[Federal Register Volume 77, Number 234 (Wednesday, December 5, 2012)]
[Proposed Rules]
[Pages 72581-72609]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-29118]



[[Page 72581]]

Vol. 77

Wednesday,

No. 234

December 5, 2012

Part IV





Office of Personnel Management





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45 CFR Part 800





Patient Protection and Affordable Care Act; Establishment of the Multi-
State Plan Program for the Affordable Insurance Exchanges; Proposed 
Rule

Federal Register / Vol. 77 , No. 234 / Wednesday, December 5, 2012 / 
Proposed Rules

[[Page 72582]]


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OFFICE OF PERSONNEL MANAGEMENT

45 CFR Part 800

RIN 3206-AM47


Patient Protection and Affordable Care Act; Establishment of the 
Multi-State Plan Program for the Affordable Insurance Exchanges

AGENCY: U.S. Office of Personnel Management.

ACTION: Proposed rule.

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SUMMARY: The U.S. Office of Personnel Management (OPM) is issuing a 
proposed rule to implement the Multi-State Plan Program (MSPP). OPM is 
establishing the MSPP pursuant to 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. 
Through contracts with OPM, health insurance issuers will offer at 
least two multi-State plans (MSPs) on each of the Affordable Insurance 
Exchanges (Exchanges). Under the law, an MSPP issuer may phase in the 
States in which it offers coverage over four years, but it must offer 
MSPs on Exchanges in all States and the District of Columbia by the 
fourth year in which the MSPP issuer participates in the MSPP. OPM aims 
to administer the MSPP in a manner that is consistent with State 
insurance laws and that is informed by input from a broad array of 
stakeholders.

DATES: Comments are due on or before January 4, 2013.

ADDRESSES: You may submit comments, identified by Regulation Identifier 
Number (RIN) 3206-AM47 using any of the following methods:
    Federal eRulemaking Portal: http://www.regulations.gov. Follow the 
instructions for submitting comments.
    Mail, Hand Delivery or Courier: National Healthcare Operations, 
Healthcare and Insurance, U.S. Office of Personnel Management, 1900 E 
Street NW., Room 2347, Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT: Julia Elam by telephone at (202) 606-
2128, by FAX at (202) 606-4430, or by email at mspp@opm.gov.

SUPPLEMENTARY INFORMATION: The U.S. Office of Personnel Management 
(OPM) is proposing this regulation to outline the Multi-State Plan 
Program (MSPP), a new program created pursuant to section 1334 of the 
Affordable Care Act to offer high-quality health insurance products on 
the Exchanges.

Abbreviations

FEHBA Federal Employees Health Benefits Act (5 U.S.C. 8901 et seq.)
FEHBP Federal Employees Health Benefits Program
HHS U.S. Department of Health and Human Services
HMO Health Maintenance Organization
MSP Multi-State Plan
MSPP Multi-State Plan Program
NAIC National Association of Insurance Commissioners
OPM U.S. Office of Personnel Management
PHS Act Public Health Service Act
QHP Qualified Health Plan
SHOP Small Business Health Options Program

Table of Contents

I. Background
    A. Affordable Insurance Exchanges
    B. Objectives of the Multi-State Plan Program (MSPP)
    C. Review of OPM's Role in Contracting Under the Federal 
Employees Health Benefits Program (FEHBP)
    D. Overview of the MSPP's Statutory Requirements
    E. Stakeholder Interaction
II. Proposed Regulatory Approach
    A. Overview of Regulatory Approach
    B. Governing Law
III. Provisions of the Proposed Regulation
    A. General Provisions and Definitions
    B. Multi-State Plan Issuer Requirements
    C. Premiums, Rating Factors, Medical Loss Ratios, and Risk 
Adjustment
    D. Application and Contracting Procedures
    E. Compliance
    F. Appeals by Enrollees for Denials of Claims for Payment or 
Service
    G. Miscellaneous
IV. Regulatory Impact Analysis
V. Paperwork Reduction Act
VI. Regulatory Flexibility Act
VII. Unfunded Mandates
VIII. Federalism

I. Background

    Section 1334 of the Affordable Care Act creates the Multi-State 
Plan Program (MSPP) to foster competition among plans competing in the 
individual and small group health insurance markets on the Affordable 
Insurance Exchanges (Exchanges) on the basis of price, quality, and 
benefit delivery. The Affordable Care Act directs the U.S. Office of 
Personnel Management (OPM) to contract with private health insurance 
issuers to offer at least two multi-State plans (MSPs) on each of the 
Exchanges in the 50 States and the District of Columbia. The law allows 
MSPP issuers to phase in coverage, but coverage must be offered on 
Exchanges in all States and the District of Columbia by the fourth year 
in which the MSPP issuer participates in the MSPP. The first open 
enrollment period for plans offered through Exchanges will begin on 
October 1, 2013, for coverage starting in January 2014.

A. Affordable Insurance Exchanges

    The Affordable Care Act authorizes the establishment of Exchanges 
where individuals and small businesses with up to 100 employees can 
purchase qualified coverage. States have the option of defining a small 
group as one with up to 50 employees through 2016.\1\ Beginning January 
1, 2014, the Exchanges will provide competitive marketplaces for 
individuals and small employers to directly compare available private 
health insurance options on the basis of price, quality, and other 
factors. The Exchanges will enhance competition in the health insurance 
market, improve choice of affordable health insurance, and give 
individuals and small businesses purchasing power comparable to that of 
large businesses.
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    \1\ For purposes of this regulation, OPM refers to Affordable 
Insurance Exchanges and SHOPs as ``Exchanges'' collectively.
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    The U.S. Department of Health and Human Services (HHS) has issued a 
final regulation outlining standards to certify Exchanges and qualified 
health plans (QHPs) that will be offered on Exchanges.\2\ If a State 
does not elect to operate an Exchange or is not certified (or 
conditionally approved) to operate one by January 1, 2013, HHS will 
operate the Exchange in that State.
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    \2\ 45 CFR Parts 155 and 156.
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    The purpose of this proposed regulation is to outline the process 
by which OPM will establish the MSPP, pursuant to section 1334 of the 
Affordable Care Act, to offer high-quality, private health insurance 
products on the Exchanges, as well as to establish standards and 
requirements for MSPs and MSPP issuers. This proposed regulation 
recognizes that the MSPP is an important tool for implementing the 
Affordable Care Act by fostering competition in Exchanges on the basis 
of price, quality, and benefit delivery, while ensuring that MSPs 
operate on a level playing field with other issuers operating in the 
Exchanges.

B. Objectives of the Multi-State Plan Program (MSPP)

    The MSP is a new product and will be one of several private health 
insurance options offered on the Exchanges beginning in 2014. In 
administering the MSPP, OPM is advancing several important objectives:
     To ensure a choice of at least two high-quality products 
to consumers participating on each Exchange;
     To promote competition in the health insurance marketplace 
to the benefit of all consumers;

[[Page 72583]]

     To offer plans from the same issuer to families or small 
businesses that may reside or operate in more than one State;
     To provide strong, effective contractual oversight of the 
issuers that choose to offer MSPs; and
     To work cooperatively with States and HHS to ensure a 
level playing field between QHPs and MSPs.
    Across the country, consumers shopping for insurance in the 
individual and small group market often have limited options. In some 
States, the market is extremely concentrated. The MSPP will provide 
consumers in every Exchange with the additional choice of two high-
quality health insurance plans thereby further promoting competition on 
the Exchanges. Moreover, like the health plans offered in the Federal 
Employees Health Benefits Program (FEHBP), consumers will benefit from 
OPM oversight and contract negotiation experience to ensure consumers 
get the greatest value for their premium dollars. Section 1334 of the 
Affordable Care Act directs OPM to enter into contracts with 
participating issuers, including negotiating premiums and benefits, as 
is done in the FEHBP. In addition, OPM will monitor MSP performance in 
the market, and oversee plan compliance with legal requirements and 
contractual terms.
    Issuers participating in the MSPP will benefit from market 
efficiencies because they will contract with a single agency--OPM--
which will enable them to participate in all Exchanges. Specifically, 
section 1334(d) of the Affordable Care Act provides that health plans 
that meet OPM's requirements for MSPs are deemed certified to be 
offered on all Exchanges. In return for these administrative 
efficiencies, MSPP issuers will offer at least two plans (one at the 
silver level of coverage and one at the gold level of coverage) in each 
Exchange. The statute allows MSPP issuers to phase in their coverage in 
all States and the District of Columbia over four years, though MSPP 
issuers must offer coverage in at least 31 States in the first year of 
their participation.
    Pursuant to section 1334 of the Affordable Care Act, the Director 
of OPM will set the standards for the MSPP. OPM expects that these 
standards will be consistent with the standards set for QHPs and QHP 
issuers by HHS and the Exchanges, although in some unique and specific 
circumstances, as addressed in this proposed rule, the MSP standards 
may differ from QHP requirements. In implementing the MSPP, OPM will 
promote a level playing field on each Exchange, meaning that, to the 
extent any of the rules governing MSPs and MSPP issuers differ from 
those governing QHPs, they will be designed to afford the MSPs and MSPP 
issuers neither a competitive advantage nor a disadvantage with respect 
to other plans offered on the Exchange. OPM will administer the MSPP in 
a manner that is sensitive to the significant State and Federal 
interests affected by the MSPP and that is informed by input from a 
broad array of stakeholders. Accordingly, OPM appreciates the 
coordination and cooperation with the States and HHS in administration 
of the MSPP.

C. Review of OPM's Role in Contracting Under the Federal Employees 
Health Benefits Program (FEHBP)

    Section 1334(a)(4) directs OPM to implement the MSPP ``in a manner 
similar to the manner in which the Director implements the contracting 
provisions with respect to carriers'' under the FEHBP. OPM therefore 
intends to draw on its significant experience in contracting with and 
overseeing private issuers in administering FEHBP to develop and manage 
the MSPP.
    The Federal Employees Health Benefits Act (FEHBA) was enacted in 
1959 to provide health benefits to Federal employees, annuitants, and 
their dependents. OPM has more than 50 years of experience working with 
private issuers in the large group market. Approximately eight million 
employees, annuitants, and their family members are currently covered 
under the FEHBP. Enrollees can choose from among fee-for-service plans 
with preferred providers, local HMOs, consumer-driven health plans, or 
high-deductible health plan options. Among these options are six 
nationwide plans, each of which offers coverage in all 50 States and 
the District of Columbia. In 2011, 78.9 percent of Federal employees 
and annuitants chose to participate in the FEHBP nationwide plans, 
which offer portable coverage that continues when the enrollee or a 
covered family member moves to another State.\3\ OPM has been able to 
administer this robust health insurance program efficiently, keeping 
administrative costs low.
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    \3\ U.S. Office of Personnel Management, Healthcare and 
Insurance, Federal Employee Insurance Operations (March 2011). This 
percentage includes participation in the following nationwide plans: 
Blue Cross Blue Shield (BCBS), Government Employees Health 
Association, Inc. (GEHA), Mail Handlers, American Postal Workers 
Union (APWU), National Association of Letter Carriers (NALC), and 
Special Agents Mutual Benefit Association (SAMBA).
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    In managing contracts with carriers in FEHBP, OPM negotiates rates 
and benefits annually, oversees contract compliance, reviews plan 
brochures, handles enrollees' complaints, contracts with an external 
entity for recommendations during OPM's review of disputed claims, and 
monitors the financial stability of all participating carriers, 
including the maintenance of adequate reserves in a dedicated fund. 
Through this process, OPM has developed relationships with health 
insurance issuers and plans around the country, including local, 
community-based plans. In the FEHBP, OPM acts on behalf of employees 
and annuitants of the Federal government. OPM has significant 
responsibility to ensure that FEHBP health plans provide the best 
possible coverage at the lowest cost.\4\
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    \4\ It should be noted that Sec.  1334(g)(2) directs OPM to 
treat MSPs as a separate risk pool from the FEHBP, and the MSPP will 
not affect FEHBP costs.
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    OPM currently only negotiates contracts with carriers in the large 
group market. While OPM intends to create a process for negotiating 
with issuers participating in the MSPP that is guided by its experience 
in the FEHBP, this process will necessarily differ in certain respects 
from the FEHBP process to account for the differences between the large 
group market, where OPM currently operates, and the individual and 
small group markets, which will be served by the Exchanges.

D. Overview of the MSPP's Statutory Requirements

    Section 1334 of the Affordable Care Act directs OPM to administer 
the MSPP. Specifically, section 1334(a)(1) of the Affordable Care Act 
requires OPM to ``enter into contracts with health insurance issuers, 
(which may include a group of health insurance issuers affiliated 
either by common ownership and control or by the common use of a 
nationally licensed service mark) * * * to offer at least 2 multi-State 
qualified health plans through each Exchange in each State.'' \5\ OPM 
interprets section 1334(a)(1) as requiring OPM to contract with at 
least two issuers, which may be ``groups of health insurance issuers 
affiliated either by common ownership and control or by the common use 
of a nationally licensed service mark.'' \6\
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    \5\ Affordable Care Act Sec.  1334(a)(1).
    \6\ Affordable Care Act Sec.  1334(a)(1).
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    The Director is authorized to implement and administer the MSPP 
``in a manner similar to the manner in which the Director implements 
the contracting provisions with respect to carriers under the Federal 
Employees Health Benefit Program.'' \7\ Further, OPM may enter into 
these contracts without regard to competitive bidding

[[Page 72584]]

laws.\8\ Each MSPP contract must be for a term of at least one year, 
but can be automatically renewable in the absence of a notice of 
termination from either the MSPP issuer or OPM.\9\
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    \7\ Affordable Care Act Sec.  1334(a)(4).
    \8\ Affordable Care Act Sec.  1334(a)(1).
    \9\ Affordable Care Act Sec.  1334(a)(2).
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    The statute grants to OPM the authority to certify MSPs.\10\ Any 
MSPs offered under a contract negotiated with OPM are then ``deemed to 
be certified by an Exchange for purposes of section 1311(d)(4)(A)'' of 
the Affordable Care Act and would not need to apply separately for 
certification on each individual Exchange,\11\ as recognized in current 
regulations at 45 CFR 155.1010(b)(1). The Director is authorized to 
withdraw approval of an MSPP contract after notice and opportunity for 
a hearing.\12\ The Director is also given the explicit statutory 
authority to negotiate with each MSP ``(A) a medical loss ratio; (B) a 
profit margin; (C) the premiums to be charged; and (D) such other terms 
and conditions of coverage as are in the interests of enrollees in such 
plans.'' \13\
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    \10\ Affordable Care Act Sec.  1334(d).
    \11\ Affordable Care Act Sec.  1334(d).
    \12\ Affordable Care Act Sec.  1334(a)(7).
    \13\ Affordable Care Act Sec.  1334(a)(4).
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    The Affordable Care Act directs that an MSPP issuer be licensed in 
each State where it offers an MSP \14\ and be ``subject to all 
requirements of State law not inconsistent with this section [1334], 
including the standards and requirements that a State imposes that do 
not prevent the application of a requirement of part A of title XXVII 
of the Public Health Service Act (PHS Act) or a requirement of this 
title [I of the Affordable Care Act].'' \15\ The Affordable Care Act 
directs that issuers must comply with the minimum standards for 
carriers under section 8902(e) of title 5 of the United States Code to 
the extent that the standards do not conflict with provisions of title 
I of the Affordable Care Act.\16\ Congress also authorized OPM to 
establish additional standards for MSPs that OPM, in consultation with 
HHS, deems ``appropriate.'' \17\
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    \14\ Affordable Care Act Sec.  1334(b)(2).
    \15\ Affordable Care Act Sec.  1334(b)(2).
    \16\ Affordable Care Act Sec.  1334(b)(3).
    \17\ Affordable Care Act Sec.  1334(b)(4).
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    The Affordable Care Act authorizes an MSPP issuer to phase-in the 
States in which the MSP is offered.\18\ In the first year the MSP is 
offered, it must be offered in at least 60 percent of the States (31 
States).\19\ In the second year, it must be offered in at least 70 
percent of the States (36 States).\20\ In the third year, it must be 
offered in at least 85 percent of the States (44 States).\21\ In all 
subsequent years, the MSPP issuer must offer the MSP in all States and 
District of Columbia.\22\
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    \18\ Affordable Care Act Sec.  1334(e).
    \19\ Affordable Care Act Sec.  1334(e)(1).
    \20\ Affordable Care Act Sec.  1334(e)(2).
    \21\ Affordable Care Act Sec.  1334(e)(3).
    \22\ Affordable Care Act Sec.  1334(e)(4).
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    The statute gave the Director the authority to determine if the 
plan meets essential health benefits package requirements, meets 
qualified health plan requirements of title I of the Affordable Care 
Act, meets premiums rating requirements under part A of title XXVII of 
the PHS Act, and offers the plan in all geographic locations prescribed 
by the statute.\23\ The statute specifies that an MSP must offer a 
uniform benefits package in each State that includes essential health 
benefits pursuant to section 1302 of the Affordable Care Act.\24\ Under 
the statute, this does not prevent a State from requiring additional 
benefits \25\ so long as it defrays the costs.\26\ The MSPP issuer must 
offer the plan in all States after a phase-in, including those with 
adjusted community rating at the time of enactment of the Affordable 
Care Act.\27\ At least one MSP must not provide coverage of services 
described in section 1303(b)(1)(B)(i) of the Affordable Care Act as 
applicable.\28\ Finally, to the extent that they do not conflict with 
provisions in title I of the Affordable Care Act, requirements under 
chapter 89 of title 5 of the United States Code (the FEHBA) will apply 
to MSPs.
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    \23\ Affordable Care Act Sec.  1334(c)(1).
    \24\ Affordable Care Act Sec.  1334(c)(1)(A).
    \25\ Affordable Care Act Sec.  1334(c)(2).
    \26\ Affordable Care Act Sec.  1334(c)(4).
    \27\ Affordable Care Act Sec.  1334(c)(1)(D).
    \28\ See also Affordable Care Act Sec.  1334(a)(6).
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    Though our experience with the FEHBP guides us in crafting the 
MSPP, the statute distinguishes the MSPP from FEHBP in important 
respects. Thus, the Affordable Care Act prohibits the Director from 
allocating fewer resources to administering the FEHBP in order to 
administer the MSPP and requires the Director to ensure that the two 
programs are kept separate.\29\ Any premiums paid for coverage under 
the MSPP are not to be considered Federal funds.\30\ Enrollees of each 
program must be treated as separate risk pools \31\ and FEHBP carriers 
are not required to participate in the MSPP.\32\
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    \29\ Affordable Care Act Sec.  1334(g)(5).
    \30\ Affordable Care Act Sec.  1334(g)(5).
    \31\ Affordable Care Act Sec.  1334(g)(2).
    \32\ Affordable Care Act Sec.  1334(g)(6).
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    We are also guided by the level playing field provision of the 
Affordable Care Act. Section 1324 of the Act specifies that if an MSP 
or Consumer Operated and Oriented Plan (CO-OP) \33\ is not subject to 
any Federal or State law related to one of the 13 categories listed in 
section 1324(b), then neither shall any health insurance coverage 
offered by a private health insurance issuer be subject to such 
law.\34\ The categories listed in section 1324(b) are: guaranteed 
renewal, rating, preexisting conditions, non-discrimination, quality 
improvement and reporting, fraud and abuse, solvency and financial 
requirements, market conduct, prompt payment, appeals and grievances, 
privacy and confidentiality, licensure, and benefit plan material or 
information. Beginning in 2014, the Affordable Care Act sets Federal 
standards for categories such as guaranteed renewal, preexisting 
conditions, and non-discrimination that will apply in all States.
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    \33\ Affordable Care Act Sec.  1322.
    \34\ Affordable Care Act Sec.  1324.
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E. Stakeholder Interaction

    In order to assess the level of interest in participating in the 
MSPP, and to obtain feedback from stakeholders about the program, OPM 
issued a Request for Information (RFI) on June 16, 2011.\35\ OPM 
received 19 responses representing the views of 39 groups and 
organizations. Responses came from health insurance issuers (including 
dental and vision insurance vendors), employer organizations, labor 
organizations, consumer groups, patient organizations, and provider 
associations. This proposed rule does not directly respond to each of 
the responses from the RFI. However, these responses informed the 
drafting of this proposed rule.
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    \35\ The RFI is available at https://www.fbo.gov/index?s=opportunity&mode=form&id=677e422dd3f2bc983cb985eb73995b63&tab=core&_cview=1.
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    In addition to the RFI, OPM has held meetings and phone calls with 
numerous stakeholders to seek input and guidance before engaging in 
proposed rulemaking, including from the National Association of 
Insurance Commissioners (NAIC), States, tribal representatives through 
the tribal consultation process, consumer advocates, health insurance 
issuers, labor organizations, provider associations, and trade groups. 
OPM values the participation of a broad array of diverse stakeholders, 
and OPM encourages them to submit comments on this proposed rule.

II. Proposed Regulatory Approach

A. Overview of Regulatory Approach

    OPM's approach to the development of this proposed regulation seeks 
to:

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     Create a program that will attract issuers to apply to 
offer a new product in each Exchange in 50 States and the District of 
Columbia.
     Balance State and Federal regulatory interests in a manner 
that will enable MSPP issuers to offer viable plans on Exchanges while 
maintaining a level playing field between issuers.
    Ensure a level playing field such that neither MSPs nor plans 
offered by non-MSPP issuers are advantaged or disadvantaged on Exchange 
marketplaces.
    OPM seeks comment on whether these proposed regulations satisfy 
these goals.

