[Federal Register Volume 77, Number 227 (Monday, November 26, 2012)]
[Proposed Rules]
[Pages 70643-70676]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-28362]



[[Page 70643]]

Vol. 77

Monday,

No. 227

November 26, 2012

Part V





Department of Health and Human Services





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45 CFR Parts 147, 155, and 156





 Patient Protection and Affordable Care Act; Standards Related to 
Essential Health Benefits, Actuarial Value, and Accreditation; Proposed 
Rule

Federal Register / Vol. 77 , No. 227 / Monday, November 26, 2012 / 
Proposed Rules

[[Page 70644]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 147, 155, and 156

[CMS-9980-P]
RIN 0938-AR03


Patient Protection and Affordable Care Act; Standards Related to 
Essential Health Benefits, Actuarial Value, and Accreditation

AGENCY: Department of Health and Human Services.

ACTION: Proposed rule.

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SUMMARY: This proposed rule details standards for health insurance 
issuers consistent with title I of the Patient Protection and 
Affordable Care Act, as amended by the Health Care and Education 
Reconciliation Act of 2010, referred to collectively as the Affordable 
Care Act. Specifically, this proposed rule outlines Exchange and issuer 
standards related to coverage of essential health benefits and 
actuarial value. This proposed rule also proposes a timeline for 
qualified health plans to be accredited in Federally-facilitated 
Exchanges and an amendment which provides an application process for 
the recognition of additional accrediting entities for purposes of 
certification of qualified health plans.

DATES: 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 December 26, 2012.

ADDRESSES: In commenting, please refer to file code CMS-9980-P. 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-9980-P, 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-9980-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. Alternatively, you may deliver (by hand or 
courier) your written comments only to the following addresses prior to 
the close of the comment period:
    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, 
call telephone number (410) 786-9994 in advance to schedule your 
arrival with one of our staff members.
    Comments erroneously mailed to the addresses indicated as 
appropriate for hand or courier delivery may be delayed and received 
after the comment period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT:
    Leigha Basini at (301) 492-4307 for general information.
    Adam Block at (410) 786-1698 for matters related to essential 
health benefits, actuarial value, and minimum value.
    Tara Oakman at (301) 492-4253 for matters related to accreditation.

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://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be 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.

Electronic Access

    This Federal Register document is also available from the Federal 
Register online database through Federal Digital System (FDsys), a 
service of the U.S. Government Printing Office. This database can be 
accessed via the internet at http://www.gpo.gov/fdsys/.

Table of Contents

I. Background
    A. Legislative Overview
    B. Stakeholder Consultation and Input
    C. Structure of the Proposed Rule
II. Provisions of the Proposed Regulation
    A. Part 147--Health Insurance Reform Requirements for the Group 
and Individual Health Insurance Markets
    1. Subpart B--Requirements Relating to Health Care Access
    B. Part 155--Exchange Establishment Standards and Other Related 
Standards Under the Affordable Care Act
    C. Part 156--Health Insurance Issuer Standards Under the 
Affordable Care Act, Including Standards Related to Exchanges
    1. Subpart A--General Provisions
    2. Subpart B--EHB Package
    3. Subpart C--Accreditation
III. Collection of Information Requirements
IV. Regulatory Impact Analysis
V. Regulatory Flexibility Act
VI. Unfunded Mandates
VII. Federalism
VIII. Appendix A--List of Proposed EHB Benchmarks [List of Received 
Benchmarks: Partial]
IX. Appendix B--Largest FEDVIP Dental and Vision Plan Options, as of 
March 31, 2012

Acronym List

    Because of the many organizations and terms to which we refer by 
acronym in this proposed rule, we are listing these acronyms and their 
corresponding terms in alphabetical order below:

AV Actuarial Value
CHIP Children's Health Insurance Program
CMS Centers for Medicare & Medicaid Services
DOL U.S. Department of Labor
EHB Essential Health Benefits
ERISA Employee Retirement Income Security Act (29 U.S.C. section 
1001, et seq.)
FDA U.S. Food and Drug Administration
FEDVIP Federal Employee Dental and Vision Insurance Program
FEHBP Federal Employees Health Benefits Program

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HEDIS Healthcare Effectiveness Data and Information Set
HHS U.S. Department of Health and Human Services
HIOS Health Insurance Oversight System
HMO Health Maintenance Organization
HSA Health Savings Account
HRA Health Reimbursement Account
IOM Institute of Medicine
IRS Internal Revenue Service
MV Minimum Value
NAIC National Association of Insurance Commissioners
OMB Office of Management and Budget
OPM U.S. Office of Personnel Management
PHS Act Public Health Service Act
PRA Paperwork Reduction Act
QHP Qualified Health Plan
SSA Social Security Administration
SHOP Small Business Health Options Program
The Act Social Security Act
The Code Internal Revenue Code of 1986
USP United States Pharmacopeia
    Executive Summary: Beginning in 2014, all non-grandfathered health 
insurance coverage \1\ in the individual and small group markets, 
Medicaid benchmark and benchmark-equivalent plans, and Basic Health 
Programs (if applicable) will be required to cover essential health 
benefits (EHB), which include items and services in 10 statutory 
benefit categories, such as hospitalization, prescription drugs, and 
maternity and newborn care, and are equal in scope to a typical 
employer health plan. In addition to offering EHB, these health plans 
will meet specific actuarial values (AVs): 60 percent for a bronze 
plan, 70 percent for a silver plan, 80 percent for a gold plan, and 90 
percent for a platinum plan. These AVs, called ``metal levels,'' will 
assist consumers in comparing and selecting health plans by allowing a 
potential enrollee to compare the relative payment generosity of 
available plans. Taken together, EHB and AV will significantly increase 
consumers' ability to compare and make an informed choice about health 
plans.
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    \1\ For more information on status as a grandfathered health 
plans under the Affordable Care Act, please see Interim Final Rule, 
``Group Health Plans and Health Insurance Coverage Relating to 
Status as a Grandfathered Health Plan Under the Patient Protection 
and Affordable Care Act.'' Available at: http://cciio.cms.gov/resources/regulations/index.html#gp.
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    The Department of Health and Human Services (HHS) has provided 
information on EHB and AV standards in several phases. On December 16, 
2011, HHS released a bulletin \2\ (the ``EHB Bulletin''), following a 
report from the U.S. Department of Labor (DOL) describing the scope of 
benefits typically covered under employer-sponsored coverage and an 
HHS-commissioned study from the Institute of Medicine (IOM) \3\ 
recommending the criteria and methods for determining and updating the 
EHB. The EHB Bulletin outlined an intended regulatory approach for 
defining EHB, including a benchmark-based framework. Shortly 
thereafter, on January 25, 2012, HHS released an illustrative list of 
the largest three small group market products by state, which were 
updated on July 2, 2012.\4\ HHS further clarified the approach 
described in the EHB Bulletin through a series of Frequently Asked 
Questions (FAQs), released on February 17, 2012. On July 20, 2012, HHS 
published a final rule \5\ authorizing the collection of data to be 
used under the intended process for states to select from among several 
benchmark options to define EHB.
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    \2\ Available at: http://cciio.cms.gov/resources/files/Files2/12162011/essential_health_benefits_bulletin.pdf.
    \3\ ``Essential Health Benefits: Balancing Coverage and Cost.'' 
October 6, 2011. Available at: http://www.iom.edu/Reports/2011/Essential-Health-Benefits-Balancing-Coverage-and-Cost.aspx.
    \4\ Available at:  http://cciio.cms.gov/resources/files/largest-smgroup-products-7-2-2012.pdf.PDF.
    \5\ 77 FR 42658 (July 20, 2012).
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    HHS also published a bulletin \6\ outlining an intended regulatory 
approach to calculations of AV and implementation of cost-sharing 
reductions on February 24, 2012 (the ``AV/CSR Bulletin''). 
Specifically, HHS outlined an intended regulatory approach for the 
calculation of AV, de minimis variation standards, and silver plan 
variations for individuals eligible for cost-sharing reductions among 
other topics. As described in section IB of this preamble, 
``Stakeholder Consultation and Input,'' HHS reviewed and considered 
comments on both the EHB and AV/CSR Bulletins in developing this 
proposed rule.
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    \6\ Available at: http://cciio.cms.gov/resources/files/Files2/02242012/Av-csr-bulletin.pdf.
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    In addition, this rule proposes to amend 45 CFR 156.275, as 
published on July 20, 2012 (77 FR 42658), which established the first 
phase of an intended two-phase approach to recognizing accrediting 
entities. As directed under law, recognized entities will implement the 
standards established under the Affordable Care Act for qualified 
health plans (QHPs) to be accredited on the basis of local performance 
on a timeline established by the Exchange. The amendment to phase one 
included herein would not alter recognition of the National Committee 
for Quality Assurance (NCQA) and URAC on the terms outlined in the 
final rule (and as provided in the Federal Register Notice being 
released concurrently with this proposed rule) and would provide an 
opportunity for additional accrediting entities meeting the conditions 
in Sec.  156.275 to be recognized by the Secretary, until phase two is 
in effect. This opportunity would include an application and review 
process. This rule also proposes a timeline for the accreditation 
standard for the purposes of QHP certification in Federally-facilitated 
Exchanges.

I. Background

A. Legislative Overview

    Section 1302 of the Affordable Care Act provides for the 
establishment of an EHB package that includes coverage of EHB (as 
defined by the Secretary of the Department of Health and Human Services 
(the Secretary)) and AV requirements. The law directs that EHB be equal 
in scope to the benefits covered by a typical employer plan and cover 
at least the following 10 general categories: Ambulatory patient 
services; emergency services; hospitalization; maternity and newborn 
care; mental health and substance use disorder services, including 
behavioral health treatment; prescription drugs; rehabilitative and 
habilitative services and devices; laboratory services; preventive and 
wellness services and chronic disease management; and pediatric 
services, including oral and vision care. Sections 1302(b)(4)(A) 
through (D) establish that the Secretary must define EHB in a manner 
that (1) Reflects appropriate balance among the 10 categories; (2) is 
not designed in such a way as to discriminate based on age, disability, 
or expected length of life; (3) takes into account the health care 
needs of diverse segments of the population; and (4) does not allow 
denials of EHB based on age, life expectancy, or disability. Sections 
1302(b)(4)(E) and (F) further direct the Secretary to consider the 
provision of emergency services and dental benefits when determining 
whether a particular health plan covers EHB. Finally, sections 
1302(b)(4)(G) and (H) specify that the Secretary periodically review 
the EHB, report the findings of such review to the Congress and to the 
public, and update the EHB as needed to address any gaps in access to 
care or advances in the relevant evidence base. Section 1311(d)(3)(B) 
establishes that states may require a QHP to cover additional benefits 
beyond those in the EHB, provided that the state defrays the costs of 
such required benefits.
    Section 1301(a)(1)(B) of the Affordable Care Act directs all 
issuers of QHPs to cover the EHB package described in section 1302(a) 
of the Affordable Care Act, including coverage of the services 
described in section

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1302(b), adhering to the cost-sharing limits described in section 
1302(c), and subject to 1302(e), meeting the AV levels established in 
section 1302(d). Section 2707(a) of the Public Health Service (PHS) Act 
extends the coverage of the EHB package to issuers of non-grandfathered 
individual and small group policies beginning with plan years starting 
on or after January 1, 2014, irrespective of whether such issuers offer 
coverage through an Exchange. In addition, section 2707(b) of the PHS 
Act directs non-grandfathered group health plans to ensure that cost-
sharing under the plan does not exceed the limitations described in 
sections 1302(c)(1) and (2) of the Affordable Care Act.
    Section 1302(d)(2) of the Affordable Care Act describes the levels 
of coverage that section 1302(a)(3) includes in the EHB package: 60 
percent for a bronze plan, 70 percent for a silver plan, 80 percent for 
a gold plan, and 90 percent for a platinum plan. Section 1302(d)(3) 
directs the Secretary to develop guidelines that allow for de minimis 
variation in AV calculations.
    Section 1311(c)(1)(D)(i) of the Affordable Care Act directs a 
health plan to ``be accredited with respect to local performance on 
clinical quality measures * * * by any entity recognized by the 
Secretary for the accreditation of health insurance issuers or plans 
(so long as any such entity has transparent and rigorous methodological 
and scoring criteria).'' Section 1311(c)(1)(D)(ii) requires that QHPs 
``receive such accreditation within a period established by an Exchange 
* * *.'' In a final rule published on July 20, 2012 (77 FR 42658), 
because the NCQA and URAC already met the statutory requirements, they 
were recognized as accrediting entities on an interim basis, subject to 
the submission of documentation required in 45 CFR 156.275(c)(4). This 
recognition is now effective as indicated in a Federal Register notice 
being published concurrently with this proposed rule. In this proposed 
rule, HHS introduces a new process by which accrediting entities that 
are not already recognized can submit an application to be recognized 
and establishes a proposed notice and final notice process for 
recognizing any new accrediting entities. HHS intends, through future 
rulemaking, to establish a phase two recognition process which may 
establish additional criteria for the recognition of accrediting 
entities. This rule also proposes a timeline for the accreditation 
requirement in a Federally-facilitated Exchange.

B. Stakeholder Consultation and Input

    HHS has consulted with interested stakeholders on several policies 
related to EHB, AV, and Exchange functions. HHS held a number of 
listening sessions with consumers, providers, employers, health plans, 
and state representatives to gather public input, and released several 
documents for public review and comment. As described previously, HHS 
released two Bulletins that outlined our intended regulatory approach 
to defining EHB and calculating AV and sought public comment on the 
specific approaches.
    In addition to the listening sessions, HHS considered the findings 
of an IOM study, as well as a report conducted by the DOL \7\ on 
typical benefits offered by employer-sponsored coverage before 
releasing the Bulletins.
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    \7\ ``Selected Medical Benefits: A Report from the Department of 
Labor to the Department of Health and Human Services.'' April 15, 
2011. Available at: http://www.bls.gov/ncs/ebs/sp/selmedbensreport.pdf.
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    Finally, HHS consulted with stakeholders through regular meetings 
with the National Association of Insurance Commissioners (NAIC), 
regular contact with states through the Exchange grant process, 
Medicaid consultation, and meetings with tribal leaders and 
representatives, health insurance issuers, trade groups, consumer 
advocates, employers, and other interested parties.
    HHS received approximately 11,000 comments in response to the EHB 
Bulletin. Commenters represented a wide variety of stakeholders, 
including health insurance issuers, consumers, health providers, 
states, employers, employees, and Members of Congress.
    We considered all of these comments as we developed the policies in 
this proposed rule. Though we do not address each comment received, we 
discuss many of the comments throughout the proposed rule. In addition, 
HHS will be consulting with federally recognized tribes on the 
provisions of this proposed rule that impact tribes.

C. Structure of the Proposed Rule

    The regulations outlined in this proposed rule would be codified in 
45 CFR parts 147, 155, and 156. Part 147 outlines proposed standards 
for health insurance issuers in the small group and individual markets 
related to health insurance reforms. Part 155 outlines the proposed 
standards for states relative to the establishment of Exchanges and 
outlines the proposed standards for Exchanges related to minimum 
Exchange functions. Part 156 outlines the proposed standards for 
issuers of QHPs, including with respect to participation in an 
Exchange. The standards proposed to be codified in Part 156 as laid out 
in this NPRM apply only in the individual and small group markets, and 
not to Medicaid benchmark or benchmark-equivalent plans. EHB 
applicability to Medicaid will be defined in a separate regulation.

II. Provisions of the Proposed Regulation

A. Part 147--Health Insurance Reform Requirements for the Group and 
Individual Health Insurance Markets

1. Subpart B--Requirements Relating to Health Care Access
a. Coverage of EHB (Sec.  147.150)
    Section 2707(a) of the Public Health Service Act (PHS Act), as 
added by the Affordable Care Act, directs health insurance issuers that 
offer non-grandfathered health insurance coverage in the individual or 
small group market to ensure that such coverage includes the EHB 
package defined under section 1302(a) of the Affordable Care Act that 
includes the coverage of EHB, application of cost-sharing limitations, 
and AV requirements (plans must be a bronze, silver, gold, or platinum 
plan or a catastrophic plan).
    Section 1255 of the Affordable Care Act provides that this EHB 
package standard applies starting the first plan year for the small 
group market or policy year for the individual market beginning on or 
after January 1, 2014. In Sec.  147.150(a), we propose that a health 
insurance issuer that offers health insurance coverage in the 
individual or small group market--inside or outside of the Exchange--
ensure that such coverage offers the EHB package.
    PHS Act section 2707(b) provides that a group health plan shall 
ensure that any annual cost-sharing imposed under the plan does not 
exceed the limitations provided for under section 1302(c)(1) and (c)(2) 
of the Affordable Care Act. Section 715(a)(1) of the Employee 
Retirement Income Security Act (ERISA) and section 9815(a)(1) of the 
Internal Revenue Code (Code) incorporates section 2707(b) of the Public 
Health Service Act into ERISA and the Code. HHS, DOL, and the 
Department of the Treasury read the limitations on the scope of section 
1302(c) of the Affordable Care Act to apply also to the scope of PHS 
Act section 2707(b). Therefore, these deductible limitations apply only 
to plans and issuers in the small group market and do not apply to 
self-insured plans or health insurance issuers offering health 
insurance

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coverage in the large group market. Section 147.150(b) is reserved at 
this time.
    In addition, section 2707(c) of the PHS Act provides that an issuer 
offering any level of coverage specified under section 1302(d) of the 
Affordable Care Act offer coverage in that level to individuals who 
have not attained the age of 21. We propose to codify this standard in 
Sec.  147.150(c). An issuer could satisfy this standard by offering the 
same product to applicants seeking child-only coverage that it offers 
to applicants seeking coverage solely for adults or for families 
including both adults and children, as long as the child-only coverage 
is priced in accordance with the applicable rating rules.

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

State Required Benefits
    Section 1311(d)(3)(B) of the Affordable Care Act explicitly permits 
a state to require QHPs to offer benefits in addition to EHB, but 
requires the state to make payments, either to the individual enrollee 
or to the issuer on behalf of the enrollee, to defray the cost of these 
additional benefits. We propose that state-required benefits enacted on 
or before December 31, 2011 (even if not effective until a later date) 
may be considered EHB, which would obviate the requirement for the 
state to pay for these state-required benefits. We also propose that 
state-required benefits that are not included in the benchmark would 
apply to QHP markets in the same way they apply in the current market. 
For example, a benefit that is only required in the individual market 
by a state law enacted prior to December 31, 2011 would only be 
considered EHB (and exempt from the requirement that the state pay the 
cost of the benefit) with respect to the individual QHP market in 2014. 
This policy regarding state-required benefits is intended to apply for 
at least plan years 2014 and 2015.
    HHS received many comments in response to the EHB Bulletin about 
how state-required benefits beyond EHB could be identified and how 
states would defray the cost of those benefits. In this proposed rule, 
we interpret state-required benefits to be specific to the care, 
treatment, and services that a state requires issuers to offer to its 
enrollees. Therefore, state rules related to provider types, cost-
sharing, or reimbursement methods would not fall under our 
interpretation of state-required benefits. Even though plans must 
comply with those state requirements, there would be no federal 
obligation for states to defray the costs associated with those 
requirements.\8\
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    \8\ For example, a state statute requiring issuers to pay the 
same for a physician consultation in the office and via telemedicine 
would not be a state-required benefit. The physician consultation is 
the service; the requirement to pay for telemedicine relates to 
payment for the service delivery method. Since the requirement 
addresses a specific delivery method, not the underlying care, 
treatment, or service being delivered, there is no requirement to 
defray the cost.
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    Under the Affordable Care Act, state payment for state-required 
benefits only applies to QHPs. Since the Exchange is responsible for 
certifying QHPs, we propose that the Exchange identify which additional 
state-required benefits, if any, are in excess of the EHB. HHS intends 
to publish a list of state-required benefits for Exchanges to use as a 
reference tool.
    After consideration of four possible entities to conduct the cost 
calculation for additional coverage (QHP issuers, the state, the 
Exchange, or HHS), we believe that the QHP issuer should conduct the 
calculation for the cost of additional benefits, because the QHP 
generates the necessary data regarding claims, utilization, trend, and 
other issuer-specific data typically used to calculate the cost of a 
benefit. Because QHP issuers will offer state-required benefits to 
every enrollee, the cost of the benefit will be built into the overall 
premium and spread across all enrollees. We believe that the best 
method to calculate the state's cost, if applicable, is to have the QHP 
issuer quantify the amount of premium attributable to each additional 
benefit.
    We additionally propose that the calculations of the cost of 
additional benefits be made by a member of the American Academy of 
Actuaries, based on an analysis performed in accordance with generally 
accepted actuarial principles and methodologies. We also propose the 
calculation be done prospectively to allow for the offset of an 
enrollee's share of premium and for purposes of calculating the premium 
tax credit and reduced cost sharing.\9\ We request comment on whether 
the state should make payments based on the statewide average cost or 
make payments based on each QHP issuer's actual cost if different 
issuers report that a particular additional required benefit costs a 
different amount. We note that we expect there will be few, if any, 
payments made for state-required benefits since required benefits 
enacted prior to December 31, 2011 will be part of EHB, and therefore 
will not require the state to incur any costs.
Accreditation Timeline (Sec.  155.1045)
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    \9\ Section 36B1401(b)(3)(D) of the Code specifies that the 
portion of the premium allocable to required additional benefits 
shall not be taken into account in determining a premium tax credit. 
Likewise, section 1402(c) of the Affordable Care Act specifies that 
cost-sharing reductions do not apply to required additional 
benefits.
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    HHS proposes to amend Sec.  155.1045 to redesignate the existing 
paragraph as paragraph (a) and add a new paragraph (b) to set forth the 
timeline for QHP accreditation in Federally-facilitated Exchanges 
(including State Partnership Exchanges). HHS proposes a phased approach 
to the requirement that QHP issuers be accredited in Federally-
facilitated Exchanges. This approach is in part modeled after the one 
used by some states that require accreditation as part of issuer 
licensing. Further, this approach will accommodate new issuers--
including Consumer Operated and Oriented Plans--and those that have not 
previously been accredited, while ensuring that all QHP issuers make a 
commitment to ensure the delivery of high quality care to consumers.
    The proposed accreditation timeline to be used in Federally-
facilitated Exchanges is as follows:
     During certification for an issuer's initial year of QHP 
certification (for example, in 2013 for the 2014 coverage year), a QHP 
issuer without existing commercial, Medicaid, or Exchange health plan 
accreditation granted by a recognized accrediting entity for the same 
state in which the issuer is applying to offer coverage must have 
scheduled or plan to schedule a review of QHP policies and procedures 
of the applying QHP issuer with a recognized accrediting entity.
     Prior to a QHP issuer's second year and third year of QHP 
certification (for example, in 2014 for the 2015 coverage year and 2015 
for the 2016 coverage year), a QHP issuer must be accredited by a 
recognized accrediting entity on the policies and procedures that are 
applicable to their Exchange products or, a QHP issuer must have 
commercial or Medicaid health plan accreditation granted by a 
recognized accrediting entity for the same state in which the issuer is 
offering Exchange coverage and the administrative policies and 
procedures underlying that accreditation must be the same or similar to 
the administrative policies and procedures used in connection with the 
QHP.
     Prior to a QHP issuer's fourth year of QHP certification 
and in every subsequent year of certification (for example, in 2016 for 
the 2017 coverage year and forward), a QHP issuer must be accredited in 
accordance with 45 CFR 156.275.

