commenters recommended the final rule add ``economic
factors'' to the list of factors by which a QHP issuer cannot establish
service areas in proposed Sec. 155.1055(b). Another set of commenters
were concerned that the proposed rule only prevented discriminatory
service areas within counties, but not between counties.
Response: We believe that this provision adequately addresses the
underlying causes of ``red-lining,'' which is to exclude populations
that are high utilizing, high cost, or medically-underserved. In
addition, while Sec. 155.1055(a) addresses discriminatory service area
practices within a county, Sec. 155.1055(b) establishes that the
general service area delineations must be established without regard to
a variety of factors that could be used to ``cherry-pick'' healthy from
unhealthy risk by geography.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.1055 of the
proposed rule with a modification to strengthen the language that
directs Exchanges to ensure that the service area standards are met.
[[Page 18411]]
h. Stand-alone Dental Plans (Sec. 155.1065)
In Sec. 155.1065, we proposed that an Exchange allow limited scope
stand-alone dental plans to be offered as stand-alone plans or in
conjunction with a QHP, provided that the plans furnish at least the
pediatric essential dental benefit described under section
1302(b)(1)(j) of the Affordable Care Act. We also proposed that the
stand-alone dental plan comply with section 9832(c)(2)(A) of the Code
and section 2791(c)(2)(A) of the PHS Act. We also proposed to allow an
Exchange to certify a health plan as a QHP if it does not offer the
pediatric essential dental benefit, provided that a stand-alone dental
plan is offered through the Exchange.
We requested comment on whether some of the QHP certification
standards and consumer protections, such as a network adequacy, should
also apply to stand-alone dental plans as a Federal minimum and what
limits Exchanges may face on placing certification standards on dental
plans given that they are excepted benefits. We also invited comment on
whether we should set specific operational minimum standards related to
allocation of advance payments of the premium tax credit, calculating
actuarial value, and ensuring the availability of pediatric dental
coverage in the Exchange. Lastly, in response to comments to the RFC,
we requested comment on whether we should establish that all dental
benefits must be offered and priced separately from medical coverage,
even when offered by the same QHP issuer.
Comment: With respect to proposed Sec. 155.1065(b), one commenter
interpreted section 1311(d)(2)(B)(ii) of the Affordable Care Act to
mean that an Exchange must allow a stand-alone dental plan to offer
coverage in an Exchange. The commenter requested clarification on
whether the partnering of a QHP with stand-alone dental plans as their
subcontractors for pediatric dental care would be consistent with this
provision.
Response: We interpret the phrase regarding the offering of stand-
alone dental plans ``either separately or in conjunction with a QHP''
to mean that the Exchange must allow stand-alone dental plans to be
offered either independently from a QHP or as a subcontractor of a QHP
issuer, but cannot limit participation of stand-alone dental products
in the Exchange to only one of these options.
Comment: A number of commenters expressed concern regarding the
applicability of cost-sharing limits and annual and lifetime limits to
stand-alone dental plans. Commenters requested clarity on whether such
limits applied, and cautioned that if stand-alone dental plans do not
have to comply with the same out-of-pocket, annual, and lifetime limit
standards that would apply QHPs, then there would be an unlevel playing
field.
Response: We accept the recommendation of commenters that cost-
sharing limits and the restrictions on annual and lifetime limits
should apply to stand-alone dental plans for coverage of the pediatric
dental essential health benefit. The Affordable Care Act directs any
issuer that must meet the coverage standards in section 1302(a) to
cover each of the ten categories; thus, any issuer covering pediatric
dental services as part of the essential health benefits must do so
without annual or lifetime limits as defined under the Affordable Care
Act and its implementing guidance, even if such issuers are otherwise
exempt from the provisions of Subparts I and II of Part A of Title
XXVII of the PHS Act (including PHS Act section 2711) under PHS Act
section 2722. We note that for any benefit offered by a stand-alone
dental plan beyond those established under section 1302(b)(1)(J) of the
Affordable Care Act, standards specific to the essential health
benefits would not apply. We plan to provide more detail in the future
regarding how a separately offered pediatric dental essential health
benefit would be considered under standards that apply to a full set of
essential health benefits.
Comment: With respect to proposed Sec. 155.1065(b), several
commenters specifically recommended that stand-alone dental plans be
directed to offer a child-only pediatric dental plan. The commenters
were concerned that an Exchange with only family dental coverage
options and QHPs that do not have to cover the pediatric dental benefit
would decrease the enrollment of children in dental coverage, as the
advance payment of the premium tax credit would only be applicable to
the pediatric dental essential health benefit. Others were concerned
that the stand-alone dental plans would not have capacity to cover all
potential enrollees which, combined with the exemption for QHPs to not
offer the pediatric dental coverage when stand-alone dental plans are
available, would create insufficient access to child-only options.
Response: In this final rule, Sec. 155.1065(a)(3) would apply the
standard of Sec. 156.200(c)(2) to offer a child-only plan to stand-
alone dental plans certified to be offered through the Exchange. In the
new paragraph Sec. 155.1065(d), we direct an Exchange to consider the
collective capacity of stand-alone dental plans during certification to
ensure sufficient access to pediatric dental coverage. By ``sufficient
access,'' we mean to convey that Exchanges should ensure that, when
combined, stand-alone dental plans have the capacity (in terms of
solvency and provider network) to provide child-only coverage to all
potential children enrolling in coverage through the Exchange.
Comment: A set of commenters addressed the request for comment in
the proposed rule on whether the final rule should establish that QHPs
must separately offer and price coverage for the pediatric dental
essential health benefit so that consumers have the potential to enroll
in dental coverage that is different from the dental benefits offered
by the QHP they selected. Some suggested a standard for QHPs to
separately price and offer pediatric dental coverage so consumers could
make direct comparisons based on premium, cost-sharing, and benefits.
Other commenters stated that it would be easier for consumers if the
benefits were bundled. A number of commenters also recommended that HHS
direct QHPs to offer medical-only options without pediatric dental
coverage.
Response: If an Exchange determines that having QHPs separately
offer and price pediatric dental coverage is in the interest of the
consumer, as described in Sec. 155.1000(c), then the Exchange may
establish such standard as a condition of QHP certification. Otherwise,
QHPs are not uniformly directed to separately price and offer pediatric
dental coverage under this final rule.
Comment: A few commenters urged HHS to allow health plans outside
of the Exchange to have the same exemption as QHPs inside the Exchange,
in that health plans would not have to cover pediatric dental if a
stand-alone plan existed in the market.
Response: This request is outside the scope of this final rule,
which addresses explicitly the standards for QHPs. Section
1302(b)(4)(F) of the Affordable Care Act specifically addresses the
exemption in terms of QHPs offered through an Exchange.
Comment: With respect to proposed Sec. 155.1065(b), a small number
of commenters requested that Exchanges ensure that stand-alone dental
plans are offered as both fee-for-service plans and managed care plans.
Response: Section 1311(e)(1)(B)(i) prohibits the Exchange from
excluding a plan from the Exchange because it is a fee-for-service
plan.
Comment: Several commenters suggested that a way to indicate to
QHPs
[[Page 18412]]
that they will not have to cover pediatric dental coverage would be to
issue a request for proposals to stand-alone dental plans in advance of
the QHP certification process.
Response: We have not set any operational standards in Sec.
155.1065. Each Exchange has discretion in determining how to implement
this provision.
Comment: With respect to proposed Sec. 155.1065(c), many
commenters voiced support for allowing an Exchange to direct issuers of
stand-alone dental plans to comply with any QHP certification standards
and consumer protections, with some specifying network adequacy and
cost-sharing standards. Many commenters stated that certification
standards are necessary to ensure a level playing field between
pediatric dental coverage offered through QHPs or stand-alone products.
A few commenters requested that HHS direct Exchanges to establish
uniform certification and recertification standards for medical and
stand-alone dental plans. A small number of commenters recommended that
HHS not establish standards for stand-alone dental plans, or specified
certain standards that should not apply, such as quality and
accreditation. One commenter suggested that QHP issuers not have to
comply with any standard that does not apply to stand-alone dental
plans for the offering of pediatric dental coverage.
Response: We are persuaded by comments suggesting that stand-alone
dental plans comply with QHP certification standards, as such standards
will help ensure a consistent level of consumer protections as QHPs.
Accordingly, we have added a new provision to Sec. 155.1065(a)(3)
establishing that stand-alone dental plans must comply with QHP
certification standards, except for those certification standards that
cannot be met because the stand-alone dental plans covers only
pediatric dental benefits. For example, to the extent that
accreditation standards specific to stand-alone dental plans do not
exist, such plans would not have to meet Sec. 155.1045. We also note
that the Exchange may establish certification standards that are
specific to the unique nature of stand-alone dental plans. For example,
an Exchange can set a different network adequacy standard for stand-
alone dental plans than for medical plans. For the purposes of this
provision, any application of QHP standards to stand-alone dental plans
by the Exchange would only apply to stand-alone dental plans offered
through the Exchange.
Comment: A small number of commenters sought clarification on
whether stand-alone vision plans could be offered through the
Exchanges. Other commenters also sought clarification about the
offering of other types of insurance that are not health plans, such as
disability insurance.
Response: HHS is still evaluating this issue and plans to provide
more details regarding the offering other coverage through an Exchange
in future guidance.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.1065 of the
proposed rule, with three modifications: in paragraph (a)(2), we
clarify that section 2711 of the PHS Act would apply to the pediatric
dental essential health benefit covered by a stand-alone dental plan.
In new paragraph (a)(3), we established that stand-alone dental plans
must comply with all QHP certification standards subject to certain
exceptions. In new paragraph (c) we directed Exchanges to consider
whether stand-alone dental plans will provide sufficient access to the
pediatric dental essential health benefit during certification of
stand-alone dental plans. Finally, we redesignated proposed paragraph
(c) as paragraph (d).
i. Recertification of QHPs (Sec. 155.1075)
In Sec. 155.1075, we proposed that the Exchange implement
procedures for the recertification of health plans as QHPs that include
a review of the general certification criteria outlined in Sec.
155.1000(c). We also proposed to permit the Exchange to determine the
frequency for recertifying QHPs. We invited comment on whether we
should outline specific standards associated with the term length for
recertification. In addition, we proposed that, after reviewing all
relevant information and determining whether to recertify a QHP, the
Exchange must notify a QHP issuer of its recertification status and
take appropriate action. Finally, we solicited comments on the
appropriateness of the proposed recertification deadline of September
15 of the applicable calendar year.
Comment: With respect to the recertification process described in
proposed Sec. 155.1075(a), many commenters provided feedback on our
proposal to permit Exchanges to establish the frequency of
recertification. While some commenters supported the flexibility
provided in the proposed rule, others recommended that HHS establish
the frequency for recertification and offered specific recommendations
about the recertification interval, such as every one year, three
years, or as-needed based on certain ``triggering'' events.
Response: We believe that Exchanges are best positioned to
establish the frequency of or other parameters for recertification that
reflect local market conditions or existing State regulatory processes.
We believe varying intervals for recertification and approaches could
be appropriate in some circumstances, and therefore are not
establishing a uniform frequency for recertification in this final
rule.
Comment: Multiple commenters recommended that specific elements be
considered during the recertification process described in proposed
Sec. 155.1075(a), such as a QHP issuer's complaint history, sanctions
imposed by State regulators, or interaction with tribes and/or American
Indian/Alaska Native populations. Commenters also suggested that the
recertification process include a review of the QHP's network and
engagement with essential community providers.
Response: An Exchange must establish a recertification process that
includes a review of the minimum certification criteria outlined in
Sec. 155.1000(c) of the final rule, and must monitor QHPs for ongoing
compliance with certification criteria, as specified in Sec.
155.1010(d). At its discretion, an Exchange may establish additional
recertification criteria or review processes, if the Exchange believes
such criteria will improve the consumer experience.
Comment: While some commenters supported the proposed
recertification deadline of September 15th of the applicable calendar
year as indicated in proposed Sec. 155.1075(b), others recommended
greater flexibility for States or an alternate deadline, such as August
15 of each year.
Response: Recertification should be completed, and the appropriate
parties notified, in advance of the open enrollment period so that
consumers, issuers, and Exchanges have sufficient time to prepare for
and make decisions about the upcoming plan year. In the proposed rule,
we set forth the dates for the initial and annual open enrollment
periods. In this final rule, we believe it is also appropriate to
establish the annual deadline for recertification. We believe that the
proposed deadline of September 15th provides sufficient time for
Exchanges and issuers to participate in a robust recertification
process, and also ensures that consumers will be fully informed of
their plan choices at the start of each open enrollment period.
Therefore, we are finalizing the proposed recertification deadline of
September 15th in this rule.
[[Page 18413]]
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.1075 of the
proposed rule, except that in paragraph (a) we clarified that,
consistent with the revisions to Sec. 155.1010, multi-State plans and
CO-OPs are not subject to the Exchange recertification process.
j. Decertification of QHPs (Sec. 155.1080)
In Sec. 155.1080, we proposed that the Exchange implement
procedures for the decertification of health plans as QHPs, which we
defined as the termination by the Exchange of the certification status
and offering of a QHP. We also proposed that the Exchange must
establish an appeals process for health plans that have been
decertified. We requested comments generally on the proposed
decertification process and asked specifically whether there were other
appropriate authorities that could assist Exchanges in the
decertification process. Finally, we proposed that if a QHP is
decertified, the Exchange must provide notice of the decertification to
parties who may be affected, including the QHP issuer, enrollees of the
decertified QHP, HHS, and the State department of insurance.
Comment: With respect to the decertification process proposed in
Sec. 155.1080(b), some commenters supported the flexibility given to
Exchanges to design the decertification process in the proposed rule,
while other commenters suggested specific approaches to
decertification. A few commenters requested that the final rule
identify ``triggering events'' for decertification, such as a
determination that a QHP's network is inadequate; others requested that
HHS provide additional clarification on when decertification would be
appropriate.
Response: We continue to provide Exchanges discretion in designing
the decertification process and making decertification decisions. The
final rule establishes that an Exchange may decertify a QHP at any time
for failure to comply with the minimum certification standards
described in Sec. 155.1000(c), and any additional certification
standards established by the Exchange. We believe that this flexibility
is necessary to allow an Exchange to tailor its process for compliance
and decertification to be appropriate for the market conditions in the
State. The Exchange is responsible for establishing the decertification
process, including the approach used to identify plans that are out of
compliance with certification standards or the associated sanctions.
Comment: One commenter requested additional information on whether
multi-State plans may be decertified through the process described in
proposed Sec. 155.1080(b).
Response: The Affordable Care Act establishes a deeming process for
multi-State plans; as a result, we clarify that multi-State plans are
exempt from the Exchange's recertification and decertification
processes.
Comment: Several commenters requested that HHS clarify the
consequences of an Exchange's failure to decertify plans that are out
of compliance with certification standards as described in proposed
Sec. 155.1080(c), and recommended that Exchanges be directed to
decertify non-compliant QHPs.
Response: QHPs with persistent or significant compliance issues
should be decertified and removed from the Exchange; however, we
recognize that Exchanges may, for example, wish to pursue intermediate
sanctions for minor violations of certification standards that do not
adversely impact consumers, so long as such actions are consistent with
applicable law. While it is our expectation that an Exchange would
decertify a QHP that is not compliant with certification standards or
where the health and safety of an enrollee may be at-risk, this final
rule permits Exchanges to explore a variety of oversight and
enforcement strategies, up to and including decertification. We intend
to address oversight of Exchanges through future implementation and
rulemaking under section 1313 of the Affordable Care Act.
Comment: One commenter recommended that an Exchange be permitted to
certify new plan(s) to replace decertified QHP(s) during the benefit or
plan year in accordance with proposed Sec. 155.1080(c).
Response: We believe it is important for QHPs to be certified prior
to the open enrollment period to ensure all consumers have the same
plan options, and are aware of those options before they make their
plan selections. However, we believe that an Exchange should have the
option to replace a decertified QHP with another QHP in certain cases,
for example if the decertification of a QHP resulted in no or few QHP
choices in some regions of an Exchange's service area. We have revised
the regulation text in Sec. 155.1010(a)(1) to provide additional
flexibility for an Exchange to certify QHPs during the benefit year by
replacing the proposal that all QHPs must be certified before the
beginning of the relevant open enrollment period with a standard that
all QHPs offered during an open enrollment period must be certified
before the beginning of such period.
Comment: A few commenters requested that the final rule clarify
that QHPs decertified in accordance with proposed Sec. 155.1080(c) may
retain non-Exchange membership.
Response: Decertification would not affect enrollees who purchased
QHP coverage directly or not through the Exchange, because such
members' enrollment occurred outside the Exchange. However, such a plan
could no longer be marketed as a QHP following decertification and the
population enrolled in that plan through the Exchange would be provided
a special enrollment period to transfer to a different QHP in
accordance with Sec. 155.420(d) and Sec. 155.430(b)(2)(iv). While the
Exchange regulates enrollment through the Exchange, any sanctions or
other actions related to a QHP's non-Exchange membership would be at
the discretion of the State insurance commissioner.
Comment: A few commenters requested additional information on the
appeals process described in proposed Sec. 155.1080(d) or suggested
specific parameters, such as 30 days to file and 30 days to hear an
appeal.
Response: Consistent with the authority to design the
decertification process, the Exchange is responsible for outlining the
parameters of the appeals process, including timing, what entity will
hear appeals, and other factors.
Comment: Several commenters endorsed a special enrollment period
for individuals whose QHP has been decertified under proposed Sec.
155.1080(c), and advocated that enrollees be permitted to change levels
of coverage during such special enrollment period. One commenter
recommended that consumers receive a special enrollment period if the
QHP in which they are enrolled appeals a decertification. One commenter
recommended that enrollees be given 63 days to enroll in other
coverage, while another suggested that coverage by the decertified QHP
continue until enrollees make new plan selections.
Response: Enrollees would have an opportunity to select a new QHP
once a QHP has been decertified. Allowing enrollees to switch plans in
advance of a formal determination could create unnecessary disruption
in the Exchange.
Consistent with Sec. 155.410, enrollees whose QHP is decertified
would have access to a special enrollment period lasting 60 days from
the date of the decertification. We believe that 60 days is a
sufficient amount of time to select a new QHP. Finally, as described in
the
[[Page 18414]]
comment and response to Sec. 155.410, we are revising the regulation
text to permit enrollees to change levels of coverage during a special
enrollment period.
Comment: One commenter requested clarification on why HHS needs to
receive information on decertified QHPs, as in proposed Sec.
155.1080(e)(3).
Response: HHS needs access to information on decertification of
QHPs for a number of policy and operational reasons. For example, HHS
will need to administer a termination of advance payments of the
premium tax credit and payment of cost-sharing reductions to issuers of
decertified QHPs.
Comment: Several commenters proposed standards for notices related
to decertification and non-renewal identified in proposed Sec.
155.1080(e), such as that the notices be available in multiple
languages, identify appropriate consumer resources, or include
information targeted to specific populations such as American Indians
and Alaska Natives. Alternatively, a few commenters recommended that
HHS publish model notices. Finally, one commenter recommended that the
final rule direct Exchanges and QHP issuers to confirm receipt of
notices related to decertification and non-renewal.
Response: Under this final rule, all notices to consumers issued by
the Exchange must conform to the minimum standards outlined in Sec.
155.230, while notices issued by a QHP issuer must conform to standards
established by Sec. 156.250. These include protections for individuals
with limited English proficiency or disabilities, and establish that
all notices be written in plain language. Further, to the extent that
State law or Exchange policies provide for greater accessibility or
additional content, an Exchange may provide notices that exceed the
minimum standards in this final rule.
We believe that establishing a standard that Exchanges and QHP
issuers confirm that each notice of decertification or non-renewal has
been received by the appropriate enrollee would place a significant
burden on Exchanges and issuers and could demand resources that are
better used for other customer service functions. Further, we believe
it is consistent with the current practices of many other programs to
rely upon the contact information provided by each enrollee without
confirming that each mailing has been successfully received.
Comment: One commenter requested that HHS clarify that in the case
of a SHOP, each enrollee, and not each employer, must receive a notice
of decertification or non-renewal described in proposed Sec.
155.1080(e), as appropriate.
Response: For purposes of SHOP, each enrollee must receive a notice
of decertification or non-renewal. We note that Sec. 156.285(d)(1)(ii)
directs QHP issuers offering QHPs through a SHOP to provide notices to
both enrollees and qualified employers.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.1080 of the
proposed rule, except that in paragraph (b) we clarified that,
consistent with the revisions to Sec. 155.1010, multi-State plans and
CO-OPs are not subject to the Exchange decertification process.
B. Part 156--Health Insurance Issuer Standards under the Affordable
Care Act, Including Standards Related to Exchanges
Part 156 contains the proposed standards for QHPs and QHP issuers
that are intended to promote robust and meaningful consumer choice.
1. Subpart A--General Provisions
a. Basis and Scope (Sec. 156.10)
Proposed Sec. 156.10 of subpart A specified the general statutory
authority for the ensuing regulation and noted that the scope of part
156 is to establish standards for health plans and health insurance
issuers related to the benefit design standards and in regard to
offering QHPs through an Exchange. We did not receive specific comments
on this section and are finalizing the provisions as proposed.
b. Definitions (Sec. 156.20)
Most of the terms that we proposed to define in this section refer
to terms proposed in Sec. 155.20. Beyond these terms, we proposed that
the term ``benefit design standards'' mean the ``essential health
benefits package'' defined in section 1302(a) of the Affordable Care
Act. We did not receive comments on this section that were not
addressed elsewhere, and are finalizing the definitions as proposed.
c. Financial Support (Sec. 156.50)
In Sec. 156.50, we proposed that participating issuers pay user
fees to support ongoing operations of an Exchange, if a State chooses
to impose such fees. We proposed to define the term ``participating
issuer'' to mean an issuer offering plans that participate in the
specific function that is funded by the user fee. We further proposed
that participating issuers pay any fees assessed by a State-based
Exchange, consistent with Exchange authority outlined in Sec. 155.160.
Comment: Several commenters on proposed Sec. 156.50 recommended
that HHS modify the definition of ``participating issuer'' by
simplifying and broadening the proposed definition. Specifically, two
commenters requested that HHS clarify whether the proposed definition
would mean that Exchanges would charge user fees in proportion to an
issuer's participation in specific Exchange functions.
Response: The definition proposed in Sec. 156.50 is structured to
accommodate the variety of functions that an Exchange could perform. We
note that the proposed definition does not direct an Exchange to pro-
rate or otherwise tailor user fees to the specific functions in which
an issuer participates. Rather, an Exchange could, but is not directed
to, charge uniform user fees to all participating issuers. We note that
the Affordable Care Act suggests user fees charged to participating
issuers as a means for States to ensure that an Exchange is self-
sustaining. We track that statutory language in this final rule when
using the term participating issuer.
Comment: A few commenters recommended that Sec. 156.50(b) of the
final rule clarify that participating issuers must pay all assessments
established by an Exchange, whether structured as user fees or
otherwise.
Response: We believe that participating issuers are responsible for
paying any assessments established by an Exchange irrespective of how
such assessments are structured. Therefore, we are revising the
regulation text in Sec. 156.50 of this final rule to reflect this
clarification.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.50 of the
proposed rule, with the following modifications: in paragraph (b), we
clarified that a participating issuer must remit user fees to a State-
based or a Federally-facilitated Exchange. We further clarified in
paragraph (b) that a QHP issuer must remit any fees charged by the
Exchange in accordance with Sec. 155.160, whether structured as user
fees or otherwise.
2. Subpart C--Qualified Health Plan Minimum Certification Standards
Section 1311(c)(1) of the Affordable Care Act authorizes the
Secretary, by regulation, to establish criteria for the certification
of health plans as QHPs; we implement that authority in this subpart.
The proposed rule clarified that, unless otherwise noted, the standards
for QHPs proposed in this subpart do not supersede existing State
[[Page 18415]]
laws or regulations applicable to the health insurance market
generally, apply specifically to the certification of QHPs for
participation in the Exchange, and do not exempt health insurance
issuers from any generally applicable State laws or regulations.
a. QHP Issuer Participation Standards (Sec. 156.200)
In Sec. 156.200, we outline the proposed standards on QHP issuers
as a condition of participation in the Exchange. These include: (1)
Complying with the standards in this subpart; (2) complying with the
proposals established in accordance with subpart K of part 155, and in
the small group market, Sec. 156.705; (3) ensuring that each QHP
complies with the benefit design standards defined in Sec. 156.20; (4)
being licensed and in good standing to offer health insurance in the
State; (5) implementing and reporting on quality improvement strategies
consistent with section 1311(g) of the Affordable Care Act; (6) paying
applicable user fees; and (7) complying with standards related to risk
adjustment under part 153. We noted that States may choose to establish
additional conditions for participation beyond the minimum standards
established by the Secretary. We also proposed that to participate in
an Exchange, a health insurance issuer must have in effect a
certification issued or recognized by the Exchange to demonstrate that
each health plan it offers in the Exchange is a QHP and that the issuer
meets all applicable standards.
We also outlined the set of proposed standards with which a QHP
issuer must comply related to the offering of a QHP, and specified that
the QHP issuer must comply with the standards set forth in this subpart
on an ongoing basis. The offering standards included: (1) Offering at
least one QHP in the silver and gold coverage level; (2) offering a
child-only plan at the same level of coverage; and (3) offering the QHP
at the same premium rate when the QHP is offered directly by the issuer
or through an agent or broker (implemented through Sec. 156.255(b)).
Finally, we proposed that a QHP issuer not discriminate on the basis of
race, color, national origin, disability, age, sex, gender identity or
sexual orientation.
Comment: Several commenters requested that HHS clarify the standard
that a QHP issuer be in ``good standing'' to offer health insurance in
proposed Sec. 156.200(b)(4). While many commenters supported the
proposed provision as written, a few suggested that HHS strengthen the
standard. Conversely, one commenter recommended that ``in good
standing'' be defined to exclude minor violations. One commenter
recommended that QHP issuers be held accountable for demonstrating good
standing, such as by providing an attestation from the relevant State
regulator.
Response: As described in the preamble to the proposed rule, we
interpret ``good standing'' to mean that an issuer faces no outstanding
sanctions imposed by a State's department of insurance. Therefore, the
specific violations or infractions that would jeopardize standing may
vary by State. With respect to determining licensure and standing,
Exchanges may wish to use a number of means, such as attestation or
verifying the information directly with State departments of insurance.
Accordingly, we do not prescribe a specific process in this final rule,
but instead allow Exchanges discretion in determining the best way to
substantiate licensure and standing.
Comment: Several commenters requested that HHS harmonize quality
reporting standards in proposed Sec. 156.200(b)(5) with other public
programs, suggested quality measures HHS could consider to evaluate
QHPs, and made specific recommendations regarding both the quality
improvement strategy and quality rating system. Commenters also
requested that national quality standards be utilized and quality used
as a factor in QHP certification decisions. Other commenters requested
that quality information be publicly reported to consumers to inform
QHP selection.
Response: We will provide additional detail on the content and
manner of quality reporting under this section in future guidance.
Comment: In response to proposed Sec. 156.200(c)(1), one commenter
recommended that plans be permitted to achieve the bronze level of
coverage over time, while participating in an Exchange as a QHP.
Response: Section 1301(a)(1)(B) of the Affordable Care Act directs
a QHP to provide the essential health benefits package, which includes
compliance with the level of coverage standards outlined in section
1302; therefore, a health plan that does not meet the bronze level of
coverage cannot be certified as a QHP and made available through the
Exchange. HHS will issue future rulemaking on section 1302, but the
Affordable Care Act does not provide for a transitional process to
achieving the coverage levels.
Comment: Many commenters offered feedback on the standard for QHP
issuers to offer a corresponding child-only plan for any QHP offered
through the Exchange, described in proposed Sec. 156.200(c)(2).
Several commenters recommended that HHS permit individuals up to age 26
to enroll in child-only coverage; two commenters recommended that
instead of offering a separate child-only plan, QHP issuers be directed
or permitted to accept enrollees of any age into a QHP offered to
single qualified applicants.
Response: Section 1302(f) of the Affordable Care Act directs a QHP
issuer that offers a non-catastrophic plan on the Exchange to offer an
identical child-only plan. We clarify that a QHP issuer could satisfy
this standard by offering a single QHP to qualified applicants seeking
child-only coverage, as long as the QHP includes rating for child-only
coverage in accordance with applicable premium rating rules. Section
1302(f) further specifies that for purposes of this standard, a child-
only plan is available to individuals under age 21 at the beginning of
the benefit year. We lack the authority to alter the age limitation for
enrollment into a child-only plan.
Comment: In response to this section, a few commenters requested
that HHS confirm whether a QHP may contract with providers that serve
specific populations, such as tribal health care providers, without
violating the anti-discrimination provisions in proposed Sec.
156.200(e).
Response: The anti-discrimination provisions included in Sec.
156.200(e) are intended to protect enrollees and potential enrollees
from discriminatory practices on the basis of race, color, national
origin, disability, age, sex, gender identity, or sexual orientation. A
QHP issuer may contract with health care providers that are authorized
or directed by law to serve specific populations, such as Indian health
providers, without violating these provisions. We note that a QHP
issuer must meet all standards related to network adequacy and
essential community providers specified in Sec. 156.230 and Sec.
156.235, respectively.
Comment: With respect to proposed Sec. 156.200 in general, several
commenters recommended that certain issuers, such as Medicaid managed
care organizations, church plans and union plans, be permitted to offer
certified QHPs on a limited-issue basis.
Response: As established in section 1301(a) of the Affordable Care
Act, all QHPs must be offered by licensed health insurance issuers that
are subject to the guaranteed issue provisions, effective January 1,
2014. Under section 2702 of the PHS Act, these issuers must issue
coverage to any individual who applies
[[Page 18416]]
for coverage in a particular health plan. Though the statute allows
issuers to stop accepting new enrollees to preserve financial solvency
or due to provider network capacity under section 2702(c) and (d),
respectively, the issuer must close off enrollment, or begin accepting
new enrollees again, uniformly rather than selectively. We note that
HHS will address the authority under 2702 under separate rulemaking.
We recognize the potential for significant movement of individuals
between the Exchanges and Medicaid, as well as the potential for
members of a family to be covered separately under the Exchange,
Medicaid, and CHIP. We recognize that QHPs offered by Medicaid managed
care organizations (MMCOs) may be able to play an important role in
keeping family members covered under a common issuer and in the same
provider network, promoting continuity of coverage, and mitigating the
potential negative effects of ``churning'' between Medicaid and the
Exchanges. HHS may provide additional guidance on this topic in the
future. Additionally, we intend to address commenters' concerns
surround multi-employer plans in future guidance.
Comment: A few commenters recommended that each Exchange include at
least one QHP that is also a Medicaid MCO to minimize enrollee churn. A
handful of commenters recommended that the Exchange be directed to deem
Medicaid MCOs and other safety net health plans as QHPs. Similarly, one
commenter recommended that safety net health plans be permitted to
achieve licensure gradually while participating in the Exchange.
Response: Medicaid MCOs must meet the same standards as other plans
to become QHPs. However, we note that Exchanges have discretion to
develop specific certification criteria in a manner that might
facilitate participation by Medicaid MCOs, including the establishment
of the accreditation timeline as specified in Sec. 155.1045 and the
setting of QHP service areas in Sec. 155.1055. We also note that there
may be opportunities to leverage the Exchange Web site in a manner that
would allow the Exchange to identify issuers that participate in both
the Exchange and Medicaid managed care.
Comment: A few commenters requested that HHS clarify States'
ability to develop additional certification and participation standards
for QHPs.
Response: We clarify that nothing in this section precludes an
Exchange from establishing additional certification criteria or issuer
participation standards beyond those specified in the final rule if in
the interest of qualified individuals and qualified employers served by
the Exchange, per final Sec. 155.1000(c) and the preamble discussion
for that section in this final rule.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.200 with the
following modification: we have removed proposed paragraph (c)(3)
related to offering a QHP at the same premium rate inside and outside
of the Exchange to avoid duplication of Sec. 156.255(b).
b. QHP Rate and Benefit Information (Sec. 156.210)
In Sec. 156.210, we proposed that a QHP's rates must be applicable
for an entire benefit year or, for the SHOP, plan year. We also
proposed that QHP issuers submit rate and benefit information to the
Exchange and that a QHP issuer submit a justification for a rate
increase prior to the implementation of such increase for purposes
described more fully in Sec. 155.1020. Additionally, we proposed that
QHP issuers post rate increase justifications on their Web sites so
they can be viewed by consumers, enrollees, and prospective enrollees.
Comment: Several commenters supported the provision in proposed
Sec. 156.210(a) that QHP issuers set rates for an entire benefit or
plan year. Conversely, some commenters recommended an exception for
plans participating in the SHOP, or to accommodate Federal or State
regulatory changes.
Response: All QHPs, including those participating in the SHOP, must
offer a set rate for an entire benefit or plan year. We note that while
QHP issuers in SHOP may establish new rates quarterly or annually,
issuers must charge the same contract rate for a plan year. We note
that most Federal and State regulatory changes are proposed well in
advance of becoming effective, so the number of regulatory changes that
would take effect in the middle of a benefit or plan year will be
limited. Therefore, no exceptions are provided in the final rule.
Comment: One commenter recommended that QHP issuers notify
enrollees in advance of any rate increase.
Response: The final rule strengthens the transparency standards
regarding rate increases. In Sec. 155.1020, QHP issuers must submit to
the Exchange a justification for a rate increase prior to the
implementation of the rate increase. Potential and current enrollees
will be able to compare QHPs and rates through the Exchange Web site.
Accordingly, we are not adding an additional notice obligation to this
section.
Comment: Several commenters offered feedback on the scope of the
standard to post rate increase justifications in proposed Sec.
156.210(c). While some commenters recommended posting of all rate
increases, others recommended that posting be limited to rate increases
determined unreasonable by a State's program for the review of rates
under section 2794 of the PHS Act.
Response: The Affordable Care Act, at section 1311(e), demands the
posting of all rate increase justifications submitted by a QHP issuer.
Therefore, Sec. 156.210(c) establishes that all rate increase
justifications must be posted, irrespective of whether the increase is
subject to review by a State's program under section 2794 of the PHS
Act to determine if it is an unreasonable increase or the determination
of such review. We continue to encourage Exchanges to leverage existing
State processes, including a State's program under section 2794 of the
PHS Act, to minimize the potential burden on QHP issuers associated
with this section.
Comment: In response to the provision in proposed Sec. 156.210(c)
that QHP issuers submit and post rate increase justifications, a few
commenters recommended that HHS clarify that such justifications must
be written in plain language and must not be deceptive.
Response: We encourage Exchanges to use the rate increase
justifications submitted as part of the State's program under section
2794 of the PHS Act, because the format for these justifications were
developed with input from the National Association of Insurance
Commissioners and incorporates consumer-friendly language.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.210 of the
proposed rule without modification.
c. Transparency in Coverage (Sec. 156.220)
In Sec. 156.220, we proposed a transparency standard as a
condition for certification of QHPs in accordance with section
1311(e)(3) of the Affordable Care Act. The proposed rule listed
specific data elements that issuers must provide, from the Affordable
Care Act: (1) Claims payment policies and practices; (2) periodic
financial disclosures; (3) data on enrollment; (4) data on
disenrollment; (5) data on the number of claims that are denied; (6)
data on rating
[[Page 18417]]
practices; (7) information on cost sharing and payments with respect to
any out-of-network coverage; and (8) information on enrollment rights
under title I of the Affordable Care Act. We sought comment on whether
QHP issuers should be directed to submit this information to the
Exchange and other entities, or to make such information available to
the Exchange and other entities. We also proposed that QHP issuers
provide the specified information in plain language. Finally, we
proposed that QHP issuers make available to the enrollee information on
cost-sharing responsibilities for a specific service by a participating
provider under that enrollee's particular plan.
Comment: Many groups commented on the data elements included in
Sec. 156.220(a) of the proposed rule. Several commenters supported the
proposed rule as written, with one commenter recommending that HHS
maintain the list as proposed without additional elements. However,
other commenters, suggested specific enhancements or clarifications to
the proposed approach or requested that HHS establish uniform standards
and methodologies. A few commenters recommended that HHS include
reporting of additional data elements, such as information about
condition-based exclusions. Some commenters requested that HHS provide
sample forms, define key terms, or outline a specific reporting format
(for example, a summary statement accompanied by data tables).
Other commenters recommended elements or approaches to transparency
reporting, such as segmenting data by enrollee demographics, collecting
information at the issuer level, or reporting at the product level. A
few commenters provided recommendations on where transparency
information should be submitted and where the information should be
made available. One commenter encouraged HHS to apply the same
standards to all plan types, including catastrophic plans. Several
commenters recommended that HHS collect transparency data annually.
Finally, one commenter stated that these standards should be extended
to Medicaid and CHIP populations.
Response: We believe that QHP issuers should submit transparency
information in a manner and timeframe that maximizes the utility of
such information to the Exchange, HHS, and individuals. HHS intends
that the reporting obligations established in this section and Sec.
155.1040 will be aligned with the transparency reporting standards
under section 2715A of the PHS Act. HHS, together with the Departments
of Labor and the Treasury, will coordinate guidance on the transparency
in coverage standards. As a result, we are not describing specific data
formats, definitions, or frequency of reporting with respect to Sec.
155.1040 in this final rule. We note that data reporting for Medicaid
and CHIP plans is outside the scope of this final rule.
Comment: Several commenters agreed with the plain language
provision in proposed Sec. 156.220(c) as written. In addition, several
commenters requested that HHS clarify how it will enforce plain
language standards, with some expressing concern about the Exchange or
HHS being able to check the accuracy of the plain language information
submitted by QHP issuers. The commenters recommended that HHS direct
QHP issuers to provide data with plain language information.
Response: We note that each Exchange will be responsible for
ensuring QHP issuer compliance with this standard. HHS and the
Department of Labor will jointly develop and issue guidance on best
practices of plain language writing, which will assist Exchanges in
determining whether issuers are using plain language, as defined in
Sec. 155.20.
Comment: We received a number of comments supporting the cost-
sharing transparency in proposed Sec. 156.220(d). Several commenters
recommended that the provision be amended to allow the consumer to be
able to request information by phone, fax, email, or online. One
commenter requested that HHS clarify whether the obligation to provide
enrollee cost-sharing information is prospective or retrospective in
nature. Several commenters recommended that HHS establish that the
cost-sharing information be provided free of charge by QHP issuers to
the enrollees.
Response: As noted previously, HHS will coordinate with the
Departments of Labor and Treasury on guidance for the transparency in
coverage standards.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.220 of the
proposed rule without modification.
d. Marketing and Benefit Design of QHPs (Sec. 156.225)
To preserve a level playing field within and outside of the
Exchange and to leverage existing State activities, we proposed in
Sec. 156.225 that QHP issuers must to comply with any applicable State
laws and regulations regarding marketing by health insurance issuers as
a certification standard, as established by section 1311(c)(1)(A) of
the Affordable Care Act. We also proposed to prohibit QHP issuers from
employing marketing practices that have the effect of discouraging
enrollment of individuals with significant health needs and sought
comment on the best means for an Exchange to monitor QHP issuers'
marketing practices to determine whether such activities are taking
place. Additionally, we invited comment on a broad prohibition against
unfair or deceptive marketing practices by all QHP issuers and their
officials, agents, and representatives, and on whether HHS should
establish a standard that QHP issuers not misrepresent the benefits,
advantages, conditions, exclusions, limitations or terms of a QHP.
Comment: Many commenters offered feedback on whether the final rule
should include a broad prohibition against deceptive marketing
practices. A number of commenters supported such a prohibition and
suggested specific Federal standards that HHS could adopt, such as
Medicare Advantage, Medicare Prescription Drug Program, or Medicaid
standards. Conversely, many commenters supported State flexibility with
respect to marketing rules and oversight. A few commenters expressed
concern that a Federal standard could be overly restrictive.
Response: States have significant experience with, and existing
infrastructure to support, monitoring and oversight of health plan
marketing activities. The National Association of Insurance
Commissioners (NAIC) has provided guidance to the States in the form of
the Model Unfair Trade Practices Act. The Model Act has been adopted by
45 States and the District of Columbia. The NAIC has also issued an
Advertisements of Accident and Sickness Insurance Model Regulation,
which has been adopted by 42 States. Both the Model Act and Model
Regulation are extensive and position States to address misleading or
deceptive practices. As a result, we are finalizing the marketing
standards with the flexibility afforded in the proposed rule.
Comment: Many commenters offered standards or clarifications for
inclusion in proposed Sec. 156.225(b), such as a list of
discriminatory versus acceptable marketing practices; a prohibition on
inducements and other tactics prone to abuse; secret shopper events;
focus group testing of marketing materials; and standardized
compensation for agents and brokers in the Exchange.
Response: We note that the above tactics could be appropriately
included in an Exchange's monitoring and
[[Page 18418]]
oversight activities, as well as its marketing rules. While we are not
establishing that an Exchange implement specific standards for the
reasons described in the preceding response, we encourage Exchanges to
consider a variety of standards, tools, and strategies to promote
transparent and consumer-oriented conduct in the Exchange.
Comment: Many commenters urged HHS to codify the statutory
prohibition against benefit designs that have the effect of
discouraging enrollment of higher-need consumers in Sec. 156.225(b) of
the final rule.
Response: We note that section 1311(c)(1)(A) specifically prohibits
QHP issuers from utilizing benefit designs that have the effect of
discouraging enrollment by higher-need individuals. We have modified
Sec. 156.225(b) in this final rule to codify the statutory
prohibition.
Comment: A few commenters recommended that the Exchange be
permitted to decertify QHPs based on improper marketing practices.
Response: Section 155.1080 of the final rule gives the Exchange the
authority to decertify a QHP at any time for failure to comply with
certification standards, including standards related to marketing
practices.
Comment: Several commenters recommended that HHS repeat the anti-
discrimination standards established in Sec. 156.200(e) in this
section.
Response: We believe that the broad prohibition on discrimination
in Sec. 156.200(e) clearly bars discrimination in marketing practices
as well as other operations of the QHP issuer, and that repeating this
language in Sec. 156.225 is unnecessary.
Comment: Several commenters encouraged HHS to establish a level
playing field with respect to marketing inside and outside of the
Exchange. Specifically, a few commenters recommended that the final
rule clarify that QHP issuers must comply with all State laws and
regulations that govern marketing other health insurance products, such
as statutes prohibiting unfair or deceptive acts or practices.
Response: We note that adopting the proposed rule's approach would
ensure QHPs conform to any standards, laws, or regulations that govern
the marketing of non-QHP health insurance products in a State.
Comment: Several commenters recommended that HHS direct Exchanges
to report on oversight activities related to marketing. A few
commenters additionally recommended that an Exchange Blueprint detail
the Exchange's proposed approach to marketing oversight.
Response: Exchanges are responsible for ensuring compliance with
the marketing standards of this section. States have significant
experience in regulating marketing of health insurance issuers, and
Exchanges may leverage the current monitoring practices of States with
respect to marketing of health insurance. As a result, we are not
imposing an additional reporting obligation for Exchanges in this area.
Comment: In response to the concern expressed in the proposed rule
preamble that certain groups (for example, Medicare beneficiaries) may
be vulnerable to deceptive marketing tactics, one commenter suggested
that the Exchange electronically verify whether QHP enrollees are also
enrolled in other coverage.
Response: We encourage Exchanges to develop a variety of strategies
to identify improper marketing practices. We note that subpart D of
this final rule provides for electronic verification of some types of
other coverage in Sec. 155.320(b).
Comment: A handful of commenters recommended that HHS establish a
mechanism to receive consumer complaints related to marketing
practices.
Response: Consumers who encounter marketing practices that they
believe are deceptive or improper should be able to report such
practices to the Exchange or State regulator, as appropriate. Because
the Exchange is responsible for monitoring marketing of QHPs and taking
any appropriate action, we believe that establishing a separate Federal
complaint reporting mechanism is unnecessary.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.225 of the
proposed rule, with the following modifications: in paragraph (b) we
codified statutory language prohibiting QHP issuers from employing
benefits designs that could discourage enrollment of individuals with
significant health needs. Accordingly, we added ``and Benefit Design''
to the title of this section.
e. Network Adequacy Standards (Sec. 156.230)
In Sec. 156.230, we proposed the minimum criteria for network
adequacy in order for health plans to be certified as QHPs. We proposed
that QHP issuers meet network adequacy standards established by the
Exchange in accordance with Sec. 155.1050 and consistent with the
provisions of section 2702(c) of the PHS Act as amended by the
Affordable Care Act. In the proposed rule, the network adequacy
standard, stated in proposed Sec. 155.1050, established ``sufficient
choice of providers'' as the touchstone of whether a provider network
is adequate. The preamble discussion identified several different
measures of network adequacy and sought comment on whether to include
additional qualitative and quantitative standards to measure network
adequacy.
We proposed that a QHP issuer make its health plan provider
directory available to the Exchange electronically and to potential
enrollees and current enrollees in hard copy upon request, and that the
directory identify providers who are no longer accepting new patients.
We sought comment on standards we might set to ensure that QHP issuers
maintain up-to-date provider directories. We refer commenters to the
summary of proposed Sec. 155.1050 in this final rule and to the
preamble to the proposed rule for additional discussion of the proposed
policy.