B. Governing Law

    The Affordable Care Act generally requires that the MSPP be 
governed by all State and Federal laws that apply to QHPs. The Act, 
however, grants discretion to the Director to administer the MSPP in a 
manner that fulfills OPM's statutory responsibility to ensure that 
there are at least two issuers offering MSPs on each Exchange in every 
State and the District of Columbia. OPM recognizes that potential MSPP 
issuers seek administrative simplicity and some uniformity of standards 
in the MSPP. Accordingly, in unusual circumstances, it may be necessary 
for the Director to adopt standards or requirements for the MSPP that 
differ from standards and requirements applicable to QHPs under either 
State or Federal law. This proposed regulation, however, reflects the 
Director's intention for the MSPs and MSPP issuers to adhere to all 
State and Federal laws applicable to QHPs and QHP issuers, except to 
the extent any such laws are inconsistent with these regulations, OPM 
guidance, or OPM's contracts with MSPP issuers.
    It is not possible at this time, however, to identify with 
specificity the laws that OPM deems to be inconsistent with these 
regulations, OPM guidance, or OPM's contracts with MSPP issuers. OPM 
will monitor future developments around the State specific requirements 
that will be in place in 2014 and beyond and identify inconsistencies 
as they arise.
    OPM has addressed the evolving nature of the law and OPM's interest 
in providing meaningful guidance to the public regarding the standards 
and requirements that apply to the MSPP in four primary ways. First, 
OPM has identified the currently existing provisions of Federal law 
that govern QHPs and, thus, the MSPP. Second, OPM has asserted its 
intention to require MSPs and MSPP issuers to follow all State law 
requirements with respect to the 13 categories of laws set forth in 
section 1324(b) of the Affordable Care Act, the level playing field 
provision. Third, OPM has set forth the standards and requirements that 
will govern the MSPP, which it has established based on its research 
into currently existing State and Federal requirements. OPM believes 
that these standards and requirements are consistent with State legal 
requirements. Fourth, OPM has proposed establishing a dispute 
resolution process to be used after these regulations are published in 
final form to resolve future disputes about the applicability of State 
law requirements to the MSPP. OPM believes this approach affords it 
sufficient flexibility to administer the MSPP in 50 States and the 
District of Columbia without disrupting State markets. OPM requests 
public comment on whether these proposed standards and requirements 
will ensure a level playing field between MSPP issuers and QHP issuers, 
whether the standards and requirements OPM is proposing for the MSPP 
are consistent with applicable State and Federal requirements for QHPs, 
and whether the MSPs or MSPP issuers will be at a competitive advantage 
or disadvantage under this approach with respect to the QHPs offered on 
the Exchanges.
Level Playing Field
    As discussed above, OPM is proposing to require compliance with 
State and Federal laws related to the 13 categories listed in section 
1324(b) of the Affordable Care Act. There are, however, three 
categories of law among the 13 listed in section 1324(b) of the 
Affordable Care Act for which OPM would like specifically to solicit 
public comment: appeals, rating, and benefit plan material or 
information.
Appeals
    OPM proposes to resolve external appeals pursuant to its own 
process, which will be similar to the disputed claims process used in 
the FEHBP. OPM interprets section 1334(a)(4) of the Affordable Care Act 
to require OPM to maintain authority over external review because 
Congress directed that OPM implement the MSPP in a manner similar to 
the manner in which it implements the contracting provisions of the 
FEHBP. In the FEHBP, OPM resolves all external appeals as a part of its 
contract administration responsibilities. OPM similarly believes that 
it is necessary to decide these appeals in the MSPP in order to ensure 
that the MSPP contract is administered equitably throughout all 51 
jurisdictions and to provide enrollees an avenue of redress for all 
denied claims. This proposed approach would not trigger the level 
playing field provisions of section 1324 because MSPP issuers will 
still be subject to the same law as other issuers. The law governing 
external appeals for all issuers is found in section 2719 of the PHS 
Act and its implementing regulations at 45 CFR 147.136. The Departments 
of Health and Human Services, Labor, and the Treasury intend to propose 
amendments to those regulations to apply to the MSPP process the same 
standards that apply to State external review processes.
Rating
    For purposes of compliance with section 1324(b)(2) of the 
Affordable Care Act, OPM has defined ``rating'' to require compliance 
with the rating factors permitted by section 2701 of the PHS Act. Thus, 
the proposed rule would require MSPP issuers, in proposing premiums for 
OPM approval, to use only the rating factors permitted by section 2701 
of the PHS Act. It would also require MSPP issuers to comply with State 
laws relating to rating factors.
    With regard to the MSPP, OPM does not consider ``rating'' to be the 
same as ``rate review.'' As directed by section 1334(a)(4) of the 
Affordable Care Act, the Director negotiates premiums, a medical loss 
ratio, a profit margin, and such other terms and conditions as are in 
the best interest of enrollees. With respect to rate review, OPM 
intends to conduct its own rate review process, and provide its rate 
review analysis to each State in which the MSP is operating. Each State 
also would have the opportunity to review the MSP rates under its own 
procedures. If a State disagrees with OPM's determination to approve 
the MSP rates, OPM would work with the State to attempt to resolve the 
differences. We expect that few such disagreements will arise and, if 
they do, that we will be successful in resolving them in a manner that 
is acceptable both to OPM and the State. In the event that a State 
withholds approval of an MSP rate for reasons that OPM determines, in 
its discretion, to be arbitrary, capricious, or an abuse of discretion, 
the Act authorizes the Director to make the final decision to approve 
rates for participation in the MSPP notwithstanding the absence of 
State approval. We expect that the Director will rarely, if ever, have 
to exercise this authority to approve MSP rates over the objection of a 
State. . OPM welcomes comments on whether this is an appropriate 
approach and on the impact of this approach.

[[Page 72586]]

Benefit Plan Material or Information
    MSPs will be subject to Federal and State laws with respect to 
benefit plan material or information, including requirements proposed 
in Sec.  800.113. OPM has defined the term ``benefit plan material or 
information'' to include explanations or descriptions, whether printed 
or electronic, that describe a health insurance issuer's products. The 
term does not include a policy or contract for health insurance 
coverage. While OPM intends to review and approve policy forms for 
health insurance coverage, OPM expects MSPP issuers to comply with 
related state law requirements for policy form review. OPM expects that 
that few disagreements will arise between OPM and a state regarding 
policy form review and, if they do, that we will be successful in 
resolving them in a manner that is acceptable both to OPM and the State 
at issue. As it does in the FEHBP, OPM will review and approve the 
policy or contract for health insurance coverage. In Sec.  800.113, OPM 
has proposed reserving its authority to request benefit plan material 
or information (other than the policy document or information) for 
review by OPM in addition to any State review. In Sec.  800.113, OPM 
also has proposed to allow an MSPP issuer to state that OPM has 
certified a plan and will oversee its administration. OPM solicits 
comments on whether it is appropriate to exclude policies and contracts 
from the definition of ``benefit plan material or information.''
Process for Disputes Regarding State Law
    OPM is sensitive to the impact that its decisions with respect to 
the standards and requirements applicable to the MSPP could potentially 
have on State insurance markets. For this reason, with respect to the 
13 categories listed in section 1324(b) of the Affordable Care Act, as 
stated above, OPM's proposal is to require MSPP issuers to comply with 
all State laws in those categories, as defined in these regulations. 
There may be other State laws, however, that are not related to the 13 
categories listed in section 1324(b) for which compliance would prevent 
OPM from administering the MSPP. In those circumstances, the State law 
requirements may be inconsistent with these regulations, OPM guidance, 
or OPM's contracts with MSPP issuers. With respect to those non-1324(b) 
provisions, OPM is proposing a process for States to seek changes to 
the regulations, OPM guidance, or OPM's contracts with MSPP issuers in 
order to bring them into compliance with applicable State law.
    The proposed process is intended to allow for a targeted analysis 
of particular State law provisions and its impact on OPM's ability to 
administer the MSPP. This process is particularly important given that 
many States are still developing their Exchange standards. OPM invites 
comments on this process, including its scope, the factors OPM should 
consider when determining whether State law is applicable or whether 
the relevant market has been or will be disrupted by the 
inapplicability of State law and whether the process will be an 
effective way to resolve any such disputes.
    OPM also invites comments on whether it should include in this 
process States' having concerns about MSPP issuer compliance with State 
law requirements related to the 13 categories listed in section 1324(b) 
of the Affordable Care Act. As discussed above, OPM's intention is to 
ensure that MSPP issuers comply with all State law requirements 
concerning the 13 categories, and OPM appreciates comments on whether 
this proposed rule has met this intent. However, OPM recognizes that 
future issues could arise regarding whether MSPs and MSPP issuers are 
properly made subject to State and Federal laws related to the section 
1324(b) categories. OPM is asking for comment on whether the dispute 
resolution process should also be available as another avenue for 
addressing any such concerns.

III. Provisions of the Proposed Regulation

A. General Provisions and Definitions (Subpart A, 800.10 and 800.20)

    The purpose of this subpart is to define the basis and scope of 
part 800. In addition, this subpart sets forth definitions for terms 
that are used throughout this part.
1. Basis and Scope (Sec.  800.10)
    The primary authority for the establishment of the MSPP is section 
1334 of the Affordable Care Act. In addition, section 1324 of the 
Affordable Care Act is the level playing field provision. It addresses 
MSP compliance with applicable Federal or State law in 13 categories. 
Other relevant statutory provisions of title I of the Affordable Care 
Act are enumerated in Sec.  800.102. In addition, MSPP issuers and MSPs 
must comply with all provisions of part A of title XXVII of the PHS Act 
enumerated in Sec.  800.102.
    Section 800.10 proposes the scope of this proposed regulation, 
which is to establish standards for the following:
    (1) Health insurance issuers wishing to contract with OPM to 
participate in the MSPP;
    (2) Health insurance issuers to appeal a decision by OPM either to 
non-renew or terminate a health insurance issuer's contract to 
participate in the MSPP; and
    (3) Enrollees in an MSP to appeal denials of payment or services by 
an MSPP issuer.
2. Definitions (Sec.  800.20)
    Section 800.20 proposes definitions for terms that are used 
throughout part 800. In general, the definitions contained in Sec.  
800.20 come from three sources: title I of the Affordable Care Act and 
the final Exchange regulation at 45 CFR parts 155, 156, and 157; title 
XXVII of the PHS Act and the regulations at 45 CFR part 144; and the 
FEHBA at chapter 89 of title 5, United States Code and the regulations 
governing the FEHBP at 5 CFR part 890 and 48 CFR 1609.70. Some new 
definitions were created for the purpose of implementing the MSPP. The 
application of the terms defined in this section is limited to this 
proposed rule.
    Several defined terms in this section are in common use and are 
defined as such. These include:
     FEHBP
     HHS
     HHS Secretary (``Secretary'')
     OPM
     OPM Director (``Director'')
    Several terms are based on definitions in the Affordable Care Act 
or regulations issued to implement 45 CFR Parts 155, 156, and 157. 
These include:
     Cost sharing (defined in 45 CFR 155.20).
     Exchange (defined in 45 CFR 155.20).
     Level of coverage (defined as one of four standardized 
actuarial values, or AV, of plan coverage specified in section 
1302(d)(1) of the Affordable Care Act).
     Plan year (defined in 45 CFR 155.20).
     QHP (defined in 45 CFR 155.20).
     SHOP (defined in 45 CFR 155.20).
     Small employer (defined in 45 CFR 155.20).
     State (defined in 45 CFR 155.20).
    OPM proposes definitions for several terms based on three HHS 
proposed rules. First, HHS published a proposed essential health 
benefits (EHB) rule in the Federal Register on November 26, 2012 to 
provide standards related to EHB, actuarial value (AV), and 
accreditation. Second, HHS published a proposed rule in the Federal 
Register on

[[Page 72587]]

November 26, 2012 to provide standards related to fair health insurance 
premiums, guaranteed availability, guaranteed renewability, risk pools, 
and rate review (the proposed health insurance market rules). Third, 
HHS will soon publish a proposed rule in the Federal Register to 
provide notice of standards relating to benefit and payment parameters 
for 2014, including standards related to advance payments of the 
premium tax credit and cost-sharing reductions (the proposed payment 
rule). OPM expects to follow the definitions promulgated by HHS. The 
proposed definitions include:
     Actuarial value (AV) (defined in proposed 45 CFR 156.20).
     EHB-benchmark plan (defined in proposed 45 CFR 156.20).
     Indian (defined in proposed 45 CFR 155.300(a)).
     Zero cost sharing plan variation (defined in proposed 45 
CFR 156.400).
     Percentage of total allowed cost of benefits (defined in 
proposed 45 CFR 156.20).
     Plan variation (defined in proposed 45 CFR 156.400).
     Silver plan variation (defined in proposed 45 CFR 
156.400).
     Standard plan (defined in proposed 45 CFR 156.400).
    Several terms are given the same definition as previously released 
regulations pertaining to the PHS Act, the Affordable Care Act, and the 
FEHBA. These include:
     Health insurance coverage (defined in 45 CFR 144.103).
     Health insurance issuer, or issuer, means an insurance 
company, insurance service, or insurance organization (including an 
HMO) that is required to be licensed to engage in the business of 
insurance in a State and that is subject to State law that regulates 
insurance (within the meaning of section 514(b)(2) of the Employee 
Retirement Income Security Act (ERISA)). This term does not include a 
group health plan as defined in 45 CFR 146.145(a).
    Several terms below are given specific definitions for use in this 
regulation and should only be read to apply to this proposed rule. OPM 
proposes the following definitions to implement this regulation.
     Applicant means an issuer or group of issuers that 
submitted an application to OPM to be considered for participation in 
the MSPP.
     Benefit plan material or information means explanations or 
descriptions, whether printed or electronic, that describes a health 
insurance issuer's products. The term does not include a policy or 
contract for health insurance coverage.
     Group of issuers means (1) a group of health insurance 
issuers who are either affiliated by common ownership and control or by 
common use of a nationally licensed service mark, or (2) an affiliation 
of health insurance issuers and an entity who is not an issuer but who 
owns a nationally licensed service mark.
     Licensure means the authorization obtained from the 
appropriate State official or regulatory authority to offer health 
insurance coverage in the State.
     MSP means a private health plan that is offered under a 
contract with OPM pursuant to section 1334 of the Affordable Care Act 
and meets the requirements of this part.
     MSPP means the program administered by OPM pursuant to 
section 1334 of the Affordable Care Act.
     MSPP issuer means a health insurance issuer or group of 
issuers, as defined in this proposed rule, that has a contract with OPM 
to offer health plans pursuant to section 1334 of the Affordable Care 
Act and meets the requirements of this part.
     Nationally licensed service mark means a word, name, 
symbol, or device, or any combination thereof, that an issuer or group 
of issuers uses consistently nationwide to identify itself. Section 
1334(a)(1) states that issuers applying for an MSPP contract may 
include a group of issuers affiliated either by common ownership and 
control or by the common use of a nationally licensed service mark. 
Licensing of service marks can take place by private agreement between 
two or more issuers.
     Non-profit entity means: (1) An organization that is 
incorporated under State law as a non-profit entity and licensed under 
State law as a health insurance issuer, or (2) a group of health 
insurance issuers licensed under State law a substantial portion of 
which are incorporated under State law as non-profit entities. Pursuant 
to section 1334(a)(3), at least one MSPP contract is to be with a non-
profit entity. OPM has interpreted this requirement with the goal of 
attracting a broad pool of potential issuers that will provide high-
quality private health insurance coverage to consumers.
     Prompt payment means a requirement imposed on a health 
insurance issuer to pay a provider or enrollee for a claimed benefit or 
service within a defined time period, including the penalty or 
consequence imposed on the issuer for failure to meet the requirement.
     Rating means the process, including rating factors, 
numbers, formulas, methodologies, and actuarial assumptions, used to 
set premiums for a health plan.
     State insurance commissioner means the commissioner or 
other chief insurance regulatory official of a State.\36\
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    \36\ This definition is used in many of the models issued by the 
NAIC. See, for example, NAIC Unfair Trade Practices Model Act Sec.  
2.B. and accompanying Drafting Note (July 2008).
---------------------------------------------------------------------------

B. Multi-State Plan Issuer Requirements (Subpart B, 800.101 Through 
800.116)

    The purpose of this subpart is to set forth standards for MSPP 
issuers in order to participate in the MSPP pursuant to section 1334(b) 
of the Affordable Care Act. The following proposed provisions of the 
regulation implement this statutory provision.
1. General Requirements (Sec.  800.101)
    This section proposes standards to implement section 1334(b) of the 
Affordable Care Act. It also proposes that an MSPP issuer must offer a 
choice of plans (i.e., at least one of each at the silver level of 
coverage and gold level of coverage) on the individual Exchange and in 
the SHOP, if the MSPP issuer chooses to participate in the SHOP. In 
addition, OPM proposes that the MSPP issuer will, pursuant to its 
contract with OPM, offer child-only coverage for each level of coverage 
that it makes available in each Exchange. An MSPP issuer must ensure 
that all MSPs it offers meet the requirements of this proposed rule.
    Regarding eligibility and enrollment, OPM proposes that MSPP 
issuers meet the same requirements as those that apply to QHP issuers 
under the Exchange rules in 45 CFR parts 155 and 156. OPM seeks comment 
on any unique enrollment and eligibility issues that might affect MSPs.
2. Compliance With Federal Law (Sec.  800.102)
    The purpose of this section is to specify the laws with which MSPP 
issuers must comply as a condition of participation in the MSPP. 
Section 1334(b)(2) of the Affordable Care Act directs an MSPP issuer to 
be licensed in every State and be ``subject to all requirements of 
State law not inconsistent with this section [1334], including the 
standards and requirements that a State imposes that do not prevent the 
application of a requirement of part A of title XXVII of the PHS Act or 
a requirement of this title [I of the Affordable Care Act].'' Section 
1334(b)(3) further directs an MSPP issuer to comply ``with the minimum 
standards prescribed for carriers offering health benefits plans under 
section 8902(e) of title 5, United States Code, to the extent that such

[[Page 72588]]

standards do not conflict with a provision of this title [I of the 
Affordable Care Act].'' In addition, section 1334(c)(1)(B) requires an 
MSP to meet all the requirements of title I of the Affordable Care Act 
with respect to a QHP, and section 1334(f) states that ``the 
requirements under chapter 89 of title 5, United States Code, 
applicable to health benefits plans under such chapter shall apply to 
multi-State qualified health plans provided for under this section 
[1334] to the extent that such requirements do not conflict with a 
provision of this title.'' OPM has performed a detailed analysis of 
title I of the Affordable Care Act and part A of title XXVII of the PHS 
Act. The list contained in the appendices of the proposed rule is 
intended to clarify for applicants and MSPP issuers the exact 
provisions of these laws that they must comply with in order to enter 
into an MSPP contract with OPM and maintain that contract.
    This list is focused exclusively on title I of the Affordable Care 
Act and part A of title XXVII of the PHS Act. It is not intended to 
specify every legal requirement that applies to MSPP issuers and MSPs. 
In addition to the statutory provisions that are listed, MSPP issuers 
must comply with any applicable regulations implementing those 
provisions. For example, MSPP issuers must ensure guaranteed 
availability of coverage, and MSPP issuers offering MSPs in a State 
must accept every individual and employer in the State that applies for 
coverage, subject to certain exceptions, as outlined in Sec.  147.104 
of the HHS proposed health insurance market rules (including any 
modifications adopted in the final HHS rules). Additionally, MSPP 
issuers must ensure guaranteed renewability of coverage, and MSPP 
issuers offering MSPs in a State must renew coverage at the option of 
the plan sponsor or individual, with certain exceptions, as outlined in 
Sec.  147.106 of the HHS proposed health insurance market rules 
(including any modifications adopted in the final HHS rules). OPM will 
coordinate its approach with the final HHS health insurance market 
rules.
    OPM notes that the preamble to the regulations implementing 45 CFR 
parts 155, 156, and 157 leaves to the discretion of each Exchange 
whether to require a QHP issuer to participate in both the SHOP and the 
individual market Exchanges.\37\ Given that MSPP issuers are required 
to make MSPs available in 31 States in the first year and must build 
the capacity to be available in all States and the District of Columbia 
by the fourth year, OPM is proposing to allow MSPP issuers flexibility 
to phase in coverage to the SHOPs. Accordingly, MSPP issuers may offer 
coverage in the individual Exchange, and not the SHOP, throughout the 
duration of the phase-in period. MSPP issuers that initially choose to 
offer coverage only in the individual Exchange and not the SHOP must 
provide to OPM their plan to expand coverage to the SHOP in all States. 
In any event, OPM proposes that by the end of the phase-in period, MSPP 
issuers are required to offer coverage on the SHOP in addition to the 
individual Exchange. We solicit comments on this approach to SHOP 
participation, including on whether participation in SHOP should be 
required from the outset or, whether we should allow MSPP issuers to 
provide a plan that requires a period longer than the phase-in period 
to fully participate in the SHOP.
---------------------------------------------------------------------------

    \37\ 77 FR at 18401 (March 27, 2012).
---------------------------------------------------------------------------