[[Page 70648]]

C. Part 156--Health Insurance Issuer Standards Under the Affordable 
Care Act, Including Standards Related to Exchanges

1. Subpart A--General Provisions
    In Sec.  156.20, we propose to add definitions as follows:
Actuarial Value and Percentage of the Total Allowed Costs of Benefits
    We propose to define ``AV'' as the percentage paid by a health plan 
of the total allowed costs of benefits (using the term ``percentage of 
the total allowed costs of benefits'' that we also propose to define 
here).
    In general, AV can be considered a general summary measure of 
health plan generosity. We propose to define the ``percentage of the 
total allowed costs of benefits'' as the anticipated covered medical 
spending for EHB coverage (as defined in Sec.  156.110 (a)) paid by a 
health plan for a standard population, computed in accordance with the 
health plan's cost sharing, divided by the total anticipated allowed 
charges for EHB coverage provided to the standard population, and 
expressed as a percentage.
    Because section 1302(d)(2) of the Affordable Care Act refers to AV 
relative to coverage of the EHB for a standard population, we propose 
these definitions together in order to provide that AV is the 
percentage that represents the total allowed costs of benefits paid by 
the health plan, based on the provision of EHB as defined for that plan 
according to Sec.  156.115.
Benchmark Plans
    Under the benchmark selection and standards proposed in Sec.  
156.100 and Sec.  156.110, we believe it is important to differentiate 
between the plan selected by a state (or through the default process in 
Sec.  156.100(c)), which we are proposing to call the ``base-benchmark 
plan,'' and the benchmark standard that EHB plans will need to meet, 
which we are proposing to call the ``EHB-benchmark plan.''
    We propose that ``base-benchmark plan'' means the plan that is 
selected by a state from the options described in Sec.  156.100(a), or 
a default benchmark plan, as described in Sec.  156.100(c), prior to 
any adjustments made to meet the benchmark standards described in Sec.  
156.110.
    We propose that ``EHB-benchmark plan'' means the standardized set 
of EHB that must be met by a QHP or other issuer as required by Sec.  
147.150.
    We propose that ``EHB package'' means the scope of covered benefits 
and associated limits of a health plan offered by an issuer, as set 
forth in section 1302(a) of the Affordable Care Act. The EHB package 
provides at least the ten statutory categories of benefits, as 
described in Sec.  156.110(a); provides benefits in the manner 
described in Sec.  156.115; limits cost-sharing for such coverage as 
described in Sec.  156.130; and subject to offering catastrophic plans 
as described in section 1302(e) of the Affordable Care Act, provides 
distinct levels of coverage as described in Sec.  156.140.
2. Subpart B--EHB Package
a. State Selection of Benchmark (Sec.  156.100)
    In Sec.  156.100, we propose criteria for the selection process if 
a state chooses to select a benchmark plan. As we note in Sec.  156.20, 
the plan selected by a state is known as the base-benchmark plan. After 
the application of any adjustments described in Sec.  156.110, the plan 
will be known as the EHB-benchmark plan. The EHB-benchmark plan would 
apply to non-grandfathered health insurance coverage offered in the 
individual or small group markets. The EHB-benchmark plan would serve 
as a reference plan, reflecting both the scope of services and limits 
offered by a typical employer plan in that state. This approach and 
benchmark selection, which would apply for at least the 2014 and 2015 
benefit years, would allow states to build on coverage that is already 
widely available, minimize market disruption, and provide consumers 
with familiar products. This approach is intended to balance consumers' 
needs for comprehensiveness and affordability, as recommended by IOM in 
its report on the EHB.\10\ In developing these proposed guidelines, we 
considered the comments on the EHB Bulletin, which urged an open and 
transparent benchmark selection process with an opportunity for public 
input.
---------------------------------------------------------------------------

    \10\ Institute of Medicine, ``Essential Health Benefits: 
Balancing Coverage and Cost'' (2011).
---------------------------------------------------------------------------

    Consistent with the approach outlined in the EHB Bulletin, we 
propose in Sec.  156.100(a) that the state may select its base-
benchmark plan from among four types of health plans. These are (1) The 
largest plan by enrollment in any of the three largest small group 
insurance products in the state's small group market as defined in 
Sec.  155.20; (2) any of the largest three state employee health 
benefit plans by enrollment; (3) any of the largest three national 
Federal Employees Health Benefits Program (FEHBP) plan options by 
enrollment that are open to Federal employees; or (4) the largest 
insured commercial non-Medicaid Health Maintenance Organization (HMO) 
operating in the state. As we discussed in the EHB Bulletin, we use 
enrollment data from the first quarter two years prior to the coverage 
year to determine plan enrollment. To help states make their benchmark 
selections, HHS has provided states with benefit data on the largest 
plans by enrollment in the three largest small group insurance products 
in each state's small group market as of the first quarter of calendar 
year 2012.\11\ States can use that information, which we collected from 
issuers through HealthCare.gov, to inform their EHB benchmark 
selections. In addition to the data available on HealthCare.gov for 
insurance products in the states' small group markets, in Appendix B, 
HHS is also making available benefit data for the single largest 
Federal Employees Dental and Vision Insurance Program (FEDVIP) dental 
and vision plans respectively, based on enrollment.
---------------------------------------------------------------------------

    \11\ http://cciio.cms.gov/resources/files/largest-smgroup-products-7-2-2012.pdf.PDF
---------------------------------------------------------------------------

    Proposed paragraph (a)(1) of Sec.  156.100 would reflect a typical 
plan in the state's small group market and provide state flexibility as 
recommended by the IOM in its report.\12\ The remaining proposed 
benchmark plan options, in paragraphs (a)(2) through (a)(4), reflect 
the benchmark approach in Medicaid defined in 42 CFR 440.330 and in the 
Children's Health Insurance Program (CHIP) in 42 CFR 457.410 and 
457.420. We believe these options reflect both the scope of services 
and any limits offered by a ``typical employer plan'' as specified by 
section 1302(b)(2)(A) of the Affordable Care Act. Based on commenters' 
requests for an open and transparent selection process, we encourage 
states to solicit public input prior to their selection and 
confirmation of a state benchmark plan.
---------------------------------------------------------------------------

    \12\ Institute of Medicine, ``Essential Health Benefits: 
Balancing Coverage and Cost'' (2011).
---------------------------------------------------------------------------

    We believe that our proposed approach and the benchmark options 
available to states for defining EHB best reflect the balance between 
comprehensiveness, affordability, and state flexibility as recommended 
by the IOM.
    Because the PHS Act defines ``state'' to include the U.S. 
territories (Puerto Rico, Guam, the Virgin Islands, American Samoa, and 
the Northern Mariana Islands), the EHB requirements established by 
section 1302 of the Affordable Care Act apply to the territories. Given 
the smaller size and unique nature of the territories' health insurance 
markets, we seek comment as to whether the benchmark default

[[Page 70649]]

process described in proposed Sec.  156.100(c) is appropriate for the 
territories. In particular, we seek comment as to whether the default 
base-benchmark plan that will apply to the states--the largest plan by 
enrollment in the largest product in the state's small group market--is 
an appropriate default base-benchmark plan for the territories; or 
whether one of the other four types of health plans outlined in the EHB 
Bulletin, such as the largest FEHBP plan, would provide a more 
appropriate default base-benchmark. We note that the territories have 
the same opportunity as states to select a benchmark plan and we 
encourage them to do so.
    In Appendix A: List of Proposed EHB Benchmarks, we provide a list 
of proposed benchmarks either selected by states or, for states that 
have not selected, we propose what the default benchmark plan would 
look like if the benchmark was determined by the Secretary in 
accordance with Sec.  156.100(c). States were encouraged to submit 
their selections by October 1, 2012 to serve as the benchmarks for 2014 
and 2015. If a state wishes to make a selection or change its previous 
selection it must do so by the end of the comment period of this 
proposed rule. Pending publication of a final rule, we are proposing 
that the default benchmark option will apply in cases where a state 
does not voluntarily select a benchmark. Issuers have commented that 
early selection is important to provide them with sufficient time to 
develop and receive certification for QHPs in advance of the QHP 
application review scheduled for early 2013.
    At Sec.  156.100(b), we propose the standard for approval of a 
state-selected EHB-benchmark plan. Section 156.100(b) specifies that to 
become an EHB-benchmark plan, a base-benchmark plan must meet the 
specifications in Sec.  156.110, which include, coverage of at least 
the 10 categories of benefits outlined in the Affordable Care Act.
    Sections 1302(b)(4)(G) and (H) of the Affordable Care Act direct 
the Secretary to periodically review the definition of EHB, report the 
findings of such review to the Congress and the public, and update the 
EHB definition as needed to address gaps in access to care or advances 
in the relevant evidence base. In response to the EHB Bulletin, we 
received different comments from stakeholders on the frequency with 
which updates to the EHB should occur. Some commenters favored annual 
updates, while others recommended less frequent updates, including 
initially waiting until 2016 or 2017. We propose that the state's 
benchmark plan selection in 2012 would be applicable for the 2014 and 
2015 benefit years, and be based on plan benefits offered by the 
selected benchmark at the time of selection, including any applicable 
state-required benefits enacted prior to December 31, 2011. We intend 
to revisit this policy for subsequent years. We chose this approach for 
establishing a consistent set of benefits for two years in order to 
directly reflect current market offerings and limit market disruption 
in the first years of the Exchanges. We invite comment on the process 
that HHS should use to update EHB over time.
    We intend to use the enforcement processes and standards 
established in 45 CFR part 150 to ensure that plans adhere to the EHB 
standards incorporated under the PHS Act. Part 150 sets forth HHS's 
enforcement processes under sections 2723 and 2761 of the PHS Act, with 
respect to the requirements of title XXVII of the PHS Act. Section 2723 
generally provides that states have primary enforcement authority over 
health insurance issuers, but allows HHS to take enforcement actions 
against issuers in a state if a state has notified HHS that it has not 
enacted legislation to enforce or that it is not otherwise enforcing, 
or when HHS has determined that a state is not substantially enforcing 
one or more provisions of part A of title XXVII of the PHS Act. HHS may 
also take direct enforcement action against issuers in a state if HHS 
determines, pursuant to the process set forth in45 CFR part 150, that a 
state is not substantially enforcing a provision of part A of title 
XXVII of the PHS Act. This enforcement authority is extended through 
section 1321(c)(2) of the Affordable Care Act to apply to enforcement 
of the requirements under title I of the Affordable Care Act, including 
section 1302.
    In Sec.  156.100(c), we propose that if a state does not make a 
selection using the process defined in this section, the default base-
benchmark plan will be the largest plan by enrollment in the largest 
product in the state's small group market.
b. Determination of EHB for Multi-State Plans (Sec.  156.105)
    In Sec.  156.105, we propose an alternative way of complying with 
the EHB requirement for multi-state plans offered under contract with 
U.S. Office of Personnel Management (OPM) pursuant to section 1334 of 
the Affordable Care Act. We propose that multi-state plans must meet 
benchmark standards set by OPM, which will promulgate forthcoming 
regulations and guidance related to its Multi-State Plan Program 
(MSPP).
c. EHB Benchmark Plan Standards (Sec.  156.110)
    Many commenters urged HHS to establish standards or a process to 
ensure that an EHB-benchmark plan contains all 10 statutory EHB 
categories, reflects an appropriate balance among the categories, and 
is non-discriminatory. In addition, a number of commenters suggested 
factors for consideration in selecting an EHB-benchmark plan, including 
plan comprehensiveness, affordability, administrative simplicity, 
evidence-based practice, ethics, population health, inclusion of value-
based insurance design, and continuity of coverage.
    To clarify the relationship between the 10 statutory categories and 
the EHB-benchmark plan, in paragraph (a) we propose that the EHB-
benchmark plan must provide coverage of at least the following 
categories of benefits described in section 1302(b)(1) of the 
Affordable Care Act: (1) Ambulatory patient services; (2) emergency 
services; (3) hospitalization; (4) maternity and newborn care; (5) 
mental health and substance use disorder services, including behavioral 
health treatment; (6) prescription drugs; (7) rehabilitative and 
habilitative services and devices; (8) laboratory services; (9) 
preventive and wellness services and chronic disease management; and 
(10) pediatric services, including oral and vision care.
    With respect to the tenth category, we interpret ``pediatric 
services'' to mean services for individuals under the age of 19 years. 
Several states have asked HHS to define the age for coverage of 
``pediatric services'' to ensure comprehensive and consistent treatment 
in every state. This interpretation is consistent with the age stated 
in the Affordable Care Act's prohibition on preexisting conditions for 
children, and the age limit for eligibility to enroll in the CHIP. 
While we recommend coverage of pediatric services up to age 19, states 
have the flexibility to extend pediatric coverage beyond the proposed 
19 year age limit.
    Since some base-benchmark plan options may not cover all 10 of the 
statutorily required EHB categories, in paragraph (b), we propose 
standards for supplementing a base-benchmark plan that does not provide 
coverage of one or more of the categories described in paragraph (a). 
In paragraph (b)(1), we propose that if a base-benchmark plan option 
does not cover any items and services within an EHB category, the base-
benchmark plan must be

[[Page 70650]]

supplemented by adding that particular category in its entirety from 
another base-benchmark plan option. The resulting plan, which would 
reflect a base-benchmark that covers all 10 EHB categories, would be 
required to meet standards for non-discrimination and balance defined 
in paragraphs (d) and (e) of this section. After meeting all of these 
requirements, it would be considered the EHB-benchmark plan.
    In paragraphs (b)(2) and (b)(3), we discuss two categories of 
benefits that may not currently be included in some major medical 
benefit plans, but which will be included in the EHB defined in Sec.  
156.110(a), based on section 1302(b)(1) of the Affordable Care Act. In 
our review of research on employer-sponsored plan benefits, including 
small employer products, HHS found that a number of potential 
benchmarks do not include coverage for pediatric oral and vision 
services, as they are often covered under stand-alone policies. To 
address these gaps, we propose targeted policy options for each of 
these benefit categories.
    In paragraph (b)(2), we provide states with two options for 
supplementing base-benchmark plans that do not include benefits for 
pediatric oral care coverage. The first option, described in paragraph 
(b)(2)(i), is to supplement with pediatric coverage included in the 
FEDVIP dental plan with the largest enrollment. The second option, 
described in paragraph (b)(2)(ii), is to supplement with the benefits 
available under that state's separate CHIP program, if applicable.
    Similarly, in paragraph (b)(3), we propose that if the base-
benchmark plan does not include pediatric vision services, then these 
benefits may be supplemented from one of two options. The first option, 
described in (b)(3)(i), is to supplement pediatric vision coverage 
included in the FEDVIP vision plan with the largest national enrollment 
offered to Federal employees under 5 U.S.C. 8982. The second option, 
described in (b)(3)(ii), is to supplement pediatric vision coverage 
with the state's separate CHIP plan, if applicable. We believe that 
this additional option--an expansion of the policy presented in the EHB 
Bulletin--will provide states with valuable flexibility as they select 
their EHB benchmark plans. HHS will make benefit data available to 
facilitate any supplementation by states of their base-benchmark plans 
with benefits from FEDVIP dental and vision plans prior to the 
publication of this final rule.
    In paragraph (c), we propose the process by which HHS would 
supplement a default base-benchmark plan, if necessary. We clarify that 
to the extent that the default base-benchmark plan option does not 
cover any items and services within an EHB category, the category must 
be added by supplementing the base-benchmark plan with that particular 
category in its entirety from another base-benchmark plan option. 
Specifically, we propose that HHS would supplement the category of 
benefits in the default base-benchmark plan with the first of the 
following options that offer benefits in that particular EHB category: 
(1) The largest plan by enrollment in the second largest product in the 
state's small group market as defined in Sec.  155.20; (2) the largest 
plan by enrollment in the third largest product in the state's small 
group market as defined in Sec.  155.20; (3) the largest national FEHBP 
plan by enrollment across states that is described in and offered to 
Federal employees under 5 U.S.C. 8903; (4) the plan described in 
paragraph (b)(2)(i) to cover pediatric oral care benefits; (5) the plan 
described in (b)(3)(i) to cover pediatric vision care benefits; and (6) 
habilitative services as described in Sec.  156.110 (f) or Sec.  
156.115(a)(4).
    In paragraph (d), we propose that the EHB-benchmark plan must not 
include discriminatory benefit designs. As set forth in Sec.  156.125, 
those standards would prohibit benefit and network designs that 
discriminate on the basis of an individual's medical condition, or 
against specific populations as described in the statute. This proposed 
standard would apply both to benefit designs that limit enrollment, and 
those that prohibit access to care for enrollees. While we believe that 
it is unlikely that an EHB-benchmark plan will include discriminatory 
benefit offerings, this section proposes that any EHB-benchmark plan 
that does include discriminatory benefit designs must be adjusted to 
eliminate such discrimination in benefit design.
    In paragraph (e), we propose implementing section 1302(b)(4) of the 
Affordable Care Act by proposing that the EHB-benchmark plan be 
required to ensure an appropriate balance among the categories of EHB 
so that benefits are not unduly weighted toward any category. We 
solicit comments on potential approaches to ensuring that the EHB-
benchmark plans do not include discriminatory benefit designs and 
reflect an appropriate balance among the categories of EHB. In 
conducting research on employer-sponsored plan benefits and state-
required benefits, HHS found that many health insurance plans do not 
identify habilitative services as a distinct group of services.\13\ 
Accordingly, we are proposing a transitional policy for coverage of 
habilitative services that would provide states with the opportunity to 
define these benefits if not included in the base-benchmark plan. 
Specifically, in paragraph (f), we propose that in order to define EHB, 
if the base-benchmark plan does not include coverage of habilitative 
services the state may determine the services included in the 
habilitative services category. We believe that this transitional 
policy--which provides states with additional flexibility beyond what 
was initially outlined in the EHB Bulletin will provide a valuable 
opportunity for states to lead the development of policy in this area 
and welcome comments on this proposed approach to providing 
habilitative services. If states choose not to define the habilitative 
services category, plans must provide these benefits as defined in 
Sec.  156.115.
---------------------------------------------------------------------------

    \13\ ASPE Research Brief, ``Essential Health Benefits: Comparing 
Benefits in Small Group Products and State and Federal Employee 
Plans.'' December 16, 2011. Available at: http://aspe.hhs.gov/health/reports/2011/MarketComparison/rb.shtml.
---------------------------------------------------------------------------

    Because states may propose benchmarks in formal comments on this 
proposed rule other than those tentatively proposed, HHS is requesting 
public comment on all possible EHB-benchmark plans, not just those 
included in Appendix A as proposed benchmarks. This would also include 
each potential base-benchmark plan available to a state for selection 
and all potential combinations of benefits used to supplement the base-
benchmark plans to ensure coverage of at least the 10 statutory benefit 
categories as set forth in Sec.  156.110. As an example, a state may 
select its largest small group product and, if the product is missing 
maternity coverage and pediatric dental coverage, supplement for 
missing maternity coverage with the second largest small group market 
product and for pediatric dental coverage with the state's CHIP dental 
plan. However, according to the process described in proposed Sec.  
156.110, the state may choose to supplement using the maternity benefit 
from any of the base-benchmark plan options in the state that offer 
maternity coverage, and the pediatric dental benefit from either FEDVIP 
or CHIP dental. In this example, commenters should consider: the state-
selected EHB-benchmark plan as supplemented, the state-selected plan 
with other permissible supplementing options, and all other base-
benchmark plans the state has the opportunity to

[[Page 70651]]

select, as supplemented by any of the options available to that state.
d. Provision of EHB (Sec.  156.115)
    In paragraph (a)(1), we propose that plans may have limitations on 
coverage that differ from the EHB-benchmark plan, but covered benefits 
must remain substantially equal to those covered by the EHB-benchmark 
plan. This standard applies to the covered benefits, limitations on 
coverage (including limits on the amount, duration, and scope of 
covered benefits), and prescription drug benefits that meet the 
requirements of Sec.  156.120.
    As previously noted, the Affordable Care Act identifies coverage of 
mental health and substance use disorder benefits as one of the 10 
statutory benefit categories, and therefore as an EHB for non-
grandfathered health insurance coverage in both the individual and 
small group markets. In paragraph (a)(2), under our authority to define 
EHB, we propose that in order to satisfy the requirement to offer EHB, 
mental health and substance use disorder services, including behavioral 
health treatment services required under Sec.  156.110(a)(5), must be 
provided in a manner that complies with the parity standards set forth 
in Sec.  146.136 of this chapter, implementing the requirements under 
the Mental Health Parity and Addiction Equity Act of 2008.
    In paragraph (a)(3), we further propose that a plan does not 
provide EHB unless it provides all preventive services described in 
section 2713 of the PHS Act, as added by section 1001 of the Affordable 
Care Act. As codified in Sec.  147.130, PHS Act section 2713 requires 
all non-grandfathered group health plans and non-grandfathered 
individual and group market plans that are not exempt from the coverage 
requirement to offer certain preventive services without cost-sharing. 
We believe it is appropriate to include a requirement for coverage of 
these services under the definition of EHB. Setting forth this explicit 
application of PHS Act section 2713 in regulation is necessary because 
EHB-benchmark plan benefits are based on 2012 plan designs and 
therefore could be based on a grandfathered plan not subject to PHS Act 
section 2713.
    As an alternative to the transitional approach outlined in Sec.  
156.110(f), some states may prefer to provide issuers with the 
opportunity to define the specific benefits included in the 
habilitative services category if it is missing from the base-benchmark 
plan. Accordingly, we are proposing that a state may allow issuers time 
and experience to define these benefits. Specifically, in paragraph 
(a)(4), we propose that if the EHB-benchmark plan does not include 
coverage for habilitative services and the state does not determine 
habilitative benefits, a health insurance issuer must either: (1) 
Provide parity by covering habilitative services benefits that are 
similar in scope, amount, and duration to benefits covered for 
rehabilitative services; or (2) Decide which habilitative services to 
cover and report on that coverage to HHS. With regard to option (2), 
HHS intends to evaluate the habilitative services reported and further 
define habilitative services in the future. The issuer only has to 
supplement habilitative services when there are no habilitative 
services at all offered in the base benchmark plan and the state has 
not exercised its option to define habilitative services under Sec.  
156.110(f). We believe that this alternative approach would provide a 
valuable window of opportunity for review and development of policy in 
this area and welcome comments on this proposed approach.
    We first introduced the concept of benefit substitution in the EHB 
Bulletin, which suggested that a plan offering the EHB could substitute 
a benefit or set of benefits for another benefit or set of similar 
benefits subject to certain constraints--for example, that the two sets 
of benefits be actuarially equivalent. In this proposed rule, we 
propose this policy for the substitution of benefits relative to the 
benefits defined by the EHB benchmark plan consistent with what HHS 
outlined in the EHB Bulletin. As outlined in paragraph (b)(1)(i), we 
propose that issuers may substitute benefits, or sets of benefits, that 
are actuarially equivalent to the benefits being replaced. We further 
propose in paragraph (b)(1)(ii) that substitution of benefits would be 
allowed in each of the 10 statutorily required benefit categories, 
meaning that substitution could only occur within benefit categories, 
not between different benefit categories. In paragraph (b)(1)(iii), we 
clarify that our proposed benefit substitution policy does not apply to 
prescription drug benefits. In paragraph (b)(2), we outline standards 
for an actuarial certification that must be submitted by an issuer to a 
state, which demonstrates that any substituted benefit, or group 
thereof, is actuarially equivalent to the original benefit or benefits 
contained in the EHB-benchmark for that state. Specifically, we propose 
that the report must: (i) Be conducted by a member of the American 
Academy of Actuaries; (ii) based on an analysis performed in accordance 
with generally accepted actuarial principles and methodologies; and 
(iii) use a standardized plan population. Lastly, in paragraph (b)(3), 
we propose that actuarial equivalence of benefits be determined based 
on the value of the service without regard to cost-sharing, as cost 
sharing will be considered in the actuarial value calculation described 
in Sec.  156.135. We note that the resulting plan benefits would be 
subject to requirements of non-discrimination described in Sec.  
156.125. In addition, we clarify that under this approach, states have 
the option to enforce a stricter standard on benefit substitution or 
prohibit it completely. With the exception of the EHB category of 
coverage for pediatric services, a plan may not exclude an enrollee 
from coverage in an entire EHB category covered by the plan. For 
example, a plan may not exclude dependent children from the category of 
maternity and newborn coverage.
    In response to our proposed approach to benefit substitution, we 
seek additional comment on the tradeoff between comparability of 
benefits and opportunities for plan innovation and benefit choice.
    In paragraph (c), we propose to clarify that a plan does not fail 
to provide the EHB solely because it does not offer the services 
described in Sec.  156.280(d). Here we extend the statutory provision 
in section 1303(b)(1)(A), that allows a QHP to meet the standards for 
EHB even if it does not offer the services described in Sec.  
156.280(d), to health insurance issuers that offer non-grandfathered 
coverage in the individual or small group market. We note that this 
provision applies to all section 1303 services, including 
pharmacological services.
    In paragraph (d), we propose that an issuer of a plan offering EHB 
may not include routine non-pediatric dental services, routine non-
pediatric eye exam services, and long-term/custodial nursing home care 
benefits as EHB. As previously noted, section 1302 of the Affordable 
Care Act requires that the EHB package include at least the 10 
statutorily required categories of EHB, and be equal to the scope of 
benefits provided under a typical employer plan. In contrast with the 
benefits covered by a typical employer health plan, non-pediatric 
dental services, non-pediatric eye exam services, cosmetic orthodontia, 
and long-term/custodial nursing home care benefits often qualify as 
excepted benefits.\14\ Pursuant to the direction provided in section 
1302 to define benefits equal in scope to a