Comment: Many commenters offered feedback on the network adequacy
standard, initially included in proposed Sec. 155.1050. Some
commenters supported the flexibility provided to States in the proposed
rule, noting that such flexibility could facilitate the alignment of
markets inside and outside of the Exchange. Conversely, many commenters
recommended that HHS establish a national, uniform standard for network
adequacy. These commenters offered numerous standards HHS could adopt,
including the NAIC Managed Care plan Network Adequacy Model Act, or the
current standards for Medicare Advantage plans, Medicaid managed care
plans, or TRICARE plans. Finally, a few commenters generally requested
that HHS clarify the meaning of ``sufficient number'' of providers.
Response: A number of competing policy goals and considerations
come into play with examinations of network adequacy: that QHPs must
provide sufficient access to providers; that Exchanges should have
discretion in how to ensure sufficient access; that a minimum standard
in this regulation would provide consistent consumer protections
nationwide; that network adequacy standards should reflect local
geography, demographics, patterns of care, and market conditions; and
that a standard in regulation could misalign standards inside and
outside of the Exchange. In balancing these considerations, we have
modified Sec. 156.230(a)(2) in this final rule to better align with
the language used in the NAIC Model Act. Specifically, the final
[[Page 18419]]
rule establishes a minimum standard that a QHP's provider network must
maintain a network of a sufficient number and type of providers,
including providers that specialize in mental health and substance
abuse, to assure that all services will be available without
unreasonable delay. We believe this modification provides additional
protection for consumers by communicating our expectations with respect
to the number and variety of providers that should be present in a
QHP's provider network. Further, the modified standard establishes a
baseline (``all services * * * without unreasonable delay'') against
which network adequacy can be measured. We note that nothing in the
final rule limits an Exchange's ability to establish more rigorous
standards for network adequacy. We also believe that this minimum
standard allows sufficient discretion to Exchanges to structure network
adequacy standards that are consistent with standards applied to plans
outside the Exchange and are relevant to local conditions. Finally,
placing the responsibility for compliance on QHP issuers, rather than
directing the Exchange to develop standards, is more consistent with
current State practice.
Comment: Several commenters urged HHS to codify the potential
additional standards listed in the preamble to the proposed rule
(access without unreasonable delay, reasonable proximity of providers
to enrollees' homes or workplaces, ongoing monitoring process, and out-
of-network care at no additional cost when in-network care is
unavailable), with the largest number of commenters expressing support
for the provision of out-of-network care at no additional cost when in-
network care is unavailable. Other commenters recommended specific
alternatives to these elements, such as a ``60 minutes or 60 miles'' or
``15-20 minutes'' standard.
Response: Based on comments, we have modified Sec. 156.230(a)(2)
in this final rule to codify the standard that services must be
available without unreasonable delay. With respect to the other
specific suggestions offered by commenters, we are concerned that the
proposed standards may not be compatible with existing State regulation
and oversight in this area. We believe that the modification to final
Sec. 156.230(a)(2) strikes the appropriate balance between assuring
access for consumers and recognizing the historical flexibility and
responsibility given to States in this area.
Comment: Several commenters recommended that the final rule
strengthen access protections in medically underserved, rural, or
professional shortage areas, and for vulnerable populations, such as
limited English proficient individuals or individuals with
disabilities. With respect to medically underserved areas, some
commenters suggested approaches that HHS could take, such as supporting
higher payment rates in these areas. Others advocated for State
flexibility to develop local solutions. One commenter requested that
the final rule clarify that a QHP's network cannot be deemed inadequate
in a professional shortage area.
Response: We did not accept comments recommending specific,
national standards given that network adequacy is typically--and
diversely--regulated by States. As described above, we amended Sec.
156.230(a)(2) in this final rule to clarify that the provider networks
maintained by QHP issuers must offer access to all services without
unreasonable delay. We believe that this modified standard enhances
protections for all Exchange consumers, including vulnerable
populations, while preserving flexibility for States to develop local
solutions to ensure access. Furthermore, we believe that the standards
for inclusion of essential community providers in QHP provider networks
in proposed Sec. 156.235 will also help to strengthen access in
medically-underserved areas and for vulnerable populations.
Comment: Many commenters recommended that the network adequacy
provisions include specific provider types, such as pediatricians,
tribal health care providers, mental health professionals, teaching
hospitals, or women's health care providers.
Response: While QHP networks should provide access to a range of
health care providers, we are concerned that mandating inclusion of a
list of specified provider types would detract from the larger issue of
broadly ensuring access to the full range of covered services (that is,
essential health benefits). Accordingly, we have modified Sec.
156.230(a)(2) of this final rule to require QHP issuers to maintain
networks that include sufficient numbers and types of providers,
including providers that specialize in mental health and substance
abuse, to ensure access to all services. We specifically highlight
mental health and substance abuse services because we recognize that
the essential health benefits will create new demands for access to
mental health and substance abuse services, and that such services have
traditionally been difficult to access in low-income and medically
underserved communities. By highlighting mental health and substance
abuse providers in the network adequacy standard, we seek to encourage
QHP issuers to provide sufficient access to a broad range of mental
health and substance abuse services, particularly in low-income and
underserved communities. In addition, we are clarifying in Sec.
155.1050 of this final rule that, because inclusion of essential
community providers is related to network adequacy, a QHP issuer may
not be prohibited from contracting with any essential community
provider described in final Sec. 156.235(c). We urge States to
consider local demographics, among other elements, when developing
network adequacy standards and note that nothing in the final rule
would preclude an Exchange from identifying specific provider types
that are particularly essential in a State.
Comment: A few commenters recommended that the final rule direct
QHP networks to maintain growth capacity, or the ability to accept
additional enrollees or utilization.
Response: We believe that the higher standard in Sec.
156.230(a)(2) of this final rule helps address the commenters'
concerns. Further, we believe that the reference to section 2702(c)(2)
of the PHS Act, included in section 1311(c)(1) of the Affordable Care
Act, implies Congressional intent to protect current enrollees from
unreasonable delays in access to care if QHPs expand enrollment too
quickly. Therefore, we are not prescribing a uniform growth capacity
standard for all Exchanges in the final rule, though we note that an
individual Exchange would be able to set such a standard.
Comment: A few commenters supported the language in the preamble to
the proposed rule encouraging Exchanges and QHP issuers to consider
broadly defining the providers that can furnish primary care services.
However, other commenters raised concerns about this broader definition
and noted that other programs, such as Medicare and Medicaid, identify
a limited set of providers who may be considered primary care
providers.
Response: We continue to encourage Exchanges to consider a broader
definition of the types of providers who may furnish primary care
services, because this should improve access to such services for
consumers, particularly those in medically underserved or rural areas.
We also recognize that the definition of a ``primary care provider''
should be consistent across health insurance programs to the extent
possible, and we
[[Page 18420]]
encourage Exchanges to be mindful of existing definitions and
approaches in other health insurance programs when outlining
corresponding standards for QHP issuers participating in the Exchange.
All provider contracts executed by QHP issuers participating in the
Exchange must be fully compliant with State scope of practice laws.
Comment: A few commenters requested that HHS provide technical
assistance on the various network adequacy benchmarks that are
available (for example, NAIC, Medicare Advantage, TRICARE, Medicaid
managed care) as States develop Exchange standards.
Response: We continue to work with States on a variety of issues
related to Exchange establishment and operations, and will consider
providing more specific technical assistance on existing network
adequacy standards in the future.
Comment: Several commenters recommended that additional items be
included in QHP provider directories described under proposed Sec.
156.230(b), such as each provider's specialty, affiliation, licensure,
or languages spoken. A few commenters requested that HHS establish that
the provider directory must be easily searchable for Indian Health
Service/Tribal/Urban (I/T/U) providers. Finally, a few commenters
recommended that provider directories include non-physician providers.
Response: Consistent with current industry practice, we expect QHP
issuers' provider directories to include information on each provider's
licensure or credentials, specialty, and contact information, which
could include any institutional affiliation. The Exchange may establish
additional data elements that QHP issuers must include, such as
identifying Indian Health Service/Tribal/Urban (I/T/U) providers.
We note that while a provider directory could include appropriate
non-physician providers, we afford Exchanges discretion regarding their
inclusion in the provider directory. A provider directory that includes
providers whose scope of practice is limited should generally identify
the services that the provider is contracted to perform, for example,
by displaying such providers only when consumers search for certain
services (for example, primary care).
Comment: Multiple commenters recommended that the Exchange
consolidate QHP provider directories as described in the preamble to
the proposed rule. Conversely, some commenters recommended maximum
flexibility for QHP issuers to submit provider information.
Response: We encourage, but do not direct, Exchanges to consolidate
QHP provider directories to make it easier for consumers to locate the
QHPs in which their providers participate. Exchanges may also want to
establish links to the provider directory on a QHP issuer's Web site.
Comment: Several commenters requested that HHS clarify how
frequently QHP issuers must update provider directories under proposed
Sec. 156.230(b). Recommendations offered by commenters ranged from in
real time to annually. A few commenters raised concerns about the
proposed standard that directories identify providers who are not
accepting new patients, noting that this could result in continuous
updates.
Response: We afford each Exchange with discretion to provide
guidance to QHP issuers with respect to the updating of provider
directories, including how frequently issuers must identify providers
who are no longer accepting new patients. We urge Exchanges to consider
the appropriate balance between supporting consumer choice and the
burden on QHP issuers associated with this standard (which should be
lower for electronic directories than for hard copy directories).
Further, in establishing such standards, we expect Exchanges to
consider the information needs of current versus potential enrollees.
Comment: A few commenters recommended that HHS establish that
provider directories developed in accordance with proposed Sec.
156.230(b) must offer meaningful access to individuals with limited
English proficiency and/or disabilities, for example by making
directories available by phone.
Response: We note that, because they are made available to
enrollees, provider directories must meet the standards for
applications, forms, and notices established in Sec. 155.230 of this
final rule, which include accommodations for individuals with limited
English proficiency and/or disabilities.
Comment: A few commenters suggested that QHP issuers be directed to
notify enrollees if their particular provider drops out of the network.
Response: Although a provider's contracting status has significant
implications for patients--especially those who regularly see a
particular provider for treatment of a chronic or complex condition--we
do not set a uniform standard for notification of individual patients
if their providers drop out of the QHP's network. Such a uniform
standard on QHPs might not be consistent with practices in the non-
Exchange market, and would raise QHP administrative costs.
Comment: HHS received comments that section 408 of the Indian
Health Care Improvement Act (IHCIA), should be interpreted to obligate
QHPs to include health programs operated by the IHS, Tribes, Tribal
organizations, and Urban Indian organizations as providers in their
networks. Several commenters also recommended that HHS clarify the
applicability of section 206 of the ICHIA to QHPs.
Response: The primary purpose of section 408 of IHCIA is to deem
Indian health providers as eligible to receive payment from Federal
Health Care Programs for health care services provided to Indians if
certain standards are met. Eligibility to receive payment under section
408 of IHCIA does not depend on in-network status with a QHP. Section
206 of IHCIA provides that all Indian providers have the right to
recover from third party payers, including QHPs, up to the reasonable
charges billed for providing health services, or, if higher, the
highest amount an insurer would pay to other providers to the extent
that the patient or another provider would be eligible for such
recoveries. We believe that section 206 will foster network
participation because it benefits QHPs to contract with Indian health
providers to establish the payment terms to which the parties agree.
Accordingly, we are not modifying the regulation text to reflect this
comment.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.230 of the
proposed rule with the following modification: in new paragraph (a)(2),
we modified the standard previously proposed in Sec. 155.1050 to
clarify that a QHP issuer must maintain a provider network that is
sufficient in number and types of providers to assure that all services
will be accessible without unreasonable delay. We also specifically
include providers that specialize in mental health and substance abuse,
because mental health and substance abuse services are essential health
benefits and because mental health parity applies to QHPs.
f. Essential Community Providers (Sec. 156.235)
In Sec. 156.235, we proposed that a health plan's network must
include a sufficient number of essential community providers who
provide care to predominantly low-income and medically-underserved
populations to
[[Page 18421]]
be certified as a QHP. We solicited comment on how to define a
sufficient number of essential community providers. We also defined the
types of providers included in the definition of essential community
providers consistent with the Affordable Care Act, which specifically
identifies all health care providers defined in section 340B(a)(4) of
the PHS Act and providers described in section 1927(c)(1)(D)(i)(IV) of
the Act. We also solicited comment on the extent to which the
definition should include other similar types of providers that serve
predominantly low-income, medically-underserved populations and furnish
the same services as the providers referenced in section 340B(a)(4) of
the PHS Act.
In the preamble to this section, we acknowledged that two
provisions of the Affordable Care Act regarding payment of essential
community providers and payment of Federally Qualified Health Centers
(FQHCs) may conflict and invited comment on this issue. We also invited
comment on specific payment and contracting issues related to Indian
health providers. Finally, we requested comment on other special
accommodations that should be made when contracting with Indian health
providers, such as the use of a standardized Indian health provider
contract addendum.
Comment: HHS received many comments seeking clarity on the proposed
standard in Sec. 156.235(a) that QHPs include in their provide
networks a ``sufficient'' number of essential community providers. Many
commenters recommended that QHP issuers include in their provider
networks all essential community providers in the area; contract with
any willing essential community provider; or contract with certain
types of providers, such as family planning providers. Some commenters
suggested HHS define sufficiency based on specific ratios of enrollees
to providers, maximum travel times, or the Need for Assistance
worksheet used by the Health Resources and Services Administration.\12\
One commenter suggested that HHS base the sufficiency standard in part
on the Health Professions Shortage Areas, Medically Underserved Areas
and Medically Underserved Populations designated by the Health
Resources and Services Administration.
---------------------------------------------------------------------------
\12\ Available at: http://www.hrsa.gov/grants/apply/assistance/NAP/forms/9needforassistance.pdf.
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In contrast, other commenters supported the proposed rule and urged
HHS to maintain a broad definition of ``sufficient'' that allows
Exchanges to establish standards appropriate for their States. A number
of commenters urged HHS to strike a balance between having QHP issuers
provide enrollees with adequate access to care from essential community
providers and allowing QHP issuers to employ innovative network designs
that improve quality and contain costs.
Response: Based on comments received, we believe that additional
clarification of the ``sufficiency'' standard is necessary.
Accordingly, we have modified final Sec. 156.235(a) to direct that
each QHP's network have a sufficient number and geographic distribution
of essential community providers, where available, to ensure reasonable
and timely access to a broad range of such providers for low-income,
medically underserved individuals in the QHP's service area, in
accordance with the Exchange's network adequacy standards. We believe
that this approach more clearly articulates our expectations with
respect to sufficiency than the standard included in the proposed rule
with respect to essential community providers while continuing to
balance the accessibility of essential community providers with network
flexibility for issuers. We emphasize that Exchanges have the
discretion to set higher, more stringent standards with respect to
essential community provider participation, including a standard that
QHP issuers offer a contract to any willing essential community
provider. HHS intends to monitor the effectiveness of this provision in
ensuring access to essential community providers, and it may be subject
to further modification.
Comment: HHS received several comments suggesting that QHP issuers
be exempt from the standard in proposed Sec. 156.235(a) to include
essential community providers in their provider networks if the
Exchange's service area does not include low-income or medically-
underserved populations.
Response: Section 1311(c)(1)(C) of the Affordable care Act directs
all QHP issuers to include essential community providers in their
provider networks; therefore, we have not amended the regulation to
provide the exemption suggested by the commenter. Further, we note that
the statute and final rule acknowledge that essential community
providers may not be available throughout a QHP's service area. We
believe that the inclusion of ``where available'' in both places
creates flexibility for QHP issuers to contract with essential
community providers in a manner that reflects the relative availability
of these providers and the needs of local communities.
Comment: A number of commenters urged us to address the services
that a QHP issuer should cover when provided by an essential community
provider in its provider network, as described in proposed Sec.
156.235(a)(1). Some commenters suggested that QHP issuers be directed
to cover all services furnished by the essential community provider.
Some commenters expressed concern that QHP issuers might contract with
essential community providers for a few services, thus fulfilling the
essential community provider ``sufficiency'' standard but prohibiting
access to the full breadth of services through such providers.
Response: While we believe the statutory directive to include
essential community providers in QHP provider networks must translate
to meaningful access to care for low-income and medically underserved
populations, section 1311(c)(1)(C) of the Affordable Care Act provides
that nothing in the standard to include essential community providers
obligates a QHP to cover any specific medical procedure. We generally
anticipate and expect QHP issuers will contract with essential
community providers for all services furnished by the provider that are
otherwise covered by the QHP.
Comment: Several commenters supported an exemption from the
standards in this section for staff-model health plans or integrated
delivery system-based health plans, though one commenter urged HHS to
make such an exemption contingent upon the organization demonstrating
that its provider network still provides meaningful access to all forms
of care to potential enrollees in the service area. One commenter
suggested that HHS establish a provision similar to Medicaid's
``freedom of choice'' provision in 42 U.S.C. 1396(a)(23) in order to
allow enrollees in staff-model QHPs to receive covered services from
other providers if needed at no additional cost to the enrollee; the
commenter specifically cited concerns that a religiously-sponsored
integrated delivery health plan may not offer a full range of
reproductive health services. Conversely, several commenters opposed
any exemption for staff-model or integrated delivery system plans.
Response: Based on comments, we are persuaded that the obligation
to contact with essential community providers should address the unique
contracting structure of staff-model health plans and integrated
delivery system-based health plans that provide a majority of services
``in-house.'' We are concerned that
[[Page 18422]]
establishing a standard for such plans to contract with essential
community providers would result in these plans having to alter their
business models, which may obviate the benefits of integration. In the
proposed rule, we noted that we were weighing whether to provide
consideration for plans that solely provide services ``in-house''. In
light of comments, however, we recognize that staff model and highly
integrated delivery system plans do not provide services solely ``in
house''; rather, as a practical matter, they must provide some level of
out-of-network services (for example, emergency services) and often
must contract with Centers of Excellence or certain specialists to
provide patients with access to highly specialized services. As a
result, we have added under final Sec. 156.235(b) a provision
directing Exchanges to offer an alternate standard for plans with a
majority of services furnished by ``in-house'' providers. Under the
alternate standard, health insurance issuers that provide a majority of
covered professional services through employed physicians or through a
single contracted medical group may demonstrate their ability to
provide an equivalent level of service accessibility for low-income and
medically underserved individuals. We note that this alternate standard
does not permit an Exchange to grant any QHP issuer a wholesale
exception to standards related to essential community providers.
Comment: In response to the discussion in the preamble to the
proposed rule, many commenters urged HHS to clarify the term
``generally applicable payment rates'' and ensure that essential
community providers are reimbursed at a reasonable level by
establishing minimum reimbursement standards for all essential
community providers. Suggestions for such a benchmark included the
Medicaid prospective payment system (PPS) rate under 42 U.S.C.
1396a(bb), Medicare rates, or a reimbursement rate at least equal to
the issuer's negotiated rate with a similarly situated non-essential
community provider. Commenters also recommended that QHPs offer
``generally applicable payment rates'' by service line to ensure that
plans do not mask low rates for particular services by providing higher
rates for less-utilized service, or otherwise discriminate against
essential community providers in contract negotiations.
Response: QHP issuers should not discriminate against essential
community providers through contract negotiations, or otherwise attempt
to circumvent the obligation to include such providers in-network by
offering unfavorable rates. In this final rule, we are not specifically
establishing that a generally applicable payment rate be based on a
particular benchmark or be calculated using a particular method (for
example, by service line), but clarify that ``generally applicable
payment rate'' means, at a minimum, the rate offered to similarly
situated providers who are not essential community providers as defined
in this section.
Comment: In response to the discussion in the preamble to the
proposed rule, many commenters offered feedback on the appropriate
payment rates for Federally-qualified health centers, or FQHCs. Several
commenters supported payment of Medicaid PPS rates to all FQHCs some
commenters advocated that Exchange provide wrap-around payments to
FQHCs, as is currently the practice in State Medicaid programs. Other
commenters supported payment of the issuer's generally applicable
payment rates, while other commenters recommended allowing payment of
mutually agreed upon rates. A few commenters offered unique suggestions
not explicitly contemplated in the proposed rule, such as negotiating
based on Medicare rates or permitting States to establish payment rates
for essential community providers.
Response: The Affordable Care Act, at section 1302(g), establishes
payment of FQHCs at the applicable Medicaid PPS rate. However, the
Affordable Care Act also supports, at section 1311(c)(2), payment of
essential community providers, including FQHCs, at the QHP issuer's
generally applicable payment rate. We are amending the regulation text
in final Sec. 156.235(e) to codify both sections 1302(g) and
1311(c)(2) of the Affordable Care Act. We interpret these two
provisions to mean that a QHP issuer must pay an FQHC the relevant
Medicaid PPS rate, or may pay a mutually agreed upon rate to the FQHC,
provided that such rate is at least equal to the QHP issuer's generally
applicable payment rate.
Comment: Several commenters suggested that, rather than direct QHP
issuers to contract with essential community providers under proposed
Sec. 156.235(a), Exchanges should provide incentives for QHP issuers
to contract with essential community providers.
Response: Including essential community providers in QHP provider
networks is a minimum certification standard specifically established
by Section 1311(c)(1)(B) of the Affordable Care Act. This does not
preclude Exchanges from offering incentives to QHP issuers (such as
priority placement on the Exchange Internet Web site) to contract with
more essential community providers than the Federal minimum standard.
Comment: In response to the list of essential community providers
in proposed Sec. 156.235(b), many commenters recommended inclusion of
specific provider types, including but not limited to rural health
clinics, community mental health centers, family planning clinics, Ryan
White Care Act providers, pediatricians and children's hospitals,
tribal health care providers, providers that serve limited English
proficient populations, school-based clinics, or the entirety of a
health system that includes a 340(B) or disproportionate share
hospital. Some commenters also expressed concern about the potential
for exclusion of or discrimination against specific types of essential
community providers, such as those that are academic medical centers,
by issuers, States or Exchanges. Conversely, a few commenters
recommended that each State define essential community providers.
Response: We acknowledge that a wide variety of health care
providers and institutions serve low-income and medically underserved
individuals, and we note that the definition of essential community
providers contained in the proposed rule encompasses a broad range of
providers that serve low income and underserved communities, including
FQHCs, disproportionate share hospitals, Ryan White Care Act Title II
and III grantees, and urban Indian organizations. We clarify that the
list of essential community providers provided in paragraphs (c)(1) and
(c)(2) are not an exhaustive list and are not meant to exclude QHP
issuers from contracting with other providers that serve predominantly
low-income, medically underserved individuals.
In Sec. 156.235(c) of the final rule, we are finalizing the
proposed rule definition, with a slight modification. Based upon
comments regarding the potential for exclusion of or discrimination
against essential community providers and consistent with the intent
explicit in section 1311(c)(1)(C) of the Affordable Care Act that
access to essential community providers be maximized in QHPs, we
clarify that any provider that meets the criteria for an essential
community provider in Sec. 156.235(c), or met the criteria on the
publication date of this regulation unless the provider lost its status
under Sec. 156.235(c)(1) or (c)(2) thereafter as a result of violating
Federal law, must be considered an essential community provider. We
intend to monitor this policy and revisit as necessary.
[[Page 18423]]
We note that the definition in the final rule, taken from the
section 1311(c)(1)(C) of the Affordable Care Act, provides a test to
determine whether a provider is an essential community provider and a
non-exhaustive list of examples. An Exchange may apply the test
contained in the definition (providers that serve predominantly low-
income, medically underserved individuals) to a particular service area
to identify additional essential community providers. Finally, we note
that each QHP provider network must be sufficient in number and types
of providers to assure that all services, including mental health and
substance abuse services, will be accessible without unreasonable
delay.
Comment: A few commenters recommended that HHS develop a standard
Indian Addendum for contracting with tribal health care providers.
Response: We recognize that furnishing QHP issuers with a standard
Indian Addendum to a provider contract may make it easier for QHP
issuers to contract with Indian providers. We note that QHP issuers may
not be aware of the various Federal authorities that govern contracting
with Indian health providers, and such an Addendum may lower the
perceived barrier of contracting with Indian providers. We plan to
develop a template for contracting between QHP issuers and tribal
health care providers. While we do not uniformly mandate that QHP
issuers use the template, we believe that QHP issuers will find it in
their interest to adopt such a template when contracting with Indian
providers. We also note that Exchanges may elect to direct QHP issuers
to use the Indian Addendum when contracting with Indian providers.
Comment: One commenter recommended that all entities designated as
essential community providers qualify for special drug pricing under
section 340B(a)(4) of the Public Health Service Act. Conversely,
another commenter requested that the final rule clarify that QHP
issuers are not obligated to contract with all 340(B) pharmacies. One
commenter suggested that HHS work with States and Exchange governing
boards to ensure that providers have a clear understanding of how key
340(B) principles apply in the Exchange context in order to avoid
confusion and violation of 340(B) anti-diversion rules.
Response: This rule concerns the establishment and operation of
Exchanges and the certification standards for QHPs; nothing in this
final rule changes or affects the operation of section 340(B) of the
Public Health Service Act. As a result, requests to interpret section
340B of the Public Health Service Act are outside the scope of this
final rule.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.235 of the
proposed rule, with the following modifications: in paragraph (a)(1) we
modified QHP issuer's contracting responsibilities with respect to
essential community providers to reflect a reasonable access standard
and a broad range of providers standard. In new paragraph (a)(2) we
added an alternate standard for QHP issuers that provide a majority of
professional services with ``in-house'' providers. In paragraph (c), we
clarified the definition of an essential community provider. We also
added new paragraphs (d) and (e) to interpret and implement Affordable
Care Act section 1311(c)(2) (regarding payment rates to essential
community providers) and section 1302(g) (regarding payment of FQHCs);
in doing so we indicate that QHP issuers and FQHCs may negotiate rates
and mutually agree on a payment rate other than the Medicaid PPS rate.
g. Treatment of Direct Primary Care Medical Home (Sec. 156.245)
In Sec. 156.245, we proposed to permit QHP issuers to provide
coverage through a direct primary care medical home (PCMH) that meets
the standards established by HHS, provided that the QHP meets all
standards otherwise applicable. We requested comment on what standards
HHS should establish under this section.
Comment: Multiple commenters recommended that direct PCMHs
described in proposed Sec. 156.245 be accredited, or comply with
existing industry standards such as the Joint Principles of the
Patient-Centered Medical Home \13\ developed by the Patient Centered
Primary Care Collaborative. Other commenters expressed general support
for PCMHs or provided data on the effectiveness of the PCMH model.
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\13\ Available at: http://www.pcpcc.net/content/joint-principles-patient-centered-medical-home.
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Response: We believe that Exchanges offer an opportunity to advance
innovative models of delivery that can improve the care experience for
patients and providers. Consistent with this overall goal, we have
structured the direct PCMH provision to encourage, rather than limit,
innovative care models. While we recognize the importance of
accreditation and quality assurance, we are not establishing that
direct PCMHs be accredited in order to participate in QHP networks. We
encourage QHP issuers to consider the accreditation, licensure, or
performance of all network providers.
Comment: Several commenters suggested that the definition of direct
PCMHs in proposed Sec. 156.245 be expanded to include accountable care
organizations or specialists who serve as a patient's ``health home.''
Response: While non-primary care clinicians can play a significant
role in care coordination, particularly for patients with multiple or
complex conditions, the statute specifically provides for inclusion of
primary care medical homes. We do not interpret that phrase as
including providers of non-primary care services, such as specialists.
However, we note that nothing in this section prohibits or limits a QHP
issuer's ability to pursue other innovative care models or contracting
structures, such as increasing payments to specialists who coordinate
an individual's care, or contracting with accountable care
organizations.
Comment: A few commenters requested that HHS clarify what
coordination is contemplated between a QHP and a contracted direct PCMH
under proposed Sec. 156.245.
Response: QHP issuers that choose to contact with direct PCMHs for
primary care services will need to consider how to promote a seamless
consumer experience. For example, the QHP issuer should ensure that
enrollees understand how to use the direct PCMH model, identify which
services will be provided by the direct PCMH and which will not, and
have clear information on how to access specialists and other non-
primary care providers.
Comment: Several commenters generally recommended that HHS
encourage QHP issuers to contract with direct PCMHs, direct issuers to
contact with a specific number of direct PCMHs, establish that a
certain percentage of network providers must be affiliated with direct
PCMHs, or direct QHP issuers to report on the number of in-network
direct PCMHs.
Response: While we believe that an Exchange could create incentives
for QHP issuers to contract with direct PCMHs, such incentives are more
appropriately considered within the context of local provider market
conditions, including the relative availability of direct PCMHs. As a
result, we are not directing Exchanges to create incentives for
contracting with direct PCMHs. We encourage Exchanges to promote, and
QHP issuers to explore,
[[Page 18424]]
innovative models of delivery along the care spectrum.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.245 of the
proposed rule without modification.
h. Health Plan Applications and Notices (Sec. 156.250)
In Sec. 156.250, we proposed basic standards for the format of
applications and notices provided by the QHP issuer to the enrollee,
specifically that QHP issuers must adhere to the standards established
for notices in Sec. 155.230.
We received a number of comments on this section. Because Sec.
156.250 cross-references to Sec. 155.230, we have responded to all
comments on applications and notices in Sec. 155.230. Accordingly, we
are finalizing Sec. 156.250 as proposed.
i. Rating Variation (Sec. 156.255)
Consistent with the rating rules established in the Affordable Care
Act, we proposed Sec. 156.255 to codify the statutory provision that
allows QHP issuers to vary premiums by the rating areas established
under section 2701(a)(2) of the PHS Act. We further proposed that each
QHP issuer offer a QHP at the same premium rate without regard to
whether the plan is offered through an Exchange or whether the plan is
offered directly from the issuer or through an agent. We also proposed
that a QHP issuer cover all the following groups using some combination
of the following categories: (1) Individuals; (2) two-adult families;
(3) one-adult families with a child or children; and (4) all other
families. We sought comment on how we might structure family rating
categories while adhering to section 2701(a)(4) of the PHS Act, which
establishes that any family rating using age or tobacco rating may only
apply those rates to the portion of the premium that is attributable to
each family member.
Additionally, we requested comment on how to apply four family
categories when performing risk adjustment. We also invited comment on
alternatives to the four categories for defining family composition,
and how to balance potential consumer confusion associated with more
categories while maintaining plan offerings and rating structures that
are similar to those that are currently available in the health
insurance market. Finally, we noted that we were also considering
whether to direct QHP issuers to cover an enrollee's tax household,
including for purposes of applying individual and family rates, and
sought comment on the potential considerations of this approach.
Comment: A few commenters asked why the proposed rule did not
address section 1312(c) of the Affordable Care Act related to a single
risk pool.
Response: The proposed rule and this final rule only address
standards that are unique to Exchanges, QHP issuers and QHPs. The
single risk pool provision applies to health insurance issuers in the
individual and small group market and to enrollees who do not enroll in
health plans through the Exchange. Therefore, it is outside the scope
of this final rule. We anticipate future rulemaking on other Affordable
Care Act provisions that apply to insurance markets generally.
Comment: One commenter suggested that the final rule establish a
process whereby a State demonstrates that existing State laws related
to rating outside of the Exchange will not undermine the Exchange.
Response: We are continuing to evaluate the relationship and
interaction of State rating laws, the market reform provisions in
section 2701 of the PHSA, and the provisions to implement the Exchange
standards. We may issue further guidance in the future.
Comment: In response to the proposed Sec. 156.255(a) on rating
areas, one commenter suggested that we codify the standard that rating
areas must be applied consistently inside and outside of the Exchange,
which we discussed in preamble of the proposed rule (76 FR 41901). A
few commenters requested that HHS establish a standard set of criteria
for rating area boundaries that reflect actual differences in health
costs within a State.
Response: Section 2701(a)(2) of the PHS Act directs States to
establish rating areas, which will be reviewed by the Secretary of HHS.
Section 1301(a)(4) of the Affordable Care Act directly references the
rating areas outlined in section 2701(a)(2) of the PHS Act, which
ensures that the rating areas are applied consistently both inside and
outside the Exchange. The requested provision is outside the scope of
this final rule; we anticipate future rulemaking on other Affordable
Care Act provisions that apply to insurance markets generally.
Comment: Several commenters requested that HHS more clearly define
what ``same plans'' would need to be offered at the same premium rate
for proposed Sec. 156.255(b). The commenters raised concerns that
issuers would offer two plans with very minor differences and then
charge a different premium for what is essentially the same plan, which
could result in adverse selection against the Exchange.
Response: We believe that, generally, this provision means that
health plans that are substantially the same as a QHP should charge the
same premium and encourage States to use this standard when evaluating
compliance with this provision. HHS may further clarify this standard
in future rulemaking or guidance.
Comment: Several commenters voiced support for proposed Sec.
156.255(b), while others had questions regarding whether user fees
charged for enrollment would undermine the same premium provision. Some
commenters suggested that HHS direct Exchanges to apply user fees to
QHPs offered outside of the Exchange in order to ensure pricing parity.
Response: We clarify that States have substantial flexibility in
establishing a funding mechanism for an Exchange to meet the self-
sustaining provision of section 1311(d)(5) of the Affordable Care Act,
implemented in this final rule at Sec. 155.160. As noted in the
statute and the regulation text, user fees on QHPs are one mechanism to
achieve this status. Such fees may be set based on a broad or narrow
set of issuers, on enrollment volume, including enrollment that is not
through the Exchange, or be set without regard to enrollment.
Comment: Several commenters suggested that we direct QHP issuers to
offer QHPs outside of the Exchange.
Response: Nothing in Federal law prohibits a QHP issuer from
offering the QHP for sale directly to an individual or through an
agent/broker in addition to through the Exchange. We note that a State
law may address this issue. Further, enrollees in such a plan would not
qualify for advanced payments of premium tax credits, among other
Exchange benefits.
Comment: In response to proposed Sec. 156.255(c), several
commenters raised issues regarding rating rules that were discussed in
the proposed rule, including the incorporation of the tobacco rating
factor described in section 2701(a)(1)(A)(iv) of the PHS Act (76 FR
41901). Other commenters made suggestions about the application of a
rating structure to a tax household.
Response: In the final rule, we have removed proposed Sec.
156.255(c), which addresses rating categories. We anticipate that
implementation of section 2701(a)(1)(A) of the PHS Act will establish
standards that apply to health insurance issuers in the individual and
small group market, including QHP issuers.
[[Page 18425]]
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.255 of the
proposed rule, with the exception of removing paragraph (c).
j. Enrollment Periods for Qualified Individuals (Sec. 156.260)
In Sec. 156.260, we proposed that QHP issuers must accept and
enroll qualified individuals during the initial open enrollment period,
during the annual open enrollment period thereafter, and during special
enrollment periods, as applicable. We further proposed that QHP issuers
adhere to the effective dates of coverage established in Sec. 155.410
for all enrollment periods in the Exchange, and provide enrollees with
notice of effective dates of coverage.
Comment: HHS received many comments about enrollment periods in
accordance with Sec. 155.410 and Sec. 155.420, which are summarized
and addressed in those sections of the final rule. One commenter
remarked specifically on proposed Sec. 156.260 and requested that HHS
clarify whether a QHP could refuse enrollment to an applicant
previously proven to have committed fraud.
Response: A QHP issuer may not refuse enrollment to a new applicant
who has previously proven to have committed fraud. We note that section
2703(b) of the PHS Act, with which QHP issuers must comply, includes an
exception to the guaranteed renewability standard in certain instances
of fraud, but includes no parallel exception for new coverage. We
further note that Sec. 156.270(a) permits QHP issuers to rescind
coverage under certain circumstances.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.260 of the
proposed rule, with a minor technical modification and no substantive
changes.
k. Enrollment Process for Qualified Individuals (Sec. 156.265)
In Sec. 156.265, we proposed that QHP issuers adhere to the
Exchange's process for enrollment in QHPs, which includes standards for
the collection and transmission of enrollment information.
Additionally, we proposed that QHP issuers use the application adopted
in accordance with Sec. 155.405 when accepting applications from
individuals seeking to enroll in a QHP through the Exchange enrollment
process. After collecting the uniform enrollment information from an
applicant, we proposed that the QHP issuer send the information to the
Exchange, in accordance with the standards established in Sec. 155.260
and, as applicable, Sec. 155.270.
Consistent with the standards established in accordance with Sec.
155.260 and in Sec. 155.270, we proposed that QHP issuers receive
enrollment information electronically from the Exchange. We sought
comment on the frequency with which plans should receive electronic
enrollment information. We also proposed that QHP issuers abide by the
premium payment process established by the Exchange and described in
Sec. 155.240.
We further proposed that QHP issuers provide enrollees in the
Exchange with an enrollment package, and the summary of benefits and
coverage document. We solicited comment on what should be included in
an enrollment package. Finally, we proposed that QHP issuers reconcile
enrollment files with the Exchange no less than once a month, and that
QHP issuers acknowledge the receipt of enrollment information in
accordance with Exchange standards established in Sec. 155.400.
Comment: Some commenters recommended that proposed Sec. 156.265(b)
prohibit agents, brokers and Web-based entities from performing
eligibility determinations.
Response: An agent, broker, or Web-based entity cannot perform
eligibility determinations as part of enrollment through the Exchange.
We note that section (b)(2)(A) of 36B of the Internal Revenue Code as
amended by the Affordable Care Act establishes that an individual must
enroll ``through the Exchange'' in order to access advance payments of
the premium tax credit and cost-sharing reductions. However, in Sec.
155.220(c)(1), we specify that an individual can be enrolled in a QHP
through the Exchange with the assistance of an agent or broker only if
the agent or broker ensures that the individual receives an eligibility
determination through the Exchange Web site.
Comment: In response to the provisions described in proposed Sec.
156.265(b), several commenters suggested that an individual have an
eligibility determination before enrolling in a QHP. Other commenters
expressed concern regarding the privacy of individuals' information
when a QHP issuer facilitates the enrollment of an individual through
the Exchange as described in proposed Sec. 156.265(b), particularly
when the individual seeks an eligibility determination. One commenter
suggested that the QHP issuer refer individuals to the Exchange to
carry out activities related to eligibility and enrollment.
Response: An individual must receive an eligibility determination
from the Exchange before enrolling in a QHP through the Exchange.
Accordingly, we have added new paragraph Sec. 156.265(b)(1) to clarify
that the QHP issuer may only enroll a qualified individual after the
Exchange has notified the QHP issuer that the individual has been
determined eligible consistent with the standards identified in part
155 subpart D, and on the basis of enrollment information sent from the
Exchange to the QHP issuer. In addition, in Sec. 156.265(b)(2), we
specify that QHP issuers must direct the individual to file an
application with the Exchange or ensure the applicant receives an
eligibility determination for coverage through the Exchange through the
Exchange Internet Web site. These provisions ensure that the
applicant's information is collected only by the Exchange and thus
firewalled from issuers and agents and brokers and accordingly
protected. We do not provide regulatory standards for enrollment in a
QHP that is not enrollment through the Exchange and defer to issuers as
to their business practices for that. We reiterate that the assistance
and protections described in part 155 apply to Exchange enrollment.
Protecting the personal health and other information provided by
potential enrollees during the eligibility and enrollment process is
critical. Further, we note that when the QHP issuer conducts relevant
enrollment functions on its own behalf, that appears to be an activity
covered by the HIPAA privacy and security rules in part 164.
Comment: HHS received a few comments in response to proposed Sec.
156.265(d), which obligates issuers to follow the premium payment
process established in Sec. 155.240. One issuer recommended that
payment directly to the QHP serve as the last resort for enrollees,
another commenter requested that enrollees retain this option in the
final rule. One commenter suggested that the enrollee pay only one
entity (that is, the Exchange or the QHP issuer) for the entire benefit
year. Finally, one commenter suggested that the Exchange be directed to
aggregate premiums to avoid unpredictable administrative costs for
issuers.
Response: As this option is statutorily established under section
1312(b) of the Affordable Care Act, consumers must have the option to
remit premium payments directly to QHP issuers. Therefore, we are
maintaining the language in Sec. 155.240(a), which directs an Exchange
to allow enrollees to pay
[[Page 18426]]
premiums directly to QHP issuers. For a full discussion of issues
related to premium payment, please refer to the responses to comment in
Sec. 155.240.
Comment: Many commenters offered suggestions related to the
enrollment package described under proposed Sec. 156.265(e). Many
commenters recommended that HHS establish meaningful access standards;
standards suggested by commenters included language written at the 6th
grade level, in-language ``taglines'' in fifteen languages directing
enrollees to oral translation services, or existing HHS Limited English
Proficiency guidance. Other commenters recommended that the package
include information about how to file a complaint. Some commenters
suggested that HHS direct issuers to follow existing State and Federal
law governing the contents of enrollment packages.
Response: The enrollment information package is subject to the
accessibility and readability standards established in Sec. 156.250,
which cross-references the access standards set forth in section Sec.
155.230(b); therefore, we have not amended the regulation text in this
section because it would be duplicative. States have the flexibility to
establish that the enrollment package include information on grievance
and appeal rights, but we note that this information is already
described in the summary of benefits and coverage as specified in
guidance published by the Departments of HHS, Labor, and the Treasury
under PHS Act section 2715, which an enrollee would receive at
essentially the same time. We also note that issuers must continue to
follow existing law regarding the content of the enrollment package.
Comment: One commenter suggested that QHP issuers be able to attach
the individual's choice of QHP to the individual's application to
determine eligibility when that application originates with the QHP
issuer.
Response: HHS will consider comments recommending that an
individual's QHP selection be included in an application that is
initiated with the QHP issuer as we develop guidance.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.265 of the
proposed rule, with the following modifications: We have rewritten
paragraph (b) to describe more clearly the process to enroll an
applicant through the Exchange when the applicant approaches the QHP
issuer directly. We modified paragraph (e) to state that the enrollment
information package must comply with accessibility and readability
standards in Sec. 155.230(b). We eliminated paragraph (f) referencing
the summary of benefits and coverage document. Because of the
elimination of the paragraph on summary of benefits and coverage, the
remaining provisions have redesignated numbers.
l. Termination of Coverage for Qualified Individuals (Sec. 156.270)
In Sec. 156.270, we proposed standards for QHP issuers regarding
the termination of coverage of individuals enrolled in QHPs through the
Exchange, and proposed that a QHP issuer may terminate coverage for
non-payment of premium, fraud and abuse, and relocation outside of the
service area, among other situations permitted by the Exchange.
Additionally, we proposed that QHP issuers provide a notice of
termination of coverage to the enrollee and the Exchange, consistent
with the standards for effective dates in Sec. 155.430. We solicited
comment on the information that should be included in the termination
notice.
We also proposed standards for QHP issuers regarding the
application of the grace period for non-payment of premiums by
individuals receiving advance payments of the premium tax credit.
Specifically, we proposed that a QHP issuer must provide a grace period
of at least three consecutive months if an enrollee receiving advance
payments of the premium tax credit has previously paid at least one
month's premium. During the grace period, we clarified that the QHP
issuer must pay all appropriate claims, apply any payment received to
the first billing cycle in which payment was delinquent, and continue
to collect the advance payments of the premium tax credit on behalf of
the enrollee from the department of the Treasury.
We also proposed to direct QHP issuers to provide a notice to
enrollees who are delinquent on premium payments and sought comment on
the potential elements of such a notice. Additionally, we proposed that
QHP issuers maintain records of terminations of coverage in accordance
with Exchange standards as established in Sec. 155.430. Finally, we
proposed that QHP issuers abide by the effective dates for termination
of coverage as described in Sec. 155.430.
Comment: Many commenters were concerned that the notices described
in proposed Sec. 156.270(b) and (e) should meet meaningful access
standards and are accessible for LEP individuals and for individuals
with disabilities.
Response: QHP notices must meet standards for LEP individuals and
for individuals with disabilities. Section 156.250 of the final rule
states that all notices from a QHP issuer must meet the standards
outlined in Sec. 155.230(b).
Comment: Some commenters were concerned that a QHP issuer could
terminate coverage under this section without sufficient notice. Other
comments urged HHS to track reasons for termination of coverage for
oversight purposes. Finally, a few commenters asked us to clarify how
QHP issuers and the Exchange would share information about termination
of coverage.
Response: In response to comments, we have added paragraph (b)(1)
to the final rule to state that QHP issuers must notify enrollees at
least 30 days prior to terminating coverage, and further that the
notice must include a reason for termination. We also added
156.270(b)(2) to the final rule to state that the QHP issuer must
notify the Exchange of the termination effective date and reason for
termination.
Comment: A significant number of commenters voiced concerns that
the proposed policy in Sec. 156.270(d) that directed QHP issuers to
pay all appropriate claims during the 3-month grace period would
exacerbate adverse selection and increase premiums across enrollees.
Several commenters representing the insurance industry specifically
noted that under the proposed policy, rates would be built with an
assumption that some portion of enrollees would pay 9 months of premium
for 12 months of full coverage.
Several alternatives were suggested, such as allowing QHP issuers
to pend claims after the first 30 days of non-payment, which would
allow the issuer to put a hold on claims until the end of the grace
period, at which point such claims would be paid if the premiums were
paid, or denied if the premiums were not paid. Another commenter
suggested allowing QHP issuers to deny coverage for certain categories
of services, such as elective, non-emergency procedures, additions of
new household members, or new prescription drugs. Other commenters
suggested that each Exchange be allowed to determine the payment
policy, and some recommended that Exchanges be responsible for helping
to pay outstanding premiums or for seeking payment of outstanding
premiums from an individual.