3. Authority To Contract With Issuers (Sec.  800.103)
    In this section, OPM specifies that it may enter into an MSPP 
contract with a group of issuers affiliated either by common ownership 
and control or by the use of a nationally licensed service mark, or an 
affiliation of health insurance issuers and an entity that is not an 
issuer but that owns a nationally licensed service mark, as set forth 
in section 1334(a)(1) of the Affordable Care Act.
4. Phased Expansion (Sec.  800.104)
    This section implements provisions of section 1334(e) of the 
Affordable Care Act. OPM proposes to allow for contracting with an 
issuer that offers coverage in part of a State, but not necessarily the 
entire State. OPM proposes that, for each State in which the MSPP 
issuer offers partial coverage, the issuer's application for 
participation in the MSPP under Sec.  800.301 and the MSPP issuer's 
information submitted to support renewal of the contract under Sec.  
800.305 must include a plan for offering coverage throughout the State. 
OPM will monitor the MSPP issuer's progress in implementing the plan as 
part of its contract compliance activities under subpart E. OPM 
requests comment on whether an MSPP issuer should be required to offer 
coverage statewide by the fourth year of participation in the MSPP, 
when coverage must be offered in each Exchange in 50 States and the 
District of Columbia. OPM will evaluate MSP issuers to ensure that the 
locations in which they propose to offer MSP coverage have been 
established without regard to racial, ethnic, language, health status-
related factors listed in section 2705(a) of the PHS Act, or other 
factors that exclude specific high utilizing, high cost, or medically-
underserved populations. OPM also proposes to clarify that, during each 
year of the phase-in period, an issuer need only be licensed in the 
States where it is offering coverage during that year, and not in all 
States.
5. Benefits (Sec.  800.105)
    The RFI did not ask specific questions about the health benefit 
packages that would be offered by MSPs.\38\ However, some respondents 
mentioned benefits package design in addressing questions about the 
level of interest in the MSPP, enrollment and marketing, and 
operations. Some respondents preferred a uniform benefits package for 
MSPs. For instance, one respondent stated that consumers would benefit 
from having an MSP structured as a national plan offering uniform 
benefits across all States. Other respondents raised the concern that a 
uniform package would be inconsistent with or inadequate in comparison 
to State benefit mandates. Another respondent stated that if OPM 
requires MSPP issuers to provide benefits that are not required for QHP 
issuers, MSPs may attract higher risk individuals, making the MSP less 
competitive on an Exchange.
---------------------------------------------------------------------------

    \38\ Responses to the RFI were due on September 9, 2011 to OPM, 
which was before HHS published its proposed rule on essential health 
benefits.
---------------------------------------------------------------------------

    Section 1334(c)(1)(A) of the Affordable Care Act directs that an 
MSP offer a benefits package that is uniform in each State and consists 
of the essential health benefits described in section 1302 of the 
Affordable Care Act. OPM proposes to implement this provision through 
proposed Sec.  800.105. OPM has developed its proposed benefits policy 
in coordination with HHS, which has already promulgated the EHB 
proposed rule. HHS proposes that EHB would be defined by a benchmark 
plan selected by each State, or in the absence of a State benchmark 
designation, a default benchmark. These proposed base-benchmark plans 
would be supplemented, if necessary, to ensure they meet EHB standards 
including coverage in each of the 10 coverage categories set forth in 
the statute.\39\ HHS

[[Page 72589]]

also proposed at 45 CFR 156.105 that MSPs must meet benchmark standards 
set by OPM.
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    \39\ The four benchmark plan types for EHB proposed by HHS for 
2014 and 2015 are: (1) The largest plan by enrollment in any of the 
three largest small group insurance products in the State's small 
group market; (2) any of the largest three State employee health 
benefit plans by enrollment; (3) any of the largest three national 
FEHBP plan options by enrollment; or (4) the largest insured 
commercial non-Medicaid Health Maintenance Organization (HMO) 
operating in the State. See proposed 45 CFR 156.100.
---------------------------------------------------------------------------

    In Sec.  800.105(a)(1), OPM proposes that an MSPP issuer must offer 
a uniform benefits package for each MSP. OPM proposes that the benefits 
for each MSP must be uniform within a State, but not necessarily 
uniform among States. In Sec.  800.105(a)(2), OPM proposes that the 
benefits package noted in Sec.  800.105(a)(1) must comply with section 
1302 of the Affordable Care Act as well as any applicable standards set 
by OPM or HHS in regulations. Together, these two provisions clarify 
that MSPP issuers must comply with applicable HHS requirements and that 
OPM may issue additional guidance regarding any issues unique to MSPs.
    In Sec.  800.105(b)(1), OPM proposes allowing potential MSPP 
issuers to offer a benefits package, in all States, that is 
substantially equal to either (1) each State's EHB-benchmark plan in 
each State in which it operates; or (2) any EHB-benchmark plan selected 
by OPM. The second option offers administrative efficiencies for MSPP 
issuers, who face a number of challenges in being able to offer MSPs in 
all 50 States and the District of Columbia. We note, however, that 
issuers could potentially accomplish a similar consistency in their 
benefits offerings by adhering to State EHB benchmark plans and 
applying the EHB substitution rules proposed at 45 CFR 156.115. We 
request comment on these options, including on whether either option 
would discourage or encourage an issuer's participation in the MSPP and 
whether or not, given the proposed substitution rules, the allowance of 
the OPM benchmark option disrupts State level playing fields.
    No matter which option an MSPP issuer chooses, it would need to 
apply that benefits package option uniformly to each of the States in 
which the MSPP issuer proposes to offer MSPs. That is, except as 
discussed below with respect to Sec.  800.105(c)(5), our proposed 
approach does not permit an issuer to use a State benchmark plan in 
some of the States in which it is operating and an OPM-chosen benchmark 
plan in others.
    In Sec.  800.105(c)(1), OPM proposes selecting, as EHB-benchmark 
plans, the three largest FEHBP plan options by enrollment that are open 
to Federal employees, and annuitants, which have been identified by HHS 
pursuant to section 1302(b) of the Affordable Care Act. On July 3, 
2012, HHS identified the largest three FEHBP plan options, as of March 
31, 2012, to be the following: Blue Cross Blue Shield (BCBS) Standard 
Option, BCBS Basic Option, and Government Employees Health Association 
(GEHA) Standard Option.\40\ An MSPP issuer that selects one of these 
benchmarks must have a uniform benefits package in all States in which 
it operates an MSP.
---------------------------------------------------------------------------

    \40\ Centers for Medicare and Medicaid Services, Essential 
Health Benefits: List of the Largest Three Small Group Products by 
State, available at http://cciio.cms.gov/resources/files/largest-smgroup-products-7-2-2012.pdf.PDF (July 3, 2012).
---------------------------------------------------------------------------

    Upon initial comparative research, it appears that the proposed 
OPM-selected EHB-benchmark plans are largely similar in scope of 
benefits covered as those benchmark-eligible plans in the small group 
markets.\41\ This research also indicates that the proposed OPM-
selected EHB-benchmark plans, like other benchmark-eligible plans, may 
lack coverage for pediatric oral services, pediatric vision services, 
and habilitative services and devices. Moreover, the EHB-benchmark may 
also lack State-required benefits. Accordingly, OPM is proposing 
standards for supplementing the proposed OPM-selected EHB-benchmark 
plans in proposed Sec. Sec.  800.105(c)(2)-(4).
---------------------------------------------------------------------------

    \41\ U.S. Department of Health and Human Services, Office of the 
Assistant Secretary for Planning and Evaluation, ASPE Research 
Brief, Essential Health Benefits: Comparing Benefits in Small Group 
Products and State and Federal Employee Plans, available at http://aspe.hhs.gov/health/reports/2011/MarketComparison/rb.pdf (December 
2011).
---------------------------------------------------------------------------

    In Sec.  800.105(c)(2), OPM proposes that any OPM-selected EHB-
benchmark plan lacking coverage of pediatric oral services or pediatric 
vision services must be supplemented by the addition of the entire 
category of benefits from the largest Federal Employee Dental and 
Vision Insurance Program (FEDVIP) dental or vision plan option, 
respectively, pursuant to 45 CFR 156.110(b) and section 1302(b) of the 
Affordable Care Act. On July 3, 2012, HHS identified the largest FEDVIP 
dental and vision plan options, as of March 31, 2012, to be, 
respectively, the following: MetLife Federal Dental Plan High Option 
and FEP BlueVision High Option.
    In Sec.  800.105(c)(4), an MSPP issuer must follow State 
definitions where the State chooses to specifically define the 
habilitative services category pursuant to proposed 45 CFR 156.110(f). 
In the case in which a State chooses not to define this category, OPM 
proposes that if any OPM-selected EHB-benchmark plan lacks coverage of 
habilitative services and devices, then OPM may determine what 
habilitative services and devices are to be included in that EHB-
benchmark plan.
    In Sec.  800.105(c)(5), OPM proposes that, for at least years 2014 
and 2015, OPM's EHB-benchmark plans would also include, for each State, 
any State-required benefits enacted by December 31, 2011 that are 
included in a State's EHB-benchmark plan or specific to the market in 
which the MSP offers coverage. Accordingly, these State-required 
benefits would be treated as part of the EHB. However, consistent with 
proposed 45 CFR 155.170, OPM is proposing that State-required benefits 
enacted after December 31, 2011 would be in addition to the EHB. Under 
section 1334(c)(4) of the Affordable Care Act, a State must assume the 
cost of such additional benefits over the EHB by making payments either 
to the enrollee or on behalf of the enrollee to the MSPP issuer, if 
applicable. An MSPP issuer must calculate and report the costs of 
additional State-required benefits pursuant to 45 CFR 155.170.
    OPM is proposing that if an MSPP issuer chooses to use an EHB-
benchmark plan selected by OPM in all States, the MSPP issuer would 
need to use a State-selected benchmark only in States that do not allow 
substitution for services at all within the benchmark benefits. MSPs 
using an OPM benchmark in States that require all plans to offer the 
same set of benefits would be different from all of the other plans 
offered on the market, potentially causing adverse selection. OPM seeks 
comment on this proposal.
    In Sec.  800.105(d), OPM proposes that an MSPP issuer's benefits 
package, including its prescription drug list, must be submitted to and 
approved by OPM, which would determine whether a benefits package 
proposed by a MSPP issuer is substantially equal to an EHB-benchmark 
plan, in accordance with the guidelines set forth by HHS in the 
proposed EHB rule. In determining whether an MSPP issuer's benefits 
package should be approved, OPM proposes to follow the HHS approach set 
forth at proposed 45 CFR 156.115, 156.120, and 156.125 (subject to any 
changes adopted in the final HHS rule). Proposed 45 CFR 156.115(b) 
allows issuers to make benefit substitutions within each EHB category, 
and directs issuers to submit evidence of actuarial equivalence of 
substituted benefits to a State. OPM requests comments on whether MSPP 
issuers should submit evidence of actuarial equivalence of substituted 
benefits to the OPM in addition to, or in lieu of, their submission to 
a State.

[[Page 72590]]

    In reviewing an MSPP issuer's proposed benefit design, OPM plans to 
review an MSPP issuer's benefits package for discriminatory benefit 
design pursuant to section 1302(b)(4) of the Affordable Care Act and 
proposed 45 CFR 156.110(d), 156.110(e), and 156.125. OPM will work 
closely with States and HHS to identify and investigate any potentially 
discriminatory benefit design in MSPs.
    OPM solicits comments on the provision of pediatric dental services 
by MSPs in order to meet the requirements of section 1302(b)(1)(J) of 
the Affordable Care Act. Under one possible approach, an MSP would have 
to cover pediatric dental services in conjunction with other benefits 
in its benefits package. OPM solicits comments on how stand-alone 
dental plans offered on the Exchanges should affect this requirement, 
if at all. OPM solicits comments on this approach, including their 
advantages, disadvantages, and whether there is legal justification for 
each approach, and invites comment on other possible approaches.
    OPM anticipates that its policy on EHB benchmark standards for the 
MSPP will evolve as HHS develops the final EHB rule. OPM solicits 
comments on the provisions of proposed Sec.  800.105, including 
provisions relating to the two EHB benchmark options and limited scope 
dental plans.\42\
---------------------------------------------------------------------------

    \42\ In a pending advanced notice of proposed rulemaking 
regarding Certain Preventive Services under the Affordable Care Act 
(77 FR 16,501 (Mar, 21, 2012), one of several proposals for comments 
was that one or more issuers offering an MSP could be incentivized 
or required to provide contraceptive coverage to participants and 
beneficiaries covered under certain religious organizations' self-
insured plans as part of an accommodation of those organizations' 
religious objections to providing such coverage. Should the proposed 
and final rule regarding Certain Preventive Services affect the 
MSPP, this final rule may include that policy as well.
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6. Cost-Sharing Limits, Premium Tax Credits, and Cost-Sharing 
Reductions (Sec.  800.106)
    In Sec.  800.106(a), OPM proposes that for each MSP it offers, an 
MSPP issuer must ensure that the cost-sharing provisions of the MSP 
comply with section 1302(c) of the Affordable Care Act as well as any 
applicable standards set by OPM or HHS in regulations. This provision 
clarifies that MSPP issuers must comply with any applicable HHS 
requirements and that OPM may issue additional guidance regarding 
issues unique to MSPs. See HHS proposed standards at 45 CFR 156.170. 
OPM solicits comments on additional standards, if any, that it should 
adopt to address unique issues faced by MSPs.
    In Sec.  800.106(b), OPM proposes that for each MSP it offers, an 
MSPP issuer must make available to an eligible individual the premium 
tax credits under section 36B of the Internal Revenue Code of 1986 and 
the cost-sharing reductions under section 1402 of the Affordable Care 
Act. An MSPP issuer must also comply with any standards set by OPM or 
HHS in regulations concerning the administration of these subsidies. 
This provision would implement section 1334(c)(3)(B) of the Affordable 
Care Act, which specifies that individuals enrolled in an MSP are 
eligible for the premium tax credits and cost-sharing reductions just 
as they would be if purchasing any other insurance product on the 
Exchange. This provision also clarifies that MSPP issuers must comply 
with applicable statutory and HHS requirements, and that OPM may issue 
additional guidance regarding any unique issues faced by MSPs. See HHS 
proposed standards at 45 CFR part 156, subpart E. OPM solicits comments 
on what additional guidance, if any, it should adopt to address unique 
issues faced by MSPs.
7. Levels of Coverage (Sec.  800.107)
    In Sec.  800.107(a), OPM proposes that an MSPP issuer, like QHPs 
participating in Exchanges, must offer at least one plan at the silver 
level of coverage and one plan at the gold level of coverage in each 
Exchange in which the issuer is certified to offer an MSP pursuant to a 
contract with OPM. OPM also clarifies that it will use its discretion 
about whether an MSPP issuer may offer products in addition to the 
required gold and silver products.
    In Sec.  800.107(c), OPM proposes that for each level of coverage, 
an MSPP issuer must offer a child-only plan at the same level of 
coverage, as any health insurance coverage offered to individuals who, 
as of the beginning of the plan year, have not attained the age of 21. 
An MSPP issuer could satisfy this standard by offering the same product 
to consumers seeking child-only coverage that it offers to consumers 
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.
    OPM recognizes that HHS has requested comments in its proposed EHB 
rule and draft notice of benefit and payment parameters for 2014 on the 
definition of levels of coverage and plan variations. The proposed HHS 
regulations direct QHP issuers to offer silver plan variations for the 
purpose of implementing the reduction or elimination of cost sharing 
for eligible enrollees in a QHP pursuant to section 1402 of the 
Affordable Care Act, see proposed 45 CFR part 156. OPM proposes in 
Sec.  800.107(d) that MSPP issuers shall comply with applicable HHS 
requirements to offer such plan variations. In addition, OPM proposes 
in Sec.  800.107(e) that MSP plan variations will be submitted to OPM 
for review and approval. OPM will coordinate its approach on this issue 
with the final HHS notice of benefit and payment parameters for 2014. 
OPM will exercise this discretion to promote the best interests of 
enrollees and potential enrollees in the MSPP and to assure adequate 
administrative oversight of each MSP and MSPP issuer.
8. Assessments and User Fees (Sec.  800.108)
    In this section, OPM proposes to reserve its authority to assess a 
user fee on MSPP issuers to cover the agency's costs of performing its 
functions under the Affordable Care Act for a plan year. The purpose of 
assessments and user fees would be to cover the administrative costs of 
performing the contracting and certification of MSPs and of operating 
the program, functions typically conducted through an Exchange for 
QHPs. OPM seeks comments on the use of assessments and user fees to 
fund the MSPP.
9. Network Adequacy (Sec.  800.109)
    Consistent with the Affordable Care Act's goal of providing more 
competition in the health insurance markets and expanding coverage of 
the uninsured, OPM asked RFI respondents to indicate which areas of the 
country are difficult to serve and how the respondent would handle 
hard-to-serve areas. OPM also asked for recommendations with respect to 
standards for network access. Respondents identified rural areas as 
difficult to serve, and one respondent noted that every State has areas 
that are difficult to serve. Some respondents were able to identify a 
means of reaching hard-to-serve areas, and some stated that they had 
been able to overcome these difficulties. In addition, some respondents 
indicated a willingness to collaborate with other organizations to 
increase capacity to provide coverage. Some respondents suggested 
having a uniform network adequacy standard across all States for MSPs, 
some wanted to preserve State network adequacy laws, and others 
suggested using the rule applicable to QHPs on a specific Exchange.
    With respect to network adequacy, OPM's proposed standard mirrors 
the HHS standard set forth in 45 CFR

[[Page 72591]]

156.230 and is intended to ensure that an MSP's services are available 
to all enrollees.\43\ Consistent with the Exchange final rule's 
alignment with the NAIC Model Act, OPM proposes to require an MSPP 
issuer to: (1) Maintain a sufficient provider network in the number and 
types of providers to assure that all services will be accessible 
without reasonable delay for enrollees; (2) offer a provider network 
that is consistent with network adequacy provisions set out in section 
2702(c) of the PHS Act; and (3) offer a provider network that includes 
essential community providers in compliance with 45 CFR 156.235. OPM 
intends for an MSPP issuer to make its provider directory available to 
the Exchange for online publication and to potential enrollees in hard 
copy, upon request. OPM is aware that certain States have more specific 
rules on network adequacy and will consult with States to set more 
specific criteria with respect to network adequacy for the MSPP in 
future guidance. OPM requests comments on its approach to network 
adequacy, including issues concerning network adequacy as a condition 
of State licensure and any issues for MSPs with respect to State-
specific network adequacy requirements.
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    \43\ This HHS standard is based on the NAIC Managed Care Plan 
Network Adequacy Model Act (74-1) and establishes a baseline for 
measuring network adequacy.
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10. Service Area (Sec.  800.110)
    With respect to service areas, OPM proposes that MSPP issuers 
adhere to the service areas defined by Exchanges, but does not 
necessarily require that an MSP be offered in all defined service 
areas. OPM proposes that, for each State in which the MSPP issuer does 
not offer coverage in all service areas, the MSPP issuer's application 
for participation in the MSPP under Sec.  800.301 and the MSPP issuer's 
information submitted to support renewal of the contract under Sec.  
800.305 must include a plan for offering coverage throughout the State. 
OPM will monitor the MSPP issuer's progress in implementing the plan as 
part of its contract compliance activities under subpart E. OPM seeks 
comment on whether MSPP issuers should be required to offer MSPs in all 
service areas by the fourth year of participation in the MSPP, when 
coverage must be offered in each Exchange in all the States and the 
District of Columbia. OPM has also heard concerns about MSPP issuers' 
ability to cover an entire Exchange service area during the four year 
phase-in period and is considering permitting an exception if an MSPP 
issuer can only offer an MSP in a portion of a service area during the 
phase-in as long as the selection of the service areas is not 
discriminatory. In States where the Exchange permits issuers to define 
their service areas, OPM proposes to require that it approve an MSPP 
issuer's service areas and will ensure MSPs meet QHP requirement in 45 
CFR 155.1055(b).\44\ OPM also plans to review any requests for coverage 
of partial county service areas and coordinate with HHS in order to 
align service areas with those of QHPs to prevent gaming of service 
areas. OPM believes that allowing MSPP issuers time to develop the 
capacity to offer coverage throughout a service area will enhance 
competition in the MSPP. OPM invites comments on this approach.
---------------------------------------------------------------------------

    \44\ 45 CFR 155.1055(b) establishes that QHP service areas be 
established in a non-discriminatory manner and states that: ``such 
service areas meet the following minimum criteria: (a) The service 
area of a QHP covers a minimum geographical area that is at least 
the entire geographic area of a county, or a group of counties 
defined by the Exchange, unless the Exchange determines that serving 
a smaller geographic area is necessary, nondiscriminatory, and in 
the best interest of the qualified individuals and employers. (b) 
The service area of a QHP has been established without regard to 
racial, ethnic, language, health status-related factors specified 
under section 2705(a) of the PHS Act, or other factors that exclude 
specific high utilizing, high cost or medically-underserved 
populations.''
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11. Accreditation Requirement (Sec.  800.111)
    With respect to accreditation, OPM proposes that MSPP issuers be or 
become accredited consistent with the requirements for QHP issuers 
specified in section 1311 of the Affordable Care Act, in 45 CFR 
156.275(a), and in applicable State law. OPM proposes that MSPP issuers 
be or become accredited by an accrediting entity recognized by HHS 
pursuant to 45 CFR 156.275(c).
    Consistent with 45 CFR 155.1045, which gives OPM discretion to 
establish a timeline for accreditation for MSPP issuers not already 
accredited, OPM proposes to require that an MSPP issuer that is not 
accredited as of the date that it enters into a contract with OPM 
become accredited within the timeframe established by OPM. A potential 
MSPP issuer may need additional time to obtain accreditation on the 
basis of the local performance of its MSPs in multiple States.
    OPM also proposes that the MSPP issuer authorize the accrediting 
entity to release to OPM and to Exchanges a copy of the MSPP issuer's 
most recent accreditation survey, along with any survey-related 
information that OPM or an Exchange may require, such as corrective 
action plans and summaries of findings. The release of survey 
information is intended to strengthen OPM's oversight of MSPs and MSPP 
issuers and is the same as standards for QHP issuers set forth in 45 
CFR 156.275. OPM requests comments on its proposed accreditation 
requirements.
12. Reporting Requirements (Sec.  800.112)
    OPM also proposes to use the FEHBP approach as a model for 
reporting requirements, and OPM requests comment on this approach. 
Examples of reporting that is currently required for the FEHBP and that 
may be required for the MSPP include financial reports, premium payment 
information, enrollment reporting, and quality assurance 
information.\45\ OPM will determine the data and information that MSPP 
issuers report and the frequency and process for submitting such 
reports. Reporting of certain types of information is critical for OPM 
to implement and administer the MSPP. To oversee MSPP contracts, OPM 
will need to collect certain information to ensure the integrity of the 
MSPP, to protect enrollees, to prevent fraud and abuse, to monitor 
quality and quality improvement, and for other purposes. The agency 
will develop and issue guidance on this subject for MSPP issuers and 
potential issuers.
---------------------------------------------------------------------------