[[Page 70652]]

typical employer plan, we propose that issuers of plans offering EHB 
may not include these benefits as EHB. We solicit comment on the 
exclusion of these specific benefits from EHB coverage.
---------------------------------------------------------------------------

    \14\ For more information on excepted benefits, see 26 CFR 
54.9831-1, 29 CFR 2590.732, 45 CFR 146.145, and 45 CFR 148.220.
---------------------------------------------------------------------------

e. Prescription Drug Benefits (Sec.  156.120)
    In the EHB Bulletin, we indicated that we were considering an 
option under which, in order to be considered substantially equal to 
the EHB-benchmark plan, issuers would be required to cover at least one 
drug in each category and class in which the EHB-benchmark plan covered 
at least one drug. The specific drugs on each plan's drug list could 
vary under this approach, as long as a drug in each category and class 
was covered.
    In response to the EHB Bulletin, a large number of commenters 
raised concerns about the comprehensiveness of prescription drug 
benefits under this potential approach. Specifically, many commenters 
indicated that a requirement to offer one drug per category and class 
could result in insufficient access to medications for individuals with 
certain conditions. Several commenters additionally recommended that 
the definition of EHB adopt the standards used in Medicare Part D, 
including the protected class policy under which all drugs in certain 
classes must be covered.\15\ Conversely, other commenters emphasized 
the importance of flexibility for issuers to design a drug benefit that 
maximizes value for consumers. Based on these comments and the need to 
balance access with affordability, we propose the following approach, 
on which we solicit comment.
---------------------------------------------------------------------------

    \15\ CMS has identified certain ``protected categories and 
classes.'' In those protected categories and classes, Plan D 
formularies must include substantially all drugs that are FDA-
approved.
---------------------------------------------------------------------------

    In paragraph (a)(1) we propose that in order to comply with the 
requirement to cover EHB, a plan would cover at least the greater of: 
(1) One drug in every category and class; or (2) the same number of 
drugs in each category and class as the EHB-benchmark plan. As such, if 
the EHB-benchmark drug list offers more than one drug in a category or 
class, then plans covering EHB would offer at least the number of drugs 
in the EHB-benchmark plan for that class. Research suggests that this 
is consistent with coverage in the small group market today: one study 
found that most existing small group plans cover more than one drug in 
each class.\16\ In paragraph (a)(2) we propose that a QHP must report 
its drug list to the Exchange, an EHB plan operating outside of the 
Exchange must report its drug list to the state, and a multi-state plan 
must report its drug list to OPM. In paragraph (b) we clarify that a 
health plan does not fail to provide EHB prescription drug benefits 
solely because it does not offer drugs that are Sec.  156.280(d) 
services.
---------------------------------------------------------------------------

    \16\ Available at: http://www.avalerehealth.net/pdfs/Avalere_EHB_Formulary_Analysis.pdf.
---------------------------------------------------------------------------

    We are considering using the most recent version of the United 
States Pharmacopeia's (USP) classification system as a common 
organizational tool for plans to report drug coverage because it is 
publically available, widely used, and comprehensive. A classification 
system functions as an organizational tool, similar to an outline or 
taxonomy. Directing plans to submit their drug list using the same 
classification system would facilitate review, analysis, and comparison 
of the number of drugs on the QHP's list to the number of drugs on the 
EHB Benchmark Plan's list. If adopted in the final rule, we will 
continue to assess the need for and value of such a tool and intend to 
work with states and the NAIC to facilitate state use of the USP 
classification system as a comparison tool.\17\
---------------------------------------------------------------------------

    \17\ The requirement to use USP classification applies only to 
submission of formulary for review/certification. Plans may continue 
to use any classification system they choose in marketing and other 
plan materials.
---------------------------------------------------------------------------

    In general, each EHB plan would be able to cover different drugs 
than are covered by the EHB-benchmark plan, but those drugs must be 
presented using the USP classification system. This approach permits 
plan flexibility in the drug benefit design and the use of medical 
management tools, while ensuring that plans offer drug coverage 
consistent with that of the typical employer plan. An EHB plan would be 
able to cover any drugs subject to meeting the minimum number per 
category and class.
    We also propose that drugs listed must be chemically distinct.\18\ 
For example, offering two dosage forms or strengths of the same drug 
would not be offering drugs that are chemically distinct. Offering a 
brand name drug and its generic equivalent is another example of drugs 
that are not chemically distinct.
---------------------------------------------------------------------------

    \18\ The concept of chemically distinct is also described in the 
Medicare Part D Manual, Chapter 6, Section 30.2.1. More information 
is available at: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/downloads//Chapter6.pdf.
---------------------------------------------------------------------------

    In paragraph (c), we propose that a plan offering EHB have 
procedures in place to ensure that enrollees have access to clinically 
appropriate drugs that are prescribed by a provider but are not 
included on the plan's drug list, which is consistent with private plan 
practice today. We solicit comments on this proposed requirement.
    As discussed below, Sec.  156.125 implements section 1302(b)(4)(B) 
of the Affordable Care Act, which directs the Secretary to ensure that 
EHBs are not designed in a discriminatory manner. In implementing Sec.  
156.125 in the context of prescription drug benefits, we encourage 
states to monitor and identify discriminatory benefit designs, or the 
implementation thereof and to test for such discriminatory prescription 
drug benefit designs. We will use information on complaints and appeals 
and data on drug lists to refine our prescription drug benefit review 
policy for future years.
f. Prohibition on Discrimination (Sec.  156.125)
    Section 1302(b)(4) of the Affordable Care Act directs the Secretary 
to address certain standards in defining EHB, including elements 
related to balance, discrimination, the needs of diverse sections of 
the population, and denial of benefits. Section 1302(b)(4)(B) of the 
Affordable Care Act provides that the Secretary ensure that in terms of 
the benefits covered, payment rates provided, or incentives built into 
the definition of EHB, there is no discrimination based on age, 
disability, or expected length of life. Similarly, section 
1302(b)(4)(C) of the Affordable Care Act provides that the Secretary 
take into account the health care needs of diverse segments of the 
population, including women, children, persons with disabilities, and 
other groups. In addition, section 1302(b)(4)(D) of the Affordable Care 
Act provides that the Secretary ensure that the EHB not be subject to 
denial to individuals against their wishes on the basis of the 
individuals' age or expected length of life, or of the individuals' 
present or predicted disability, degree of medical dependency, or 
quality of life. Taken collectively, we interpret these provisions as a 
prohibition on discrimination by issuers. To inform the development of 
the policy on discrimination in the EHB, we sought stakeholder 
feedback, and considered guidance provided by the IOM. Many commenters 
expressed concern about the potential for benefit designs that might 
discriminate against certain populations or consumers with significant 
health needs. Commenters also recommended that HHS establish an 
explicit non-discrimination policy for benefit design. Based on this 
information, in Sec.  156.125, we propose an approach to addressing 
discrimination that would allow states

[[Page 70653]]

to monitor and identify discriminatory benefit designs, or the 
implementation thereof. Under this approach, consistent with section 
1563(d) of the Affordable Care Act, we would not prohibit issuers 
implementing the EHB standards from applying utilization management 
techniques. However, issuers could not use such techniques to 
discriminate against certain groups of people. For example, an issuer 
could use prior authorization, but could not implement prior 
authorization in a manner that discriminates on the basis of factors 
including age, disability, or length of life (for example, in terms of 
whether prior authorization is required, or when authorization is 
granted).
    To address potentially discriminatory practices, based on the 
authority in section 1302(b)(4) of the Affordable Care Act, we propose 
in paragraph (a) that an issuer does not provide EHB if its benefit 
design, or the implementation of its benefit design, discriminates 
based on an individual's age, expected length of life, or present or 
predicted disability, degree of medical dependency, quality of life, or 
other health conditions. In paragraph (b), we reiterate that Sec.  
156.200 and Sec.  156.225 also apply to plans providing EHB. Section 
156.200 prohibits discrimination based on factors including but not 
limited to race, disability, and age. Section 156.225 prohibits 
marketing practices and benefit designs that result in discrimination 
against individuals with significant or high cost health care needs.
    This proposal is intended to develop the framework for analysis 
tools to facilitate testing for discriminatory plan benefits. The IOM, 
in its report on the EHB, suggests that states have an important role 
in monitoring to ensure that issuers' plans do not contain outlier 
practices that would undermine EHB coverage. We believe that 
discrimination analyses could include evaluations to identify 
significant deviation from typical plan offerings including unusual 
cost sharing and limitations for benefits with specific 
characteristics. We also note that Medicare Advantage Program cost-
sharing designs are subjected to this type of analysis for potential 
discriminatory effects. We welcome comments on our proposed approach to 
prohibiting discriminatory benefit design.
g. Cost-Sharing Requirements (Sec.  156.130)
    Section 1302(c)(1) of the Affordable Care Act identifies an annual 
limitation on enrollee cost sharing. Section 1301(a)(1)(B) of the 
Affordable Care Act requires all qualified health plans to comply with 
these limits, and section 2707(a) of the Public Health Service Act 
requires compliance by issuers offering non-grandfathered health 
insurance coverage in the individual and small group markets. Standards 
proposed here, at Sec.  156.130, would be applicable to QHPs pursuant 
to 45 CFR 156.200(b)(3), which requires QHPs to offer the essential 
health benefits package described at section 1302(a) of the Affordable 
Care Act. Similarly, these standards would be applicable to health 
insurance coverage offered by health insurance issuers in the 
individual and small group markets pursuant to Sec.  147.150 of these 
regulations, as discussed earlier.
    Cost sharing is defined in Sec.  156.20 as any expenditure required 
by or on behalf of an enrollee with respect to essential health 
benefits. The term includes deductibles, coinsurance, copayments, or 
similar charges, but excludes premiums, balance billing amounts for 
non-network providers, and spending for non-covered services. We 
discuss here the implications and rationale of setting these standards 
in the context of their application to QHPs and issuers of health plans 
in the individual and small group markets.
    In Sec.  156.130(a), we codify the Affordable Care Act's annual 
limitation on cost sharing for 2014 and in subsequent years. Section 
1302(c)(1)(A) of the Affordable Care Act identifies the limit on total 
enrollee cost-sharing that can be incurred. The annual limitation on 
cost sharing ensures that health plans pay for significant health 
expenses associated with EHB and the risk of medical debt or bankruptcy 
for individuals insured by such plans is limited. Once the limitation 
on cost sharing is reached for the year, the enrollee is not 
responsible for additional cost sharing for EHBs for the remainder of 
the plan year.
    Section 156.130(a)(1) ties the annual limitation on cost sharing 
for plan years beginning on or after January 1, 2014, to the enrollee 
out-of-pocket limit for high-deductible health plans (HDHP), as 
calculated pursuant to section 223(c)(2)(A)(ii) of Internal Revenue 
Code of 1986 (the Code) based on section 1302(c)(1)(A) of the 
Affordable Care Act. Paragraph (a)(1)(i) addresses the limitation for 
self-only coverage and paragraph (a)(1)(ii) addresses the limitation 
for coverage other than self-only coverage; the practical effect for 
coverage other than self-only coverage is that the annual limitation 
will be double the limitation applicable to self-only coverage. For 
illustrative purposes only, for the year 2013 these amounts will be 
$6,250 in 2013 for self-only and $12,500 for non-self only 
coverage.\19\ In Sec.  156.130(a)(2)(i), we propose that the annual 
limitation on cost sharing is increased by the premium adjustment 
percentage, which is set by HHS as described in Sec.  156.130(e), in 
years after 2014 for self-only coverage. In Sec.  156.130(a)(2)(ii), we 
propose that the annual limitation on cost sharing in years after 2014 
for non-self only coverage is double the annual limitation on cost 
sharing for self-only coverage for that year. These proposed rules 
basically codify the statute.
---------------------------------------------------------------------------

    \19\ http://www.irs.gov/pub/irs-drop/rp-12-26.pdf.
---------------------------------------------------------------------------

    Sections 1302(c)(2)(A)(i) and 1302(c)(2)(A)(ii) of the Affordable 
Care Act define and Sec.  156.130(b) codifies the annual limitation on 
deductibles for health plans offered in the small group market. This 
limitation on cost-sharing is imposed on QHPs by section 1301(a)(1)(B) 
of the Affordable Care Act and 45 CFR 156.200(b)(3). The limitation is 
also imposed on non-grandfathered coverage in the small group market by 
section 2707(b) of the PHS Act, which we propose here to implement in 
proposed 45 CFR 147.150(a). In Sec.  156.130(b)(1)(i), we propose that 
the annual limitation on deductibles for the year 2014 are $2,000 for 
self-only coverage and in Sec.  156.160(b)(1)(ii), $4,000 for non self-
only coverage. In Sec.  156.130(b)(2) we propose that in years beyond 
2014, the annual deductible limits for self-only plans are increased by 
the premium adjustment percentage described in paragraph (e) based on 
section 1302(c)(2)(B) of the Affordable Care Act. In Sec.  
156.130(b)(2)(i), we specify this for self-only coverage and in Sec.  
156.130(b)(2)(ii), we specify this is doubled for family coverage or 
coverage of any type other than self-only.
    Section 1302(c)(2)(C) of the Affordable Care Act directs that the 
limit on deductibles described in section 1302(c)(2)(A) for a health 
plan offered in the small group market be applied so as to not affect 
the actuarial value of any health plan. We interpret and implement this 
provision through our proposal at Sec.  156.130(b)(3) by authorizing a 
health insurance issuer to make adjustments to its deductible to 
maintain the specified actuarial value for the applicable level of 
coverage required under proposed Sec.  156.140 and annual limitation on 
cost sharing. In Sec.  156.130(b)(3), we propose that a plan may exceed 
the annual deductible limit if it cannot reasonably reach a given level 
of coverage (metal tier) without doing so.

[[Page 70654]]

    We propose to use a ``reasonableness'' standard and request comment 
on what evidence or factors should be required from an issuer and 
considered in determining whether this standard is met with respect to 
health insurance coverage subject to 2707(b) of the PHS Act. While it 
may be possible to develop plan designs to meet all of these 
constraints, we believe it could be difficult to develop plans with 
reasonable coinsurance or equivalent cost sharing rates in the future, 
for example in bronze plans. An alternative would be to use the 
actuarial value calculator described in Sec.  156.135 to determine a 
reasonable increase to the amounts described in paragraph (b) that can 
be used by all plans in the small group market. We solicit comment on 
this approach on whether a specific variation threshold should be 
identified, and if so, how any such threshold should be established.
    Section 1302(c)(2)(A) of the Affordable Care Act provides that in 
certain circumstances, the deductible maximums described in Sec.  
156.130(b)(1) may be increased by the maximum amount of reimbursement 
``reasonably available'' to an employee under a flexible spending 
arrangement (FSA) described in section 106(c)(2) of the Code. We 
considered permitting the maximum deductible to increase by the amount 
available to each employee under the FSA. Permitting such variability 
in the maximum deductible by employee would require different 
deductible plans to be available to different employees based on an FSA 
decision made during the open enrollment process. Because we interpret 
section 1302(c)(2)(A) of the Affordable Care Act as permitting but not 
requiring FSAs to be taken into account when determining the deductible 
maximum, we propose to standardize the maximum deductible for all 
health plans in the small group market at $2,000 for self-only coverage 
and $4,000 for non-self-only coverage, as described in Sec.  
156.130(b)(1) and potentially adjusted in Sec.  156.130(b)(3), and not 
increase the deductible levels by the amount available under the FSA. 
However, we welcome comments on permitting such an adjustment, 
including permitting an employer to attest to the amount available to 
employees in an FSA as the basis for increasing the maximum permissible 
deductible for employees.
    In Sec.  156.130(c), we propose a special rule for network plans. 
Under our proposal, cost- sharing requirements for benefits from a 
provider outside of a plan's network do not count towards the annual 
limitation on cost sharing, as defined in paragraph (a) of this 
section, or the annual limitation on deductibles, as defined in 
paragraph (b) of this section. We consider an out-of-network provider 
to be a provider with whom the issuer does not have a contractual 
arrangement with respect to the applicable plan. For example, if an 
issuer offers a three-tiered network plan, with the third tier 
considered to be ``out-of-network'' (that is, providers without 
contractual relationships for providing services), only the cost 
sharing that an enrollee pays for benefits provided under the first and 
second tiers would count towards the annual limitation on cost sharing 
(and, if the plan is one offered in the small group market, the annual 
limitation on deductibles). Therefore, an enrollee who utilizes many 
services could reach the annual limitation on cost sharing, but still 
be required to pay cost sharing if the enrollee chooses to purchase 
services outside of the plan's network that year. This policy aligns 
with the definition of the enrollee out-of-pocket limit for high 
deductible health plans, articulated in section 223(c)(2)(D) of the 
Code. We believe this policy would allow issuers greater flexibility to 
design innovative plan benefit structures. We note that nothing in this 
proposal explicitly prohibits an issuer from voluntarily establishing a 
maximum out-of-pocket limit applicable to out-of-network services, or a 
state from requiring that issuers do so. We welcome comment on this 
approach.
    In Sec.  156.130(d), we codify sections 1302(c)(1)(B) and 
1302(c)(2)(B) of the Affordable Care Act by requiring that the annual 
limitation on cost sharing and the annual limitation on deductibles for 
a plan year beginning after calendar year 2014 only increase by 
multiples of $50 and must be rounded to the next lowest multiple of 
$50.
    In paragraph (e), we codify section 1302(c)(4) of the Affordable 
Care Act, which specifies that the premium adjustment percentage is 
calculated as the percentage (if any) by which the average per capita 
premium for health insurance coverage for the preceding calendar year 
exceeds such average per capita premium for health insurance for 2013. 
This ensures that the annual limitation on cost sharing and the annual 
limitation on deductibles change with health insurance market premiums 
over time. HHS will publish the methodology and annual premium 
adjustment percentage in the annual HHS notice of benefit and payment 
parameters.\20\
---------------------------------------------------------------------------

    \20\ The annual HHS notice of benefit and payment parameters 
will first be published this year, as discussed in the Standards 
Related to Reinsurance, Risk Corridors and Risk Adjustment, final 
rule (77 FR 17220 (March 23, 2012)).
---------------------------------------------------------------------------

    In paragraph (f), we codify section 1302(c)(2)(D) of the Affordable 
Care Act, which states that the annual deductibles do not apply to 
preventive care described in Sec.  147.130. In paragraph (g), under our 
authority in section 1302(b)(4)(B) of the Affordable Care Act 
prohibiting EHBs from discriminating against individuals based on age, 
disability, or expected length of life, and our general authority under 
section 1321(a)(1)(D) of the Affordable Care Act to establish 
appropriate requirements by regulation, we propose to require that 
cost-sharing requirements conform with the anti-discrimination 
provisions of Sec.  156.125.
    Paragraph (h) would implement the requirements in section 
1302(b)(4)(E) of the Affordable Care Act that (1) emergency department 
services will be provided out-of-network \21\ without imposing any 
requirement under the plan for prior authorization of services, or any 
limitation on coverage for the provision of services, that is more 
restrictive than the requirements or limitations that apply to 
emergency department services received from network providers, and (2) 
cost sharing in the form of a copayment or coinsurance for emergency 
department services amount for an out-of-network provider is the same 
as would apply to an in-network provider. Because we have already 
promulgated regulations at Sec.  147.138(b)(3) implementing identical 
statutory language in section 2719A(b)(1)(C)(ii)(II) of the Public 
Health Service Act regarding limitations on cost-sharing in the 
emergency room context, we are proposing to require in paragraph (h) 
that an issuer comply with the cost-sharing requirements at 45 
CFR147.138(b)(3). This treatment of out-of-network emergency services 
extends the in-network treatment of cost-sharing payments and 
limitations to out-of-network emergency services as a part of the 
annual limit on cost sharing defined in paragraph (a).
---------------------------------------------------------------------------

    \21\ For consistency, we are using the term ``out-of-network'' 
here to refer to services where the ``provider of services does not 
have a contractual relationship with the plan,'' as this phrase is 
used in section 1302(b)(4)(E).
---------------------------------------------------------------------------

h. AV Calculation for Determining Level of Coverage (Sec.  156.135)
    As we stated previously in connection with Sec.  156.20, AV is a 
measure of the percentage of expected health care costs a health plan 
will cover for a standard

[[Page 70655]]

population and can be considered a general summary measure of health 
plan generosity. The Affordable Care Act directs issuers offering non-
grandfathered health insurance coverage in the individual and small 
group markets to ensure that plans meet a level of coverage specified 
in section 1302(a)(3) of the Affordable Care Act and defined in Sec.  
156.140(b). Under the statute, each level of coverage corresponds to an 
AV calculated based on the cost-sharing features of the plan as 
described above. In this section, we propose an approach for issuer 
calculation of AV as discussed in the AV/CSR Bulletin.\22\ In paragraph 
(a), we propose that an issuer would use the AV calculator developed by 
HHS to determine its level of coverage as proposed in Sec.  156.140(b), 
subject to the exception in paragraph (b).
---------------------------------------------------------------------------

    \22\ Available at http://cciio.cms.gov/resources/files/Files2/02242012/Av-csr-bulletin.pdf.
---------------------------------------------------------------------------