Response: We did not accept the recommendation that each Exchange
set its own standard. Advance payments of the premium tax credit are
directly tied to the grace period. Thus the grace period's parameters
will have an impact on potential Federal tax liability of consumers and
on Federal administration of the advance payments
[[Page 18427]]
of the premium tax credit. As a result, it is critical that the Federal
government establish a uniform grace period policy to balance the
potential impacts on the consumer's tax liability, coverage liability
for issuers and providers, and appropriate administration of advance
payments of the premium tax credit.
However, we are persuaded that the proposed standards should be
adjusted in this final rule to decrease the opportunities for risk
manipulation, adverse selection, and premium increases. In Sec.
156.270(d)(1) and (d)(2) of the final rule, we now direct QHP issuers
to pay all appropriate claims for services provided during the first
month of the grace period. We believe that the first month of non-
payment is the month in which an enrollee is the most likely to resume
timely payments, and thus is the time period in which it is most
important to ensure seamless coverage. As such, issuers should
adjudicate claims as they would for any enrollee that pays his or her
premium in full. However, we acknowledge that as the amount owed by an
enrollee increases during the 3-month grace period, the risk of non-
payment increases as well. To decrease the financial risk to issuers,
and to individuals as described below, the final rule now permits QHP
issuers to pend claims in the second and third months. We note that QHP
issuers may still decide to pay claims for services rendered during
that time period in accordance with company policy or State laws, but
the option to pend claims exists. If the individual settles all
outstanding premium payments by the end of the grace period, then the
pended claims would be paid as appropriate. If not, the claims for the
second and third months could be denied. The grace period under this
final rule represents an extended time for enrollees to catch up on
premium payments before coverage is terminated. Several considerations
informed this amended approach.
First, the statutory 3-month grace period is substantially longer
than many current grace periods and only applies to recipients of
advance payments of the premium tax credit, assuming they have paid at
least one monthly premium. In light of this fact, a grace period policy
that is significantly different from the rest of the market could
produce markedly different premiums between the Exchange and non-
Exchange markets. The final rule approach helps mitigate these concerns
by aligning the grace period claims payment standards more closely with
current industry practices.
Second, in accordance with section 36B of the Code, individuals may
incur a tax liability for any advance payments of the premium tax
credit that are paid on their behalf for a month that such individual
did not pay his or her portion of the premium. Under the policy in the
proposed rule, an individual would potentially be liable for three
months of advance payments of the premium tax credit, which could be
substantial in some instances. Given the potential for a large tax
liability on the part of enrollees receiving advance premium tax
credits that fail to pay their residual premiums to QHP issuers, we
believe that a retroactive termination date is appropriate to mitigate
excessive individual financial exposure. Under the final rule policy,
an individual's financial exposure would be limited to the first
month's advance payment of the premium tax credit if the individual did
not pay his or her portion of the premium for that month. We have
provided several examples below to illustrate how the new grace period
policy would work:
Grace Period Examples:
Assumptions for a monthly premium:
--Premium: $500.
--Advance premium tax credit share of premium: $450.
--Enrollee share of premium: $50.
--First month of grace period: March.
--Individual pays enrollee share of premium for January and February
coverage.
Example #1: Individual misses $50 payment that is due February
28 for March coverage. Individual realizes mistake and pays $100 on
March 31st for March and April coverage, satisfying all obligations
for premium payments through the end of March.
[cir] Issuer adjudicates claims for March consistent with normal
practices (that is, for non-grace periods)
[cir] Individual will have full coverage for March and April
[cir] Individual has paid full premium for March and April as is
eligible for premium tax credit for March and April.
Example #2: Individual misses $50 payment that is due February
28 for March coverage and misses $50 payment that is due March 31st
for April coverage. Individual Pays $150 on April 30 for March,
April and May coverage.
[cir] Issuer adjudicates claims for March
[cir] Coverage continues for April and May (2nd and 3rd months
of the grace period), but:
[ssquf] Providers are notified of the potential for a denied
claim.
[ssquf] Issuer pends claims for services performed in April and
May until individual pays outstanding premiums.
[ssquf] Individual has paid full premium for March, April and
May as is eligible for premium tax credit for March, April and May.
Example #3: Same facts as Example 2 except that
individual does not pay enrollee's share of premium for March, April
or May.
[cir] Coverage terminated retroactively to March 31
[cir] Issuer can deny claims for services rendered during April
and May. Providers could then seek payment directly from the
individual for any services provided during that time.
[cir] Individual may have additional tax liability attributable
to the $450 for the advance payment of the premium tax credit paid
on his or her behalf for March's coverage. The exact amount of
additional tax liability would be determined in accordance with the
rules for tax credit reconciliation under section 36B of the Code.
Comment: Several commenters supported the proposed standards in
Sec. 156.270(d) that QHP issuers pay all appropriate claims during the
3-month grace period for enrollees receiving advance payments of the
premium tax credit. Commenters said this would protect providers that
render services to such enrollees during the grace period. A few
commenters were also concerned about the timing of claims, and
suggested that QHP issuers be obligated to pay claims based on the date
the service was rendered, and not the date the claim was submitted.
Response: We understand that pended claims increase uncertainty for
providers and increase the burden of uncompensated care. The obligation
to pay all appropriate claims established in the proposed rule was
intended to protect providers during an extended grace period. However,
given the significant concerns regarding premium increases and the
potential tax liability to consumers, we were concerned that this
approach did not strike the right balance. Because we share providers'
concerns about incurring claims during the grace period that are not
ultimately paid, we now establish in Sec. 156.270(d)(3) of the final
rule that QHP issuers notify providers who submit claims for services
rendered during the second and third months of the grace period that
any such claims will be pended, and potentially not reimbursed by the
QHP issuer if the individual does not settle outstanding premium
payments. We believe that there are technology-based approaches to
provide this notification. We also clarify in Sec. 156.270(d)(1) that
the application of the grace period to claims is based on the date the
service was rendered, and not the date the claim was submitted.
Comment: Some commenters suggested that the 3-month grace period
proposed in Sec. 156.270(d) should be
[[Page 18428]]
shorter, and that HHS refrain from establishing additional rules. Other
commenters suggested extending the grace period to 6 months, at least
for the first few years.
Response: As stated in the proposed rule, section
1412(c)(2)(B)(iv)(II) of the Affordable Care establishes that QHP
issuers ``receiving advance payments of the premium tax credit with
respect to an individual enrolled in the plan shall * * * allow a 3-
month grace period for non-payment of premiums before discontinuing
coverage'' (76 FR 41902). We do not believe that the statute provides
the flexibility to alter the grace period timeframe.
Comment: Several commenters requested clarification on whether the
grace period described in proposed Sec. 156.270(d) would be triggered
by a full non-payment of premium or a partial non-payment of premium.
Response: The 3-month grace period applies whenever the QHP issuer
has received payment of less than the full amount of the enrollee's
share of the premium for a given month. It is our understanding that
issuers have varying practices related to the triggering of a grace
period, with some issuers initiating a grace period for any payment
that is not the full premium and others initiating a grace period only
if the individual has not submitted an amount above some threshold.
However, in order to be consistent with policy related to the advance
payments of the premium tax credit, the enrollee must pay the full
amount of his or her portion of the premium or the grace period would
be triggered.
Comment: Several commenters voiced concerns about the potential for
gaming during the grace period described in proposed Sec. 156.270(d).
Commenters suggested that we take action to prevent people from
habitually paying 9 months of premiums, stopping premium payment for 3
months, and then enrolling in a new QHP to start the process over
again. Commenter suggestions included: requiring payment of all
outstanding premiums before enrollees can change issuers, enroll in a
different QHP, or re-enroll in a QHP; establishing a 60-day waiting
period for individuals who have been terminated for coverage due to
non-payment of premiums but seeking re-enrollment in another QHP;
allowing issuers to seek reimbursement for claims paid during the grace
period from enrollee after termination; issuing a late enrollment
penalty or establish a pre-existing condition exclusion period for
individuals seeking re-enrollment after termination due to non-payment
of premiums; prohibiting enrollment in a QHP until the following open
enrollment period; prohibiting someone who has been terminated due to
non-payment of premiums from qualifying for a special enrollment period
later in the year; imposing penalties for repeat offenders, increasing
premiums; allowing QHP issuers to collect the first and last month's
premium at the time of application; and finally, limiting grace periods
to one year. Other commenters recommended that States have the
flexibility to establish their own protections against opportunistic
consumer behavior.
Response: We did not adopt the recommendations regarding non-
issuance of coverage for individuals who have outstanding premium
payments for a previous QHP because we believe that there are
implications for rescissions, guaranteed issue, and pre-existing
condition policies. HHS will continue to explore options for
incentivizing appropriate use of the grace period, either through
future rulemaking or in the context of general insurance market
reforms. We will also consider the implications for automatic
redeterminations and reenrollment in instances where individuals have
had their coverage terminated for non-payment of premiums. Gaming will
not only affect issuers, but also represents potential for misuse of
the advance payments of the premium tax credits. Given the compelling
Federal financial stake in grace period, HHS will monitor this issue
moving forward and will continue to work on the development of policies
to prevent misuse of the grace period.
Comment: Many commenters voiced support of the continued issuance
of advance payments of the premium tax credit on behalf of enrollees
during the 3-month grace period, as proposed in Sec. 156.270(e). Some
commenters suggested that if QHP issuers were allowed to terminate
coverage retroactively, then QHP issuers should be directed to return
the advance payments of the premium tax credits.
Response: We have maintained the proposed rule policy that QHP
issuers must continue to receive advance payments of the premium tax
credit being paid on behalf of an enrollee in a grace period. In
addition, we included in Sec. 156.270(e)(2) an instruction for QHP
issuers to return advance payments of the premium tax credit for the
second and third months of the grace period for individuals who exhaust
the grace period without paying outstanding premiums, because such
individuals will have their coverage terminated retroactively to the
end of the first month of the grace period. We note that, consistent
with section 36B of the Code, individuals may owe a tax liability as a
result of advance payments of the premium tax credit paid on their
behalf during a month in which they did not pay their portion of the
premium. Under the final rule, individuals will have a liability as a
result of the advance payment of the premium tax credit for the first
month of the grace period if they never pay their portion of the first
month's premium. If an individual exhausts the grace period without
paying all outstanding premiums, QHP issuers can terminate coverage
retroactive to the end of the first month of the grace period and deny
claims that were pended. An issuer who terminated coverage in this
fashion would be obligated to return the advance payments of the
premium tax credit made on behalf of the individual for the second and
third months of the grace period.
Comment: Some commenters requested clarification of the proposed
policy in Sec. 156.270(g) regarding whether a partial payment could
extend the grace period once it has already been triggered, or if only
full payment of all outstanding premiums would allow an individual to
resolve a grace period. Commenters supported the resetting of the grace
period only when all outstanding payments are made.
Response: The grace period may only be reset be if an individual
has paid all outstanding premiums. We believe that a ``rolling'' grace
period that moves the initial date of the grace period in correlation
with any payment made by an individual would be not only confusing to
consumers but administratively burdensome, particularly in light of the
revised payment policy described in paragraph (d). Therefore, in this
final rule, we have added language to clarify this policy in Sec.
156.270(g). Once a grace period has been initiated by a QHP issuer, the
individual has three months to settle all outstanding premium payments,
at which time the grace period is either resolved and pended claims are
paid or the individual's coverage is terminated.
Comment: Commenters requested clarification on the proposed policy
in Sec. 156.270(g) regarding whether a QHP issuer could terminate
coverage retroactively to the last date of payment, or whether the
termination was prospective from the end of the 3-month grace period.
Commenters also requested clarification regarding how advance payments
of the premium tax credit and payments to providers would be reconciled
if the date of termination were retroactive.
[[Page 18429]]
Response: We clarify in final Sec. 156.270(g) that if an
individual exhausts the grace period without settling all outstanding
premium payments, then the QHP issuer can terminate coverage
retroactively to the first day of the second month in the grace period.
We understand that many States allow issuers to terminate to the last
paid date of coverage. In addition, HHS issued rules concerning
rescissions of health insurance coverage, under which issuers are
permitted to cancel coverage retroactively due to a failure to timely
pay premiums (PHS Act section 2712; 45 CFR 147.128). However, the final
Exchange standards for QHP issuers add more consumer protections than
the generally applicable PHS Act's standards. During the first month,
full coverage will be provided and the QHP issuer will be able to keep
the advance payment of the premium tax credit. As a result, we treat
the last day of the first month of the grace period as the ``last paid
date.'' We note that the enrollee may be obligated to repay the advance
payment of the premium tax credit for the first month in the form of an
additional tax liability if the individual does not pay the enrollee's
portion of the premium. For purposes of claims payment, the QHP issuer
must treat the first month of the grace period as if the full premium
has been paid. However, the QHP issuer may pursue collection of the
individual's portion of the premium; if the individual pays the unpaid
enrollee portion of the premium, the individual would retain the
potential to be eligible for the premium tax credit for that month.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.270 of the
proposed rule, with the following modifications: We added paragraph
(b)(1) to note that a QHP issuer must provide the enrollee with a
notice of termination of coverage at least 30 days prior to
effectuating termination. We added paragraph (b)(2) to clarify that the
QHP issuer must give reason for termination in a notice. We have also
amended the proposed policy regarding the statutory 3-month grace
period for individuals receiving advance payments of the premium tax
credit. As described in paragraphs (d) through (g), QHP issuers will
now be directed to pay appropriate claims in the first month only of
the grace period, and will be able to pend claims in the second and
third months. QHP issuers must notify providers who submit claims that
an enrollee is in the second or third month of the grace period and
that a claim may be denied if the outstanding premiums are not paid in
full. Finally, QHP issuers must retain advance payments of the premium
tax credit made on behalf of an individual for the first month, and
must return such payments for the second and third months to the
Department of the Treasury. Finally, we redesignated proposed
paragraphs (g) and (h) as (h) and (i), respectively, to accommodate
other changes to this section.
m. Accreditation of QHP Issuers (Sec. 156.275)
In Sec. 156.275, we proposed to codify the statutory provision
that a QHP issuer be accredited on the basis of local performance in
each of the nine categories listed in the Affordable Care Act, where
``local performance'' means performance of the QHP issuer in the State
in which it is licensed. We further specified that a QHP issuer must be
accredited by an entity recognized by HHS. We also proposed that a QHP
issuer must obtain its accreditation within a time period established
by the Exchange under Sec. 155.1045.
Comment: In general, commenters supported accreditation as a
condition of QHP certification. One commenter voiced concern over the
cost of private accreditation and the impact on participation of
issuers in Exchanges. Commenters also suggested additional areas that
HHS should include in standards for accreditation beyond those
specified in the proposed rule, including specific clinical measure
sets that should be included, among others. Another commenter asked
that new accreditation models be reviewed that are specifically
developed for the individual and small group market. One commenter
asked for clarification if States would be able to establish more
stringent accreditation standards beyond the Federal minimum.
Response: While we understand that accreditation can be a costly
and resource-intensive process for issuers, it is established in the
Affordable Care Act for certification of QHPs. At this time we are also
not adding any additional standards for accreditation beyond what is
specified in the Affordable Care Act. The Affordable Care Act is clear
as to which criteria should be included in accreditation standards and
we are codifying the statute in this regard. We clarify that Exchanges
may impose accreditation standards that are more stringent than those
contained in the Affordable Care Act.
Comment: Several commenters suggested specific entities that should
be recognized by HHS and asked that more than one accrediting entity be
recognized. Other commenters asked HHS to specify which accreditation
entities would be selected and requested including both private and
public entities.
Response: We will be issuing future rulemaking to establish a
process by which accrediting entities will be recognized. Comments that
requested specific products be considered for accreditation are beyond
the scope of this rule.
Comment: A commenter did not support the proposal to direct issuers
to authorize the release of their accreditation survey.
Response: We codify the obligation that issuers authorize the
release of their accreditation survey to the Exchange and HHS. We
believe that this is necessary to monitor the accreditation of QHP
issuers beyond what can be learned from a simple reporting of
accreditation status. We are also exploring the extent to which data
submitted on the accreditation survey may be used to fulfill quality
reporting standards, which may help alleviate potential reporting
burden on Exchanges and issuers.
Comment: In general, commenters supported establishing a timeline
for accreditation of QHP issuers under proposed Sec. 156.275(b).
However, several commenters disagreed with our proposal to allow
Exchanges to set the timeline and requested that HHS establish a
Federal timeline for accreditation that all Exchanges must follow.
Commenters also provided recommendations on appropriate accreditation
timelines for HHS to establish, ranging from one to several years.
Other commenters suggested that there should be a transition period for
new plans to become accredited.
Response: The Affordable Care Act, at section 1311(c)(1)(D)(ii)
clearly provides for the Exchange to establish the timeframe.
Consistent with the statute, we believe that Exchanges are in the best
position to determine the accreditation timeline for QHP issuers
operating in their States. Exchanges are familiar with local market
conditions and the needs of their constituents. Therefore, we are
maintaining the regulation text as proposed.
Summary of Regulatory Changes
We are finalizing Sec. 156.275 as proposed.
n. Segregation of Funds for Abortion Services (Sec. 156.280)
In Sec. 156.280, we proposed to implement section 1303 of the
Affordable Care Act by codifying the statutory provisions. This
codification includes the non-discrimination clause for providers and
facilities, a voluntary
[[Page 18430]]
choice clause for issuers with respect to abortion services, the
standards for the segregation of funds for QHP issuers that elect to
cover abortion services for which public funding is prohibited, and the
associated communication standards related to such services. We
solicited comment on the related model guidelines issued by HHS and the
Office of Management and Budget on September 20, 2010,\14\ noting that
we intended the model guidelines to serve as the basis for the final
rule.
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\14\ Available at: http://www.whitehouse.gov/sites/default/files/omb/assets/financial_pdf/segregation_2010-09-20.pdf.
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Comment: A large number of commenters offered feedback on proposed
Sec. 156.280. Of these, many expressed general support for or
opposition to abortion coverage in Exchanges. A number of commenters
supported specific provisions of the proposed rule and recommended that
they be finalized; for example, the voluntary choice provision for QHP
issuers and the provision on the applicability of emergency services
laws. Conversely, a few commenters recommended changes to the proposed
provisions--such as that each Exchange be directed to include one QHP
that covers non-excepted abortion services. A few commenters requested
that HHS provide additional technical guidance on the provisions in
section 1303 of the Affordable Care Act; for example, a few commenters
suggested specific clarifications to the pre-regulatory model
guidelines that describe high-level principles for QHP issuers'
segregation plans, while other commenters recommended that Exchanges be
directed to review the actuarial value of abortion coverage calculated
by QHP issuers. Commenters also recommended that HHS clarify the
provisions regarding separate payments for non-excepted abortion and
all other services, specifically whether QHP issuers must collect
separate payments from all enrollees or only from those receiving
Federal financial assistance, whether QHP issuers may satisfy the
separate payment provision by providing each enrollee with an itemized
bill, and whether an enrollee's coverage would be terminated for
failure to comply with the separate payment provision. A few commenters
requested that HHS strengthen anti-discrimination protections for
providers or expand the conscience protection. Finally, a few
commenters raised concerns regarding provisions that HHS believes are
addressed elsewhere in the final rule, such as privacy of individuals'
QHP selections, and accessibility standards and other protections for
QHP notices and plan information.
Response: We considered the comments received on this section, and
are finalizing the provisions of proposed Sec. 156.280 without
modification, with the exception of finalizing the pre-regulatory model
guidelines on issuer segregation plans released by HHS and the Office
of Management and Budget.\15\ Where future guidance is issued on this
section, these comments will be taken into account.
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\15\ Available at: http://www.whitehouse.gov/sites/default/files/omb/assets/financial_pdf/segregation_2010-09-20.pdf.
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Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.280 of the
proposed rule, with the following modifications: we redesignated
paragraph (e)(5)(ii) as (e)(5)(iv). In new paragraphs (e)(5)(ii) and
(e)(5)(iii), we codified the pre-regulatory model guidelines on
segregation of funds published by the Office of Management and Budget
and the Assistant Secretary for Financial Resources as proposed.
o. Additional Standards Specific to the SHOP (Sec. 156.285)
In Sec. 156.285, we proposed rating and premium payment standards
for QHP issuers participating in the SHOP, including a proposal that
the QHP issuer accept aggregated premiums, abide by the rate setting
timeline established by the SHOP, and charge the same contract rate for
a plan year. We also proposed that QHP issuers must accept and enroll
applicants during the annual open enrollment period described in Sec.
155.725 and the special enrollment periods described in Sec. 155.420
(excluding paragraphs (d)(3) and (d)(6)), and they must ensure
effective dates of coverage in accordance with Sec. 155.410(c). We
solicited comment on whether to direct QHPs in the SHOP to allow
employers to offer dependent coverage.
We also proposed that QHP issuers abide by the SHOP enrollment
timeline process standards, including the standards that QHP issuers
must frequently accept electronic transmission of enrollment
information from the SHOP, provide all new enrollees with the
enrollment information package, and provide qualified employers and
employees with the summary of cost and coverage document. We further
proposed that QHP issuers reconcile enrollment files with the SHOP at
least monthly. Additionally, we proposed that QHP issuers abide by the
SHOP standards for acknowledgement of the receipt of enrollment
information and issue qualified employees a policy that aligns with the
qualified employer's plan year and contract.
We also proposed general standards related to termination of
coverage in the SHOP that are largely similar to the standards for the
Exchange with respect to their enrollees from the individual market. We
noted that the QHP issuer would be directed to provide the qualified
employers and employees with a notice of termination of coverage of
enrollees and QHP non-renewal to ensure that the qualified employer is
aware of the changes in coverage for its employees and the availability
of coverage in the SHOP. We indicated that a QHP issuer must terminate
all enrolled qualified employees of the withdrawing employer if the
employer chooses to stop participating in the SHOP.
Comment: In response to proposed Sec. 156.285(b), one commenter
recommended that the employer, and not the SHOP, establish the specific
standards and dates for open enrollment and special enrollment periods.
Response: We believe that States should have the flexibility in
establishing their enrollment periods based on the specific market and
employer circumstances in the State, as it often does today for the
small group market.
Comment: One commenter recommended that proposed Sec.
156.285(b)(2) specify that employees who enroll during a special
enrollment period should be allowed to purchase coverage at the same
rates as those employees who enrolled during the annual open enrollment
period for that plan year.
Response: We note that Sec. 156.210 directs an issuer to set rates
for an employer that will remain in effect for the employer's entire
plan year.
Comment: One commenter suggested that the preamble text, which
states that the rule would direct issuers to provide all new enrollees
with an enrollment information package as described in Sec.
156.265(e), is inconsistent with the proposed regulation text in Sec.
156.285(c)(3), which states that the enrollment information package is
described in Sec. 156.265(f).
Response: We have modified the final rule to correctly reference
Sec. 156.265(e).
Comment: One commenter requested clarification of the definition of
a QHP for the SHOP.
Response: We note that all of the standards in part 156, including
definitions, pertaining to QHPs also apply to the QHPs offered through
the
[[Page 18431]]
SHOP in the small group market unless the regulation text explicitly
indicates that a specific standard pertains only to QHPs offered to
qualified individuals, or are otherwise exempted.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.285 of the
proposed rule, with the following modifications in conformance with
changes to part 155 subpart H: in new paragraph (b)(3) we clarified
that a SHOP must offer an enrollment period to a newly qualified
employee who becomes qualified outside of the initial or annual open
enrollment period. In new paragraph (b)(4) we established that a SHOP
must conform to the effective dates of coverage described in Sec.
156.260 and Sec. 155.720. In new paragraph (e) we clarified that QHP
issuers participating in the SHOP may not impose minimum participation
rules with respect to a QHP unless the SHOP authorizes the minimum
participation rule in accordance with 155.705(b)(10). Finally, we made
a limited number of technical changes to clarify the language in this
section.
p. Non-renewal and Decertification of QHPs (Sec. 156.290)
In Sec. 156.290, we proposed standards for QHP issuers that
voluntarily do not renew participation of a QHP in the Exchange,
including notification, benefit coverage standards, and reporting
standards. Specifically, we proposed to direct QHP issuers that do not
renew QHP participation to provide written notice to each enrollee. We
solicited comment on the potential content of the non-renewal notice
and any other information that we should consider including. We also
proposed that if an Exchange decertifies a QHP, the QHP issuer must
terminate coverage for enrollees only after the Exchange has notified
the QHP's enrollees as described in Sec. 155.1080 and enrollees have
had the opportunity to enroll in other coverage. We requested comment
on the extent to which enrollees should continue to receive coverage
from a decertified plan.
Comment: One commenter recommended that HHS or Exchanges attach
penalties to the decision not to seek recertification described in
proposed Sec. 156.290(a), such as barring the QHP from participating
in the Exchange for one year following the non-renewal. Conversely, a
few commenters requested that HHS prohibit Exchanges from imposing
penalties or sanctions on plans that voluntarily non-renew.
Response: HHS lacks authority under the Affordable Care Act to
impose any penalties for non-renewal of a QHP in an Exchange. Exchanges
may take varied approaches to voluntary non-renewal; for example, some
Exchanges may establish criteria for re-entry, while other Exchanges
may utilize the standard certification process.
Comment: One commenter recommended that the final rule direct QHPs
that choose not pursue recertification to complete data reporting 6 to
12 months after exiting the market.
Response: Obtaining data from non-renewing QHPs will be important
for Exchanges. We note that Sec. 156.290(a)(3) expressly obligates a
non-renewing QHP to complete its reporting through the end of the plan
or benefit year.
Comment: A few commenters suggested that HHS establish more
advanced notice for non-renewal than the proposed deadline of September
15th.
Response: We believe that a deadline of September 15th is
sufficiently far in advance of the annual open enrollment period to
provide adequate notice for Exchanges and enrollees. Accordingly, we
are finalizing that deadline as proposed.
Comment: Several commenters suggested that HHS direct QHPs to
notify participating providers of a decision not to renew. These
commenters further suggested that the QHP pay all incurred claims until
participating providers have been notified.
Response: Section 156.290 of the final rule establishes that QHPs
that choose not to pursue recertification must cover benefits for
enrollees for the duration of the plan or benefit year. Similarly, QHPs
must pay all claims incurred while certified and participating in the
Exchange, subject to the terms and conditions of the QHP's contracts
with providers. While participating providers have a significant
interest in a QHP's decision not to seek recertification with the
Exchange, we believe that establishing a standard for QHP issuers to
notify participating providers would impose a significant burden on
QHPs. Therefore, we are not adding such a standard in the final rule.
Summary of Regulatory Changes
We are finalizing Sec. 156.290 as proposed.
q. Prescription Drug Distribution and Cost Reporting (Sec. 156.295)
In accordance with section 6005 of the Affordable Care Act, we
proposed in Sec. 156.295 that QHP issuers provide the following
information related to prescription drug distribution--(1) The
percentage of all prescriptions that were provided under the contract
through retail pharmacies compared to mail order pharmacies, and the
percentage of prescriptions for which a generic drug was available and
dispensed compared to all drugs dispensed, broken down by pharmacy
type, that is paid by the QHP issuer or pharmacy benefit manager (PBM)
under the contract; (2) the aggregate amount, and the type of rebates,
discounts, or price concessions, with certain exceptions, that the PBM
negotiates that are attributable to patient utilization under the plan,
and the aggregate amount of the rebates, discounts, or price
concessions that are passed through to the plan sponsor, and the total
number of prescriptions that were dispensed; and (3) the aggregate
amount of the difference between the amount the QHP issuer pays the PBM
and the amount that the PBM pays retail pharmacies, and mail order
pharmacies, and the total number of prescriptions that were dispensed.
We sought comment on how a QHP issuer whose contracted PBM operates its
own mail order pharmacy can meaningfully report on element (3). We also
requested comment on potential definitions for ``rebates,''
``discounts'' and ``price concessions''; and noted that we were
considering using the term ``direct and indirect remuneration,'' to
encompass these various arrangements. We also requested comment on our
proposed definition of PBM and whether we should define PBMs as any
entities that perform specific functions on behalf of a health
insurance issuer. We sought comment on how to minimize the burden of
these reporting standards.
Finally, we also proposed to codify the statutory penalties for
noncompliance, including $10,000 per day that information is not
provided; contract termination if the information is not reported
within 90 days of the deadline; and $100,000 per piece of false
information provided.
Comment: In response to proposed Sec. 156.295(a)(1)--(3) and the
discussion in the preamble to the proposed rule, many commenters
requested clarification of key terms used in this section, such as
``PBM,'' ``generic drug,'' ``bona fide service fees,'' and ``rebates,
discounts, or price concessions.'' One commenter requested that
stakeholders have future opportunities to review and comment on the
technical specifications of this section. Some commenters supported the
proposed definition of ``PBM,'' while others recommended a broader
definition that would encompass all entities that provide
[[Page 18432]]
management services but do not negotiate directly with manufacturers. A
few commenters requested clarification of this definition with respect
to medical benefit and physician-administered drugs. With respect to
the definition of ``generic drug,'' commenters offered numerous
alternate definitions that HHS could adopt, including the definition
provided in the Social Security Act, single source versus multiple
source drugs, or therapeutically and bioequivalent. Several commenters
responded to HHS' request for comment on the definition of ``rebates,
discounts, or price concessions.'' Some urged HHS to codify the statute
as written, or proposed specific definitions for these terms. Other
commenters recommended use of the term ``direct and indirect
remuneration'' and recommended that CMS maintain consistent definitions
across the Exchange and the Medicare program.
Response: Section 6005 of the Affordable Care Act includes similar
standards for both the Medicare program and the Exchange. We believe
that many of the entities and issuers that will report these data may
participate in both programs. Therefore, we will align definitions with
the Medicare program to the extent possible. We note that we are
maintaining the proposed definition of ``PBM'', which we believe
encompasses a sufficiently broad spectrum of entities and activities.
We are similarly maintaining the proposed interpretations of ``generic
drug'' and ``rebates, discounts, or price concessions.'' Finally, we
are revising the description of ``bona fide service fees'' to better
align with the definition included by the Medicare program in a
proposed rule released on October 11, 2011, and to provide for greater
flexibility with respect to this definition, given that bona fide
services are subject to change as new ones are developed or other bona
fide services are discontinued. Accordingly, we are not finalizing the
specific examples of bona fide service fees included in the proposed
rule.
As we noted in the preamble to the proposed rule, we intend to
clarify these standards through forthcoming guidance. We anticipate
continuing to work with stakeholders to refine these standards.
Comment: One commenter requested that HHS clarify the standard in
proposed Sec. 156.295(a)(1) that QHP issuers report generic dispending
rates ``broken down by pharmacy type.''
Response: We clarify that paragraph (a)(1) directs QHP issuers to
report generic dispensing rates separately for each of four types of
pharmacies: mail order pharmacies, independent pharmacies, supermarket
pharmacies, and mass merchandiser pharmacies.
Comment: In response to HHS' request for comment on how a QHP
issuer whose contracted PBM operates its own mail order pharmacy can
meaningfully report on the aggregate difference between what the issuer
pays the PBM and what the PBM pays the pharmacy, several commenters
suggested that mail order pharmacies owned by PBMs do not present
unique challenges with respect to this reporting activity.
Response: As noted in the preamble to the proposed rule, we expect
to issue further guidance on this section, and will continue to engage
stakeholders to refine these reporting activities.
Comment: In response to HHS' request for comment on how to minimize
the burden associated with proposed Sec. 156.295(a)(1)--(3), several
commenters recommended that HHS limit the collection of information to
those data elements listed in the Affordable Care Act. Commenters also
suggested that HHS harmonize reporting standards across programs to the
extent possible, such as by using the PDE reporting format currently
used in the Medicare Part D program. Multiple commenters recommended
that HHS monitor compliance with this section through audits only,
either of QHP issuers or of PBMs.
Response: We clarify that HHS will only collect those data elements
specified in the Affordable Care Act. We further intend to be
consistent across programs to minimize burden and promote consistency,
and are aligning the definitions of key terms used in this section with
the Medicare Part D program. We expect to provide additional detail on
the exact format and content of this reporting in future guidance.
Comment: In response to the reporting standards identified in
proposed Sec. 156.295(a), a few commenters requested more detailed
information on why HHS needs to receive the data and how the data will
be used. Conversely, some commenter favored greater transparency of
prescription drug cost information and recommended that the information
be reported to the Exchange.
Response: Section 6005 of the Affordable Care Act directs HHS to
collect the data elements listed in the statute. We note that the
Affordable Care Act limits the disclosure of these data, which we
codify in paragraph (b). At this time we are still refining the process
for reporting and uses for these data, and expect to provide additional
guidance on this section in the future.
Comment: A few commenters raised concerns about QHP issuers'
ability to comply with the reporting standards in proposed Sec.
156.295(a)(1) through (3), noting that current contracts between
issuers and PBMs do not typically cover these data elements.
Response: We believe that issuers and PBMs will have sufficient
time to renegotiate or modify these contracts before reporting becomes
necessary.
Comment: One commenter recommended that HHS establish some
flexibility in the application of penalties to accommodate delays in
the realization of price concessions and exceptional circumstances such
as IT failure or human error.
Response: HHS intends to issue further guidance on these reporting
standards, including how the statutory penalties may be applied.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.295 of the
proposed rule, with the following modification: in paragraph (a)(2)(i)
we revised the description of ``bona fide service fees'' to better
align with the definition included by the Medicare program in a
proposed rule released on October 11, 2011, published at 76 FR 63018,
and to provide for greater flexibility with respect to this definition,
given that bona fide services are subject to change as new ones are
developed or other bona fide services are discontinued.
1. Subpart F--Consumer Operated and Oriented Plan Program
Definitions (Sec. 156.505)
Section 156.505 sets forth definitions for terms that are used
throughout subpart F for the CO-OP program. In the final rule,
``Establishment of Consumer Operated and Oriented Plan (CO-OP) Program
(76 FR 77392), we revised the definitions of several terms to remove
references to the ``Establishment of Exchanges and QHPs'' rule (76 FR
41866), because it had not yet been finalized. We also added
definitions for several terms as they were proposed in the rule,
``Establishment of Exchanges and QHPs'' (76 FR 41866), because those
terms were referred to within the revised definitions.
In the CO-OP Program Final Rule, we stated that once the
``Establishment of Exchanges and QHPs'' rule (76 FR 77392) was
finalized, we would revise the definitions in section 156.505 to
incorporate the definitions adopted in the new part 155. Consistent
with this intent, we have revised the definitions
[[Page 18433]]
for the terms ``CO OP QHP,'' ``Exchange,'' ``individual market,''
``issuer,'' ``small group market,'' ``SHOP,'' and ``State'' from the
CO-OP Program Final Rule to reference the definitions in the new part
155. As explained later in this preamble, the changes in this section
are being issued on an interim basis. These revisions ensure that the
definitions used in subpart F of section 156 are consistent with the
definitions in the new part 155. We also removed the definitions of
``group health plans,'' ``health insurance coverage,'' ``small
employer,'' ``qualified employer,'' and ``QHP'' because these terms are
no longer referenced in the aforementioned definitions.
We made a technical change to section 156.510(b)(2)(ii). When
referring to an applicant that ``has as a sponsor a nonprofit, not-for-
profit, public benefit, or similarly organized entity that is also a
sponsor for a pre-existing issuer,'' we inadvertently used the defined
term ``sponsor.'' Our intent was to refer to an entity that sponsors a
pre-existing issuer and not an entity that serves as a CO-OP's sponsor.
Therefore, we revised this provision to refer to an applicant that
``has as a sponsor a nonprofit, not-for-profit, public benefit, or
similarly organized entity that also sponsors a pre-existing issuer.''
C. Part 157--Employer Interactions with Exchange and SHOP Participation
In part 157, we proposed standards that address qualified employer
participation in SHOP. Also, we briefly outlined employer interactions
with Exchanges related to the verification of employees' eligibility
for qualifying coverage in an eligible employer-sponsored plan.
1. Subpart A--General Provisions
Subpart A outlines the basis and scope for part 157 and defines
terms used throughout part 157.
a. Basis and scope (Sec. 157.10)
In Sec. 157.10, we proposed the general statutory authority for
the proposed regulations and outlined the scope of part 157, which is
to establish the standards for employers in connection with Exchanges.
We did not receive specific comments on this section and are finalizing
the provisions as proposed.
b. Definitions (Sec. 157.20)
In Sec. 157.20, we proposed definitions for terms used in part 157
that need clarification. The definitions presented in Sec. 157.20 are
taken directly from the statute or based on definitions we proposed in
part 155 or part 156. For instance, we stated that the terms
``qualified employer,'' ``qualified employee'' and ``small employer''
have the meaning given to the terms in Sec. 155.20.
We did not receive specific comments on this section and are
finalizing the provisions as proposed. Furthermore, we are finalizing
the definitions proposed in Sec. 157.20 of the proposed rule without
modification.
2. Subpart C--Standards for Qualified Employers
Subpart C of this part outlines the general provisions for employer
participation in SHOPs. As we noted in the preamble to the proposed
rule, this subpart substantially mirrors and complements subpart H of
part 155.
a. Eligibility of Qualified Employers to Participate in the SHOP (Sec.
157.200)
In Sec. 157.200, we proposed the standards for an employer that
seeks to offer health coverage to its employees through a SHOP. We
proposed that only qualified employers may participate in a SHOP. In
the preamble to the proposed rule, we noted that some small employers
may have employees in multiple States or SHOP service areas,
referencing proposed Sec. 155.710, which would allow multi-State
employers flexibility in offering coverage to their employees. We did
not receive specific comments on this section and are finalizing the
provisions as proposed.
b. Employer Participation Process in the SHOP (Sec. 157.205)
In Sec. 157.205, we proposed the process for employer
participation in the SHOP. Specifically, we proposed that a qualified
employer make available QHPs to employees in accordance with the
process developed by the SHOP pursuant to Sec. 155.705, and that a
qualified employer participating in a SHOP disseminate information to
its employees about the methods for selecting and enrolling in a QHP.
We also proposed that a qualified employer submit premium payments
according to the process proposed in Sec. 155.705. Additionally, we
proposed that a qualified employer must provide an employee hired
outside of the initial enrollment or annual open enrollment period with
specific information.
We further proposed that a qualified employer provide the SHOP with
information about individuals or employees whose eligibility to
purchase coverage through the employer has changed. We also proposed
that a qualified employer adhere to the annual employer election period
to change program participation for the next plan year. In Sec.
155.725, we proposed that a qualified employer may begin participating
in the SHOP at any time.
Finally, we proposed that if a qualified employer remains eligible
for coverage and does not take action during the annual employer
election period, the employer would continue to offer the same plan,
coverage level or plans selected the previous year for the next plan
year unless the QHP or QHPs are no longer available. We invited
comments regarding the feasibility of the processes established in this
section and the implications for small employers and their employees.
Comment: Some commenters requested that the final rule direct the
SHOP to create a specific timeline for employers to notify their
employees regarding their coverage options. Some commenters strongly
supported the suggestion that the SHOP create a toolkit to help
qualified employers explain the enrollment process and the choices
available to employees.
Response: SHOPs may support employers through electronic means and
through informational packages in communicating with their employees
about available coverage options, and note that nothing in this section
would preclude a SHOP from developing such resources. We do not codify
an employer notification standard because we think it unnecessary.
Comment: One commenter stated that HHS should clarify that
qualified employers offering coverage through the SHOP should be able
to choose which QHPs they will offer their employees rather than
allowing SHOPs to potentially decide employer offerings.
Response: Section 1311 of the Affordable Care Act directs a SHOP
to, at a minimum, offer coverage to qualified employees as follows:
qualified employers select a cost sharing level, within which qualified
employees may select any available QHP. We recognize the need to
balance the extent of employer and employee choice against the
potential for risk selection resulting from those choices. As discussed
more fully in the comment and response section of Sec. 155.705(b)(2)
and (3), we have neither specified nor restricted the range of
additional employer options a SHOP may offer. Therefore, we are
finalizing the provisions of this section as proposed with minor edits
for better clarity and precision.
Summary of Regulatory Changes
We are finalizing the definitions proposed in Sec. 157.205 of the
proposed rule with the following modification: in paragraph (e)(1) we
clarify that a SHOP
[[Page 18434]]
must offer an enrollment period to a newly qualified employee beginning
on the first day of such employee becoming qualified.
IV. Waiver of Proposed Rulemaking
We ordinarily publish a notice of proposed rulemaking in the
Federal Register and invite public comment on the proposed rule. The
notice of proposed rulemaking includes a reference to the legal
authority under which the rule is proposed, and the terms and substance
of the proposed rule or a description of the subjects and issues
involved. This procedure can be waived, however, if an agency finds
good cause that a notice-and-comment procedure is impracticable,
unnecessary, or contrary to the public interest and incorporates a
statement of the finding and its reasons in the rule issued.
Based on the comments that we received on the Exchange
establishment and eligibility proposed rules, we believe that there are
new options and specific standards that should be implemented in
connection with eligibility determinations. Specifically, we finalize
here the ability of an Exchange to fulfill minimum functions without
making eligibility determinations for Medicaid or CHIP, advance
payments of premium tax credits, or cost-sharing reductions, provided
that certain conditions and performance standards are met. As this
option for a bifurcation of the responsibility to determine eligibility
was not included in the proposed rule, the proposal also did not
address the regulatory framework and standards necessary under this
option to achieve a system of streamlined and coordinated eligibility
and enrollment, the major goal underpinning our proposals in the
Exchange eligibility proposed rule (76 FR 51204). In this rule, in part
155 subpart D in the sections identified below, we outline the options
and approach to maintain the seamless consumer experience while
allowing States to design the eligibility process to best match their
current systems and capacity and State policy goals.
A compliant system for eligibility determination is critical to the
establishment and implementation of Exchanges. In this final rule, we
provide additional flexibility for how and by which eligibility for
various insurance affordability programs will be made than was proposed
in the Exchange proposed rules released in the summer of 2011. We also
outline certain timeliness standards and agreements to permit a non-
integrated approach to eligibility determination that still affords
applicants a seamless path to enrollment in coverage but would not
increase administrative burden and costs.
In addition, we finalize on an interim basis certain eligibility
standards for cost-sharing reductions for multi-state households,
Exchange timeliness standards for eligibility determinations, Exchange
timeliness standards for administration of cost-sharing reduction and
advance payments of premium tax credit, and a limited exception to the
general verification rules for individuals in special circumstances.
Although the proposed rule did not clearly and consistently address
these timeliness provisions, commenters indicated the importance of
such standards and we recognize the importance of providing finality
for these standards at this time. We finalize an interim provision, at
Sec. 155.315(g), to provide a process by which the Exchange must
complete verifications of information for applicants without
documentation; this interim provision is also included in the Medicaid
final rule. This provision was not proposed but several commenters
raised the need for such a limited exception to the verification
procedures otherwise required in subpart D. Further, HHS and CMS
received comments in response to the Exchange Eligibility proposed rule
and the Medicaid proposed rule related to better alignment of the
Exchange and Medicaid and CHIP programs. Interim final provisions to
set parameters for cooperation and coordination of these programs are
included here at Sec. 155.345(a) and (g).
The process for approval of State-based Exchanges must begin prior
to January 1, 2013, a date by which HHS must approve (or conditionally-
approve) States-based Exchanges for the 2014 coverage year. States that
elect to establish an Exchange must make and implement critical
decisions in order to seek approval of a State-based Exchange,
including those about how eligibility determinations will be made. As
they make these decisions, it is essential that States know the
standards and necessary agreements associated with the new bifurcation
alternatives for making eligibility determinations, the additional
parameters for cooperation and alignment with Medicaid and CHIP
programs, and the new rules governing Exchange eligibility
determinations. Like the new bifurcation options described above, the
new standards associated with Exchange determinations are also integral
to developing and establishing an Exchange--and the systems to support
it--in order to meet the January 1, 2013 deadline for HHS approval. For
example, the timeliness and verification standards for Exchange
eligibility determinations need to be part of the eligibility
determination system that is developed. Similarly, the timeliness
standards associated with administration of cost sharing reductions and
premium tax credits are necessary to include in the initial
establishment of Exchange systems. Accordingly, we believe we need to
finalize these provisions as soon as possible to provide States the
information they need for Exchange establishment.
As a result, based on the comments to the 2011 Exchange proposed
rules regarding these policies, we believe it would be contrary to the
public interest to delay issuing new eligibility determination and
timeliness standards rules. Further, providing public notice and
additional comment periods for these policies would not provide States
with sufficient lead time to take advantage of and incorporate these
additional policies, prepare their State Exchange Blueprints, and
complete the State Exchange readiness assessments process as set out in
the proposed and this final rule. In light of the timing constraints,
we are soliciting additional comment and issuing as interim final the
following provisions:
Sec. 155.300(b)--Related to Medicaid and CHIP
regulations;
Sec. 155.302--Related to options for conducting
eligibility determinations;
Sec. 155.305(g)--Related to eligibility standards for
cost-sharing reductions;
Sec. 155.310(e)--Related to timeliness standards for
Exchange eligibility determinations;
Sec. 155.315(g)--Related to verification for applicants
with special circumstances;
Sec. 155.340(d)--Related to timeliness standards for the
transmission of information for the administration of advance payments
of the premium tax credit and cost-sharing reductions; and
Sec. 155.345(a) and Sec. 155.345(g)--Related to
agreements between agencies administering insurance affordability
programs.