    \45\ OPM's Routine Reports and Submissions required for FEHB 
carriers is available at http://www.opm.gov/carrier/reports/index.asp.
---------------------------------------------------------------------------

    The proposed regulation specifies that OPM may collect such data 
and information as are permitted or required by the Affordable Care Act 
to be collected from an MSPP issuer. Additionally, the Affordable Care 
Act at section 3101(a)(2)(E), requires that ``any reporting requirement 
imposed for purposes of measuring quality under any ongoing or 
federally conducted or supported health care or public health program, 
activity, or survey includes requirements for the collection of data on 
individuals receiving health care items or services under such programs 
activities by race, ethnicity, sex, primary language, and disability 
status.''
    Therefore, OPM intends to collect this data by these categories. 
OPM will also collect such other data and information as it determines 
necessary for the oversight and administration of the MSPP. OPM 
requests comments on the types of information it proposes to collect 
and mechanisms that can reduce unnecessary duplication of data 
disclosure to OPM, HHS, States, and the Exchanges.
    With respect to quality reporting, under FEHBP, OPM requires all 
health plans to report their performance through Healthcare 
Effectiveness Data

[[Page 72592]]

and Information Set (HEDIS) metrics and Consumer Assessment of 
Healthcare Providers and Systems (CAHPS) surveys, independent of the 
source of plan accreditation. This allows for comparison between plans 
in a consistent manner. OPM expects to take a similar approach to 
performance measurement in MSPs to facilitate oversight. OPM requests 
comments on the unique aspects of accreditation and reporting for MSPs 
as compared with accreditation of QHPs.
13. Benefit Plan Material or Information (Sec.  800.113)
    OPM has defined the term ``benefit plan material or information'' 
narrowly to include explanations or descriptions, whether printed or 
electronic, that describe a health insurance issuer's products. The 
term does not include a policy or contract for health insurance 
coverage.
    OPM proposes that MSPP issuers comply with Federal and State laws 
related to benefit plan material or information. OPM also proposes that 
an MSPP issuer must comply with OPM guidance specifying OPM standards, 
process, and timeline for approval of benefit plan material or 
information.
    Similar to QHPs, OPM proposes that all MSP enrollee notices must 
meet minimum access standards for individuals with limited English 
proficiency and for individuals with disabilities as described in 45 
CFR 155.205(c). As stated in the final Exchange rule, HHS intends to 
issue further guidance on minimum standards to address language access 
and coordinate HHS accessibility standards with insurance affordability 
programs, and across HHS programs, as appropriate. OPM expects MSPP 
issuers to adhere to these minimum access standards once HHS publishes 
this guidance. OPM may also establish additional standards for MSPP 
applications and notices.
    OPM proposes that an MSPP issuer is responsible for the accuracy of 
its benefit plan material or information. Benefit plan material or 
information must also be in plain language, be truthful, not be 
misleading, and contain no material omissions. QHPs must comply with 
the provisions of section 2715 of the PHS Act and its implementing 
regulations at 45 CFR 147.200 on uniform explanation of coverage 
documents and standardized definitions, and OPM also will require MSPs 
to comply with the statute and regulations. Additionally, OPM expects 
that MSPP issuers will meet any requirements that allow standardized 
benefit information to be displayed on HHS or Exchange web portals.
    Unlike the policy or contract for health insurance coverage, which 
OPM will review and approve, OPM proposes to review and approve only 
certain benefit plan material or information as defined in Sec.  800.20 
of the proposed regulation. OPM may not necessarily review all benefit 
plan material or information. It may request from MSPP issuers those 
materials that it wishes to review and approve. OPM's review will focus 
on the MSPP issuer's compliance with the standards promulgated by OPM 
with respect to benefit plan material or information. OPM will work 
with States concerning this review of benefit plan material or 
information and may work with States to define the respective roles 
through Memoranda of Understanding (MOU).
    In paragraph (g) of Sec.  800.113, OPM proposes to allow an MSPP 
issuer to state that OPM has certified a plan as an MSP and will 
oversee its administration. OPM is aware that many States have adopted 
laws or regulations prohibiting issuers from using advertisements that 
``may lead the public to believe that the advertised coverages are 
somehow provided by or endorsed by [a] governmental agenc[y].'' \46\ 
However, because OPM will have certified an MSPP issuer and an MSP as 
meeting certain standards, potential issuers may wish to include this 
fact in materials they distribute to the public subject to review by 
OPM. OPM does not view this as a violation of State law anti-
endorsement provisions, because it is a recitation of the fact that the 
issuer is providing coverage pursuant to a contract with OPM.
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    \46\ These State law prohibitions derive from the NAIC's 
Advertisements of Accident and Sickness Insurance Model Regulation 
Sec.  13.C. (Apr. 1999).
---------------------------------------------------------------------------

14. Compliance With State Law (Sec.  800.114)
    In Sec.  800.114, OPM proposes that MSPP issuers generally must 
comply with State law in accordance with section 1334(b)(2) of the 
Affordable Care Act. However, the Affordable Care Act provides that 
MSPs and MSPP issuers need not comply with State laws that:
    (1) Are inconsistent with section 1334 of the Affordable Care Act 
or regulations issued to implement that section;
    (2) Prevent the application of a requirement of part A of title 
XXVII of the PHS Act; or
    (3) Prevent the application of a requirement of title I of the 
Affordable Care Act.
    Accordingly, OPM reserves the right to determine in its judgment, 
as effectuated through an MSPP contract, these regulations, or OPM 
guidance, whether particular State laws fall into these categories.
15. Level Playing Field (Sec.  800.115)
    In Sec.  800.115, OPM proposes to maintain a level playing field by 
requiring MSPs and MSPP issuers to comply with the State and Federal 
laws relating to the 13 categories listed in section 1324(b) of the 
Affordable Care Act.
16. Process for Dispute Resolution (Sec.  800.116)
    In Sec.  800.116, OPM proposes a process for resolving disputes 
about the applicability to the MSPs and MSPP issuers of State laws not 
related to the categories set forth in section 1324(b) of the 
Affordable Care Act. Under this process, a State may request that OPM 
reconsider a standard applicable to MSPs or MSPP issuers that is 
consistent with that State's laws for QHPs or QHP issuers. As discussed 
above (see discussion on proposed Sec.  800.114), the State must 
demonstrate that the law is not inconsistent with section 1334 or 
regulations issued to implement that section; does not prevent the 
application of part A of title XXVII of the PHS Act; and does not 
prevent the application of a requirement of the sections of title I of 
the Affordable Care Act specified in Sec.  800.101 of this proposed 
regulation. In making these determinations, OPM proposes to examine 
several factors, including whether the law at issue:
    (1) Imposes on MSPP issuers or MSPs any requirement that differs 
from those applicable to QHP issuers or QHPs offered in one or more 
Exchanges in that State;
    (2) Creates responsibilities, administrative burdens, or costs for 
an MSPP issuer that significantly deter or impede the MSPP issuer from 
offering a viable product in one or more Exchanges;
    (3) Creates responsibilities, administrative burdens, or costs for 
OPM that significantly deter or impede OPM's effective implementation 
of the MSPP; or
    (4) Prevents an MSPP issuer from offering an MSP in one or more 
Exchanges in a State.
    OPM solicits comments on whether to have such a process, its scope, 
the factors OPM should consider when determining whether State law is 
applicable or whether the relevant market has been or will be disrupted 
by the inapplicability of State law, and whether the process will be an 
effective way to resolve any such disputes. OPM

[[Page 72593]]

further invites comments on whether the process should also be 
available for States to raise disputes concerning laws related to the 
13 categories listed in section 1324(b) of the Affordable Care Act.
17. Other Issues
    Adjusted community rating:
    Section 1334(c)(1)(D) of the Affordable Care Act requires that MSPP 
issuers offer the MSP in all geographic regions and in all States that 
have adopted adjusted community rating before March 23, 2010, the 
enactment date of the Affordable Care Act. The statute does not require 
that these adjusted community rating States be included in the first 
year of the phase-in process described in section 1334(e) of the 
Affordable Care Act and in Sec.  800.104 of this proposed regulation 
for several reasons. First, in 2014 all health insurance issuers in the 
individual and small group market, both inside and outside the 
Exchange, must comply with section 2701 of the PHS Act and will 
therefore use adjusted community rating based only on age, tobacco use, 
geographic area, and family composition. The States described in 
section 1334(c)(1)(D) will therefore not be unique. Second, OPM 
interprets the phase-in provision of subsection (e) of section 1334 to 
permit a phase-in of compliance with (c)(1)(D) of section 1334. OPM's 
rationale is that an MSPP issuer has four years to offer MSPs in each 
Exchange in all States and the District of Columbia, and section 
1334(e) contains no requirements about the particular States an MSPP 
issuer must cover in any of the phase-in years. Potential issuers will 
need flexibility to choose their initial States and the order in which 
they phase in other States. For this reason, OPM proposes not to 
identify any specific States that an MSPP issuer must cover in the 
initial years of the MSPP.
    Financial requirements:
    OPM anticipates MSPP issuers will meet State financial requirements 
including participation in State guaranty funds and meeting State 
reserving requirements. OPM may seek to execute an MOU between a State 
and OPM specifying how OPM will be notified and the circumstances that 
would trigger a payment from such fund with respect to an MSPP issuer 
or MSP. OPM invites comments on the participation of MSPP issuers in 
State guaranty funds. OPM also seeks comment on how it may further 
ensure the financial stability of MSPs across State lines.

C. Premiums, Rating Factors, Medical Loss Ratios, and Risk Adjustment 
(Subpart C, 800.201 Through 800.204)

    Section 1334(a)(4) on ``Administration'' directs that OPM implement 
the MSPP ``in a manner similar to the manner'' in which OPM implements 
the contracting provisions with respect to carriers under the FEHBP, 
including negotiating with each MSPP issuer: (1) A medical loss ratio 
(MLR); (2) a profit margin; (3) the premiums to be charged; and (4) 
such other terms and conditions of coverage as are in the interests of 
enrollees in such plans. The following proposed provisions of the 
regulation implement this section.
1. General Requirements (Sec.  800.201)
    As it does with FEHBP carriers, OPM proposes in Sec.  800.201(a) 
and (b) to negotiate annually with an MSPP issuer the premiums for each 
MSP offered by that issuer, and these premiums will remain in effect 
for the 12-month plan year. OPM has authority to negotiate ``premiums 
to be charged,'' including the authority to review an MSPP issuer's 
rating practices. ``Rating'' means the process, including rating 
factors, numbers, formulas, methodologies, and actuarial assumptions, 
used to set premiums for a health plan. In addition to rating factors, 
HHS or the States may set other requirements for premium increases in 
the individual and small group markets. In reviewing an MSPP issuer's 
proposed rate information, OPM plans to review an MSPP issuer's rate 
proposal and cost-sharing arrangements for discriminatory benefit 
design, and will work closely with States to identify and investigate 
any potentially discriminatory benefit design in MSPs.
    In FEHBP, OPM issues rating guidance to FEHBP carriers via a 
carrier letter. This guidance provides carriers information needed to 
construct their rating structures for FEHBP and instructions for 
submitting rates for negotiation with OPM. Similarly, OPM proposes to 
issue guidance addressing methods for the development of rates for the 
MSPP. In addition, this guidance will provide instructions for 
submitting rating structures as part of OPM's process for negotiating 
premiums with each MSPP issuer.
    OPM intends that each MSP set its premiums on a State-by-State 
basis. Unlike the FEHBP, there will not be any MSPs that are offered at 
one premium nationwide. Therefore, OPM intends to follow State rating 
laws as much as practicable so as not to distort local markets. This 
will also be necessary in order for MSPP issuers to participate in the 
temporary reinsurance program established pursuant to section 1341 of 
the Affordable Care Act and 45 CFR part 153, the risk corridor program 
established pursuant to section 1342 of the Affordable Care Act and 45 
CFR part 153, and the risk adjustment program established pursuant to 
section 1343 of the Affordable Care Act and 45 CFR part 153.
    OPM recognizes that HHS has requested comments on calculation of AV 
in its proposed EHB rule; see proposed 45 CFR 156.135. The proposed HHS 
regulation states an issuer would use the AV calculator developed by 
HHS to determine the plan's level of coverage as proposed, subject to 
exceptions in section 156.135(b) OPM proposes in section 800.201(d) 
that MSPP issuers shall calculate AV in the same manner as QHP issuers. 
OPM intends to review MSPP issuer compliance with these AV provisions. 
OPM will coordinate its approach with the final HHS EHB rule on this 
issue.
    In approving rates for MSPs, OPM intends to follow State rating 
standards with respect to rating factors generally applicable in a 
State. OPM will comply with section 2701 of the PHS Act and any 
applicable regulations under that section that sets forth basic 
requirements in terms of rating factors and their application. Under 
section 2701, States have flexibility in applying narrower ratios for 
age and tobacco use and may require issuers to use pure community 
rating. Section 1334(a)(4) gives OPM the explicit authority to 
negotiate premiums, profit margins, and an MLR. Recognizing that some 
States have a prior approval process for rates and the authority to 
reject rates, OPM intends to work closely with each State in approving 
a rate for the MSPs in that State and will consult with that State 
about patterns in its markets and about other rates that an MSPP issuer 
might be proposing in that State for non-MSPs. However, the final 
decision regarding rates for MSPs rests with OPM, as required by the 
statute. OPM proposes that MSPP issuers follow State rating standards, 
and OPM's process will meet the standards with respect to review and 
disclosure requirements for an ``effective rate review program'' as set 
out in 45 CFR 154.\47\
---------------------------------------------------------------------------

    \47\ Rate Increase Disclosure and Review, 45 CFR 154 (May 23, 
2012), available at http://cciio.cms.gov/resources/files/rate_increase_final_rule.pdf.
---------------------------------------------------------------------------

    As described above, and set out in the proposed Sec.  800.201(e) 
and (f), with respect to rate review, OPM intends to conduct its own 
rate review process, but intends to share its rate review analysis

[[Page 72594]]

with each State in which an MSP is operating. MSPP issuers are subject 
to a State's rate review process including a State's Effective Rate 
Review Program established by HHS pursuant to section 2794 of the PHS 
Act and 45 CFR 154. OPM proposes that for States with Effective Rate 
Review Programs under section 2794, the MSPP issuer would comply with 
the State standards. In addition, OPM proposes that in States where HHS 
is reviewing rates, HHS would take the judgment of OPM for MSP rates. 
Furthermore, MSPP issuers must comply with the reporting and disclosure 
requirements for all rate justifications to HHS, States, and Exchanges, 
such as the requirements set forth in 42 CFR 156.210(c).
    Each State would have the opportunity to review the MSP rates under 
its own procedures and processes. If a State disagrees with OPM's 
determination to approve the MSP rates, OPM would work with the State 
to attempt to resolve the differences. OPM expects that few such 
disagreements will arise and, if they do, that we will be successful in 
resolving them in a manner that is acceptable both to OPM and the State 
at issue. In the event that a State withholds approval of an MSP rate 
for reasons that OPM determines, in its discretion, to be arbitrary, 
capricious, or an abuse of discretion, the Act authorizes the Director 
to make the final decision to approve rates for participation in the 
MSPP notwithstanding the absence of State approval. We expect that the 
Director will rarely, if ever, have to exercise this authority to 
approve MSP rates over the objection of a State. OPM welcomes comments 
on whether this is an appropriate approach and on the impact of this 
approach.
    After OPM and the MSPP issuer complete the rate negotiation 
process, and OPM approves the rates, an MSPP issuer would file rates 
with the Exchange, when necessary to post MSP premium and rate 
information to the Exchange portal, and with the State, when necessary 
to meet licensure requirements.
    Section 1312(c)(1) and (2) of the Affordable Care Act provide that 
a health insurance issuer consider all enrollees in all non-
grandfathered health plans in the individual market to be members of a 
single risk pool and all enrollees in non-grandfathered health plans in 
the small group market to be members of a single risk pool within a 
State. With proposed Sec.  800.201(g), OPM clarifies that an MSPP 
issuer must consider MSP enrollees to be members of the same risk pool 
as all other enrollees of the issuer in non-grandfathered health plans 
in the individual and small group markets, respectively. OPM intends 
for the MSPP issuer to be subject to any Federal or State regulations 
that implement or enforce section 1312(c), such as proposed 45 CFR 
156.80. In addition, section 1312(c)(3) permits a State to merge the 
individual and small group markets within the State. Under Sec.  
800.201(g), a State election to merge its individual and small group 
markets, as well as any Federal or State regulations promulgated to 
implement section 1312, would apply to an MSPP issuer.
2. Rating Factors (Sec.  800.202)
    Section 2701 of the PHS Act, as amended by the Affordable Care Act, 
requires issuers in the individual and small group market to rate based 
only on permitted rating factors: Family composition, geographic area, 
age, and tobacco use within limits. Section 1334(c)(1)(C) of the 
Affordable Care Act explicitly limits MSPP issuers to only these 
factors as well. OPM proposes in Sec.  800.202(a) that MSPP issuers 
shall comply with requirements setting standards for fair health 
insurance premiums appearing in HHS regulations. MSPP issuers must 
follow standards set for rating areas in a State established under any 
HHS or State regulations implementing section 2701 of the PHS Act.
    In approving rates for MSPs, OPM intends to follow State rating 
standards with respect to rating factors, including the application of 
tobacco use. OPM will also coordinate its approach with the final HHS 
health insurance market rules.
3. Medical Loss Ratio (Sec.  800.203)
    OPM expects MSPP issuers to attain the MLR required under section 
2718 of the PHS Act and regulations promulgated by HHS. Section 
1334(a)(4) of the Affordable Care Act authorizes OPM to set an MLR for 
each MSP, similar to FEHBP. OPM reserves the authority to impose a 
different, MSP-specific MLR threshold (i.e., an MLR threshold based 
only on an MSPP issuer's MSP population in each State) if that would be 
in the best interests of enrollees. Proposed Sec.  800.203 articulates 
this discretion. It is not OPM's intention to apply a national 
aggregate MLR. OPM requests comments on its proposal to set an MSP-
specific MLR and the methodology that MSPP issuers should use to 
calculate an MSP-specific MLR.
    The proposed rule gives OPM the discretion to take appropriate 
action if an MSPP issuer fails to attain any required MLR. Such 
appropriate actions may include intermediate sanctions, such as 
suspension of marketing. In the case of widespread, repeated failures, 
more severe sanctions may include decertifying an MSP in one or more 
States or terminating an MSPP issuer's contract pursuant to Sec.  
800.404. OPM will coordinate all actions concerning MLR with HHS to 
ensure that there is not duplicative reporting by issuers or 
duplicative compliance activity.
    In addition to the explicit authority for OPM to set an MLR, 
section 1334(a)(4) also provides OPM with the authority to set a profit 
margin. OPM has not proposed a standard for profit margin. OPM seeks 
comment on whether OPM should set such a standard, and the impact that 
such a standard would have on the Exchanges and any existing state 
requirements concerning profit margin.
4. Reinsurance, Risk Corridors, and Risk Adjustment (Sec.  800.204)
    OPM proposes that an MSPP issuer participates in the transitional 
reinsurance program for the individual market established pursuant to 
section 1341 of the Affordable Care Act and 45 CFR part 153 and comply 
with requirements issued by HHS or the State, if the State is operating 
an Exchange, to implement the program. For example, if a State were to 
impose additional reinsurance assessments on issuers, MSPs would be 
subject to such assessments in order to maintain a level playing field. 
OPM also proposes that an MSPP issuer participates in the temporary 
risk corridors program established pursuant to section 1342 of the 
Affordable Care Act and 45 CFR part 153 and comply with requirements 
issued by HHS to implement the program. Additionally, OPM proposes that 
an MSPP issuer participates in the risk adjustment program established 
pursuant to section 1343 of the Affordable Care Act and 45 CFR part 153 
and comply with requirements on issued by HHS or the State, if the 
State is operating an Exchange, to implement the program. Participation 
by MSPP issuers in these programs will ensure that all issuers have the 
same fiscal responsibilities and protections.