    The AV calculator, as proposed here, has been developed using a set 
of claims data weighted to reflect the standard population projected to 
enroll in the individual and small group markets for the identified 
year of enrollment. Plans would input information on cost-sharing 
parameters. A methodology document including both the logic behind the 
calculator and a description of the development of the standard 
population, represented in the calculator as tables of aggregated data 
called continuance tables, is available and proposed at http://cciio.cms.gov/resources/regulations/index.html#pm to promote 
transparency. The document is part of the proposal for the use of the 
AV calculator in determining actuarial value of an applicable plan.
    We solicit comment on the methodology for the development of the AV 
calculator and the continuance tables, which were developed based on 
the standard population. The consistent methodology in AV calculation 
ensures a consistent set of assumptions and methods in AV calculation 
for all health plans using the calculator, resulting in comparability 
for consumers since plans with the same cost-sharing design would have 
the same AV. Because empirically only a small percentage of total costs 
come from out-of-network utilization, the difference in a plan's AV 
resulting from the inclusion of out-of-network utilization in the AV 
calculation is small. Therefore, the proposal for determining AV and, 
thus, the calculator only considers in-network utilization. Comments 
from the American Academy of Actuaries to the AV Bulletin confirmed 
that, for the majority of plans, estimations only including in-network 
cost sharing are appropriate even if some plans offer in-network 
services only, while other plans offer out-of-network services with 
higher cost-sharing, because in general, out-of-network costs are a 
very small percentage of total medical spending. The calculator and 
accompanying continuance tables are available at http://cciio.cms.gov/resources/regulations/index.html#pm and are subject to comment.
    Under this proposal, the AV calculator will be available for both 
formal and informal calculations and could be used as a tool to assist 
in the design of health plans. The calculator will allow health plan 
issuers to devise a compliant plan without the burden of making the 
assumptions needed or paying for the analysis for an AV calculation. 
Thus, the calculator would reduce issuer burden in calculating AV. We 
solicit comment on this proposal to direct the use of the AV calculator 
and on the parameters described here for development of the AV 
calculator.
    Consistent with section 1302(d)(2)(A) of the Affordable Care Act, 
that AV be calculated based on the provision of the EHB to a standard 
population, we propose that the AV calculator will use one or more sets 
of national claims data reflecting plans of various levels of 
generosity as the underlying standard population. We considered 
distributing a standard set of de-identified individual-level claims 
data to issuers as the standard population and allowing them to 
estimate the AV of their plans by comparing that standard set of claims 
against their plan designs. However, we are not aware at this time of a 
sufficiently robust person-level data set that could be made publicly 
available. As another alternative, we considered distributing only the 
continuance tables, representing the standard population and its 
utilization, to issuers to perform AV calculations. Under this method, 
the set of assumptions would be more uniform, but there would still be 
inconsistency and variation among issuers depending on the specific 
calculation method and logic used by each issuer. Comments on the AV/
CSR Bulletin were generally supportive of the approach we propose here 
to develop a publicly available and transparent AV calculator based on 
a standard population represented through continuance tables.
    In paragraph (b), we propose options for an issuer whose plan 
designs do not permit the calculator to provide an accurate summary of 
plan generosity. Although HHS anticipates that the vast majority of 
plans will be able to use the calculator in 2014 and beyond, no uniform 
calculator can accommodate the entire potential universe of plan 
designs. Therefore, there may be a small subset of plans whose design 
would not be compatible with the calculator. We intend to interpret 
this standard as dependent on whether the calculator takes into account 
or accommodates all material aspects of a plan's cost sharing 
structure. For example, we expect that the calculator will not be able 
to accommodate plan designs with multiple coinsurance rates as 
different levels of out-of-pocket spending are met or a multi-tier 
network with substantial amounts of utilization expected in tiers other 
than the lowest-priced tier. As proposed in paragraph (b)(1), these 
plans would need to submit to the appropriate entity (the state, HHS, 
the Exchange, or OPM) documentation in the form of actuarial 
certification that they have complied with one of the methods described 
below.
    Paragraph (b)(2) proposes two options to accommodate plans with 
benefit designs that cannot be accommodated by the AV calculator. In 
paragraph (b)(2)(i), we propose that a health plan issuer be permitted 
to decide how to adjust the plan benefit design (for calculation 
purposes only) to fit the parameters of the calculator and then, 
pursuant to paragraph (b)(2)(ii), have an actuary who is a member of 
the American Academy of Actuaries certify that the methodology is in 
accordance with generally accepted actuarial principles and 
methodologies. In paragraph (b)(3), we propose a second option, that 
the plan may use the calculator for the plan design provisions that 
correspond to the parameters of the calculator and then have a member 
of the American Academy of Actuaries calculate appropriate adjustments 
to the AV as determined by the AV calculator for plan design features 
that deviate substantially, in accordance with generally accepted 
actuarial principles and methodologies. We propose in paragraph (b)(4) 
that, to align with the AV calculator and the rules proposed here for 
how AV is determined, plans using one of these methods would exclude 
out-of-network costs when using additional calculation methods. We also 
note, however, that a multi-tiered plan should consider all network 
tiers in its AV calculation and exclude only costs that are truly out-
of-network (providers with which the plan has no contractual 
relationship).
    In paragraph (c), we propose a standard for the treatment of small 
group market HDHPs offered with a health savings account (HSA) or a 
health plan in the small group market integrated with a health 
reimbursement

[[Page 70656]]

arrangement (HRA), so that HDHP and HSAs/HRAs are integrated. 
Recognizing that simply calculating the AV of the HDHP based on the 
insurance plan alone could understate the value of coverage if the 
values of the employer contribution to such accounts are not included, 
and that employer-provided HSAs and HRAs are generally the equivalent 
of first dollar coverage for any cost-sharing requirements encountered 
by the enrollee, in paragraph (c)(1), we propose that the annual 
employer contributions to HSAs and amounts newly made available under 
HRAs for the current year should count within the plan design. This 
treatment of HSA and HRA contributions is similar to how other employer 
contributions toward cost-sharing are treated within the plan design, 
such that a plan with a $0 deductible has the same AV as a plan with a 
$1,000 deductible plus a $1,000 HSA or HRA.
    Section 1302(d)(2)(B) of the Affordable Care Act directs the 
Secretary to issue regulations under which employer contributions to an 
HSA (within the meaning of section 223 of the Internal Revenue Code of 
1986) may be taken into account in determining the level of coverage 
for a plan of the employer. HHS is interpreting the statute to allow 
for a similar treatment of HRAs because amounts newly made available 
under an HRA integrated with a small group market plan have a similar 
impact on AV calculation as employer contributions to an HSA when 
adjusted as described below in the discussion of paragraphs (c)(2)(i) 
and (c)(2)(ii). In paragraph (c)(2), we propose that these 
contributions be applied to the plan design to account for the fact 
that HSA and HRA contributions are the equivalent of first dollar 
coverage for any cost-sharing requirements encountered by the enrollee 
and similar to other employer cost-sharing contributions to plan 
design.
    In paragraphs (c)(2)(i) and (c)(2)(ii), we propose that the AV 
calculator would include any current year HSA contributions or amounts 
newly made available under an HRA for the current year as an input into 
the calculator that can be used to determine the AV of an employer 
health benefit plan. We note that employee HSA contributions will not 
count towards AV, nor do these provisions apply to the coverage offered 
by issuers in the individual market because HSAs in the individual 
market are funded directly by the enrollee.
    Paragraph (d) proposes that in years 2015 and after, a state-
specific data set may be used as the standard population (i.e. in place 
of the HHS-issued continuance tables) for AV calculations if approved 
by HHS. Issuers in such a state would still use the AV calculator 
logic, but the underlying data used for generating the AV would be 
specific to the state. Paragraphs (d)(1) through (5) propose criteria 
for acceptable state claims data and their use. The proposed criteria 
are based on our review of a July, 2011 American Academy of Actuaries 
issue brief.\23\ Paragraph (d)(1) proposes that the data support the 
calculation of AVs for the full range of health plans available in the 
market, meaning that the structure and definitions for the data set 
must be standardized and clearly documented. Paragraph (d)(2) proposes 
that the underlying population must be derived from the non-elderly 
population likely to be covered by private plans in the 2014 market and 
beyond. For example, the underlying population cannot be based 
primarily on Medicaid or Medicare enrollees. This criterion is also 
intended to ensure that the data set represents members in the then 
current small group and individual markets for the state. Paragraph 
(d)(3) proposes that the data set must be large enough so that (i) 
demographic patterns and spending patterns are stable over time to 
accommodate periodic updates and (ii) a substantial majority of the 
state's insured population is included, subject to the requirement in 
paragraph (2) to cover the expected insured population in 2014. 
Paragraph (d)(4) proposes that, if a state intends to reflect 
geographic differences within the state, the data set must be 
sufficiently large and geographically diverse for area-specific 
calculations. Paragraph (d)(5) proposes that the data set must capture 
a wide range of health care services typically offered, including those 
that fall within EHB and are at the time of submission offered in a 
typical employer plan. For example the data set must include claims for 
maternity, prescription drugs, and mental health benefits. Comments on 
the AV/CSR Bulletin \24\ generally supported the proposal to allow 
states the flexibility to provide their own data sets. Some groups 
commented that the state data would need to be at least as robust as 
the national data set. HHS believes that the parameters outlined above, 
and adopted from the American Academy of Actuaries' recommendations, 
will ensure that state specific data are sufficiently robust. We 
solicit comment on this proposal and our adoption of criteria 
identified by the American Academy of Actuaries.
---------------------------------------------------------------------------

    \23\ Available at http://www.actuary.org/pdf/health/Actuarial_Value_Issue_Brief_072211.pdf.
    \24\ http://cciio.cms.gov/resources/files/Files2/02242012/Av-csr-bulletin.pdf.
---------------------------------------------------------------------------

    In paragraph (e), HHS proposes that the default standard population 
provided by HHS, which is described in paragraph (f) and represented in 
the continuance tables incorporated into this regulatory proposal by 
reference, would be used unless the state submits its own standard 
population consistent with paragraphs (d) and (e). In paragraph (e), 
HHS proposes that the state data set be submitted in a format that can 
support the AV calculator described in paragraph (a). Because HHS will 
use continuance tables to support the development of the AV calculator, 
we anticipate that states will also submit any state-specific data sets 
in the form of continuance tables. HHS intends to provide a template 
and instructions for these submissions.
    Several comments on the AV/CSR Bulletin requested additional 
guidance on the process and timeline for state submission of data. We 
remain open to comments on the use of state data for 2014, but given 
timing constraints, we propose that the option for states to submit a 
state-specific standard population will begin for plan years starting 
in 2015. We expect that submissions will be due in the second quarter 
of the year prior to the benefit year.
    Paragraph (f) proposes that HHS will develop the standard 
population to be used to calculate AV in accordance with section 
1302(d)(2)(A) of the Affordable Care Act, which requires that AV be 
calculated using a standard population. This standard population will 
be used for AV calculation under Sec.  156.135. Comments on the AV/CSR 
Bulletin were generally supportive of the proposal to use a standard 
data set developed by HHS, with the option of state flexibility to 
provide a state-specific data set for AV calculations. We solicit 
comment on whether the AV calculator should allow for this variation 
between states. We also solicit comment on whether we should consider 
including up to three regional adjustments for geographic price 
differences as described in the AV/CSR Bulletin.
i. Levels of Coverage (Sec.  156.140)
    This section describes standards for meeting the Affordable Care 
Act provisions that issuers offering QHPs or non-grandfathered health 
plans in the individual and small group markets offer plans that meet 
distinct levels of coverage; we note that an applicable issuer may 
offer a catastrophic plan, as described in section 1302(e) of the 
Affordable Care Act, in lieu of a health plan that meets one of these 
levels of

[[Page 70657]]

coverage. Section 1302(d)(2) of the Affordable Care Act directs the 
Secretary to issue regulations on the calculation of AV and its 
application to the levels of coverage.
    Paragraph (a) proposes the general requirement that the AV of a 
plan must be calculated according to Sec.  156.135, within de minimis 
variation, in order to determine a plan's level of coverage.
    Paragraph (b) proposes to codify section 1302(d)(1) of the 
Affordable Care Act, which requires that a bronze plan has an AV of 60 
percent; a silver plan, 70 percent; a gold plan, 80 percent; and a 
platinum plan, 90 percent.
    Paragraph (c) proposes standards for de minimis variation. Section 
1302(d)(3) of the Affordable Care Act authorizes the Secretary to 
determine a reasonable de minimis variation in the AVs used to 
determine levels of coverage. In paragraph (c), we propose a de minimis 
variation of +/- 2 percentage points for all non-grandfathered plans. 
For example, a silver plan could have an AV between 68 and 72 percent. 
We believe that a de minimis amount of +/- 2 percentage points strikes 
the right balance between ensuring comparability of plans within each 
metal level and allowing plans the flexibility to use convenient cost-
sharing metrics. Comments on this proposal in the AV/CSR Bulletin were 
generally supportive of this approach.
j. Determination of Minimum Value (Sec.  156.145)
    Section 1302(d)(2)(C) of the Affordable Care Act sets forth the 
rules for calculating the percentage of the total allowed costs of 
benefits provided under a group health plan or health insurance 
coverage. Section 36B(c)(2)(C)(ii) of the Code provides that an 
employer-sponsored plan provides minimum value (MV) if this percentage 
is no less than 60 percent. For the purpose of determining that a given 
plan provides MV, we propose in paragraph (a) that the percentage of 
the total allowed cost of benefits will be determined using one of the 
main methodologies as described in Treasury Notice 2012-31, released on 
May 14, 2012 (``MV Notice''). We also propose, in paragraph (c), that 
MV for employer-sponsored self-insured group health plans and insured 
large group health plans will be determined using a standard population 
that is based upon large self-insured group health plans. We also 
propose that employer contributions to an HSA and amounts newly made 
available under an HRA will be taken into account in determining MV in 
accordance with the principles applied in taking such amounts into 
account in determining AV.
    In applying this approach to determining MV, in paragraph (a)(1), 
we propose that employer-sponsored self-insured and insured large group 
plans will be able to use the MV calculator, which will be made 
available by HHS and the Internal Revenue Service. Under this proposal, 
the MV calculator will be similar in design to the AV calculator but 
based on continuance tables and a standard population reflecting claims 
data of typical self-insured employer plans. This will be a better 
reflection of the typical employer plan that will use the MV 
calculator, resulting in a similar or higher actuarial value than the 
AV calculator for the same benefit designs. This approach would permit 
an employer-sponsored plan to enter information about the plan's cost 
sharing to determine whether the plan provides MV.
    As an alternative to using the MV calculator, we propose in 
paragraph (a)(2) that an employer-sponsored plan would be able to use 
an array of design-based safe harbors published by HHS and the Internal 
Revenue Service in the form of checklists to determine whether the plan 
provides MV. Each safe harbor checklist would describe the cost sharing 
attributes of a plan that apply to the following four core categories 
of benefits and services which comprise the vast majority of group 
health plan spending as described in the MV Notice: physician and mid-
level practitioner care, hospital and emergency room services, pharmacy 
benefits, and laboratory and imaging services.
    Finally, if an employer-sponsored plan contains non-standard 
features that are not suitable for the use of the calculator and do not 
fit the safe harbor checklists, we propose in paragraph (a)(3) to 
permit MV to be determined through certification by an actuary without 
the use of the MV calculator. The actuary would make this determination 
based on the plan's benefits and coverage data and the standard 
population, utilization, and pricing tables available for purposes of 
the valuation of employer-sponsored plans. This final option would be 
available only when one of the other methodologies is not applicable to 
the employer-sponsored plan. We propose that the determination of MV 
must be made by a member of the American Academy of Actuaries, based on 
an analysis performed in accordance with generally accepted actuarial 
principles and methodologies. We intend to issue applicable guidance 
concerning the actuarial analysis.
    In the event that a plan uses the MV calculator and offers an EHB 
outside of the parameters of the MV calculator, we propose in paragraph 
(b)(1) that an actuary who is a member of the American Academy of 
Actuaries will be permitted to determine the value of that benefit and 
add it to the result derived from the MV calculator in accordance with 
the generally accepted actuarial principles and methodologies. This 
aims to consider the value of benefits that are among the EHB options, 
but not necessarily in a state benchmark because there is no EHB 
standard for employer-sponsored self-insured group health plans or 
insured large group health plans. There is no requirement that 
employer-sponsored self-insured and insured large group health plans 
offer all categories of EHB or conform to any of the EHB benchmarks. 
For clarity, alignment, and administrative ease, we propose in 
paragraph (b)(2), for purposes of determining that a group health plan 
provides MV, that such plans will be permitted to take into account all 
benefits provided by the plan that are included in any of the EHB 
benchmarks.
    We also propose, in paragraph (c), that MV determinations under 
Sec.  156.145(a) will be based on a standard population based on data 
from self-insured group health plans.
k. Application to Stand-alone Dental Plans inside the Exchange (Sec.  
156.150)
    Section 1302 of the Affordable Care Act outlines the standards for 
health plans to cover the ten categories of the EHB. Section 
1311(d)(2)(B)(ii) of the Affordable Care Act, as codified in Sec.  
155.1065 of this subchapter, allows the pediatric dental component of 
the EHB to be offered through a stand-alone dental plan in an Exchange. 
If stand-alone dental plans are available in an Exchange, section 
1302(b)(4)(F) of the Affordable Care Act permits QHPs offered in that 
Exchange to exclude coverage of the pediatric dental component of the 
EHB. This is the only exception to EHB coverage permitted under section 
1302. Section 1311 also outlines how cost-sharing limits and AV would 
apply to such stand-alone dental plans.
    In paragraph (a), we propose that stand-alone dental plans would 
have a separate annual limitation on cost sharing from QHPs covering 
the remaining EHBs. While the annual limitation on cost-sharing for a 
QHP must be consistent with Sec.  156.130, the annual limitation on 
cost sharing for a stand-alone dental plan would be considered 
separately. We propose that the plan must demonstrate the annual

[[Page 70658]]

limitation on cost sharing for the stand-alone dental plan is 
reasonable for coverage of the pediatric dental EHB. We request comment 
on this proposal and what parameters should be considered a 
``reasonable'' annual limitation on cost sharing. We note that the 
annual limitation on cost sharing would be applicable to in-network 
services only, consistent with Sec.  156.130(c).
    We considered applying the full annual limitation on cost sharing 
described in section 1302(c) of the Affordable Care Act separately to 
stand-alone dental plans. However, if a person purchased pediatric 
dental benefits through a stand-alone plan, it would effectively double 
the potential out-of-pocket costs, putting individuals with similar 
coverage, but purchasing pediatric dental through a stand-alone plan, 
at much greater financial risk.
    Another alternative would be to exclude the pediatric dental 
benefit entirely from the annual limitation on cost sharing, whether it 
is offered through a health plan or through a stand-alone dental plan. 
However, we were concerned that not applying any annual limitation on 
cost sharing to stand-alone dental plans would treat such benefits 
differently than plans offering an embedded pediatric dental benefit, 
which could create a price advantage over medical plans.
    We also considered requiring that the combination of the annual 
limitations on cost-sharing in the QHP and the stand-alone dental plan 
must not exceed the limitations identified in Sec.  156.130, regardless 
of whether the person received coverage through a health plan that 
covers all of the 10 EHB categories including dental, or received 
coverage through a combination of a QHP and a stand-alone dental 
policy. However, this approach would entail a high level of 
coordination between an Exchange, QHP issuers, and issuers of stand-
alone dental plans to track an enrollee's cost sharing and notify the 
issuers if the limit was reached, which we are concerned may be 
difficult to administer.
    We request comment generally on whether this approach to applying 
the annual limitations on cost-sharing standard is appropriate for 
stand-alone dental plans.
    In paragraph (b), we propose actuarial value standards for stand-
alone dental plans. The calculator developed by HHS under Sec.  156.135 
would be inappropriate for stand-alone dental plans because the 
standard population that underlies the HHS-developed calculator cannot 
be reasonably adapted to reflect a pediatric-only population that 
utilizes dental services. Accordingly, in paragraph (b)(1), we propose 
that stand-alone dental plans may not use the HHS-developed AV 
calculator. Instead, given the unique and narrow focus of the stand-
alone dental plan market, we propose in paragraph (b)(2) that any 
stand-alone dental plan certified to meet an 75 percent AV, with a de 
minimis range of +/- 2 percentage points, be considered a ``low'' plan 
and anything with an AV of 85 percent, with a de minimis range of +/- 2 
percentage points, be considered a ``high'' plan. We request comment on 
whether a de minimis variation of +/- 2 percentage points is feasible 
for stand-alone dental plans. The ``high/low'' actuarial value standard 
would apply to the pediatric dental EHB only in a stand-alone dental 
plan. We note that when the pediatric dental EHB is included in a 
health plan, the AV calculator would apply to the pediatric dental EHB. 
In order to meet this standard we propose in paragraph (b)(3) that the 
issuer of a stand-alone plan demonstrate that the plan meets the 
``high'' or ``low'' level of coverage as certified by a member of the 
American Academy of Actuaries using generally accepted actuarial 
principles. This proposal would provide a means of comparison for 
consumers as well as providing a comparable method of fulfilling the 
offering requirements laid out in Sec.  156.200(c)(1). We request 
comment on this proposal and whether the actuarial value standards for 
a ``high'' and ``low'' plan are appropriate.
    As an alternative, we considered requiring that a stand-alone 
dental plan meet at least a silver or gold level of coverage as 
certified by a member of the American Academy of Actuaries using 
generally accepted actuarial principles. However, some commenters noted 
that because pediatric dental coverage is comprised largely of 
preventive services with 100 percent cost-sharing covered by the plan, 
in order to meet a 70 percent AV, issuers of stand-alone dental plans 
would need to add a deductible that is not currently included in plans. 
In contrast, our proposal would be more in line with current industry 
practices and would result in fewer out-of-pocket costs for consumers.
3. Subpart C--Accreditation
Accreditation of QHP Issuers (Sec.  156.275)
Recognition of Accrediting Entity by HHS (Sec.  156.275(c)(1) and Sec.  
156.275(c)(4))
    This proposed rule would amend the current (``phase one'') 
recognition process and provide additional accrediting entities the 
opportunity to apply and demonstrate how they meet the conditions for 
recognition articulated in section 1311(c)(1)(D) of the Affordable Care 
Act and 45 CFR 156.275(c)(2) through (c)(5).\25\ HHS intends, through 
future rulemaking, to establish a phase two recognition process which 
may establish additional criteria for recognized accrediting entities.
---------------------------------------------------------------------------

    \25\ Patient Protection and Affordable Care Act; Data Collection 
to Support Standards Related to Essential Health Benefits; 
Recognition of Entities for the Accreditation of Qualified Health 
Plans (CMS-9965-F), 77 FR 42,658 (July 20, 2012).
---------------------------------------------------------------------------

    HHS's initial survey of the market showed that two entities, NCQA 
and URAC, met the statutory requirements for accreditation. During the 
public comment period for 45 CFR 156.275, additional accrediting 
entities indicated that they may soon meet the accreditation conditions 
specified in 45 CFR 156.275 (c)(2) and (c)(3). HHS believes that 
opening up the phase one recognition process to provide other entities 
an opportunity to apply would provide expanded choices regarding QHP 
accreditation for Exchanges, states and issuers.
    Therefore, HHS proposes to amend Sec.  156.275(c)(1) to provide an 
application and review process for phase one recognition of accrediting 
entities. Under this proposal, accrediting entities could apply and 
demonstrate how they meet the requirements for recognition as 
established in 45 CFR 156.275 (c)(2) and (c)(3). Such applications must 
include the documentation described in 45 CFR 156.275(c)(4), including 
current accreditation standards and requirements, processes, and 
measure specifications for performance measures, and a document that 
illustrates how (via a crosswalk) the accrediting entity meets the 
standards established in Sec.  156.275(c)(2) and (c)(3). This proposal 
would require HHS, within 60 days of receiving the complete 
application, to publish a notice in the Federal Register identifying 
the accrediting entity making the request for phase one recognition, 
summarizing HHS's analysis of whether the applicant meets the criteria 
for recognition, and providing no less than a 30-day public comment 
period on this applicant accrediting entity. HHS will compare the 
applicant accrediting entity's standards and processes to the 
requirements for recognition established in 45 CFR 156.275(c)(2) and 
(3). This assessment will be the same as that underlying the 
recognition of NCQA and URAC. After the close of the comment period, 
HHS will notify the public in the Federal Register of the names of the 
accrediting entities

[[Page 70659]]

recognized and not recognized to provide accreditation of QHPs for the 
purposes of QHP certification. If an accrediting entities is not 
recognized, then it may re-apply for recognition following the same 
application procedure as proposed in Sec.  156.275(c)(1).
    HHS is also amending Sec.  156.275(c)(4)(i) to delete the timeframe 
of submitting the documentation within 60 days of publication of this 
final rule. Under the amended application and review process proposed 
in Sec.  156.275(c)(1), accrediting entities must provide the 
documentation described in Sec.  156.275(c)(4)(i) with their 
application for review.
    In a Federal Register notice being published concurrently with this 
proposed rule, we are notifying the public that NCQA and URAC are 
recognized as accrediting entities for the purposes of QHP 
certification consistent with the final rule published on July 20, 
2012. NCQA and URAC do not need to reapply under this proposal but 
remain subject to the requirements of 45 CFR 156.275(c), including 
(c)(4)(ii), which requires recognized accrediting entities to provide 
to HHS any proposed changes or updates to the accreditation standards 
and requirements, processes, and measure specifications for performance 
measures with 60 days' notice prior to public notification. This 
proposed amendment of Sec.  156.275(c) only renumbers the applicable 
portion of the regulation recognizing NCQA and URAC. As discussed in 
the preamble to the final rule published on July 20, 2012, the 
recognition of accrediting entities in phase one is effective until it 
is rescinded or this interim phase one process is replaced by the phase 
two process.