We also received comments on the Exchanges establishment proposed
rule regarding the need for performance and training standards that
should be developed by HHS or required by HHS for agent and brokers who
are assisting individuals with applications for insurance affordability
programs. The proposed rule discussed and solicited comment about how
to incorporate agents and brokers in the process of enrolling qualified
individuals and qualified employers through the
[[Page 18435]]
Exchange; provisions to achieve that policy goal are finalized in this
rule in light of the comments received to the proposed rule.\16\ We did
not propose or solicit comment on specific standards related to the
provision of application assistance by agents and brokers. To provide
useful assistance, agents and brokers should be fully aware of the
complex eligibility and verification standards that will be used to
determine eligibility for advance payment of premium tax credits and
cost-sharing reductions. Also, in connection with this assistance,
agents and brokers may gain access to a potential enrollee's income
information, including access to sensitive tax data. Because the
proposed rule did not apply training or performance standards to agents
and brokers in connection with providing assistance to applicants, we
did not address the regulatory framework supporting standards to ensure
that agents and brokers are cognizant of the eligibility determination
standards and process, maintain the confidentiality of such data, and
operate in a manner that support their access to such data. In Sec.
155.220, we describe these standards in more detail and outline their
importance and connection to privacy and security standards described
elsewhere in this rule.
---------------------------------------------------------------------------
\16\ We direct attention to Sec. 155.220(a)(2) and the preamble
for that section for a more detailed discussion.
---------------------------------------------------------------------------
Agent and brokers, where permitted to operate in a State, may serve
an important role in assisting individuals in applying for coverage in
the Exchange and with assisting individuals in gaining access to health
insurance affordability programs. Because open enrollment for Exchanges
will begin on October 1, 2013, and Exchanges require lead time to
develop and implement privacy and security standards, agreements,
training programs for agent and brokers, as well as systems to support
agents and brokers working with Exchanges. As a result, we find that
providing public notice and additional comment periods for these
policies would not provide States with sufficient lead time to take
advantage of and incorporate these additional policies prior to
Exchange approval under the processes as set out in the proposed and
this final rule. In light of the timing constraints, we are also
soliciting additional comment and issuing as interim final the
following provision:
Sec. 155.220(a)(3)--Related to the ability of a State to
permit agents and brokers to assist qualified individuals in applying
for advance payments of the premium tax credit and cost-sharing
reductions for QHPs.
For the reasons stated above, we find good cause to waive the
notice of proposed rulemaking and to issue these specific portions of
this final rule on an interim basis. We are providing a 45-day public
comment period in connection with these provisions.
Finally, this final rule makes a small number of technical changes
to the provisions relating to CO-OPs, 45 CFR part 156 subpart F. We
find there is good cause to waive notice and comment rulemaking for
these changes because soliciting comment on them is unnecessary. These
changes do not alter the substance of the CO-OP regulations and are
therefore being finalized in this rule. As discussed the preamble
above, they are being made principally to minimize duplicative
definitions within parts 155 and 156.
IV. Provisions of the Final Regulations
For the most part, this final rule incorporates the provisions of
the proposed rule. Those provisions of this final rule that differ from
the proposed rule are as follows:
Changes to Sec. 155.20
Changes full definitions to statutory and regulatory
definitions, where applicable, including the definitions of
``applicant,'' ``eligible employer-sponsored plan,'' ``health plan,''
``plain language,'' ``individual market,'' and ``small group market.''
Added definitions for ``application filer,'' ``educated
health care consumer,'' and ``Exchange Blueprint.''
Changes to Sec. 155.105
Adds that HHS would consult with other relevant Federal
agencies in approval of State Exchanges.
Establishes timeframe for review of significant changes to
one where any change would receive written approved or denial within 60
days, or the approval would be automatic after 60 days (which may be
extended by 30 days by HHS).
Changes to Sec. 155.110
Establishes that other State agencies are eligible
contracting entities (such as departments of insurance).
Establishes that Exchange boards must have at least one
consumer representative on a governing board.
Changes to Sec. 155.160
Streamlines language regarding user fees, and removed
policy that States announce user fees annually.
Changes to Sec. 155.200
Removes appeals of eligibility determinations as a minimum
Exchange function.
Adds a clarification that in carrying out its statutorily-
required responsibilities, the Exchange is not construed to be acting
on behalf of a QHP to convey that Exchanges are not automatically
considered HIPAA business associates.
Changes to Sec. 155.205
Adds more detail regarding meaningful access standards.
Clarifies standards for persons with disabilities,
including the provision of auxiliary aids at no cost to the individual.
Outlines standards for limited English proficient
individuals, including oral and written translations and the use of
taglines on the Exchange Web site.
Changes to Sec. 155.210
Directs Exchanges to develop and publicly disseminate
conflict of interest standards and training standards for entities to
be awarded Navigator grants.
Applies privacy and security standards to Navigators.
Establishes that at least one Navigator entity must be a
community and consumer-focused non-profit group.
Clarifies entities that are not eligible to serve as
Navigators.
Prohibits Navigators from receiving compensation by
issuers for enrollment into plans outside of the Exchange.
Changes to Sec. 155.220
Establishes standards related to the ability of a State to
permit agents and brokers to assist qualified individuals enrolling in
QHPs through an Exchange; as described elsewhere in this rule, this
provision is being published as interim.
Establishes participation standards for agents and brokers
to facilitate QHP selection through a non-Exchange Web site.
Changes to Sec. 155.230
Aligns notices with expanded meaningful access standards
in Sec. 155.205.
Maintains standard that the Exchange must re-evaluate the
appropriateness and usability of applications, forms, and notices, but
removes the policy that this must occur ``on an annual basis and in
consultation with HHS in instances when significant changes are made.''
Adds that a notice must include a reason for intended
action.
[[Page 18436]]
Changes to Sec. 155.240
Removes duplicative standard for the Exchange to accept
aggregated payments from qualified employers; Sec. 155.705(b)(4)
retains the premium aggregation function for the SHOP.
Changes to Sec. 155.260
Removed definition of ``personally identifiable
information.''
Includes more specific standards for privacy and security
of personally identifiable information.
Includes privacy and security principles based on the Fair
Information Practice Principles (FIPPs) framework adopted by ONCHIT and
a list of critical security outcomes.
Clarifies that the privacy and security standards of this
section apply only to information created or collected for the purposes
of carrying out Exchange minimum functions.
Expands the scope of information to which the standards
apply to information created, collected, used, or disclosed by an
Exchange or other individual or entity that has an agreement with the
Exchange.
Adds the standard that the Exchange workforce complies
with the privacy and security policies and procedures developed and
implemented by the Exchange.
Establishes that Exchanges must develop and utilize secure
electronic interfaces when sharing personally identifiable information
electronically.
Adds standards for data matching and sharing arrangements
that facilitate the sharing of personally identifiable information
between the Exchange and agencies administering Medicaid, CHIP, or the
BHP.
Changes to Sec. 155.300
Adds that references to Medicaid and CHIP regulations in
this subpart refer to those regulations as implemented in accordance
with rules and procedures which are the same as those applied by the
State Medicaid or State CHIP agency or approved by such agency in the
agreement described in Sec. 155.435(a), and as described elsewhere in
this rule, this provision is being published as interim final.
Adds Sec. 155.302
Adds section outlining options for (1) the Exchange to
conduct assessments of eligibility for Medicaid and CHIP rather than an
eligibility determination for Medicaid and CHIP, and; (2) the Exchange
to implement a determination of eligibility for advance payments of the
premium tax credit and cost-sharing reductions for the Exchange, and as
described elsewhere in this rule, this provision is being published as
interim.
Includes standards for such assessments and eligibility
determinations, and as described elsewhere in this rule, this provision
is being published as interim.
Changes to Sec. 155.305
Adds language throughout to clarify that individuals must
be ``living'' in the service area of the Exchange in addition to the
prior standards for residency, in order to align with changes to
Medicaid residency standards.
Adds that an applicant age 21 and over also meets the
residency standard if he or she has entered the service area of the
Exchange with a job commitment or seeking employment (whether or not
currently employed), in order to align with changes to Medicaid
residency standards.
Adds language clarifying how to address cost-sharing
reductions in situations in which multiple tax households are covered
by a single policy, and as described elsewhere in this rule, this
provision is being published as interim.
Clarifies that cost-sharing reductions use the same
household income and FPL definitions as advance payments of the premium
tax credit.
Changes to Sec. 155.310
Adds language directing Exchanges to obtain attestations
from a tax filer regarding advance payments of the premium tax credit,
with flexibility to identify specific attestations in future guidance.
Adds language clarifying that applicants must provide
social security numbers.
Adds a standard that the Exchange must determine
eligibility promptly and without undue delay, and as described
elsewhere in this rule, this provision is being published as interim.
Adds content, consistent with the statute, to the notice
to an employer regarding an employee's eligibility for the advanced
payment of tax credits.
Adds the standard to provide employer with an indication
the employee has been determined eligible for advance payments of the
premium tax credit, that the employer may be liable for the payment
assessed under section 4980H of the Code if they have more than 50
full-time employees, and that the employer has the right to appeal the
determination.
Changes to Sec. 155.315
Provides flexibility for the Exchange to accept
attestation of residency or examine electronic data sources, regardless
of the choices made by the State Medicaid or CHIP agencies.
Adds provision specifying that the Exchange will validate
all social security numbers with SSA.
Allows applicants and application filers to submit
documentation to resolve inconsistencies via channels available for
submission of application.
Includes a new provision which specifies that the Exchange
will accept an applicant's attestation if documentation with which to
resolve an inconsistency does not exist or is not reasonably available,
with the exception of inconsistencies related to citizenship and
immigration status, and as described elsewhere in this rule, this
provision is being published as interim.
Changes to Sec. 155.320
Sets forth that if an applicant's attestation to projected
annual household income is no more than ten percent below his or her
prior tax data, the Exchange must rely on the attestation without
further verification as part of the alternate verification process, and
specifies that if his or her attestation is greater than ten percent
below his or her prior tax data, the Exchange will conduct further
verification.
Allows the use of the alternate income verification
process when a tax filer's filing status has changed, as directed by
statute.
Allows the use of the alternate income verification
process when a tax filer's family composition has changed or is
reasonably expected to change.
Clarifies that if there is no tax data, the Exchange must
discontinue advance payments of the premium tax credit and cost-sharing
reductions at the end of the 90 day inconsistency period.
Clarifies that the Exchange verify whether an applicant
reasonably expects to be enrolled in employer-sponsored insurance the
year for which he or she is seeking coverage, in addition to whether
the applicant is currently enrolled.
Changes to Sec. 155.330
Allows the Exchange to establish a reasonable threshold
for changes in income that an enrollee must report.
Allows the Exchange to expand data matching during the
benefit year within certain standards and without HHS approval.
Adds procedures for notifying and redetermining an
enrollee's eligibility upon obtaining data via data matches; outlines
different procedures for data related to income, family size, or family
composition and data not related to
[[Page 18437]]
income, family size, or family composition.
Allows the Exchange to align eligibility effective dates
for redeterminations with coverage effective dates in subpart E.
Changes to Sec. 155.335
Adds timing standard for annual redetermination notice and
provides that the annual redetermination notice be combined with the
annual notice of open enrollment into a single, coordinated notice in
the first two years.
Provides flexibility to States on timing of notice
starting with redeterminations of coverage effective on or after
January 1, 2017, and sets forth standards for such flexibility.
Clarifies effective dates of annual redetermination.
Adds that the Exchange is authorized to obtain tax data
for a period of up to five years, unless the individual declines this
authorization or chooses to authorize for a period of less than five
years.
Adds limitation to redetermination if an individual
requests eligibility determination for insurance affordability programs
but does not have an authorization for the Exchange to obtain tax data
as part of annual redetermination process; Exchange must notify
enrollee and not proceed with redetermination until authorization has
been obtained or enrollee declines financial assistance.
Changes to Sec. 155.340
Replaces ``Social Security number'' with ``taxpayer
identification number,'' in accordance with statute.
Adds the standard that the Exchange must transmit promptly
and without undue delay information to enable advance payments of the
premium tax credits and cost-sharing reductions, and as described
elsewhere in this rule, this provision is being published as interim.
Changes to Sec. 155.345
Adds standards for agreements between the Exchange and
other insurance affordability programs, and as described elsewhere in
this rule, this provision is being published as interim.
Clarifies responsibilities of the Exchange when applicants
are found potentially eligible for Medicaid based on factors other than
MAGI which includes notifying the applicant; clarifies standards for
providing advance payments of the premium tax credit and cost-sharing
reductions to such individuals.
Adds standards for the Exchange when accepting
applications from other insurance affordability programs and sending
applications to agencies administering other insurance affordability
programs, and as described elsewhere in this rule, this provision is
being published as interim.
Adds a special rule providing that if the Exchange finds a
tax filer's household income is less than 100 percent of the FPL and
one or more applicant in the tax filer's household is found ineligible
for Medicaid or CHIP, the Exchange follow the procedures in Sec.
155.320(c)(3).
Changes to Sec. 155.350
Clarifies that an individual must be eligible for advance
payments of the premium tax credit in order to be eligible for cost-
sharing reductions, in accordance with statute.
Clarifies that cost-sharing reductions use the same
household income and FPL definitions as advance payments of the premium
tax credit.
Changes to Sec. 155.400
Adds policy in Sec. 155.400(b)(2) for Exchanges to submit
eligibility and enrollment information to HHS and QHP issuers promptly
and without undue delay.
Removes policy from Sec. 155.400(c) that the Exchange
must submit enrollment information to HHS on a monthly basis.
Adds policy in Sec. 155.400(d) that the Exchange must
reconcile enrollment information with HHS and QHP issuers on a monthly
basis.
Changes to Sec. 155.410
Extends the initial open enrollment period from February
28, 2014 to March 31, 2014.
Modifies the standards in this section such that an
enrollment transaction must be received by the 15th of the month to
secure an effective date of the first of the following month.
Gives the Exchange flexibility to negotiate earlier
effective dates and/or later plan selection cutoff dates, but notes
that the Exchange must secure agreement from all participating QHP
issuers. Further, an earlier effective date can only be offered to an
individual who is not determined eligible for or forgoes advance
payments of the premium tax credit/cost-sharing reductions for the
first partial month of coverage.
Gives the Exchange the option to automatically enroll
individuals contingent upon demonstrating good cause to HHS.
Changes to Sec. 155.420
Aligns coverage effective dates for special enrollment
periods with the new dates for the initial open enrollment periods as
described in Sec. 155.410, except in the case of marriage or loss of
minimum essential coverage.
Removes the limits on special enrollment periods formerly
in Sec. 155.420(f).
Changes to Sec. 155.430
Defines reasonable notice, for the purposes of
effectuating a termination, as 14 days.
Clarifies the effective dates of terminations for
enrollees under various scenarios, including individuals newly eligible
for Medicaid, or CHIP; and individuals receiving advance payments of
the premium tax credit.
Changes to Sec. 155.700
Adds a definition for minimum participation rules.
Changes to Sec. 155.705
Permits the SHOP to impose minimum participation rules at
the SHOP level.
Adds a standard that the SHOP develop and offer a premium
calculator.
Changes to Sec. 155.715
Clarifies that SHOPs may not use section 1411(b)(2) or
1411(c) verification processes for the SHOP eligibility determination
process.
Clarifies that for eligibility determination purposes, the
SHOP may collect only the minimum information necessary to make such a
determination.
Changes to Sec. 155.720
Adds a standard that the SHOP must report to the IRS
employer participation and employee enrollment information in a form
and manner specified by HHS.
Changes to Sec. 155.725
Adds a standard that the SHOP offer the same special
enrollment periods as the individual Exchange, with the exception of
changes in citizenship status or eligibility for insurance
affordability programs.
Clarifies that the annual election/open enrollment periods
for employers/employees must be at least 30 days.
Clarifies that the SHOP provide newly qualified employees
with a specified enrollment period.
Changes to Sec. 155.730
Adds safeguards to protect information collected on
application.
Changes to Sec. 155.1010
Clarifies that multi-State plans and CO-OPs are recognized
as QHPs.
[[Page 18438]]
Allows Exchanges to certify QHPs during the plan/benefit
year if necessary.
Changes to Sec. 155.1020
Clarifies that multi-State plans are exempt from the
Exchange process for receiving and considering rate increase
justifications, and from the Exchange process for receiving annual rate
and benefit information.
Establishes that the Exchange must post rate increase
justifications on its Web site.
Changes to Sec. 155.1040
Clarifies that multi-State plans must submit transparency
data in a time and manner determined by the U.S. Office of Personnel
Management.
Changes to Sec. 155.1045
Clarifies that the U.S. Office of Personnel Management
will establish the accreditation timeline for multi-State plans.
Changes to Sec. 155.1050
Clarifies that the U.S. Office of Personnel Management
will ensure compliance with network adequacy standards by multi-State
plans.
Clarifies that a QHP issuer in an Exchange may not be
prohibited from contracting with any essential community provider
designated under Sec. 156.235(c).
Changes to Sec. 155.1065
Clarifies that stand-alone dental plans must meet most QHP
certification standards, including Sec. 155.1020(c) and that stand-
alone dental plans must offer the pediatric dental essential health
benefit without annual and lifetime limits as applied to the essential
health benefits in section 1302(b) of the Affordable Care Act.
Adds a standard for the Exchange to ensure sufficient
access to pediatric dental coverage.
Changes to Sec. 155.1075
Exempts multi-State plans and CO-OPs from the Exchange
recertification process.
Changes to Sec. 155.1080
Exempts multi-State plans and CO-OPs from the Exchange
decertification process.
Changes to Sec. 156.50
Clarifies that participating issuers must remit user fees,
as defined by an Exchange, and other assessments, if applicable, to a
State-based or Federally-facilitated Exchange.
Changes to Sec. 156.225
Codifies the statutory prohibition against QHP benefit
designs that have the effect of discouraging enrollment by higher-need
individuals.
Changes to Sec. 156.230
Expands the proposed standard such that a QHP must
maintain a network that is sufficient in number and types of providers,
including providers that specialize in mental health and substance
abuse, to assure that all services will be accessible without
unreasonable delay.
Changes to Sec. 156.235
Sets minimum standards that a QHP must have a sufficient
number and geographic distribution of essential community providers to
ensure reasonable and timely access to a broad range such providers for
low-income, medically underserved individuals in the QHP's service
area.
Clarifies the definition of essential community provider
to include providers that met the criteria to be an essential community
provider on the publication date of this regulation unless the provider
lost its status as an essential community provider as a result of
violating Federal law.
Establishes an alternate standard for integrated delivery
systems and staff model plans.
Clarifies payment policy with respect to FQHCs and all
other essential community providers.
Changes to Sec. 156.255
Removes provision related to covering specific rating
categories or groups.
Changes to Sec. 156.265
Clarifies the role of the QHP issuer in the enrollment
process for enrollment through the Exchange.
Changes to Sec. 156.270
Adds a standard that the QHP issuer must notify the
affected individual 30 days in advance of a termination.
Clarifies that for individuals receiving advance payments
of the premium tax credit who are terminated for non-payment, the QHP
issuer must pay all claims for the first month of the grace period. The
issuer may pend claims during the second and third months, but must
notify providers. Finally, the issuer must return to Treasury any
advance payment of the premium tax credit for the second and third
months at the conclusion of the grace period and effectuate termination
of coverage at the end of the first month of the grace period.
Changes to Sec. 156.280
Codifies the pre-regulatory model guidelines on issuer
segregation plans.
Changes to Sec. 156.285
Clarifies that QHP issuers must provide newly qualified
employees with a specified enrollment period.
Clarifies that QHP issuers participating in the SHOP may
not set minimum participation rules for offering health coverage in
connection with a QHP.
Changes to Sec. 156.295
Modifies definition of ``bona fide service fees.''
Changes to Sec. 157.205
Removes requirement for SHOP to continue coverage if
employer fails to take action during election period.
V. Collection of Information Requirements
Paperwork Reduction Act
As noted above, this final rule incorporates provisions originally
published as two proposed rules, the July 15, 2011 rule titled
Establishment of Exchanges and Qualified Health Plans, and the August
17, 2011 rule titled Exchange Functions in the Individual Market:
Eligibility Determinations and Exchange Standards for Employers. These
proposed rules are referred to collectively as the Exchange
establishment and eligibility proposed rules. In the Exchange
establishment proposed rule published on July 15, 2011, we sought
comment on certain information collection requirements associated with
that proposed rule. We received one comment that stated a concern
regarding the adequacy of the burden estimates stated in the Collection
of Information Requirements section. We considered the commenter's
concern and plan to issue more detail regarding the collection of
information requirements in this rule.
In the Exchange establishment proposed rule, we explained that we
would seek comments on the standards associated with Sec. 155.105,
which are finalized in this rule as the standards for the Exchange
Blueprint. On November 10, 2011, we issued a 60-day Federal Register
Notice seeking comments on a template for the Exchange Blueprint. For
more information, please see page 70418 of Vol. 76, No. 218 of the
Federal Register.
In the Exchange eligibility proposed rule published on August 17,
2011, we did not seek comment on the associated
[[Page 18439]]
information collection requirements. In accordance with the Paperwork
Reduction Act (PRA), we will issue a Federal Register Notice in the
coming weeks to seek public comments on these provisions.
In addition, this final rule includes certain regulatory provisions
that differ from those included in the Exchange establishment proposed
rule. Some of those provisions involve changes from the information
collection requirements described in the Exchange establishment
proposed rule. These changes include the following:
Exchange up-to-date Internet Web site (Sec. 155.205);
Standard for Exchanges to maintain records of enrollment
(Sec. 155.400);
Standard for Exchanges to submit eligibility and
enrollment information to QHP issuers and HHS promptly and without
undue delay and reconcile enrollment information with QHP issuers and
HHS on at least a monthly basis (Sec. 155.400);
Notice of eligibility to applicant (Sec. 155.405);
Notice of annual open enrollment period to applicant
(Sec. 155.410);
Standard for Exchanges to maintain records of coverage
terminations (Sec. 155.430);
Notice to employers (Sec. 155.715);
Notice to individual of inability to substantiate employee
status (Sec. 155.715);
Notice of employer eligibility (Sec. 155.715);
Notice of employee eligibility (Sec. 155.715);
Notice of employer withdrawal from SHOP (Sec. 155.715);
Notice of effective date to employees (Sec. 155.720);
Notice of employee termination of coverage to employer
(Sec. 155.720);
Standard for the SHOP to maintain records of enrollment
(Sec. 155.720);
Standard for the SHOP to reconcile enrollment information
(Sec. 155.720);
Notice of annual employer election period (Sec. 155.725);
Notice to employee of open enrollment period (Sec.
155.725);
Standard for Exchanges to collect QHP issuer reports on
covered benefits, rates, and cost sharing requirements (Sec.
155.1020);
Notice to the QHP issuer, enrollees, HHS, and the State
insurance department of the decertification of a QHP (Sec. 155.1080);
Issuer reporting of benefit and rate information (Sec.
156.210);
Issuer reporting of rate increase justifications (Sec.
156.210);
Issuer reporting of transparency in coverage information
(Sec. 156.220);
Standard for QHP issuers to make available enrollee cost
sharing information (Sec. 156.220);
Notice to applicants and enrollees that includes the
provider directory (Sec. 156.230);
Notice of effective date of coverage to individuals (Sec.
156.260);
Standard for QHP issuers to collect enrollment information
and submit the enrollment information to the Exchange (Sec. 156.265);
Standard for QHP issuers to provide an enrollment package
to enrollee (Sec. 156.265);
Summary of cost and coverage document(Sec. 156.265);
Standard for QHP issuers to reconcile enrollment
information with the Exchange (Sec. 156.265);
Notice to the enrollee of the termination of coverage
(Sec. 156.270);
Notice to the enrollee of payment delinquency (Sec.
156.270);
Standard for QHP issuers to maintain records of coverage
terminations (Sec. 156.270);
Standard for QHP issuers to provide enrollment information
package to SHOP enrollees (Sec. 156.285);
Summary of cost and coverage document for employees and
employers (Sec. 156.285);
Standard for QHP issuers to reconcile enrollment
information with the SHOP (Sec. 156.285);
Notice to SHOP enrollee of the termination of coverage
(Sec. 156.285);
Notice of QHP issuer non-renewal of certification to
Exchange (Sec. 156.290);
Notice of QHP issuer non-renewal of certification to
enrollees (Sec. 156.290); and
Standard for QHP issuers to submit prescription drug
distribution and cost reporting (Sec. 156.295);
This final rule also includes some information collection
requirements for which we did not seek comment in the Exchange
establishment proposed rule. In accordance with the Paperwork Reduction
Act (PRA), we will issue a Federal Register Notice in the coming weeks
to seek public comments on these provisions.
Finally, this final rule describes some information collections for
which CMS plans to seek approval at a later date. For these information
collections, CMS will issue future Federal Register notices to seek
comments on those information collections, as required by the PRA. This
includes, among other collections:
Navigator standards (Sec. 155.210);
Single streamlined application to determine eligibility
and collect information for enrollment (Sec. 155.405);
SHOP single employer application (Sec. 155.715);
SHOP single employee application (Sec. 155.715);
Alternative employer application (Sec. 155.730);
Collection of rates, covered benefits, and cost sharing
information (Sec. 155.200);
Collection of transparency of coverage information (Sec.
155.1040);
Evaluation of service area (Sec. 155.1055);
Standards for the certification of stand-alone dental
plans (Sec. 155.1065);
Submission of rates, covered benefits, and cost sharing
information (Sec. 156.210); and
Submission of transparency of coverage information (Sec.
156.220).
VI. Summary of Regulatory Impact Analysis
The summary analysis of benefits and costs included in this rule is
drawn from the detailed Regulatory Impact Analysis. That impact
analysis evaluates the impacts of this rule and a second rule,
``Patient Protection and Affordable Care Act; Standards Related to
Reinsurance, Risk Corridors and Risk Adjustment.'' The second final
rule will be published separately. The following summary focuses on the
benefits and costs of this final rule.
A. Introduction
HHS has examined the impacts of this final rule under Executive
Orders 12866 and 13563, the Regulatory Flexibility Act (5 U.S.C. 601-
612), the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and the
Executive Order 13132 on Federalism. Executive Orders 13563 and 12866
direct agencies to assess all costs and benefits (both quantitative and
qualitative) of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). Executive Order 13563
emphasizes the importance of quantifying both costs and benefits, of
reducing costs, of harmonizing rules, and of promoting flexibility.
This rule has been designated an ``economically'' significant rule,
under section 3(f)(1) of Executive Order 12866. Accordingly, the rule
has been reviewed by the Office of Management and Budget.
The Regulatory Flexibility Act requires agencies to analyze
regulatory options that would minimize any significant impact of a rule
on small entities. Using the Small Business Administration (SBA)
definitions of small entities for issuers, agents and brokers, and
employers, HHS concludes
[[Page 18440]]
that a significant number of firms affected by this final rule are not
small businesses.
Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires
that agencies prepare a written statement, which includes an assessment
of anticipated costs and benefits, before promulgating ``any rule that
includes any Federal mandate that may result in the expenditure by
State, local, and tribal governments, in the aggregate, or by the
private sector, of $100,000,000 or more (adjusted annually for
inflation) in any one year.'' The current threshold after adjustment
for inflation is approximately $136 million, using the most current
(2011) Implicit Price Deflator for the Gross Domestic Product. HHS does
not expect this final rule to result in one-year expenditures that
would meet or exceed this amount.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a final rule that imposes
substantial direct costs on State and local governments, preempts State
law, or otherwise has Federalism implications. Specifically, an agency
must act in strict accordance with the governing law, consult with
State officials, and address their concerns.
B. Need for This Regulation
This final rule implements standards related to the Establishment
of Exchanges and Qualified Health Plans and standards for Qualified
Employers consistent with the Affordable Care Act. The Exchanges will
provide competitive marketplaces for individuals and small employers to
directly compare available private health insurance options on the
basis of price, quality, and other factors. The Exchanges, which will
become operational by January 1, 2014, will help enhance competition in
the health insurance market, improve choice of affordable health
insurance, and give small business the same purchasing power as large
businesses.
C. Summary of Costs and Benefits of the Regulation
This summary focuses on the benefits and costs of the requirements
in this Exchange final rule that combines the policies in the Exchange
establishment proposed rule and the Exchange eligibility proposed rule.
Benefits in Response to the Regulation
The Exchanges and their associated policies, according to CBO's
letter to Evan Bayh from November 30, 2009, reduce premiums for the
same benefits compared to prior law. CBO estimated that, in 2016,
people purchasing non-group coverage through the Exchanges would pay 7
to 10 percent less due to the healthier risk pool that results from the
coverage expansion. An additional 7 to 10 percent in savings would
result from gains in economies of scale in purchasing insurance and
lower administrative costs from elimination of underwriting, decreased
marketing costs, and the Exchanges' simpler system for finding and
enrolling individuals in health insurance plans.\17\
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\17\ Congressional Budget Office, ``Letter to the Honorable Evan
Bayh: An Analysis of Health Insurance Premiums Under the Patient
Protection and Affordable Care Act '' (Washington, 2009).
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CBO also estimates that premiums for small businesses purchasing
through the Exchanges would be up to 2 percent lower than they would be
without the Affordable Care Act, for comparable reasons. CBO estimated
that the administrative costs to health plans (described in greater
detail below) would be more than offset by savings resulting from lower
overhead due to new policies to limit benefit variation, and end
underwriting. Premium savings to individuals and small businesses allow
for alternative uses of income and resources, such as increasing
retirement savings for families or investing in new jobs for small
businesses.
Simplified eligibility processes will increase take-up of health
insurance leading to improved health. In a recent study, compared to
the uninsured group, the insured received more hospital care, more
outpatient care, had lower medical debt, better self-reported health,
and other health related benefits. The evaluation concluded that for
low-income uninsured adults, coverage has the following benefits: (1)
Significantly higher utilization of preventive care (mammograms,
cholesterol monitoring, blood tests for high blood sugar related to
diabetes, etc.); (2) a significant increase in the probability of
having a regular office or clinic for primary care; and, (3)
significantly better self-reported health. In addition, the use of
electronic records among State and Federal agencies with information to
verify eligibility will minimize the transaction costs associated with
purchasing health insurance improving market efficiency and minimizing
time cost for enrollees on enrollment.
Costs in Response to the Regulation
Meeting the requirements of this rule will have costs affecting
Exchanges and issuers of qualified health plans (QHPs). The
administrative costs of operating an Exchange will almost certainly
vary by the number of enrollees in the Exchange due to economies of
scale, variation in the scope of the Exchange's activities, and
variation in average premium in the Exchange service areas. However, we
believe major cost components for Exchanges will include: IT
infrastructure, Navigators, notifications, enrollment standards,
application process, SHOP, certification of QHPs, and quality
reporting. The major costs on issuers of QHPs will include:
accreditation, network adequacy standards, and quality improvement
strategy reporting. CBO estimates that the administrative costs to QHP
issuers would be more than offset by savings resulting from lower
overhead due to new policies to limit benefit variation, prohibit
``riders,'' and end under-writing.
To support the new eligibility structure, States are expected to
build new or modify existing information technology systems. How each
State constructs and assembles the components necessary to support its
Exchange and Medicaid infrastructure will vary and depend on the level
of maturity of current systems, current governance and business models,
size, and other factors. Administrative costs to support the vision for
a streamlined and coordinated eligibility and enrollment process will
also vary for each State depending on the specific approaches taken
regarding the integration between programs and its decision to build a
new system or use existing systems; while the Affordable Care Act
requires a high level of integration, States have the option to go
beyond the requirements of the Act.
We also believe that overall administrative costs may increase in
the short term as States build information technology systems; however,
in the long-term States will see savings through the use of more
efficient systems. As noted in the preamble, we believe the approach we
are taking to supporting the verification of applicant information with
SSA, IRS, and DHS reduces administrative complexity and associated
costs. Administrative costs to States incurred in the development of
information technology infrastructure to support the Exchange are
funded wholly through State Exchange Planning and Establishment Grants.
Costs for information technology infrastructure that will also support
Medicaid must be allocated to Medicaid, but are eligible for a time-
limited 90 percent Federal matching rate to assist in development.
Methods of Analysis
This impact analysis references both estimates from the
Congressional Budget Office (CBO), as well as Center for
[[Page 18441]]
Medicare & Medicaid Services (CMS) estimates from the FY 2013
President's Budget. The CBO estimate remains the most comprehensive
accounting of all the interacting provisions pertaining to the
Affordable Care Act, and contains cost estimates of some provisions
that have not been independently estimated by CMS. Based on our review,
we expect that the requirements in these final rules will not
significantly alter CBO's estimates of the budget impact of Exchanges
or enrollment. The requirements are well within the parameters used in
the modeling of the Affordable Care Act. Our review and analysis of the
requirements indicate that the impacts are within the model's margin of
error. In the regulatory impact analysis that accompanied the proposed
Exchange establishment rule, we displayed CBO estimates of Exchange
grant outlays. The estimates in this analysis reflect the most up-to-
date estimates from the FY 2013 President's Budget for State Planning
and Establishment Grants.
Table 1 includes the estimates of grants to States for Exchange
start up from 2012 to 2016. It does not include costs related to
reduced Federal revenues from refundable premium tax credits, which are
administered by the Department of the Treasury subject to IRS
rulemaking, the Medicaid effects, which are subject to separate
rulemaking, or the policies whose offsets led CBO to estimate that the
Affordable Care Act would reduce the Federal budget deficit by over
$100 billion over the next 10 years. As this is a summary of the final
impact analysis, for further information on the expected benefits and
costs of this rule, please see the final regulatory impact analysis.
Table 1--Estimated Outlays for the Affordable Insurance Exchanges FY 2012-FY2016
[In billions of dollars]
----------------------------------------------------------------------------------------------------------------
Year 2012 2013 2014 2015 2016 2012-2016
----------------------------------------------------------------------------------------------------------------
Grant Authority for Exchange Start up \a\.......... 0.9 1.1 0.8 0.4 0.1 3.4
----------------------------------------------------------------------------------------------------------------
\a\ FY 2013 President's Budget, Analytical Perspectives, Table 32-1.
Regulatory Options Considered
In addition to a baseline, HHS has identified three regulatory
options for this final rule as required by Executive Order 12866 for
Exchange establishment and eligibility.
(1) Uniform Standard for Operations of an Exchange. Under this
alternative HHS would require a single standard for State operations of
Exchanges. The regulation offers States the choice of whether to
establish an Exchange, how to structure governance of the Exchange,
whether to join with other States to form a regional Exchange, and how
much education and outreach to engage in, among other factors. This
alternative model would restrict State flexibility, requiring a more
uniform standard that States must enact in order to achieve approval of
an Exchange.
(2) Uniform Standard for Health Insurance Coverage. Under this
alternative, there would be a single uniform standard for certifying
QHPs. QHPs would need to meet a single standard in terms of benefit
packages, network adequacy, premiums, etc. HHS would set these
standards in advance of the certification process and QHPs would either
meet those standards and thereby be certified or would fail to meet
those standards and therefore would not be available to enrollees.
(3) Require a Paper-Driven Process for Conducting Eligibility
Determinations. In this final rule, to verify applicant information
used to support an eligibility determination, we generally require the
Exchange first use electronic data, where available, prior to
requesting paper documentation. Under this rule, individuals will be
asked to provide only the minimum amount of information necessary to
complete an eligibility determination, and will only be required to
submit paper if electronic data cannot be used to complete the
verification process. Under this alternative, the Exchange would
require individuals to submit paper documentation to verify information
necessary for an eligibility determination. This would not only
increase the amount of burden placed on individuals to identify and
collect this information, which may not be readily available to the
applicant, but would also necessitate additional time and resources for
Exchanges to accept and verify the paper documentation needed for an
eligibility determination.
Summary of Costs for Each Option
HHS notes that Option 1, which promotes uniformity, could produce a
benefit of reduced Federal oversight cost; however this option would
reduce innovation and therefore limit diffusion of successful policies
and furthermore interfere with Exchange functions and needs. HHS also
notes that while Option 2 could produce administrative burdens on
Exchanges, this approach could reduce Exchanges' and QHP issuers'
ability to innovate. These costs and benefits are discussed more fully
in the detailed Regulatory Impact Analysis.
The paper-driven process in option 3 would ultimately increase the
amount of time it would take for an individual to receive health
coverage, would reduce the number of States likely to operate an
Exchange due to increased administrative costs, and would dissuade
individuals from seeking coverage through the Exchange. We believe
using technology to minimize burden on individuals and States will help
increase access to coverage by streamlining the eligibility process,
and will reduce administrative burden on Exchanges, while increasing
accuracy by relying on trusted data for eligibility.
VIII. Accounting Statement
[[Page 18442]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimates Units
--------------------------------------------------------------------------------------------------------------------
Category Discount Period
Primary estimate Low estimate High estimate Year dollar rate covered
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized Monetized ($millions/ Not Estimated......... $.................... $.................... 2011............... 7% 2012-2016
year).
Not Estimated......... $.................... $.................... 2011............... 3% 2012-2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
Qualitative........................ The Exchanges, combined with other actions being taken to implement the Affordable Care Act, will improve access to
health insurance, with numerous positive effects, including earlier treatment and improved morbidity, fewer
bankruptcies and decreased use of uncompensated care. The Exchange will also serve as a distribution channel for
insurance reducing administrative costs as a part of premiums and providing comparable information on health plans
to allow for a more efficient shopping experience.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized Monetized ($millions/ $690.55............... Not Estimated........ Not Estimated........ 2011............... 7% 2012-2016
year).
$673.50............... Not Estimated........ Not Estimated........ 2011............... 3% 2012-2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
Qualitative........................ These costs include grant outlays to States to establish Exchanges.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Transfers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Federal Annualized Monetized 0..................... $.................... $.................... 2011............... 7% 2012-2016
($millions/year).
0..................... $0.00................ $0.00................ 2011............... 3% 2012-2016
From/To............................ From: To:
Other Annualized Monetized 0.0................... 0.0.................. 0.0..................
($millions/year).
0.0................... 0.0.................. 0.0..................
From/To............................ From: To:
--------------------------------------------------------------------------------------------------------------------------------------------------------
VII. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA)
requires agencies to prepare an regulatory flexibility analysis to
describe the impact of the final rule on small entities, unless the
head of the agency can certify that the rule will not have a
significant economic impact on a substantial number of small entities.
The Act generally defines a ``small entity'' as (1) A proprietary firm
meeting the size standards of the Small Business Administration (SBA),
(2) a not-for-profit organization that is not dominant in its field, or
(3) a small government jurisdiction with a population of less than
50,000. States and individuals are not included in the definition of
``small entity.'' HHS uses as its measure of significant economic
impact on a substantial number of small entities a change in revenues
of more than 3 to 5 percent.
As discussed above, this final rule is necessary to implement
standards related to the Establishment of Exchanges and Qualified
Health Plans as authorized by the Affordable Care Act. For purpose of
the Regulatory Flexibility Analysis, we expect the following types of
entities to be affected by this final rule: (1) QHP issuers; (2) agents
and brokers; (3) employers. We believe that health insurers and agents
and brokers would be classified under the North American Industry
Classification System (NAICS) Codes 524114 (Direct Health and Medical
Insurance Carriers) and 524210 (Insurance Agencies and Brokers).
According to SBA size standards, entities with average annual receipts
of $7 million or less would be considered small entities for both of
these NAICS codes. Health issuers could possibly be classified in
621491 (HMO Medical Centers) and, if this is the case, the SBA size
standard would be $10 million or less.
As discussed in the Web Portal interim final rule (75 FR 24481),
HHS examined the health insurance industry in depth in the Regulatory
Impact Analysis we prepared for the proposed rule on establishment of
the Medicare Advantage program (69 FR 46866, August 3, 2004). In that
analysis we determined that there were few, if any, insurance firms
underwriting comprehensive health insurance policies (in contrast, for
example, to travel insurance policies or dental discount policies) that
fell below the size thresholds for ``small'' business established by
the SBA (currently $7 million in annual receipts for health insurers,
based on North American Industry Classification System Code
524114).\18\
---------------------------------------------------------------------------
\18\ `Table of Size Standards Matched To North American Industry
Classification System Codes,'' effective November 5, 2010, U.S.
Small Business Administration, available at http://www.sba.gov.
---------------------------------------------------------------------------
Additionally, as discussed in the Medical Loss Ratio interim final
rule (75 FR 74918), the Department used a data set created from 2009
National Association of Insurance Commissioners (NAIC) Health and Life
Blank annual financial statement data to develop an updated estimate of
the number of small entities that offer comprehensive major medical
coverage in the individual and group markets. For purposes of that
analysis, the Department used total Accident and Health (A&H) earned
premiums as a proxy for annual receipts. The Department estimated that
there were 28 small entities with less than $7 million in accident and
health earned premiums offering individual or group comprehensive major
medical
[[Page 18443]]
coverage; however, this estimate may overstate the actual number of
small health insurance issuers offering such coverage, since it does
not include receipts from these companies' other lines of business.
This rule finalizes Exchange standards related to offering the
QHPs. These standards and the associated certification process will
impose costs on issuers, but these costs will vary depending on a
number of factors, including the operating model chosen by the
Exchange, their current accreditation status, and the variation between
these standards and current practice. Some QHP issuers will be more
prepared to meet the standards than others and will incur fewer costs.
For example, if data reporting functions required for certification
already exist at the QHP issuer, there would be no additional cost.
Exchanges also have the flexibility in some cases to set requirements.
For example, the rule provides discretion for Exchanges in setting
network adequacy standards for participating health insurance issuers.
The cost to the issuer will depend on whether the Exchange determines
that compliance with relevant State law and licensure requirements is
sufficient for a QHP issuer to participate in the Exchange or whether
they decide to set additional standards in accordance with current
provider market characteristics and consumer needs.
The cost of participating in an Exchange is an investment for QHP
issuers, with benefits expected to accrue to QHP issuers. The Exchange
will function as an important distribution channel for QHPs. QHP
issuers currently fund their own sales and marketing efforts. As a
centralized outlet to attract and enroll consumers, the Exchanges will
supplement and reduce incremental health plan sales and marketing costs
with their consumer assistance, education and outreach functions.
We anticipate that the agent and broker industry, which is
comprised of large brokerage organizations, small groups, and
independent agents, will play a critical role in enrolling qualified
individuals in QHPs. We are codifying section 1312(e) of the Affordable
Care Act, which gives States the option to permit agents or brokers to
assist individuals in enrolling in QHPs through the Exchange. If a
State chooses to allow agents and brokers to assist individuals in
enrolling in QHPs through the Exchange, we establish standards that
would apply for such enrollment. Agents and brokers must meet these
standards and any conditions imposed by the State and, as a result,
could incur costs. In addition, agents and brokers who become
Navigators will also agree to comply with associated requirements and
are likely to incur some costs. Because the States and the Exchanges
will make these determinations, we cannot provide an estimate of the
potential number of small entities that will be affected or the costs
associated with these decisions.
This final rule establishes requirements on employers that choose
to participate in a SHOP. As discussed above, the SHOP is limited by
statute to employers with at least one but not more than 100 employees.
For this reason, we expect that many employers would meet the SBA
Standard for Small entities. We do not believe that the regulation
imposes requirements on employers offering health insurance through
SHOP that are more restrictive than the current requirements on
employers offering employer sponsored health insurance. For this
reason, we also believe the processes that we have established
constitute the minimum amount of requirements necessary to implement
statutory mandates and accomplish our policy goals, and that no
appropriate regulatory alternatives could be developed to lessen the
compliance burden. We also expect that for some employers, risk pooling
and economies of scale will reduce the administrative cost of offering
coverage through the SHOP and that they will, therefore, benefit from
participation.
VIII. Unfunded Mandates
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits and take
certain other actions before issuing a final rule that includes any
Federal mandate that may result in expenditures in any one year by a
State, local, or tribal governments, in the aggregate, or by the
private sector, of $100 million in 1995 dollars, updated annually for
inflation. In 2011, that threshold is approximately $136 million.
Because States are not required to set up an Exchange, and because
grants are available for funding of the establishment of an Exchange by
a State, we anticipate that this final rule would not impose costs
above that $136 million UMRA threshold on State, local, or tribal
governments.
IX. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a final rule that imposes
substantial direct costs on State and local governments, pre-empts
State law, or otherwise has Federalism implications. Because States
have flexibility in designing their Exchange, State decisions will
ultimately influence both administrative expenses and overall premiums.
States are not required to establish an approved Exchange. For States
electing to create an Exchange, much of the initial costs to the
creation of Exchanges will be funded by Exchange Planning and
Establishment Grants. After this time, Exchanges will be financially
self-sustaining with revenue sources at the discretion of the State.
Current State Exchanges charge user fees to issuers.
In the Department's view, while this final rule does not impose
substantial direct requirement costs on State and local governments,
this regulation has Federalism implications due to direct effects on
the distribution of power and responsibilities among the State and
Federal governments relating to determining standards relating to
health insurance coverage (that is, for QHPs) that is offered in the
individual and small group markets. Each State electing to establish an
Exchange must adopt the Federal standards contained in the Affordable
Care Act and in this final rule, or have in effect a State law or
regulation that implements these Federal standards. However, the
Department anticipates that the Federalism implications (if any) are
substantially mitigated because under the statute, States have choices
regarding the structure and governance of their Exchanges.
Additionally, the Affordable Care Act does not require States to
establish an Exchange; if a State elects not to establish an Exchange
or the State's Exchange is not approved, HHS, either directly or
through agreement with a non-profit entity, must establish and operate
an Exchange in that State.
In compliance with the requirement of Executive Order 13132 that
agencies examine closely any policies that may have Federalism
implications or limit the policy making discretion of the States, the
Department has engaged in efforts to consult with and work
cooperatively with affected States, including participating in
conference calls with and attending conferences of the National
Association of Insurance Commissioners, and consulting with State
insurance officials on an individual basis.