D. Application and Contracting Procedures (Subpart D, 800.301 Through 
800.306)

    This subpart describes the process by which issuers can apply to 
participate in the MSPP.
1. Application Process (Sec.  800.301)
    Section 1334(a) authorizes OPM to implement the MSPP without regard 
to section 5 of title 41, United States Code, or other statutes 
requiring competitive

[[Page 72595]]

bidding. Therefore, OPM has structured the process as an application 
process rather than a request for proposals, which affords the agency 
discretion to contract with as many issuers as meet the requirements of 
section 1334. The MSPP contract application must be in such form, 
contain such information, and be submitted in such manner as OPM may 
prescribe. This process is modeled on the approach OPM uses under the 
FEHBP.
2. Review of Applications (Sec.  800.302)
    OPM will review applications to determine whether the applicant 
meets the requirements of this part. OPM may request additional 
information from the applicant to make the determination. OPM may 
either accept an applicant to enter into MSPP contract negotiations or 
decline to enter negotiations with the applicant. In the latter case, 
OPM will inform the applicant in writing of the reason(s) for declining 
the application.
    OPM reserves discretion about whether to enter into contract 
negotiations with an applicant. However, a decision by OPM to decline 
an application to participate in the MSPP does not preclude the 
applicant from submitting an application to participate in the MSPP for 
a subsequent year.
3. MSPP Contracting (Sec.  800.303)
    An applicant does not become an MSPP issuer until it signs a 
contract with OPM to participate in the MSPP. OPM will establish a 
standard contract for the MSPP. OPM will approve benefit packages and 
negotiate premiums for an MSP for each plan year. OPM may also 
negotiate additional terms, conditions, and requirements that are in 
the interests of MSP enrollees or that OPM, in consultation with HHS, 
determines to be appropriate.
    Each MSPP contract will specify the Exchanges in which the MSPP 
issuer is authorized to offer the MSP for a plan year, as well as the 
benefit packages and premiums to be charged. An MSPP issuer cannot 
offer an MSP on an Exchange unless its MSPP contract includes a 
certification authorizing the MSPP issuer to offer the MSP on that 
Exchange.
4. Term of the Contract (Sec.  800.304)
    The term of the contract will be for a period of at least 12 
consecutive months defined as the plan year. ``Plan year'' is defined 
as a consecutive 12-month period during which the MSP provides coverage 
for health benefits and may be a calendar year or otherwise.
5. Contract Renewal Process (Sec.  800.305)
    If an MSPP issuer is in compliance with the requirements of this 
rule and wishes to continue participating in the MSPP, OPM will conduct 
negotiations with such an issuer to renew its MSPP contract. The agency 
recognizes that section 1334(a)(2) creates an expectation of automatic 
renewal. However, OPM intends to fulfill its statutory responsibility 
to ensure that all MSPP issuers and MSPs remain in compliance with all 
legal requirements. Therefore, an MSPP issuer wishing to continue in 
the MSPP for a subsequent year must provide to OPM, in the form, 
manner, and timeline prescribed by OPM, the information requested by 
OPM for determining whether the MSPP issuer continues to meet the 
requirements of the MSPP. OPM retains discretion to renew the MSPP 
contract for a subsequent plan year with an MSPP issuer who submits the 
information described above and continues to meet the requirements of 
applicable law and this rule. OPM may decline to renew the MSPP 
contract of an MSPP issuer if: (1) OPM and the MSPP issuer fail to 
agree on benefits and premiums for an MSP on one or more Exchanges for 
the subsequent plan year; (2) the MSPP issuer has engaged in conduct 
described in Sec.  800.404(a); or (3) OPM determines that the MSPP 
issuer will be unable to comply with a material provision of section 
1334 of the Affordable Care Act.
    If OPM and the MSPP issuer fail to agree on benefits and premiums 
for an MSP on one or more Exchanges by the date set by OPM, that MSP 
would be offered on that Exchange or Exchanges in the subsequent plan 
year with the same premiums and benefits as in the current plan year, 
unless OPM or the MSPP issuer provides written notice of non-renewal, 
or OPM exercises its discretion to withdraw the certification of that 
MSP on one or more Exchanges. Based on its experience with the FEHBP, 
OPM anticipates that situations in which OPM and the MSPP issuer fail 
to agree on premiums and benefits will occur infrequently. If OPM 
chooses not to renew an MSPP issuer's MSPP contract, OPM must provide 
the MSPP issuer with notice and the opportunity for a hearing pursuant 
to Sec.  800.405. It is OPM's intention to ensure that premium and 
benefit information for all MSPs are submitted to each Exchange in 
compliance with the timeline established by that Exchange.
6. Nonrenewal (Sec.  800.306)
    For this subpart, OPM is defining ``nonrenewal'' to mean the 
decision by either OPM or an MSPP issuer to not renew an MSPP contract. 
Either OPM or an MSPP issuer may decline to renew a contract by giving 
a written notice of nonrenewal. The issuer's notice must be given in 
accordance with its MSPP contract, and an issuer must comply with the 
rules of an Exchange with respect to termination of a QHP, including 
the requirement to provide advance notice in writing to enrollees. If 
an Exchange does not specify the timeframe for notifying enrollees, OPM 
will require notice no later than 90 days prior to termination, unless 
OPM determines that there is good cause for less than 90 days' notice.

E. Compliance (Subpart E, 800.401 Through 800.405)

    This subpart describes how OPM will enforce compliance in the MSPP.
1. Contract Performance (Sec.  800.401)
    Pursuant to an MSPP contract with OPM, an MSPP issuer must meet the 
requirements of section 1334 and the requirements of this part. Each 
MSPP issuer will be required to:
     Have the financial resources, in the judgment of OPM, to 
carry out its obligations under the MSPP.
     Keep reasonable financial and statistical records, and 
furnish reports related to these records with respect to the MSP or the 
MSPP, as may be requested by OPM.
     Permit representatives of OPM (including the OPM Office of 
Inspector General), the U.S. Government Accountability Office, and any 
other applicable Federal government auditing entities to audit and 
examine its records and accounts which pertain, directly or indirectly, 
to the MSP at such reasonable times and places as may be designated by 
OPM or the U.S. Government Accountability Office. Also, note that 
nothing in this proposed regulation changes or diminishes the 
authorities of HHS, including the authorities of the HHS Office of 
Inspector General.
     Submit to OPM a properly completed and signed novation or 
change-of-name agreement in a timely manner and in accordance with 48 
CFR 42.12.
     Perform the MSPP contract in accordance with prudent 
business practices as described below.
     Not engage in poor business practices as described below.
    Under the MSPP, OPM proposes prudent businesses practices to 
include, but not be limited to: (1) Timely compliance with OPM 
instructions and directives; (2) legal and ethical business and health 
care practices; (3) compliance with the terms of the MSPP

[[Page 72596]]

contract, regulations, statutes, and additional agency guidance; (4) 
timely and accurate adjudication of claims or rendering of medical 
services; (5) a system of accounting for costs incurred under the MSPP 
contract; (6) accurate accounting reports of administration costs 
relevant to the MSPP contract; (7) applying performance standards for 
assuring contract quality outlined in Sec.  800.402; and (8) a system 
of internal controls related to the MSP and MSPP issuer.
    Under the MSPP, OPM will consider the following types of 
activities, among others, as poor business practices: (1) Using 
fraudulent or unethical business or health care practices or otherwise 
displaying a lack of business integrity or honesty; (2) repeatedly or 
knowingly providing false or misleading information in the rate setting 
process for an MSP; (3) failing to comply with OPM instructions or 
directives; (4) having an accounting system that is incapable of 
separate accounting for costs incurred under the MSPP contract and/or 
lacks internal controls necessary to fulfill the terms of the MSPP 
contract; (5) failing to assure that the MSPP issuer properly pays or 
denies claims, or provides medical services which are inconsistent with 
standards of good medical practice; and (6) entering into contracts or 
employment agreements with providers, provider groups, or health care 
workers that include provisions or financial incentives that directly 
or indirectly create an inducement to limit or restrict communication 
about medically necessary services to any individual covered under the 
MSPP. Financial incentives are defined as bonuses, withholds, 
commissions, profit sharing or other similar adjustments to basic 
compensation (e.g., service fee, capitation, salary) which have the 
effect of limiting or reducing communication about appropriate 
medically necessary services.
    OPM seeks to encourage MSPP issuers to meet or exceed performance 
standards. OPM proposes to establish performance escrow accounts for 
each MSPP issuer through a modest assessment on issuers. The funds from 
such accounts could be used to provide a rebate to enrollees in cases 
of inadequate performance or could be returned to plan as a reward for 
meeting performance standards. These accounts could also be used to 
hold funds paid in response to audit findings, not meeting performance 
standards under the contract, or other issues of noncompliance. OPM 
requests comment on the establishment of a performance escrow account. 
Specifically, OPM solicits comments on how best to collect, hold, and 
release these funds. OPM also requests comments on alternative methods 
of fulfilling OPM's goals of ensuring contract compliance and ensuring 
performance standards are met.
2. Contract Quality Assurance (Sec.  800.402)
    This section describes general policies and procedures to ensure 
that services acquired under the MSPP contract conform to the 
contract's quality assurance requirements. Periodically, OPM will 
evaluate an MSPP issuer's system of internal controls as discussed in 
Sec.  800.401. Upon the initial review, OPM will acknowledge in writing 
whether or not the system established and maintained by the MSPP issuer 
is consistent with the requirements set forth in the MSPP contract. In 
addition to reviewing an MSPP issuer's system of internal controls, OPM 
will issue specific performance standards for MSPP contracts. The OPM 
Office of the Inspector General will conduct periodic evaluations of 
the contractor's system of internal controls.
3. Fraud and Abuse (Sec.  800.403)
    Pursuant to the MSPP contract, an MSPP issuer is required to have a 
program to assess its vulnerability to fraud and abuse as well as to 
address such vulnerabilities. The fraud detection system of the MSPP 
issuer must be designed to detect and eliminate fraud and abuse by 
employees of the MSPP issuer and its subcontractors, by providers 
furnishing goods and services to MSP enrollees, and by MSP enrollees. 
An MSPP issuer must provide to OPM, upon request, such information or 
assistance as may be necessary for OPM to carry out any audit 
activities. OPM will determine the timeline, form, and manner in which 
the MSPP issuer must submit this information to OPM.
4. Compliance Actions (Sec.  800.404)
    OPM may impose compliance actions against an MSPP issuer for the 
following causes, as OPM may determine:
     Failure of the MSPP issuer to meet the requirements of the 
MSPP contract and Sec.  800.401(a) and (b).
     Sustained failure of the MSPP issuer to perform the MSPP 
contract in accordance with prudent business practices.
     Evidence of poor business practices or demonstration of a 
pattern of poor business practices by the MSPP issuer.
     Violation of law or regulation by the MSPP issuer.
    At any time during the contract term, OPM may impose a compliance 
action against an MSPP issuer if it determines that the MSPP issuer is 
not in compliance with applicable law, this part, or the terms of the 
MSPP contract. In this situation, OPM may take compliance actions 
against the MSPP issuer, including, but not limited to: (1) 
Establishing and implementing a corrective action plan; (2) imposing 
intermediate sanctions; (3) imposing monetary penalties; (4) reducing 
the MSPP issuer's service area; (5) withdrawing certification for the 
MSPP issuer to offer an MSP on one or more Exchanges; (6) not renewing 
the MSPP contract; or (7) terminating the MSPP contract. If OPM 
initiates a compliance action, it will notify the MSPP issuer in 
writing of the compliance action. The notice will indicate the specific 
reason for the compliance action. If the compliance action is the 
withdrawal of the certification of the MSPP issuer to offer the MSP on 
one or more Exchanges, the nonrenewal of the MSPP contract, or the 
termination of the MSPP contract, the notice must also include a 
statement that the MSPP issuer is entitled to request a reconsideration 
of OPM's determination to impose the compliance action in accordance 
with Sec.  800.405, including a hearing on the issuer's request.
    If OPM does not renew or terminates an MSPP contract or withdraws 
certification of the MSPP issuer to offer an MSP on one or more 
Exchanges, the MSPP issuer must adhere to any requirements related to 
notification of termination of a QHP imposed by an Exchange. If an 
Exchange does not have requirements to notify enrollees of the 
termination of a QHP, then the MSPP issuer must provide current 
enrollees with a notice of the MSP's termination no later than 90 
calendar days prior to termination.
    For purposes of subpart E of 45 CFR part 800, termination of a 
contract means OPM's withdrawal of approval of the contract.
5. Reconsideration of Compliance Actions (Sec.  800.405)
    In the case of withdrawal of the certification of the MSPP issuer 
to offer the MSP on one or more Exchanges, nonrenewal of the MSPP 
contract, or termination of the MSPP contract, the MSPP issuer has the 
right to request a reconsideration of OPM's action in accordance with 
the process proposed in this regulation. OPM's reconsideration may be 
conducted by the Director or a representative designated by the 
Director who did not participate in the initial decision that is the 
subject of the request for review. OPM will notify the MSPP issuer in

[[Page 72597]]

writing of the final decision and the specific reasons for that final 
decision. OPM's written decision will constitute final agency action 
that is subject to review under the Administrative Procedure Act in the 
appropriate U.S. district court. Such review is limited to the record 
that was before OPM when it made its decision.

F. Appeals by Enrollees for Denial of Claims for Payment or Service 
(Subpart F, 800.501 Through 800.505)

    The Affordable Care Act added a new section 2719 to the PHS Act. 
This section requires that all non-grandfathered group health plans and 
health insurance issuers provide for internal appeals and external 
review processes that meet specific consumer protection standards. 
Under regulations and guidance issued by HHS, along with the 
Departments of Labor and Treasury, health insurance issuers must meet 
specific standards with respect to internal appeals and external review 
processes. With respect to external review, States must have external 
review processes that meet specific minimum criteria. If a State 
external review process meets these criteria, an issuer in that State 
must comply with that external review process. In States with no 
external review process, or with a process that has not been determined 
to meet specific criteria, health insurance issuers must implement a 
separate ``federal external review process.'' In this subpart, OPM 
proposes that MSPP issuers have an internal appeals process consistent 
with the requirements of section 2719 of the PHS Act and its 
implementing regulations at 45 CFR 147.136(b). With respect to its 
internal appeals process, therefore, an MSP must meet the same 
standards as QHPs.
    With respect to external review, OPM proposes that MSPP issuers 
would comply with OPM's external review process, which will meet the 
standards for State external review processes established under section 
2719 of the PHS Act and 45 CFR 147.136(c). OPM's external review 
process for the MSPP will be similar to the disputed claims process 
administered under the FEHBP.
    The disputed claims process serves two purposes: First, it provides 
an avenue of redress for enrollees whose claims have been denied, and 
second, it permits OPM to ensure the uniform and correct administration 
of FEHBP contracts. Similarly, proposed Sec.  800.504(b) would protect 
enrollees by creating a process for review of adverse benefit 
determinations while simultaneously providing OPM with a necessary tool 
for contractual oversight. By reviewing these adverse benefit 
determinations, OPM would be able to ensure the uniform and equitable 
administration of the MSPP. OPM will issue further guidance explaining 
the details of its process for external review of adverse benefit 
determinations.
    OPM considered an approach for external review that would expand 
the use of the Federal external review process that OPM administers in 
conjunction with HHS, which is currently used for external review of 
cases arising in States without effective processes, to be the 
exclusive method of external review for the MSPP. OPM also considered a 
hybrid approach to external review under which OPM would render a final 
decision in all cases, using the standards and timeframes of 45 CFR 
147.136(d) for adverse benefit determinations based on medical 
judgment, and using a process similar to the FEHBP disputed claims 
process for adverse benefit determinations not based on medical 
judgment.
    OPM proposes instead to build on its expertise concerning external 
review while adhering to external standards under section 2719 and its 
implementing regulations. MSP enrollees would benefit from access to an 
external review process that is consistent with the process that is 
available to enrollees in QHPs for adverse benefit determinations. OPM 
considers it necessary for the appropriate administration of MSPP 
contracts to perform external review of adverse benefit determinations.
    For all notices involving internal appeals and external review, 
cultural and linguistic appropriateness standards, as articulated in 45 
CFR 147.136(e), would apply. Notices to MSP enrollees must adequately 
describe the enrollee's rights and obligations with respect to external 
review of adverse benefit determinations. OPM will review such notices 
to ensure appropriateness and accessibility.\48\
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    \48\ Note, nothing in this regulation should be construed as 
limiting an individual's rights under federal civil rights statutes, 
such as Section 1557 of the Affordable Care Act and Title VI of the 
Civil Rights Act of 1964 (Title VI). For example, to ensure non-
discrimination on the basis of national origin, entities covered by 
Title VI must take reasonable steps to ensure meaningful access by 
persons with limited English proficiency to their programs and 
activities. For more information, see ``Guidance to federal 
Financial Assistance recipients regarding Title VI Prohibition 
Against National Origin Discrimination Affecting Limited English 
Proficient Persons to better understand the obligations under Title 
VI,'' at http://www.hhs.gov/ocr/civilrights/resources/specialtopics/lep/policyguidancedocument.html.
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    OPM's decision about an adverse benefit determination will 
constitute final agency action that is subject to review under the 
Administrative Procedure Act in the appropriate U.S. district court.
    OPM requests comments on this approach for MSPP appeals as well as 
the alternative approaches mentioned and feasible combinations of the 
different approaches. OPM also invites comments on the impact of the 
approaches in providing for a level playing field for all plans on the 
Exchanges, consumer choice and consistency of processes across 
different Exchanges.

G. Miscellaneous (Subpart G, 800.601 and 800.602)

    Section 800.601 reserves to OPM the right to implement and 
supplement this regulation with operational guidelines.
    Section 800.602(a) implements the requirement of section 1334(a)(6) 
of the Affordable Care Act that at least one MSP on each Exchange not 
provide coverage of services described in section 1303(b)(1)(B) of the 
Affordable Care Act. OPM proposes to implement this requirement across 
all Exchanges subject to the phase-in provision of Sec.  800.104. In 
Sec.  800.602(b), OPM proposes to apply the State opt out provisions in 
section 1303(a) of the Affordable Care Act to MSPs.

IV. Regulatory Impact Analysis

    OPM has examined the impact of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993) and 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 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). A 
regulatory impact analysis must be prepared for major rules with 
economically significant effects ($100 million or more in any 1 year 
adjusted for inflation). Section 3(f) of Executive Order 12866 defines 
a ``significant regulatory action'' as an action that is likely to 
result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more in 
any one year or adversely affect in a material way a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal government or communities;

[[Page 72598]]

    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impacts of entitlement grants, 
user fees, or loan programs, or the rights and obligations of 
recipients thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
Executive Order 12866.
    The economic impact of this rule may exceed the $100 million 
threshold for at least one year; we therefore assess costs and benefits 
as required by the Executive Order.
    This rule gives health insurance issuers the opportunity to 
contract with OPM to offer a product on the Affordable Insurance 
Exchanges, but does not require those issuers to outlay funds. In a 
2009 analysis of legislation that ultimately became the Affordable Care 
Act, the Congressional Budget Office (CBO) and the Joint Committee on 
Taxation (JCT) estimated the effects of the Affordable Care Act on 
nationwide insurance enrollment and on the federal budget.\49\ CBO and 
JCT estimated that ``from 2016 on, between 23 million and 25 million 
people will receive coverage through the [E]xchanges.'' \50\ We lack 
the information necessary to make assumptions about the potential 
enrollment penetration for MSPs on the Exchange but seek comment on the 
number of states where MSPs will participate and the influence of 
current market dynamics on enrollment in MSPs.
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    \49\ Letter to Senator Harry Reid, Majority Leader, from Douglas 
W. Elmendorf, Director of the Congressional Budget Office, December 
19, 2009, p. 9.
    \50\ Congressional Budget Office, Estimates for the Insurance 
Coverage Provisions of the Affordable Care Act Updated for the 
Recent Supreme Court Decision (July 2012), p.13.
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    One primary benefit of health insurance coverage would be an 
increase in longevity or health for newly enrolled individuals. 
Improved access to health care services has been shown to lead to 
higher use of preventive services and health improvements, such as 
reduced hypertension, improved vision and better self-reported health 
status, as well as better clinical outcomes and lower 
mortality.51 52
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    \51\ Brook, Robert H., John E. Ware, William H. Rogers, Emmett 
B. Keeler, Allyson Ross Davies, Cathy D. Sherbourne, George A. 
Goldberg, Kathleen N. Lohr, Patricia Camp and Joseph P. Newhouse. 
The Effect of Coinsurance on the Health of Adults: Results from the 
RAND Health Insurance Experiment. Santa Monica, CA: RAND 
Corporation, 1984. Finkelstein, A. et al. ``The Oregon Health 
Insurance Experiment: Evidence from the First Year.'' NBER Working 
Paper No. 17190, July 2011. Doyle, J.J. ``Health Insurance, 
Treatment and Outcomes: Using Auto Accidents and Health Shocks.'' 
National Bureau of Economic Research. NBER Working Paper No. 11099, 
February 2005.
    \52\ See the regulatory impact analysis developed by HHS for the 
Exchange Establishment final rule, available at http://cciio.cms.gov 
under ``Regulations and Guidance'', for a comprehensive overview of 
the empirical evidence on the benefits of enhanced availability of 
quality, affordable health insurance, which to great extent applies 
to the MSPP program and this proposed rule as well.
---------------------------------------------------------------------------

    Additional benefits would be generated for newly enrolled 
individuals in the form of improved financial security. There is 
evidence that bankruptcy filings, for instance, decrease in response to 
increases in Medicaid eligibility.\53\ Furthermore, a 2011 analysis by 
the Office of the Assistant Secretary for Planning and Evaluation 
(ASPE) found that most of the uninsured were unable to afford a single 
hospitalization, because 90 percent of the uninsured reported having 
total financial assets below $13,000.\54\ A related benefit would be 
generated by increased access to non-employment-based health insurance, 
which can give individuals greater flexibility to separate from current 
employment in order to search for positions that better match their 
skills or interests.
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    \53\ Gross, T., Notowidigdo, M. ``Health Insurance and the 
Consumer Bankruptcy Decision: Evidence from Medicaid Expansions.'' 
Journal of Public Economics 95(7-8): 2011.
    \54\ Assistant Secretary for Planning and Evaluation The Value 
of Health Insurance: Few of the Uninsured Have Adequate Resources to 
Pay Potential Hospital Bills: 2011. Washington DC: US Department of 
Health and Human Services.
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    Expansion of health insurance coverage leads to many benefits such 
as improved access to health care, and improved financial security for 
the newly insured. However, insurance coverage, which generally makes 
medical care more affordable, can lead to an inefficiency commonly 
called moral hazard. When people make economic decisions to purchase 
goods and services, but do not bear the full cost of these goods and 
services, there can be a tendency to purchase more than the efficient 
amount of that service. Studies that estimated the effects of Medicare, 
however, found that the cost of this inefficiency is likely more than 
offset by the benefit of risk reduction.55 56
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    \55\ Finkelstein A, McKnight R: ``What Did Medicare Do (And Was 
It Worth It)?'' Journal of Public Economics 2008, 92:1644-1669.
    \56\ Finkelstein, Amy, ``The Aggregate Effects of Health 
Insurance: Evidence from the Introduction of Medicare,'' National 
Bureau of Economic Research. Working Paper No. 11619, Sept, 2005.
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    Administrative costs of the rule would be generated both within OPM 
and by issuers deciding to offer MSPs. The costs that MSPP issuers may 
incur are the same as those of QHPs and, as stated in 45 CFR part 157, 
will include: accreditation, network adequacy standards, and quality 
improvement strategy reporting. The costs associated with MSP 
certification offset the costs that issuers would face were they to be 
certified by the State, or HHS on behalf of the State, to offer QHPs 
through the Exchange.
    Finally, some of the most notable effects of Exchanges in general, 
and MSPs in particular, may not be net social costs or benefits, but 
would instead be transfers between members of society. Potential 
examples include decreases in uncompensated care and changes in 
premiums that do not reflect shifts in society's resource use to or 
away from provision of medical services and insurance policies.
    OPM lacks data to quantify most of these benefits, costs and 
transfers. Perhaps most notably, OPM cannot isolate the effects of MSPs 
from forecasts of the overall effects of the Affordable Care Act 
coverage provisions, and, therefore, requests comments on any aspects 
of this proposed rule's cost-benefit analysis.

V. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35; see 5 
CFR part 1320) requires that OMB approve all collections of information 
by a Federal agency from the public before they can be implemented. 
Respondents are not required to respond to any collection of 
information unless it displays a current valid OMB control number. OPM 
is proposing several collections from MSPP issuers or applicants 
seeking to become MSPP issuers, but we have determined that they are 
exempt from the requirements of the Paperwork Reduction Act. For 
example, we seek to collect information in connection with the MSPP 
application process and reporting requirements under Sec.  800.112. We 
are also proposing requirements for issuers to authorize accrediting 
entities to send documentation to OPM under Sec.  800.111. The proposal 
would also set up a process under Sec.  800.116 for states to request 
that OPM reconsider a standard applicable to MSPs or MSPP issuers that 
does not comply with that State's laws for QHPs. Under Sec.  800.503, 
MSPP issuers are directed to provide certain written notices, which are 
third-party disclosures under the Paperwork Reduction Act. These 
collections would generally be considered reporting requirements under 
the Paperwork Reduction Act. Moreover, based on responses to the RFI, 
subsequent conversations with both responding health insurance issuers 
and other

[[Page 72599]]

health insurance issuers subsequent to the RFI, and other practical 
considerations, OPM expects fewer than ten responsible entities to 
respond to all of the collections noted above. For that reason alone, 
the collections are exempt from the Paperwork Reduction Act under 44 
U.S.C. 3502(3)(A)(i). There may also be other reasons why these 
collections are exempt from these requirements. We seek comments on 
these assumptions.

VI. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) \57\ requires agencies to 
prepare an initial regulatory flexibility analysis to describe the 
impact of the proposed rule on small entities, unless the head of the 
agency can certify that the rule would not have a significant economic 
impact on a substantial number of small entities. The RFA 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.''
---------------------------------------------------------------------------

    \57\ 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------

    The 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. For purposes of the RFA, small 
entities include small businesses, small non-profit organizations, and 
small government jurisdictions. Small businesses are those with sizes 
below thresholds established by the SBA. With respect to health 
insurers, the SBA size standard is $7.0 million in annual receipts.\58\
---------------------------------------------------------------------------

    \58\ According to the SBA size standards, entities with average 
annual receipts of $7 million or less would be considered small 
entities for North American Industry Classification System (NAICS) 
Code 524114 (Direct Health and Medical Insurance Carriers) (for more 
information, see ``Table of Size Standards Matched To North American 
Industry Classification System Codes,'' effective March 26, 2012, 
U.S. Small Business Administration, available at http://www.sba.gov).
---------------------------------------------------------------------------

    OPM does not think that small businesses with annual receipts less 
than $7.0 million would likely have sufficient economies of scale to 
become MSPP issuers or be part of a group of MSPP issuers. Similarly, 
while the Director must enter into an MSPP contract with at least one 
non-profit entity, OPM does not think that small non-profit 
organizations would likely have sufficient economies of scale to become 
MSPP issuers or be part of a group of MSPP issuers.
    OPM does not think that this proposed rule would have a significant 
economic impact on a substantial number of small businesses with annual 
receipts less than $7.0 million, because there are only a few health 
insurance issuers that could be considered small businesses. Moreover, 
while the Director must enter into an MSPP contract with at least one 
non-profit entity, OPM does not think that this proposed rule would 
have a significant economic impact on a substantial number of small 
non-profit organizations, because few health insurance issuers are 
small non-profit organizations.
    OPM incorporates by reference previous analysis by HHS, which 
provides some insight into the number of health insurance issuers that 
could be small entities. Particularly, as discussed by HHS in the 
Medical Loss Ratio interim final rule (75 FR 74918), few, if any, 
issuers are small enough to fall below the size thresholds for small 
business established by the SBA. In that rule, HHS used a data set 
created from 2009 NAIC Health and Life Blank annual financial statement 
data to develop an updated estimate of the number of small entities 
that offer comprehensive major medical coverage in the individual and 
group markets. For purposes of that analysis, HHS used total Accident 
and Health earned premiums as a proxy for annual receipts. HHS 
estimated that there are 28 small entities with less than $7 million in 
accident and health earned premiums offering individual or group 
comprehensive major medical coverage. OPM concurs with this HHS 
analysis, and, thus, does not think that this proposed rule would have 
a significant economic impact on a substantial number of small 
entities.
    Based on the foregoing, OPM is not preparing an analysis for the 
RFA because OPM has determined, and the Director certifies, that this 
proposed rule would not have a significant economic impact on a 
substantial number of small entities.

VII. Unfunded Mandates

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) \59\ 
requires that agencies assess anticipated costs and benefits and take 
certain other actions before issuing a proposed rule (and subsequent 
final rule) that includes any Federal mandate that may result in 
expenditures in any one year by a State, local, or tribal governments, 
in the aggregate, or by the private sector, of $100 million in 1995 
dollars, updated annually for inflation. In 2012, that threshold is 
approximately $139 million. UMRA does not address the total cost of a 
rule. Rather, it focuses on certain categories of costs, 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.
---------------------------------------------------------------------------

    \59\ Public Law 104-4.
---------------------------------------------------------------------------

    This proposed rule does not place any Federal mandates on State, 
local, or Tribal governments, or on the private sector. This proposed 
rule would establish the MSPP, a voluntary federal program that 
provides health insurance issuers the opportunity to contact with OPM 
to offer MSPs on the Exchanges. Section 3 of UMRA excludes from the 
definition of ``Federal mandate'' duties that arise from participation 
in a voluntary Federal program. Accordingly, no analysis under UMRA is 
required.

VIII. Federalism

    Executive Order 13132 outlines fundamental principles of 
federalism, and requires the adherence to specific criteria by Federal 
agencies in the process of their formulation and implementation of 
policies that have ``substantial direct effects'' on the States, the 
relationship between the national government and States, or on the 
distribution of power and responsibilities among the various levels of 
government. Federal agencies promulgating regulations that have these 
federalism implications must consult with State and local officials, 
and describe the extent of their consultation and the nature of the 
concerns of State and local officials in the preamble to the 
regulation.
    These proposed regulations have federalism implications, because 
they have direct effects on the States, the relationship between the 
national government and States, or on the distribution of power and 
responsibilities among various levels of government. In particular, 
under proposed Sec.  800.114, OPM may deem a State law to be 
inconsistent with section 1334 of the Affordable Care Act, and, thus, 
inapplicable to an MSP or MSPP issuer. However, in OPM's view, the 
federalism implications of these proposed regulations are substantially 
mitigated because, OPM expects that the vast majority of States have 
laws that are consistent with section 1334 of the Affordable Care Act. 
Furthermore, proposed Sec.  800.116 sets forth a process for dispute 
resolution if a State seeks to

[[Page 72600]]

challenge OPM's determination that a State law is inapplicable to an 
MSP or MSPP issuer.
    In compliance with the requirement of Executive Order 13132 that 
agencies examine closely any policies that may have federalism 
implications or limit the policy making discretion of the States, OPM 
has engaged in efforts to consult with and work cooperatively with 
affected State and local officials, including attending meetings of the 
NAIC and consulting with State insurance officials on an individual 
basis. It is expected OPM will act in a similar fashion in enforcing 
the Affordable Care Act requirements. Throughout the process of 
developing these proposed regulations, OPM has attempted to balance the 
States' interests in regulating health insurance issuers, and the 
statutory requirement to provide two MSPs in all Exchanges in the 50 
States and the District of Columbia. By doing so, it is OPM's view that 
it has complied with the requirements of Executive Order 13132.
    Pursuant to the requirements set forth in section 8(a) of Executive 
Order 13132, and by the signature affixed to this proposed regulation, 
OPM certifies that it has complied with the requirements of Executive 
Order 13132 for the attached regulations in a meaningful and timely 
manner.

List of Subjects in 45 CFR Part 800

    Administrative practice and procedure, Health facilities, Health 
insurance, Health professions, reporting and recordkeeping 
requirements.

U.S. Office of Personnel Management.
John Berry,
Director.

    For the reasons stated in the preamble, the U.S. Office of 
Personnel Management proposes to add 45 CFR chapter VIII, consisting of 
part 800, to read as follows:

Title 45

CHAPTER VIII--OFFICE OF PERSONNEL MANAGEMENT

PART 800--MULTI-STATE PLAN PROGRAM

Subpart A--General Provisions and Definitions
Sec.
800.10 Basis and scope.
800.20 Definitions.
Subpart B--Multi-State Plan Issuer Requirements
800.101 General requirements.
800.102 Compliance with Federal law.
800.103 Authority to contract with issuers.
800.104 Phased expansion.
800.105 Benefits.
800.106 Cost-sharing limits, premium tax credits, and cost-sharing 
reductions.
800.107 Levels of coverage.
800.108 Assessments and user fees.
800.109 Network adequacy.
800.110 Service area.
800.111 Accreditation requirement.
800.112 Reporting requirements.
800.113 Benefit plan material or information.
800.114 Compliance with applicable State law.
800.115 Level playing field.
800.116 Process for dispute resolution.
Subpart C--Premiums, Rating Factors, Medical Loss Ratios, and Risk 
Adjustment
800.201 General requirements.
800.202 Rating factors.
800.203 Medical loss ratio.
800.204 Reinsurance, risk corridors, and risk adjustment.
Subpart D--Application and Contracting Procedures
800.301 Application process.
800.302 Review of applications.
800.303 MSPP contracting.
800.304 Term of the contract.
800.305 Contract renewal process.
800.306 Nonrenewal.
Subpart E--Compliance
800.401 Contract performance.
800.402 Contract quality assurance.
800.403 Fraud and abuse.
800.404 Compliance actions.
800.405 Reconsideration of compliance actions.
Subpart F--Appeals by Enrollees for Denials of Claims for Payment or 
Service
800.501 General requirements.
800.502 MSPP issuer internal claims and appeals processes.
800.503 MSPP issuer internal claims and appeals timeframes and 
notice of determination.
800.504 External review.
800.505 Judicial review.
Subpart G--Miscellaneous
800.601 Reservation of authority.
800.602 Consumer choice with respect to certain services.
Appendix A to Part 800--Applicable Provisions of Part A of title 
XXVII of the PHS Act
Appendix B to Part 800--Applicable Provisions of the Affordable Care 
Act
Appendix C to Part 800--Applicable Provisions of the Internal 
Revenue Code

    Authority: Section 1334 of the Patient Protection and Affordable 
Care Act, (Pub. L. 111-148), as amended by the Health Care and 
Education Reconciliation Act of 2010 (Pub. L. 111-152).

Subpart A--General Provisions and Definitions


Sec.  800.10  Basis and scope.

    (a) Basis. This part is based on the following sections of title I 
of the Affordable Care Act:
    (1) 1001. Amendments to the Public Health Service Act.
    (2) 1302. Essential Health Benefit Requirements.
    (3) 1311. Affordable Choices of Health Benefit Plans.
    (4) 1324. Level Playing Field.
    (5) 1334. Multi-State Plans.
    (6) 1341. Transitional Reinsurance Program for Individual Market in 
Each State.
    (7) 1342. Establishment of Risk Corridors for Plans in Individual 
and Small Group Markets.
    (8) 1343. Risk Adjustment.
    (b) Scope. This part establishes standards for health insurance 
issuers to contract with the United States Office of Personnel 
Management (OPM) to offer multi-State plans to provide health insurance 
coverage on Exchanges for each State. It also establishes standards for 
appeal of a decision by OPM affecting the issuer's participation in the 
Multi-State Plan Program (MSPP) and standards for an enrollee in a 
multi-State plan (MSP) to appeal denials of payment or services by an 
MSPP issuer.


Sec.  800.20  Definitions.

    The following definitions apply to this part:
    Actuarial value (AV) has the meaning given such term in proposed 45 
CFR 156.20.
    Affordable Care Act means the Patient Protection and Affordable 
Care Act (Pub. L. 111-148) as amended by the Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152).
    Applicant means an issuer or group of issuers that has submitted an 
application to OPM to be considered for participation in the Multi-
State Plan Program.
    Benefit plan material or information means explanations or 
descriptions, whether printed or electronic, that describe a health 
insurance issuer's products. The term does not include a policy or 
contract for health insurance coverage.
    Cost sharing has the meaning given such term in 45 CFR 155.20.
    Director means the Director of the United States Office of 
Personnel Management.
    EHB-benchmark plan has the meaning given such term in proposed 45 
CFR 156.20.
    Exchange means a governmental agency or non-profit entity that 
meets the applicable requirements of 45 CFR part 155 and makes 
qualified health plans (QHPs) and MSPs available to qualified 
individuals and qualified employers. Unless otherwise identified, this 
term refers to State Exchanges,

[[Page 72601]]

regional Exchanges, subsidiary Exchanges, and a Federally-facilitated 
Exchange.
    Federal Employees Health Benefits Program or FEHBP means the health 
benefits program administered by the United States Office of Personnel 
Management pursuant to chapter 89 of title 5, United States Code.
    Group of issuers means:
    (1) A group of health insurance issuers who are affiliated either 
by common ownership and control or by common use of a nationally 
licensed service mark (as defined in this section); or
    (2) An affiliation of health insurance issuers and an entity that 
is not an issuer but that owns a nationally licensed service mark (as 
defined in this section).
    Health insurance coverage means benefits consisting of medical care 
(provided directly, through insurance or reimbursement, or otherwise) 
under any hospital or medical service policy or certificate, hospital 
or medical service plan contract, or HMO contract offered by a health 
insurance issuer. Health insurance coverage includes group health 
insurance coverage, individual health insurance coverage, and short-
term, limited duration insurance.
    Health insurance issuer or Issuer means an insurance company, 
insurance service, or insurance organization (including an HMO) that is 
required to be licensed to engage in the business of insurance in a 
State and that is subject to State law that regulates insurance (within 
the meaning of section 514(b)(2) of the Employee Retirement Income 
Security Act (ERISA)). This term does not include a group health plan 
as defined in 45 CFR 146.145(a).
    HHS means the United States Department of Health and Human 
Services.
    Indian has the meaning given to the term in proposed 45 CFR 
155.300(a).
    Indian plan variation has the meaning given such term in proposed 
45 CFR 156.400.
    Level of Coverage means one of four standardized actuarial values 
of plan coverage as defined by section 1302(d)(1) of the Affordable 
Care Act.
    Licensure means the authorization obtained from the appropriate 
State official or regulatory authority to offer health insurance 
coverage in the State.
    Multi-State Plan or MSP means a health plan that is offered under a 
contract with OPM pursuant to section 1334 of the Affordable Care Act 
and meets the requirements of this part.
    Multi-State Plan Program Issuer or MSPP issuer means a health 
insurance issuer or group of issuers (as defined in this section) that 
has a contract with OPM to offer health plans pursuant to section 1334 
of the Affordable Care Act and meets the requirements of this part.
    Multi-State Plan Program or MSPP means the program administered by 
OPM pursuant to section 1334 of the Affordable Care Act.
    Nationally licensed service mark means a word, name, symbol, or 
device, or any combination thereof, that an issuer or group of issuers 
uses consistently nationwide to identify itself.
    Non-profit entity means:
    (1) An organization that is incorporated under State law as a non-
profit entity and licensed under State law as a health insurance 
issuer; or
    (2) A group of health insurance issuers licensed under State law, a 
substantial portion of which are incorporated under State law as non-
profit entities.
    OPM means the United States Office of Personnel Management.
    Percentage of total allowed cost of benefits has the meaning given 
such term in 45 CFR 156.20.
    Plan year means a consecutive 12 month period during which a health 
plan provides coverage for health benefits. A plan year may be a 
calendar year or otherwise.
     Prompt payment means a requirement imposed on a health insurance 
issuer to pay a provider or enrollee for a claimed benefit or service 
within a defined time period, including the penalty or consequence 
imposed on the issuer for failure to meet the requirement.
    Qualified Health Plan or QHP means a health plan that has in effect 
a certification that it meets the standards described in subpart C of 
45 CFR part 156 issued or recognized by each Exchange through which 
such plan is offered pursuant to the process described in subpart K of 
45 CFR part 155.
    Rating means the process, including rating factors, numbers, 
formulas, methodologies, and actuarial assumptions, used to set 
premiums for a health plan.
    Secretary means the Secretary of the Department of Health and Human 
Services.
    SHOP means a Small Business Health Options Program operated by an 
Exchange through which a qualified employer can provide its employees 
and their dependents with access to one or more qualified health plans 
(QHPs).
    Silver plan variation has the meaning given such term in 45 CFR 
156.400.
    Small employer means, in connection with a group health plan with 
respect to a calendar year and a plan year, an employer who employed an 
average of at least 1 but not more than 100 employees on business days 
during the preceding calendar year and who employs at least 1 employee 
on the first day of the plan year. In the case of plan years beginning 
before January 1, 2016, a State may elect to define small employer by 
substituting ``50 employees'' for ``100 employees.''
    Standard plan has the meaning given such term in proposed 45 CFR 
156.400.
    State means each of the 50 States or the District of Columbia.
    State Insurance Commissioner means the commissioner or other chief 
insurance regulatory official of a State.

Subpart B--Multi-State Plan Issuer Requirements


Sec.  800.101  General requirements.

    An MSPP issuer must:
    (a) Licensed. Be licensed as a health insurance issuer in each 
State where it offers health insurance coverage;
    (b) Contract with OPM. Have a contract with OPM pursuant to this 
part;
    (c) Required levels of coverage. Offer levels of coverage as 
required by Sec.  800.107;
    (d) Eligibility and enrollment. MSPs and MSPP issuers must meet the 
same requirements for eligibility, enrollment, and termination of 
coverage as those that apply to QHPs and QHP issuers pursuant to 45 CFR 
parts 155 subparts D, E, and H and 45 CFR 156.250, 156.260, 156.265, 
156.270, 156.285.
    (e) Applicable to each MSP. Ensure that each of its MSPs meets the 
requirements of this part;
    (f) Compliance. Comply with all standards set forth in this part;
    (g) OPM direction and other legal requirements. Timely comply with 
OPM instructions and directions and with other applicable law; and
    (h) Other requirements. Meet such other requirements as determined 
appropriate by OPM, in consultation with HHS, pursuant to Sec.  
1334(b)(4) of the Affordable Care Act.
    (i) Non-discrimination. In carrying out the requirements of this 
part, the MSPP issuer must:
    (1) Comply with applicable non-discrimination statutes; and
    (2) With respect to its MSP, not discriminate based on race, color, 
national origin, disability, age, sex (including pregnancy and gender 
identity), or sexual orientation.


Sec.  800.102  Compliance with Federal law.

    (a) Public Health Service Act. As a condition of participation in 
the MSPP, an MSPP issuer must comply with the

[[Page 72602]]

provisions of part A of title XXVII of the PHS Act, as determined by 
the Director, as listed in appendix A to this part.
    (b) Affordable Care Act. As a condition of participation in the 
MSPP, an MSPP issuer must comply with the provisions of title I of the 
Affordable Care Act, as determined by the Director, as listed in 
appendix B to this part.


Sec.  800.103  Authority to contract with issuers.

    (a) General. OPM may enter into contracts with health insurance 
issuers to offer at least two MSPs on Exchanges and SHOPs in each 
State, without regard to any statutes that would otherwise require 
competitive bidding.
    (b) Non-profit entity. In entering into contracts with health 
insurance issuers to offer MSPs, OPM will enter into a contract with at 
least one non-profit entity as defined in Sec.  800.20.
    (c) Group of issuers. Any contract to offer an MSP may be with a 
group of issuers as defined in Sec.  800.20.
    (d) Individual and group coverage. The contracts will provide for 
individual health insurance coverage and for group health insurance 
coverage for small employers.


Sec.  800.104  Phased expansion.

    (a) Phase-in. OPM may enter into a contract with a health insurance 
issuer to offer an MSP if the health insurance issuer agrees that:
    (1) With respect to the first year for which the health insurance 
issuer offers an MSP, the health insurance issuer will offer the MSP in 
at least 60 percent of the States (31 States);
    (2) With respect to the second such year, the health insurance 
issuer will offer the MSP in at least 70 percent of the States (36 
States);
    (3) With respect to the third such year, the health insurance 
issuer will offer the MSP in at least 85 percent of the States (44 
States); and
    (4) With respect to each subsequent year, the health insurance 
issuer will offer the MSP in all States.
    (b) Partial coverage within a State. OPM may enter into a contract 
with an MSPP issuer even if the MSPP issuer's MSPs for a State cover 
fewer than all the service areas specified for that State pursuant to 
Sec.  800.110. For each State in which the MSPP issuer offers partial 
coverage, the MSPP issuer's application for participation in the MSPP 
under section 800.301 and the MSPP issuer's information submitted to 
support renewal of the contract under section 800.305 must include a 
plan for offering coverage throughout the State. OPM will monitor the 
MSPP issuer's progress in implementing the plan as part of its contract 
compliance activities under subpart E of this part.
    (c) Licensed where offered. OPM may enter into a contract with an 
MSPP issuer who is not licensed in every State, provided that the 
issuer is licensed in every State where it offers MSP coverage through 
any Exchanges in that State and demonstrates to OPM that it is making a 
good faith effort to become licensed in every State consistent with the 
timeframe in paragraph (a) of this section.