III. Collection of Information

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before an information collection request is submitted to the 
Office of Management and Budget (OMB) for review and approval. In order 
to fairly evaluate whether an information collection should be approved 
by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 
requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    Below is a summary of the proposed information collection 
requirements outlined in this regulation. Throughout this section we 
assume that each data collection will occur on an annual basis unless 
otherwise noted. We used the Bureau of Labor Statistics (BLS) Web site 
to identify salary data, unless otherwise indicated. Fringe benefit 
estimates were taken from the BLS March 2011 Employer Costs for 
Employee Compensation report. These compensation estimates were 
selected to align with the burden estimates for the data collections 
described in the ``Establishment of Exchanges and Qualified Health 
Plans Final Rule'' (77 FR 18310 (March 27, 2012)). For purposes of 
presenting an estimate of paperwork burden, we reflect the operation of 
an Exchange in fifty states and the District of Columbia. Similarly, we 
estimate the burden for issuers participating in all 51 Exchanges. 
Therefore, these estimates should be considered an upper bound of 
burden estimates. These estimates may be adjusted in future Paperwork 
Reduction Act (PRA) packages. We are soliciting public comment on each 
of these issues for the following sections of this document that 
contain information collection requirements (ICRs):

A. ICRs Regarding Additional Required Benefits (Sec.  155.170(c))

    In Sec.  155.170(c), we direct issuers to quantify and report to 
the Exchange the cost attributable to required benefits in addition to 
EHB. This is a third-party disclosure requirement. Issuers will use a 
uniform rate template in a revision to the Rate Increase Disclosure and 
Review Reporting Requirements PRA package (CMS-10379) (Rate Review PRA 
package) to report this information. The burden associated with meeting 
this data collection is included in the Rate Review PRA package. A 
Federal Register notice seeking comments on this PRA package is being 
published concurrently with this proposed rule.
    As noted in the Rate Review PRA package, we estimate that a total 
of 2,010 issuers in the individual market and 1,050 issuers in the 
small group market will offer products and that each issuer will have 
an average of 2.5 submissions per year. We anticipate that it will take 
an actuary a total of 11 hours to complete the uniform rate template, 
at $225 per hour for an actuary. The total annual burden is estimated 
to be $18,933,750. Of this total amount, only a fraction can be 
attributable to the portion of the uniform rate template that pertains 
to benefits in addition to EHB. We estimate that of the total 11 hours 
it will take an actuary to complete the uniform rate template, it will 
take an actuary 1 hour to complete the portion pertaining to benefits 
in addition to EHB. Therefore, we estimate the burden attributable to 
the collection of information regarding benefits in addition to EHB to 
be $1,721,250. Given the policies included in this proposed rule 
regarding state required benefits, we seek comment on this estimated 
time for additional benefits.

B. ICRs Regarding State Selection of Benchmark (Sec.  156.100) and EHB 
Benchmark Plan Standards (Sec.  156.110)

    In Sec.  156.100, we propose that a state may select a base-
benchmark plan to serve as a reference plan to define EHB in that 
state. We also propose that if a state does not select a benchmark 
plan, its base-benchmark will be the largest plan by enrollment in the 
largest product in the state's small group market. In Sec.  156.110, we 
propose that a state-selected or default benchmark plan must offer 
coverage in each EHB category, as required by the Affordable Care Act. 
We propose that if a base-benchmark plan does not offer coverage in a 
category, it must be supplemented to include those missing benefit 
categories.
    We do not believe that this is a change to the information 
collection associated with state selection and submission of a 
benchmark plan and associated benefits and the data collection to 
establish default benchmark plans, including any required 
supplementing, which is already captured in the collection approved 
under OMB Control Number 0938-1174.

C. ICRs Regarding AV Calculation for Determining Level of Coverage 
(Sec.  156.135)

    In Sec.  156.135(b), we propose to create an exception to using the 
AV calculator for issuers with health plans that are not designed in a 
way that is compatible with the AV calculator. To take advantage of 
this exception, issuers must submit an actuarial certification on their 
alternative method to the state, HHS, the Exchange, or OPM. This is a 
third-party disclosure requirement when the issuers submit to the state 
or the Exchange, and this is a reporting requirement when the issuers 
submit to HHS, OPM, or a Federally-facilitated Exchange. We account for 
this collection in the Initial Plan Data Collection to Support 
Qualified Health Plan Certification and Other Financial Management and 
Exchange Operations

[[Page 70660]]

PRA package (CMS-10433) (QHP Certification PRA package). A Federal 
Register notice regarding this PRA package is being published 
concurrently with this proposed rule.
    In the QHP Certification PRA package, we estimate that 1,200 
issuers will each offer 15 potential QHPs, for a total of 18,000 
potential QHPs, and that the per-issuer burden will be 175 hours. We 
estimate the cost per issuer in the first year of operations to be 
$13,475, which represents an aggregation of several staff, including 
actuarial staff. This PRA package includes data collections for QHP 
certification, risk adjustment, and reinsurance. We believe that only 5 
percent of issuers will be unable to use the AV calculator, thus use 
the process proposed in Sec.  156.135(b) and that it will take each 
issuer 8 of the total 175 hours to provide the requested information. 
We further assume that the 8 hours of work would be performed by an 
actuary, at $225 per hour. Therefore, we estimate the total cost 
attributable to Sec.  156.135(b) to be $1,800 per QHP and $1,620,000 in 
total.
    In Sec.  156.135(d), we propose that beginning in 2015, a state may 
submit a state-specific standard population, to be used for AV 
calculation, so long as the criteria described in Sec.  156.135(d)(1) 
through (6) are met. This will require the state to submit to HHS 
summary evidence that the requirements described in the proposed rule 
are met and the dataset in a format that will support the use of the AV 
calculator. We expect that for each state choosing this option, the 
data submission will require 15 hours from a database administrator at 
$47.70 an hour, 4 hours of actuarial work at $56.89 an hour, and 1 hour 
of management review at $75.15 an hour. Therefore, the total burden 
associated with the reporting requirement for each state choosing this 
option will be $1,018. We assume that states opting to develop a state-
specific standard population will provide new data every three to five 
years.

D. ICRs Regarding Stand-Alone Dental Plans Inside the Exchange (Sec.  
156.150(a))

    In Sec.  156.150(a), we propose that stand-alone dental plans 
covering the pediatric dental EHB under Sec.  155.1065 must demonstrate 
to the Exchange that they have a reasonable annual limitation on cost 
sharing. This is a third-party disclosure requirement.
    We account for this collection in the QHP Certification PRA 
package, where we estimate that 40 issuers will each offer a stand-
alone dental plan, and that the burden for certification will be 6 
hours per issuer, at a total hourly billing rate of $77, for a total 
cost of $462 per issuer. We estimate that of those 8 hours, 1 will be 
attributable to demonstrating that the annual limitation on cost 
sharing is reasonable, at a cost of $77 per plan. Therefore, across 40 
plans, we estimate the total annual cost to be $3,080.

E. ICRs Regarding Accreditation (Sec.  156.275)

    In Sec.  156.275, HHS proposes an amendment to the phase one 
process by which accrediting entities can submit an application to be 
recognized by HHS for purposes of accrediting QHPs. HHS previously 
sought OMB approval for recognition of two specific entities under 
Sec.  156.275(c)(1); this was approved under OMB Control Number 0938-
1176. Under this proposed rule, this same process will be open to 
additional applicants; therefore, we propose to revise our estimate of 
the number of applicants to four. We will revise the information 
collection request approved under OMB Control Number 0938-1176 to 
account for the adjustment in the number of respondents and the 
corresponding adjustment to the burden. If you comment on these 
information collection requirements, please do either of the following:
    1. Submit your comments electronically as specified in the 
ADDRESSES section of this proposed rule; or
    2. Submit your comments to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, Attention: CMS Desk Officer, 
[insert filecode], Fax: (202) 395-6974; or Email: OIRA_submission@omb.eop.gov.

IV. Regulatory Impact Analysis

    HHS has examined the impacts of this proposed regulation under 
Executive Order 12866 on Regulatory Planning and Review (September 30, 
1993) and Executive Order 13563 on Improving Regulation and Regulatory 
Review (February 2, 2011).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 is supplemental to and reaffirms the principles, 
structures, and definitions governing regulatory review as established 
in Executive Order 12866--emphasizing the importance of quantifying 
both costs and benefits, of reducing costs, of harmonizing rules, and 
of promoting flexibility.
    A regulatory impact analysis (RIA) must be prepared for rules with 
economically significant effects ($100 million or more in any 1 year), 
and a ``significant'' regulatory action is subject to review by the 
Office of Management and Budget (OMB). Section 3(f) of Executive Order 
12866 defines a ``significant regulatory action.'' In accordance with 
the provisions of Executive Order 12866, this regulation was reviewed 
by the Office of Management and Budget as an economically significant 
regulatory action.

A. Summary

    As stated earlier in this preamble, this proposed regulation would 
implement the requirements related to EHB and AV levels of coverage, 
and establish the timeline according to which QHP issuers participating 
in FFEs must be accredited. We note that the Exchange regulation (45 
CFR 156.200) established that QHPs will cover essential health 
benefits, as defined by the Secretary, and that QHPs be accredited on 
the basis of local performance. The cost to health plans of obtaining 
QHP certification and participating in Exchanges are already accounted 
for in the regulatory impact analysis that accompanies that 
regulation.\26\ Therefore, this analysis describes the incremental 
costs, benefits, and transfers associated with provisions in this 
proposed rule, for example that health plans cover the essential health 
benefits as specifically defined herein, and that health plans use the 
HHS-developed AV calculator.
---------------------------------------------------------------------------

    \26\ ``Patient Protection and Affordable Care Act; Establishment 
of Exchanges and Qualified Health Plans, Exchange Standards for 
Employers (CMS-9989-FWP) and Standards Related to Reinsurance, Risk 
Corridors and Risk Adjustment (CMS-9975-F): Regulatory Impact 
Analysis.'' Centers for Medicare & Medicaid Services. Available at: 
http://cciio.cms.gov/resources/files/Files2/03162012/hie3r-ria-032012.pdf.
---------------------------------------------------------------------------

    This proposed rule also contains details relating to the 
establishment of a timeline by which QHPs seeking certification by FFEs 
must be accredited. We do not believe that this results in incremental 
benefits, costs, or transfers.
    HHS has proposed this regulation to implement the protections 
intended by the Congress in the most economically efficient manner 
possible. In accordance with OMB Circular A-4, HHS has quantified the 
benefits, costs and transfers where possible, and has also provided a 
qualitative discussion of some of the benefits, costs and transfers 
that may stem from this proposed regulation.

[[Page 70661]]

B. Overview of Key Provisions in the Proposed Rule

    As described earlier in this proposed rule, the Affordable Care Act 
directs the Secretary of the Department of Health and Human Services 
(the Secretary) to define EHB such that EHB includes at least and 
reflects an appropriate balance among 10 benefit categories, and is 
equal in scope to benefits offered by a typical employer plan. Non-
grandfathered plans in the individual and small group markets both 
inside and outside of the Exchanges, including multi-state plans, 
Medicaid benchmark and benchmark-equivalent, and Basic Health Programs, 
if applicable, must cover EHB beginning in 2014. This proposed rule 
establishes how the Secretary will define EHB based on a state-specific 
benchmark plan and lays out standards for the EHB-benchmark plan and 
for issuers that cover EHB.
    In addition, the Affordable Care Act directs issuers offering non-
grandfathered health in the individual and small group markets to 
ensure that any offered plan meets specific AVs. The proposed rule 
outlines a process for computing plan AV using an HHS-developed AV 
calculator, as well as standards and flexibility for issuers in meeting 
the metal tiers.

C. Need for Regulatory Action

    This rule proposes standards related to EHB and AV consistent with 
the Affordable Care Act. HHS believes that the provisions that are 
included in this proposed rule are necessary to fulfill the Secretary's 
obligations under sections 1302 and 1311 of the Affordable Care Act. 
Establishing specific approaches for defining EHB and calculating AV 
will bring needed clarity for states, issuers, and other stakeholders. 
Absent the provisions outlined in this proposed rule, states, issuers, 
and consumers would face significant uncertainty about how coverage of 
EHB should be defined and evaluated. Similarly, failing to specify a 
method for calculating AV could result in significant inconsistency 
across states and issuers. Finally, establishing a clear timeline for 
potential QHPs to become accredited is essential to successful issuer 
participation in FFEs.

D. Summary of Impacts and Accounting Table

    In accordance with OMB Circular A-4, Table IV.1 below depicts an 
accounting statement summarizing HHS's assessment of the benefits, 
costs, and transfers associated with this regulatory action.
    HHS anticipates that the provisions of this proposed rule will 
assure consumers that they will have health insurance coverage for 
essential health benefits, and significantly increase consumers' 
ability to compare health plans, make an informed selection by 
promoting consistency across covered benefits and levels of coverage, 
and more efficiently purchase coverage. This proposed rule ensures that 
consumers can shop on the basis of issues that are important to them 
such as price, network physicians, and quality, and be confident that 
the plan they choose does not include unexpected coverage gaps, like 
hidden benefit exclusions. It also allows for some flexibility for 
plans to promote innovation in benefit design.
    Insurance contracts are extremely complicated documents; therefore, 
many consumers may not understand the content of the contracts they 
purchase.\27\ This complexity has two undesirable results. First, 
consumers may unknowingly purchase a product that does not meet their 
basic needs--the product may not cover benefits that the consumer needs 
to restore or maintain good health, or may result in more financial 
exposure than the consumer anticipated. Second, the complexity reduces 
competitive pressure on insurers, and blunts insurer incentives to 
improve the quality and value of the products they offer. As a result 
of complexity and information gaps, some consumers cannot purchase 
health insurance efficiently. This inefficiency may reduce incentives 
for insurers to improve the value of their products.
---------------------------------------------------------------------------

    \27\ Consumers Union. (2012). ``What's Behind the Door: 
Consumers' Difficulties Selecting Health Plans.'' Available at: 
http://www.consumersunion.org/pub/pdf/Consumer%20Difficulties%20Selecting%20Health%20Plans%20Jan%202012.pdf
.
---------------------------------------------------------------------------

    The specific approach to defining EHB in this proposed rule 
realizes the benefits of simplicity and transparency by allowing each 
state to choose a benchmark from a set of plans that are typical of the 
benefits offered by employers in that state. The proposed rule allows 
that EHB in each state reflect the choices made by employers and 
employees in that state today, and minimizes disruption in existing 
coverage in the small group market. In addition, the proposed 
provisions addressing specific benefit categories, such as habilitative 
services and pediatric dental and vision services, will improve access 
to care for consumers who require these benefits.
    The approach to defining AV in this proposed rule uses standard 
assumptions about utilization and prices, and, for most products, 
directs issuers to use an AV calculator created by the Department to 
compute AV. This approach will ensure that two plans with the same 
cost-sharing parameters (that is, deductibles, copayments, and 
coinsurance features) will have the same AVs. This approach is intended 
to lower consumer information costs and drive competition in the market 
by enabling consumers to easily compare the relative generosity of 
plans, knowing that the AV of each plan has been calculated in the same 
manner.
    In accordance with Executive Order 12866, HHS believes that the 
benefits of this regulatory action justify the costs.

                                          Table IV.1--Accounting Table
----------------------------------------------------------------------------------------------------------------
                                                                                       Units
                                                                 -----------------------------------------------
               Category                         Estimates                          Discount rate      Period
                                                                    Year dollar      (percent)        covered
----------------------------------------------------------------------------------------------------------------
Benefits:
    Annualized Monetized ($millions/    Not Estimated...........            2012               7       2012-2016
     year).
                                        Not Estimated...........            2012               3       2012-2016
                                       -------------------------------------------------------------------------
    Qualitative:......................    (1) Improved coverage in benefit categories less typically available.
                                         Expanded access to coverage of benefits, particularly in the individual
                                               market, including maternity and prescription drug coverage.
                                          (2) Alignment with current consumer and employer choices. Flexibility
                                             for states; limited market disruption; allowance for health plan
                                           innovation (e.g., substitution within benefit categories; de minimis
                                                                    variation for AV).

[[Page 70662]]

 
                                        (3) Efficiency due to greater transparency. Increased transparency and
                                         consumer ability to compare coverage.
                                       -------------------------------------------------------------------------
Costs:
    Annualized Monetized ($millions/    $1.7 *..................            2012               7       2012-2016
     year).
                                        $1.5 *..................            2012               3       2012-2016
                                       -------------------------------------------------------------------------
    Qualitative.......................     (1) Administrative costs. Insurers will incur administrative costs
                                         associated with altering benefit packages to ensure compliance with the
                                          definition of EHB established in this proposed rule. Issuers may also
                                                incur minor administrative costs related to computing AV.
                                             (2) Costs due to higher service utilization. As consumers gain
                                            additional coverage for benefits that previously did not meet the
                                         standards outlined in this proposed rule (for example, pediatric dental
                                            or vision coverage), utilization, and thus costs, may increase. A
                                           portion of this increased utilization and costs will be economically
                                         inefficient, as insurance coverage creates a tendency to overuse health
                                          care. Further, there may be incremental costs to consumers associated
                                                            with greater service utilization.
                                       -------------------------------------------------------------------------
Transfers:
    Federal Annualized Monetized        Not Estimated...........            2012               7       2012-2016
     ($millions/year).
                                        Not Estimated...........            2012               3       2012-2016
----------------------------------------------------------------------------------------------------------------
* Note: Administrative costs include costs associated with Information Collection Requirements as described in
  section III of this proposed rule.

E. Methods and Limitations of Analysis

    There are many provisions of the Affordable Care Act that are 
integral to the goal of expanding access to affordable insurance 
coverage, including the provisions of this proposed rule relating to 
EHB and AV. Because it is often difficult to isolate the effects 
associated with each particular provision of the Affordable Care Act, 
we discuss the evidence relating to the provisions of this proposed 
rule, as well as related provisions of the Affordable Care Act, in this 
regulatory impact analysis. We present quantitative evidence where it 
is possible and supplement with qualitative discussion.

F. Estimated Number of Affected Entities

    As discussed elsewhere in the preamble, standards relating to EHB 
and AV will apply to all health insurance issuers offering non-
grandfathered coverage in the individual and small group markets--both 
inside and outside of the Exchanges. The following sections summarize 
HHS's estimates of the number of entities that will be affected by this 
proposed regulation.
a. Issuers
    For purposes of the regulatory impact analysis, we have estimated 
the total number of health insurance issuers that will be affected by 
this proposed regulation at the company level because this is the level 
at which issuers currently submit their annual financial reports to the 
National Association of Insurance Commissioners (NAIC). Table IV.2 
shows the estimated distribution of issuers offering comprehensive 
major medical coverage in the individual and small group markets based 
on data submitted on the National Association of Insurance 
Commissioners' 2011 Supplemental Health Care Exhibit (SHCE).\28\ 
Additionally, because many issuers are licensed in more than one state, 
we have also included data by ``licensed entity'' (company/state 
combination) for each market.
---------------------------------------------------------------------------

    \28\ The most complete source of data on the number of entities 
offering fully insured, private comprehensive major medical coverage 
in the individual and group markets is the National Association of 
Insurance Commissioners (NAIC) Annual Financial Statements and 
Policy Experience Exhibits database. These data contain information 
that issuers submit to the NAIC through State insurance regulators 
on four different financial exhibits (the Health, Life, Property & 
Casualty, and Fraternal ``Blanks''). The 2011 SHCE captures data on 
individual, small group and large group comprehensive major medical 
coverage at the State level in a consistent manner across all 
Blanks, providing more extensive information about this market than 
was previously available. We note that issuers electing not to offer 
non-grandfathered individual or small group market policies would 
not be affected by the proposed rule.

