[Federal Register Volume 82, Number 32 (Friday, February 17, 2017)]
[Proposed Rules]
[Pages 10980-10998]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-03027]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 147, 155, and 156

[CMS-9929-P]
RIN 0938-AT14


Patient Protection and Affordable Care Act; Market Stabilization

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This rule proposes changes that would help stabilize the 
individual and small group markets. This proposed rule would amend 
standards relating to special enrollment periods, guaranteed 
availability, and the timing of the annual open enrollment period in 
the individual market for the 2018 plan year; standards related to 
network adequacy and essential community providers for qualified health 
plans; and the rules around actuarial value requirements.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on March 7, 2017.

ADDRESSES: In commenting, please refer to file code CMS-9929-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-9929-P, P.O. Box 8016, 
Baltimore, MD 21244-8016.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-9929-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. Alternatively, you may deliver (by hand or 
courier) your written comments ONLY to the following addresses prior to 
the close of the comment period:
    a. For delivery in Washington, DC--

Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, Room 445-G, Hubert H. Humphrey Building, 200 
Independence Avenue SW., Washington, DC 20201

    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--

Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.

    If you intend to deliver your comments to the Baltimore address, 
call telephone number (410) 786-7195 in advance to schedule your 
arrival with one of our staff members.
    Comments erroneously mailed to the addresses indicated as 
appropriate for hand or courier delivery may be delayed and received 
after the comment period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: 
     Jeff Wu, (301) 492-4305, Lindsey Murtagh, (301) 492-4106, or 
Michelle Koltov, (301) 492-4225, for general information.
    Rachel Arguello, (301) 492-4263, for matters related to Exchange 
special enrollment periods and annual open enrollment periods.
    Erika Melman, (301) 492-4348, for matters related to network 
adequacy, and essential community providers.
    Allison Yadsko, (410) 786-1740, for matters related to actuarial 
value.
    Jacob Ackerman, (301) 492-4179, for matters related to guaranteed 
availability.

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received at http://regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will be also available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

I. Executive Summary

    Affordable Insurance Exchanges, or ``Exchanges'' (in this proposed 
rule, we also call an Exchange a Health Insurance Marketplace\SM\,\1\ 
or Marketplace\SM\) are competitive marketplaces through which 
qualified individuals and qualified employers can purchase health 
insurance coverage. Many individuals who enroll in qualified health 
plans (QHPs) through individual market Exchanges are eligible to 
receive a premium tax credit to make health insurance premiums

[[Page 10981]]

more affordable, and receive reductions in cost-sharing payments to 
reduce out-of-pocket expenses for health care services.
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    \1\ Health Insurance Marketplace\SM\ and Marketplace\SM\ are 
service marks of the U.S. Department of Health & Human Services.
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    The health and competitiveness of the Exchanges, as well as the 
individual and small group markets in general, have recently been 
threatened by issuer exit and increasing rates in many geographic 
areas. Some issuers have had difficulty attracting and retaining the 
healthy consumers necessary to provide for a stable risk pool that will 
support stable rates. In particular, some issuers have cited special 
enrollment periods as a potential source of adverse selection that has 
contributed to this problem. Concerns over the risk pool have led some 
issuers to cease offering coverage on the Exchanges in particular 
states and counties, and other issuers have increased their rates.
    A stabilized individual and small group insurance market will 
depend on greater choice to draw consumers to the market and vibrant 
competition to ensure consumers have access to competitively priced, 
affordable coverage. Higher rates, particularly for consumers who are 
not receiving advance payments of the premium tax credit (APTC), 
resulting from minimal choice and competition can cause healthier 
individuals to drop out of the market, further damaging the risk pool, 
and risking additional issuer attrition from the market. This proposed 
rule would take steps to provide needed flexibility to issuers to help 
attract healthy consumers to enroll in health insurance coverage, 
improving the risk pool and bringing stability and certainty to the 
individual and small group markets.
    To improve the risk pool and promote stability in the individual 
insurance market, we propose taking several steps to increase the 
incentives for individuals to maintain enrollment in health coverage 
and decrease the incentives for individuals to enroll only after they 
discover they require services. First, we propose changing the dates 
for open enrollment in the individual market for the benefit year 
starting January 1, 2018, from a range of November 1, 2017, to January 
31, 2018 (the previously established open enrollment period for 2018), 
to a range of November 1, to December 15. This change would require 
individuals to enroll in coverage prior to the beginning of the year, 
unless eligible for a special enrollment period, and is consistent with 
the open enrollment period established for the open enrollment periods 
for 2019 and beyond. We anticipate this change could improve the risk 
pool because it would reduce opportunities for adverse selection by 
those who learn they will need services in late December and January; 
and will encourage healthier individuals who might have previously 
enrolled in partial year coverage after December 15th to instead enroll 
in coverage for the full year.
    Second, in response to concerns from issuers about potential abuse 
of special enrollment periods in the individual market Exchanges 
resulting in individuals enrolling in coverage only after they realize 
they will need services, we propose increasing pre-enrollment 
verification of eligibility for all categories of individual market 
special enrollment periods for all States served by the HealthCare.gov 
platform from 50 to 100 percent of new consumers who seek to enroll in 
Exchange coverage. We also propose making several additional changes to 
our regulations regarding special enrollment periods that we believe 
could improve the risk pool, improve market stability, and promote 
continuous coverage.
    Third, we propose revising our interpretation of the guaranteed 
availability requirement to allow issuers to apply a premium payment to 
an individual's past debt owed for coverage from the same issuer 
enrolled in within the prior 12 months. We believe this proposal would 
have a positive impact on the risk pool by removing economic incentives 
individuals may have had to pay premiums only when they were in need of 
health care services. We also believe this proposal is important as a 
means of encouraging individuals to maintain continuous coverage 
throughout the year and prevent gaming.
    Fourth, we propose to increase the de minimis variation in the 
actuarial values (AVs) used to determine metal levels of coverage for 
the 2018 plan year. This proposed change is intended to allow issuers 
greater flexibility in designing new plans and to provide additional 
options for issuers to keep cost sharing the same from year to year. We 
are not proposing a modification for the de minimis range for the 
silver plan variations.
    We believe these changes are critical to improving the risk pool, 
and would together promote a more competitive market with increased 
choice for consumers.
    The proposed amendments in this rule are also intended to affirm 
the traditional role of States in overseeing their health insurance 
markets while reducing the regulatory burden of participating in 
Exchanges for issuers. The first of these proposals relates to network 
adequacy review for QHPs. The modified approach would not only lessen 
the regulatory burden on issuers, but also would recognize the primary 
role of States in regulating this area. The second change would allow 
issuers to use a write-in process to identify essential community 
providers (ECPs) who are not on the HHS list of available ECPs for the 
2018 plan year; and lower the ECP standard to 20 percent (rather than 
30 percent), which we believe would make it easier for a QHP issuer to 
build networks that comply with the ECP standard.
    Robust issuer participation in the individual and small group 
markets is critical for ensuring consumers have access to affordable 
coverage, and have real choice in coverage. Continued uncertainty 
around the future of the markets and concerns regarding the risk pools 
are two of the primary reasons issuer participation in some areas 
around the country has been limited. The proposed changes in this rule 
are intended to promote issuer participation in these markets and to 
address concerns raised by issuers, States, and consumers. We believe 
such changes would result in broader choices and more affordable 
coverage.

II. Background

A. Legislative and Regulatory Overview

    The Patient Protection and Affordable Care Act (Pub. L. 111-148) 
was enacted on March 23, 2010. The Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152), which amended and revised 
several provisions of the Patient Protection and Affordable Care Act, 
was enacted on March 30, 2010. In this proposed rule, we refer to the 
two statutes collectively as the ``Affordable Care Act.''
    The Affordable Care Act reorganizes, amends, and adds to the 
provisions of title XXVII of the Public Health Service Act (PHS Act) 
relating to group health plans and health insurance issuers in the 
group and individual markets.
    Section 2702 of the PHS Act, as added by the Affordable Care Act, 
requires health insurance issuers that offer non-grandfathered health 
insurance coverage in the group or individual market in a State to 
offer coverage to and accept every employer and individual in the State 
that applies for such coverage unless an exception applies.
    Section 2703 of the PHS Act, as added by the Affordable Care Act, 
and former section 2712 and section 2742 of the PHS Act, as added by 
the Health Insurance Portability and Accountability Act of 1996 
(HIPAA), require health insurance issuers that