Sec.  800.105  Benefits.

    (a) Benefits package. (1) An MSPP issuer must offer a uniform 
benefits package, including the essential health benefits (EHB) 
described in section 1302 of the Affordable Care Act, for each MSP 
within a State.
    (2) The benefits package noted in paragraph (a)(1) of this section 
must comply with section 1302 of the Affordable Care Act as well as any 
applicable standards set by OPM or HHS.
    (b) Benefits package options. (1) An MSPP issuer must offer a 
benefits package, in all States, that is substantially equal to:
    (i) The EHB-benchmark plan in each State in which it operates; or
    (ii) Any EHB-benchmark plan selected by OPM under paragraph (c) of 
this section.
    (2) An issuer applying to participate in the MSPP must select one 
of the two benefits package options described in paragraph (b)(1) of 
this section in its application.
    (c) OPM selection of benchmark plans. (1) The OPM-selected EHB-
benchmark plans are the three largest Federal Employees Health Benefits 
Program (FEHBP) plan options, as identified by HHS pursuant to section 
1302(b) of the Affordable Care Act, and as supplemented pursuant to 
paragraphs (c)(2) through (4) of this section.
    (2) Any EHB-benchmark plan selected by OPM under paragraph (c)(1) 
of this section lacking the coverage of pediatric oral services or 
pediatric vision services must be supplemented by the addition of the 
entire category of benefits from the largest Federal Employee Dental 
and Vision Insurance Program (FEDVIP) dental or vision plan options, 
respectively, pursuant to 45 CFR 156.110(b) and section 1302(b) of the 
Affordable Care Act.
    (3) An MSPP issuer must follow State definitions where the State 
chooses to specifically define the habilitative services category 
pursuant to 45 CFR 156.110(f).
    (4) Any EHB-benchmark plan selected by OPM under paragraph (c)(1) 
of this section must include, for each State, any State-required 
benefits enacted before December 31, 2011 that are included in the 
State's EHB-benchmark plan as described in paragraph (b)(1)(i) of this 
section, or specific to the market in which the plan is offered. In the 
case in which a State chooses not to define this category, OPM proposes 
that if any OPM-selected EHB-benchmark plan lacks coverage of 
habilitative services and devices, then OPM may determine what 
habilitative services and devices are to be included in that EHB-
benchmark plan.
    (d) OPM approval. An MSPP issuer's benefits package, including its 
prescription drug list, must be submitted to approved by OPM, which 
will review a benefits package proposed by an MSPP issuer and determine 
if it is substantially equal to an EHB-benchmark plan described in 
paragraph (b)(1) of this section pursuant to standards set forth by OPM 
or HHS including proposed 45 CFR 156.115, 156.120, and 156.125.
    (e) State payments for additional State-required benefits. If a 
State requires that benefits in addition to the benchmark package be 
offered to MSP enrollees in that State, then pursuant to section 
1334(c)(2) of the Affordable Care Act, the State must assume the cost 
of such additional benefits by making payments either to the enrollee 
or on behalf of the enrollee to the MSPP issuer.


Sec.  800.106  Cost-sharing limits, premium tax credits, and cost-
sharing reductions.

    (a) Cost-sharing limits. For each MSP it offers, an MSPP issuer 
must ensure that the cost-sharing provisions of the MSP comply with 
section 1302(c) of the Affordable Care Act as well as any applicable 
standards set by OPM or HHS.
    (b) Premium tax credits and cost-sharing reductions. For each MSP 
it offers, an MSPP issuer must make available to an eligible individual 
the premium tax credits under section 36B of the Internal Revenue Code 
of 1986 and the cost-sharing reductions under section 1402 of the 
Affordable Care Act. An MSPP issuer must also comply with any 
applicable standards set by OPM or HHS.


Sec.  800.107  Levels of coverage.

    (a) Silver and gold levels of coverage required. An MSPP issuer 
must offer at least one MSP at the silver level of coverage and at 
least one MSP at the gold level of coverage on each Exchange in which 
the issuer is certified to offer an MSP pursuant to a contract with 
OPM.

[[Page 72603]]

    (b) Bronze or platinum metal levels of coverage permitted. Pursuant 
to a contract with OPM, an MSPP issuer may offer one or more MSPs at 
the bronze level of coverage or the platinum level of coverage, or 
both, on any Exchange or SHOP in any State.
    (c) Child-only plans. For each level of coverage, the MSPP issuer 
must offer a child-only plan at the same level of coverage, as any 
health insurance coverage offered to individuals who, as of the 
beginning of the plan year, have not attained the age of 21.
    (d) Plan variations for the reduction or elimination of cost 
sharing. An MSPP issuer must comply with section 1402 of the Affordable 
Care Act as well as any applicable standards set by OPM or HHS.
    (e) OPM approval. An MSPP issuer must submit the levels of coverage 
plans and plan variations to OPM for review and approval by OPM.


Sec.  800.108  Assessments and user fees.

    (a) Discretion to charge assessment and user fees. OPM may require 
an MSPP issuer to pay an assessment or user fee as a condition of 
participating in the MSPP.
    (b) Determination of amount. The amount of the assessment or user 
fee charged by OPM for a plan year is the amount determined necessary 
by OPM to meet the costs of OPM's functions under the Affordable Care 
Act for a plan year, including but not limited to such functions as 
entering into contracts with, certifying, recertifying, decertifying, 
and overseeing MSPs and MSPP issuers for that plan year.


Sec.  800.109  Network adequacy.

    (a) General requirement. An MSPP issuer must ensure that the 
provider network of each of its MSPs, as available to all enrollees, 
meets the following standards:
    (1) Maintains a network that is sufficient in number and types of 
providers to assure that all services will be accessible without 
unreasonable delay;
    (2) Is consistent with the network adequacy provisions of section 
2702(c) of the Public Health Service Act; and
    (3) Includes essential community providers in compliance with 45 
CFR 156.235.
    (b) Provider directory. An MSPP issuer must make its provider 
directory for an MSP available to the Exchange for publication online 
pursuant to guidance from the Exchange and to potential enrollees in 
hard copy upon request. In the provider directory, an MSPP issuer must 
identify providers that are not accepting new patients.
    (c) OPM guidance. OPM will issue guidance containing the criteria 
and standards that it will use to determine the adequacy of a provider 
network.


Sec.  800.110  Service area.

    An MSPP issuer must offer an MSP within one or more service areas 
in a State defined by each Exchange pursuant to 45 CFR 155.1055. If an 
Exchange permits issuers to define their service areas, an MSPP issuer 
must obtain OPM's approval for its proposed service areas. Pursuant to 
Sec.  800.104, OPM may enter into a contract with an MSPP issuer even 
if the MSPP issuer's MSPs for a State cover fewer than all the service 
areas specified for that State. For each State in which the MSPP issuer 
does not offer coverage in all service areas, the MSPP issuer's 
application for participation in the MSPP under section 800.301 and the 
MSPP issuer's information submitted to support renewal of the contract 
under section 800.305 must include a plan for offering coverage 
throughout the State. OPM will monitor the MSPP issuer's progress in 
implementing the plan as part of its contract compliance activities 
under Subpart E and will ensure MSPs meet QHP requirement in 45 CFR 
155.1055(b).


Sec.  800.111  Accreditation requirement.

    (a) General requirement. An MSPP issuer must be or become 
accredited consistent with the requirements for QHP issuers specified 
in section 1311 of the Affordable Care Act and in 45 CFR 156.275(a).
    (b) Release of survey. An MSPP issuer must authorize the 
accrediting entity that accredits the MSPP issuer to release to OPM and 
to the Exchange a copy of its most recent accreditation survey, 
together with any survey-related information that OPM or an Exchange 
may require, such as corrective action plans and summaries of findings.
    (c) Timeframe for accreditation. An MSPP issuer that is not 
accredited as of the date that it enters into a contract with OPM must 
become accredited within the timeframe established by OPM as authorized 
by 45 CFR 155.1045.


Sec.  800.112  Reporting requirements.

    (a) OPM specification of reporting requirements. OPM will specify 
the data and information that must be reported by an MSPP issuer, 
including data permitted or required by the Affordable Care Act and 
such other data as OPM may determine necessary for the oversight and 
administration of the MSPP. OPM will also specify the form, manner, 
processes, and frequency for the reporting of data and information. The 
Director of OPM may require that MSPP issuers submit claims payment and 
enrollment data to facilitate OPM's oversight and administration of the 
MSPP in a manner similar to the FEHBP.
    (b) Quality and quality improvement standards. An MSPP issuer must 
comply with any standards required by OPM for reporting quality and 
quality improvement activities including, but not limited to, 
implementation of a quality improvement strategy, disclosure of quality 
measures to enrollees and prospective enrollees, reporting of pediatric 
quality measures, and implementation of rating and enrollee 
satisfaction surveys, which will be similar to standards under section 
1311(c)(1)(E), (H), and (I), (c)(3), and (c)(4) of the Affordable Care 
Act.


Sec.  800.113  Benefit plan material or information.

    (a) Compliance with Federal and State law. An MSPP issuer must 
comply with Federal and State laws relating to benefit plan material or 
information, including the provisions of this section and guidance 
issued by OPM specifying its standards, process, and timeline for 
approval of benefit plan material or information.
    (b) General standards for MSP applications and notices. An MSPP 
issuer must provide all applications and notices to enrollees in 
accordance with the standards described in at 45 CFR 155.205(c). OPM 
may establish additional standards to meet the needs of MSP enrollees.
    (c) Accuracy. An MSPP issuer is responsible for the accuracy of its 
benefit plan material or information.
    (d) Truthful, not misleading, no material omissions, and plain 
language. All benefit plan material or information must be:
    (1) Truthful, not misleading, and not contain material omissions; 
and
    (2) Written in plain language, as defined in section 1311(e)(3)(B) 
of the Affordable Care Act.
    (e) Uniform Explanation of Coverage Documents and Standardized 
Definitions. An MSPP issuer must comply with the provisions of section 
2715 of the PHS Act and regulations issued to implement that section.
    (f) OPM review and approval of benefit plan material or 
information. OPM may request an MSPP issuer submit to OPM benefit plan 
material or information, as defined in Sec.  800.20. OPM reserves the 
right to review and approve benefit plan material or information to 
ensure that an MSPP issuer complies with Federal and State laws, and 
the standards prescribed by

[[Page 72604]]

OPM with respect to benefit plan material or information.
    (g) Statement on certification by OPM. An MSPP issuer may include a 
statement in its benefit plan material or information that:
    (1) OPM has certified the MSP as eligible to be offered on the 
Exchange; and
    (2) OPM monitors the MSP for compliance with all applicable law.


Sec.  800.114  Compliance with applicable State law.

    (a) Compliance with State law. An MSPP issuer must, with respect to 
each of its MSPs, generally comply with State law pursuant to section 
1334(b)(2) of the Affordable Care Act. However, the MSPs and MSPP 
issuers need not comply with State laws that:
    (1) Are inconsistent with section 1334 of the Affordable Care Act 
or this part;
    (2) Prevent the application of a requirement of part A of title 
XXVII of the PHS Act; and
    (3) Prevent the application of a requirement of title I of the 
Affordable Care Act.
    (b) Determination of inconsistency. OPM reserves the right to 
determine, in its judgment, as effectuated through an MSPP contract, 
these regulations, or OPM guidance whether the standards set forth in 
paragraph (a) of this section are satisfied with respect to particular 
State laws. In making any such determinations, OPM will consider 
whether the State law at issue:
    (1) Imposes on MSPP issuers or MSPs a requirement or requirements 
that differ from those applicable to QHP issuers and QHPs offered on 
one or more Exchanges in that State;
    (2) Creates responsibilities, administrative burdens, or costs for 
an MSPP issuer that significantly deter or impede the MSPP issuer from 
offering a viable product on one or more Exchanges;
    (3) Creates responsibilities, administrative burdens, or costs for 
OPM that significantly deter or impede OPM's effective implementation 
of the MSPP; or
    (4) Prevents an MSPP issuer from offering an MSP on one or more 
Exchanges in that State.


Sec.  800.115  Level playing field.

    An MSPP issuer must, with respect to each of its MSPs, meet the 
following requirements in order to ensure a level playing field:
    (a) Guaranteed renewal. Guarantee that an enrollee can renew 
enrollment in an MSP in compliance with sections 2703 and 2742 of the 
PHS Act.
    (b) Rating. In proposing premiums for OPM approval, use only the 
rating factors permitted under section 2701 of the PHS Act and State 
law.
    (c) Preexisting conditions. Not impose any preexisting condition 
exclusion and comply with section 2704 of the PHS Act.
    (d) Non-discrimination. Comply with section 2705 of the PHS Act.
    (e) Quality improvement and reporting. Comply with all Federal and 
State quality improvement and reporting requirements. ``Quality 
improvement and reporting'' means quality improvement as defined in 
section 1311(h) of the Affordable Care Act and quality improvement 
plans or strategies required under State law, and quality reporting as 
defined in section 2717 of the PHS Act and section 1311(g) of the 
Affordable Care Act. Quality improvement also includes activities such 
as, but not limited to, implementation of a quality improvement 
strategy, disclosure of quality measures to enrollees and prospective 
enrollees, and reporting of pediatric quality measures, which will be 
similar to standards under section 1311(c)(1)(E), (H), and (I) of the 
Affordable Care Act.
    (f) Fraud and abuse. Comply with all Federal and State fraud and 
abuse laws.
    (g) Licensure. Be licensed in every State in which it offers an 
MSP.
    (h) Solvency and financial requirements. Comply with the solvency 
standards set by each State in which it offers an MSP.
    (i) Market conduct. Comply with the market conduct standards of 
each State in which it offers an MSP.
    (j) Prompt payment. Adhere to applicable State law in negotiating 
the terms of payment in contracts with its providers and in making 
payments to claimants and providers.
    (k) Appeals and grievances. Comply with Federal standards under 
section 2719 of the PHS Act for appeals and grievances relating to 
adverse benefit determinations, as described in subpart F.
    (l) Privacy and confidentiality. Comply with all Federal and State 
privacy and security requirements and laws. Comply with any standards 
required by OPM in guidance or contract, which will be similar to the 
standards contained in 45 CFR part 162 and applicable State law.
    (m) Benefit plan material or information. Comply with Federal and 
State law, including Sec.  800.113 of this part.


Sec.  800.116  Process for dispute resolution.

    (a) Determinations about applicability of State law under section 
1334(b)(2) of the Affordable Care Act. In the event of a dispute about 
the applicability to an MSP or MSPP issuer of a State law not related 
to the 13 categories in section 1324(b) of the Affordable Care Act, the 
State may request that OPM reconsider a determination, made under 
section 800.114 that an MSP or MSPP issuer is not subject to such State 
law.
    (b) Required demonstration. A State making a request under 
subparagraph (1) must demonstrate that the State law at issue:
    (1) Is not inconsistent with section 1334 of the Affordable Care 
Act or this part;
    (2) Does not prevent the application of a requirement of part A of 
title XXVII of the PHS Act; and
    (3) Does not prevent the application of a requirement of title I of 
the Affordable Care Act.
    (c) Request for review. The request must be in writing and include 
contact information, including the name, telephone number, email 
address, and mailing address of the person or persons whom OPM may 
contact regarding the request for review. The request must be in such 
form, contain such information, and be submitted in such manner and 
within such timeframe as OPM may prescribe.
    (1) The requester may submit to OPM any relevant information to 
support its request.
    (2) OPM may obtain additional information relevant to the request 
from any source as it may, in its judgment, deem necessary. OPM will 
provide the requester with a copy of any additional information it 
obtains and provide an opportunity for the requester to respond 
(including by submission of additional information or explanation).
    (3) OPM will issue a written decision within 60 calendar days after 
receiving the written request, or after the due date for the response, 
whichever is later, unless a different timeframe is agreed upon.
    (4) OPM's written decision will constitute final agency action that 
is subject to review under the Administrative Procedure Act in the 
appropriate U.S. district court. Such review is limited to the record 
that was before OPM when OPM made its decision.

Subpart C--Premiums, Rating Factors, Medical Loss Ratios, and Risk 
Adjustment


Sec.  800.201  General requirements.

    (a) Premium negotiation. OPM will negotiate annually with an MSPP 
issuer, on a State by State basis, the premiums for each MSP offered by 
that issuer in that State. Such negotiations may

[[Page 72605]]

include negotiations about the cost-sharing provisions of an MSP.
    (b) Duration. Premiums will remain in effect for the plan year.
    (c) Guidance on rate development. OPM will issue guidance 
addressing methods for the development of premiums for the MSPP. Such 
guidance will follow State rating standards generally applicable in a 
State to the greatest extent practicable.
    (d) Calculation of actuarial value. An MSPP issuer must calculate 
actuarial value in the same manner as QHP issuers under section 1302(d) 
of the Affordable Care Act as well as any applicable standards set by 
OPM or HHS.
    (e) OPM rate review process. An MSPP issuer must participate in the 
rate review process established by OPM to negotiate rates for MSPs. The 
rate review process established by OPM will be similar to the process 
established by HHS pursuant to section 2794 of the PHS Act and 
disclosure and review standards established under 45 CFR part 154.
    (f) State Effective Rate Review. With respect to its MSPs, an MSPP 
issuer is subject to a State's rate review process including a State's 
Effective Rate Review program established by HHS pursuant to section 
2794 of the PHS Act and 45 CFR part 154. In the event HHS is reviewing 
rates for a State pursuant to section 2794 of the PHS Act, then HHS 
will defer to OPM's judgment of the MSPs proposed rate increase. In the 
event that a State withholds approval of an MSP rate for reasons that 
OPM determines, in its discretion, to be arbitrary, capricious, or an 
abuse of discretion, OPM retains authority to make the final decision 
to approve rates for participation in the MSPP notwithstanding the 
absence of State approval.
    (g) Single risk pool. An MSPP issuer must consider all enrollees in 
an MSP to be in the same risk pool as all enrollees in all other health 
plans in the individual market or small group market, respectively, in 
compliance with section 1312(c) of the Affordable Care Act, 45 CFR 
156.80, and any applicable Federal or State laws and regulations 
implementing section 1312(c).


Sec.  800.202  Rating factors.

    (a) Permissible rating factors. In proposing premiums for each MSP, 
an MSPP issuer must use only the rating factors permitted under section 
2701 of the PHS Act.
    (b) Application of variations based on age or tobacco use. Rating 
variations permitted under section 2701(a) of the PHS Act must be 
applied by an MSPP issuer based on the portion of the premium 
attributable to each family member covered under the coverage in 
accordance with any applicable Federal or State laws and regulations 
implementing section 2701(a) of the PHS Act.
    (c) Age rating. For age rating, an MSPP issuer must use the ratio 
established by the State in which the MSP is offered if it is less than 
3:1.
    (1) Age bands. An MSPP issuer must use the uniform age bands 
established under HHS regulations implementing section 2701(a) of the 
PHS Act.
    (2) Age curves. An MSPP issuer must use the age curves established 
under HHS regulations implementing section 2701(a) of the PHS Act.
    (d) Rating areas. An MSP must use the rating areas appropriate to 
the State in which the MSP is offered and established under HHS 
regulations implementing section 2701(a) of the PHS Act.
    (e) Tobacco rating. An MSPP issuer must apply tobacco use as a 
rating factor in accordance with any applicable Federal or State laws 
and regulations implementing section 2701(a) of the PHS Act.


Sec.  800.203  Medical loss ratio.

    (a) Required medical loss ratio. An MSPP issuer must attain:
    (1) The medical loss ratio (MLR) required under section 2718 of the 
PHS Act and regulations promulgated by HHS; and
    (2) Any MSP-specific MLR that OPM may set in the best interests of 
MSP enrollees or that is necessary to be consistent with a State's 
requirements with respect to MLR.
    (b) Consequences of not attaining required medical loss ratio. If 
an MSPP issuer fails to attain an MLR set forth in paragraph (a), then 
OPM may take any appropriate action including, intermediate sanctions, 
such as suspension of marketing, but not limited to, decertifying a MSP 
in one or more States or terminating an MSPP issuer's contract pursuant 
to Sec.  800.404.


Sec.  800.204  Reinsurance, risk corridors, and risk adjustment.

    (a) Transitional reinsurance program. An MSPP issuer must comply 
with section 1341 of the Affordable Care Act, 45 CFR part 153, and any 
applicable Federal or State regulations under that section that sets 
forth requirements to implement the transitional reinsurance program 
for the individual market.
    (b) Temporary risk corridors program. An MSPP issuer must comply 
with section 1342 of the Affordable Care Act, 45 CFR part 153, and any 
applicable Federal or State regulations under section 1342 that sets 
forth requirements to implement the risk corridor program.
    (c) Risk adjustment program. An MSPP issuer must comply with 
participate in the risk adjustment program established pursuant to 
section 1343 of the Affordable Care Act, 45 CFR part 153, and any 
applicable Federal or State regulations under section 1343 that sets 
forth requirements to implement the risk adjustment program.

Subpart D--Application and Contracting Procedures


Sec.  800.301  Application process.

    (a) Acceptance of applications. Without regard to section 6101(b) 
through (d) of title 41, United States Code, or any other statute 
requiring competitive bidding, OPM may consider annually applications 
from health insurance issuers, including groups of health insurance 
issuers as defined in Sec.  800.20, to participate in the MSPP. If OPM 
determines that it is not beneficial for the MSPP to consider new 
applications for an upcoming year, OPM will issue a notice to that 
effect.
    (b) Form and manner of applications. An applicant must submit to 
OPM, in the form and manner, and in accordance with the timeline 
specified by OPM, the information requested by OPM for determining 
whether an applicant meets the requirements of this part.