Throughout the process of developing this rule, the Department has
attempted to balance the States' interests in regulating health
insurance issuers, and Congress' intent to provide access to Affordable
Insurance Exchanges for consumers in every State. By doing so, it is
the Department's view that we have
[[Page 18444]]
complied with the requirements of Executive Order 13132.
Pursuant to the requirements set forth in section 8(a) of Executive
Order 13132, and by the signatures affixed to this regulation, the
Department certifies that CMS has complied with the requirements of
Executive Order 13132 for the attached regulation in a meaningful and
timely manner.
List of Subjects
45 CFR Part 155
Administrative practice and procedure, Advertising, Brokers,
Conflict of interest, Consumer protection, Grant programs-health,
Grants administration, Health care, Health insurance, Health
maintenance organization (HMO), Health records, Hospitals, Indians,
Individuals with disabilities, Loan programs-health, Organization and
functions (Government agencies), Medicaid, Public assistance programs,
Reporting and recordkeeping requirements, Safety, State and local
governments, Technical assistance, Women, and Youth.
45 CFR Part 156
Administrative practice and procedure, Advertising, Advisory
committees, Brokers, Conflict of interest, Consumer protection, Grant
programs-health, Grants administration, Health care, Health insurance,
Health maintenance organization (HMO), Health records, Hospitals,
Indians, Individuals with disabilities, Loan programs-health,
Organization and functions (Government agencies), Medicaid, Public
assistance programs, Reporting and recordkeeping requirements, Safety,
State and local governments, Sunshine Act, Technical Assistance, Women,
and Youth.
45 CFR Part 157
Employee benefit plans, Health insurance, Health maintenance
organization (HMO), Health records, Hospitals, Indians, Individuals
with disabilities, Organization and functions (Government agencies),
Medicaid, Public assistance programs, Reporting and recordkeeping
requirements, Safety, State and local governments, Sunshine Act,
Technical Assistance, Women, and Youth.
For the reasons set forth in the preamble, the Department of Health
and Human Services amends 45 CFR subtitle A, subchapter B, as set forth
below:
Subchapter B--Requirements Relating to Health Care Access
PART 155--EXCHANGE ESTABLISHMENT STANDARDS AND OTHER RELATED
STANDARDS UNDER THE AFFORDABLE CARE ACT
0
1. The authority citation for part 155 is revised to read as follows:
Authority: Title I of the Affordable Care Act, sections 1301,
1302, 1303, 1304, 1311, 1312, 1313, 1321, 1322, 1331, 1334, 1402,
1411, 1412, 1413.
0
2. Revise the part 155 heading to read as set forth above.
0
3. Add subparts A through E to read as follows:
Subpart A--General Provisions
Sec.
155.10 Basis and scope.
155.20 Definitions.
Subpart B--General Standards Related to the Establishment of an
Exchange
155.100 Establishment of a State Exchange.
155.105 Approval of a State Exchange.
155.106 Election to operate an Exchange after 2014.
155.110 Entities eligible to carry out Exchange functions.
155.120 Non-interference with Federal law and non-discrimination
standards.
155.130 Stakeholder consultation.
155.140 Establishment of a regional Exchange or subsidiary Exchange.
155.150 Transition process for existing State health insurance
exchanges.
155.160 Financial support for continued operations.
Subpart C--General Functions of an Exchange
155.200 Functions of an Exchange.
155.205 Consumer assistance tools and programs of an Exchange.
155.210 Navigator program standards.
155.220 Ability of States to permit agents and brokers to assist
qualified individuals, qualified employers, or qualified employees
enrolling in QHPs.
155.230 General standards for Exchange notices.
155.240 Payment of premiums.
155.260 Privacy and security of personally identifiable information.
155.270 Use of standards and protocols for electronic transactions.
Subpart D--Exchange Functions in the Individual Market: Eligibility
Determinations for Exchange Participation and Insurance Affordability
Programs
155.300 Definitions and general standards for eligibility
determinations.
155.302 Options for conducting eligibility determinations.
155.305 Eligibility standards.
155.310 Eligibility process.
155.315 Verification process related to eligibility for enrollment
in a QHP through the Exchange.
155.320 Verification process related to eligibility for insurance
affordability programs.
155.330 Eligibility redetermination during the benefit year.
155.335 Annual eligibility redetermination.
155.340 Administration of advance payments of the premium tax credit
and cost-sharing reductions.
155.345 Coordination with Medicaid, CHIP, the Basic Health Program,
and the Pre-existing Condition Insurance Plan.
155.350 Special eligibility standards and process for Indians.
155.355 Right to appeal.
Subpart E--Exchange Functions in the Individual Market: Enrollment in
Qualified Health Plans
155.400 Enrollment of qualified individuals into QHPs.
155.405 Single streamlined application.
155.410 Initial and annual open enrollment periods.
155.420 Special enrollment periods.
155.430 Termination of coverage.
Subpart A--General Provisions.
Sec. 155.10 Basis and scope.
(a) Basis. This part is based on the following sections of title I
of the Affordable Care Act:
(1) 1301. Qualified health plan defined
(2) 1302. Essential health benefits requirements
(3) 1303. Special rules
(4) 1304. Related definitions
(5) 1311. Affordable choices of health benefit plans.
(6) 1312. Consumer choice
(7) 1313. Financial integrity.
(8) 1321. State flexibility in operation and enforcement of
Exchanges and related requirements.
(9) 1322. Federal program to assist establishment and operation of
nonprofit, member-run health insurance issuers.
(10) 1331. State flexibility to establish Basic Health Programs for
low-income individuals not eligible for Medicaid.
(11) 1334. Multi-State plans.
(12) 1402. Reduced cost-sharing for individuals enrolling in QHPs.
(13) 1411. Procedures for determining eligibility for Exchange
participation, advance premium tax credits and reduced cost sharing,
and individual responsibility exemptions.
(14) 1412. Advance determination and payment of premium tax credits
and cost-sharing reductions.
(15) 1413. Streamlining of procedures for enrollment through an
exchange and State Medicaid, CHIP, and health subsidy programs.
(b) Scope. This part establishes minimum standards for the
establishment of an Exchange, minimum Exchange functions, eligibility
determinations, enrollment periods, minimum SHOP functions,
[[Page 18445]]
certification of QHPs, and health plan quality improvement.
Sec. 155.20 Definitions.
The following definitions apply to this part:
Advance payments of the premium tax credit means payment of the tax
credits specified in section 36B of the Code (as added by section 1401
of the Affordable Care Act) which are provided on an advance basis to
an eligible individual enrolled in a QHP through an Exchange in
accordance with sections 1402 and 1412 of the Affordable Care Act.
Affordable Care Act means the Patient Protection and Affordable
Care Act of 2010 (Pub. L. 111-148), as amended by the Health Care and
Education Reconciliation Act of 2010 (Pub. L. 111-152).
Agent or broker means a person or entity licensed by the State as
an agent, broker or insurance producer.
Annual open enrollment period means the period each year during
which a qualified individual may enroll or change coverage in a QHP
through the Exchange.
Applicant means:
(1) An individual who is seeking eligibility for him or herself
through an application submitted to the Exchange or transmitted to the
Exchange by an agency administering an insurance affordability program
for at least one of the following:
(i) Enrollment in a QHP through the Exchange; or
(ii) Medicaid, CHIP, and the BHP, if applicable.
(2) An employer or employee seeking eligibility for enrollment in a
QHP through the SHOP, where applicable.
Application filer means an applicant, an adult who is in the
applicant's household, as defined in 42 CFR 435.603(f), or family, as
defined in section 36B(d)(1) of the Code, an authorized representative,
or if the applicant is a minor or incapacitated, someone acting
responsibly for an applicant.
Benefit year means a calendar year for which a health plan provides
coverage for health benefits.
Code means the Internal Revenue Code of 1986.
Cost sharing means any expenditure required by or on behalf of an
enrollee with respect to essential health benefits; such term includes
deductibles, coinsurance, copayments, or similar charges, but excludes
premiums, balance billing amounts for non-network providers, and
spending for non-covered services.
Cost-sharing reductions means reductions in cost sharing for an
eligible individual enrolled in a silver level plan in the Exchange or
for an individual who is an Indian enrolled in a QHP in the Exchange.
Educated health care consumer has the meaning given the term in
section 1304(e) of the Affordable Care Act.
Eligible employer-sponsored plan has the meaning given the term in
section 5000A(f)(2) of the Code.
Employee has the meaning given to the term in section 2791 of the
PHS Act.
Employer has the meaning given to the term in section 2791 of the
PHS Act, except that such term includes employers with one or more
employees. All persons treated as a single employer under subsection
(b), (c), (m), or (o) of section 414 of the Code are treated as one
employer.
Employer contributions means any financial contributions towards an
employer sponsored health plan, or other eligible employer-sponsored
benefit made by the employer including those made by salary reduction
agreement that is excluded from gross income.
Enrollee means a qualified individual or qualified employee
enrolled in a QHP.
Exchange means a governmental agency or non-profit entity that
meets the applicable standards of this part and makes QHPs available to
qualified individuals and qualified employers. Unless otherwise
identified, this term refers to State Exchanges, regional Exchanges,
subsidiary Exchanges, and a Federally-facilitated Exchange.
Exchange Blueprint means information submitted by a State, an
Exchange, or a regional Exchange that sets forth how an Exchange
established by a State or a regional Exchange meets the Exchange
approval standards established in Sec. 155.105(b) and demonstrates
operational readiness of an Exchange as described in Sec.
155.105(c)(2).
Exchange service area means the area in which the Exchange is
certified to operate, in accordance with the standards specified in
subpart B of this part.
Grandfathered health plan has the meaning given the term in Sec.
147.140.
Group health plan has the meaning given to the term in Sec.
144.103.
Health insurance issuer or issuer has the meaning given to the term
in Sec. 144.103.
Health insurance coverage has the meaning given to the term in
Sec. 144.103.
Health plan has the meaning given to the term in section 1301(b)(1)
of the Affordable Care Act.
Individual market has the meaning given the term in section
1304(a)(2) of the Affordable Care Act.
Initial open enrollment period means the period during which a
qualified individual may enroll in coverage through the Exchange for
coverage during the 2014 benefit year.
Large employer means, in connection with a group health plan with
respect to a calendar year and a plan year, an employer who employed an
average of at least 101 employees on business days during the preceding
calendar year and who employs at least 1 employee on the first day of
the plan year. In the case of plan years beginning before January 1,
2016, a State may elect to define large employer by substituting ``51
employees'' for ``101 employees.''
Lawfully present has the meaning given the term in Sec. 152.2.
Minimum essential coverage has the meaning given in section
5000A(f) of the Code.
Navigator means a private or public entity or individual that is
qualified, and licensed, if appropriate, to engage in the activities
and meet the standards described in Sec. 155.210.
Plan year means a consecutive 12 month period during which a health
plan provides coverage for health benefits. A plan year may be a
calendar year or otherwise.
Plain language has the meaning given to the term in section
1311(e)(3)(B) of the Affordable Care Act.
Qualified employee means an individual employed by a qualified
employer who has been offered health insurance coverage by such
qualified employer through the SHOP.
Qualified employer means a small employer that elects to make, at a
minimum, all full-time employees of such employer eligible for one or
more QHPs in the small group market offered through a SHOP. Beginning
in 2017, if a State allows large employers to purchase coverage through
the SHOP, the term ``qualified employer'' shall include a large
employer that elects to make all full-time employees of such employer
eligible for one or more QHPs in the large group market offered through
the SHOP.
Qualified health plan or QHP means a health plan that has in effect
a certification that it meets the standards described in subpart C of
part 156 issued or recognized by each Exchange through which such plan
is offered in accordance with the process described in subpart K of
part 155.
Qualified health plan issuer or QHP issuer means a health insurance
issuer that offers a QHP in accordance with a certification from an
Exchange.
[[Page 18446]]
Qualified individual means, with respect to an Exchange, an
individual who has been determined eligible to enroll through the
Exchange in a QHP in the individual market.
SHOP means a Small Business Health Options Program operated by an
Exchange through which a qualified employer can provide its employees
and their dependents with access to one or more QHPs.
Small employer means, in connection with a group health plan with
respect to a calendar year and a plan year, an employer who employed an
average of at least 1 but not more than 100 employees on business days
during the preceding calendar year and who employs at least 1 employee
on the first day of the plan year. In the case of plan years beginning
before January 1, 2016, a State may elect to define small employer by
substituting ``50 employees'' for ``100 employees.''
Small group market has the meaning given to the term in section
1304(a)(3) of the Affordable Care Act.
Special enrollment period means a period during which a qualified
individual or enrollee who experiences certain qualifying events may
enroll in, or change enrollment in, a QHP through the Exchange outside
of the initial and annual open enrollment periods.
State means each of the 50 States and the District of Columbia.
Subpart B--General Standards Related to the Establishment of an
Exchange
Sec. 155.100 Establishment of a State Exchange.
(a) General requirements. Each State may elect to establish an
Exchange that facilitates the purchase of health insurance coverage in
QHPs and provides for the establishment of a SHOP.
(b) Eligible Exchange entities. The Exchange must be a governmental
agency or non-profit entity established by a State, consistent with
Sec. 155.110.
Sec. 155.105 Approval of a State Exchange.
(a) State Exchange approval requirement. Each State Exchange must
be approved by HHS by no later than January 1, 2013 to offer QHPs on
January 1, 2014, and thereafter required in accordance with Sec.
155.106. HHS may consult with other Federal Government agencies in
determining whether to approve an Exchange.
(b) State Exchange approval standards. HHS will approve the
operation of an Exchange established by a State provided that it meets
the following standards:
(1) The Exchange is able to carry out the required functions of an
Exchange consistent with subparts C, D, E, H, and K of this part;
(2) The Exchange is capable of carrying out the information
reporting requirements in accordance with section 36B of the Code;
(3) The entire geographic area of the State is in the service area
of an Exchange, or multiple Exchanges consistent with Sec. 155.140(b).
(c) State Exchange approval process. In order to have its Exchange
approved, a State must:
(1) Elect to establish an Exchange by submitting, in a form and
manner specified by HHS, an Exchange Blueprint that sets forth how the
Exchange meets the standards outlined in paragraph (b) of this section;
and
(2) Demonstrate operational readiness to execute its Exchange
Blueprint through a readiness assessment conducted by HHS.
(d) State Exchange approval. Each Exchange must receive written
approval or conditional approval of its Exchange Blueprint and its
performance under the operational readiness assessment consistent with
paragraph (c) of this section in order to be considered an approved
Exchange.
(e) Significant changes to Exchange Blueprint. The State must
notify HHS in writing before making a significant change to its
Exchange Blueprint; no significant change to an Exchange Blueprint may
be effective until it is approved by HHS in writing or 60 days after
HHS receipt of a completed request. For good cause, HHS may extend the
review period by an additional 30 days to a total of 90 days. HHS may
deny a request for a significant change to an Exchange Blueprint within
the review period.
(f) HHS operation of an Exchange. If a State is not an electing
State under Sec. 155.100(a) or an electing State does not have an
approved or conditionally approved Exchange by January 1, 2013, HHS
must (directly or through agreement with a not-for-profit entity)
establish and operate such Exchange within the State. In the case of a
Federally-facilitated Exchange, the requirements in Sec. 155.130 and
subparts C, D, E, H, and K of this part will apply.
Sec. 155.106 Election to operate an Exchange after 2014.
(a) Election to operate an Exchange after 2014. A State electing to
seek approval of its Exchange later than January 1, 2013 must:
(1) Comply with the State Exchange approval requirements and
process set forth in Sec. 155.105;
(2) Have in effect an approved, or conditionally approved, Exchange
Blueprint and operational readiness assessment at least 12 months prior
to the Exchange's first effective date of coverage; and
(3) Develop a plan jointly with HHS to facilitate the transition
from a Federally-facilitated Exchange to a State Exchange.
(b) Transition process for State Exchanges that cease operations. A
State that ceases operations of its Exchange after January 1, 2014
must:
(1) Notify HHS that it will no longer operate an Exchange at least
12 months prior to ceasing operations; and
(2) Coordinate with HHS on a transition plan to be developed
jointly between HHS and the State.
Sec. 155.110 Entities eligible to carry out Exchange functions.
(a) Eligible contracting entities. The State may elect to authorize
an Exchange established by the State to enter into an agreement with an
eligible entity to carry out one or more responsibilities of the
Exchange. Eligible entities are:
(1) An entity:
(i) Incorporated under, and subject to the laws of, one or more
States;
(ii) That has demonstrated experience on a State or regional basis
in the individual and small group health insurance markets and in
benefits coverage; and
(iii) Is not a health insurance issuer or treated as a health
insurance issuer under subsection (a) or (b) of section 52 of the Code
of 1986 as a member of the same controlled group of corporations (or
under common control with) as a health insurance issuer; or
(2) The State Medicaid agency, or any other State agency that meets
the qualifications of paragraph (a)(1) of this section.
(b) Responsibility. To the extent that an Exchange establishes such
agreements, the Exchange remains responsible for ensuring that all
Federal requirements related to contracted functions are met.
(c) Governing board structure. If the Exchange is an independent
State agency or a non-profit entity established by the State, the State
must ensure that the Exchange has in place a clearly-defined governing
board that:
(1) Is administered under a formal, publicly-adopted operating
charter or by-laws;
(2) Holds regular public governing board meetings that are
announced in advance;
(3) Represents consumer interests by ensuring that overall
governing board membership:
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(i) Includes at least one voting member who is a consumer
representative;
(ii) Is not made up of a majority of voting representatives with a
conflict of interest, including representatives of health insurance
issuers or agents or brokers, or any other individual licensed to sell
health insurance; and
(4) Ensures that a majority of the voting members on its governing
board have relevant experience in health benefits administration,
health care finance, health plan purchasing, health care delivery
system administration, public health, or health policy issues related
to the small group and individual markets and the uninsured.
(d) Governance principles. (1) The Exchange must have in place and
make publicly available a set of guiding governance principles that
include ethics, conflict of interest standards, accountability and
transparency standards, and disclosure of financial interest.
(2) The Exchange must implement procedures for disclosure of
financial interests by members of the Exchange board or governance
structure.
(e) SHOP independent governance. (1) A State may elect to create an
independent governance and administrative structure for the SHOP,
consistent with this section, if the State ensures that the SHOP
coordinates and shares relevant information with the Exchange operating
in the same service area.
(2) If a State chooses to operate its Exchange and SHOP under a
single governance or administrative structure, it must ensure that the
Exchange has adequate resources to assist individuals and small
employers in the Exchange.
(f) HHS review. HHS may periodically review the accountability
structure and governance principles of a State Exchange.
Sec. 155.120 Non-interference with Federal law and non-discrimination
standards.
(a) Non-interference with Federal law. An Exchange must not
establish rules that conflict with or prevent the application of
regulations promulgated by HHS under subtitle D of title I of the
Affordable Care Act.
(b) Non-interference with State law. Nothing in parts 155, 156, or
157 of this subchapter shall be construed to preempt any State law that
does not prevent the application of the provisions of title I of the
Affordable Care Act.
(c) Non-discrimination. In carrying out the requirements of this
part, the State and the Exchange must:
(1) Comply with applicable non-discrimination statutes; and
(2) Not discriminate based on race, color, national origin,
disability, age, sex, gender identity or sexual orientation.
Sec. 155.130 Stakeholder consultation.
The Exchange must regularly consult on an ongoing basis with the
following stakeholders:
(a) Educated health care consumers who are enrollees in QHPs;
(b) Individuals and entities with experience in facilitating
enrollment in health coverage;
(c) Advocates for enrolling hard to reach populations, which
include individuals with mental health or substance abuse disorders;
(d) Small businesses and self-employed individuals;
(e) State Medicaid and CHIP agencies;
(f) Federally-recognized Tribes, as defined in the Federally
Recognized Indian Tribe List Act of 1994, 25 U.S.C. 479a, that are
located within such Exchange's geographic area;
(g) Public health experts;
(h) Health care providers;
(i) Large employers;
(j) Health insurance issuers; and
(k) Agents and brokers.
Sec. 155.140 Establishment of a regional Exchange or subsidiary
Exchange.
(a) Regional Exchange. A State may participate in a regional
Exchange if:
(1) The Exchange spans two or more States, regardless of whether
the States are contiguous; and
(2) The regional Exchange submits a single Exchange Blueprint and
is approved to operate consistent with Sec. 155.105(c).
(b) Subsidiary Exchange. A State may establish one or more
subsidiary Exchanges within the State if:
(1) Each such Exchange serves a geographically distinct area; and
(2) The area served by each subsidiary Exchange is at least as
large as a rating area described in section 2701(a) of the PHS Act.
(c) Exchange standards. Each regional or subsidiary Exchange must:
(1) Otherwise meet the requirements of an Exchange consistent with
this part; and
(2) Meet the following standards for SHOP:
(i) Perform the functions of a SHOP for its service area in
accordance with subpart H of this part; and
(ii) If a State elects to operate its individual market Exchange
and SHOP under two governance or administrative structures as described
in Sec. 155.110(e), the SHOP must encompass a geographic area that
matches the geographic area of the regional or subsidiary Exchange.
Sec. 155.150 Transition process for existing State health insurance
exchanges.
(a) Presumption. Unless an exchange is determined to be non-
compliant through the process in paragraph (b) of this section, HHS
will otherwise presume that an existing State exchange meets the
standards under this part if:
(1) The exchange was in operation prior to January 1, 2010; and
(2) The State has insured a percentage of its population not less
than the percentage of the population projected to be covered
nationally after the implementation of the Affordable Care Act,
according to the Congressional Budget Office estimates for projected
coverage in 2016 that were published on March 30, 2011.
(b) Process for determining non-compliance. Any State described in
paragraph (a) of this section must work with HHS to identify areas of
non-compliance with the standards under this part.
Sec. 155.160 Financial support for continued operations.
(a) Definition. For purposes of this section, participating issuers
has the meaning provided in Sec. 156.50.
(b) Funding for ongoing operations. A State must ensure that its
Exchange has sufficient funding in order to support its ongoing
operations beginning January 1, 2015, as follows:
(1) States may generate funding, such as through user fees on
participating issuers, for Exchange operations; and
(2) No Federal grants under section 1311 of the Affordable Care Act
will be awarded for State Exchange establishment after January 1, 2015.
Subpart C--General Functions of an Exchange
Sec. 155.200 Functions of an Exchange.
(a) General requirements. The Exchange must perform the minimum
functions described in this subpart and in subparts D, E, H, and K of
this part.
(b) Certificates of exemption. The Exchange must issue certificates
of exemption consistent with sections 1311(d)(4)(H) and 1411 of the
Affordable Care Act.
(c) Oversight and financial integrity. The Exchange must perform
required functions related to oversight and financial integrity
requirements in accordance with section 1313 of the Affordable Care
Act.
(d) Quality activities. The Exchange must evaluate quality
improvement strategies and oversee implementation of enrollee
satisfaction surveys,
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assessment and ratings of health care quality and outcomes, information
disclosures, and data reporting in accordance with sections 1311(c)(1),
1311(c)(3), and 1311(c)(4) of the Affordable Care Act.
(e) Clarification. In carrying out its responsibilities under this
subpart, an Exchange is not operating on behalf of a QHP.
Sec. 155.205 Consumer assistance tools and programs of an Exchange.
(a) Call center. The Exchange must provide for operation of a toll-
free call center that addresses the needs of consumers requesting
assistance and meets the requirements outlined in paragraphs (c)(1),
(c)(2)(i), and (c)(3) of this section.
(b) Internet Web site. The Exchange must maintain an up-to-date
Internet Web site that meets the requirements outlined in paragraph (c)
of this section and:
(1) Provides standardized comparative information on each available
QHP, including at a minimum:
(i) Premium and cost-sharing information;
(ii) The summary of benefits and coverage established under section
2715 of the PHS Act;
(iii) Identification of whether the QHP is a bronze, silver, gold,
or platinum level plan as defined by section 1302(d) of the Affordable
Care Act, or a catastrophic plan as defined by section 1302(e) of the
Affordable Care Act;
(iv) The results of the enrollee satisfaction survey, as described
in section 1311(c)(4) of the Affordable Care Act;
(v) Quality ratings assigned in accordance with section 1311(c)(3)
of the Affordable Care Act;
(vi) Medical loss ratio information as reported to HHS in
accordance with 45 CFR part 158;
(vii) Transparency of coverage measures reported to the Exchange
during certification in accordance with Sec. 155.1040; and
(viii) The provider directory made available to the Exchange in
accordance with Sec. 156.230.
(2) Publishes the following financial information:
(i) The average costs of licensing required by the Exchange;
(ii) Any regulatory fees required by the Exchange;
(iii) Any payments required by the Exchange in addition to fees
under paragraphs (b)(2)(i) and (ii) of this section;
(iv) Administrative costs of such Exchange; and
(v) Monies lost to waste, fraud, and abuse.
(3) Provides applicants with information about Navigators as
described in Sec. 155.210 and other consumer assistance services,
including the toll-free telephone number of the Exchange call center
required in paragraph (a) of this section.
(4) Allows for an eligibility determination to be made in
accordance with subpart D of this part.
(5) Allows a qualified individual to select a QHP in accordance
with subpart E of this part.
(6) Makes available by electronic means a calculator to facilitate
the comparison of available QHPs after the application of any advance
payments of the premium tax credit and any cost-sharing reductions.
(c) Accessibility. Information must be provided to applicants and
enrollees in plain language and in a manner that is accessible and
timely to--
(1) Individuals living with disabilities including accessible Web
sites and the provision of auxiliary aids and services at no cost to
the individual in accordance with the Americans with Disabilities Act
and section 504 of the Rehabilitation Act.
(2) Individuals who are limited English proficient through the
provision of language services at no cost to the individual, including
(i) Oral interpretation;
(ii) Written translations; and
(iii) Taglines in non-English languages indicating the availability
of language services.
(3) Inform individuals of the availability of the services
described in paragraphs (c)(1) and (2) of this section and how to
access such services.
(d) Consumer assistance. The Exchange must have a consumer
assistance function that meets the standards in paragraph (c) of this
section, including the Navigator program described in Sec. 155.210,
and must refer consumers to consumer assistance programs in the State
when available and appropriate.
(e) Outreach and education. The Exchange must conduct outreach and
education activities that meet the standards in paragraph (c) of this
section to educate consumers about the Exchange and insurance
affordability programs to encourage participation.
Sec. 155.210 Navigator program standards.
(a) General Requirements. The Exchange must establish a Navigator
program consistent with this section through which it awards grants to
eligible public or private entities or individuals described in
paragraph (c) of this section.
(b) Standards. The Exchange must develop and publicly disseminate--
(1) A set of standards, to be met by all entities and individuals
to be awarded Navigator grants, designed to prevent, minimize and
mitigate any conflicts of interest, financial or otherwise, that may
exist for an entity or individuals to be awarded a Navigator grant and
to ensure that all entities and individuals carrying out Navigator
functions have appropriate integrity; and
(2) A set of training standards, to be met by all entities and
individuals carrying out Navigator functions under the terms of a
Navigator grant, to ensure expertise in:
(i) The needs of underserved and vulnerable populations;
(ii) Eligibility and enrollment rules and procedures;
(iii) The range of QHP options and insurance affordability
programs; and,
(iv) The privacy and security standards applicable under Sec.
155.260.
(c) Entities and individuals eligible to be a Navigator. (1) To
receive a Navigator grant, an entity or individual must--
(i) Be capable of carrying out at least those duties described in
paragraph (e) of this section;
(ii) Demonstrate to the Exchange that the entity has existing
relationships, or could readily establish relationships, with employers
and employees, consumers (including uninsured and underinsured
consumers), or self-employed individuals likely to be eligible for
enrollment in a QHP;
(iii) Meet any licensing, certification or other standards
prescribed by the State or Exchange, if applicable;
(iv) Not have a conflict of interest during the term as Navigator;
and,
(v) Comply with the privacy and security standards adopted by the
Exchange as required in accordance with Sec. 155.260.
(2) The Exchange must include an entity as described in paragraph
(c)(2)(i) of this section and an entity from at least one of the other
following categories for receipt of a Navigator grant:
(i) Community and consumer-focused nonprofit groups;
(ii) Trade, industry, and professional associations;
(iii) Commercial fishing industry organizations, ranching and
farming organizations;
(iv) Chambers of commerce;
(v) Unions;
(vi) Resource partners of the Small Business Administration;
(vii) Licensed agents and brokers; and
(viii) Other public or private entities or individuals that meet
the requirements of this section. Other entities may include but are
not limited
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to Indian tribes, tribal organizations, urban Indian organizations, and
State or local human service agencies.
(d) Prohibition on Navigator conduct. The Exchange must ensure that
a Navigator must not--
(1) Be a health insurance issuer;
(2) Be a subsidiary of a health insurance issuer;
(3) Be an association that includes members of, or lobbies on
behalf of, the insurance industry; or,
(4) Receive any consideration directly or indirectly from any
health insurance issuer in connection with the enrollment of any
individuals or employees in a QHP or a non-QHP.
(e) Duties of a Navigator. An entity that serves as a Navigator
must carry out at least the following duties:
(1) Maintain expertise in eligibility, enrollment, and program
specifications and conduct public education activities to raise
awareness about the Exchange;
(2) Provide information and services in a fair, accurate and
impartial manner. Such information must acknowledge other health
programs;
(3) Facilitate selection of a QHP;
(4) Provide referrals to any applicable office of health insurance
consumer assistance or health insurance ombudsman established under
section 2793 of the PHS Act, or any other appropriate State agency or
agencies, for any enrollee with a grievance, complaint, or question
regarding their health plan, coverage, or a determination under such
plan or coverage; and
(5) Provide information in a manner that is culturally and
linguistically appropriate to the needs of the population being served
by the Exchange, including individuals with limited English
proficiency, and ensure accessibility and usability of Navigator tools
and functions for individuals with disabilities in accordance with the
Americans with Disabilities Act and section 504 of the Rehabilitation
Act.
(f) Funding for Navigator grants. Funding for Navigator grants may
not be from Federal funds received by the State to establish the
Exchange.
Sec. 155.220 Ability of States to permit agents and brokers to assist
qualified individuals, qualified employers, or qualified employees
enrolling in QHPs.
(a) General rule. A State may permit agents and brokers to--
(1) Enroll individuals, employers or employees in any QHP in the
individual or small group market as soon as the QHP is offered through
an Exchange in the State;
(2) Subject to paragraphs (c), (d), and (e) of this section, enroll
qualified individuals in a QHP in a manner that constitutes enrollment
through the Exchange; and
(3) Subject to paragraphs (d) and (e) of this section, assist
individuals in applying for advance payments of the premium tax credit
and cost-sharing reductions for QHPs.
(b) Web site disclosure. The Exchange may elect to provide
information regarding licensed agents and brokers on its Web site for
the convenience of consumers seeking insurance through that Exchange.
(c) Enrollment through the Exchange. A qualified individual may be
enrolled in a QHP through the Exchange with the assistance of an agent
or broker if--
(1) The agent or broker ensures the applicant's completion of an
eligibility verification and enrollment application through the
Exchange Web site as described in Sec. 155.405;
(2) The Exchange transmits enrollment information to the QHP issuer
as provided in Sec. 155.400(a) to allow the issuer to effectuate
enrollment of qualified individuals in the QHP.
(3) When an Internet Web site of the agent or broker is used to
complete the QHP selection, at a minimum the Internet Web site must:
(i) Meet all standards for disclosure and display of QHP
information contained in Sec. 155.205(b)(1) and (c);
(ii) Provide consumers the ability to view all QHPs offered through
the Exchange;
(iii) Not provide financial incentives, such as rebates or
giveaways;
(iv) Display all QHP data provided by the Exchange;
(v) Maintain audit trails and records in an electronic format for a
minimum of ten years; and
(vi) Provide consumers with the ability to withdraw from the
process and use the Exchange Web site described in Sec. 155.205(b)
instead at any time.
(d) Agreement. An agent or broker that enrolls qualified
individuals in a QHP in a manner that constitutes enrollment through
the Exchange or assists individuals in applying for advance payments of
the premium tax credit and cost-sharing reductions for QHPs must comply
with the terms of an agreement between the agent or broker and the
Exchange under which the agent or broker at least:
(1) Registers with the Exchange in advance of assisting qualified
individuals enrolling in QHPs through the Exchange;
(2) Receives training in the range of QHP options and insurance
affordability programs; and
(3) Complies with the Exchange's privacy and security standards
adopted consistent with Sec. 155.260.
(e) Compliance with State law. An agent or broker that enrolls
qualified individuals in a QHP in a manner that constitutes enrollment
through the Exchange or assists individuals in applying for advance
payments of the premium tax credit and cost-sharing reductions for QHPs
must comply with applicable State law related to agents and brokers,
including applicable State law related to confidentiality and conflicts
of interest.
Sec. 155.230 General standards for Exchange notices.
(a) General requirement. Any notice required to be sent by an
Exchange to applicants, qualified individuals, qualified employees,
qualified employers, and enrollees must be written and include:
(1) Contact information for available customer service resources;
(2) An explanation of appeal rights, if applicable; and
(3) A citation to or identification of the specific regulation
supporting the action, including the reason for the intended action.
(b) Accessibility and readability requirements. All applications,
forms, and notices, including the single, streamlined application
described in Sec. 155.405 and notice of annual redetermination
described in Sec. 155.335(c), must conform to the standards outlined
in Sec. 155.205(c).
(c) Re-evaluation of appropriateness and usability. The Exchange
must re-evaluate the appropriateness and usability of applications,
forms, and notices.
Sec. 155.240 Payment of premiums.
(a) Payment by individuals. The Exchange must allow a qualified
individual to pay any applicable premium owed by such individual
directly to the QHP issuer.
(b) Payment by tribes, tribal organizations, and urban Indian
organizations. The Exchange may permit Indian tribes, tribal
organizations and urban Indian organizations to pay aggregated QHP
premiums on behalf of qualified individuals, including aggregated
payment, subject to terms and conditions determined by the Exchange.
(c) Payment facilitation. The Exchange may establish a process to
facilitate through electronic means the collection and payment of
premiums to QHP issuers.
(d) Required standards. In conducting an electronic transaction
with a QHP
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issuer that involves the payment of premiums or an electronic funds
transfer, the Exchange must comply with the privacy and security
standards adopted in accordance with Sec. 155.260 and use the
standards and operating rules referenced in Sec. 155.270.
Sec. 155.260 Privacy and security of personally identifiable
information.
(a) Creation, collection, use and disclosure. (1) Where the
Exchange creates or collects personally identifiable information for
the purposes of determining eligibility for enrollment in a qualified
health plan; determining eligibility for other insurance affordability
programs, as defined in 155.20; or determining eligibility for
exemptions from the individual responsibility provisions in section
5000A of the Code, the Exchange may only use or disclose such
personally identifiable information to the extent such information is
necessary to carry out the functions described in Sec. 155.200 of this
subpart.
(2) The Exchange may not create, collect, use, or disclose
personally identifiable information while the Exchange is fulfilling
its responsibilities in accordance with Sec. 155.200 of this subpart
unless the creation, collection, use, or disclosure is consistent with
this section.
(3) The Exchange must establish and implement privacy and security
standards that are consistent with the following principles:
(i) Individual access. Individuals should be provided with a simple
and timely means to access and obtain their personally identifiable
health information in a readable form and format;
(ii) Correction. Individuals should be provided with a timely means
to dispute the accuracy or integrity of their personally identifiable
health information and to have erroneous information corrected or to
have a dispute documented if their requests are denied;
(iii) Openness and transparency. There should be openness and
transparency about policies, procedures, and technologies that directly
affect individuals and/or their personally identifiable health
information;
(iv) Individual choice. Individuals should be provided a reasonable
opportunity and capability to make informed decisions about the
collection, use, and disclosure of their personally identifiable health
information;
(v) Collection, use, and disclosure limitations. Personally
identifiable health information should be created, collected, used,
and/or disclosed only to the extent necessary to accomplish a specified
purpose(s) and never to discriminate inappropriately;
(vi) Data quality and integrity. Persons and entities should take
reasonable steps to ensure that personally identifiable health
information is complete, accurate, and up-to-date to the extent
necessary for the person's or entity's intended purposes and has not
been altered or destroyed in an unauthorized manner;
(vii) Safeguards. Personally identifiable health information should
be protected with reasonable operational, administrative, technical,
and physical safeguards to ensure its confidentiality, integrity, and
availability and to prevent unauthorized or inappropriate access, use,
or disclosure; and,
(viii) Accountability. These principles should be implemented, and
adherence assured, through appropriate monitoring and other means and
methods should be in place to report and mitigate non-adherence and
breaches.
(4) For the purposes of implementing the principle described in
paragraph (a)(3)(vii) of this section, the Exchange must establish and
implement operational, technical, administrative and physical
safeguards that are consistent with any applicable laws (including this
section) to ensure--
(i) The confidentiality, integrity, and availability of personally
identifiable information created, collected, used, and/or disclosed by
the Exchange;
(ii) Personally identifiable information is only used by or
disclosed to those authorized to receive or view it;
(iii) Return information, as such term is defined by section
6103(b)(2) of the Code, is kept confidential under section 6103 of the
Code;
(iv) Personally identifiable information is protected against any
reasonably anticipated threats or hazards to the confidentiality,
integrity, and availability of such information;
(v) Personally identifiable information is protected against any
reasonably anticipated uses or disclosures of such information that are
not permitted or required by law; and
(vi) Personally identifiable information is securely destroyed or
disposed of in an appropriate and reasonable manner and in accordance
with retention schedules;
(5) The Exchange must monitor, periodically assess, and update the
security controls and related system risks to ensure the continued
effectiveness of those controls.
(6) The Exchange must develop and utilize secure electronic
interfaces when sharing personally identifiable information
electronically.
(b) Application to non-Exchange entities. Except for tax return
information, which is governed by section 6103 of the Code, when
collection, use or disclosure is not otherwise required by law, an
Exchange must require the same or more stringent privacy and security
standards (as Sec. 155.260(a)) as a condition of contract or agreement
with individuals or entities, such as Navigators, agents, and brokers,
that:
(1) Gain access to personally identifiable information submitted to
an Exchange; or
(2) Collect, use or disclose personally identifiable information
gathered directly from applicants, qualified individuals, or enrollees
while that individual or entity is performing the functions outlined in
the agreement with the Exchange.
(c) Workforce compliance. The Exchange must ensure its workforce
complies with the policies and procedures developed and implemented by
the Exchange to comply with this section.
(d) Written policies and procedures. Policies and procedures
regarding the collection, use, and disclosure of personally
identifiable information must, at minimum:
(1) Be in writing, and available to the Secretary of HHS upon
request; and
(2) Identify applicable law governing collection, use, and
disclosure of personally identifiable information.
(e) Data sharing. Data matching and sharing arrangements that
facilitate the sharing of personally identifiable information between
the Exchange and agencies administering Medicaid, CHIP or the BHP for
the exchange of eligibility information must:
(1) Meet any applicable requirements described in this section;
(2) Meet any applicable requirements described in section
1413(c)(1) and (c)(2) of the Affordable Care Act;
(3) Be equal to or more stringent than the requirements for
Medicaid programs under section 1942 of the Act; and
(4) For those matching agreements that meet the definition of
``matching program'' under 5 U.S.C. 552a(a)(8), comply with 5 U.S.C.
552a(o).
(f) Compliance with the Code. Return information, as defined in
section 6103(b)(2) of the Code, must be kept confidential and
disclosed, used, and maintained only in accordance with section 6103 of
the Code.
(g) Improper use and disclosure of information. Any person who
knowingly and willfully uses or discloses information in violation of
[[Page 18451]]
section 1411(g) of the Affordable Care Act will be subject to a civil
penalty of not more than $25,000 per person or entity, per use or
disclosure, in addition to other penalties that may be prescribed by
law.
Sec. 155.270 Use of standards and protocols for electronic
transactions.
(a) HIPAA administrative simplification. To the extent that the
Exchange performs electronic transactions with a covered entity, the
Exchange must use standards, implementation specifications, operating
rules, and code sets adopted by the Secretary in 45 CFR parts 160 and
162.
(b) HIT enrollment standards and protocols. The Exchange must
incorporate interoperable and secure standards and protocols developed
by the Secretary in accordance with section 3021 of the PHS Act. Such
standards and protocols must be incorporated within Exchange
information technology systems.
Subpart D--Exchange Functions in the Individual Market: Eligibility
Determinations for Exchange Participation and Insurance
Affordability Programs
Sec. 155.300 Definitions and general standards for eligibility
determinations.
(a) Definitions. In addition to those definitions in Sec. 155.20,
for purposes of this subpart, the following terms have the following
meaning:
Adoption taxpayer identification number has the same meaning as it
does in 26 CFR 301.6109-3(a).
Applicable Children's Health Insurance Program (CHIP) MAGI-based
income standard means the applicable income standard as defined at 42
CFR 457.310(b)(1), as applied under the State plan adopted in
accordance with title XXI of the Act, or waiver of such plan and as
certified by the State CHIP Agency in accordance with 42 CFR
457.348(d), for determining eligibility for child health assistance and
enrollment in a separate child health program.
Applicable Medicaid modified adjusted gross income (MAGI)-based
income standard has the same meaning as ``applicable modified adjusted
gross income standard,'' as defined at 42 CFR 435.911(b), as applied
under the State plan adopted in accordance with title XIX of the Act,
or waiver of such plan, and as certified by the State Medicaid agency
in accordance with 42 CFR 435.1200(b)(2) for determining eligibility
for Medicaid.
Federal poverty level or FPL means the most recently published
Federal poverty level, updated periodically in the Federal Register by
the Secretary of Health and Human Services under the authority of 42
U.S.C. 9902(2), as of the first day of the annual open enrollment
period for coverage in a QHP through the Exchange, as specified in
Sec. 155.410.
Indian means any individual as defined in section 4(d) of the
Indian Self-Determination and Education Assistance Act (Pub. L. 93-
638).
Insurance affordability program has the same meaning as ``insurance
affordability program,'' as specified in 42 CFR 435.4.
MAGI-based income has the same meaning as it does in 42 CFR
435.603(e).
Minimum value, when used to describe coverage in an eligible
employer-sponsored plan, means that the plan meets the requirements
with respect to coverage of the total allowed costs of benefits set
forth in section 36B(c)(2)(C)(ii) of the Code.
Modified Adjusted Gross Income (MAGI) has the same meaning as it
does in section 36B(d)(2)(B) of the Code.
Non-citizen means an individual who is not a citizen or national of
the United States, in accordance with section 101(a)(3) of the
Immigration and Nationality Act.
Qualifying coverage in an eligible employer-sponsored plan means
coverage in an eligible employer-sponsored plan that meets the
affordability and minimum value standards specified in section
36B(c)(2)(C) of the Code.
State CHIP Agency means the agency that administers a separate
child health program established by the State under title XXI of the
Act in accordance with implementing regulations at 42 CFR 457.
State Medicaid Agency means the agency established or designated by
the State under title XIX of the Act that administers the Medicaid
program in accordance with implementing regulations at 42 CFR parts 430
through 456.
Tax dependent has the same meaning as the term dependent under
section 152 of the Code.
Tax filer means an individual, or a married couple, who indicates
that he, she or they expects--
(1) To file an income tax return for the benefit year, in
accordance with 26 U.S.C. 6011, 6012, and implementing regulations;
(2) If married (within the meaning of 26 CFR 1.7703-1), to file a
joint tax return for the benefit year;
(3) That no other taxpayer will be able to claim him, her or them
as a tax dependent for the benefit year; and
(4) That he, she, or they expects to claim a personal exemption
deduction under section 151 of the Code on his or her tax return for
one or more applicants, who may or may not include himself or herself
and his or her spouse.
(b) Medicaid and CHIP. In general, references to Medicaid and CHIP
regulations in this subpart refer to those regulations as implemented
in accordance with rules and procedures which are the same as those
applied by the State Medicaid or State CHIP agency or approved by such
agency in the agreement described in Sec. 155.345(a).
(c) Attestation. (1) Except as specified in paragraph (c)(2) of
this section, for the purposes of this subpart, an attestation may be
made by the application filer.
(2) The attestations specified in Sec. 155.310(d)(2)(ii) and Sec.
155.315(f)(4)(ii) must be provided by the tax filer.
(d) Reasonably compatible. For purposes of this subpart, the
Exchange must consider information obtained through electronic data
sources, other information provided by the applicant, or other
information in the records of the Exchange to be reasonably compatible
with an applicant's attestation if the difference or discrepancy does
not impact the eligibility of the applicant, including the amount of
advance payments of the premium tax credit or category of cost-sharing
reductions.
Sec. 155.302 Options for conducting eligibility determinations.
(a) Options for conducting eligibility determinations. The Exchange
may satisfy the requirements of this subpart--
(1) Directly or through contracting arrangements in accordance with
Sec. 155.110(a); or
(2) Through a combination of the approach described in paragraph
(a)(1) of this section and one or both of the options described in
paragraph (b) or (c) of this section, subject to the standards in
paragraph (d) of this section.
(b) Medicaid and CHIP. Notwithstanding the requirements of this
subpart, the Exchange may conduct an assessment of eligibility for
Medicaid and CHIP, rather than an eligibility determination for
Medicaid and CHIP, provided that--
(1) The Exchange makes such an assessment based on the applicable
Medicaid and CHIP MAGI-based income standards and citizenship and
immigration status, using verification rules and procedures consistent
with 42 CFR parts 435 and 457, without regard to how such standards are
implemented
[[Page 18452]]
by the State Medicaid and CHIP agencies.