[[Page 10982]]

offer health insurance coverage in the group or individual market to 
renew or continue in force such coverage at the option of the plan 
sponsor or individual, unless an exception applies.
    Section 1302(d) of the Affordable Care Act describes the various 
levels of coverage based on actuarial value. Consistent with section 
1302(d)(2)(A) of the Affordable Care Act, AV is calculated based on the 
provision of essential health benefits (EHB) to a standard population. 
Section 1302(d)(3) of the Affordable Care Act directs the Secretary to 
develop guidelines that allow for de minimis variation in AV 
calculations. Section 2707(a) of the PHS Act directs health insurance 
issuers that offer non-grandfathered health insurance coverage in the 
individual or small group market to ensure that such coverage includes 
essential health benefits.
    Section 1311(c)(1)(B) of the Affordable Care Act requires the 
Secretary to establish minimum criteria for provider network adequacy 
that a health plan must meet to be certified as a QHP.
    Section 1311(c)(6)(B) of the Affordable Care Act states that the 
Secretary is to set annual open enrollment periods for Exchanges for 
calendar years after the initial enrollment period.
    Section 1311(c)(6)(C) of the Affordable Care Act states that the 
Secretary is to provide for special enrollment periods specified in 
section 9801 of the Internal Revenue Code of 1986 (the Code) and other 
special enrollment periods under circumstances similar to such periods 
under part D of title XVIII of the Social Security Act (the Act) for 
the Exchanges.
    Section 1321(a) of the Affordable Care Act provides broad authority 
for the Secretary to establish standards and regulations to implement 
the statutory requirements related to Exchanges, QHPs and other 
components of title I of the Affordable Care Act.
1. Market Rules
    A proposed rule relating to the 2014 health insurance market rules 
was published in the November 26, 2012 Federal Register (77 FR 70584). 
A final rule implementing the health insurance market rules was 
published in the February 27, 2013 Federal Register (78 FR 13406) (2014 
Market Rules).
    A proposed rule relating to Exchanges and Insurance Market 
Standards for 2015 and Beyond was published in the March 21, 2014 
Federal Register (79 FR 15808) (2015 Market Standards Proposed Rule). A 
final rule implementing the Exchange and Insurance Market Standards for 
2015 and Beyond was published in the May 27, 2014 Federal Register (79 
FR 30240) (2015 Market Standards Rule).
2. Exchanges
    We published a request for comment relating to Exchanges in the 
August 3, 2010 Federal Register (75 FR 45584). We issued initial 
guidance to States on Exchanges on November 18, 2010.\2\ We proposed a 
rule in the July 15, 2011 Federal Register (76 FR 41865) to implement 
components of the Exchanges, and a rule in the August 17, 2011 Federal 
Register (76 FR 51201) regarding Exchange functions in the individual 
market, eligibility determinations, and Exchange standards for 
employers. A final rule implementing components of the Exchanges and 
setting forth standards for eligibility for Exchanges was published in 
the March 27, 2012 Federal Register (77 FR 18309) (Exchange 
Establishment Rule).
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    \2\ Initial Guidance to States on Exchanges (November 10, 2018). 
Available at https://www.cms.gov/CCIIO/Resources/Files/guidance_to_states_on_exchanges.html.
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    In the March 8, 2016 Federal Register (81 FR 12203), we published 
the Patient Protection and Affordable Care Act; HHS Notice of Benefit 
and Payment Parameters for 2017 (2017 Payment Notice), and established 
additional Exchange standards, including requirements for network 
adequacy and essential community providers; and established the timing 
of annual open enrollment periods.
    In the September 6, 2016 Federal Register (81 FR 61456), we 
published the Patient Protection and Affordable Care Act; HHS Notice of 
Benefit and Payment Parameters for 2018 proposed rule (proposed 2018 
Payment Notice). In the December 22, 2016 Federal Register (81 FR 
94058), we published the Patient Protection and Affordable Care Act; 
HHS Notice of Benefit and Payment Parameters for 2018 final rule (2018 
Payment Notice) and established additional Exchange standards, 
including requirements for network adequacy and essential community 
providers.
3. Special Enrollment Periods
    In the July 15, 2011 Federal Register (76 FR 41865), we published a 
proposed rule establishing special enrollment periods for the Exchange. 
We implemented these special enrollment periods in the Exchange 
Establishment Rule (77 FR 18309). In the January 22, 2013 Federal 
Register (78 FR 4594), we published a proposed rule amending certain 
special enrollment periods, including the special enrollment periods 
described in Sec.  155.420(d)(3) and (7). We finalized these rules in 
the July 15, 2013 Federal Register (78 FR 42321).
    In the June 19, 2013 Federal Register (78 FR 37032), we proposed to 
add a special enrollment period when the Exchange determines that a 
consumer has been incorrectly or inappropriately enrolled in coverage 
due to misconduct on the part of a non-Exchange entity. We finalized 
this proposal in the October 30, 2013 Federal Register (78 FR 65095). 
In the March 21, 2014 Federal Register (79 FR 15808), we proposed to 
amend various special enrollment periods. In particular, we proposed to 
clarify that later coverage effective dates for birth, adoption, 
placement for adoption, or placement for foster care would be effective 
the first of the month. The rule also proposed to clarify that earlier 
effective dates would be allowed if all issuers in an Exchange agree to 
effectuate coverage only on the first day of the specified month. 
Finally, this rule proposed adding that consumers may report a move in 
advance of the date of the move and established a special enrollment 
period for individuals losing medically needy coverage under the 
Medicaid program even if the medically needy coverage is not recognized 
as minimum essential coverage (individuals losing medically needy 
coverage that is recognized as minimum essential coverage already were 
eligible for a special enrollment period under the regulation). We 
finalized these provisions in the May 27, 2014 Federal Register (79 FR 
30348). In the October 1, 2014 Federal Register (79 FR 59137), we 
published a correcting amendment related to codifying the coverage 
effective dates for plan selections made during a special enrollment 
period and clarifying a consumer's ability to select a plan 60 days 
before and after a loss of coverage.
    In the November 26, 2014 Federal Register (79 FR 70673), we 
proposed to amend effective dates for special enrollment periods, the 
availability and length of special enrollment periods, the specific 
types of special enrollment periods, and the option for consumers to 
choose a coverage effective date of the first of the month following 
the birth, adoption, placement for adoption, or placement in foster 
care. We finalized these provisions in the February 27, 2015 Federal 
Register (80 FR 10866). In the July 7, 2015 Federal Register (80 FR 
38653), we issued a correcting amendment to include those who become 
newly eligible for a QHP due to a release from incarceration. In the

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December 2, 2015 Federal Register (80 FR 75487) (proposed 2017 Payment 
Notice), we sought comment and data related to existing special 
enrollment periods, including data relating to the potential abuse of 
special enrollment periods. In the 2017 Payment Notice, we stated that 
in order to review the integrity of special enrollment periods, the 
Federally-facilitated Exchange (FFE) will conduct an assessment by 
collecting and reviewing documents from consumers to confirm their 
eligibility for the special enrollment periods under which they 
enrolled.
    In an interim final rule with comment published in the May 11, 2016 
Federal Register (81 FR 29146) we amended the parameters of certain 
special enrollment periods.
    In the 2018 Payment Notice we established additional Exchange 
standards, including requirements for certain special enrollments.
4. Actuarial Value
    On February 25, 2013, we established the requirements relating to 
EHBs and AVs in the Standards Related to Essential Health Benefits, 
Actuarial Value, and Accreditation Final Rule, which was published in 
the Federal Register (78 FR 12833) (EHB Rule), implementing section 
1302 of the Affordable Care Act and 2707 of the PHS Act. In the 2018 
Payment Notice published in the December 22, 2016 Federal Register (81 
FR 94058), we finalized a provision that allow an expanded de minimis 
range for certain bronze plans.

B. Stakeholder Consultation and Input

    HHS has consulted with stakeholders on policies related to the 
operation of Exchanges. We have held a number of listening sessions 
with consumers, providers, employers, health plans, the actuarial 
community, and State representatives to gather public input, with a 
particular focus on risks to the individual and small group markets. We 
consulted with stakeholders through regular meetings with the National 
Association of Insurance Commissioners, regular contact with States 
through the Exchange Establishment grant and Exchange Blueprint 
approval processes, and meetings with Tribal leaders and 
representatives, health insurance issuers, trade groups, consumer 
advocates, employers, and other interested parties.