Table IV.2--Estimated Number of Issuers and Licensed Entities Affected by the EHB and AV Requirements by Market,
                                                      2011
----------------------------------------------------------------------------------------------------------------
                                                      Issuers \(1)\ offering          Licensed entities \(2)\
                                                    comprehensive major medical    offering comprehensive major
                                                             coverage                    medical coverage
                   Description                   ---------------------------------------------------------------
                                                                    Percent of                      Percent of
                                                      Number           total          Number           total
----------------------------------------------------------------------------------------------------------------
Total Issuers Offering Comprehensive Major                   446           100.0           2,107           100.0
 Medical Coverage \(3)\.........................
By Market: \(4)\
    Individual Market...........................             355            79.6           1,663            78.9
    Small Group Market \(5)\....................             366            82.1           1,039            49.3
    Large Group Market..........................             375            84.1             922            43.8

[[Page 70663]]

 
    Individual and/or Small Group Markets \(6)\.             427            95.7           1,993            94.6
    Individual Market Only......................              82            18.4             904            42.9
    Small Group Market Only.....................              39             8.7             117             5.6
    Individual & Small Group Markets Only.......              29             6.5             164             7.8
    All Three Markets...........................             279            62.6             545            25.9
----------------------------------------------------------------------------------------------------------------
Notes: (1) Issuers represents companies (for example, NAIC company codes). (2) Licensed Entities represents
  company/state combinations. (3) Total issuers excludes data for companies that are regulated by the California
  Department of Managed Health Care. (4) To be counted as offering coverage in a particular comprehensive major
  medical market, the issuer must have reported non-zero premiums and claims and had at least $1,000 in total
  premiums per life year for at least one state. (5) Small group is defined based on the current definition in
  the PHS Act. (6) Subcategories do not add to the total because other categories are not shown separately such
  as those entities in the large group and small group markets, but not in the individual market.
Source: ASPE analysis of 2011 NAIC Supplemental Health Care Exhibit data.

b. Individuals
    Persons enrolled in non-grandfathered individual or small group 
market coverage inside or outside of the Exchanges beginning in 2014 
will be affected by the provisions of this proposed rule.\29\
---------------------------------------------------------------------------

    \29\ As discussed earlier, the provisions in this proposed 
regulation could also potentially affect some enrollees with non-
grandfathered large group market coverage in States that choose to 
give larger employers the option of purchasing coverage through the 
Exchange starting in 2017. However, the Congressional Budget Office 
(CBO) and Joint Committee on Taxation (JCT) ``expect that few large 
firms would take [advantage of] that option if offered because their 
administrative costs would generally be lower than those of nongroup 
policies that would be available in the exchanges.'' (For more 
information, see Congressional Budget Office, ``Letter to the 
Honorable Evan Bayh: An Analysis of Health Insurance Premiums under 
the Patient Protection and Affordable Care Act,'' Washington, DC, 
2009).
---------------------------------------------------------------------------

    In July 2012, CBO estimated that there will be approximately 23 
million enrollees in Exchange coverage by 2016.\30\ Participation rates 
among potential enrollees are expected to be lower in the first few 
years of Exchange availability as employers and individuals adjust to 
the features of the Exchanges.\31\ Additionally, the EHB and AV 
provisions of this proposed rule will also affect enrollees in non-
grandfathered individual and small group coverage outside of the 
Exchanges.
---------------------------------------------------------------------------

    \30\ ``Estimates for the Insurance Coverage Provisions of the 
Affordable Care Act Updated for the Recent Supreme Court Decision,'' 
Congressional Budget Office, July 2012.
    \31\ Congressional Budget Office, ``Letter to the Honorable Evan 
Bayh: An Analysis of Health Insurance Premiums under the Patient 
Protection and Affordable Care Act,'' Washington, DC, 2009.
---------------------------------------------------------------------------

G. Anticipated Benefits

    The Affordable Care Act ensures non-grandfathered health plans 
offered in the individual and small group markets offer a basic package 
of items and services. The benefits of health insurance coverage are 
well documented and discussed at length in previous RIAs,\32\ including 
improvement in clinical outcomes, financial security, and decreased 
uncompensated care.33, 34 This proposed rule applies a 
definition to EHB and proposes other standards that are required of 
health plans, as directed under the statute.
---------------------------------------------------------------------------

    \32\ Available at: http://cciio.cms.gov/resources/files/Files2/03162012/hie3r-ria-032012.pdf.
    \33\ Institute of Medicine (2001). Coverage Matters: Insurance 
and Health Care. National Academies Press: Washington, DC. Burstin 
HR, Swartz K, O'Neil AC, Orav EJ, Brennan TA. 1999. The effect of 
change of health insurance on access to care. Inquiry; 35: 389-97. 
Finkelstein A et al. 2011. The Oregon health insurance experiment: 
Evidence from the first year. NBER Working Paper No. 17190
    \34\ Institute of Medicine (2002). Care without coverage: too 
little, too late. National Academies Press. Ayanian J, et al. 
``Unmet Health Needs of Uninsured Adults in the United States.'' 
JAMA. 284(16). 2000:2061-9. 27; Roetzheim R, et al. ``Effects of 
Health Insurance and Race on Colorectal Cancer Treatments and 
Outcomes.'' American Journal of Public Health 90(11). 2000: 1746-54; 
Wilper, et al. ``Health Insurance and Mortality in US Adults.'' 
American Journal of Public Health. 99(12). 2009: 2289-2295.
---------------------------------------------------------------------------

    In the market today, it is difficult for consumers to make well-
informed choices when choosing among competing health plans. The 
benefits offered are complicated and can vary widely across plans, 
making it difficult for consumers to understand which benefits are 
covered.\35\ Further, wide variation in deductibles, coinsurance, and 
other cost sharing features make it difficult for consumers to 
understand the relative levels of financial protection they will 
receive under competing plans.36, 37
---------------------------------------------------------------------------

    \35\ Garnick, D.W. et al. (1993). ``How well do Americans 
understand their health coverage?'' Health Affairs, 12(3); 204-212.
    \36\ Consumers Union. (2012). ``What's Behind the Door: 
Consumers' Difficulties Selecting Health Plans.'' Available at: 
http://www.consumersunion.org/pub/pdf/Consumer%20Difficulties%20Selecting%20Health%20Plans%20Jan%202012.pdf
.
    \37\ Isaacs, S.L. (2006). Consumer's information needs: results 
of a national survey. Health Affairs, 15(4): 31-41.
---------------------------------------------------------------------------

    Under the provisions in this proposed rule, the EHB-benchmark plan 
will reflect both the scope of services and any limits offered by a 
``typical employer plan'' in that state. This approach, applying for 
the 2014 and 2015 benefit years, will allow states to build on coverage 
that is already widely available, minimize market disruption, and 
provide consumers with familiar products. This should heighten consumer 
understanding of plan options and may facilitate consumers' abilities 
to make choices that better suit their needs. In addition, by ensuring 
that all plans cover a core set of benefits and services that will be 
compared against other plans that offer the same financial protection 
to the consumer, this proposed rule is expected to improve the quality 
and value of the coverage that is available for EHB.
    Information on AV is expected to be used by consumers to compare 
non-grandfathered individual and small group market plans, and provides 
a method for consumers to understand relative plan value. Proposing 
standard pricing and utilization assumptions for AV calculations for 
QHPs and non-grandfathered health plans in the individual and small 
group markets will promote transparency and simplicity in the consumer 
shopping experience, as well as offer issuers the flexibility to set 
cost-sharing rates that are simple and competitive. Without this 
approach,

[[Page 70664]]

plans with the same cost-sharing provisions could have different AVs 
making it difficult for consumers to compare and choose among health 
plans. It also fosters plan competition based on price, quality, and 
service--rather than variations in benefit design.

H. Anticipated Costs and Transfers

    In addition to the administrative costs described in the 
Information Collection Requirements section of this proposed rule, HHS 
anticipates that the provisions of this proposed regulation will likely 
result in increased costs related to increased utilization of health 
care services by people receiving coverage for previously uncovered 
benefits.
    States have primary enforcement authority over health insurance 
issuers and this proposed rule extends this primary enforcement 
authority for compliance with EHB and AV requirements defined in this 
rule. In addition, states must defray the cost of any state-required 
benefits in excess of the EHB that apply to QHPs and multi-state plans 
offered through Exchanges. As stated earlier, we expect that this will 
rarely occur, if at all, in 2014 and 2015, the period coverage by the 
benchmark policy.
    The anticipated effects on enrollees in the individual market are 
expected to be larger than the effects on enrollees in the small group 
market. Coverage in the small group market is much more likely to 
include EHB and, in fact, is included in the choice of benchmark 
plans.\38\ Second, almost all products in the group market have AV 
above 60 percent,\39\ while there are likely to be changes to products 
in the individual market due to the provisions of this proposed rule.
---------------------------------------------------------------------------

    \38\ A study conducted by the Assistant Secretary for Planning 
and Evaluation (ASPE) found that commonly purchased products in the 
small group market, state employee plans, and federal employee plans 
do not differ significantly in the range of services they cover. 
Because one of these plans will be chosen as the reference plan for 
EHB, most small group plans will provide benefits that are similar 
to EHB. (ASPE Issue Brief (2011). ``EHB: Comparing Benefits in Small 
Group Products and State and Federal Employee Plans,'' U.S. 
Department of Health & Human Services.) In contrast, another ASPE 
study found that many current subscribers in the individual market 
lack coverage for some EHB benefits and services, such as maternity 
care and prescription drugs. (ASPE Research Brief (2011). ``EHB: 
Individual Market Coverage'' U.S. Department of Health & Human 
Services.)
    \39\ ASPE Research Brief (2011). ``AV and Employer Sponsored 
Insurance,'' available at: http://aspe.hhs.gov/health/reports/2011/AV-ESI/rb.pdf. Similar results were found in a recent study by Gabel 
and colleagues. Jon R. Gabel, Ryan Lore, Roland D. McDevitt, Jeremy 
D. Pickreign, Heidi Whitmore, Michael Slover and Ethan Levy-
Forsythe, ``More Than Half Of Individual Health Plans Offer Coverage 
That Falls Short Of What Can Be Sold Through Exchanges As Of 2014,'' 
Health Affairs, (2012), available at: http://
content.healthaffairs.org/content/early/2012/05/22/
hlthaff.2011.1082.full.pdf+html.
---------------------------------------------------------------------------

Impact on Issuers
    Commonly purchased products in the small group market, state 
employee plans, and the FEHBP Blue Cross Blue Shield (BCBS) Standard 
and Basic Options and Government Employees Health Association (GEHA) 
plans do not differ significantly in the range of services they 
cover.\40\ Because one of these plans will be chosen as the reference 
plan for EHB, most small group plans will provide benefits that are 
similar to EHB, and changes in benefits offered to comply with EHB 
provisions will be relatively minor.
---------------------------------------------------------------------------

    \40\ ASPE Issue Brief (2011). ``EHB: Comparing Benefits in Small 
Group Products and State and Federal Employee Plans,'' U.S. 
Department of Health & Human Services.
---------------------------------------------------------------------------

    Notwithstanding this general conclusion, there are four types of 
benefits where changes are expected in the small group market: Mental 
health and substance use disorder, habilitative services, pediatric 
dental care, and pediatric vision services. In addition, individual 
health plans are less likely than small group health plans to cover all 
of the 10 categories of EHB. Below we discuss two categories of 
benefits and services that are less likely to be covered in the market 
today: Mental health and substance use disorder services, and 
habilitative services.
    The coverage of additional benefits results in a transfer from out-
of-pocket payments to premium payments. Increased access to insurance 
coverage for previously excluded benefits will make medical care for 
those benefit categories more affordable for consumers by covering a 
portion of the costs of those services. While out of pocket costs would 
decline, consumers could purchase benefits and services inefficiently--
that is, purchase more than the efficient amount of the previously 
excluded benefits and services. However, studies of the Medicare 
program suggest that the costs of this inefficiency are likely more 
than offset by the benefits of risk reduction.\41\ Because the 
standards outlined in this proposed rule will likely result in 
incremental gains in access, rather than changes in status from 
uninsured to insured, any costs associated with any inefficiency, 
should be further reduced. As discussed previously, many other 
provisions of the Affordable Care Act, including healthier risk pools, 
greater administrative efficiencies, premium tax credits, and the 
transitional reinsurance program will lower premiums in the individual 
market and Exchanges.
---------------------------------------------------------------------------

    \41\ Finkelstein A, McKnight R: ``What Did Medicare Do (And Was 
It Worth It)?'' Journal of Public Economics 2008, 92:1644-1669; and 
Finkelstein, A, ``The Aggregate Effects of Health Insurance: 
Evidence from the Introduction of Medicare,'' National Bureau of 
Economic Research. Working Paper No. 11619, Sept, 2005.
---------------------------------------------------------------------------

    The statute requires that all plans covering EHB must offer mental 
health and substance use disorder service benefits, including 
behavioral health treatment and services. The preamble of this rule 
proposes that coverage must provide parity in treatment limitations 
between medical and surgical benefits and the mental health and 
substance use disorder benefits required to be covered as EHB in both 
the individual and small group markets. Many states 42 43 
have already added some form of mental health parity in some or all 
insured markets.\44\ About 95 percent of those with coverage through 
the three largest small group products in each state had substance use 
disorder and mental health benefits.\45\ Additionally, a study of 
implementation of parity in the FEHBP plans \46\ as well as research 
into state-passed mental health parity laws \47\ have shown little or 
no increase in utilization of mental health services, but found that 
parity reduced out-of-pocket spending among those who used mental 
health and substance abuse services.
---------------------------------------------------------------------------

    \42\ Kaiser State Health Facts. State mandated benefits in small 
group private health insurance: Mandated coverage in mental health, 
as of January 2010. Available at: http://www.statehealthfacts.org/comparereport.jsp?rep=2&cat=7.
    \43\ Health Insurance Mandates in the States 2010, Council for 
Affordable Health Insurance, available at: http://www.cahi.org/cahi_contents/resources/pdf/MandatesintheStates2010ExecSummary.pdf.
    \44\ Health Insurance Mandates in the States 2010, Council for 
Affordable Health Insurance, available at: http://www.cahi.org/cahi_contents/resources/pdf/MandatesintheStates2010ExecSummary.pdf.
    \45\ ASPE Issue Brief, ``EHB: Comparing Benefits in Small Group 
Products and State and Federal Employee Plans, U.S. Department of 
Health & Human Services (2011).
    \46\ Goldman HH, et al. 2006. Behavioral health insurance parity 
for federal employees. New Engl J Med; 354 1378-86.
    \47\ Barry CL, Busch SH. 2007. Effects of state parity laws on 
the family financial burden of children with mental health care 
needs. Health Serv Res; 42: 1061-84. Ma CA, McGuire TG. 1998. Cost 
and incentives in a behavioral health carve-out. Health Affairs;17: 
56-67,
---------------------------------------------------------------------------

    As indicated in the preamble, many health insurance plans do not 
identify habilitative services as a distinct group of services.\48\ By 
proposing a transitional policy for coverage of habilitative services, 
this rule allows issuers time for review and development of policy in 
this area, and to gain experience to define these benefits. To the 
extent that states

[[Page 70665]]

exercise the option to define habilitative services, small group market 
issuers may incur administrative and contracting costs associated with 
bringing their products into compliance with a state's definition. 
However, because it is not yet clear which states will exercise this 
option or how any such states will define habilitative services, HHS 
cannot estimate these costs at this time.
---------------------------------------------------------------------------

    \48\ ASPE Research Brief (2011). ``EHB: Comparing Benefits in 
Small Group Products and State and Federal Employee Plans.'' 
Available at: http://aspe.hhs.gov/health/reports/2011/MarketComparison/rb.shtml.
---------------------------------------------------------------------------

    With respect to AV, research indicates that the overwhelming 
majority of employer-sponsored health plans meets and exceeds an AV of 
60 percent.\49\ Combining both small group and large group, an 
estimated 1.6 percent to 2.0 percent of people covered by employer- 
sponsored insurance are enrolled in plans with an AV of less than 60 
percent.
---------------------------------------------------------------------------

    \49\ ASPE Research Brief (2011). ``AV and Employer Sponsored 
Insurance,'' available at: http://aspe.hhs.gov/health/reports/2011/AV-ESI/rb.pdf. Similar results were found in a recent study by Gabel 
and colleagues. Jon R. Gabel, Ryan Lore, Roland D. McDevitt, Jeremy 
D. Pickreign, Heidi Whitmore, Michael Slover and Ethan Levy-
Forsythe, ``More Than Half Of Individual Health Plans Offer Coverage 
That Falls Short Of What Can Be Sold Through Exchanges As Of 2014,'' 
Health Affairs, (2012), available at: http://
content.healthaffairs.org/content/early/2012/05/
22hlthaff.2011.1082.full.pdf+html.
---------------------------------------------------------------------------

    In the individual health insurance market, McKethan et al. 
estimated the percentage of individual market plans falling below 60 
percent (the AV of a bronze plan), meaning that the health insurance 
coverage paid for less than 60 percent of benefit costs for the average 
enrollee, at between 9 percent and 11 percent.\50\ To keep premium 
costs low, the Affordable Care Act allows certain individuals (adults 
under age 30 and people who otherwise have unaffordable coverage) to 
purchase catastrophic coverage, which still guarantees first dollar 
coverage of preventive services and primary care check-ups but has 
higher deductibles and lower AVs.
---------------------------------------------------------------------------

    \50\ Aaron McKethan, Mark Zezza, Lawrence Kocot, Mark Shepard, 
and Don Cohn, ``Minimum Creditable Coverage,'' Bipartisan Policy 
Center, January 2010.
---------------------------------------------------------------------------

Costs to States
    State governments are generally responsible for health insurance 
enforcement in the individual and small group markets, with the federal 
government assuming that role in connection with federal law 
requirements if a state does not do so. While HHS expects that states 
may need additional resources to enforce the requirements that non-
grandfathered plans in the individual and small group market provide 
EHB, and that these plans offer coverage with an AV equal to one of the 
four metal levels, these costs will be relatively minor. We request 
comment on the burden states will incur in enforcing these 
requirements.
    If a state requires issuers to cover benefits in excess of EHB, the 
Affordable Care Act directs the state to defray the costs of these 
benefits in QHPs. States may include as part of their benchmark plan 
state benefit requirements that were enacted before December 31, 2011, 
avoiding costs associated with these provisions.
Costs to Health Insurance Issuers
    Issuers will incur administrative costs to modify existing 
offerings to meet EHB and AV standards as defined in this proposed 
rule. For example, issuers that do not currently meet the standards for 
prescription drug coverage will incur contracting and one-time 
administrative costs to bring their pharmacy benefits into compliance. 
Issuers may also incur minor administrative costs related to AV 
standards and computing AV. However, because EHB will be based on a 
benchmark plan that is typical of what is offered in the market in each 
state currently, the modifications in benefits are expected to be 
relatively minor for most issuers. Further, issuers have extensive 
experience in offering products with various levels of cost sharing, 
and HHS expects that following the process for computing AV outlined in 
this proposed rule will not demand many additional resources.

I. Regulatory Alternatives

    In addition to the regulatory approach outlined in the Essential 
Health Bulletin issued on December 16, 2011, HHS considered several 
alternatives when developing policy around defining EHBs and 
calculating AV.
Definition of EHBs
    At the request of some commenters, HHS considered one national 
definition of EHB that would have applicable issuers offer a uniform 
list of benefits. However, this approach would not allow for state 
flexibility and issuer innovation in benefit design, would require a 
burdensome overhaul for issuers, and would disrupt the market.
    HHS also considered codifying the 10 statutorily required 
categories without additional definition and allowing issuers to adjust 
their benefit packages accordingly. However, this approach would have 
allowed wide variation across plans in the benefits offered, would not 
have assured consumers that they would have coverage for basic 
benefits, and would not have improved the ability of consumers to make 
comparisons among plans.
    HHS believes the benchmark approach best strikes the balance 
between comprehensiveness, affordability, and state flexibility. 
Additionally, HHS believes that the benchmark approach, supplemented 
when necessary, best addresses the statutory requirements that EHBs 
reflect a typical employer plan and encompass at least the 10 
categories of items and services outlined in the statute.
Calculation of AV
    In the calculation of AV, the statute specifies the use of a 
standard population. As described in the AV/CSR Bulletin, HHS 
considered allowing issuers to use their own utilization and pricing 
data in connection with an HHS-defined standard population (that is, 
HHS-set demographics for the standard population) to calculate a 
standard population. However, this would not have allowed for consumer 
transparency and would not have increased competition. The approach in 
this proposed rule instead reduces issuer burden while allowing 
consumers to compare more easily among plans.

VI. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) 
requires agencies to analyze options for regulatory relief of small 
businesses if a proposed rule has a significant 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 proposed rule is necessary to implement 
standards related to the EHB, AV, cost-sharing limitations, and 
quality, as authorized by the Affordable Care Act. For purposes of the 
Regulatory Flexibility Analysis, we expect the following types of 
entities to be affected by this proposed rule: (1) Issuers; (2) 
employers; and (3) providers.
    We believe that health insurers would be classified under the North 
American Industry Classification System (NAICS) Code 524114 (Direct 
Health and Medical Insurance Carriers). According to SBA size 
standards, entities with average

[[Page 70666]]

annual receipts of $7 million or less would be considered small 
entities for this NAICS code. Health issuers could possibly also be 
classified in NAICS Code 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).\51\
---------------------------------------------------------------------------

    \51\ `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.
---------------------------------------------------------------------------

    For purposes of this proposed rule, HHS used 2011 National 
Association of Insurance Commissioners (NAIC) Supplemental Health Care 
Exhibit data to develop an updated estimate of the number of small 
entities that offer comprehensive major medical coverage in the 
individual and small group markets. HHS used total Accident and Health 
(A&H) earned premiums as a proxy for annual receipts. Table IV.3 shows 
that HHS estimates that there were 35 small entities with less than $7 
million in accident and health earned premiums offering individual or 
small group comprehensive major medical (CMM) 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.
    HHS estimates that 83 percent of these small issuers are 
subsidiaries of larger carriers, and 71 percent also offer large group 
or other types of A&H coverage. On average, HHS estimates that 
individual and small group CMM coverage accounts for approximately 45 
percent of total A&H earned premiums for these small issuers. HHS 
estimates that 75 percent of these small issuers only offer individual 
and small group CMM coverage in a single state. Additionally, HHS 
estimates that approximately a third (11) of these small issuers only 
offer individual market CMM coverage.

             Table IV.3--Description of Issuers Offering Individual or Small Group Comprehensive Major Medical (CMM) Coverage by Size, 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Average       Percent of
                                           Total issuers                     number of     issuers only    Individual &     Percent of       Number of
                                             offering       Percent of       states in       offering       small group    issuers also    issuers only
 Total earned premiums for accident and    individual or   issuers that        which       individual or   CMM  premiums  offering large     offering
             health coverage                small group     are part of    individual or    small group    as a percent    group CMM or     individual
                                            market CMM        larger        small group    CMM  coverage   of total A&H      other A&H      market CMM
                                             coverage        carriers      CMM  coverage    in a single      premiums        coverage        coverage
                                                                            is  offered        state
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less Than $7 Million....................              35            82.9             2.3            74.3            45.0            71.4              11
$7 million to $99 million...............              93            68.8             4.5            62.4            37.2            66.7               6
$100 million to $999 billion............             184            87.0             5.2            65.8            27.0            84.8              11
$1 billion or more......................             115            87.8             4.8            69.6            24.0            93.9               1
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................             427            82.9             4.7            66.7            24.5            82.2              29
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: (1) Issuers represents companies (for example, NAIC company codes). (2) Licensed Entities represents company/state combinations. (3) Total
  issuers excludes data for companies that are regulated by the California Department of Managed Health Care. (4) To be counted as offering coverage in
  a particular comprehensive major medical market, the issuer must have reported positive premiums, non-zero claims and had at least $1,000 in total
  premiums per life year for at least one state. (5) Small group is defined based on the current definition in the PHS Act.
Sources: ASPE analysis of 2011 NAIC Supplemental Health Care Exhibit data.

    This rule proposes standards related to EHBs, AV, and 
accreditation. These standards may impose some additional costs on 
issuers offering coverage that is affected by these provisions. For 
example, as discussed earlier, issuers are likely to experience some 
administrative costs associated with reconfiguring existing non-
grandfathered plans to meet EHB and AV metal level standards as defined 
in this proposed rule. However, these costs will vary depending on a 
number of factors, including the extent to which an issuer offers 
coverage in multiple states or is a subsidiary of a larger carrier, and 
the variation between these standards and current practice. Further, 
some of the changes that standardize coverage may reduce administrative 
costs. Accordingly, we cannot estimate an effect on premiums with 
precision prior to final state selection of benchmarks.
    As discussed in the regulatory impact analysis for the 
Establishment of Exchanges and Qualified Health Plans; Exchange 
Standards for Employers final rule (77 FR 18310 (Mar. 27, 2012)), the 
cost of participating in an Exchange is an investment for QHP issuers, 
with benefits expected to accrue to QHP issuers because of access to 
new markets where consumers may receive generous tax credits to 
purchase insurance.
    This proposed rule also establishes standards that will affect 
employers participating in the small group market, including those that 
choose to participate in a SHOP. As discussed in the Summary of 
Regulatory Impact Analysis for the Establishment of Exchanges and 
Qualified Health Plans; Exchange Standards for Employers final rule, 
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 affected 
employers would meet the SBA standard for small entities. However, the 
standards outlined in this proposed rule apply to issuers of small 
group market health insurance coverage, and not to any small employers 
that elect to purchase such coverage on behalf of their employees (that 
is, the proposed rule impacts what coverage is available to be 
purchased).We anticipate that the essential health benefits, coupled 
with the ability to compare plans based on metal level, will lead to 
greater

[[Page 70667]]

transparency and reduce transaction costs for small employers.
    HHS anticipates that the provisions in this proposed rule will have 
a positive effect on providers--particularly those offering services in 
areas where many individual market enrollees previously did not have 
coverage for these services, and those who serve a substantial share of 
the low-income population. HHS anticipates that small providers will 
also experience positive effects relating to the provisions of this 
proposed rule.
    Therefore, the Secretary certifies that this proposed rule will not 
have a significant impact on a substantial number of small entities. We 
welcome comment on the analysis described in this section and on HHS's 
conclusion.