(2) Notices and other activities required in connection with an
eligibility determination for Medicaid or CHIP are performed by the
Exchange consistent with the standards identified in this subpart or
the State Medicaid or CHIP agency consistent with applicable law.
(3) Applicants found potentially eligible for Medicaid or CHIP.
When the Exchange assesses an applicant as potentially eligible for
Medicaid or CHIP consistent with the standards in subparagraph (b)(1)
of this section, the Exchange transmits all information provided as a
part of the application, update, or renewal that initiated the
assessment, and any information obtained or verified by the Exchange to
the State Medicaid agency or CHIP agency via secure electronic
interface, promptly and without undue delay.
(4) Applicants not found potentially eligible for Medicaid and
CHIP. (i) If the Exchange conducts an assessment in accordance with
paragraph (b) of this section and finds that an applicant is not
potentially eligible for Medicaid or CHIP based on the applicable
Medicaid and CHIP MAGI-based income standards, the Exchange must
consider the applicant as ineligible for Medicaid and CHIP for purposes
of determining eligibility for advance payments of the premium tax
credit and cost-sharing reductions and must notify such applicant, and
provide him or her with the opportunity to--
(A) Withdraw his or her application for Medicaid and CHIP; or
(B) Request a full determination of eligibility for Medicaid and
CHIP by the applicable State Medicaid and CHIP agencies.
(ii) To the extent that an applicant described in paragraph
(b)(4)(i) of this section requests a full determination of eligibility
for Medicaid and CHIP, the Exchange must--
(A) Transmit all information provided as a part of the application,
update, or renewal that initiated the assessment, and any information
obtained or verified by the Exchange to the State Medicaid agency and
CHIP agency via secure electronic interface, promptly and without undue
delay; and
(B) Consider such an applicant as ineligible for Medicaid and CHIP
for purposes of determining eligibility for advance payments of the
premium tax credit and cost-sharing reductions until the State Medicaid
or CHIP agency notifies the Exchange that the applicant is eligible for
Medicaid or CHIP.
(5) The Exchange adheres to the eligibility determination for
Medicaid or CHIP made by the State Medicaid or CHIP agency;
(6) The Exchange and the State Medicaid and CHIP agencies enter
into an agreement specifying their respective responsibilities in
connection with eligibility determinations for Medicaid and CHIP.
(c) Advance payments of the premium tax credit and cost-sharing
reductions. Notwithstanding the requirements of this subpart, the
Exchange may implement a determination of eligibility for advance
payments of the premium tax credit and cost-sharing reductions made by
HHS, provided that--
(1) Verifications, notices, and other activities required in
connection with an eligibility determination for advance payments of
the premium tax credit and cost-sharing reductions are performed by the
Exchange in accordance with the standards identified in this subpart or
by HHS in accordance with the agreement described in paragraph (c)(4)
of this section;
(2) The Exchange transmits all information provided as a part of
the application, update, or renewal that initiated the eligibility
determination, and any information obtained or verified by the
Exchange, to HHS via secure electronic interface, promptly and without
undue delay;
(3) The Exchange adheres to the eligibility determination for
advance payments of the premium tax credit and cost-sharing reductions
made by HHS; and
(4) The Exchange and HHS enter into an agreement specifying their
respective responsibilities in connection with eligibility
determinations for advance payments of the premium tax credit and cost-
sharing reductions.
(d) Standards. To the extent that assessments of eligibility for
Medicaid and CHIP based on MAGI or eligibility determinations for
advance payments of the premium tax credit and cost-sharing reductions
are made in accordance with paragraphs (b) or (c) of this section, the
Exchange must ensure that--
(1) Eligibility processes for all insurance affordability programs
are streamlined and coordinated across HHS, the Exchange, the State
Medicaid agency, and the State CHIP agency, as applicable;
(2) Such arrangement does not increase administrative costs and
burdens on applicants, enrollees, beneficiaries, or application filers,
or increase delay; and
(3) Applicable requirements under 45 CFR 155.260, 155.270, and
155.315(i), and section 6103 of the Code with respect to the
confidentiality, disclosure, maintenance, and use of information are
met.
Sec. 155.305 Eligibility standards.
(a) Eligibility for enrollment in a QHP through the Exchange. The
Exchange must determine an applicant eligible for enrollment in a QHP
through the Exchange if he or she meets the following requirements:
(1) Citizenship, status as a national, or lawful presence. Is a
citizen or national of the United States, or is a non-citizen who is
lawfully present in the United States, and is reasonably expected to be
a citizen, national, or a non-citizen who is lawfully present for the
entire period for which enrollment is sought;
(2) Incarceration. Is not incarcerated, other than incarceration
pending the disposition of charges; and
(3) Residency. Meets the applicable residency standard identified
in this paragraph (a)(3).
(i) For an individual who is age 21 and over, is not living in an
institution as defined in 42 CFR 435.403(b), is capable of indicating
intent, and is not receiving an optional State supplementary payment as
addressed in 42 CFR 435.403(f), the service area of the Exchange of the
individual is the service areas of the Exchange in which he or she is
living and--
(A) Intends to reside, including without a fixed address; or
(B) Has entered with a job commitment or is seeking employment
(whether or not currently employed).
(ii) For an individual who is under the age of 21, is not living in
an institution as defined in 42 CFR 435.403(b), is not eligible for
Medicaid based on receipt of assistance under title IV-E of the Social
Security Act as addressed in 42 CFR 435.403(g), is not emancipated, is
not receiving an optional State supplementary payment as addressed in
42 CFR 435.403(f), the Exchange service area of the individual--
(A) Is the service area of the Exchange in which he or she resides,
including without a fixed address; or
(B) Is the service area of the Exchange of a parent or caretaker,
established in accordance with paragraph (a)(3)(i) of this section,
with whom the individual resides.
(iii) Other special circumstances. In the case of an individual who
is not described in paragraphs (a)(3)(i) or (ii) of this section, the
Exchange must apply the residency requirements described in 42 CFR
435.403 with respect to the service area of the Exchange.
(iv) Special rule for tax households with members in multiple
Exchange
[[Page 18453]]
service areas. (A) Except as specified in paragraph (a)(3)(iv)(B) of
this section if all of the members of a tax household are not within
the same Exchange service area, in accordance with the applicable
standards in paragraphs (a)(3)(i), (ii), and (iii) of this section, any
member of the tax household may enroll in a QHP through any of the
Exchanges for which one of the tax filers meets the residency standard.
(B) If both spouses in a tax household enroll in a QHP through the
same Exchange, a tax dependent may only enroll in a QHP through that
Exchange, or through the Exchange that services the area in which the
dependent meets a residency standard described in paragraphs (a)(3)(i),
(ii), or (iii) of this section.
(b) Eligibility for QHP enrollment periods. The Exchange must
determine an applicant eligible for an enrollment period if he or she
meets the criteria for an enrollment period, as specified in Sec. Sec.
155.410 and 155.420.
(c) Eligibility for Medicaid. The Exchange must determine an
applicant eligible for Medicaid if he or she meets the non-financial
eligibility criteria for Medicaid for populations whose eligibility is
based on MAGI-based income, as certified by the Medicaid agency in
accordance with 42 CFR 435.1200(b)(2), has a household income, as
defined in 42 CFR 435.603(d), that is at or below the applicable
Medicaid MAGI-based income standard as defined in 42 CFR 435.911(b)(1)
and--
(1) Is a pregnant woman, as defined in the Medicaid State Plan in
accordance with 42 CFR 435.4;
(2) Is under age 19;
(3) Is a parent or caretaker relative of a dependent child, as
defined in the Medicaid State plan in accordance with 42 CFR 435.4; or
(4) Is not described in paragraph (c)(1), (2), or (3) of this
section, is under age 65 and is not entitled to or enrolled for
benefits under part A of title XVIII of the Social Security Act, or
enrolled for benefits under part B of title XVIII of the Social
Security Act.
(d) Eligibility for CHIP. The Exchange must determine an applicant
eligible for CHIP if he or she meets the requirements of 42 CFR 457.310
through 457.320 and has a household income, as defined in 42 CFR
435.603(d), at or below the applicable CHIP MAGI-based income standard.
(e) Eligibility for BHP. If a BHP is operating in the service area
of the Exchange, the Exchange must determine an applicant eligible for
the BHP if he or she meets the requirements specified in section
1331(e) of the Affordable Care Act and regulations implementing that
section.
(f) Eligibility for advance payments of the premium tax credit. (1)
In general. The Exchange must determine a tax filer eligible for
advance payments of the premium tax credit if the Exchange determines
that--
(i) He or she is expected to have a household income, as defined in
section 36B(d)(2) of the Code, of greater than or equal to 100 percent
but not more than 400 percent of the FPL for the benefit year for which
coverage is requested; and
(ii) One or more applicants for whom the tax filer expects to claim
a personal exemption deduction on his or her tax return for the benefit
year, including the tax filer and his or her spouse--
(A) Meets the requirements for eligibility for enrollment in a QHP
through the Exchange, as specified in paragraph (a) of this section;
and
(B) Is not eligible for minimum essential coverage, with the
exception of coverage in the individual market, in accordance with
section 36B(c)(2)(B) and (C) of the Code.
(2) Special rule for non-citizens who are lawfully present and who
are ineligible for Medicaid by reason of immigration status. The
Exchange must determine a tax filer eligible for advance payments of
the premium tax credit if the Exchange determines that--
(i) He or she meets the requirements specified in paragraph (f)(1)
of this section, except for paragraph (f)(1)(i);
(ii) He or she is expected to have a household income, as defined
in section 36B(d)(2) of the Code, of less than 100 percent of the FPL
for the benefit year for which coverage is requested; and
(iii) One or more applicants for whom the tax filer expects to
claim a personal exemption deduction on his or her tax return for the
benefit year, including the tax filer and his or her spouse, is a non-
citizen who is lawfully present and ineligible for Medicaid by reason
of immigration status, in accordance with section 36B(c)(1)(B) of the
Code.
(3) Enrollment required. The Exchange may provide advance payments
of the premium tax credit on behalf of a tax filer only if one or more
applicants for whom the tax filer attests that he or she expects to
claim a personal exemption deduction for the benefit year, including
the tax filer and his or her spouse, is enrolled in a QHP through the
Exchange.
(4) Compliance with filing requirement. The Exchange may not
determine a tax filer eligible for advance payments of the premium tax
credit if HHS notifies the Exchange as part of the process described in
Sec. 155.320(c)(3) that advance payments of the premium tax credit
were made on behalf of the tax filer or either spouse if the tax filer
is a married couple for a year for which tax data would be utilized for
verification of household income and family size in accordance with
Sec. 155.320(c)(1)(i), and the tax filer or his or her spouse did not
comply with the requirement to file an income tax return for that year
as required by 26 U.S.C. 6011, 6012, and implementing regulations and
reconcile the advance payments of the premium tax credit for that
period.
(5) Calculation of advance payments of the premium tax credit. The
Exchange must calculate advance payments of the premium tax credit in
accordance with section 36B of the Code.
(6) Collection of Social Security numbers. The Exchange must
require an application filer to provide the Social Security number of a
tax filer who is not an applicant only if an applicant attests that the
tax filer has a Social Security number and filed a tax return for the
year for which tax data would be utilized for verification of household
income and family size.
(g) Eligibility for cost-sharing reductions. (1) Eligibility
criteria. (i) The Exchange must determine an applicant eligible for
cost-sharing reductions if he or she--
(A) Meets the requirements for eligibility for enrollment in a QHP
through the Exchange, as specified in paragraph (a) of this section;
(B) Meets the requirements for advance payments of the premium tax
credit, as specified in paragraph (f) of this section; and
(C) Is expected to have a household income that does not exceed 250
percent of the FPL, for the benefit year for which coverage is
requested.
(ii) The Exchange may only provide cost-sharing reductions to an
enrollee who is not an Indian if he or she is enrolled through the
Exchange in a silver-level QHP, as defined by section 1302(d)(1)(B) of
the Affordable Care Act.
(2) Eligibility categories. The Exchange must use the following
eligibility categories for cost-sharing reductions when making
eligibility determinations under this section--
(i) An individual who is expected to have a household income
greater than or equal to 100 percent of the FPL and less than or equal
to 150 percent of the FPL for the benefit year for which coverage is
requested, or for an individual who is eligible for advance payments of
the premium tax credit under paragraph (f)(2) of this section, a
household income less than 100 percent of the FPL
[[Page 18454]]
for the benefit year for which coverage is requested;
(ii) An individual is expected to have a household income greater
than 150 percent of the FPL and less than or equal to 200 percent of
the FPL for the benefit year for which coverage is requested; and
(iii) An individual who is expected to have a household income
greater than 200 percent of the FPL and less than or equal to 250
percent of the FPL for the benefit year for which coverage is
requested.
(3) Special rule for multiple tax households. To the extent that an
enrollment in a QHP under a single policy covers individuals who are
expected to be in different tax households for the benefit year for
which coverage is requested, the Exchange must apply only the first
category of cost-sharing reductions listed below for which the Exchange
has determined that one of the applicants in the tax households is
eligible.
(i) Sec. 155.350(b);
(ii) Paragraph (g)(2)(iii) of this section;
(iii) Paragraph (g)(2)(ii) of this section;
(iv) Paragraph (g)(3)(i) of this section;
(v) Sec. 155.350(a).
(4) For the purposes of paragraph (g) of this section, ``household
income'' means household income as defined in section 36B(d)(2) of the
Code.
Sec. 155.310 Eligibility process.
(a) Application. (1) Accepting applications. The Exchange must
accept applications from individuals in the form and manner specified
in Sec. 155.405.
(2) Information collection from non-applicants. The Exchange may
not request information regarding citizenship, status as a national, or
immigration status for an individual who is not seeking coverage for
himself or herself on any application or supplemental form.
(3) Collection of Social Security numbers. (i) The Exchange must
require an applicant who has a Social Security number to provide such
number to the Exchange.
(ii) The Exchange may not require an individual who is not seeking
coverage for himself or herself to provide a Social Security number,
except as specified in Sec. 155.305(f)(6).
(b) Applicant choice for Exchange to determine eligibility for
insurance affordability programs. The Exchange must permit an applicant
to request only an eligibility determination for enrollment in a QHP
through the Exchange; however, the Exchange may not permit an applicant
to request an eligibility determination for less than all insurance
affordability programs.
(c) Timing. The Exchange must accept an application and make an
eligibility determination for an applicant seeking an eligibility
determination at any point in time during the year.
(d) Determination of eligibility. (1) The Exchange must determine
an applicant's eligibility, in accordance with the standards specified
in Sec. 155.305.
(2) Special rules relating to advance payments of the premium tax
credit. (i) The Exchange must permit an enrollee to accept less than
the full amount of advance payments of the premium tax credit for which
he or she is determined eligible.
(ii) The Exchange may authorize advance payments of the premium tax
credit on behalf of a tax filer only if the Exchange first obtains
necessary attestations from the tax filer regarding advance payments of
the premium tax credit, including, but not limited to attestations
that--
(A) He or she will file an income tax return for the benefit year,
in accordance with 26 U.S.C. 6011, 6012, and implementing regulations;
(B) If married (within the meaning of 26 CFR 1.7703-1), he or she
will file a joint tax return for the benefit year;
(C) No other taxpayer will be able to claim him or her as a tax
dependent for the benefit year; and
(D) He or she will claim a personal exemption deduction on his or
her tax return for the applicants identified as members of his or her
family, including the tax filer and his or her spouse, in accordance
with Sec. 155.320(c)(3)(i).
(3) Special rule relating to Medicaid and CHIP. To the extent that
the Exchange determines an applicant eligible for Medicaid or CHIP, the
Exchange must notify the State Medicaid or CHIP agency and transmit all
information from the records of the Exchange to the State Medicaid or
CHIP agency, promptly and without undue delay, that is necessary for
such agency to provide the applicant with coverage.
(e) Timeliness standards. (1) The Exchange must determine
eligibility promptly and without undue delay.
(2) The Exchange must assess the timeliness of eligibility
determinations based on the period from the date of application or
transfer from an agency administering an insurance affordability
program to the date the Exchange notifies the applicant of its decision
or the date the Exchange transfers the application to another agency
administering an insurance affordability program, when applicable.
(f) Effective dates for eligibility. Upon making an eligibility
determination, the Exchange must implement the eligibility
determination under this section for enrollment in a QHP through the
Exchange, advance payments of the premium tax credit, and cost-sharing
reductions as follows--
(1) For an initial eligibility determination, in accordance with
the dates specified in Sec. 155.410(c) and (f) and Sec. 155.420(b),
as applicable,
(2) For a redetermination, in accordance with the dates specified
in Sec. 155.330(f) and Sec. 155.335(i), as applicable.
(g) Notification of eligibility determination. The Exchange must
provide timely written notice to an applicant of any eligibility
determination made in accordance with this subpart.
(h) Notice of an employee's eligibility for advance payments of the
premium tax credit and cost-sharing reductions to an employer. The
Exchange must notify an employer that an employee has been determined
eligible for advance payments of the premium tax credit or cost-sharing
reductions upon determination that an employee is eligible for advance
payments of the premium tax credit or cost-sharing reductions. Such
notice must:
(1) Identify the employee;
(2) Indicate that the employee has been determined eligible for
advance payments of the premium tax credit;
(3) Indicate that, if the employer has 50 or more full-time
employees, the employer may be liable for the payment assessed under
section 4980H of the Code; and
(4) Notify the employer of the right to appeal the determination.
(i) Duration of eligibility determinations without enrollment. To
the extent that an applicant who is determined eligible for enrollment
in a QHP does not select a QHP within his or her enrollment period in
accordance with subpart E, and seeks a new enrollment period--
(1) Prior to the date on which his or her eligibility would have
been redetermined in accordance with Sec. 155.335 had he or she
enrolled in a QHP, the Exchange must require the applicant to attest as
to whether information affecting his or her eligibility has changed
since his or her most recent eligibility determination before
determining his or her eligibility for an enrollment period, and must
process any changes reported in accordance with the procedures
specified in Sec. 155.330.
(2) On or after the date on which his or her eligibility would have
been redetermined in accordance with Sec. 155.335 had he or she
enrolled in a QHP, the Exchange must apply the
[[Page 18455]]
procedures specified in Sec. 155.335 before determining his or her
eligibility for an enrollment period.
Sec. 155.315 Verification process related to eligibility for
enrollment in a QHP through the Exchange.
(a) General requirement. Unless a request for modification is
granted in accordance with paragraph (h) of this section, the Exchange
must verify or obtain information as provided in this section in order
to determine that an applicant is eligible for enrollment in a QHP
through the Exchange.
(b) Validation of Social Security number. (1) For any individual
who provides his or her Social Security number to the Exchange, the
Exchange must transmit the Social Security number and other identifying
information to HHS, which will submit it to the Social Security
Administration.
(2) To the extent that the Exchange is unable to validate an
individual's Social Security number through the Social Security
Administration, the Exchange must follow the procedures specified in
paragraph (f) of this section, except that the Exchange must provide
the individual with a period of 90 days from the date on which the
notice described in paragraph (f)(2)(i) of this section is received for
the applicant to provide satisfactory documentary evidence or resolve
the inconsistency with the Social Security Administration. The date on
which the notice is received means 5 days after the date on the notice,
unless the individual demonstrates that he or she did not receive the
notice within the 5 day period.
(c) Verification of citizenship, status as a national, or lawful
presence. (1) Verification with records from the Social Security
Administration. For an applicant who attests to citizenship and has a
Social Security number, the Exchange must transmit the applicant's
Social Security number and other identifying information to HHS, which
will submit it to the Social Security Administration.
(2) Verification with the records of the Department of Homeland
Security. For an applicant who has documentation that can be verified
through the Department of Homeland Security and who attests to lawful
presence, or who attests to citizenship and for whom the Exchange
cannot substantiate a claim of citizenship through the Social Security
Administration, the Exchange must transmit information from the
applicant's documentation and other identifying information to HHS,
which will submit necessary information to the Department of Homeland
Security for verification.
(3) Inconsistencies and inability to verify information. For an
applicant who attests to citizenship, status as a national, or lawful
presence, and for whom the Exchange cannot verify such attestation
through the Social Security Administration or the Department of
Homeland Security, the Exchange must follow the procedures specified in
paragraph (f) of this section, except that the Exchange must provide
the applicant with a period of 90 days from the date on which the
notice described in paragraph (f)(2)(i) of this section is received for
the applicant to provide satisfactory documentary evidence or resolve
the inconsistency with the Social Security Administration or the
Department of Homeland Security, as applicable. The date on which the
notice is received means 5 days after the date on the notice, unless
the applicant demonstrates that he or she did not receive the notice
within the 5 day period.
(d) Verification of residency. The Exchange must verify an
applicant's attestation that he or she meets the standards of Sec.
155.305(a)(3) as follows--
(1) Except as provided in paragraphs (d)(3) and (4) of this
section, accept his or her attestation without further verification; or
(2) Examine electronic data sources that are available to the
Exchange and which have been approved by HHS for this purpose, based on
evidence showing that such data sources are sufficiently current and
accurate, and minimize administrative costs and burdens.
(3) If information provided by an applicant regarding residency is
not reasonably compatible with other information provided by the
individual or in the records of the Exchange the Exchange must examine
information in data sources that are available to the Exchange and
which have been approved by HHS for this purpose, based on evidence
showing that such data sources are sufficiently current and accurate.
(4) If the information in such data sources is not reasonably
compatible with the information provided by the applicant, the Exchange
must follow the procedures specified in paragraph (f) of this section.
Evidence of immigration status may not be used to determine that an
applicant is not a resident of the Exchange service area.
(e) Verification of incarceration status. The Exchange must verify
an applicant's attestation that he or she meets the requirements of
Sec. 155.305(a)(2) by--
(1) Relying on any electronic data sources that are available to
the Exchange and which have been approved by HHS for this purpose,
based on evidence showing that such data sources are sufficiently
current, accurate, and offer less administrative complexity than paper
verification; or
(2) Except as provided in paragraph (e)(3) of this section, if an
approved data source is unavailable, accepting his or her attestation
without further verification.
(3) To the extent that an applicant's attestation is not reasonably
compatible with information from approved data sources described in
paragraph (e)(1) of this section or other information provided by the
applicant or in the records of the Exchange, the Exchange must follow
the procedures specified in Sec. 155.315(f).
(f) Inconsistencies. Except as otherwise specified in this subpart,
for an applicant for whom the Exchange cannot verify information
required to determine eligibility for enrollment in a QHP, advance
payments of the premium tax credit, and cost-sharing reductions,
including when electronic data is required in accordance with this
subpart but not available, the Exchange:
(1) Must make a reasonable effort to identify and address the
causes of such inconsistency, including through typographical or other
clerical errors, by contacting the application filer to confirm the
accuracy of the information submitted by the application filer;
(2) If unable to resolve the inconsistency through the process
described in paragraph (f)(1) of this section, must--
(i) Provide notice to the applicant regarding the inconsistency;
and
(ii) Provide the applicant with a period of 90 days from the date
on which the notice described in paragraph (f)(2)(i) of this section is
sent to the applicant to either present satisfactory documentary
evidence via the channels available for the submission of an
application, as described in Sec. 155.405(c), except for by telephone
through a call center, or otherwise resolve the inconsistency.
(3) May extend the period described in paragraph (f)(2)(ii) of this
section for an applicant if the applicant demonstrates that a good
faith effort has been made to obtain the required documentation during
the period.
(4) During the period described in paragraph (f)(2)(ii) of this
section, must:
(i) Proceed with all other elements of eligibility determination
using the applicant's attestation, and provide eligibility for
enrollment in a QHP to the
[[Page 18456]]
extent that an applicant is otherwise qualified; and
(ii) Ensure that advance payments of the premium tax credit and
cost-sharing reductions are provided on behalf of an applicant within
this period who is otherwise qualified for such payments and
reductions, as described in Sec. 155.305, if the tax filer attests to
the Exchange that he or she understands that any advance payments of
the premium tax credit paid on his or her behalf are subject to
reconciliation.
(5) If, after the period described in paragraph (f)(2)(ii) of this
section, the Exchange remains unable to verify the attestation, must--
(i) Determine the applicant's eligibility based on the information
available from the data sources specified in this subpart, unless such
applicant qualifies for the exception provided under paragraph (i) of
this section, and notify the applicant of such determination in
accordance with the notice requirements specified in Sec. 155.310(g),
including notice that the Exchange is unable to verify the attestation;
and
(ii) Effectuate the determination specified in paragraph (f)(5)(i)
of this section no earlier than 10 days after and no later than 30 days
after the date on which the notice in paragraph (f)(5)(i) of this
section is sent.
(g) Exception for special circumstances. For an applicant who does
not have documentation with which to resolve the inconsistency through
the process described in paragraph (f)(2) of this section because such
documentation does not exist or is not reasonably available and for
whom the Exchange is unable to otherwise resolve the inconsistency,
with the exception of an inconsistency related to citizenship or
immigration status, the Exchange must provide an exception, on a case-
by-case basis, to accept an applicant's attestation as to the
information which cannot otherwise be verified along with an
explanation of circumstances as to why the applicant does not have
documentation.
(h) Flexibility in information collection and verification. HHS may
approve an Exchange Blueprint in accordance with Sec. 155.105(d) or a
significant change to the Exchange Blueprint in accordance with Sec.
155.105(e) to modify the methods to be used for collection of
information and verification of information as set forth in this
subpart, as well as the specific information required to be collected,
provided that HHS finds that such modification would reduce the
administrative costs and burdens on individuals while maintaining
accuracy and minimizing delay, that it would not undermine coordination
with Medicaid and CHIP, and that applicable requirements under Sec.
155.260, Sec. 155.270, paragraph (i) of this section, and section 6103
of the Code with respect to the confidentiality, disclosure,
maintenance, or use of such information will be met.
(i) Applicant information. The Exchange must not require an
applicant to provide information beyond the minimum necessary to
support the eligibility and enrollment processes of the Exchange,
Medicaid, CHIP, and the BHP, if a BHP is operating in the service area
of the Exchange, described in this subpart.
Sec. 155.320 Verification process related to eligibility for
insurance affordability programs.
(a) General requirements. (1) The Exchange must verify information
in accordance with this section only for an applicant or tax filer who
requested an eligibility determination for insurance affordability
programs in accordance with Sec. 155.310(b).
(2) Unless a request for modification is granted in accordance with
Sec. 155.315(h), the Exchange must verify or obtain information in
accordance with this section before making an eligibility determination
for insurance affordability programs, and must use such information in
such determination.
(b) Verification of eligibility for minimum essential coverage
other than through an eligible employer-sponsored plan. (1) The
Exchange must verify whether an applicant is eligible for minimum
essential coverage other than through an eligible employer-sponsored
plan, Medicaid, CHIP, or the BHP, using information obtained by
transmitting identifying information specified by HHS to HHS.
(2) The Exchange must verify whether an applicant has already been
determined eligible for coverage through Medicaid, CHIP, or the BHP, if
a BHP is operating in the service area of the Exchange, within the
State or States in which the Exchange operates using information
obtained from the agencies administering such programs.
(c) Verification of household income and family/household size. (1)
Data. (i) Tax return data. (A) For all individuals whose income is
counted in calculating a tax filer's household income, in accordance
with section 36B(d)(2) of the Code, or an applicant's household income,
in accordance with 42 CFR 435.603(d), and for whom the Exchange has a
Social Security number or an adoption taxpayer identification number,
the Exchange must request tax return data regarding MAGI and family
size from the Secretary of the Treasury by transmitting identifying
information specified by HHS to HHS.
(B) If the identifying information for one or more individuals does
not match a tax record on file with the Secretary of the Treasury that
may be disclosed in accordance with section 6103(l)(21) of the Code and
its accompanying regulations, the Exchange must proceed in accordance
with Sec. 155.315(f)(1).
(ii) Data regarding MAGI-based income. For all individuals whose
income is counted in calculating a tax filer's household income, in
accordance with section 36B(d)(2) of the Code, or an applicant's
household income, in accordance with 42 CFR 435.603(d), the Exchange
must request data regarding MAGI-based income in accordance with 42 CFR
435.948(a).
(2) Verification process for Medicaid and CHIP. (i) Household size.
(A) The Exchange must verify household size in accordance with 42 CFR
435.945(a) or through other reasonable verification procedures
consistent with the requirements in 42 CFR 435.952.
(B) The Exchange must verify the information in paragraph
(c)(2)(i)(A) of this section by accepting an applicant's attestation
without further verification, unless the Exchange finds that an
applicant's attestation to the individuals that comprise his or her
household for Medicaid and CHIP is not reasonably compatible with other
information provided by the application filer for the applicant or in
the records of the Exchange, in which case the Exchange must utilize
data obtained through electronic data sources to verify the
attestation. If such data sources are unavailable or information in
such data sources is not reasonably compatible with the applicant's
attestation, the Exchange must request additional documentation to
support the attestation within the procedures specified in 42 CFR
435.952.
(ii) Verification process for MAGI-based household income. The
Exchange must verify MAGI-based income, within the meaning of 42 CFR
435.603(d), for the household described in paragraph (c)(2)(i) in
accordance with the procedures specified in Medicaid regulations 42 CFR
435.945, 42 CFR 435.948, and 42 CFR 435.952 and CHIP regulations at 42
CFR 457.380.
(3) Verification process for advance payments of the premium tax
credit and cost-sharing reductions. (i) Family size. (A) The Exchange
must require an applicant to attest to the individuals that comprise a
tax filer's family for advance payments of the premium tax credit and
cost-sharing reductions.
[[Page 18457]]
(B) To the extent that the applicant attests that the information
described in paragraph (c)(1)(i) of this section represents an accurate
projection of a tax filer's family size for the benefit year for which
coverage is requested, the Exchange must determine the tax filer's
eligibility for advance payments of the premium tax credit and cost-
sharing reductions based on the family size data in paragraph (c)(1)(i)
of this section.
(C) To the extent that the data described in paragraph (c)(1)(i) of
this section is unavailable, or an applicant attests that a change in
circumstances has occurred or is reasonably expected to occur, and so
it does not represent an accurate projection of a tax filer's family
size for the benefit year for which coverage is requested, the Exchange
must verify the tax filer's family size for advance payments of the
premium tax credit and cost-sharing reductions by accepting an
applicant's attestation without further verification, except as
specified in paragraph (c)(3)(i)(D) of this section.
(D) If Exchange finds that an applicant's attestation of a tax
filer's family size is not reasonably compatible with other information
provided by the application filer for the family or in the records of
the Exchange, with the exception of the data described in paragraph
(c)(1)(i) of this section, the Exchange must utilize data obtained
through other electronic data sources to verify the attestation. If
such data sources are unavailable or information in such data sources
is not reasonably compatible with the applicant's attestation, the
Exchange must request additional documentation to support the
attestation within the procedures specified in Sec. 155.315(f).
(ii) Basic verification process for annual household income. (A)
The Exchange must compute annual household income for the family
described in paragraph (c)(3)(i)(A) of this section based on the tax
return data described in paragraph (c)(1)(i) of this section;
(B) The Exchange must require the applicant to attest regarding a
tax filer's projected annual household income;
(C) To the extent that the applicant's attestation indicates that
the information described in paragraph (c)(3)(ii)(A) of this section
represents an accurate projection of the tax filer's household income
for the benefit year for which coverage is requested, the Exchange must
determine the tax filer's eligibility for advance payments of the
premium tax credit and cost-sharing reductions based on the household
income data in paragraph (c)(3)(ii)(A) of this section.
(D) To the extent that the data described in paragraph (c)(1)(i) of
this section is unavailable, or an applicant attests that a change in
circumstances has occurred or is reasonably expected to occur, and so
it does not represent an accurate projection of the tax filer's
household income for the benefit year for which coverage is requested,
the Exchange must require the applicant to attest to the tax filer's
projected household income for the benefit year for which coverage is
requested.
(iii) Verification process for increases in household income. (A)
If an applicant's attestation, in accordance with paragraph
(c)(3)(ii)(B) of this section, indicates that a tax filer's annual
household income has increased or is reasonably expected to increase
from the data described in paragraph (c)(3)(ii)(A) of this section to
the benefit year for which the applicant(s) in the tax filer's family
are requesting coverage and the Exchange has not verified the
applicant's MAGI-based income through the process specified in
paragraph (c)(2)(ii) of this section to be within the applicable
Medicaid or CHIP MAGI-based income standard, the Exchange must accept
the applicant's attestation for the tax filer's family without further
verification, except as provided in paragraph (c)(3)(iii)(B) of this
section.
(B) If the Exchange finds that an applicant's attestation of a tax
filer's annual household income is not reasonably compatible with other
information provided by the application filer or available to the
Exchange in accordance with paragraph (c)(1)(ii) of this section, the
Exchange must utilize data obtained through electronic data sources to
verify the attestation. If such data sources are unavailable or
information in such data sources is not reasonably compatible with the
applicant's attestation, the Exchange must request additional
documentation using the procedures specified in Sec. 155.315(f).
(iv) Eligibility for alternate verification process for decreases
in annual household income and situations in which tax return data is
unavailable. The Exchange must determine a tax filer's annual household
income for advance payments of the premium tax credit and cost-sharing
reductions based on the alternate verification procedures described in
paragraph (c)(3)(v) of this section, if an applicant attests to
projected annual household income in accordance with paragraph
(c)(3)(ii)(B) of this section, the tax filer does not meet the criteria
specified in paragraph (c)(3)(iii) of this section, the applicants in
the tax filer's family have not established MAGI-based income through
the process specified in paragraph (c)(2)(ii) of this section that is
within the applicable Medicaid or CHIP MAGI-based income standard, and
one of the following conditions is met--
(A) The Secretary of the Treasury does not have tax return data
that may be disclosed under section 6103(l)(21) of the Code for the tax
filer that is at least as recent as the calendar year two years prior
to the calendar year for which advance payments of the premium tax
credit or cost-sharing reductions would be effective;
(B) The applicant attests that the tax filer's applicable family
size has changed or is reasonably expected to change for the benefit
year for which the applicants in his or her family are requesting
coverage, or the members of the tax filer's family have changed or are
reasonably expected to change for the benefit year for which the
applicants in his or her family are requesting coverage;
(C) The applicant attests that a change in circumstances has
occurred or is reasonably expected to occur, and so the tax filer's
annual household income has decreased or is reasonably expected to
decrease from the data described in paragraph (c)(1)(i) of this section
for the benefit year for which the applicants in his or her family are
requesting coverage;
(D) The applicant attests that the tax filer's filing status has
changed or is reasonably expected to change for the benefit year for
which the applicants in his or her family are requesting coverage; or
(E) An applicant in the tax filer's family has filed an application
for unemployment benefits.
(v) Alternate verification process. If a tax filer qualifies for an
alternate verification process based on the requirements specified in
paragraph (c)(3)(iv) of this section and the applicant's attestation to
projected annual household income, as described in paragraph
(c)(3)(ii)(B) of this section, is no more than ten percent below the
annual household income computed in accordance with paragraph
(c)(3)(ii)(A) of this section, the Exchange must accept the applicant's
attestation without further verification.
(vi) Alternate verification process for decreases in annual
household income and situations in which tax return data is
unavailable. If a tax filer qualifies for an alternate verification
process based on the requirements specified in paragraph (c)(3)(iv) of
this section and the applicant's attestation to projected annual
household income, as described in paragraph (c)(3)(ii)(B) of this
section, is greater than ten percent below the
[[Page 18458]]
annual household income computed in accordance with paragraph
(c)(3)(ii)(A), or if data described in paragraph (c)(1)(i) of this
section is unavailable, the Exchange must attempt to verify the
applicant's attestation of the tax filer's projected annual household
income for the tax filer by--
(A) Using annualized data from the MAGI-based income sources
specified in paragraph (c)(1)(ii) of this section;
(B) Using other electronic data sources that have been approved by
HHS, based on evidence showing that such data sources are sufficiently
accurate and offer less administrative complexity than paper
verification; or
(C) If electronic data are unavailable or do not support an
applicant's attestation, the Exchange must follow the procedures
specified in Sec. 155.315(f)(1) through (4).
(D) If, following the 90-day period described in paragraph
(c)(3)(vi)(C) of this section, an applicant has not responded to a
request for additional information from the Exchange and the data
sources specified in paragraph (c)(1) of this section indicate that an
applicant in the tax filer's family is eligible for Medicaid or CHIP,
the Exchange must not provide the applicant with eligibility for
advance payments of the premium tax credit, cost-sharing reductions,
Medicaid, CHIP or the BHP, if a BHP is operating in the service area of
the Exchange.
(E) If, at the conclusion of the period specified in paragraph
(c)(3)(vi)(C) of this section, the Exchange remains unable to verify
the applicant's attestation, the Exchange must determine the
applicant's eligibility based on the information described in paragraph
(c)(3)(ii)(A) of this section, notify the applicant of such
determination in accordance with the notice requirements specified in
Sec. 155.310(g), and implement such determination in accordance with
the effective dates specified in Sec. 155.330(f).
(F) If, at the conclusion of the period specified in paragraph
(c)(3)(vi)(C) of this section, the Exchange remains unable to verify
the applicant's attestation for the tax filer and the information
described in paragraph (c)(3)(ii)(A) of this section is unavailable,
the Exchange must determine the tax filer ineligible for advance
payments of the premium tax credit and cost-sharing reductions, notify
the applicant of such determination in accordance with the notice
requirement specified in Sec. 155.310(g), and discontinue any advance
payments of the premium tax credit and cost-sharing reductions in
accordance with the effective dates specified in Sec. 155.330(f).
(vii) For the purposes of this paragraph (c)(3), ``household
income'' means household income as specified in section 36B(d)(2) of
the Code.
(viii) For purposes of paragraph (c)(3) of this section, ``family
size'' means family size as specified in section 36B(d)(1) of the Code.
(4) The Exchange must provide education and assistance to an
applicant regarding the process specified in this paragraph.
(d) Verification related to enrollment in an eligible employer-
sponsored plan. (1) Except as provided in paragraph (d)(2) of this
section, the Exchange must verify whether an applicant who requested an
eligibility determination for insurance affordability programs is
enrolled in an eligible employer-sponsored plan or reasonably expects
to be enrolled in an eligible employer-sponsored plan for the benefit
year for which coverage is requested by accepting an applicant's
attestation without further verification.
(2) If the Exchange finds that an applicant's attestation regarding
enrollment in an eligible employer-sponsored plan is not reasonably
compatible with other information provided by the applicant or in the
records of the Exchange, the Exchange must utilize data obtained
through electronic data sources to verify the attestation. If such data
sources are unavailable or information in such data sources is not
reasonably compatible with the applicant's attestation, the Exchange
may request additional documentation to support the attestation within
the procedures specified in Sec. 155.315(f).
(e) Verification related to eligibility for qualifying coverage in
an eligible employer-sponsored plan. (1) The Exchange must require an
applicant to attest to an applicant's eligibility for qualifying
coverage in an eligible employer-sponsored plan for the benefit year
for which coverage is requested for the purposes of eligibility for
advance payments of the premium tax credit and cost-sharing reductions,
and to provide information identified in section 1411(b)(4) of the
Affordable Care Act.
(2) The Exchange must verify whether an applicant is eligible for
qualifying coverage in an eligible employer-sponsored plan for the
purposes of eligibility for advance payments of the premium tax credit
and cost-sharing reductions.
(f) Additional verification related to immigration status for
Medicaid and CHIP. (1) For purposes of determining eligibility for
Medicaid, the Exchange must verify whether an applicant who does not
attest to being a citizen or a national has satisfactory immigration
status to be eligible for Medicaid, as required by 42 CFR 435.406 and,
if applicable under the State Medicaid plan, section 1903(v)(4) of the
Act.
(2) For purposes of determining eligibility for CHIP, the Exchange
must verify whether an applicant who does not attest to being a citizen
or a national has satisfactory immigration status to be eligible for
CHIP, in accordance with 42 CFR 457.320(b) and if applicable under the
State Child Health Plan, section 2107(e)(1)(J) of the Act.
Sec. 155.330 Eligibility redetermination during a benefit year.
(a) General requirement. The Exchange must redetermine the
eligibility of an enrollee in a QHP through the Exchange during the
benefit year if it receives and verifies new information reported by an
enrollee or identifies updated information through the data matching
described in paragraph (d) of this section.
(b) Requirement for individuals to report changes. (1) Except as
specified in paragraphs (b)(2) and (3) of this section, the Exchange
must require an enrollee to report any change with respect to the
eligibility standards specified in Sec. 155.305 within 30 days of such
change.
(2) The Exchange must not require an enrollee who did not request
an eligibility determination for insurance affordability programs to
report changes that affect eligibility for insurance affordability
programs.
(3) The Exchange may establish a reasonable threshold for changes
in income, such that an enrollee who experiences a change in income
that is below the threshold is not required to report such change.
(4) The Exchange must allow an enrollee, or an application filer,
on behalf of the enrollee, to report changes via the channels available
for the submission of an application, as described in Sec. 155.405(c).
(c) Verification of reported changes. The Exchange must--
(1) Verify any information reported by an enrollee in accordance
with the processes specified in Sec. Sec. 155.315 and 155.320 prior to
using such information in an eligibility redetermination; and
(2) Provide periodic electronic notifications regarding the
requirements for reporting changes and an enrollee's opportunity to
report any changes as described in paragraph (b)(3) of this section, to
an enrollee who has elected to receive electronic notifications,
[[Page 18459]]
unless he or she has declined to receive notifications under this
paragraph (c)(2).
(d) Periodic examination of data sources. (1) The Exchange must
periodically examine available data sources described in Sec.
155.315(b)(1) and Sec. 155.320(b) to identify the following changes:
(i) Death; and
(ii) Eligibility determinations for Medicare, Medicaid, CHIP, or
the BHP, if a BHP is operating in the service area of the Exchange.
(2) Flexibility. The Exchange may make additional efforts to
identify and act on changes that may affect an enrollee's eligibility
for enrollment in a QHP through the Exchange or for insurance
affordability programs, provided that such efforts--
(i) Would reduce the administrative costs and burdens on
individuals while maintaining accuracy and minimizing delay, that it
would not undermine coordination with Medicaid and CHIP, and that
applicable requirements under Sec. Sec. 155.260, 155.270, 155.315(i),
and section 6103 of the Code with respect to the confidentiality,
disclosure, maintenance, or use of such information will be met; and
(ii) Comply with the standards specified in paragraphs (e)(2) and
(3) of this section.
(e) Redetermination and notification of eligibility. (1) Enrollee-
reported data. If the Exchange verifies updated information reported by
an enrollee, the Exchange must--
(i) Redetermine the enrollee's eligibility in accordance with the
standards specified in Sec. 155.305;
(ii) Notify the enrollee regarding the determination in accordance
with the requirements specified in Sec. 155.310(g); and
(iii) Notify the enrollee's employer, as applicable, in accordance
with the requirements specified in Sec. 155.310(h).
(2) Data matching not regarding income, family size and family
composition. If the Exchange identifies updated information through the
data matching taken in accordance with paragraph (d)(1) or through
other data matching under paragraph (d)(2) of this section, with the
exception of data matching related to income, the Exchange must--
(i) Notify the enrollee regarding the updated information, as well
as the enrollee's projected eligibility determination after considering
such information;
(ii) Allow an enrollee 30 days from the date of the notice to
notify the Exchange that such information is inaccurate; and
(iii) If the enrollee responds contesting the updated information,
proceed in accordance with Sec. 155.315(f).
(iv) If the enrollee does not respond within the 30-day period
specified in paragraph (e)(2)(ii), proceed in accordance with
paragraphs (e)(1)(i) and (ii) of this section.
(3) Data matching regarding income, family size and family
composition. If the Exchange identifies updated information regarding
income, family size and composition through the data matching taken in
accordance with paragraph (c)(2) of this section, the Exchange must--
(i) Follow procedures described in paragraph (e)(2)(i) and (ii) of
this section; and
(ii) If the enrollee responds confirming the updated information or
providing more up to date information, proceed in accordance with
paragraphs (e)(1)(i) and (ii) of this section.
(iii) If the enrollee does not respond within the 30-day period
specified in paragraph (e)(2)(ii) of this section, maintain the
enrollee's existing eligibility determination without considering the
updated information.
(f) Effective dates. (1) Except as specified in paragraphs (f)(2)
or (3) of this section, the Exchange must implement changes resulting
from a redetermination under this section on the first day of the month
following the date of the notice described in paragraph (e)(1)(ii) of
this section.
(2) The Exchange may determine a reasonable point in a month after
which a change captured through a redetermination will not be effective
until the first day of the month after the month specified in paragraph
(f)(1) of this section. Such reasonable point in a month must be no
earlier than the date described in Sec. 155.420(b)(2).
(3) In the case of a redetermination that results in an enrollee
being ineligible to continue his or her enrollment in a QHP through the
Exchange, the Exchange must maintain his or her eligibility for
enrollment in a QHP without advance payments of the premium tax credit
and cost-sharing reductions, in accordance with the effective dates
described in Sec. 155.430(d)(3).
Sec. 155.335 Annual eligibility redetermination.
(a) General requirement. Except as specified in paragraph (l) of
this section, the Exchange must redetermine the eligibility of an
enrollee in a QHP through the Exchange on an annual basis.
(b) Updated income and family size information. In the case of an
enrollee who requested an eligibility determination for insurance
affordability programs in accordance with Sec. 155.310(b), the
Exchange must request updated tax return information, if the enrollee
has authorized the request of such tax return information, and data
regarding MAGI-based income as described in Sec. 155.320(c)(1) for use
in the enrollee's eligibility redetermination.