III. Provisions of the Proposed Rule

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

1. Guaranteed Availability of Coverage (Sec.  147.104)
    The guaranteed availability provisions at section 2702 of the PHS 
Act and Sec.  147.104 require health insurance issuers offering non-
grandfathered coverage in the individual or group market to offer 
coverage to and accept every individual and employer in the State that 
applies for such coverage unless an exception applies. Individuals and 
employers typically are required to pay the first month's premium to 
have coverage effectuated.
    We have previously interpreted the guaranteed availability 
requirement to mean that an issuer may not apply any premium payment 
made for coverage in a different product to any outstanding debt owed 
from any previous coverage and then refuse to effectuate the enrollment 
based on failure to pay premiums.\3\ Under that interpretation, any 
coverage under a different product would fall under the guaranteed 
availability requirements and the consumer must be allowed to purchase 
coverage without having to pay past due premiums. However, under our 
previous interpretation, should the individual seek to renew prior 
coverage with the same issuer in the same product, the issuer could 
attribute the enrollee's forthcoming premium payments to prior non-
payments.
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    \3\ Federally-facilitated Marketplace (FFM) and Federally-
facilitated Small Business Health Options Program Enrollment Manual, 
Section 6.3 Terminations for Non-Payment of Premiums, available at 
https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/ENR_FFMSHOP_Manual_080916.pdf.
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    HHS has received comments from stakeholders expressing concerns 
about the potential for individuals with histories of non-payment to 
take advantage of guaranteed availability by declining to make premium 
payments for coverage at the end of a benefit year, for example.\4\ In 
the preamble to the 2014 Market Rules, HHS encouraged States to 
consider approaches to discourage gaming and adverse selection while 
upholding consumers' guaranteed availability rights and indicated that 
we intended to address this issue in future guidance.
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    \4\ 78 FR 13416 (Feb. 27, 2013).
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    To address the concern about potential gaming, we propose to modify 
our interpretation of the guaranteed availability rules with respect to 
non-payment of premiums. Under this proposal, an issuer would not be 
considered to violate the guaranteed availability requirements if the 
issuer attributes a premium payment for coverage under the same or a 
different product to the outstanding debt associated with non-payment 
of premiums for coverage from the same issuer enrolled in within the 
prior 12 months and refuses to effectuate new coverage for failure to 
pay premiums. Assuming State law does not prohibit such action, this 
would permit an issuer to require a policyholder whose coverage is 
terminated for non-payment of premium in the individual or group market 
to pay all past due premium owed to that issuer after the applicable 
due date for coverage enrolled in the prior 12 months in order to 
resume coverage from that issuer. The issuer would be required to apply 
its premium payment policy uniformly to all employers or individuals 
regardless of health status, and consistent with applicable non-
discrimination requirements.\5\ This proposal would not prevent the 
individual or employer from enrolling in coverage with a different 
issuer, or affect the ability of any individual other than the person 
contractually responsible for the payment of premium to purchase 
coverage, whether from the same or different issuer. We encourage 
States to adopt a similar approach, with respect to any State laws that 
might otherwise prohibit this practice.
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    \5\ We remind issuers that they may also have obligations under 
other applicable Federal laws prohibiting discrimination, and 
issuers are responsible for ensuring compliance with all applicable 
laws and regulations. For example, issuers that receive Federal 
financial assistance are subject to Title VI of the Civil Rights Act 
of 1964, section 504 of the Rehabilitation Act of 1973, and section 
1557 of the Affordable Care Act, and as a result, have separate 
responsibilities not to discriminate on the basis of race, color, 
national origin, sex, age, and disability, in providing access to 
their services. In addition, Sec.  156.200(e) requires QHP issuers 
to not discriminate on the basis of race, color, national origin, 
disability, age, sex, gender identity or sexual orientation. There 
may also be separate, independent non-discrimination obligations 
under State law.
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    Because of rules regarding grace periods and termination of 
coverage, individuals with past due premium would generally owe no more 
than 3 months of premiums.\6\ Furthermore, for

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individuals on whose behalf the issuer received APTC, their past 
premium owed would be net of any APTC paid on their behalf to the 
issuer.
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    \6\ Section 156.270(d) requires issuers to observe a 3 
consecutive month grace period before terminating coverage for those 
enrollees who are eligible for and have elected to receive APTC and 
who upon failing to timely pay their premiums are receiving APTC. 
Section 155.430(d)(4) requires that when coverage is terminated 
following this grace period, the last day of enrollment in a QHP 
through the Exchange is the last day of the first month of the grace 
period. Therefore, individuals whose coverage is terminated at the 
conclusion of a grace period would owe at most 1 month of premiums. 
Individuals who attempt to enroll in new coverage while in a grace 
period (and whose coverage has not yet been terminated) could owe up 
to 3 months of premium, net of any APTC paid on their behalf to the 
issuer.
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    We note that due to operational constraints, the Federally-
facilitated Small Business Health Options Program will be unable to 
offer issuers this flexibility at this time.
    We seek comment on this proposal, including whether issuers that 
choose to adopt this type of premium payment policy should be permitted 
to implement it with a premium payment threshold policy, under which 
the issuer can consider an individual to have paid all amounts due, if 
the individual pays an amount sufficient to maintain a percentage of 
total premium paid out of the total premium owed equal to or greater 
than a level prescribed by the issuer. We also seek comment on whether 
issuers should be required to provide notice to individuals regarding 
whether they have adopted a premium payment policy permitted under this 
proposal.
    In addition, we propose to amend paragraph (b)(2)(i) to conform 
with proposed changes to special enrollment periods discussed in 
greater detail in section III.B.2. of this proposed rule. Because the 
proposed changes to Sec.  155.420(a)(4) through (5) are being proposed 
for special enrollment periods in the individual market, both inside 
and outside of an Exchange, we propose to amend Sec.  147.104(b)(2)(i) 
to specify that these paragraphs apply to special enrollment periods 
throughout the individual market. We seek comment on how these changes 
would be operationalized outside of the Exchanges.

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

1. Initial and Annual Open Enrollment Periods (Sec.  155.410)
    We propose to amend paragraph (e) of Sec.  155.410, which provides 
the dates for the annual Exchange open enrollment period in which 
qualified individuals and enrollees may apply for or change coverage in 
a QHP. In prior rulemaking, we established that the open enrollment 
period for the benefit year beginning on January 1, 2018 would begin on 
November 1, 2017 and extend through January 31, 2018; and that the open 
enrollment period for benefit years beginning on January 1, 2019 and 
beyond would begin on November 1 and extend through December 15 of the 
calendar year preceding the benefit year.\7\ We noted at the time that 
we believe that, as the Exchanges continue, a month-and-a-half open 
enrollment period provides sufficient time for consumers to enroll in 
or change QHPs for the upcoming plan year. We also noted that this 
timeframe would achieve our goals of shifting to an earlier end date 
for open enrollment so that all consumers who enroll during this time 
will receive a full year of coverage, which will simplify operational 
processes for issuers and the Exchanges. We also believe that this 
shorter open enrollment period may have a positive impact on the risk 
pool because it will reduce opportunities for adverse selection by 
those who learn they will need services in late December or January. 
While we originally included a longer transition period before moving 
to this shorter open enrollment period, we believe that the market and 
issuers are ready for this adjustment sooner. Therefore, we propose to 
amend Sec.  155.410(e) to change the open enrollment period for plan 
year 2018 so that it begins on November 1, 2017, and ends on December 
15, 2017. All consumers who select plans on or before December 15, 2017 
would receive an enrollment effective date of January 1, 2018, as 
already required by Sec.  155.410(f)(2)(i). We believe that this open 
enrollment period would align better with many open enrollment periods 
for employer-based coverage, as well as the open enrollment period for 
Medicare. We would intend to conduct extensive outreach to ensure that 
all consumers are aware of this change and have the opportunity to 
enroll in coverage within this shorter time frame.
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    \7\ 81 FR 12203, 12273.
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    We seek comment on this proposal, in particular on the capacity of 
State-based Exchanges to shift to the shorter open enrollment period 
for the 2018 plan year, on the effect of the shorter enrollment period 
on issuers' ability to enroll healthy consumers, and any difficulties 
agents, brokers, navigators and assisters may have in serving consumers 
seeking to enroll during this shorter time period.
2. Special Enrollment Periods (Sec.  155.420)
    Section 1311(c)(6) of the Affordable Care Act establishes 
enrollment periods, including special enrollment periods for qualified 
individuals, for enrollment in QHPs through an Exchange. Section 
1311(c)(6)(C) of the Affordable Care Act states that the Secretary is 
to provide for special enrollment periods specified in section 9801 of 
the Code and other special enrollment periods under circumstances 
similar to such periods under part D of title XVIII of the Act. Section 
2702(b)(3) of the PHS Act also directs the Secretary to provide for 
market-wide special enrollment periods for qualifying events under 
section 603 of the Employee Retirement Income Security Act of 1974.
    Special enrollment periods are a longstanding feature of employer-
sponsored coverage. They exist to ensure that people who lose health 
coverage during the year (for example, through non-voluntary loss of 
minimum essential coverage provided through an employer), or who 
experience other qualifying events such as marriage or the birth or 
adoption of a child, have the opportunity to enroll in new coverage or 
make changes to their existing coverage. While the annual open 
enrollment period allows previously uninsured individuals to enroll in 
new coverage, special enrollment periods are intended, in part, to 
promote continuous enrollment in health coverage during the plan year 
by allowing those who were previously enrolled in coverage to obtain 
new coverage without a lapse or gap in coverage.
    Our past practice, in many cases, was to permit individuals seeking 
coverage through the Exchanges to self-attest to their eligibility for 
most special enrollment periods and to enroll in coverage without 
further verification of their eligibility or without submitting proof 
of prior coverage. This practice had the virtue of minimizing barriers 
for consumers to obtain coverage, which can, in particular, deter 
enrollment by healthy individuals. However, as the Government 
Accountability Office noted in a November 2016 report, relying on self-
attestation without verifying documents submitted to support a special 
enrollment period triggering event could allow applicants to obtain 
subsidized coverage they would otherwise not qualify for.\8\ In 
addition, allowing previously uninsured individuals who elected not to 
enroll in coverage during the annual open enrollment period to instead 
enroll in coverage through a special enrollment period that they would 
not otherwise qualify for during the coverage year, undermines the 
incentive for enrolling in a full year of coverage through the annual 
open enrollment period and increases the risk of adverse selection from 
individuals who wait to enroll until they are sick. Such behaviors can