Sec.  800.302  Review of applications.

    (a) Determinations. OPM will determine if an applicant meets the 
requirements of this part. If OPM determines that an applicant meets 
the requirements of this part, OPM may accept the applicant to enter 
into contract negotiations with OPM to participate in the MSPP.
    (b) Requests for additional information. OPM may request additional 
information from an applicant before making a decision about whether to 
enter into contract negotiations with that applicant to participate in 
the MSPP.
    (c) Declination of application. If, after reviewing an application 
to participate in the MSPP, OPM declines to enter into contract 
negotiations with the applicant, OPM will inform the applicant in 
writing of the reasons for that decision.
    (d) Discretion. The decision whether to enter into contract 
negotiations with a health insurance issuer who has applied to 
participate in the MSPP is committed to OPM's discretion.
    (e) Impact on future applications. OPM's declination of an 
application to participate in the MSPP will not

[[Page 72606]]

preclude the applicant from submitting an application for a subsequent 
year to participate in the MSPP.


Sec.  800.303  MSPP contracting.

    (a) Participation in MSPP. To become an MSPP issuer, the applicant 
and the Director or his designee must sign a contract that meets the 
requirements of this part.
    (b) Standard contract. OPM will establish a standard contract for 
the MSPP.
    (c) Premiums. OPM and the applicant will negotiate the premiums for 
an MSP for each plan year in accordance with the provisions of subpart 
C.
    (d) Benefit packages. OPM must approve the applicant's benefit 
packages for an MSP.
    (e) Additional terms and conditions. OPM may elect to negotiate 
with an applicant such additional terms, conditions, and requirements 
that:
    (1) Are in the interests of MSP enrollees; or
    (2) OPM determines to be appropriate.
    (f) Certification to offer health insurance coverage. (1) For each 
plan year, an MSPP contract will contain a certification that specifies 
the Exchanges in which the MSPP issuer is authorized to offer an MSP, 
as well as the specific benefit packages authorized to be offered on 
each Exchange and the premiums to be charged for each benefit package 
on each Exchange.
    (2) An MSPP issuer cannot offer an MSP on an Exchange unless its 
MSPP contract with OPM includes a certification authorizing the MSPP 
issuer to offer the MSP on that Exchange in accordance with paragraph 
(f)(1) of this section.


Sec.  800.304  Term of the contract.

    (a) Term of a contract. The term of the contract will be specified 
in the MSPP contract and must be for a period of at least the 12 
consecutive months defined as the plan year.
    (b) Plan year. The plan year is a consecutive 12 month period 
during which an MSP provides coverage for health benefits. A plan year 
may be a calendar year or otherwise.


Sec.  800.305  Contract renewal process.

    (a) Renewal. To continue participating in the MSPP, an MSPP issuer 
must provide to OPM, in the form and manner, and in accordance with the 
timeline prescribed by OPM, the information requested by OPM for 
determining whether the MSPP issuer continues to meet the requirements 
of this part.
    (b) OPM decision. Subject to paragraph (c) of this section, OPM 
will renew the MSPP contract of an MSPP issuer who timely submits the 
information described in paragraph (a) of this section.
    (c) OPM discretion not to renew. OPM may decline to renew the 
contract of an MSPP issuer if:
    (1) OPM and the MSPP issuer fail to agree on premiums and benefits 
for an MSP for the subsequent plan year;
    (2) The MSPP issuer has engaged in conduct described in Sec.  
800.404(a); or
    (3) OPM determines that the MSPP issuer will be unable to comply 
with a material provision of section 1334 of the Affordable Care Act or 
this part.
    (d) Failure to agree on premiums and benefits. Except as otherwise 
provided in this part, if an MSPP issuer has complied with paragraph 
(a) of this section and OPM and the MSPP issuer fail to agree on 
premiums and benefits for an MSP on one or more Exchanges for the 
subsequent plan year by the date required by OPM, either party may 
provide notice of nonrenewal pursuant to Sec.  800.306 or OPM may in 
its discretion withdraw the certification of that MSP on the Exchange 
or Exchanges for that plan year. In addition, if OPM and the MSPP 
issuer fail to agree on benefits and premiums for an MSP on one or more 
Exchanges by the date set by OPM and in the event of no action (no 
notice of nonrenewal or renewal) by either party, the MSPP contract 
will be renewed and the existing premiums and benefits for that MSP on 
that Exchange or Exchanges will remain in effect for the subsequent 
plan year.


Sec.  800.306  Nonrenewal.

    (a) Definition of nonrenewal. As used in this subpart and subpart E 
of this part, ``nonrenewal'' means a decision by either OPM or an MSPP 
issuer not to renew an MSPP contract.
    (b) Notice required. Either OPM or an MSPP issuer may decline to 
renew an MSPP contract by providing a written notice of nonrenewal to 
the other party.
    (c) MSPP issuer responsibilities. The MSPP issuer's written notice 
of nonrenewal must be made in accordance with its MSPP contract with 
OPM. The MSPP issuer must also adhere to any requirements imposed by an 
Exchange with respect to the termination of a QHP, including the 
requirement to provide advance written notice of termination to 
enrollees. If an Exchange does not have requirements about advance 
written notice of termination to enrollees, the MSPP issuer must inform 
current MSP enrollees in writing of the MSP's termination no later than 
90 days prior to termination, unless OPM determines that there is good 
cause for less than 90 days' notice.

Subpart E--Compliance


Sec.  800.401  Contract performance.

    (a) General. An MSPP issuer must perform an MSPP contract with OPM 
in accordance with the requirements of section 1334 of the Affordable 
Care Act and the requirements of this part. The MSPP issuer must 
continue to meet such requirements while under an MSPP contract with 
OPM.
    (b) Specific requirements for issuers. In addition to the 
requirements described in paragraph (a) of this section, the following 
requirements apply to each MSPP issuer:
    (1) It must have, in the judgment of OPM, the financial resources 
to carry out its obligations under the MSPP;
    (2) It must keep such reasonable financial and statistical records, 
and furnish to OPM such reasonable financial and statistical reports 
with respect to the MSP or the MSPP, as may be requested by OPM;
    (3) It must permit representatives of OPM (including the OPM Office 
of Inspector General), the U.S. Government Accountability Office, and 
any other applicable Federal government auditing entities to audit and 
examine its records and accounts which pertain, directly or indirectly, 
to the MSP at such reasonable times and places as may be designated by 
OPM or the U.S. Government Accountability Office;
    (4) It must timely submit to OPM a properly completed and signed 
novation or change-of-name agreement in accordance with 48 CFR part 42 
subpart 42.12;
    (5) It must perform the MSPP contract in accordance with prudent 
business practices, as described in paragraph (c) of this section; and
    (6) It must not perform the MSPP contract in accordance with poor 
business practices, as described in paragraph (d) of this section.
    (c) Prudent business practices. For purposes of paragraph (b)(5) of 
this section, prudent business practices include, but are not limited 
to, the following:
    (1) Timely compliance with OPM instructions and directives;
    (2) Legal and ethical business and health care practices;
    (3) Compliance with the terms of the MSPP contract, regulations, 
and statutes;
    (4) Timely and accurate adjudication of claims or rendering of 
medical services;
    (5) Operating a system for accounting for costs incurred under the 
MSPP

[[Page 72607]]

contract, which includes segregating and pricing MSP medical 
utilization and allocating indirect and administrative costs in a 
reasonable and equitable manner;
    (6) Maintaining accurate accounting reports of costs incurred in 
the administration of the MSPP contract;
    (7) Applying performance standards for assuring contract quality as 
outlined at Sec.  800.402; and
    (8) Establishing and maintaining a system of internal controls that 
provides reasonable assurance that:
    (i) The provision and payments of benefits and other expenses 
comply with legal, regulatory, and contractual guidelines;
    (ii) MSP funds, property, and other assets are safeguarded against 
waste, loss, unauthorized use, or misappropriation; and
    (iii) Data are accurately and fairly disclosed in all reports 
required by OPM.
    (d) Poor business practices. For purposes of paragraph (b)(6) of 
this section, poor business practices include, but are not limited to, 
the following:
    (1) Using fraudulent or unethical business or health care practices 
or otherwise displaying a lack of business integrity or honesty;
    (2) Repeatedly or knowingly providing false or misleading 
information in the rate setting process;
    (3) Failing to comply with OPM instructions and directives;
    (4) Having an accounting system that is incapable of separately 
accounting for costs incurred under the contract and/or that lacks the 
internal controls necessary to fulfill the terms of the contract;
    (5) Failing to assure that the MSP properly pays or denies claims, 
or if applicable, provides medical services that are inconsistent with 
standards of good medical practice; and
    (6) Entering into contracts or employment agreements with 
providers, provider groups, or health care workers that include 
provisions or financial incentives that directly or indirectly create 
an inducement to limit or restrict communication about medically 
necessary services to any individual covered under the MSPP. Financial 
incentives are defined as bonuses, withholds, commissions, profit 
sharing or other similar adjustments to basic compensation (e.g., 
service fee, capitation, salary) which have the effect of limiting or 
reducing communication about appropriate medically necessary services.
    (e) Performance escrow account. OPM may require MSPP issuers to pay 
an assessment into an escrow account to ensure contract compliance and 
benefit MSP enrollees.


Sec.  800.402  Contract quality assurance.

    (a) General. This section prescribes general policies and 
procedures to ensure that services acquired under MSPP contracts 
conform to the contract's quality requirements.
    (b) Internal controls. OPM will periodically evaluate the 
contractor's system of internal controls under the quality assurance 
program required by the contract and will acknowledge in writing 
whether or not the system is consistent with the requirements set forth 
in the contract. OPM's reviews do not diminish the contractor's 
obligation to implement and maintain an effective and efficient system 
to apply the internal controls.
    (c) Performance standards. (1) OPM will issue specific performance 
standards for MSPP contracts and will inform MSPP issuers of the 
applicable performance standards prior to negotiations for the contract 
year. OPM may benchmark its standards against standards generally 
accepted in the insurance industry. OPM may authorize nationally 
recognized standards to be used to fulfill this requirement.
    (2) MSPP issuers must comply with the performance standards issued 
under this section.


Sec.  800.403  Fraud and abuse.

    (a) Program required. An MSPP issuer must conduct a program to 
assess its vulnerability to fraud and abuse as well as to address such 
vulnerabilities.
    (b) Fraud detection system. An MSPP issuer must operate a system 
designed to detect and eliminate fraud and abuse by employees and 
subcontractors of the MSPP issuer, by providers furnishing goods or 
services to MSP enrollees, and by MSP enrollees.
    (c) Submission of information. An MSPP issuer must provide to OPM 
(including its Office of Inspector General) such information or 
assistance as may be necessary for the agency to carry out the duties 
and responsibilities specified in sections 4 and 6 of the Inspector 
General Act of 1978 (5 U.S.C. App.). An MSPP issuer must provide any 
requested information in the form, manner, and timeline prescribed by 
OPM.


Sec.  800.404  Compliance actions.

    (a) Causes for OPM compliance actions. The following constitute 
cause for OPM to impose a compliance action described in paragraph (b) 
of this section against an MSPP issuer:
    (1) Failure by the MSPP issuer to meet the requirements described 
in Sec.  800.401(a) and (b);
    (2) An MSPP issuer's sustained failure to perform the MSPP contract 
in accordance with prudent business practices, as described in Sec.  
800.401(c);
    (3) A pattern of poor conduct or evidence of poor business 
practices such as those described in Sec.  800.401(d); or
    (4) Such other violations of law or regulation as OPM may 
determine.
    (b) Compliance actions. (1) OPM may impose a compliance action 
against an MSPP issuer at any time during the contract term if it 
determines that the MSPP issuer is not in compliance with applicable 
law, this part, or the terms of its contract with OPM.
    (2) Compliance actions may include, but are not limited to:
    (i) Establishment and implementation of a corrective action plan;
    (ii) Imposition of intermediate sanctions such as suspension of 
marketing;
    (iii) Performance incentives;
    (iv) Reduction of service area or area(s);
    (v) Withdrawal of the certification of the MSPP issuer to offer the 
MSP on one or more Exchanges;
    (vi) Nonrenewal of the MSPP contract; and
    (vii) Withdrawal of approval or termination of the MSPP contract.
    (c) Notice of compliance action. (1) OPM must notify an MSPP issuer 
in writing of a compliance action under this section. Such notice must 
indicate the specific compliance action undertaken and the reason for 
the compliance action.
    (2) For compliance actions listed in Sec.  800.404(b)(2)(v) through 
(vii), such notice must include a statement that the MSPP issuer is 
entitled to request a reconsideration of OPM's determination to impose 
a compliance action pursuant to Sec.  800.405.
    (d) Notice to enrollees. If OPM terminates an MSPP issuer's MSPP 
contract with OPM, or OPM withdraws the MSPP issuer's certification to 
offer the MSP on an Exchange, the MSPP issuer must adhere to any 
requirements imposed by an Exchange in which the MSP was offered with 
respect to the termination of a QHP, including the requirement to 
provide advance written notice of termination to enrollees. If an 
Exchange does not have requirements about advance written notice of 
termination to enrollees, the MSPP issuer must inform current MSP 
enrollees in writing of the MSP's termination no later than 90 days 
prior to termination, unless OPM determines that there is good cause 
for less than 90 days' notice.

[[Page 72608]]

    (e) Definition. As used in this subpart, ``termination'' means a 
decision by OPM to cancel an MSPP contract prior to the end of its 
contract term. The term includes OPM's withdrawal of approval of an 
MSPP contract.


Sec.  800.405  Reconsideration of compliance actions.

    (a) Right to request reconsideration. An MSPP issuer may request 
that OPM reconsider a determination to impose one of the following 
compliance actions:
    (1) Withdrawal of the certification of the MSPP issuer to offer the 
MSP on one or more Exchanges.
    (2) Nonrenewal of the MSPP contract; or
    (3) Termination of the MSPP contract;
    (b) Request for reconsideration and/or hearing. (1) An MSPP issuer 
with a right to request reconsideration specified in paragraph (a) of 
this section may request a hearing in which OPM will reconsider its 
determination to impose a compliance action.
    (2) A request under this section must be in writing and contain 
contact information, including the name, telephone number, email 
address, and mailing address of the person or persons whom OPM may 
contact regarding a request for a hearing with respect to the 
reconsideration. The request must be in such form, contain such 
information, and be submitted in such manner as OPM may prescribe.
    (3) The request must be received by OPM within 15 calendar days 
after the date of the MSPP issuer's receipt of the notice of compliance 
action. The MSPP issuer may request that OPM's reconsideration allow a 
representative of the MSPP issuer to appear personally before OPM.
    (4) A request under this section must include a detailed statement 
of the reasons that the MSPP issuer disagrees with OPM's imposition of 
the compliance action, and may include any additional information that 
will assist OPM in rendering a final decision under this section.
    (5) OPM may obtain additional information relevant to the request 
from any source as it may, in its judgment, deem necessary. OPM will 
provide the MSPP issuer with a copy of any additional information it 
obtains and provide an opportunity for the MSPP issuer to respond 
(including by submission of additional information or explanation).
    (6) OPM's reconsideration and hearing if requested may be conducted 
by the Director or a representative designated by the Director who did 
not participate in the initial decision that is the subject of the 
request for review.
    (c) Notice of final decision. OPM will notify the MSPP issuer, in 
writing, of OPM's final decision on the MSPP issuer's request for 
reconsideration and the specific reasons for that final decision. OPM's 
written decision will constitute final agency action that is subject to 
review under the Administrative Procedure Act in the appropriate U.S. 
district court. Such review is limited to the record that was before 
OPM when it made its decision.

Subpart F--Appeals by Enrollees for Denials of Claims for Payment 
or Service


Sec.  800.501  General requirements.

    (a) Definitions. For purposes of this subpart:
    (1) Claim means a request for:
    (i) Payment of a health-related bill; or
    (ii) Provision of a health-related service or supply.
    (2) Adverse benefit determination means an adverse benefit 
determination as defined in 45 CFR 147.136(a)(2)(i).
    (b) Applicability. This subpart applies to enrollees and to other 
individuals or entities who are acting on behalf of an enrollee and who 
have the enrollee's specific written consent to pursue a remedy of an 
adverse benefit determination.


Sec.  800.502  MSPP issuer internal claims and appeals processes.

    MSPP issuers are required to comply with the internal claims and 
appeals processes applicable to group health plans and health insurance 
issuers under 45 CFR 147.136(b).


Sec.  800.503  MSPP issuer internal claims and appeals timeframes and 
notice of determination.

    An MSPP issuer must provide written notice to an enrollee of its 
determination on a claim brought under Sec.  800.502 according to the 
timeframes and notification rules under 45 CFR 147.136(b) and (e), 
including the timeframes for urgent claims. If the MSPP issuer denies a 
claim (or a portion of the claim), the enrollee may appeal the adverse 
benefit determination to the MSPP issuer in accordance with 45 CFR 
147.136(b).


Sec.  800.504  External review.

    (a) External review by OPM. OPM will conduct external review of 
adverse benefit determinations using a process similar to OPM review of 
disputed claims under 5 CFR 890.105(e), subject to the standards and 
timeframes set forth at 45 CFR 147.136(c)(2).
    (b) Notice. Notices to MSP enrollees regarding external review 
under paragraph (a) of this section must comply with 45 CFR 147.136(e), 
and are subject to review and approval by OPM.
    (c) Issuer obligation. An MSPP issuer must pay a claim or provide a 
health-related service or supply pursuant to OPM's final decision or 
the final decision of an independent review organization without delay, 
regardless of whether the plan or issuer intends to seek judicial 
review of the external review decision and unless or until there is a 
judicial decision otherwise.


Sec.  800.505  Judicial review.

    OPM's written decision under Sec.  800.504(a) will constitute final 
agency action that is subject to review under the Administrative 
Procedure Act in the appropriate U.S. district court. Such review is 
limited to the record that was before OPM when it made its decision.

Subpart G--Miscellaneous


Sec.  800.601  Reservation of authority.

    OPM reserves the right to implement and supplement these 
regulations with written operational guidelines.


Sec.  800.602  Consumer choice with respect to certain services.

    (a) Assured availability of varied coverage. Consistent with Sec.  
800.104, OPM will ensure that at least one of the MSPP issuers on each 
Exchange in each State offers at least one MSP that does not provide 
coverage of services described in section 1303(b)(1)(B) of the 
Affordable Care Act.
    (b) State opt-out. An MSP may not offer abortion coverage in any 
State where such coverage of abortion services is prohibited by State 
law.

Appendix A to Part 800--Applicable Provisions of Part A of Title XXVII 
of the PHS Act

Section 2701: Fair Health Insurance Premiums
Section 2702: Guaranteed Availability of Coverage
Section 2703: Guaranteed Renewability of Coverage
Section 2704: Prohibition of Preexisting Condition Exclusions or 
Other Discrimination Based on Health Status
Section 2705: Prohibiting Discrimination Against Individual 
Participants and Beneficiaries Based on Health Status
Section 2706: Non-Discrimination in Health Care
Section 2707: Comprehensive Health Insurance Coverage
Section 2708: Prohibition on Excessive Waiting Periods
Section 2709: Coverage for Individuals Participating in Approved 
Clinical Trials
Section 2709 [sic]: Disclosure of Information
Section 2711: No Lifetime or Annual Limits
Section 2712: Prohibition on Rescissions
Section 2713: Coverage of Preventive Health Services

[[Page 72609]]

Section 2714: Extension of Dependent Coverage
Section 2715: Development and Utilization of Uniform Explanation of 
Coverage Documents and Standardized Definitions
Section 2715A: Provision of Additional Information
Section 2717: Ensuring the Quality of Care
Section 2718: Bringing Down the Cost of Health Care Coverage
Section 2719: Appeals Process
Section 2719A: Patient Protections
Section 2725: Standards Relating to Benefits for Mothers and 
Newborns [in the Group Market]
Section 2726: Parity in Mental Health and Substance Use Disorder 
Benefits
Section 2727: Required Coverage for Reconstructive Surgery Following 
Mastectomies
Section 2728: Coverage of Dependent Students on Medically Necessary 
Leave of Absence
Section 2741: Guaranteed Availability of Individual Health Insurance 
Coverage to Certain Individuals With Prior Group Coverage
Section 2742: Guaranteed Renewability of Individual Health Insurance 
Coverage
Section 2743: Certification of Coverage
Section 2751: Standards Relating to Benefits for Mothers and 
Newborns [in the Individual Market]
Section 2752: Required Coverage for Reconstructive Surgery Following 
Mastectomies
Section 2753: Prohibition of Health Discrimination on the Basis of 
Genetic Information
Section 2753 [sic]: Coverage of Dependent Students on Medically 
Necessary Leave of Absence

Appendix B to Part 800--Applicable Provisions of the Affordable Care 
Act

Section 1302: Essential Health Benefits Requirements
Section 1303: Special Rules
Section 1304: Related Definitions
Section 1311: Affordable Choices of Health Benefit Plans
Section 1334: Multi-State Plans
Section 1341: Transitional Reinsurance Program for Individual Market 
in Each State
Section 1342: Establishment of Risk Corridors for Plans in 
Individual and Small Group Markets
Section 1343: Risk Adjustment
Section 1401: Refundable Premium Tax Credit Providing Premium 
Assistance for Coverage under a Qualified Health Plan
Section 1402: Reduced Cost-Sharing for Individuals Enrolling in 
Qualified Health Plans
Section 1412(c): Payment of Premium Tax Credits and Cost-Sharing 
Reductions
Section 1557: Nondiscrimination
Section 6005: Pharmacy Benefit Managers Transparency Requirements

Appendix C to Part 800--Applicable Provisions of the Internal Revenue 
Code

Section 36B: Internal Revenue Code of 1986

[FR Doc. 2012-29118 Filed 11-30-12; 11:15 am]
BILLING CODE 6325-64-P