(c) Notice to enrollee. The Exchange must provide an enrollee with
an annual redetermination notice including the following:
(1) The data obtained under paragraph (b) of this section, if
applicable; and
(2) The data used in the enrollee's most recent eligibility
determination; and
(3) The enrollee's projected eligibility determination for the
following year, after considering any updated information described in
paragraph (c)(1) of this section, including, if applicable, the amount
of any advance payments of the premium tax credit and the level of any
cost-sharing reductions or eligibility for Medicaid, CHIP or BHP.
(d) Timing. (1) For redeterminations under this section for
coverage effective January 1, 2015, the Exchange must satisfy the
notice provisions of paragraph (c) of this section and Sec. 155.410(d)
through a single, coordinated notice.
(2) For redeterminations under this section for coverage effective
on or after January 1, 2017, the Exchange may send the notice specified
in paragraph (c) of this section separately from the notice of annual
open enrollment specified in Sec. 155.410(d), provided that--
(i) The Exchange sends the notice specified in paragraph (c) of
this section no earlier than the date of the notice of annual open
enrollment specified in Sec. 155.410(d); and
(ii) The timing of the notice specified in paragraph (c) of this
section allows a reasonable amount of time for the enrollee to review
the notice, provide a timely response, and for the Exchange to
implement any changes in coverage elected during the annual open
enrollment period.
(e) Changes reported by enrollees. (1) The Exchange must require an
enrollee to report any changes with respect to the information listed
in the notice described in paragraph (c) of this section within 30 days
from the date of the notice.
(2) The Exchange must allow an enrollee, or an application filer,
on behalf of the enrollee, to report changes via the channels available
for the submission of an application, as described in Sec.
155.405(c)(2).
[[Page 18460]]
(f) Verification of reported changes. The Exchange must verify any
information reported by an enrollee under paragraph (e) of this section
using the processes specified in Sec. 155.315 and Sec. 155.320,
including the relevant provisions in those sections regarding
inconsistencies, prior to using such information to determine
eligibility.
(g) Response to redetermination notice. (1) The Exchange must
require an enrollee, or an application filer, on behalf of the
enrollee, to sign and return the notice described in paragraph (c) of
this section.
(2) To the extent that an enrollee does not sign and return the
notice described in paragraph (c) of this section within the 30-day
period specified in paragraph (e) of this section, the Exchange must
proceed in accordance with the procedures specified in paragraph (h)(1)
of this section.
(h) Redetermination and notification of eligibility. (1) After the
30-day period specified in paragraph (e) of this section has elapsed,
the Exchange must--
(i) Redetermine the enrollee's eligibility in accordance with the
standards specified in Sec. 155.305 using the information provided to
the individual in the notice specified in paragraph (c), as
supplemented with any information reported by the enrollee and verified
by the Exchange in accordance with paragraphs (e) and (f) of this
section;
(ii) Notify the enrollee in accordance with the requirements
specified in Sec. 155.310(g); and
(iii) If applicable, notify the enrollee's employer, in accordance
with the requirements specified in Sec. 155.310(h).
(2) If an enrollee reports a change with respect to the information
provided in the notice specified in paragraph (c) of this section that
the Exchange has not verified as of the end of the 30-day period
specified in paragraph (e) of this section, the Exchange must
redetermine the enrollee's eligibility after completing verification,
as specified in paragraph (f) of this section.
(i) Effective date of annual redetermination. The Exchange must
ensure that a redetermination under this section is effective on the
first day of the coverage year following the year in which the Exchange
provided the notice in paragraph (c) of this section, or in accordance
with the rules specified in Sec. 155.330(f) regarding effective dates,
whichever is later.
(j) Renewal of coverage. If an enrollee remains eligible for
coverage in a QHP upon annual redetermination, such enrollee will
remain in the QHP selected the previous year unless such enrollee
terminates coverage from such plan, including termination of coverage
in connection with enrollment in a different QHP, in accordance with
Sec. 155.430.
(k) Authorization of the release of tax data to support annual
redetermination. (1) The Exchange must have authorization from an
enrollee in order to obtain updated tax return information described in
paragraph (b) of this section for purposes of conducting an annual
redetermination.
(2) The Exchange is authorized to obtain the updated tax return
information described in paragraph (b) of this section for a period of
no more than five years based on a single authorization, provided
that--
(i) An individual may decline to authorize the Exchange to obtain
updated tax return information; or
(ii) An individual may authorize the Exchange to obtain updated tax
return information for fewer than five years; and
(iii) The Exchange must allow an individual to discontinue, change,
or renew his or her authorization at any time.
(l) Limitation on redetermination. To the extent that an enrollee
has requested an eligibility determination for insurance affordability
programs in accordance with Sec. 155.310(b) and the Exchange does not
have an active authorization to obtain tax data as a part of the annual
redetermination process, the Exchange must notify the enrollee in
accordance with the timing described in paragraph (d) of this section.
The Exchange may not proceed with the redetermination process described
in paragraphs (c) and (e) through (j) of this section until such
authorization has been obtained or the enrollee discontinues his or her
request for an eligibility determination for insurance affordability
programs in accordance with Sec. 155.310(b).
Sec. 155.340 Administration of advance payments of the premium tax
credit and cost-sharing reductions.
(a) Requirement to provide information to enable advance payments
of the premium tax credit and cost-sharing reductions. In the event
that the Exchange determines that a tax filer is eligible for advance
payments of the premium tax credit, an applicant is eligible for cost-
sharing reductions, or that such eligibility for such programs has
changed, the Exchange must, simultaneously--
(1) Transmit eligibility and enrollment information to HHS
necessary to enable HHS to begin, end, or change advance payments of
the premium tax credit or cost-sharing reductions; and
(2) Notify and transmit information necessary to enable the issuer
of the QHP to implement, discontinue the implementation, or modify the
level of advance payments of the premium tax credit or cost-sharing
reductions, as applicable, including:
(i) The dollar amount of the advance payment; and
(ii) The cost-sharing reductions eligibility category.
(b) Requirement to provide information related to employer
responsibility. (1) In the event that the Exchange determines that an
individual is eligible for advance payments of the premium tax credit
or cost-sharing reductions based in part on a finding that an
individual's employer does not provide minimum essential coverage, or
provides minimum essential coverage that is unaffordable, within the
standard of section 36B(c)(2)(C)(i) of the Code, or does not meet the
minimum value requirement specified in section 36B(c)(2)(C)(ii) of the
Code, the Exchange must transmit the individual's name and taxpayer
identification number to HHS.
(2) If an enrollee for whom advance payments of the premium tax
credit are made or who is receiving cost-sharing reductions notifies
the Exchange that he or she has changed employers, the Exchange must
transmit the enrollee's name and taxpayer identification number to HHS.
(3) In the event that an individual for whom advance payments of
the premium tax credit are made or who is receiving cost-sharing
reductions terminates coverage from a QHP through the Exchange during a
benefit year, the Exchange must--
(i) Transmit the individual's name and taxpayer identification
number, and the effective date of coverage termination, to HHS, which
will transmit it to the Secretary of the Treasury; and,
(ii) Transmit the individual's name and the effective date of the
termination of coverage to his or her employer.
(c) Requirement to provide information related to reconciliation of
advance payments of the premium tax credit. The Exchange must comply
with the requirements specified in section 36B(f)(3) of the Code
regarding reporting to the IRS and to taxpayers.
(d) Timeliness standard. The Exchange must transmit all information
required in accordance with paragraphs (a) and (b) of this section
promptly and without undue delay.
[[Page 18461]]
Sec. 155.345 Coordination with Medicaid, CHIP, the Basic Health
Program, and the Pre-existing Condition Insurance Plan.
(a) Agreements. The Exchange must enter into agreements with
agencies administering Medicaid, CHIP, and the BHP as are necessary to
fulfill the requirements of this subpart and provide copies of any such
agreements to HHS upon request. Such agreements must include a clear
delineation of the responsibilities of each program to--
(1) Minimize burden on individuals;
(2) Ensure prompt determinations of eligibility and enrollment in
the appropriate program without undue delay, based on the date the
application is submitted to or redetermination is initiated by the
agency administering Medicaid, CHIP, or the BHP, or to the Exchange;
and
(3) Ensure compliance with paragraphs (c), (d), (e), and (g) of
this section.
(b) Responsibilities related to individuals potentially eligible
for Medicaid based on other information or through other coverage
groups. For an applicant who is not eligible for Medicaid based on the
standards specified in Sec. 155.305(c), the Exchange must assess the
information provided by the applicant on his or her application to
determine whether he or she is potentially eligible for Medicaid based
on factors not otherwise considered in this subpart.
(c) Individuals requesting additional screening. The Exchange must
notify an applicant of the opportunity to request a full determination
of eligibility for Medicaid based on eligibility criteria that are not
described in Sec. 155.305(c), and provide such an opportunity. The
Exchange must also make such notification to an enrollee and provide an
enrollee such opportunity in any determination made in accordance with
Sec. 155.330 or Sec. 155.335.
(d) Notification of applicant and State Medicaid agency. If an
Exchange identifies an applicant as potentially eligible for Medicaid
under paragraph (b) of this section or an applicant requests a full
determination for Medicaid under paragraph (c) of this section, the
Exchange must--
(1) Transmit all information provided on the application and any
information obtained or verified by, the Exchange to the State Medicaid
agency, promptly and without undue delay; and
(2) Notify the applicant of such transmittal.
(e) Treatment of referrals to Medicaid on eligibility for advance
payments of the premium tax credit and cost-sharing reductions. The
Exchange must consider an applicant who is described in paragraph (d)
of this section and has not been determined eligible for Medicaid based
on the standards specified in Sec. 155.305(c) as ineligible for
Medicaid for purposes of eligibility for advance payments of the
premium tax credit or cost-sharing reductions until the State Medicaid
agency notifies the Exchange that the applicant is eligible for
Medicaid.
(f) Special rule. If the Exchange verifies that a tax filer's
household income, as defined in section 36B(d)(2) of the Code, is less
than 100 percent of the FPL for the benefit year for which coverage is
requested, determines that the tax filer is not eligible for advance
payments of the premium tax credit based on Sec. 155.305(f)(2), and
one or more applicants in the tax filer's household has been determined
ineligible for Medicaid and CHIP based on income, the Exchange must--
(1) Provide the applicant with any information regarding income
used in the Medicaid and CHIP eligibility determination; and
(2) Follow the procedures specified in Sec. 155.320(c)(3).
(g) Determination of eligibility for individuals submitting
applications directly to an agency administering Medicaid, CHIP, or the
BHP. The Exchange, in consultation with the agencies administering
Medicaid, CHIP, or the BHP, if a BHP is operating in the service area
of the Exchange, must establish procedures to ensure that an
eligibility determination for enrollment in a QHP, advance payments of
the premium tax credit and cost-sharing reductions is performed when an
application is submitted directly to an agency administering Medicaid,
CHIP, or the BHP, if a BHP is operating in the service area of the
Exchange. Under such procedures, the Exchange must--
(1) Accept, via secure electronic interface, all information
provided on the application and any information obtained or verified
by, the agency administering Medicaid, CHIP, or the BHP, if a BHP is
operating in the service area of the Exchange, for the individual, and
not require submission of another application;
(2) Not duplicate any eligibility and verification findings already
made by the transmitting agency, to the extent such findings are made
in accordance with this subpart;
(3) Not request information of documentation from the individual
already provided to another insurance affordability program and
included in the transmission of information provided on the application
or other information transmitted from the other program;
(4) Determine the individual's eligibility for enrollment in a QHP,
advance payments of the premium tax credit, and cost-sharing
reductions, promptly and without undue delay, and in accordance with
this subpart; and
(5) Provide for following a streamlined process for eligibility
determinations regardless of the agency that initially received an
application.
(h) Standards for sharing information between the Exchange and the
agencies administering Medicaid, CHIP, and the BHP. (1) The Exchange
must utilize a secure electronic interface to exchange data with the
agencies administering Medicaid, CHIP, and the BHP, if a BHP is
operating in the service area of the Exchange, including to verify
whether an applicant for insurance affordability programs has been
determined eligible for Medicaid, CHIP, or the BHP, as specified in
Sec. 155.320(b)(2), and for other functions required under this
subpart.
(2) Model agreements. The Exchange may utilize any model agreements
as established by HHS for the purpose of sharing data as described in
this section.
(i) Transition from the Pre-existing Condition Insurance Plan
(PCIP). The Exchange must follow procedures established in accordance
with 45 CFR 152.45 to transition PCIP enrollees to the Exchange to
ensure that there are no lapses in health coverage.
Sec. 155.350 Special eligibility standards and process for Indians.
(a) Eligibility for cost-sharing reductions. (1) The Exchange must
determine an applicant who is an Indian eligible for cost-sharing
reductions if he or she--
(i) Meets the requirements specified in Sec. 155.305(a) and Sec.
155.305(f);
(ii) Is expected to have a household income, as defined in section
36B(d)(2) of the Code, that does not exceed 300 percent of the FPL for
the benefit year for which coverage is requested.
(2) The Exchange may only provide cost-sharing reductions to an
individual who is an Indian if he or she is enrolled in a QHP through
the Exchange.
(b) Special cost-sharing rule for Indians regardless of income. The
Exchange must determine an applicant eligible for the special cost-
sharing rule described in section 1402(d)(2) of the Affordable Care Act
if he or she is an Indian, without requiring the applicant to request
an eligibility determination for insurance affordability programs in
accordance with Sec. 155.310(b) in order to qualify for this rule.
(c) Verification related to Indian status. To the extent that an
applicant attests that he or she is an Indian, the
[[Page 18462]]
Exchange must verify such attestation by--
(1) Utilizing any relevant documentation verified in accordance
with Sec. 155.315(f);
(2) Relying on any electronic data sources that are available to
the Exchange and which have been approved by HHS for this purpose,
based on evidence showing that such data sources are sufficiently
accurate and offer less administrative complexity than paper
verification; or
(3) To the extent that approved data sources are unavailable, an
individual is not represented in available data sources, or data
sources are not reasonably compatible with an applicant's attestation,
the Exchange must follow the procedures specified in Sec. 155.315(f)
and verify documentation provided by the applicant in accordance with
the standards for acceptable documentation provided in section
1903(x)(3)(B)(v) of the Social Security Act.
Sec. 155.355 Right to appeal.
Individual appeals. The Exchange must include the notice of the
right to appeal and instructions regarding how to file an appeal in any
eligibility determination notice issued to the applicant in accordance
with Sec. 155.310(g), Sec. 155.330(e)(1)(ii), or Sec.
155.335(h)(1)(ii).
Subpart E--Exchange Functions in the Individual Market: Enrollment
in Qualified Health Plans
Sec. 155.400 Enrollment of qualified individuals into QHPs.
(a) General requirements. The Exchange must accept a QHP selection
from an applicant who is determined eligible for enrollment in a QHP in
accordance with subpart D, and must--
(1) Notify the issuer of the applicant's selected QHP; and
(2) Transmit information necessary to enable the QHP issuer to
enroll the applicant.
(b) Timing of data exchange. The Exchange must:
(1) Send eligibility and enrollment information to QHP issuers and
HHS promptly and without undue delay; and
(2) Establish a process by which a QHP issuer acknowledges the
receipt of such information.
(c) Records. The Exchange must maintain records of all enrollments
in QHP issuers through the Exchange.
(d) Reconcile files. The Exchange must reconcile enrollment
information with QHP issuers and HHS no less than on a monthly basis.
Sec. 155.405 Single streamlined application.
(a) The application. The Exchange must use a single streamlined
application to determine eligibility and to collect information
necessary for:
(1) Enrollment in a QHP;
(2) Advance payments of the premium tax credit;
(3) Cost-sharing reductions; and
(4) Medicaid, CHIP, or the BHP, where applicable.
(b) Alternative application. If the Exchange seeks to use an
alternative application, such application, as approved by HHS, must
request the minimum information necessary for the purposes identified
in paragraph (a) of this section.
(c) Filing the single streamlined application. The Exchange must--
(1) Accept the single streamlined application from an application
filer;
(2) Provide the tools to file an application--
(i) Via an Internet Web site;
(ii) By telephone through a call center;
(iii) By mail; and
(iv) In person, with reasonable accommodations for those with
disabilities, as defined by the Americans with Disabilities Act.
Sec. 155.410 Initial and annual open enrollment periods.
(a) General requirements. (1) The Exchange must provide an initial
open enrollment period and annual open enrollment periods consistent
with this section, during which qualified individuals may enroll in a
QHP and enrollees may change QHPs.
(2) The Exchange may only permit a qualified individual to enroll
in a QHP or an enrollee to change QHPs during the initial open
enrollment period specified in paragraph (b) of this section, the
annual open enrollment period specified in paragraph (e) of this
section, or a special enrollment period described in Sec. 155.420 of
this subpart for which the qualified individual has been determined
eligible.
(b) Initial open enrollment period. The initial open enrollment
period begins October 1, 2013 and extends through March 31, 2014.
(c) Effective coverage dates for initial open enrollment period.
(1) Regular effective dates. For a QHP selection received by the
Exchange from a qualified individual--
(i) On or before December 15, 2013, the Exchange must ensure a
coverage effective date of January 1, 2014;
(ii) Between the first and fifteenth day of any subsequent month
during the initial open enrollment period, the Exchange must ensure a
coverage effective date of the first day of the following month; and
(iii) Between the sixteenth and last day of the month for any month
between December 2013 and March 31, 2014, the Exchange must ensure a
coverage effective date of the first day of the second following month.
(2) Option for earlier effective dates. Subject to the Exchange
demonstrating to HHS that all of its participating QHP issuers agree to
effectuate coverage in a timeframe shorter than discussed in paragraphs
(c)(1)(ii) and (iii) of this section, the Exchange may do one or both
of the following for all applicable individuals:
(i) For a QHP selection received by the Exchange from a qualified
individual in accordance with the dates specified in paragraph
(c)(1)(ii) or (iii) of this section, the Exchange may provide a
coverage effective date for a qualified individual earlier than
specified in such paragraphs, provided that either--
(A) The qualified individual has not been determined eligible for
advance payments of the premium tax credit or cost-sharing reductions;
or
(B) The qualified individual pays the entire premium for the first
partial month of coverage as well as all cost sharing, thereby waiving
the benefit of advance payments of the premium tax credit and cost-
sharing reduction payments until the first of the next month.
(ii) For a QHP selection received by the Exchange from a qualified
individual on a date set by the Exchange after the fifteenth of the
month for any month between December 2013 and March 31, 2014, the
Exchange may provide a coverage effective date of the first of the
following month.
(d) Notice of annual open enrollment period. Starting in 2014, the
Exchange must provide a written annual open enrollment notification to
each enrollee no earlier than September 1, and no later than September
30.
(e) Annual open enrollment period. For benefit years beginning on
or after January 1, 2015, the annual open enrollment period begins
October 15 and extends through December 7 of the preceding calendar
year.
(f) Effective date for coverage after the annual open enrollment
period. The Exchange must ensure coverage is effective as of the first
day of the following benefit year for a qualified individual who has
made a QHP selection during the annual open enrollment period.
(g) Automatic enrollment. The Exchange may automatically enroll
qualified individuals, at such time and in such manner as HHS may
specify, and subject to the Exchange demonstrating to HHS that it has
good
[[Page 18463]]
cause to perform such automatic enrollments.
Sec. 155.420 Special enrollment periods.
(a) General requirements. The Exchange must provide special
enrollment periods consistent with this section, during which qualified
individuals may enroll in QHPs and enrollees may change QHPs.
(b) Effective dates. (1) Regular effective dates. Except as
specified in paragraphs (b)(2) and (3) of this section, for a QHP
selection received by the Exchange from a qualified individual--
(i) Between the first and the fifteenth day of any month, the
Exchange must ensure a coverage effective date of the first day of the
following month; and
(ii) Between the sixteenth and the last day of any month, the
Exchange must ensure a coverage effective date of the first day of the
second following month.
(2) Special effective dates. (i) In the case of birth, adoption or
placement for adoption, the Exchange must ensure that coverage is
effective on the date of birth, adoption, or placement for adoption,
but advance payments of the premium tax credit and cost-sharing
reductions, if applicable, are not effective until the first day of the
following month, unless the birth, adoption, or placement for adoption
occurs on the first day of the month; and
(ii) In the case of marriage, or in the case where a qualified
individual loses minimum essential coverage, as described in paragraph
(d)(1) of this section, the Exchange must ensure coverage is effective
on the first day of the following month.
(3) Option for earlier effective dates. Subject to the Exchange
demonstrating to HHS that all of its participating QHP issuers agree to
effectuate coverage in a timeframe shorter than discussed in paragraph
(b)(1) or (b)(2)(ii) of this section, the Exchange may do one or both
of the following for all applicable individuals:
(i) For a QHP selection received by the Exchange from a qualified
individual in accordance with the dates specified in paragraph (b)(1)
or (b)(2)(ii) of this section, the Exchange may provide a coverage
effective date for a qualified individual earlier than specified in
such paragraphs, provided that either--
(A) The qualified individual has not been determined eligible for
advance payments of the premium tax credit or cost-sharing reductions;
or
(B) The qualified individual pays the entire premium for the first
partial month of coverage as well as all cost sharing, thereby waiving
the benefit of advance payments of the premium tax credit and cost-
sharing reduction payments until the first of the next month.
(ii) For a QHP selection received by the Exchange from a qualified
individual on a date set by the Exchange after the fifteenth of the
month, the Exchange may provide a coverage effective date of the first
of the following month.
(c) Length of special enrollment periods. Unless specifically
stated otherwise herein, a qualified individual or enrollee has 60 days
from the date of a triggering event to select a QHP.
(d) Special enrollment periods. The Exchange must allow qualified
individuals and enrollees to enroll in or change from one QHP to
another as a result of the following triggering events:
(1) A qualified individual or dependent loses minimum essential
coverage;
(2) A qualified individual gains a dependent or becomes a dependent
through marriage, birth, adoption or placement for adoption;
(3) An individual, who was not previously a citizen, national, or
lawfully present individual gains such status;
(4) A qualified individual's enrollment or non-enrollment in a QHP
is unintentional, inadvertent, or erroneous and is the result of the
error, misrepresentation, or inaction of an officer, employee, or agent
of the Exchange or HHS, or its instrumentalities as evaluated and
determined by the Exchange. In such cases, the Exchange may take such
action as may be necessary to correct or eliminate the effects of such
error, misrepresentation, or inaction;
(5) An enrollee adequately demonstrates to the Exchange that the
QHP in which he or she is enrolled substantially violated a material
provision of its contract in relation to the enrollee;
(6) An individual is determined newly eligible or newly ineligible
for advance payments of the premium tax credit or has a change in
eligibility for cost-sharing reductions, regardless of whether such
individual is already enrolled in a QHP. The Exchange must permit
individuals whose existing coverage through an eligible employer-
sponsored plan will no longer be affordable or provide minimum value
for his or her employer's upcoming plan year to access this special
enrollment period prior to the end of his or her coverage through such
eligible employer-sponsored plan;
(7) A qualified individual or enrollee gains access to new QHPs as
a result of a permanent move;
(8) An Indian, as defined by section 4 of the Indian Health Care
Improvement Act, may enroll in a QHP or change from one QHP to another
one time per month; and
(9) A qualified individual or enrollee demonstrates to the
Exchange, in accordance with guidelines issued by HHS, that the
individual meets other exceptional circumstances as the Exchange may
provide.
(e) Loss of minimum essential coverage. Loss of minimum essential
coverage includes those circumstances described in 26 CFR 54.9801-
6(a)(3)(i) through (iii). Loss of coverage does not include termination
or loss due to--
(1) Failure to pay premiums on a timely basis, including COBRA
premiums prior to expiration of COBRA coverage, or
(2) Situations allowing for a rescission as specified in 45 CFR
147.128.
Sec. 155.430 Termination of coverage.
(a) General requirements. The Exchange must determine the form and
manner in which coverage in a QHP may be terminated.
(b) Termination events. (1) The Exchange must permit an enrollee to
terminate his or her coverage in a QHP, including as a result of the
enrollee obtaining other minimum essential coverage, with appropriate
notice to the Exchange or the QHP.
(2) The Exchange may initiate termination of an enrollee's coverage
in a QHP, and must permit a QHP issuer to terminate such coverage, in
the following circumstances:
(i) The enrollee is no longer eligible for coverage in a QHP
through the Exchange;
(ii) Non-payment of premiums for coverage of the enrollee, and
(A) The 3-month grace period required for individuals receiving
advance payments of the premium tax credit has been exhausted as
described in Sec. 156.270(g); or,
(B) Any other grace period not described in paragraph (b)(2)(ii)(A)
of this section has been exhausted;
(iii) The enrollee's coverage is rescinded in accordance with Sec.
147.128 of this subtitle;
(iv) The QHP terminates or is decertified as described in Sec.
155.1080; or
(v) The enrollee changes from one QHP to another during an annual
open enrollment period or special enrollment period in accordance with
Sec. 155.410 or Sec. 155.420.
(c) Termination of coverage tracking and approval. The Exchange
must--
(1) Establish mandatory procedures for QHP issuers to maintain
records of termination of coverage;
[[Page 18464]]
(2) Send termination information to the QHP issuer and HHS,
promptly and without undue delay, at such time and in such manner as
HHS may specify, in accordance with Sec. 155.400(b).
(3) Require QHP issuers to make reasonable accommodations for all
individuals with disabilities (as defined by the Americans with
Disabilities Act) before terminating coverage for such individuals; and
(4) Retain records in order to facilitate audit functions.
(d) Effective dates for termination of coverage. (1) For purposes
of this section, reasonable notice is defined as fourteen days from the
requested effective date of termination.
(2) In the case of a termination in accordance with paragraph
(b)(1) of this section, the last day of coverage is--
(i) The termination date specified by the enrollee, if the enrollee
provides reasonable notice;
(ii) Fourteen days after the termination is requested by the
enrollee, if the enrollee does not provide reasonable notice; or
(iii) On a date determined by the enrollee's QHP issuer, if the
enrollee's QHP issuer is able to effectuate termination in fewer than
fourteen days and the enrollee requests an earlier termination
effective date.
(iv) If the enrollee is newly eligible for Medicaid, CHIP, or the
BHP, if a BHP is operating in the service area of the Exchange, the
last day of coverage is the day before such coverage begins.
(3) In the case of a termination in accordance with paragraph
(b)(2)(i) of this section, the last day of coverage is the last day of
the month following the month in which the notice described in Sec.
155.330(e)(1)(ii) is sent by the Exchange unless the individual
requests an earlier termination effective date per paragraph (b)(1) of
this section.
(4) In the case of a termination in accordance with paragraph
(b)(2)(ii)(A) of this section, the last day of coverage will be the
last day of the first month of the 3-month grace period.
(5) In the case of a termination in accordance with paragraph
(b)(2)(ii)(B) of this section, the last day of coverage should be
consistent with existing State laws regarding grace periods.
(6) In the case of a termination in accordance with paragraph
(b)(2)(v) of this section, the last day of coverage in an enrollee's
prior QHP is the day before the effective date of coverage in his or
her new QHP.
0
4. Add subpart H to read as follows:
Subpart H--Exchange Functions: Small Business Health Options Program
(SHOP)
Sec.
155.700 Standards for the establishment of a SHOP.
155.705 Functions of a SHOP.
155.710 Eligibility standards for SHOP.
155.715 Eligibility determination process for SHOP.
155.720 Enrollment of employees into QHPs under SHOP.
155.725 Enrollment periods under SHOP.
155.730 Application standards for SHOP.
Subpart H--Exchange Functions: Small Business Health Options
Program (SHOP)
Sec. 155.700 Standards for the establishment of a SHOP.
(a) General requirement. An Exchange must provide for the
establishment of a SHOP that meets the requirements of this subpart and
is designed to assist qualified employers and facilitate the enrollment
of qualified employees into qualified health plans.
(b) Definition. For the purposes of this subpart:
Group participation rule means a requirement relating to the
minimum number of participants or beneficiaries that must be enrolled
in relation to a specified percentage or number of eligible individuals
or employees of an employer.
Sec. 155.705 Functions of a SHOP.
(a) Exchange functions that apply to SHOP. The SHOP must carry out
all the required functions of an Exchange described in this subpart and
in subparts C, E, and K of this part, except:
(1) Requirements related to individual eligibility determinations
in subpart D of this part;
(2) Requirements related to enrollment of qualified individuals
described in subpart E of this part;
(3) The requirement to issue certificates of exemption in
accordance with Sec. 155.200(b); and
(4) Requirements related to the payment of premiums by individuals,
Indian tribes, tribal organizations and urban Indian organizations
under Sec. 155.240.
(b) Unique functions of a SHOP. The SHOP must also provide the
following unique functions:
(1) Enrollment and eligibility functions. The SHOP must adhere to
the requirements outlined in Sec. Sec. 155.710, 155.715, 155.720,
155.725, and 155.730.
(2) Employer choice requirements. With regard to QHPs offered
through the SHOP, the SHOP must allow a qualified employer to select a
level of coverage as described in section 1302(d)(1) of the Affordable
Care Act, in which all QHPs within that level are made available to the
qualified employees of the employer.
(3) SHOP options with respect to employer choice requirements. With
regard to QHPs offered through the SHOP, the SHOP may allow a qualified
employer to make one or more QHPs available to qualified employees by a
method other than the method described in paragraph (b)(2) of this
section.
(4) Premium aggregation. The SHOP must perform the following
functions related to premium payment administration:
(i) Provide each qualified employer with a bill on a monthly basis
that identifies the employer contribution, the employee contribution,
and the total amount that is due to the QHP issuers from the qualified
employer;
(ii) Collect from each employer the total amount due and make
payments to QHP issuers in the SHOP for all enrollees; and
(iii) Maintain books, records, documents, and other evidence of
accounting procedures and practices of the premium aggregation program
for each benefit year for at least 10 years.
(5) QHP Certification. With respect to certification of QHPs in the
small group market, the SHOP must ensure each QHP meets the
requirements specified in Sec. 156.285 of this subchapter.
(6) Rates and rate changes. The SHOP must--
(i) Require all QHP issuers to make any change to rates at a
uniform time that is either quarterly, monthly, or annually; and
(ii) Prohibit all QHP issuers from varying rates for a qualified
employer during the employer's plan year.
(7) QHP availability in merged markets. If a State merges the
individual market and the small group market risk pools in accordance
with section 1312(c)(3) of the Affordable Care Act, the SHOP may permit
a qualified employee to enroll in any QHP meeting the following
requirements of the small group market:
(i) Deductible maximums described in section 1302(c) of the
Affordable Care Act; and
(ii) Levels of coverage described in section 1302(d) of the
Affordable Care Act.
(8) QHP availability in unmerged markets. If a State does not merge
the individual and small group market risk pools, the SHOP must permit
each qualified employee to enroll only in QHPs in the small group
market.
(9) SHOP expansion to large group market. If a State elects to
expand the SHOP to the large group market, a SHOP must allow issuers of
health insurance coverage in the large group market in the State to
offer QHPs in such market
[[Page 18465]]
through a SHOP beginning in 2017 provided that a large employer meets
the qualified employer requirements other than that it be a small
employer.
(10) Participation rules. The SHOP may authorize uniform group
participation rules for the offering of health insurance coverage in
the SHOP. If the SHOP authorizes a minimum participation rate, such
rate must be based on the rate of employee participation in the SHOP,
not on the rate of employee participation in any particular QHP or QHPs
of any particular issuer.
(11) Premium calculator. In the SHOP, the premium calculator
described in Sec. 155.205(b)(6) must facilitate the comparison of
available QHPs after the application of any applicable employer
contribution in lieu of any advance payment of the premium tax credit
and any cost-sharing reductions.
Sec. 155.710 Eligibility standards for SHOP.
(a) General requirement. The SHOP must permit qualified employers
to purchase coverage for qualified employees through the SHOP.
(b) Employer eligibility requirements. An employer is a qualified
employer eligible to purchase coverage through a SHOP if such
employer--
(1) Is a small employer;
(2) Elects to offer, at a minimum, all full-time employees coverage
in a QHP through a SHOP; and
(3) Either--
(i) Has its principal business address in the Exchange service area
and offers coverage to all its full-time employees through that SHOP;
or
(ii) Offers coverage to each eligible employee through the SHOP
serving that employee's primary worksite.
(c) Participating in multiple SHOPs. If an employer meets the
criteria in paragraph (b) of this section and makes the election
described in (b)(3)(ii) of this section, a SHOP shall allow the
employer to offer coverage to those employees whose primary worksite is
in the SHOP's service area.
(d) Continuing eligibility. The SHOP must treat a qualified
employer which ceases to be a small employer solely by reason of an
increase in the number of employees of such employer as a qualified
employer until the qualified employer otherwise fails to meet the
eligibility criteria of this section or elects to no longer purchase
coverage for qualified employees through the SHOP.
(e) Employee eligibility requirements. An employee is a qualified
employee eligible to enroll in coverage through a SHOP if such employee
receives an offer of coverage from a qualified employer.
Sec. 155.715 Eligibility determination process for SHOP.
(a) General requirement. Before permitting the purchase of coverage
in a QHP, the SHOP must determine that the employer or individual who
requests coverage is eligible in accordance with the requirements of
Sec. 155.710.
(b) Applications. The SHOP must accept a SHOP single employer
application form from employers and the SHOP single employee
application form from employees wishing to elect coverage through the
SHOP, in accordance with the relevant standards of Sec. 155.730.
(c) Verification of eligibility. For the purpose of verifying
employer and employee eligibility, the SHOP--
(1) Must verify that an individual applicant is identified by the
employer as an employee to whom the qualified employer has offered
coverage and must otherwise accept the information attested to within
the application unless the information is inconsistent with the
employer-provided information;
(2) May establish, in addition to or in lieu of reliance on the
application, additional methods to verify the information provided by
the applicant on the applicable application;
(3) Must collect only the minimum information necessary for
verification of eligibility in accordance with the eligibility
standards described in Sec. 155.710; and
(4) May not perform individual eligibility determinations described
in sections 1411(b)(2) or 1411(c) of the Affordable Care Act.
(d) Eligibility adjustment period. (1) When the information
submitted on the SHOP single employer application is inconsistent with
the eligibility standards described in Sec. 155.710, the SHOP must--
(i) Make a reasonable effort to identify and address the causes of
such inconsistency, including through typographical or other clerical
errors;
(ii) Notify the employer of the inconsistency;
(iii) Provide the employer with a period of 30 days from the date
on which the notice described in paragraph (d)(1)(ii) of this section
is sent to the employer to either present satisfactory documentary
evidence to support the employer's application, or resolve the
inconsistency; and
(iv) If, after the 30-day period described in paragraph (d)(1)(iii)
of this section, the SHOP has not received satisfactory documentary
evidence, the SHOP must--
(A) Notify the employer of its denial of eligibility in accordance
with paragraph (e) of this section and of the employer's right to
appeal such determination; and
(B) If the employer was enrolled pending the confirmation or
verification of eligibility information, discontinue the employer's
participation in the SHOP at the end of the month following the month
in which the notice is sent.
(2) For an individual requesting eligibility to enroll in a QHP
through the SHOP for whom the SHOP receives information on the
application inconsistent with the employer provided information, the
SHOP must--
(i) Make a reasonable effort to identify and address the causes of
such inconsistency, including through typographical or other clerical
errors;
(ii) Notify the individual of the inability to substantiate his or
her employee status;
(iii) Provide the employee with a period of 30 days from the date
on which the notice described in paragraph (d)(2)(ii) of this section
is sent to the employee to either present satisfactory documentary
evidence to support the employee's application, or resolve the
inconsistency; and
(iv) If, after the 30-day period described in paragraph (d)(2)(iii)
of this section, the SHOP has not received satisfactory documentary
evidence, the SHOP must notify the employee of its denial of
eligibility in accordance with paragraph (f) of this section.
(e) Notification of employer eligibility. The SHOP must provide an
employer requesting eligibility to purchase coverage with a notice of
approval or denial of eligibility and the employer's right to appeal
such eligibility determination.
(f) Notification of employee eligibility. The SHOP must notify an
employee seeking to enroll in a QHP offered through the SHOP of the
determination by the SHOP whether the individual is eligible in
accordance with Sec. 155.710 and the employee's right to appeal such
determination.
(g) Notification of employer withdrawal from SHOP. If a qualified
employer ceases to purchase coverage through the SHOP, the SHOP must
ensure that--
(1) Each QHP terminates the coverage of the employer's qualified
employees enrolled in the QHP through the SHOP; and
(2) Each of the employer's qualified employees enrolled in a QHP
through the SHOP is notified of the termination of coverage prior to
such termination. Such notification must also provide information about
other potential sources of coverage, including access to
[[Page 18466]]
individual market coverage through the Exchange.
Sec. 155.720 Enrollment of employees into QHPs under SHOP.
(a) General requirements. The SHOP must process the SHOP single
employee applications of qualified employees to the applicable QHP
issuers and facilitate the enrollment of qualified employees in QHPs.
All references to QHPs in this section refer to QHPs offered through
the SHOP.
(b) Enrollment timeline and process. The SHOP must establish a
uniform enrollment timeline and process for all QHP issuers and
qualified employers to follow, which includes the following activities
that must occur before the effective date of coverage for qualified
employees:
(1) Determination of employer eligibility for purchase of coverage
in the SHOP as described in Sec. 155.715;
(2) Qualified employer selection of QHPs offered through the SHOP
to qualified employees, consistent with Sec. 155.705(b)(2) and (3);
(3) Provision of a specific timeframe during which the qualified
employer can select the level of coverage or QHP offering, as
appropriate;
(4) Provision of a specific timeframe for qualified employees to
provide relevant information to complete the application process;
(5) Determination and verification of employee eligibility for
enrollment through the SHOP;
(6) Processing enrollment of qualified employees into selected
QHPs; and
(7) Establishment of effective dates of employee coverage.
(c) Transfer of enrollment information. In order to enroll
qualified employees of a qualified employer participating in the SHOP,
the SHOP must--
(1) Transmit enrollment information on behalf of qualified
employees to QHP issuers in accordance with the timeline and process
described in paragraph (b) of this section; and
(2) Follow requirements set forth in Sec. 155.400(c) of this part.
(d) Payment. The SHOP must--
(1) Follow requirements set forth in Sec. 155.705(b)(4) of this
part; and
(2) Terminate participation of qualified employers that do not
comply with the process established in Sec. 155.705(b)(4).
(e) Notification of effective date. The SHOP must ensure that a QHP
issuer notifies a qualified employee enrolled in a QHP of the effective
date of coverage consistent with Sec. 156.260(b).
(f) Records. The SHOP must receive and maintain for at least 10
years records of enrollment in QHPs, including identification of--
(1) Qualified employers participating in the SHOP; and
(2) Qualified employees enrolled in QHPs.
(g) Reconcile files. The SHOP must reconcile enrollment information
and employer participation information with QHPs on no less than a
monthly basis.
(h) Employee termination of coverage from a QHP. If any employee
terminates coverage from a QHP, the SHOP must notify the employee's
employer.
(i) Reporting requirement for tax administration purposes. The SHOP
must report to the IRS employer participation, employer contribution,
and employee enrollment information in a time and format to be
determined by HHS.
Sec. 155.725 Enrollment periods under SHOP.
(a) General requirements. The SHOP must--
(1) Adhere to the start of the initial open enrollment period set
forth in Sec. 155.410;
(2) Ensure that enrollment transactions are sent to QHP issuers and
that such issuers adhere to coverage effective dates in accordance with
Sec. 156.260 of this subchapter; and
(3) Provide the special enrollment periods described in Sec.
155.420 excluding paragraphs (d)(3) and (6).
(b) Rolling enrollment in the SHOP. The SHOP must permit a
qualified employer to purchase coverage for its small group at any
point during the year. The employer's plan year must consist of the 12-
month period beginning with the qualified employer's effective date of
coverage.
(c) Annual employer election period. The SHOP must provide
qualified employers with a period of no less than 30 days prior to the
completion of the employer's plan year and before the annual employee
open enrollment period, in which the qualified employer may change its
participation in the SHOP for the next plan year, including--
(1) The method by which the qualified employer makes QHPs available
to qualified employees pursuant to Sec. 155.705(b)(2) and (3);
(2) The employer contribution towards the premium cost of coverage;
(3) The level of coverage offered to qualified employees as
described in Sec. 155.705(b)(2) and (3); and
(4) The QHP or QHPs offered to qualified employees in accordance
with Sec. 155.705.
(d) Annual employer election period notice. The SHOP must provide
notification to a qualified employer of the annual election period in
advance of such period.
(e) Annual employee open enrollment period. The SHOP must establish
a standardized annual open enrollment period of no less than 30 days
for qualified employees prior to the completion of the applicable
qualified employer's plan year and after that employer's annual
election period.
(f) Annual employee open enrollment period notice. The SHOP must
provide notification to a qualified employee of the annual open
enrollment period in advance of such period.
(g) Newly qualified employees. The SHOP must provide an employee
who becomes a qualified employee outside of the initial or annual open
enrollment period an enrollment period to seek coverage in a QHP
beginning on the first day of becoming a qualified employee.
(h) Effective dates. The SHOP must establish effective dates of
coverage for qualified employees consistent with the effective dates of
coverage described in Sec. 155.720.
(i) Renewal of coverage. If a qualified employee enrolled in a QHP
through the SHOP remains eligible for coverage, such employee will
remain in the QHP selected the previous year unless--
(1) The qualified employee terminates coverage from such QHP in
accordance with standards identified in Sec. 155.430;
(2) The qualified employee enrolls in another QHP if such option
exists; or
(3) The QHP is no longer available to the qualified employee.
Sec. 155.730 Application standards for SHOP.
(a) General requirements. Application forms used by the SHOP must
meet the requirements set forth in this section.
(b) Single employer application. The SHOP must use a single
application to determine employer eligibility and to collect
information necessary for purchasing coverage. Such application must
collect the following--
(1) Employer name and address of employer's locations;
(2) Number of employees;
(3) Employer Identification Number (EIN); and
(4) A list of qualified employees and their taxpayer identification
numbers.
(c) Single employee application. The SHOP must use a single
application for eligibility determination, QHP selection and enrollment
for qualified employees and their dependents.
(d) Model application. The SHOP may use the model single employer
application and the model single employee application provided by HHS.
(e) Alternative employer and employee application. The SHOP may use
an alternative application if such
[[Page 18467]]
application is approved by HHS and collects the following:
(1) In the case of the employer application, the information in
described in paragraph (b); and
(2) In the case of the employee application, the information
necessary to establish eligibility of the employee as a qualified
employee and to complete the enrollment of the qualified employee and
any dependents to be enrolled.
(f) Filing. The SHOP must allow an employer to file the SHOP single
employer application and employees to file the single employee
application in the form and manner described in Sec. 155.405(c).
(g) Additional safeguards. The SHOP may not provide to the employer
any information collected on the employee application with respect to
spouses or dependents other than the name, address, and birth date of
the spouse or dependent.
0
5. Subpart K is added to read as follows:
Subpart K--Exchange Functions: Certification of Qualified Health Plans
Sec.
155.1000 Certification standards for QHPs.
155.1010 Certification process for QHPs.
155.1020 QHP issuer rate and benefit information.
155.1040 Transparency in coverage.
155.1045 Accreditation timeline.
155.1050 Establishment of Exchange network adequacy standards.
155.1055 Service area of a QHP.
155.1065 Stand-alone dental plans.
155.1075 Recertification of QHPs.
155.1080 Decertification of QHPs.
Subpart K--Exchange Functions: Certification of Qualified Health
Plans
Sec. 155.1000 Certification standards for QHPs.
(a) Definition. The following definition applies in this subpart:
Multi-State plan means a health plan that is offered in accordance
with section 1334 of the Affordable Care Act.
(b) General requirement. The Exchange must offer only health plans
which have in effect a certification issued or are recognized as plans
deemed certified for participation in an Exchange as a QHP, unless
specifically provided for otherwise.
(c) General certification criteria. The Exchange may certify a
health plan as a QHP in the Exchange if--
(1) The health insurance issuer provides evidence during the
certification process in Sec. 155.1010 that it complies with the
minimum certification requirements outlined in subpart C of part 156,
as applicable; and
(2) The Exchange determines that making the health plan available
is in the interest of the qualified individuals and qualified
employers, except that the Exchange must not exclude a health plan--
(i) On the basis that such plan is a fee-for-service plan;
(ii) Through the imposition of premium price controls; or
(iii) On the basis that the health plan provides treatments
necessary to prevent patients' deaths in circumstances the Exchange
determines are inappropriate or too costly.
Sec. 155.1010 Certification process for QHPs.
(a) Certification procedures. The Exchange must establish
procedures for the certification of QHPs consistent with Sec.
155.1000(c).
(1) Completion date. The Exchange must complete the certification
of the QHPs that will be offered during the open enrollment period
prior to the beginning of such period, as outlined in Sec. 155.410.
(2) Ongoing compliance. The Exchange must monitor the QHP issuers
for demonstration of ongoing compliance with the certification
requirements in Sec. 155.1000(c).
(b) Exchange recognition of plans deemed certified for
participation in an Exchange. Notwithstanding paragraph (a) of this
section, an Exchange must recognize as certified QHPs:
(1) A multi-State plan certified by and under contract with the
U.S. Office of Personnel Management.
(2) A CO-OP QHP as described in subpart F of part 156 and deemed as
certified under Sec. 156.520(e).
Sec. 155.1020 QHP issuer rate and benefit information.