[[Page 10985]]

create a sicker risk pool, leading to higher rates and less 
availability of coverage.
---------------------------------------------------------------------------

    \8\ November 2016, Results of Enrollment Testing for the 2016 
Special Enrollment Period, GAO-17-78, U.S. Government Accountability 
Office.
---------------------------------------------------------------------------

    In an effort to curb abuses of special enrollment periods, in 2016 
we added warnings on HealthCare.gov regarding inappropriate use of 
special enrollment periods. We also eliminated several special 
enrollment periods and tightened certain eligibility rules.\9\ Also in 
2016, we announced retrospective audits of a random sampling of 
enrollments through loss of minimum essential coverage and permanent 
move special enrollment periods, two commonly used special enrollment 
periods. Additionally, we created The Special Enrollment Confirmation 
Process under which consumers enrolling through common special 
enrollment periods were directed to provide documentation to confirm 
their eligibility.\10\ Finally, we proposed to implement (beginning in 
June 2017) a pilot program for conducting pre-enrollment verification 
of eligibility for certain special enrollment periods.\11\
---------------------------------------------------------------------------

    \9\ February 25, 2016. Fact Sheet: Special Enrollment 
Confirmation Process. Available online at https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-02-24.html.
    \10\ Ibid.
    \11\ December 14, 2016, Fact Sheet: Pre-Enrollment Verification 
for Special Enrollment Periods, available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/Pre-Enrollment-SEP-fact-sheet-FINAL.PDF.
_____________________________________-

    As discussed in the 2018 Payment Notice, the impact of special 
enrollment period verification on risk pools may be complex. Some 
commenters suggested that additional steps to determine special 
enrollment period eligibility worsen the problem by creating new 
barriers to enrollment, with healthier, less motivated individuals, the 
most likely to be deterred. The pilot was initially planned to sample 
50 percent of consumers who were attempting to newly enroll in Exchange 
coverage through certain special enrollment periods in order to provide 
a statistically sound method to compare the claims experience in the 
second half of 2017 between individuals subject to pre-enrollment 
verification with those who were not.
    However, based on strong issuer feedback and the potential to help 
to stabilize the market for 2018 coverage, we propose to increase the 
scope of pre-enrollment verification of special enrollment periods to 
all applicable special enrollment periods, as outlined below, in order 
to ensure complete verification of eligibility. We would begin to 
implement this expanded pre-enrollment verification starting in June 
2017. We have consistently heard from issuers and other stakeholders 
that pre-enrollment verification of special enrollment periods is 
critical to promote continuous coverage, protect the risk pool, and 
stabilize rates. We agree that policies and practices that allow 
individuals to remain uninsured and wait to sign up for coverage 
through a special enrollment period only after becoming sick can 
contribute to market destabilization and reduced issuer participation, 
which can reduce the availability of coverage for individuals.
    Therefore, this rule proposes that HHS conduct pre-enrollment 
verification of eligibility for Exchange coverage for all categories of 
special enrollment periods for all new consumers in all States served 
by the HealthCare.gov platform, which includes Federally-facilitated 
Exchanges and State-based Exchanges on the Federal platform (SBE-FPs).
    Under pre-enrollment verification, HHS would verify eligibility for 
certain special enrollment period categories for all new consumers who 
seek to enroll in Exchange coverage through a special enrollment 
period. Consumers would be able to submit their applications and select 
a plan and, as is the current practice for most special enrollment 
periods, the start date of that coverage would be determined by the 
date of plan selection. However, the consumers' enrollment would be 
``pended'' until verification of special enrollment period eligibility 
is completed. In this context, ``pending'' means holding the 
information regarding plan selection and coverage date at the FFE or 
SBE-FP until special enrollment period eligibility is confirmed, before 
releasing the enrollment information to the relevant issuer. Consumers 
would be given 30 days to provide documentation, and would be able to 
upload documents into their account on HealthCare.gov or send their 
documents in the mail. Where applicable, we intend to make every effort 
to verify an individual's eligibility for the applicable special 
enrollment period through automated electronic means instead of through 
documentation. For example, verifying a birth by confirming the baby's 
existence through existing electronic verifications or verifying 
electronically that a consumer was denied Medicaid or CHIP coverage, 
where such information is available. Otherwise, we will seek 
documentation from the individual applying for the special enrollment 
period. We note that even though we do not currently perform 
verification for all consumers new to the Exchange, we already require 
all consumers to provide documentation if they are applying for a 
special enrollment period based on certain triggering events. Under 
this proposal, we anticipate approximately the same amount of 
documentation and therefore would not anticipate an increased burden on 
consumers. We seek comment on the impact on consumers. We seek comment 
on our proposed method for pre-enrollment verification and whether we 
should retain a small percentage of enrollees outside the pre-
enrollment verification process to conduct the study discussed above. 
If we do not, HHS would continue to monitor other indicators of risk 
where available in lieu of the statistical comparison. Recognizing that 
pre-enrollment verification could have the unintended consequence of 
deterring healthier individuals from purchasing Exchange coverage, we 
also seek comment on what strategies HHS should take to increase the 
chances that these individuals complete the verification process.
    We also recommend that State-based Exchanges that do not currently 
conduct pre-enrollment verification of special enrollment period 
eligibility consider following this approach as well, and request 
comment on whether State-based Exchanges should also be required to 
conduct pre-enrollment verification, with an appropriate amount of time 
to implement such a process, and how long that transition period should 
be.
    As noted above, the pre-enrollment verification of special 
enrollment period eligibility is intended to address concerns about 
potential adverse selection. However, we have heard concerns that 
existing Exchange enrollees are utilizing special enrollment periods to 
change plan metal levels based on ongoing health needs during the 
coverage year, and that this is having a negative impact on the risk 
pool. We have concerns about applying the approach of pending a plan 
selection until pre-enrollment verification is conducted while the 
consumer would still have an active policy because we believe the 
potential overlap of current, active policies and pended plan 
selections will create significant confusion for consumers and create 
burden on issuers to manage the potential operational issues. For 
example, if a consumer who is currently enrolled is seeking to add a 
new spouse under the marriage special enrollment period, the current 
coverage would remain in force until the consumer submits documentation 
to verify the marriage. At that time the pended plan selection would be 
released, potentially with a retroactive coverage effective date based 
on the date of the plan

[[Page 10986]]