VII. Unfunded Mandates

    Section 202 of the Unfunded Mandates Reform Act (UMRA) of 1995 
requires that agencies assess anticipated costs and benefits before 
issuing any proposed rule that includes a federal mandate that could 
result in expenditure in any one year by state, local or tribal 
governments, in the aggregate, or by the private sector, of $100 
million in 1995 dollars, updated annually for inflation. In 2012, that 
threshold level is approximately $139 million.
    UMRA does not address the total cost of a proposed rule. Rather, it 
focuses on certain categories of cost, mainly those ``Federal mandate'' 
costs resulting from: (1) Imposing enforceable duties on state, local, 
or tribal governments, or on the private sector; or (2) increasing the 
stringency of conditions in, or decreasing the funding of, state, 
local, or tribal governments under entitlement programs.
    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 threshold on state, local, or Tribal governments. In 
addition, because states largely already collect information on plan 
rates and benefits to license them, we believe that the burden on 
states is limited. However, because these costs have not been 
estimated, HHS seeks comments on any additional burdens.
    Under the proposed rule, issuers will provide coverage of certain 
benefits. While some issuers may not currently offer benefit packages 
that meet the standards outlined in the proposed rule, we anticipate 
that the administrative costs associated with compliance will fall 
below the threshold. We anticipate that such administrative costs will 
be concentrated in the initial year, with costs significantly tapering 
off during subsequent years.
    The benchmark-based approach to defining EHB ensures that EHB will 
reflect the scope of services offered by a ``typical employer plan.'' 
Accordingly, we anticipate that many small group market plans meet or 
are close to meeting the coverage requirements for EHB and will not 
need to incur significant administrative costs to bring currently 
available plans into compliance. Individual market plans are somewhat 
less likely to cover all statutorily required benefits and services as 
described in this proposed rule; however, many such plans are offered 
by issuers with diverse portfolios that may include small and large 
group products or other individual market products that do include the 
required services. Accordingly, we do not anticipate that the 
provisions related to the EHB package outlined in the proposed rule 
impose costs greater than $139 million on the private sector.
    Consistent with policy embodied in UMRA, this notice for proposed 
rulemaking has been designed to be the least burdensome alternative for 
state, local and tribal governments, and the private sector while 
achieving the objectives of the Affordable Care Act.

VIII. Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule that imposes 
substantial direct requirement costs on state and local governments, 
preempts state law, or otherwise has federalism implications.
    States regulate health insurance coverage. States would continue to 
apply state laws regarding health insurance coverage. However, if any 
state law or requirement prevents the application of a Federal 
standard, then that particular state law or requirement would be 
preempted. State requirements that are more stringent than the Federal 
requirements would not be preempted by this proposed rule unless such 
requirements prevent the application of Federal law. Accordingly, 
states have significant latitude to impose requirements with respect to 
health insurance coverage that are more consumer-protective than the 
Federal law.
    In the view of HHS, this proposed rule does not impose substantial 
direct costs on state and local governments. However, we believe that 
this proposed rule has Federalism implications due to direct effects on 
the distribution of power and responsibilities among the state and 
Federal governments relating to determining standards for health 
insurance coverage that is offered in the individual and small group 
markets. Each state would adhere to the federal standards outlined in 
the proposed rule for purposes of determining whether non-grandfathered 
individual and small group market health insurance coverage includes 
the EHB package, or have HHS enforce these policies.
    HHS expects that the federalism implications, if any, are 
substantially mitigated for a number of reasons. First, the proposed 
rule affords discretion to states to select an EHB-benchmark plan. 
States also can choose to be responsible for evaluating the selected 
benchmark and making adjustments as needed, and for determining whether 
non-grandfathered individual and small group market health insurance 
coverage meets the standards outlined in the proposed rule. While the 
proposed rule establishes new federal standards for certain health 
insurance coverage, states will retain their traditional regulatory 
roles. Further, if a state elects not to substantially enforce the 
standards outlined in the final rule, the Federal government will 
assume responsibility for these standards.
    In compliance with the requirement of Executive Order 13132 that 
agencies examine closely any policies that may have federalism 
implications or limit the policymaking discretion of the states, HHS 
has made efforts to consult with and work cooperatively with states as 
evidenced by continued communication through weekly calls and listening 
sessions.
    HHS initiated weekly calls with key stakeholders from states in 
April 2010 as a way for HHS and states to have a regular means of 
communication about the Affordable Care Act. The audience for the call 
is ``State Government Implementers of the Affordable Care Act'' which 
often includes Governors' office staff, state Medicaid Directors' 
staff, Insurance Commissioners' staff, state high risk pool staff, 
Exchange grantees, health reform coordinators, and other state staff. 
National intergovernmental organizations are also invited to 
participate. Regular participants also include representatives from the 
following intergovernmental organizations:

 National Governors Association
 National Conference of State Legislatures
 National Association of Medicaid Directors
 National Association of Insurance Commissioners
 American Public Human Services Association

[[Page 70668]]

 The Council of State Governments
 National Academy for State Health Policy
 National Association of Counties

    These calls, in addition to listening sessions specifically related 
to EHB, have helped HHS understand states' major concerns about 
implementation of the Affordable Care Act. Continuous communication 
with states allowed HHS to develop policy that addressed two central 
concerns: flexibility and state-required benefits. The benchmark 
approach allows states to select a benchmark option that offer benefit 
packages that reflect the needs of their populations and maintain 
state-required benefits that were enacted before December 31, 2011. 
This approach minimizes state burden while increasing access to quality 
health care.

List of Subjects

45 CFR Part 147

    Health care, Health insurance, Reporting and recordkeeping 
requirements, state regulation of health insurance.

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.

    For the reasons set forth in the preamble, the Department of Health 
and Human Services proposes to amend 45 CFR parts 147, 155, and 156 as 
set forth below:

Subchapter B--Requirements Relating to Health Care Access

PART 147--HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP AND 
INDIVIDUAL HEALTH INSURANCE MARKETS

    1. The authority citation for part 147 continues to read as 
follows:

    Authority: Secs 2701 through 2763, 2791, and 2792 of the Public 
Health Service Act (42 U.S.C. 300gg through 300gg-63, 300gg-91, and 
300gg-92), as amended.

    2. Section 147.150 is added to read as follows:


Sec.  147.150  Coverage of essential health benefits.

    (a) Requirement to cover the essential health benefits package. A 
health insurance issuer offering health insurance coverage in the 
individual or small group market must ensure that such coverage 
includes the essential health benefits package as defined in section 
1302(a) of the Affordable Care Act effective for plan or policy years 
beginning on or after January 1, 2014.
    (b) Cost-sharing under group health plans. [Reserved.]
    (c) Child-only plans. If a health insurance issuer in the 
individual market offers health insurance coverage in any level of 
coverage specified under section 1302(d)(1) of the Affordable Care Act, 
the issuer must offer coverage in that level to individuals who, as of 
the beginning of a plan year, have not attained the age of 21.

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

    3. 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, Pub. L. 111-148, 124 Stat. 119 (42 U.S.C. 18021-
18024, 18031-18033, 18041-18042, 18051, 18054, 18071, and 18081-
18083.

    4. Adding Sec.  155.170 to subpart B to read as follows:


Sec.  155.170  Additional required benefits.

    (a) Additional required benefits. (1) A state may require a QHP to 
offer benefits in addition to the essential health benefits.
    (2) A state-required benefit enacted on or before December 31, 2011 
is not considered in addition to the essential health benefits.
    (3) The Exchange shall identify which state-required benefits are 
in excess of EHB.
    (b) Payments. The state must make payments to defray the cost of 
additional required benefits specified in paragraph (a) of this section 
to one of the following:
    (1) To an individual enrollee, as defined in Sec.  155.20 of this 
subchapter; or
    (2) Directly to the QHP issuer on behalf of the individual 
described in paragraph (b)(1) of this section.
    (c) Cost of additional required benefits. (1) Each QHP issuer in 
the state shall quantify cost attributable to each additional required 
benefit specified in paragraph (a) of this section.
    (2) A QHP issuer's calculation shall be:
    (i) Based on an analysis performed in accordance with generally 
accepted actuarial principles and methodologies;
    (ii) Conducted by a member of the American Academy of Actuaries; 
and
    (iii) Reported to the Exchange.
    5. Revise Sec.  155.1045 to read as follows:


Sec.  155.1045  Accreditation timeline.

    (a) 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 subchapter, except for multi-state plans. The U.S. Office of 
Personnel Management will establish the accreditation period for multi-
state plans.
    (b) Federally-facilitated Exchange. The accreditation timeline used 
in Federally-facilitated Exchanges follows:
    (1) During certification for an issuer's initial year of QHP 
certification (for example, in 2013 for the 2014 coverage year), a QHP 
issuer without existing commercial, Medicaid, or Exchange health plan 
accreditation granted by a recognized accrediting entity for the same 
state in which the issuer is applying to offer coverage must have 
scheduled or plan to schedule a review of QHP policies and procedures 
of the applying QHP issuer with a recognized accrediting entity.
    (2) Prior to a QHP issuer's second year and third year of QHP 
certification (for example, in 2014 for the 2015 coverage year and 2015 
for the 2016 coverage year), a QHP issuer must be accredited by a 
recognized accrediting entity on the policies and procedures that are 
applicable to their Exchange products or, a QHP issuer must have 
commercial or Medicaid health plan accreditation granted by a 
recognized accrediting entity for the same State in which the issuer is 
offering Exchange coverage and the administrative policies and 
procedures underlying that

[[Page 70669]]

accreditation must be the same or similar to the administrative 
policies and procedures used in connection with the QHP.
    (3) Prior to the QHP issuer's fourth year of QHP certification and 
in every subsequent year of certification (for example, in 2016 for the 
2017 coverage year and forward), a QHP issuer must be accredited in 
accordance with Sec.  156.275 of this subchapter.

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

    6. The authority citation for part 156 is revised to read as 
follows:

    Authority: Title I of the Affordable Care Act, sections 1301-
1304, 1311-1312, 1321-1322, 1324, 1334, 1342-1343, and 1401-1402, 
Pub. L. 111-148, 124 Stat. 119 (42 U.S.C. 18021-18024, 18031-18032, 
18041-18042, 18044, 18054, 18061, 18063, 18071, and 26 U.S.C. 36B).

    7. Amend Sec.  156.20 by adding definitions for ``Actuarial value 
(AV),'' ``Base-benchmark plan,'' ``EHB-benchmark plan,'' ``EHB 
package,'' and ``Percentage of the total allowed costs of benefits'' in 
alphabetical order to read as follows:


Sec.  156.20  Definitions.

* * * * *
    Actuarial value (AV) means the percentage paid by a health plan of 
the percentage of the total allowed costs of benefits.
* * * * *
    Base-benchmark plan means the plan that is selected by a state from 
the options described in Sec.  156.100(a) of this subchapter, or a 
default benchmark plan, as described in Sec.  156.100(c) of this 
subchapter, prior to any adjustments made pursuant to the benchmark 
standards described in Sec.  156.110 of this subchapter.
* * * * *
    EHB-benchmark plan means the standardized set of essential health 
benefits that must be met by a QHP, as defined in Sec.  155.20 of this 
section, or other issuer as required by Sec.  147.150 of this 
subchapter.
    EHB package means the scope of covered benefits and associated 
limits of a health plan offered by an issuer that provides at least the 
ten statutory categories of benefits, as described in Sec.  156.110(a) 
of this subchapter; provides the benefits in the manner described in 
Sec.  156.115 of this subchapter; limits cost sharing for such coverage 
as described in Sec.  156.130 of this subchapter; and subject to 
offering catastrophic plans as described in section 1302(e) of the 
Affordable Care Act, provides distinct levels of coverage as described 
in Sec.  156.140 of this subchapter.
* * * * *
    Percentage of the total allowed costs of benefits means the 
anticipated covered medical spending for EHB coverage (as defined in 
Sec.  156.110(a) of this subchapter) paid by a health plan for a 
standard population, computed in accordance with the plan's cost-
sharing, divided by the total anticipated allowed charges for EHB 
coverage provided to a standard population, and expressed as a 
percentage.
* * * * *
    8. Revise subpart B to read as follows:

Subpart B--Essential Health Benefits package

Sec.
156.100 State selection of benchmark.
156.105 Determination of EHB for multi-state plans.
156.110 EHB-benchmark plan standards.
156.115 Provision of EHB.
156.120 Prescription drug benefits.
156.125 Prohibition on discrimination.
156.130 Cost-sharing requirements.
156.135 AV calculation for determining level of coverage.
156.140 Levels of coverage.
156.145 Determination of minimum value
156.150 Application to stand-alone dental plans inside the Exchange.


Sec.  156.100  State selection of benchmark.

    Each state may identify a single EHB-benchmark plan according to 
the selection criteria described below:
    (a) State-selection of base-benchmark plan. The options from which 
a base-benchmark plan may be selected by the state are the following:
    (1) Small group market health plan. The largest health plan by 
enrollment in any of the three largest small group insurance products, 
as defined in Sec.  159.110 of this subpart, in the state's small group 
market as defined in Sec.  155.20 of this subchapter.
    (2) State employee health benefit plan. Any of the largest three 
employee health benefit plan options by enrollment offered and 
generally available to state employees in the state involved.
    (3) FEHBP plan. Any of the largest three national Federal Employees 
Health Benefits Program (FEHBP) plan options by aggregate enrollment 
that is offered to all health-benefits-eligible federal employees under 
5 U.S.C. 8903.
    (4) HMO. The coverage plan with the largest insured commercial non-
Medicaid enrollment offered by a health maintenance organization 
operating in the state.
    (b) EHB-benchmark selection standards. In order to become an EHB-
benchmark plan as defined in Sec.  156.20 of this subchapter, a state-
selected base-benchmark plan must meet the requirements for coverage of 
benefits and limits described in Sec.  156.110 of this subpart; and
    (c) Default base-benchmark plan. If a state does not make a 
selection using the process defined in Sec.  156.100 of this section, 
the default base-benchmark plan will be the largest plan by enrollment 
in the largest product in the state's small group market.


Sec.  156.105  Determination of EHB for multi-state plans.

    A Multi-State Plan must meet benchmark standards set by the U.S. 
Office of Personnel Management.


Sec.  156.110  EHB-benchmark plan standards.

    General requirements. An EHB-benchmark plan must meet the following 
standards:
    (a) EHB coverage. Provide coverage of at least the following 
categories of benefits:
    (1) Ambulatory patient services.
    (2) Emergency services.
    (3) Hospitalization.
    (4) Maternity and newborn care.
    (5) Mental health and substance use disorder services, including 
behavioral health treatment.
    (6) Prescription drugs.
    (7) Rehabilitative and habilitative services and devices.
    (8) Laboratory services.
    (9) Preventive and wellness services and chronic disease 
management.
    (10) Pediatric services, including oral and vision care.
    (b) Coverage in each benefit category. A base-benchmark plan not 
providing any coverage in one or more of the categories described in 
paragraph (a) of this section, must be supplemented as follows:
    (1) General supplementation methodology. A base-benchmark plan that 
does not include items or services within one or more of the categories 
described in paragraph (a) of this section must be supplemented by the 
addition of the entire category of such benefits offered under any 
other benchmark plan option described in Sec.  156.100(a) of this 
subpart unless otherwise described in this subsection.
    (2) Supplementing pediatric oral services. A base-benchmark plan 
lacking the category of pediatric oral services must be supplemented by 
the addition of the entire category of benefits from one of the 
following:
    (i) The FEDVIP dental plan with the largest national enrollment 
that is

[[Page 70670]]

described in and offered to federal employees under 5 U.S.C. 8952; or
    (ii) The benefits available under that state's separate CHIP plan, 
if a separate CHIP plan exists, to the eligibility group with the 
highest enrollment.
    (3) Supplementing pediatric vision services. A base-benchmark plan 
lacking the category of pediatric vision services must be supplemented 
by the addition of the entire category of such benefits from one of the 
following:
    (i) The FEDVIP vision plan with the largest national enrollment 
that is offered to Federal employees under 5 U.S.C. 8982; or
    (ii) The benefits available under the state's separate CHIP plan, 
if a separate CHIP plan exists, to the eligibility group with the 
highest enrollment.
    (c) Supplementing the default base-benchmark plan. A default base-
benchmark plan as defined in Sec.  156.100(c) of this subpart that 
lacks any categories of essential health benefits will be supplemented 
by HHS in the following order, to the extent that any of the plans 
offer benefits in the missing EHB category:
    (1) The largest plan by enrollment in the second largest product in 
the state's small group market, as defined in Sec.  155.20 of this 
subchapter (except for pediatric oral and vision benefits);
    (2) The largest plan by enrollment in the third largest product in 
the state's small group market, as defined in Sec.  155.20 of this 
subchapter (except for pediatric oral and vision benefits);
    (3) The largest national FEHBP plan by enrollment across states 
that is offered to federal employees under 5 U.S.C. 8903 (except for 
pediatric oral and vision benefits);
    (4) The plan described in paragraph (b)(2)(i) of this section with 
respect to pediatric oral care benefits;
    (5) The plan described in paragraph (b)(3)(i) of this section with 
respect to pediatric vision care benefits; and
    (6) A habilitative benefit determined by the plan as described in 
Sec.  156.115(a)(4) of this subpart or by the state as described in 
paragraph (f) of this section.
    (d) Non-discrimination. Not include discriminatory benefit designs 
that contravene the non-discrimination standards defined in Sec.  
156.125 of this subpart.
    (e) Balance. Ensure an appropriate balance among the EHB categories 
to ensure that benefits are not unduly weighted toward any category.
    (f) Determining habilitative services. If the base-benchmark plan 
does not include coverage for habilitative services, the state may 
determine which services are included in that category.


Sec.  156.115  Provision of EHB.

    (a) Provision of EHB means that a health plan provides benefits 
that--
    (1) Are substantially equal to the EHB-benchmark plan including:
    (i) Covered benefits;
    (ii) Limitations on coverage including coverage of benefit amount, 
duration, and scope; and
    (iii) Prescription drug benefits that meet the requirements of 
Sec.  156.120 of this subpart;
    (2) With respect to the mental health and substance use disorder 
services, including behavioral health treatment services, required 
under Sec.  156.110(a)(5) of this subpart, comply with the requirements 
of Sec.  146.136 of this subchapter.
    (3) Include preventive health services described in Sec.  147.130 
of this subchapter.
    (4) If the EHB-benchmark plan does not include coverage for 
habilitative services, as described in Sec.  156.110(f) of this 
subpart, a plan must include habilitative services that meet one of the 
following--
    (i) Provide parity by covering habilitative services benefits that 
are similar in scope, amount, and duration to benefits covered for 
rehabilitative services; or
    (ii) Are determined by the issuer and reported to HHS.
    (b) Benefit substitution is allowed if the issuer of a plan 
offering EHB meets the following conditions--
    (1) Substitutes a benefit that meets the following conditions:
    (i) Is actuarially equivalent to the benefit that is being replaced 
as determined in paragraph (b)(3) of this section;
    (ii) Is made only within the same essential health benefit 
category; and
    (iii) Is not a prescription drug benefit.
    (2) Submits evidence of actuarial equivalence of substituted 
benefits to the state. The certification must:
    (i) Be conducted by a member of the American Academy of Actuaries;
    (ii) Be based on an analysis performed in accordance with generally 
accepted actuarial principles and methodologies; and
    (iii) Use a standardized plan population;
    (3) Actuarial equivalence of benefits is determined regardless of 
cost-sharing.
    (c) A health plan does not fail to provide EHB solely because it 
does not offer the services described in Sec.  156.280(d) of this 
subchapter.
    (d) An issuer of a plan offering EHB may not include routine non-
pediatric dental services, routine non-pediatric eye exam services, or 
long-term/custodial nursing home care benefits, or cosmetic orthodontia 
as EHB.


Sec.  156.120  Prescription drug benefits.

    (a) A health plan does not provide essential health benefits unless 
it:
    (1) Subject to the exception in paragraph (b) of this section, 
covers at least the greater of:
    (i) One drug in every United States Pharmacopeia (USP) category and 
class; or
    (ii) The same number of prescription drugs in each category and 
class as the EHB-benchmark plan; and
    (2) Submits its drug list to the Exchange, the state, or OPM.
    (b) A health plan does not fail to provide EHB prescription drug 
benefits solely because it does not offer drugs for services described 
in Sec.  156.280(d) of this subchapter.
    (c) A health plan providing essential health benefits must have 
procedures in place that allow an enrollee to request clinically 
appropriate drugs not covered by the health plan.


Sec.  156.125  Prohibition on discrimination.

    (a) An issuer does not provide EHB if its benefit design, or the 
implementation of its benefit design, discriminates based on an 
individual's age, expected length of life, present or predicted 
disability, degree of medical dependency, quality of life, or other 
health conditions; and
    (b) An issuer providing EHB must comply with the requirements of 
Sec.  156.200(e) and Sec.  156.225 of this subchapter.


Sec.  156.130  Cost-sharing requirements.