(a) Receipt and posting of rate increase justification. The
Exchange must ensure that a QHP issuer submits a justification for a
rate increase for a QHP prior to the implementation of such an
increase, except for multi-State plans, for which the U.S. Office of
Personnel Management will provide a process for the submission of rate
justifications. The Exchange must ensure that the QHP issuer has
prominently posted the justification on its Web site as required under
Sec. 156.210. To ensure consumer transparency, the Exchange must also
provide access to the justification on its Internet Web site described
in Sec. 155.205(b).
(b) Rate increase consideration. (1) The Exchange must consider
rate increases in accordance with section 1311(e)(2) of the Affordable
Care Act, which includes consideration of the following:
(i) A justification for a rate increase prior to the implementation
of the increase;
(ii) Recommendations provided to the Exchange by the State in
accordance with section 2794(b)(1)(B) of the PHS Act; and
(iii) Any excess of rate growth outside the Exchange as compared to
the rate of such growth inside the Exchange.
(2) This paragraph does not apply to multi-State plans for which
the U.S. Office of Personnel Management will provide a process for rate
increase consideration.
(c) Benefit and rate information. The Exchange must receive the
information described in this paragraph, at least annually, from QHP
issuers for each QHP in a form and manner to be specified by HHS.
Information about multi-State plans may be provided in a form and
manner determined by the U.S. Office of Personnel Management. The
information identified in this paragraph is:
(1) Rates;
(2) Covered benefits; and
(3) Cost-sharing requirements.
Sec. 155.1040 Transparency in coverage.
(a) General requirement. The Exchange must collect information
relating to coverage transparency as described in Sec. 156.220 of this
subtitle from QHP issuers, and from multi-State plans in a time and
manner determined by the U.S. Office of Personnel Management.
(b) Use of plain language. The Exchange must determine whether the
information required to be submitted and made available under paragraph
(a) of this section is provided in plain language.
(c) Transparency of cost-sharing information. The Exchange must
monitor whether a QHP issuer has made cost-sharing information
available in a timely manner upon the request of an individual as
required by Sec. 156.220(d) of this subtitle.
Sec. 155.1045 Accreditation timeline.
The Exchange must establish a uniform period following
certification of a QHP within which a QHP issuer that is not already
accredited must become accredited as required by Sec. 156.275 of this
subtitle, except for multi-State plans. The U.S. Office of Personnel
Management will establish the accreditation period for multi-State
plans.
Sec. 155.1050 Establishment of Exchange network adequacy standards.
(a) An Exchange must ensure that the provider network of each QHP
meets the
[[Page 18468]]
standards specified in Sec. 156.230 of this subtitle, except for
multi-State plans.
(b) The U.S. Office of Personnel Management will ensure compliance
with the standards specified in Sec. 156.230 of this subtitle for
multi-State plans.
(c) A QHP issuer in an Exchange may not be prohibited from
contracting with any essential community provider designated under
Sec. 156.235(c) of this subtitle.
Sec. 155.1055 Service area of a QHP.
The Exchange must have a process to establish or evaluate the
service areas of QHPs to ensure such service areas meet the following
minimum criteria:
(a) The service area of a QHP covers a minimum geographical area
that is at least the entire geographic area of a county, or a group of
counties defined by the Exchange, unless the Exchange determines that
serving a smaller geographic area is necessary, nondiscriminatory, and
in the best interest of the qualified individuals and employers.
(b) The service area of a QHP has been established without regard
to racial, ethnic, language, health status-related factors specified
under section 2705(a) of the PHS Act, or other factors that exclude
specific high utilizing, high cost or medically-underserved
populations.
Sec. 155.1065 Stand-alone dental plans.
(a) General requirements. The Exchange must allow the offering of a
limited scope dental benefits plan through the Exchange, if--
(1) The plan meets the requirements of section 9832(c)(2)(A) of the
Code and 2791(c)(2)(A) of the PHS Act; and
(2) The plan covers at least the pediatric dental essential health
benefit as defined in section 1302(b)(1)(J) of the Affordable Care Act,
provided that, with respect to this benefit, the plan satisfies the
requirements of section 2711 of the PHS Act; and
(3) The plan and issuer of such plan meets QHP certification
standards, including Sec. 155.1020(c), except for any certification
requirement that cannot be met because the plan covers only the
benefits described in paragraph (a)(2) of this section.
(b) Offering options. The Exchange may allow the dental plan to be
offered--
(1) As a stand-alone dental plan; or
(2) In conjunction with a QHP.
(c) Sufficient capacity. An Exchange must consider the collective
capacity of stand-alone dental plans during certification to ensure
sufficient access to pediatric dental coverage.
(d) QHP Certification standards. If a plan described in paragraph
(a) of this section is offered through an Exchange, another health plan
offered through such Exchange must not fail to be treated as a QHP
solely because the plan does not offer coverage of benefits offered
through the stand-alone plan that are otherwise required under section
1302(b)(1)(J) of the Affordable Care Act.
Sec. 155.1075 Recertification of QHPs.
(a) Recertification process. Except with respect to multi-State
plans and CO-OP QHPs, an Exchange must establish a process for
recertification of QHPs that, at a minimum, includes a review of the
general certification criteria as outlined in Sec. 155.1000(c). Upon
determining the recertification status of a QHP, the Exchange must
notify the QHP issuer.
(b) Timing. The Exchange must complete the QHP recertification
process on or before September 15 of the applicable calendar year.
Sec. 155.1080 Decertification of QHPs.
(a) Definition. The following definition applies to this section:
Decertification means the termination by the Exchange of the
certification status and offering of a QHP.
(b) Decertification process. Except with respect to multi-State
plans and CO-OP QHPs, the Exchange must establish a process for the
decertification of QHPs, which, at a minimum, meet the requirements in
this section.
(c) Decertification by the Exchange. The Exchange may at any time
decertify a health plan if the Exchange determines that the QHP issuer
is no longer in compliance with the general certification criteria as
outlined in Sec. 155.1000(c).
(d) Appeal of decertification. The Exchange must establish a
process for the appeal of a decertification of a QHP.
(e) Notice of decertification. Upon decertification of a QHP, the
Exchange must provide notice of decertification to all affected
parties, including:
(1) The QHP issuer;
(2) Exchange enrollees in the QHP who must receive information
about a special enrollment period, as described in Sec. 155.420;
(3) HHS; and
(4) The State department of insurance.
PART 156--HEALTH INSURANCE ISSUER STANDARDS UNDER THE AFFORDABLE
CARE ACT, INCLUDING STANDARDS RELATED TO EXCHANGES
0
6. The authority citation for part 156 continues to read as follows:
Authority: Title I of the Affordable Care Act, Sections 1301-
1304, 1311-1312, 1321, 1322, 1324, 1334, 1341-1343, and 1401-1402,
Pub. L. 111-148, 124 Stat. 119 (42 U.S.C. 18042).
0
7. Revise the part 156 heading to read as set forth above.
0
8. Add subpart A to read as follows:
Subpart A--General Provisions
Sec.
156.10 Basis and scope.
156.20 Definitions.
156.50 Financial support.
Subpart A--General Provisions
Sec. 156.10 Basis and scope.
(a) Basis. (1) This part is based on the following sections of
title I of the Affordable Care Act:
(i) 1301. QHP defined.
(ii) 1302. Essential health benefits requirements.
(iii) 1303. Special rules.
(iv) 1304. Related definitions.
(v) 1311. Affordable choices of health benefit plans.
(vi) 1312. Consumer choice.
(vii) 1313. Financial integrity.
(viii) 1321. State flexibility in operation and enforcement of
Exchanges and related requirements.
(ix) 1322. Federal program to assist establishment and operation of
nonprofit, member-run health insurance issuers.
(x) 1331. State flexibility to establish Basic Health Programs for
low-income individuals not eligible for Medicaid.
(xi) 1334. Multi-State plans.
(xii) 1402. Reduced cost-sharing for individuals enrolling in QHPs.
(xiii) 1411. Procedures for determining eligibility for Exchange
participation, advance premium tax credits and reduced cost sharing,
and individual responsibility exemptions.
(xiv) 1412. Advance determination and payment of premium tax
credits and cost-sharing reductions.
(xv) 1413. Streamlining of procedures for enrollment through an
Exchange and State, Medicaid, CHIP, and health subsidy programs.
(2) This part is based on section 1150A, Pharmacy Benefit Managers
Transparency Requirements, of title I of the Act:
(b) Scope. This part establishes standards for QHPs under
Exchanges, and addresses other health insurance issuer requirements.
Sec. 156.20 Definitions.
The following definitions apply to this part, unless the context
indicates otherwise:
Applicant has the meaning given to the term in Sec. 155.20 of this
subchapter.
[[Page 18469]]
Benefit design standards means coverage that provides for all of
the following:
(1) The essential health benefits as described in section 1302(b)
of the Affordable Care Act;
(2) Cost-sharing limits as described in section 1302(c) of the
Affordable Care Act; and
(3) A bronze, silver, gold, or platinum level of coverage as
described in section 1302(d) of the Affordable Care Act, or is a
catastrophic plan as described in section 1302(e) of the Affordable
Care Act.
Benefit year has the meaning given to the term in Sec. 155.20 of
this subtitle.
Cost-sharing has the meaning given to the term in Sec. 155.20 of
this subtitle.
Cost-sharing reductions has the meaning given to the term in Sec.
155.20 of this subtitle.
Group health plan has the meaning given to the term in Sec.
144.103 of this subtitle.
Health insurance coverage has the meaning given to the term in
Sec. 144.103 of this subtitle.
Health insurance issuer or issuer has the meaning given to the term
in Sec. 144.103 of this subtitle.
Level of coverage means one of four standardized actuarial values
as defined by section 1302(d)(2) of the Affordable Care Act of plan
coverage.
Plan year has the meaning given to the term in Sec. 155.20 of this
subchapter.
Qualified employer has the meaning given to the term in Sec.
155.20 of this subchapter.
Qualified health plan has the meaning given to the term in Sec.
155.20 of this subchapter.
Qualified health plan issuer has the meaning given to the term in
Sec. 155.20 of this subchapter.
Qualified individual has the meaning given to the term in Sec.
155.20 of this subchapter.
Sec. 156.50 Financial support.
(a) Definitions. The following definitions apply for the purposes
of this section:
Participating issuer means any issuer offering a plan that
participates in the specific function that is funded by user fees. This
term may include: health insurance issuers, QHP issuers, issuers of
multi-State plans (as defined in Sec. 155.1000(a) of this subchapter),
issuers of stand-alone dental plans (as described in Sec. 155.1065 of
this subtitle), or other issuers identified by an Exchange.
(b) Requirement for Exchanges user fees. A participating issuer
must remit user fee payments, or any other payments, charges, or fees,
if assessed by the Federally-facilitated Exchange under 31 U.S.C. 9701
or a State-based Exchange under Sec. 155.160 of this subchapter.
0
9. Add subpart C to read as follows:
Subpart C--Qualified Health Plan Minimum Certification Standards
Sec.
156.200 QHP issuer participation standards.
156.210 QHP rate and benefit information.
156.220 Transparency in coverage.
156.225 Marketing and Benefit Design of QHPs.
156.230 Network adequacy standards.
156.235 Essential community providers.
156.245 Treatment of direct primary care medical homes.
156.250 Health plan applications and notices.
156.255 Rating variations.
156.260 Enrollment periods for qualified individuals.
156.265 Enrollment process for qualified individuals.
156.270 Termination of coverage for qualified individuals.
156.275 Accreditation of QHP issuers.
156.280 Segregation of funds for abortion services.
156.285 Additional standards specific to SHOP.
156.290 Non-renewal and decertification of QHPs.
156.295 Prescription drug distribution and cost reporting.
Subpart C--Qualified Health Plan Minimum Certification Standards
Sec. 156.200 QHP issuer participation standards.
(a) General requirement. In order to participate in an Exchange, a
health insurance issuer must have in effect a certification issued or
recognized by the Exchange to demonstrate that each health plan it
offers in the Exchange is a QHP.
(b) QHP issuer requirement. A QHP issuer must--
(1) Comply with the requirements of this subpart with respect to
each of its QHPs on an ongoing basis;
(2) Comply with Exchange processes, procedures, and requirements
set forth in accordance with subpart K of part 155 and, in the small
group market, Sec. 155.705 of this subchapter;
(3) Ensure that each QHP complies with benefit design standards, as
defined in Sec. 156.20;
(4) Be licensed and in good standing to offer health insurance
coverage in each State in which the issuer offers health insurance
coverage;
(5) Implement and report on a quality improvement strategy or
strategies consistent with the standards of section 1311(g) of the
Affordable Care Act, disclose and report information on health care
quality and outcomes described in sections 1311(c)(1)(H) and (I) of the
Affordable Care Act, and implement appropriate enrollee satisfaction
surveys consistent with section 1311(c)(4) of the Affordable Care Act;
(6) Pay any applicable user fees assessed under Sec. 156.50; and
(7) Comply with the standards related to the risk adjustment
program under 45 CFR part 153.
(c) Offering requirements. A QHP issuer must offer through the
Exchange:
(1) At least one QHP in the silver coverage level and at least one
QHP in the gold coverage level as described in section 1302(d)(1) of
the Affordable Care Act; and,
(2) A child-only plan at the same level of coverage, as described
in section 1302(d)(1) of the Affordable Care Act, as any QHP offered
through the Exchange to individuals who, as of the beginning of the
plan year, have not attained the age of 21.
(d) State requirements. A QHP issuer certified by an Exchange must
adhere to the requirements of this subpart and any provisions imposed
by the Exchange, or a State in connection with its Exchange, that are
conditions of participation or certification with respect to each of
its QHPs.
(e) Non-discrimination. A QHP issuer must not, with respect to its
QHP, discriminate on the basis of race, color, national origin,
disability, age, sex, gender identity or sexual orientation.
Sec. 156.210 QHP rate and benefit information.
(a) General rate requirement. A QHP issuer must set rates for an
entire benefit year, or for the SHOP, plan year.
(b) Rate and benefit submission. A QHP issuer must submit rate and
benefit information to the Exchange.
(c) Rate justification. A QHP issuer must submit to the Exchange a
justification for a rate increase prior to the implementation of the
increase. A QHP issuer must prominently post the justification on its
Web site.
Sec. 156.220 Transparency in coverage.
(a) Required information. A QHP issuer must provide the following
information in accordance with the standards in paragraph (b) of this
section:
(1) Claims payment policies and practices;
(2) Periodic financial disclosures;
(3) Data on enrollment;
(4) Data on disenrollment;
(5) Data on the number of claims that are denied;
(6) Data on rating practices;
[[Page 18470]]
(7) Information on cost-sharing and payments with respect to any
out-of-network coverage; and
(8) Information on enrollee rights under title I of the Affordable
Care Act.
(b) Reporting requirement. A QHP issuer must submit, in an accurate
and timely manner, to be determined by HHS, the information described
in paragraph (a) of this section to the Exchange, HHS and the State
insurance commissioner, and make the information described in paragraph
(a) of this section available to the public.
(c) Use of plain language. A QHP issuer must make sure that the
information submitted under paragraph (b) is provided in plain language
as defined under Sec. 155.20 of this subtitle.
(d) Enrollee cost sharing transparency. A QHP issuer must make
available the amount of enrollee cost sharing under the individual's
plan or coverage with respect to the furnishing of a specific item or
service by a participating provider in a timely manner upon the request
of the individual. At a minimum, such information must be made
available to such individual through an Internet Web site and such
other means for individuals without access to the Internet.
Sec. 156.225 Marketing and Benefit Design of QHPs.
A QHP issuer and its officials, employees, agents and
representatives must--
(a) State law applies. Comply with any applicable State laws and
regulations regarding marketing by health insurance issuers; and
(b) Non-discrimination. Not employ marketing practices or benefit
designs that will have the effect of discouraging the enrollment of
individuals with significant health needs in QHPs.
Sec. 156.230 Network adequacy standards.
(a) General requirement. A QHP issuer must ensure that the provider
network of each of its QHPs, as available to all enrollees, meets the
following standards--
(1) Includes essential community providers in accordance with Sec.
156.235;
(2) Maintains a network that is sufficient in number and types of
providers, including providers that specialize in mental health and
substance abuse services, to assure that all services will be
accessible without unreasonable delay; and,
(3) Is consistent with the network adequacy provisions of section
2702(c) of the PHS Act.
(b) Access to provider directory. A QHP issuer must make its
provider directory for a QHP available to the Exchange for publication
online in accordance with guidance from the Exchange and to potential
enrollees in hard copy upon request. In the provider directory, a QHP
issuer must identify providers that are not accepting new patients.
Sec. 156.235 Essential community providers.
(a) General requirement. (1) A QHP issuer must have a sufficient
number and geographic distribution of essential community providers,
where available, to ensure reasonable and timely access to a broad
range of such providers for low-income, medically underserved
individuals in the QHP's service area, in accordance with the
Exchange's network adequacy standards.
(2) A QHP issuer that provides a majority of covered professional
services through physicians employed by the issuer or through a single
contracted medical group may instead comply with the alternate standard
described in paragraph (b) of this section.
(3) Nothing in this requirement shall be construed to require any
QHP to provide coverage for any specific medical procedure provided by
the essential community provider.
(b) Alternate standard. A QHP issuer described in paragraph (a)(2)
of this section must have a sufficient number and geographic
distribution of employed providers and hospital facilities, or
providers of its contracted medical group and hospital facilities to
ensure reasonable and timely access for low-income, medically
underserved individuals in the QHP's service area, in accordance with
the Exchange's network adequacy standards.
(c) Definition. Essential community providers are providers that
serve predominantly low-income, medically underserved individuals,
including providers that meet the criteria of paragraph (c)(1) or (2)
of this section, and providers that met the criteria under paragraph
(c)(1) or (2) of this section on the publication date of this
regulation unless the provider lost its status under paragraph (c)(1)
or (2) of this section thereafter as a result of violating Federal law:
(1) Health care providers defined in section 340B(a)(4) of the PHS
Act; and
(2) Providers described in section 1927(c)(1)(D)(i)(IV) of the Act
as set forth by section 221 of Public Law 111-8.
(d) Payment rates. Nothing in paragraph (a) of this section shall
be construed to require a QHP issuer to contract with an essential
community provider if such provider refuses to accept the generally
applicable payment rates of such issuer.
(e) Payment of federally-qualified health centers. If an item or
service covered by a QHP is provided by a federally-qualified health
center (as defined in section 1905(l)(2)(B) of the Act) to an enrollee
of a QHP, the QHP issuer must pay the federally-qualified health center
for the item or service an amount that is not less than the amount of
payment that would have been paid to the center under section 1902(bb)
of the Act for such item or service. Nothing in this paragraph (e)
would preclude a QHP issuer and federally-qualified health center from
mutually agreeing upon payment rates other than those that would have
been paid to the center under section 1902(bb) of the Act, as long as
such mutually agreed upon rates are at least equal to the generally
applicable payment rates of the issuer indicated in paragraph (d) of
this section.
Sec. 156.245 Treatment of direct primary care medical homes.
A QHP issuer may provide coverage through a direct primary care
medical home that meets criteria established by HHS, so long as the QHP
meets all requirements that are otherwise applicable and the services
covered by the direct primary care medical home are coordinated with
the QHP issuer.
Sec. 156.250 Health plan applications and notices.
QHP issuers must provide all applications and notices to enrollees
in accordance with the standards described in Sec. 155.230(b) of this
subtitle.
Sec. 156.255 Rating variations.
(a) Rating areas. A QHP issuer, including an issuer of a multi-
State plan, may vary premiums by the geographic rating area established
under section 2701(a)(2) of the PHS Act.
(b) Same premium rates. A QHP issuer must charge the same premium
rate without regard to whether the plan is offered through an Exchange,
or whether the plan is offered directly from the issuer or through an
agent.
Sec. 156.260 Enrollment periods for qualified individuals.
(a) Individual market requirement. A QHP issuer must:
(1) Enroll a qualified individual during the initial and annual
open enrollment periods described in Sec. 155.410(b) and (e) of this
subchapter, and abide by the effective dates of coverage established by
the Exchange in accordance with Sec. 155.410(c) and (f) of this
subchapter; and
[[Page 18471]]
(2) Make available, at a minimum, special enrollment periods
described in Sec. 155.420(d) of this subchapter, for QHPs and abide by
the effective dates of coverage established by the Exchange in
accordance with Sec. 155.420(b) of this subchapter.
(b) Notification of effective date. A QHP issuer must notify a
qualified individual of his or her effective date of coverage.
Sec. 156.265 Enrollment process for qualified individuals.
(a) General requirement. A QHP issuer must process enrollment in
accordance with this section.
(b) Enrollment through the Exchange for the individual market. (1)
A QHP issuer must enroll a qualified individual only if the Exchange--
(i) Notifies the QHP issuer that the individual is a qualified
individual; and
(ii) Transmits information to the QHP issuer as provided in Sec.
155.400(a) of this subchapter.
(2) If an applicant initiates enrollment directly with the QHP
issuer for enrollment through the Exchange, the QHP issuer must
either--
(i) Direct the individual to file an application with the Exchange
in accordance with Sec. 155.310, or
(ii) Ensure the applicant received an eligibility determination for
coverage through the Exchange through the Exchange Internet Web site.
(c) Acceptance of enrollment information. A QHP issuer must accept
enrollment information consistent with the privacy and security
requirements established by the Exchange in accordance with Sec.
155.260 and in an electronic format that is consistent with Sec.
155.270.
(d) Premium payment. A QHP issuer must follow the premium payment
process established by the Exchange in accordance with Sec. 155.240.
(e) Enrollment information package. A QHP issuer must provide new
enrollees an enrollment information package that is compliant with
accessibility and readability standards established in Sec.
155.230(b).
(f) Enrollment reconciliation. A QHP issuer must reconcile
enrollment files with the Exchange no less than once a month in
accordance with Sec. 155.400(d).
(g) Enrollment acknowledgement. A QHP issuer must acknowledge
receipt of enrollment information transmitted from the Exchange in
accordance with Exchange standards established in accordance with Sec.
155.400(b)(2) of this subchapter.
Sec. 156.270 Termination of coverage for qualified individuals.
(a) General requirement. A QHP issuer may only terminate coverage
as permitted by the Exchange in accordance with Sec. 155.430(b) of
this subchapter.
(b) Termination of coverage notice requirement. If an enrollee's
coverage in a QHP is terminated for any reason, the QHP issuer must:
(1) Provide the enrollee with a notice of termination of coverage
that includes the reason for termination at least 30 days prior to the
last day of coverage, consistent with the effective date established by
the Exchange in accordance with Sec. 155.430(d) of this subchapter.
(2) Notify the Exchange of the termination effective date and
reason for termination.
(c) Termination of coverage due to non-payment of premium. A QHP
issuer must establish a standard policy for the termination of coverage
of enrollees due to non-payment of premium as permitted by the Exchange
in Sec. 155.430(b)(2)(ii) of this subchapter. This policy for the
termination of coverage:
(1) Must include the grace period for enrollees receiving advance
payments of the premium tax credits as described in paragraph (d) of
this section; and
(2) Must be applied uniformly to enrollees in similar
circumstances.
(d) Grace period for recipients of advance payments of the premium
tax credit. A QHP issuer must provide a grace period of three
consecutive months if an enrollee receiving advance payments of the
premium tax credit has previously paid at least one full month's
premium during the benefit year. During the grace period, the QHP
issuer must:
(1) Pay all appropriate claims for services rendered to the
enrollee during the first month of the grace period and may pend claims
for services rendered to the enrollee in the second and third months of
the grace period;
(2) Notify HHS of such non-payment; and,
(3) Notify providers of the possibility for denied claims when an
enrollee is in the second and third months of the grace period.
(e) Advance payments of the premium tax credit. For the 3-month
grace period described in paragraph (d) of this section, a QHP issuer
must:
(1) Continue to collect advance payments of the premium tax credit
on behalf of the enrollee from the Department of the Treasury.
(2) Return advance payments of the premium tax credit paid on the
behalf of such enrollee for the second and third months of the grace
period if the enrollee exhausts the grace period as described in
paragraph (g) of this section.
(f) Notice of non-payment of premiums. If an enrollee is delinquent
on premium payment, the QHP issuer must provide the enrollee with
notice of such payment delinquency.
(g) Exhaustion of grace period. If an enrollee receiving advance
payments of the premium tax credit exhausts the 3-month grace period in
paragraph (d) of this section without paying all outstanding premiums,
the QHP issuer must terminate the enrollee's coverage on the effective
date described in Sec. 155.430(d)(4) of this subchapter, provided that
the QHP issuer meets the notice requirement specified in paragraph (b)
of this section.
(h) Records of termination of coverage. QHP issuers must maintain
records in accordance with Exchange standards established in accordance
with Sec. 155.430(c) of this subchapter.
(i) Effective date of termination of coverage. QHP issuers must
abide by the termination of coverage effective dates described in Sec.
155.430(d) of this subchapter.
Sec. 156.275 Accreditation of QHP issuers.
(a) General requirement. A QHP issuer must:
(1) Be accredited on the basis of local performance of its QHPs in
the following categories by an accrediting entity recognized by HHS:
(i) Clinical quality measures, such as the Healthcare Effectiveness
Data and Information Set;
(ii) Patient experience ratings on a standardized CAHPS survey;
(iii) Consumer access;
(iv) Utilization management;
(v) Quality assurance;
(vi) Provider credentialing;
(vii) Complaints and appeals;
(viii) Network adequacy and access; and
(ix) Patient information programs, and
(2) Authorize the accrediting entity that accredits the QHP issuer
to release to the Exchange and HHS a copy of its most recent
accreditation survey, together with any survey-related information that
HHS may require, such as corrective action plans and summaries of
findings.
(b) Timeframe for accreditation. A QHP issuer must be accredited
within the timeframe established by the Exchange in accordance with
Sec. 155.1045 of this subchapter. The QHP issuer must maintain
accreditation so long as the QHP issuer offers QHPs.
[[Page 18472]]
Sec. 156.280 Segregation of funds for abortion services.
(a) State opt-out of abortion coverage. A QHP issuer must comply
with a State law that prohibits abortion coverage in QHPs.
(b) Termination of opt out. A QHP issuer may provide coverage of
abortion services through the Exchange in a State described in
paragraph (a) of this section if the State repeals such law.
(c) Voluntary choice of coverage of abortion services.
Notwithstanding any other provision of title I of the Affordable Care
Act (or any other amendment made under that title):
(1) Nothing in title I of the Affordable Care Act (or any
amendments by that title) shall be construed to require a QHP issuer to
provide coverage of services described in paragraph (d) of this section
as part of its essential health benefits, as described in section
1302(b) of the Affordable Care Act, for any plan year.
(2) Subject to paragraphs (a) and (b) of this section, the QHP
issuer must determine whether or not the QHP provides coverage of
services described in paragraph (d) of this section as part of such
benefits for the plan year.
(d) Abortion services. (1) Abortions for which public funding is
prohibited. The services described in this paragraph are abortion
services for which the expenditure of Federal funds appropriated for
HHS is not permitted, based on the law in effect 6 months before the
beginning of the plan year involved.
(2) Abortions for which public funding is allowed. The services
described in this paragraph are abortion services for which the
expenditure of Federal funds appropriated for HHS is permitted, based
on the law in effect 6 months before the beginning of the plan year
involved.
(e) Prohibition on the use of Federal funds. (1) If a QHP provides
coverage of services described in paragraph (d)(1) of this section, the
QHP issuer must not use any amount attributable to any of the following
for the purposes of paying for such services:
(i) The credit under section 36B of the Code and the amount (if
any) of the advance payment of the credit under section 1412 of the
Affordable Care Act;
(ii) Any cost-sharing reduction under section 1402 of the
Affordable Care Act and the amount (if any) of the advance payments of
the reduction under section 1412 of the Affordable Care Act.
(2) Establishment of allocation accounts. In the case of a QHP to
which paragraph (e)(1) of this section applies, the QHP issuer must:
(i) Collect from each enrollee in the QHP (without regard to the
enrollee's age, sex, or family status) a separate payment for each of
the following:
(A) An amount equal to the portion of the premium to be paid
directly by the enrollee for coverage under the QHP of services other
than services described in (d)(1) of this section (after reductions for
credits and cost-sharing reductions described in paragraph (e)(1) of
this section); and
(B) An amount equal to the actuarial value of the coverage of
services described in paragraph (d)(1) of this section.
(ii) Deposit all such separate payments into separate allocation
accounts as provided in paragraph (e)(3) of this section. In the case
of an enrollee whose premium for coverage under the QHP is paid through
employee payroll deposit, the separate payments required under this
subparagraph shall each be paid by a separate deposit.
(3) Segregation of funds. (i) The QHP issuer to which paragraph
(e)(1) of this section applies must establish allocation accounts
described in paragraph (e)(3)(ii) of this section for enrollees
receiving the amounts described in paragraph (e)(1) of this section.
(ii) Allocation accounts. The QHP issuer to which paragraph (e)(1)
of this section applies must deposit:
(A) All payments described in paragraph (e)(2)(i)(A) of this
section into a separate account that consists solely of such payments
and that is used exclusively to pay for services other than the
services described in paragraph (d)(1) of this section;
(B) All payments described in paragraph (e)(2)(i)(B) of this
section into a separate account that consists solely of such payments
and that is used exclusively to pay for services described in paragraph
(d)(1) of this section.
(4) Actuarial value. The QHP issuer must estimate the basic per
enrollee, per month cost, determined on an average actuarial basis, for
including coverage under the QHP of services described in paragraph
(d)(1) of this section. In making such an estimate, the QHP issuer:
(i) May take into account the impact on overall costs of the
inclusion of such coverage, but may not take into account any cost
reduction estimated to result from such services, including prenatal
care, delivery, or postnatal care;
(ii) Must estimate such costs as if such coverage were included for
the entire population covered; and
(iii) May not estimate such a cost at less than one dollar per
enrollee, per month.
(5) Ensuring compliance with segregation requirements. (i) Subject
to paragraph (e)(5)(iv) of this section, the QHP issuer must comply
with the efforts or direction of the State health insurance
commissioner to ensure compliance with this section through the
segregation of QHP funds in accordance with applicable provisions of
generally accepted accounting requirements, circulars on funds
management of the Office of Management and Budget and guidance on
accounting of the Government Accountability Office.
(ii) Each QHP issuer that participates in an Exchange and offers
coverage for services described in paragraph (d)(1) of this section
should, as a condition of participating in an Exchange, submit a plan
that details its process and methodology for meeting the requirements
of section 1303(b)(2)(C), (D), and (E) (hereinafter, ``segregation
plan'') to the State health insurance commissioner. The segregation
plan should describe the QHP issuer's financial accounting systems,
including appropriate accounting documentation and internal controls,
that would ensure the segregation of funds required by section
1303(b)(2)(C), (D), and (E), and should include:
(A) The financial accounting systems, including accounting
documentation and internal controls, that would ensure the appropriate
segregation of payments received for coverage of services described in
paragraph (d)(1) of this section from those received for coverage of
all other services;
(B) The financial accounting systems, including accounting
documentation and internal controls, that would ensure that all
expenditures for services described in paragraph (d)(1) of this section
are reimbursed from the appropriate account; and
(C) An explanation of how the QHP issuer's systems, accounting
documentation, and controls meet the requirements for segregation
accounts under the law.
(iii) Each QHP issuer participating in the Exchange must provide to
the State insurance commissioner an annual assurance statement
attesting that the plan has complied with section 1303 of the
Affordable Care Act and applicable regulations.
(iv) Nothing in this clause shall prohibit the right of an
individual or QHP issuer to appeal such action in courts of competent
jurisdiction.
(f) Rules relating to notice. (1) Notice. A QHP that provides for
coverage of services in paragraph (d)(1) of this section, must provide
a notice to enrollees, only as part of the summary
[[Page 18473]]
of benefits and coverage explanation, at the time of enrollment, of
such coverage.
(2) Rules relating to payments. The notice described in paragraph
(f)(1) of this section, any advertising used by the QHP issuer with
respect to the QHP, any information provided by the Exchange, and any
other information specified by HHS must provide information only with
respect to the total amount of the combined payments for services
described in paragraph (d)(1) of this section and other services
covered by the QHP.
(g) No discrimination on basis of provision of abortion. No QHP
offered through an Exchange may discriminate against any individual
health care provider or health care facility because of its
unwillingness to provide, pay for, provide coverage of, or refer for
abortions.
(h) Application of State and Federal laws regarding abortions. (1)
No preemption of State laws regarding abortion. Nothing in the
Affordable Care Act shall be construed to preempt or otherwise have any
effect on State laws regarding the prohibition of (or requirement of)
coverage, funding, or procedural requirements on abortions, including
parental notification or consent for the performance of an abortion on
a minor.
(2) No effect on Federal laws regarding abortion. Nothing in the
Affordable Care Act shall be construed to have any effect on Federal
laws regarding:
(i) Conscience protection;
(ii) Willingness or refusal to provide abortion; and
(iii) Discrimination on the basis of the willingness or refusal to
provide, pay for, cover, or refer for abortion or to provide or
participate in training to provide abortion.
(3) No effect on Federal civil rights law. Nothing in section
1303(c) of the Affordable Care Act shall alter the rights and
obligations of employees and employers under Title VII of the Civil
Rights Act of 1964.
(i) Application of emergency services laws. Nothing in the
Affordable Care Act shall be construed to relieve any health care
provider from providing emergency services as required by State or
Federal law, including section 1867 of the Act (popularly known as
``EMTALA'').
Sec. 156.285 Additional standards specific to SHOP.
(a) SHOP rating and premium payment requirements. QHP issuers
offering a QHP through a SHOP must:
(1) Accept payment from the SHOP on behalf of a qualified employer
or an enrollee in accordance with Sec. 155.705(b)(4) of this
subchapter;
(2) Adhere to the SHOP timeline for rate setting as established in
Sec. 155.705(b)(6) of this subchapter; and
(3) Charge the same contract rate for a plan year.
(b) Enrollment periods for the SHOP. QHP issuers offering a QHP
through the SHOP must:
(1) Enroll a qualified employee in accordance with the qualified
employer's annual employee open enrollment period described in Sec.
155.725 of this subchapter;
(2) Provide special enrollment periods described in Sec. 155.420
excluding paragraphs (d)(3) and (6);
(3) Provide an enrollment period for an employee who becomes a
qualified employee outside of the initial or annual open enrollment
period as described in Sec. 155.725(g) of this subchapter; and
(4) Adhere to effective dates of coverage in accordance with Sec.
156.260 and those established through Sec. 155.720 of this subchapter.
(c) Enrollment process for the SHOP. A QHP issuer offering a QHP
through the SHOP must:
(1) Adhere to the enrollment timeline and process for the SHOP as
described in Sec. 155.720(b) of this subchapter;
(2) Receive enrollment information in an electronic format, in
accordance with the requirements in Sec. Sec. 155.260 and 155.270 of
this subchapter, from the SHOP as described in Sec. 155.720(c);
(3) Provide new enrollees with the enrollment information package
as described in Sec. 156.265(e);
(4) Reconcile enrollment files with the SHOP at least monthly;
(5) Acknowledge receipt of enrollment information in accordance
with SHOP standards; and
(6) Enroll all qualified employees consistent with the plan year of
the applicable qualified employer.
(d) Termination of coverage in the SHOP. QHP issuers offering a QHP
through the SHOP must:
(1) Comply with the following requirements with respect to coverage
termination of enrollees in the SHOP:
(i) General requirements regarding termination of coverage
established in Sec. 156.270(a);
(ii) Requirements for notices to be provided to enrollees and
qualified employers in Sec. 156.270(b) and Sec. 156.290(b); and
(iii) Requirements regarding termination of coverage effective
dates as set forth in Sec. 156.270(i).
(2) If a qualified employer chooses to withdraw from participation
in the SHOP, the QHP issuer must terminate coverage for all enrollees
of the withdrawing qualified employer.
(e) Participation rules. QHP issuers offering a QHP through the
SHOP may impose group participation rules for the offering of health
insurance coverage in connection with a QHP only if and to the extent
authorized by the SHOP in accordance with Sec. 155.705 of this
subchapter.
Sec. 156.290 Non-renewal and decertification of QHPs.
(a) Non-renewal of recertification. If a QHP issuer elects not to
seek recertification with the Exchange, the QHP issuer, at a minimum,
must--
(1) Notify the Exchange of its decision prior to the beginning of
the recertification process and procedures adopted by the Exchange in
accordance with Sec. 155.1075 of this subchapter;
(2) Fulfill its obligation to cover benefits for each enrollee
through the end of the plan or benefit year;
(3) Fulfill data reporting obligations from the last plan or
benefit year of the certification;
(4) Provide notice to enrollees as described in paragraph (b) of
this section; and
(5) Terminate coverage for enrollees in the QHP in accordance with
Sec. 156.270, as applicable.
(b) Notice of QHP non-renewal. If a QHP issuer elects not to seek
recertification with the Exchange for its QHP, the QHP issuer must
provide written notice to each enrollee.
(c) Decertification. If a QHP is decertified by the Exchange, the
QHP issuer must terminate coverage for enrollees only after:
(1) The Exchange has made notification as described in Sec.
155.1080 of this subchapter; and
(2) Enrollees have an opportunity to enroll in other coverage.
Sec. 156.295 Prescription drug distribution and cost reporting.
(a) General requirement. In a form, manner, and at such times
specified by HHS, a QHP issuer must provide to HHS the following
information:
(1) The percentage of all prescriptions that were provided under
the QHP through retail pharmacies compared to mail order pharmacies,
and the percentage of prescriptions for which a generic drug was
available and dispensed compared to all drugs dispensed, broken down by
pharmacy type, which includes an independent pharmacy, supermarket
pharmacy, or mass merchandiser pharmacy that is licensed as a pharmacy
by the State and that dispenses medication to the general public, that
is paid by the QHP issuer or the QHP issuer's contracted PBM;
[[Page 18474]]
(2) The aggregate amount, and the type of rebates, discounts or
price concessions (excluding bona fide service fees) that the QHP
issuer or its contracted PBM negotiates that are attributable to
patient utilization under the QHP, and the aggregate amount of the
rebates, discounts, or price concessions that are passed through to the
QHP issuer, and the total number of prescriptions that were dispensed.
(i) Bona fide service fees means fees paid by a manufacturer to an
entity that represent fair market value for a bona fide, itemized
service actually performed on behalf of the manufacturer that the
manufacturer would otherwise perform (or contract for) in the absence
of the service arrangement, and that are not passed on in whole or in
part to a client or customer of an entity, whether or not the entity
takes title to the drug.
(ii) [Reserved]
(3) The aggregate amount of the difference between the amount the
QHP issuer pays its contracted PBM and the amounts that the PBM pays
retail pharmacies, and mail order pharmacies, and the total number of
prescriptions that were dispensed.
(b) Confidentiality. Information disclosed by a QHP issuer or a PBM
under this section is confidential and shall not be disclosed by HHS or
by a QHP receiving the information, except that HHS may disclose the
information in a form which does not disclose the identity of a
specific PBM, QHP, or prices charged for drugs, for the following
purposes:
(1) As HHS determines to be necessary to carry out section 1150A or
part D of title XVIII of the Act;
(2) To permit the Comptroller General to review the information
provided;
(3) To permit the Director of the Congressional Budget Office to
review the information provided; or
(4) To States to carry out section 1311 of the Affordable Care Act.
(c) Penalties. A QHP issuer that fails to report the information
described in paragraph (a) of this section to HHS on a timely basis or
knowingly provides false information will be subject to the provisions
of subsection (b)(3)(C) of section 1927 of the Act.
0
9. Section 156.505 is amended by--
0
A. Revising the definitions of ``CO-OP qualified health plan,''
``Exchange,'' Individual market,'' ``Issuer,'' ``SHOP,'' ``Small group
market,'' and ``State.''
0
B. Removing the definitions of ``Group health plan,'' ``Health
insurance coverage,'' ``Qualified employer,'' ``Qualified health
plan,'' and ``Small employer.''
The revisions read as follows:
Sec. 156.505 Definitions.
* * * * *
CO-OP qualified health plan means a health plan that has in effect
a certification that it meets the standards described in subpart C of
this part, except that the plan can be deemed certified by CMS or an
entity designated by CMS as described in Sec. 156.520(e).
Exchange has the meaning given to the term in Sec. 155.20 of this
subchapter.
* * * * *
Individual market has the meaning given to the term in Sec. 155.20
of this subchapter.
Issuer has the meaning given to the term in Sec. 155.20 of this
subchapter.
* * * * *
SHOP has the meaning given to the term in Sec. 155.20 of this
subchapter.
Small group market has the meaning given to the term in Sec.
155.20 of this subchapter.
* * * * *
State has the meaning given to the term in Sec. 155.20 of this
subchapter.
0
10. Section 156.510 is amended by revising paragraph (b)(2)(i) to read
as follows:
Sec. 156.510 Eligibility.
* * * * *
(b) * * *
(2) * * *
(i) Has as a sponsor a nonprofit, not-for-profit, public benefit,
or similarly organized entity that also sponsors a pre-existing issuer
but is not an issuer, a foundation established by a pre-existing
issuer, a holding company that controls a pre-existing issuer, or a
trade association comprised of pre-existing issuers and whose purpose
is to represent the interests of the health insurance industry,
provided that the pre-existing issuer sponsored by the nonprofit
organization does not share any of its board or the same chief
executive with the applicant; or
* * * * *
Sec. 156.520 [Amended]
0
11. Section 156.520 is amended by removing paragraph (e)(1), and
redesignating paragraphs (e)(2), (3), and (4) as paragraphs (e)(1),
(2), and (3) respectively.
0
12. Part 157 is added to read as follows:
PART 157--EMPLOYER INTERACTIONS WITH EXCHANGES AND SHOP
PARTICIPATION
Subpart A--General Provisions
Sec.
157.10 Basis and scope.
157.20 Definitions.
Subpart B--[Reserved]
Subpart C--Standards for Qualified Employers
157.200 Eligibility of qualified employers to participate in a SHOP.
157.205 Qualified employer participation process in a SHOP.
Authority: Title I of the Affordable Care Act, Sections 1311,
1312, 1321, 1411, 1412, Pub. L. 111-148, 124 Stat. 199.
Subpart A--General Provisions
Sec. 157.10 Basis and scope.
(a) Basis. This part is based on the following sections of title I
of the Affordable Care:
(1) 1311. Affordable choices of health benefits plans.
(2) 1312. Consumer Choice.
(3) 1321. State flexibility in operation and enforcement of
Exchanges and related requirements.
(4) 1411. Procedures for determining eligibility for Exchange
participation, advance payments of the premium tax credit and cost-
sharing reductions, and individual responsibility exemptions.
(5) 1412. Advance determination and payment of the premium tax
credit and cost-sharing reductions.
(b) Scope. This part establishes the requirements for employers in
connection with the operation of Exchanges.
Sec. 157.20 Definitions.
The following definitions apply to this part, unless otherwise
indicated:
Qualified employee has the meaning given to the term in Sec.
155.20 of this subchapter.
Qualified employer has the meaning given to the term in Sec.
155.20 of this subchapter.
Small employer has the meaning given to the term in Sec. 155.20 of
this subchapter.
Subpart B--[Reserved]
Subpart C--Standards for Qualified Employers
Sec. 157.200 Eligibility of qualified employers to participate in a
SHOP.
(a) General requirement. Only a qualified employer may participate
in the SHOP in accordance with Sec. 155.710 of this subchapter.
(b) Continuing participation for growing small employers. A
qualified employer may continue to participate in the SHOP if it ceases
to be a small employer in accordance with Sec. 155.710 of this
subchapter.
(c) Participation in multiple SHOPs. A qualified employer may
participate in multiple SHOPs in accordance with Sec. 155.710 of this
subchapter.
[[Page 18475]]
Sec. 157.205 Qualified employer participation process in a SHOP.
(a) General requirements. When joining the SHOP, a qualified
employer must comply with the requirements, processes, and timelines
set forth by this part and must remain in compliance for the duration
of the employer's participation in the SHOP.
(b) Selecting QHPs. During an election period, a qualified employer
may make coverage in a QHP available through the SHOP in accordance
with the processes developed by the SHOP in accordance with Sec.
155.705 of this subchapter.
(c) Information dissemination to employees. A qualified employer
participating in the SHOP must disseminate information to its qualified
employees about the process to enroll in a QHP through the SHOP.
(d) Payment. A qualified employer must submit any contribution
towards the premiums of any qualified employee according to the
standards and processes described in Sec. 155.705 of this subchapter.
(e) Employees hired outside of the initial or annual open
enrollment period. Qualified employers must provide employees hired
outside of the initial or annual open enrollment period with:
(1) A period to seek coverage in a QHP beginning on the first day
of becoming a qualified employee; and
(2) Information about the enrollment process in accordance with
Sec. 155.725 of this subchapter.
(f) New employees and changes in employee eligibility. Qualified
employers participating in the SHOP must provide the SHOP with
information about dependents or employees whose eligibility status for
coverage purchased through the employer in the SHOP has changed,
including:
(1) Newly eligible dependents and employees; and
(2) Loss of qualified employee status.
(g) Annual employer election period. Qualified employers must
adhere to the annual employer election period to change their program
participation for the next plan year described in Sec. 155.725(c) of
this subchapter.
Dated: March 1, 2012.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: March 2, 2012.
Kathleen Sebelius,
Secretary.
[FR Doc. 2012-6125 Filed 3-12-12; 11:15 am]
BILLING CODE 4120-01-P