selection with both individuals; and the current coverage with the 
single enrollee would be retroactively terminated to when the new 
policy begins. If the new plan selection is with a new issuer, any 
claims incurred during that time period would need to be reconciled 
across the issuers.
    As an alternative, we are proposing new paragraph (a)(4) to limit 
the ability of existing Exchange enrollees to change plan metal levels 
during the coverage year. The proposed changes in paragraph (a)(4) 
would apply in the individual market outside the Exchanges, but would 
not apply in the group market. We are proposing changes to Sec.  
147.104(b)(2)(i) and Sec.  155.725(j)(2)(i) to specify this. We are 
also proposing to amend the introductory language in paragraph (d) of 
this section and to add a new paragraph (a)(3) to conform with this 
proposed change. For special enrollment periods administered on the 
Exchange, the Exchange would limit the plan selection choices. We 
request comment on all aspects of this proposal, including whether it 
would be preferable to address adverse selection concerns for existing 
enrollees by applying the approach of pending plan selections until 
pre-enrollment verification is completed based on document reviews 
instead of the current plan and metal level restrictions. We also 
request comment on any alternative strategies for addressing potential 
adverse selection issues for existing enrollees who are eligible for a 
special enrollment period.
    We understand that State-based Exchanges may not be able to 
implement these changes starting in 2017, and seek comment on an 
appropriate transitional period for State-based Exchanges, or whether 
these changes should be optional for State-based Exchanges.
    Under new paragraph (a)(4)(i), we propose to require that if an 
enrollee qualifies for a special enrollment period due to gaining a 
dependent in paragraph (d)(2)(i) of this section, the Exchange may 
allow him or her to add the new dependent to his or her current QHP 
(subject to the ability to enroll in silver level coverage in certain 
circumstances as discussed in the next paragraph). Alternatively, if 
the QHP's business rules do not allow the new dependent to enroll, the 
Exchange may allow the enrollee and his or her new dependent to enroll 
in another QHP within the same level of coverage (or an ``adjacent'' 
level of coverage, if no such plans are available), as defined in Sec.  
156.140(b). This ensures that enrollees who qualify for the special 
enrollment period due to gaining a dependent are using this special 
enrollment period for its primary purpose of enrolling the new 
dependent in coverage. If finalized, we intend to implement this policy 
for the FFEs and SBE-FPs as soon as practicable. We seek comment on 
this proposal.
    New paragraph (a)(4)(ii) proposes to require that if an enrollee or 
his or her dependent is not enrolled in a silver level QHP and becomes 
newly eligible for cost-sharing reductions and qualifies for the 
special enrollment periods in paragraph (d)(6)(i) and (ii) of this 
section, the Exchange may allow the enrollee and dependent to enroll in 
only a QHP at the silver level, as specified in Sec.  156.140(b)(2). We 
seek comment on this proposal, including with respect to whether 
individuals newly eligible for APTC in this circumstance should also be 
able to enroll in a silver level QHP, or QHPs of other metal levels.
    New paragraph (a)(4)(iii) proposes that, for an enrollee who 
qualifies for the remaining special enrollment periods specified in 
paragraph (d), the Exchange must only allow the enrollee and his or her 
dependents to make changes to their enrollment in the same QHP or to 
change to another QHP within the same level of coverage, as defined in 
Sec.  156.140(b), if other QHPs at that metal level are available. This 
restriction would extend to enrollees who are on an application where a 
new applicant is enrolling in coverage through a special enrollment 
period. This proposal ensures that enrollees who qualify for a special 
enrollment period or are on an application where an applicant qualifies 
for a special enrollment period to newly enroll in coverage are not 
using this special enrollment period to simply switch levels of 
coverage during the coverage year. This policy would apply to most 
Exchange enrollees who qualify for a special enrollment period during 
the coverage year, further protecting the Exchanges from adverse 
selection. Affected special enrollment periods include special 
enrollment periods for enrollees who lost minimum essential coverage 
through the Exchange during the coverage year in accordance with 
paragraph (d)(1); demonstrated to the Exchange that the QHP into which 
they have enrolled has violated a material provision of its contract in 
accordance with paragraph (d)(5); gained access to a new QHP due to a 
permanent move in accordance with paragraph (d)(7); or were affected by 
a material plan or benefit display errors in accordance with paragraph 
(d)(12). Enrollees who qualify for the special enrollment periods in 
paragraphs (d)(4), (d)(9), and (d)(10) would be excluded from this new 
requirement because the qualifying events that enabled them to qualify 
for these special enrollment periods may have also resulted in an 
inability to enroll in their desired plan during the annual open 
enrollment period. In addition, we propose to exclude the special 
enrollment period in paragraph (d)(8) for Indians and their dependents. 
We seek comment on this proposal, and whether other special enrollment 
periods should be excluded. We also seek comment on the appropriate 
transitional period to enable State-based Exchanges to build these 
capacities, or whether the proposals in new paragraph (a)(4) should be 
at the option of the Exchanges. We also seek comment on how this 
proposal would be operationalized in the off-Exchange individual 
market.
    In the 2018 Notice of Payment and Benefit Parameters, HHS finalized 
paragraph (b)(5) to allow consumers to request a later coverage 
effective date than originally assigned if his or her enrollment was 
delayed due to an eligibility verification and the consumer would be 
required to pay 2 or more months of retroactive premium in order to 
effectuate coverage or avoid termination of coverage due to nonpayment 
of premiums. When finalizing this amendment, we did not place a limit 
on how much later the coverage effective date could be. After further 
consideration and concerns raised by stakeholders regarding potential 
adverse selection impacts, we propose modifying that requirement and 
instead allowing consumers to start their coverage 1 month later than 
their effective date would ordinarily have been, if the special 
enrollment period verification process results in a delay in their 
enrollment such that they would be required to pay 2 or more months of 
retroactive premium to effectuate coverage or avoid termination for 
non-payment. Therefore, a consumer who was originally scheduled to 
begin coverage on March 1, may elect to have coverage start on April 1, 
if he or she owes retroactive premiums for March, April, and May due to 
delays in document verification. We note that we do not anticipate that 
many consumers would be eligible to request a later effective date 
under this paragraph, as we do not expect the pre-enrollment 
verification processes to result in such significant delays. However, 
we recognize that there may be unforeseen challenges as we implement 
the verification process, and believe it is important to offer this 
flexibility in the event of such delays. We believe the

[[Page 10987]]

option to have a later effective date could help keep healthier 
individuals in the market, who otherwise might be deterred by the 
prospect of paying for 2 or more months of retroactive coverage that 
they did not use. We seek comment on this proposal, and the appropriate 
coverage effective date for these consumers.
    As part of our enhanced verification efforts for special enrollment 
periods, we are proposing to take additional steps to strengthen and 
streamline the parameters of several existing special enrollment 
periods and ensure consumers are adhering to existing and new 
eligibility parameters to further promote continuity of coverage and 
market stability.
    First, in order to ensure that a special enrollment period for loss 
of minimum essential coverage in paragraph (d)(1) is not granted in 
cases where an individual was terminated for non-payment of premium, as 
described in paragraph (e)(1), FFE (and SBE-FPs) will permit the issuer 
to reject an enrollment for which the issuer has a record of 
termination due to non-payment of premiums unless the individual 
fulfills obligations for premiums due for previous coverage, consistent 
with the guaranteed availability approach discussed in the preamble for 
Sec.  147.104. We believe that verifying that consumers are not 
attempting to enroll in coverage through the special enrollment period 
for loss of minimum essential coverage when the reason for their loss 
of coverage is due to non-payment of premiums is an important measure 
to prevent instances of gaming related to individuals only paying 
premiums and maintaining coverage for months in which they seek 
services. We seek comment on this proposal.
    Further, HHS intends to explore options for verifying that a 
consumer was not terminated due to non-payment of premiums for coverage 
within the FFEs as a precursor for being eligible for the loss of 
minimum essential coverage special enrollment period. HHS proposes to 
allow Exchanges to collect and store information from issuers about 
whether consumers have been terminated from Exchange coverage due to 
nonpayment of premiums so that the Exchange may automatically prevent 
these consumers from qualifying for the special enrollment period due 
to a loss of minimum essential coverage if the consumer attempts to 
renew his or her Exchange coverage within 60 days of being terminated. 
We note that, if the consumer attempts to renew his or her Exchange 
coverage more than 60 days after being terminated, the consumer would 
not be eligible for a special enrollment period due to loss of minimum 
essential coverage. We seek comment on this proposal.
    Second, in response to concerns that consumers are opting not to 
enroll in QHP coverage during the annual open enrollment period and are 
instead newly enrolling in coverage during the coverage year through 
the special enrollment period for marriage, we are proposing to add new 
paragraph (d)(2)(i)(A) to require that, if consumers are newly 
enrolling in QHP coverage through the Exchange through the special 
enrollment period for marriage, at least one spouse must demonstrate 
having had minimum essential coverage as described in 26 CFR 1.5000A-
1(b) for 1 or more days during the 60 days preceding the date of 
marriage. However, we recognize that individuals who were previously 
living abroad or in a U.S. territory may not have had access to 
coverage that is considered minimum essential coverage in accordance 
with 26 CFR 1.5000A-1(b) prior to moving to the U.S. Therefore, we 
propose that, when consumers are newly enrolling in coverage during the 
coverage year through the special enrollment period for marriage, at 
least one spouse must either demonstrate that they had minimum 
essential coverage or that they lived outside of the U.S. or in a U.S. 
territory for 1 or more days during the 60 days preceding the date of 
the marriage. This proposed change would only apply in the individual 
market. We seek comment on this proposal.
    To streamline our regulations regarding special enrollment periods 
that require consumers to demonstrate prior coverage, we propose to add 
new paragraph (a)(5) to clarify that qualified individuals who are 
required to demonstrate prior coverage can either demonstrate that they 
had minimum essential coverage as described in 26 CFR 1.5000A-1(b) for 
1 or more days during the 60 days preceding the date of the qualifying 
event or that they lived outside of the U.S. or in a U.S. territory for 
1 or more days during the 60 days preceding the date of the qualifying 
event. Paragraph (a)(5) would apply to paragraph (d)(2)(i)(A) for 
marriage (discussed above) and paragraph (d)(7)(i) for permanent move 
and this paragraph would replace current paragraph (d)(7)(ii). We seek 
comment on this proposal.
    HHS acknowledges that this rule proposes changes for special 
enrollment periods in the individual market that differ from the rules 
regarding special enrollment periods in the group market. For example, 
this rule proposes changes that would require consumers to demonstrate 
prior coverage to qualify for the special enrollment period for 
marriage in proposed paragraph (d)(2)(i)(A) and would generally limit 
plan selection to the same plan or level of coverage when an enrollee 
qualifies for a special enrollment period during the coverage year in 
proposed paragraph (a)(4). However, we believe that the differences in 
the markets--and the impacts of those differences on the risk pool--
warrant an approach in the individual market that diverges from long-
standing rules and norms in the group market. Employer-sponsored 
coverage is generally a more stable risk pool and less susceptible to 
gaming because the coverage is tied to employment and often 
substantially subsidized by the employer. Thus, we believe taking an 
approach in the individual market that imposes tighter restrictions on 
special enrollments and the ability to change plans for current 
enrollees better addresses the unique challenges faced in the 
individual market. We believe that this approach is consistent with the 
requirement in section 1311(c)(6)(C) of the Affordable Care Act 
directing the Secretary to require Exchanges to establish special 
enrollment periods as specified in section 9801of the Code and under 
circumstances similar to such periods under Part D of title XVIII of 
the Act and the Secretary's authority under section 2702(b)(3) to 
promulgate regulations for the individual market with respect to 
special enrollment periods for qualifying events under section 603 of 
the Employee Retirement Income Security Act of 1974. We interpret 
section 1311 of the Affordable Care Act and section 2702 of the PHS Act 
to require the Secretary to implement special enrollment periods with 
the same triggering events as in the group market, but to provide the 
Secretary with flexibility in the specific parameters around how those 
special enrollment periods are implemented in the individual market, 
due to these unique dynamics of the individual market.
    Third, we propose to expand the verification requirements related 
to the special enrollment period for a permanent move in paragraph 
(d)(7). This special enrollment period is only available to a qualified 
individual or enrollee who has gained access to new QHPs as a result of 
a permanent move and had coverage for 1 or more days in the 60 days 
preceding the move, unless he or she is moving to the U.S. from abroad 
or a U.S. territory. Currently, we require documentation to show a move 
occurred, and accept an attestation