    (a) Annual limitation on cost sharing. (1) For a plan year 
beginning in the calendar year 2014, cost sharing may not exceed the 
following:
    (i) For self-only coverage--the annual dollar limit as described in 
section 223(c)(2)(A)(ii)(I) of the Internal Revenue Code of 1986 as 
amended, for self-only coverage that is in effect for 2014; or
    (ii) For other than self-only coverage--the annual dollar limit in 
section 223(c)(2)(A)(ii)(II) of the Internal Revenue Code of 1986 as 
amended, for non-self-only coverage that is in effect for 2014.
    (2) For a plan year beginning in a calendar year after 2014, cost 
sharing may not exceed the following:
    (i) For self-only coverage--the dollar limit for calendar year 2014 
increased by an amount equal to the product of that amount and the 
premium adjustment percentage, as defined in paragraph (e) of this 
section.
    (ii) For other than self-only coverage--twice the dollar limit for 
self-only coverage described in paragraph (a)(2)(i) of this section.
    (b) Annual limitation on deductibles for plans in the small group 
market. (1)

[[Page 70671]]

For a plan year beginning in calendar year 2014, the annual deductible 
for a health plan in the small group market may not exceed the 
following:
    (i) For self-only coverage--$2,000; or
    (ii) For coverage other than self-only--$4,000.
    (2) For a plan year beginning in a calendar year after 2014, the 
annual deductible for a health plan in the small group market may not 
exceed the following:
    (i) For self-only coverage--the annual limitation on deductibles 
for calendar year 2014 increased by an amount equal to the product of 
that amount and the premium adjustment percentage as defined in 
paragraph (e) of this section; and
    (ii) For other than self-only coverage--twice the annual deductible 
limit for self-only coverage described in paragraph (b)(2)(i) of this 
section.
    (3) A health plan's annual deductible may exceed the annual 
deductible limit if that plan may not reasonably reach the actuarial 
value of a given level of coverage as defined in Sec.  156.140 of this 
subpart without exceeding the annual deductible limit.
    (c) Special rule for network plans. In the case of a plan using a 
network of providers, cost-sharing paid by, or on behalf of, an 
enrollee for benefits provided outside of such network shall not count 
towards the annual limitation on cost sharing (as defined in paragraph 
(a) of this section), or the annual limitation on deductibles (as 
defined in paragraph (b) of this section).
    (d) Increase annual dollar limits in multiples of 50. For a plan 
year beginning in a calendar year after 2014, any increase in the 
annual dollar limits described in paragraphs (a) and (b) of this 
section that do not result in a multiple of 50 dollars must be rounded 
to the next lowest multiple of 50 dollars.
    (e) Premium adjustment percentage. The premium adjustment 
percentage is the percentage (if any) by which the average per capita 
premium for health insurance coverage for the preceding calendar year 
exceeds such average per capita premium for health insurance for 2013. 
HHS will publish the annual premium adjustment percentage in the annual 
HHS notice of benefits and payment parameters.
    (f) Coordination with preventive limits. Nothing in this subpart is 
in derogation of the requirements of Sec.  147.130 of this subchapter.
    (g) Prohibition of discriminatory cost sharing. The structure of 
cost sharing required under a plan must conform to the 
nondiscrimination requirements applicable to benefits set forth in 
Sec.  156.125 of this subpart.
    (h) Coverage of emergency department services. Emergency department 
services must be provided as follows:
    (1) Without imposing any requirement under the plan for prior 
authorization of services or any limitation on coverage where the 
provider of services is out of network that is more restrictive than 
the requirements or limitations that apply to emergency department 
services received in network; and
    (2) If such services are provided out-of-network, cost-sharing must 
be limited as provided in Sec.  147.138(b)(3) of this subchapter.


Sec.  156.135  AV calculation for determining level of coverage.

    (a) Calculation of AV. Subject to paragraph (b) of this section, to 
calculate the AV of a health plan, the issuer must use the AV 
calculator developed and made available by HHS.
    (b) Exception to the use of the AV calculator. If a health plan's 
design is not compatible with the AV calculator, the issuer must meet 
the following:
    (1) Submit the actuarial certification on the chosen methodology 
identified in paragraphs (b)(2) and (3) of this section:
    (2) Calculate the plan's AV by:
    (i) Estimating a fit of its plan design into the parameters of the 
AV calculator; and
    (ii) Having an actuary, who is a member of the American Academy of 
Actuaries, certify that the plan design was fit appropriately in 
accordance with generally accepted actuarial principles and 
methodologies; or
    (3) Use the AV calculator to determine the AV for the plan 
provisions that fit within the calculator parameters and have an 
actuary, who is a member of the American Academy of Actuaries 
calculate, in accordance with generally accepted actuarial principles 
and methodologies, appropriate adjustments, to the AV identified by the 
calculator, for plan design features that deviate substantially from 
the parameters of the AV calculator.
    (4) The calculation methods described in (b)(2) or (3) of this 
section may include only in-network cost-sharing, including multi-tier 
networks.
    (c) Employer contributions to health savings accounts and amounts 
made available under health reimbursement arrangements. In plans other 
than those in the individual market that are offered with an HSA or 
HRA, annual employer contributions to HSAs and amounts newly made 
available under HRAs for the current year in the small group market 
are:
    (1) Counted towards the total anticipated medical spending of the 
standard population that is paid by the health plan; and
    (2) Adjusted to reflect the expected spending for health care costs 
in a benefit year so that:
    (i) Any current year HSA contributions are accounted for; and
    (ii) The amounts newly made available under an HRA for the current 
year are accounted for.
    (d) Use of state-specific standard population for the calculation 
of AV. Beginning in 2015, if submitted by the state and approved by 
HHS, a state-specific data set will be used as the standard population 
to calculate AV in accordance with paragraph (a) of this section. The 
data set may be approved by HHS if it is submitted in accordance with 
paragraph (e) of this section and:
    (1) Supports the calculation of AVs for the full range of health 
plans available in the market;
    (2) Is derived from a non-elderly population and estimates those 
likely to be covered by private health plans on or after January 1, 
2014;
    (3) Is large enough that:
    (i) The demographic and spending patterns are stable over time; and
    (ii) Includes a substantial majority of the state's insured 
population, subject to the requirement in paragraph (d)(2) of this 
section;
    (4) Is a statistically reliable and stable basis for area-specific 
calculations; and
    (5) Contains claims data on health care services typically offered 
in the then-current market.
    (e) Submission of state-specific data. AV will be calculated using 
the default standard population described in paragraph (f) of this 
section, unless a data set in a format specified by HHS that can 
support the use of the AV calculator as described in paragraph (a) of 
this section is submitted by a state and approved by HHS consistent 
with paragraph (d) of this section by a date specified by HHS.
    (f) Default standard population. The default standard population 
for AV calculation will be developed and summary statistics, such as in 
continuance tables, will be provided by HHS in a format that supports 
the calculation of AV as described in paragraph (a) of this section.


Sec.  156.140  Levels of coverage.

    (a) General requirement for levels of coverage. AV, calculated as 
described in Sec.  156.135 of this subpart, and within a de minimis 
variation as defined in paragraph (c) of this section, determines 
whether a health plan offers a bronze, silver, gold, or platinum level 
of coverage.
    (b) Levels of coverage. The levels of coverage are:

[[Page 70672]]

    (1) A bronze health plan is a health plan that has an AV of 60 
percent.
    (2) A silver health plan is a health plan that has an AV of 70 
percent.
    (3) A gold health plan is a health plan that has an AV of 80 
percent.
    (4) A platinum health plan is a health plan that has as an AV of 90 
percent.
    (c) De minimis variation. The allowable variation in the AV of a 
health plan that does not result in a material difference in the true 
dollar value of the health plan is +/- 2 percentage points.


Sec.  156.145  Determination of minimum value.

    (a) Acceptable methods for determining MV. For the purposes of 
determining that an employer-sponsored plan provides MV, a group health 
plan may use the following methods to calculate the percentage of the 
total allowed costs of benefits provided under the plan or coverage:
    (1) The MV calculator to be made available by HHS and the Internal 
Revenue Service. The result derived from the calculator may be modified 
under the rules in paragraph (b) of this section.
    (2) Any safe harbor established by HHS and the Internal Revenue 
Service.
    (3) A group health plan may seek an appropriate certification by an 
actuary to determine MV if neither of the methods described in 
paragraphs (a)(1) or (2) of this section is appropriate. The 
determination of MV must be made by a member of the American Academy of 
Actuaries, based on an analysis performed in accordance with generally 
accepted actuarial principles and methodologies.
    (b) Benefits that may be counted towards the determination of MV. 
(1) In the event that a group health plan uses the MV calculator and 
offers an EHB outside of the parameters of the MV calculator, the plan 
may seek an actuary, who is a member of the American Academy of 
Actuaries, to determine the value of that benefit and adjust the result 
derived from the MV calculator to reflect that value.
    (2) For this purpose of the options described in this subsection in 
determining MV, a group health plan will be permitted to take into 
account all benefits provided by the plan that are included in any of 
the EHB benchmarks.
    (c) Standard population. The standard population for MV 
determinations described in paragraph (a) of this section is the 
standard population developed by HHS for such use and described through 
summary statistics issued by HHS. The standard population for MV shall 
reflect the population covered by self-insured group health plans.


Sec.  156.150  Application to stand-alone dental plans inside the 
Exchange.

    (a) Annual limitation on cost-sharing. A stand-alone dental plan 
covering the pediatric dental EHB under Sec.  155.1065 of this 
subchapter must demonstrate to the Exchange that it has a reasonable 
annual limitation on cost-sharing. Such annual limit is calculated 
without regard to EHBs provided by the QHP and without regard to out-
of-network services.
    (b) Calculation of AV. A stand-alone dental plan:
    (1) May not use the AV calculator in Sec.  156.135 of this subpart;
    (2) Must demonstrate that the stand-alone dental plan offers the 
pediatric dental essential health benefit at either:
    (i) A low level of coverage with an AV of 75 percent; or
    (ii) A high level of coverage with an AV of 85 percent; and
    (iii) Within a de minimis variation of +/- 2 percentage points of 
the level of coverage in paragraphs (b)(2)(i) or (ii) of this section.
    (3) The level of coverage as defined in paragraph (b)(2) of this 
section must be certified by a member of the American Academy of 
Actuaries using generally accepted actuarial principles.
    9. In Sec.  156.275, revise paragraphs (c)(1), (c)(4) introductory 
text, and (c)(4)(i) to read as follows:


Sec.  156.275  Accreditation of QHP Issuers.

* * * * *
    (c) * * *
    (1) Recognition of accrediting entity by HHS--(i) Application. An 
accrediting entity may apply to HHS for recognition. An application 
must include the documentation described in paragraph (c)(4) of this 
section and demonstrate, in a concise and organized fashion how the 
accrediting entity meets the requirements of paragraphs (c)(2) and (3) 
of this section.
    (ii) Proposed notice. Within 60 days of receiving a complete 
application as described in paragraph (c)(1)(i) of this section, HHS 
will publish a notice in the Federal Register identifying the 
accrediting entity making the request, summarizing HHS's analysis of 
whether the accrediting entity meets the criteria described in 
paragraphs (c)(2) and (3) of this section, and providing no less than a 
30-day public comment period about whether HHS should recognize the 
accrediting entity.
    (iii) Final notice. After the close of the comment period described 
in paragraph (c)(1)(ii) of this section, HHS will notify the public in 
the Federal Register of the names of the accrediting entities 
recognized and those not recognized as accrediting entities by the 
Secretary of HHS to provide accreditation of QHPs.
    (iv) Other recognition. Effective upon completion of conditions 
listed in paragraphs (c)(2), (3), and (4) of this section, HHS will 
notify the public in the Federal Register, that the National Committee 
for Quality Assurance (NCQA) and URAC are recognized as accrediting 
entities by the Secretary of HHS to provide accreditation of QHPs 
meeting the requirements of this section.
* * * * *
    (4) Documentation. An accrediting entity applying to be recognized 
under the process described in (c)(1) of this section must provide the 
following documentation:
    (i) To be recognized, an accrediting entity must provide current 
accreditation standards and requirements, processes and measure 
specifications for performance measures to demonstrate that it meets 
the conditions described in paragraphs (c)(2) and (3) of this section 
to HHS.
* * * * *

    Dated: August 1, 2012.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: November 14, 2012.
Kathleen Sebelius,
Secretary.

    Note: The following appendices will not appear in the Code of 
Federal Regulations:

Appendix A: List of Proposed Essential Health Benefits Benchmarks

    The purpose of this appendix is to list the proposed EHB 
benchmark plans for the 50 states and the District of Columbia for 
public review and comment. As described in the EHB Bulletin 
published December 16, 2011, and proposed in Sec.  156.100 of this 
regulation, each state may select a benchmark plan to serve as the 
standard for plans required to offer EHB in the state.\52\ HHS has 
also proposed that the default benchmark plan for states that do not 
exercise the option to select a benchmark health plan would be the 
largest plan by enrollment in the largest product in the state's 
small group market. As described in proposed Sec.  156.110, an EHB-
benchmark plan must offer coverage in each of the 10 statutory 
benefit categories. In the summary table that follows, we list the 
proposed EHB benchmark plans. Additional information on

[[Page 70673]]

the specific benefits, limits, and prescription drug categories and 
classes covered by the EHB-benchmark plans, and state-required 
benefits, is provided on the Center for Consumer Information and 
Insurance Oversight (CCIIO) Web site (http://cciio.cms.gov/resources/data/ehb.html).
---------------------------------------------------------------------------

    \52\ Non-grandfathered plans in the individual and small group 
markets both inside and outside of the Exchanges along with certain 
other types of plans must cover EHBs beginning in 2014. Self-insured 
group health plans, health insurance coverage offered in the large 
group market, and grandfathered health plans are not required to 
cover the essential health benefits.

 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Supplemented       Supplementary plan
               State                      Plan type           Issuer and plan name          categories               type          Habilitative services
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama...........................  Largest small group    Blue Cross Blue Shield of   Pediatric oral......  FEDVIP..............  Yes.
                                     product.               Alabama PPO 320 Plan.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alaska............................  Largest small group    Premera Blue Cross Blue     Mental health and     Largest FEHBP.......  Yes.
                                     product.               Shield of Alaska Heritage   substance use
                                                            Select Envoy PPO.           disorder, including
                                                                                        behavioral health
                                                                                        treatment.
                                                                                       Pediatric oral......  FEDVIP..............
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Arizona...........................  Largest state          Arizona Benefit Options     Pediatric oral......  FEDVCP.
                                     employee plan.         EPO Plan, administered by
                                                            United HealthCare.
                                                                                       Pediatric vision....  FEDVIP..............  No.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Arkansas..........................  Plan from 3rd largest  HMO Partners, Inc. Open     Mental health and     2nd largest FEHBP...  No.
                                     small group product.   Access POS, 13262AR001.     substance use
                                                                                        disorder, including
                                                                                        behavioral health
                                                                                        treatment.
                                                                                       Pediatric oral......  CHIP................
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
California........................  Plan from largest      Kaiser Foundation Health    Pediatric oral......  CHIP................  Yes.
                                     small group product.   Plan, Inc. Small Group
                                                            HMO 30 ID 40513CA035.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Colorado..........................  Plan from largest      Kaiser Foundation Health    Pediatric oral......  CHIP................  No.
                                     small group product.   Plan of Colorado Ded HMO
                                                            1200D.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Connecticut.......................  Largest state non-     ConnectiCare HMO..........  Pediatric oral......  CHIP................  No.
                                     Medicaid HMO.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Delaware..........................  Plan from second       Highmark Blue Cross Blue    Pediatric oral......  FEDVIP..............  No.
                                     largest small group    Shield Delaware Simply
                                     product.               Blue EPO 100 500.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
District of Columbia..............  Plan from largest      Group Hospitalization and   Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   Medical Services, Inc.
                                                            BluePreferred PPO.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Florida...........................  Plan from largest      Blue Cross Blue Shield of   Pediatric oral......  FEDVIP..............  No.
                                     small group product.   Florida, Inc. BlueOptions
                                                            PPO.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Georgia...........................  Plan from largest      Blue Cross Blue Shield of   Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   Georgia HMO Urgent Care
                                                            60 Copay.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hawaii............................  Plan from largest      Hawaii Medical Service      Pediatric oral......  CHIP................  No.
                                     small group product.   Association Preferred
                                                            Provider Plan 2010.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Idaho.............................  Plan from largest      Blue Cross of Idaho Health  Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   Service, Inc. Preferred
                                                            Blue PPO.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Illinois..........................  Plan from largest      Blue Cross and Blue Shield  Pediatric oral......  CHIP................  No.
                                     small group product.   of Illinois BlueAdvantage
                                                            PPO.

[[Page 70674]]

 
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Indiana...........................  Plan from largest      Anthem Blue Cross and Blue  Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   Shield of Indiana Blue 5
                                                            Blue Access PPO Medical
                                                            Option 6 Rx Option G.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Iowa..............................  Plan from largest      Wellmark Inc. Alliance      Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   Select Copayment Plus PPO.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Kansas............................  Plan from largest      Blue Cross and Blue Shield  Pediatric oral......  FEDVIP..............  No.
                                     small group product.   of Kansas Comprehensive
                                                            Major Medical Blue Choice
                                                            PPO GF 500 deductible
                                                            with Blue Rx card.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Kentucky..........................  Plan from largest      Anthem Health Plans of      Pediatric oral......  CHIP................  Yes.
                                     small group product.   Kentucky, Inc. PPO.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Louisiana.........................  Plan from largest      Blue Cross and Blue Shield  Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   of Louisiana GroupCare
                                                            PPO.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Maine.............................  Plan from largest      Anthem Health Plans of      Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   Maine Blue Choice 20 PPO
                                                            with RX 10 30 50 50.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Maryland..........................  Largest state          CareFirst of Maryland,      Pediatric oral......  CHIP................  Yes.
                                     employee plan.         Inc. State of Maryland
                                                            PPO.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Massachusetts.....................  Plan from largest      Blue Cross Blue Shield of   Pediatric oral......  CHIP................  Yes.
                                     small group product.   Massachusetts, Inc. HMO
                                                            Blue 2000 Deductible.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Michigan..........................  Largest state non-     Priority Health             Pediatric oral......  CHIP................  No.
                                     Medicaid HMO.          PriorityHMO 100 Percent
                                                            Hospital Services Plan.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Minnesota.........................  Plan from largest      HealthPartners 500 25 Open  Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   Access PPO.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mississippi.......................  Plan from largest      Blue Cross and Blue Shield  Pediatric oral......  CHIP................  Yes.
                                     small group product.   of Mississippi Network
                                                            Blue PPO.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Missouri..........................  Plan from largest      Healthy Alliance Life       Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   Insurance Co. (Anthem
                                                            BCBS) Blue 5 Blue Access
                                                            PPO Medical Option 4 Rx
                                                            Option D.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Montana...........................  Plan from largest      Blue Cross and Blue Shield  Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   of Montana Blue
                                                            Dimensions PPO.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nebraska..........................  Plan from largest      Blue Cross and Blue Shield  Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   of Nebraska BluePride PPO.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nevada............................  Plan from largest      Rocky Mountain Hospital &   Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   Medical Service, Inc.
                                                            (Anthem BCBS) GenRx PPO
                                                            45 Copay.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 70675]]

 
New Hampshire.....................  Plan from largest      Matthew Thornton Health     Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   Plan (Anthem BCBS) HMO
                                                            Blue New England 25 50
                                                            WITH Rx 10 35 30 OOP 2500.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
New Jersey........................  Plan from largest      Horizon HMO Access HSA      Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   Compatible.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
New Mexico........................  Plan from largest      Lovelace Insurance Company  Pediatric oral......  CHIP................  Yes.
                                     small group product.   Classic PPO.
--------------------------------------------------------------------------------------------------------------------------------------------------------
New York..........................  Plan from largest      Oxford Health Insurance,    Pediatric oral......  CHIP................  Yes.
                                     small group product.   Inc. Oxford EPO.
--------------------------------------------------------------------------------------------------------------------------------------------------------
North Carolina....................  Plan from largest      Blue Cross and Blue Shield  Pediatric oral......  FEDVIP..............  No.
                                     small group product.   of North Carolina Blue
                                                            Options PPO.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
North Dakota......................  Largest state non-     Sanford Health Plan HMO...  Pediatric oral......  CHIP................  No.
                                     Medicaid HMO.
                                                                                       Pediatric vision....  CHIP................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ohio..............................  Plan from largest      Community Insurance         Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   Company (Anthem BCBS)
                                                            Blue 6 Blue Access PPO
                                                            Medical Option D4 Rx
                                                            Option G.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Oklahoma..........................  Plan from largest      Blue Cross and Blue Shield  Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   of Oklahoma BlueOptions
                                                            PPO RYB05.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Oregon............................  Plan from 3rd largest  PacificSource Health Plans  Pediatric oral......  CHIP................  No.
                                     small group product.   PPO Preferred CoDeduct
                                                            Value 3000 35 70.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pennsylvania......................  Plan from largest      Aetna Health, Inc. PA POS   Pediatric oral......  FEDVIP..............  No.
                                     small group product.   Cost Sharing 34 1500 Ded.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rhode Island......................  Plan from largest      Blue Cross and Blue Shield  Pediatric oral......  FEDVIP..............  No.
                                     small group product.   of Rhode Island Vantage
                                                            Blue PPO.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
South Carolina....................  Plan from largest      Blue Cross Blue Shield of   Pediatric oral......  FEDVIP..............  No.
                                     small group product.   South Carolina Business
                                                            Blue Complete PPO.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
South Dakota......................  Plan from largest      Wellmark of South Dakota    Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   Blue Select PPO.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tennessee.........................  Plan from largest      Blue Cross Blue Shield of   Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   Tennessee PPO.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Texas.............................  Plan from largest      Blue Cross Blue Shield of   Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   Texas BestChoice PPO RS26.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 70676]]

 
Utah..............................  Plan from 3rd largest  Public Employee's Health    None................  None................  Yes.
                                     state employee plan.   Program Utah Basic Plus.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Vermont...........................  Plan from largest      The Vermont Health Plan,    Pediatric oral......  CHIP................  No.
                                     small group product.   LLC, CDHP-HMO.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Virginia..........................  Plan from largest      Anthem Health Plans of VA   Pediatric oral......  FEDVIP..............  Yes.
                                     small group product.   PPO KeyCare 30 with KC30
                                                            Rx plan 10 30 50 OR 20.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Washington........................  Plan from largest      Regence BlueShield non-     Pediatric oral......  CHIP................  Yes.
                                     small group product.   grandfathered small group
                                                            product.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
West Virginia.....................  Plan from largest      Highmark Blue Cross Blue    Pediatric oral......  FEDVIP..............  No.
                                     small group product.   Shield West Virginia
                                                            Super Blue PPO Plus 2000
                                                            1000 Ded.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Wisconsin.........................  Plan from largest      UnitedHealthcare Insurance  Pediatric oral......  FEDVIP..............  No.
                                     small group product.   Company Choice Plus
                                                            Definity HSA Plan A92NS.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Wyoming...........................  Plan from largest      Blue Cross Blue Shield of   Pediatric oral......  FEDVIP..............  No.
                                     small group product.   Wyoming Blue Choice
                                                            Business 1000 80 20.
                                                                                       Pediatric vision....  FEDVIP..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: If the base-benchmark plan does not include habilitative services, then states have the opportunity to define those benefits.

Appendix B: Largest FEDVIP Dental and Vision Plan Options, as of March 
31, 2012

    Section 156.110(b)(2)-(3) directs States to supplement base-
benchmark plans that lack pediatric oral or vision services with 
benefits drawn from either the Federal Employees Dental and Vision 
Program (FEDVIP) or a state's separate CHIP program. Specifically, 
states may select benefits from either: (1) The FEDVIP dental or 
vision plans with the largest national enrollments, or (2) the 
state's separate CHIP program's dental or vision benefits, where 
they exist, which offer benefits to the eligibility group with the 
highest enrollment. To assist states with this process, we collected 
information about the benefits provided in the FEDVIP dental and 
vision plans with the highest national enrollments, as issued by 
MetLife and FED Blue, respectively. Below, we provide a chart with a 
summary of the benefits offered by these plans.

  Largest FEDVIP Dental and Vision Plan Options, as of March 31, 2012 *
------------------------------------------------------------------------
                                                         Additional
          Issuer name               Plan name           information
------------------------------------------------------------------------
MetLife (dental)                MetLife Federal    2012 Plan Benefit
                                 Dental Plan--      Brochure: http://
                                 High.              www.opm.gov/insure/
                                                    health/planinfo/2012/
                                                    brochures/
                                                    MetLife.pdf.
BCBS Association (vision)       FEP BlueVision--   2012 Plan Benefit
                                 High.              Brochure: http://www.opm.gov/insure/health/planinfo/2012/brochures/FEPBlueVi.pdf.
------------------------------------------------------------------------
Source: U.S. Office of Personnel Management.
* Please note that this information will be updated with the latest data
  when released.

[FR Doc. 2012-28362 Filed 11-20-12; 11:15 am]
BILLING CODE 4120-01-P