[[Page 10988]]

regarding having had prior coverage or moving from abroad or a U.S. 
territory. To ensure that consumers meet all the requirements for this 
special enrollment period, we propose to require that new applicants 
applying for coverage through this special enrollment period submit 
acceptable documentation to the FFEs and SBE-FPs to prove both their 
previous and new addresses and evidence of prior coverage, if 
applicable, through the pre-enrollment verification process. If 
finalized, we intend to release guidance on what documentation would be 
acceptable. We seek comment on this proposal.
    Fourth, for the remainder of 2017 and for future plan years, we 
propose to significantly limit the use of the exceptional circumstances 
special enrollment period described in paragraph (d)(9). In previous 
years, this special enrollment period has been used to address 
eligibility or enrollment issues that affect large cohorts of 
individuals where they had made reasonable efforts to enroll but were 
hindered by outside events. For example, in past years, the FFEs have 
offered exceptional circumstances special enrollment periods to groups 
of consumers who were enrolled in coverage that they believed was 
minimum essential coverage at the time of enrollment, but was not. HHS 
proposes to henceforth apply a more rigorous test for future uses of 
the exceptional circumstances special enrollment period, including 
requiring supporting documentation where practicable, under which we 
would only grant this special enrollment period if provided with 
sufficient evidence to conclude that the consumer's situation was truly 
exceptional and in instances where it is verifiable that consumers were 
directly impacted by the circumstance, as practicable. We would provide 
guidance on examples of situations that we believe meet this more 
rigorous text and what corresponding documentation consumers will be 
required to provide, if requested by the FFE. We seek comment on this 
proposal.
    Over the past few years, the Exchange has, at times, offered 
special enrollment periods for a variety of circumstances related to 
errors that occurred more frequently in the early years of operations. 
However, as the Exchanges continue, HHS will evaluate existing special 
enrollment periods to determine their continued utility and necessity. 
This rule proposes to formalize previous guidance\12\ from HHS that the 
following special enrollment periods are no longer available. We are 
publishing this list in this proposed rule in response to confusion by 
stakeholders about whether current special enrollment periods 
previously made available through guidance are still available to 
consumers, for the purposes of clarity.
---------------------------------------------------------------------------

    \12\ HHS, Clarifying, Eliminating and Enforcing Special 
Enrollment Periods (January 19, 2016), available at http://wayback.archive-it.org/2744/20170118130449/https://blog.cms.gov/2016/01/19/clarifying-eliminating-and-enforcing-special-enrollment-periods/.
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     Consumers who enrolled with advance payments of the 
premium tax credit that are too large because of a redundant or 
duplicate policy;
     Consumers who were affected by a temporary error in the 
treatment of Social Security Income for tax dependents;
     Lawfully present non-citizens that were affected by a 
temporary error in the determination of their eligibility for advance 
payments of the premium tax credit
     Lawfully present non-citizens with incomes below 100% FPL 
who experienced certain processing delays; and
     Consumers who were eligible for or enrolled in COBRA and 
not sufficiently informed about their coverage options.
    Because of concerns that improper uses of the special enrollment 
periods outlined in this section will lead to adverse selection and 
immediate, unexpected financial losses in the remaining months of this 
year, which could lead to premium increases or issuers exiting the 
market, we believe that the changes discussed above are needed to 
stabilize the risk pool and encourage robust issuer Exchange 
participation, which will also benefit both consumers and the 
individual market as a whole in the future.
3. Continuous Coverage
    Because of the challenges in the individual market related to 
adverse selection, HHS believes it is especially important in this 
market to adopt policies that promote continuous enrollment in health 
coverage and to discourage individuals from waiting until illness 
occurs to enroll in coverage.
    While the proposals in this rule relating to guaranteed 
availability, the annual open enrollment period, and special enrollment 
periods would encourage individuals to maintain coverage throughout the 
year, we are also actively exploring additional policies in the 
individual market that would promote continuous coverage and seek input 
on which policies would effectively do so consistent with existing 
legal authorities. For example, with respect to special enrollment 
periods that require evidence of prior coverage, we are considering 
policies for the individual market that would require that individuals 
show evidence of prior coverage for a longer ``look back'' period. For 
example, we could require prior coverage for 6 to 12 months, except 
that we might consider an individual to have had prior coverage, even 
if there was a small gap in coverage (for example, up to 60 days). 
Alternatively, for individuals who are not able to provide evidence of 
prior coverage during such a look back period, an exception could allow 
them to enroll in coverage if they otherwise qualify for a special 
enrollment period, but impose a waiting period of at least 90 days 
before effectuating enrollment, or assess a late enrollment penalty. 
These policies could provide a disincentive for individuals to drop out 
of coverage, thus promoting continuous coverage.
    HHS is also interested in whether policies are needed for the 
individual market similar to those that existed under the Health 
Insurance Portability and Accountability Act of 1996 (Pub. L. 104-191) 
(HIPAA), which required maintenance of continuous, creditable coverage 
without a 63-day break in the group market if individuals wished to 
avoid the pre-existing condition exclusions, and allowed waiting 
periods to be imposed under certain circumstances. Although the HIPAA 
rules did not require that individuals maintain coverage, the rules 
were designed to provide an important incentive for individuals to 
enroll in coverage year-round, not just when in need of health care 
services; reduce adverse selection; and help prevent premiums from 
climbing to levels that would keep most healthy individuals from 
purchasing coverage.
    With these policies, we likely would seek not only to encourage 
uninsured individuals to enroll in coverage during the open enrollment 
period, but also to encourage those with coverage to maintain 
continuous coverage throughout the year.
    We note that we seek comment on additional policies that would 
promote continuous coverage, but are not, at this time, proposing any 
of the policies described in this section III.B.3. of this notice.
4. Enrollment Periods Under SHOP
    Because the proposed changes to Sec.  155.420(a)(3) through (5) are 
being proposed for special enrollment periods in the individual market 
only, we propose to amend Sec.  155.725(j)(2)(i) to

[[Page 10989]]

specify that these paragraphs do not apply to special enrollment 
periods under the Small Business Health Options Program (SHOP). A more 
detailed discussion of the proposed changes in Sec.  155.420(a) is 
provided in section III.B.2. of this proposed rule.
5. Exchange Functions: Certification of Qualified Health Plans (Part 
155, Subpart K)
    In light of the need for issuers to make modifications to their 
products and applications to accommodate the changes proposed in this 
rule, should they be finalized, we would issue separate guidance to 
update the QHP certification calendar and the rate review submission 
deadlines to give additional time for issuers to develop, and States to 
review, form and rate filings for the 2018 plan year that reflect these 
changes.

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

1. Levels of Coverage (Actuarial Value) (Sec.  156.140)
    Section 2707(a) of the PHS Act and section 1302 of the Affordable 
Care Act direct issuers of non-grandfathered individual and small group 
health insurance plans, including QHPs, to ensure that these plans 
adhere to the levels of coverage specified in section 1302(d)(1) of the 
Affordable Care Act. A plan's coverage level, or actuarial value (AV), 
is determined based on its coverage of the EHB for a standard 
population. Section 1302(d)(1) of the Affordable Care Act requires a 
bronze plan to have an AV of 60 percent, a silver plan to have an AV of 
70 percent; a gold plan to have an AV of 80 percent; and a platinum 
plan to have an AV of 90 percent. Section 1302(d)(2) of the Affordable 
Care Act directs the Secretary to issue regulations on the calculation 
of AV and its application to the levels of coverage. Section 1302(d)(3) 
of the Affordable Care Act authorizes the Secretary to develop 
guidelines to provide for a de minimis variation in the actuarial 
valuations used in determining the level of coverage of a plan to 
account for differences in actuarial estimates.
    In the EHB Rule, at Sec.  156.140(c), HHS established that the 
allowable variation in the AV of a health plan that does not result in 
a material difference in the true dollar value of the health plan is +/
-2 percentage points. As finalized in the 2018 Payment Notice, Sec.  
156.140(c) permits a de minimis variation of +/- 2 percentage points, 
except if a bronze health plan either covers and pays for at least one 
major service, other than preventive services, before the deductible or 
meets the requirements to be a high deductible health plan within the 
meaning of 26 U.S.C. 223(c)(2), the allowable variation in AV for such 
plan is -2 percentage points and +5 percentage points. We established 
this additional flexibility for certain bronze plans in the 2018 
Payment Notice to provide a balanced approach to ensure that a variety 
of bronze plans can be offered, including high deductible health plans, 
while ensuring that bronze plans can remain at least as generous as 
catastrophic plans. As discussed in the EHB Rule, our intention with 
the de minimis variation of +/-2 percentage points was to give issuers 
the flexibility to set cost-sharing rates that are simple and 
competitive while ensuring consumers can easily compare plans of 
similar generosity. While the de minimis range is intended to allow 
plans to float within a reasonable range and is not intended to freeze 
plan designs preventing innovation in the market, it was also intended 
to mitigate the need for annual plan redesign, allowing plans to retain 
the same plan design year to year while remaining at the same metal 
level.
    At this time, we believe that further flexibility is needed for the 
AV de minimis range for metal levels to help issuers design new plans 
for future plan years, thereby promoting competition in the market. In 
addition, we believe that changing the de minimis range will allow more 
plans to keep their cost sharing the same from year to year. Although 
the AV Calculator is not a pricing tool, changing the de minimis range 
could also put downward pressure on premiums. Thus, we anticipate that 
this flexibility could encourage healthier consumers to enroll in 
coverage, improving the risk pool and increasing market stability. For 
these reasons, we believe that changing the AV de minimis range would 
help retain and attract issuers to the non-grandfathered individual and 
small group markets, which would increase competition and help 
consumers. Therefore, we propose amending the definition of de minimis 
included in Sec.  156.140(c), to a variation of -4/+2 percentage 
points, rather than +/- 2 percentage points for all non-grandfathered 
individual and small group market plans that are required to comply 
with AV. Under the proposed standard, for example, a silver plan could 
have an AV between 66 and 72 percent. We believe that a de minimis 
amount of -4/+2 percentage points would provide the necessary 
flexibility to issuers in designing plans while striking the right 
balance between ensuring comparability of plans within each metal level 
and allowing plans the flexibility to use convenient and competitive 
cost-sharing metrics.
    We also note that as established at Sec.  156.135(a), to calculate 
the AV of a health plan, the issuer must use the AV Calculator 
developed and made available by HHS for the given benefit year. The AV 
Calculator represents an empirical estimate of the AV calculated in a 
manner that provides a close approximation to the actual average 
spending by a wide range of consumers in a standard population. For the 
2018 AV Calculator, we made several key updates to the AV Calculator, 
including updating the claims data underlying the continuance tables 
that represent the standard population to reflect more current claims 
data. For example, all previous versions of the AV Calculator had been 
using 2010 (pre-Affordable Care Act) claims data and the 2018 AV 
Calculator is using 2015 (post-Affordable Care Act) claims data. As 
discussed in the 2018 AV Calculator Methodology, due to the scope and 
number of updates in the 2018 AV Calculator, the impact on current 
plans' AVs will vary.\13\ Indeed, issuers have reported that the AV of 
2017 plans have varied in unexpected ways when entered into the 2018 AV 
Calculator. Therefore, the proposed flexibility in the de minimis range 
is also intended to help provide some stability to those plans that are 
being impacted by the updates to the AV Calculator.
---------------------------------------------------------------------------

    \13\ 2018 AV Calculator Methodology is available at https://www.cms.gov/cciio/resources/regulations-and-guidance/#Plan.
---------------------------------------------------------------------------

    We are proposing to provide the increased flexibility in the de 
minimis range starting with the 2018 AV Calculator. We seek comment on 
whether making the change effective for the 2019 plan year would be 
preferable, given the lead time issuers require to design plans.
    While we are proposing to modify the de minimis range for the metal 
level plans (bronze, silver, gold, and platinum), we are not proposing 
to modify the de minimis range for the silver plan variations (the 
plans with an AV of 73, 87 and 94 percent) under Sec. Sec.  156.400 and 
156.420 at this time. The de minimis variation for a silver plan 
variation of a single percentage point would still apply. In the 
Actuarial Value and Cost-Sharing Reductions Bulletin we issued on 
February 24, 2012,\14\ we

[[Page 10990]]

explained why we did not intend to require issuers to offer a cost-
sharing reduction plan variation with an AV of 70. However, given our 
proposal, we also are considering whether the ability for an issuer to 
offer a standard silver level plan at an AV of 66 would require a plan 
variation to be offered at an AV of 70 or some other mechanism to 
provide for cost-sharing reductions for eligible individuals with 
household incomes that are more than 250 percent but not more than 400 
percent of the poverty line for a family of the size involved.
---------------------------------------------------------------------------

    \14\ Available at https://www.cms.gov/CCIIO/Resources/Files/Downloads/Av-csr-bulletin.pdf.
---------------------------------------------------------------------------

    We also would maintain the bronze plan de minimis range policy 
finalized in the 2018 Payment Notice at Sec.  156.140(c) with one 
modification. We propose to change the de minimis range for the 
expanded bronze plans from +5/-2 percentage points to +5/-4 percentage 
points to align with the policy in this rule. Therefore, for those 
bronze plans that either cover and pay for at least one major service, 
other than preventive services, before the deductible or meet the 
requirements to be a high deductible health plan within the meaning of 
26 U.S.C. 223(c)(2), we are proposing the allowable variation in AV 
would be -4 percentage points and +5 percentage points.\15\
---------------------------------------------------------------------------

    \15\ Although we are expanding the de minimis range for bronze 
plans to -4 percentage points, we recognize that achieving an AV 
below 58 percent is difficult with the claims distribution 
underlying the current AV calculator.
---------------------------------------------------------------------------

    We seek comment on this proposal, including on the appropriate de 
minimis values for metal level plans and silver plan variations, and 
whether those values should differ when increasing or decreasing AV.
    To implement the amended AV de minimis range in this proposed rule, 
we would update the 2018 AV Calculator in accordance with this policy.
2. Network Adequacy (Sec.  156.230)
    At Sec.  156.230, we established the minimum criteria for network 
adequacy that health and dental plan issuers must meet to be certified 
as QHPs, including stand-alone dental plans (SADPs), in accordance with 
the Secretary's authority in section 1311(c)(1)(B) of the Affordable 
Care Act. Section 156.230(a)(2) requires a QHP issuer to maintain a 
network that is sufficient in number and types of providers, including 
providers that specialize in mental health and substance abuse 
services, to assure that all services will be accessible without 
unreasonable delay.
    In recognition of the traditional role States have in developing 
and enforcing network adequacy standards, we propose to rely on State 
reviews for network adequacy in States in which an FFE is operating, 
provided the State has a sufficient network adequacy review process, 
rather than performing a time and distance evaluation. For the 2018 
plan year, we propose to defer to the States' reviews in States with 
the authority that is at least equal to the ``reasonable access 
standard'' defined in Sec.  156.230 and means to assess issuer network 
adequacy, regardless of whether the Exchange is a State-based Exchange 
(SBE) or FFE, and regardless of whether the State performs plan 
management functions.
    We are also proposing a change to our approach to reviewing network 
adequacy in States that do not have the authority and means to conduct 
sufficient network adequacy reviews. In those States, we would, for the 
2018 plan year, apply a standard similar to the one used in the 2014 
plan year.\16\ As HHS did in 2014, in States without the authority or 
means to conduct sufficient network adequacy reviews, we would rely on 
an issuer's accreditation (commercial or Medicaid) from an HHS-
recognized accrediting entity. HHS has previously recognized 3 
accrediting entities for the accreditation of QHPs: the National 
Committee for Quality Assurance, URAC, and Accreditation Association 
for Ambulatory Health Care.\17\ We would recognize these same three 
accrediting entities for network adequacy reviews for the 2018 plan 
year. Unaccredited issuers would be required to submit an access plan 
as part of the QHP Application. To show that the QHP's network meets 
the requirement in Sec.  156.230(a)(2), the access plan would need to 
demonstrate that an issuer has standards and procedures in place to 
maintain an adequate network consistent with the National Association 
of Insurance Commissioners' Health Benefit Plan Network Access and 
Adequacy Model Act (the Model Act is available at http://www.naic.org/store/free/MDL-74.pdf). This approach would supersede the time and 
distance criteria described in the 2018 Letter to Issuers in the 
Federally-facilitated Marketplaces.\18\
---------------------------------------------------------------------------

    \16\ Letter to Issuers on Federally-facilitated and State 
Partnership Exchanges (April 5, 2013). Available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2014_letter_to_issuers_04052013.pdf.
    \17\ Recognition of Entities for the Accreditation of Qualified 
Health Plans 77 FR 70163 (November 23, 2012) and Approval of an 
Application by the Accreditation Association for Ambulatory Health 
Care (AAAHC) To Be a Recognized Accrediting Entity for the 
Accreditation of Qualified Health Plans 78 FR 77470 (December 23, 
2013).
    \18\ 2018 Letter to Issuers in the Federally-facilitated 
Marketplaces (December 16, 2016). Available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-2018-Letter-to-Issuers-in-the-Federally-facilitated-Marketplaces.pdf.
---------------------------------------------------------------------------

    We would further coordinate with States to monitor network 
adequacy, for example, through complaint tracking. As noted elsewhere 
in this rule, we intend to release a proposed timeline for the QHP 
certification process for plan year 2018 that would provide issuers 
with additional time to implement proposed changes that are finalized 
prior to the 2018 coverage year.
    We seek comment on these proposals.
3. Essential Community Providers (Sec.  156.235)
    Essential community providers (ECPs) include providers that serve 
predominantly low-income and medically underserved individuals, and 
specifically include providers described in section 340B of the PHS Act 
and section 1927(c)(1)(D)(i)(IV) of the Social Security Act. Section 
156.235 establishes requirements for inclusion of ECPs in QHP provider 
networks and provides an alternate standard for issuers that provide a 
majority of covered services through employed physicians or a single 
contracted medical group.
    In conducting reviews of the ECP standard for QHP and SADP 
certification for the 2018 plan year, HHS proposes to follow the 
approach previously finalized in the 2018 Payment Notice and outlined 
in the 2018 Letter to Issuers in the Federally-facilitated 
Marketplaces, with two changes as outlined below. States performing 
plan management functions in the FFEs would be permitted to use a 
similar approach.
    Section 156.235(2)(i) stipulates that a plan has a sufficient 
number and geographic distribution of ECPs if it demonstrates, among 
other criteria, that the network includes as participating 
practitioners at least a minimum percentage, as specified by HHS. For 
the 2014 plan year, we set this minimum percentage at 20 percent, but, 
starting with the 2015 Letter to Issuers in the Federally-facilitated 
Marketplaces, we increased the minimum percentage to 30 percent.\19\ 
For certification for the 2018 plan year we propose to return to the 
percentage used in the 2014 plan year, and would instead again consider 
the issuer to have satisfied the regulatory standard if the issuer 
contracts with at least 20 percent of

[[Page 10991]]

available ECPs in each plan's service area to participate in the plan's 
provider network. The calculation methodology outlined in the 2018 
Letter to Issuers in the Federally-facilitated Marketplaces and 2018 
Payment Notice would remain unchanged.
---------------------------------------------------------------------------

    \19\ 2015 Letter to Issuers in the Federally-facilitated 
Marketplaces. Available online at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2015-final-issuer-letter-3-14-2014.pdf.
---------------------------------------------------------------------------

    We believe this standard will substantially lessen the regulatory 
burden on issuers while preserving adequate access to care provided by 
ECPs. In particular, we believe this proposal would result in fewer 
issuers needing to submit a justification to prove that they include in 
their provider networks a sufficient number and geographic distribution 
of ECPs to meet the standard in Sec.  156.235. For the 2017 plan year, 
six percent of issuers were required to submit such a justification. 
Although none of their networks met the 30 percent ECP threshold, all 
of these justifications were deemed sufficient, and each network would 
have met the 20 percent threshold. We anticipate that issuers will 
readily be able to contract with at least 20 percent of ECPs in a 
service area.
    We also propose to modify our previous guidance regarding which 
providers issuers may identify as ECPs within their provider networks. 
Under our current guidance, issuers would only be able to identify 
providers in their network who are included on a list of available ECPs 
maintained by HHS (``the HHS ECP list''). This list is based on data 
maintained by HHS, including provider data that HHS receives directly 
from providers through the ECP petition process for the 2018 plan 
year.\20\ In previous years, issuers were also permitted to identify 
ECPs through a write-in process. Because the ECP petition process is 
intended to ensure qualified ECPs are included in the HHS ECP list, we 
indicated in guidance that we would not allow issuers to submit ECP 
write-ins for plan year 2018. However, we are aware that not all 
qualified ECPs have submitted an ECP petition, and therefore have 
determined the write-in process is still needed to allow issuers to 
identify all ECPs in their network. Therefore, as for plan year 2017, 
for plan year 2018, we propose that an issuer's ECP write-ins would 
count toward the satisfaction of the ECP standard only for the issuer 
that wrote in the ECP on its ECP template, provided that the issuer 
arranges that the written-in provider has submitted an ECP petition to 
HHS by no later than the deadline for issuer submission of changes to 
the QHP application. For example, issuers may write in any providers 
that are currently eligible to participate in 340B programs that are 
not included on the HHS list, or not-for-profit or state-owned 
providers that would be entities described in section 340B but do not 
receive federal funding under the relevant section of law referred to 
in section 340B, as long as the provider has submitted a timely ECP 
petition. Such providers include not-for-profit or governmental family 
planning service sites that do not receive a grant under Title X of the 
PHS Act. We believe this proposal would (1) help build the HHS ECP list 
so that it is more inclusive of qualified ECPs; and (2) better 
recognize issuers for the ECPs with whom they contract.
---------------------------------------------------------------------------

    \20\ List available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Marketplaces/Downloads/FINAL-CMS-ECP-LIST-PY-2018_12-16-16.xlsx.
---------------------------------------------------------------------------

    As in previous years, if an issuer's application does not satisfy 
the ECP standard, the issuer would be required to include as part of 
its application for QHP certification a satisfactory narrative 
justification describing how the issuer's provider networks, as 
presently constituted, provide an adequate level of service for low-
income and medically underserved individuals and how the issuer plans 
to increase ECP participation in the issuer's provider networks in 
future years. At a minimum, such narrative justification would include 
the number of contracts offered to ECPs for the 2018 plan year, the 
number of additional contracts an issuer expects to offer and the 
timeframe of those planned negotiations, the names of the specific ECPs 
to which the issuer has offered contracts that are still pending, and 
contingency plans for how the issuer's provider network, as currently 
designed, would provide adequate care to enrollees who might otherwise 
be cared for by relevant ECP types that are missing from the issuer's 
provider network.
    We seek comment on these proposals.

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget for review and approval. This 
proposed rule contains information collection requirements (ICRs) that 
are subject to review by OMB. A description of these provisions is 
given in the following paragraphs, with an estimate of the annual 
burden, summarized in Table 1. To fairly evaluate whether an 
information collection should be approved by OMB, section 3506(c)(2)(A) 
of the Paperwork Reduction Act of 1995 requires that we solicit comment 
on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of these issues for the 
following sections of this proposed rule that contain ICRs.

A. ICRs Regarding Verification of Eligibility for Special Enrollment 
Periods (Sec.  155.420)

    This proposed rule proposes that, starting in June 2017, HHS would 
begin to implement pre-enrollment verification of eligibility for all 
categories of special enrollment periods for all States served by the 
HealthCare.gov platform. Currently, individuals self-attest to their 
eligibility for many special enrollment periods and submit supporting 
documentation, but enroll in coverage through the Exchanges without any 
pre-enrollment verification. As mentioned earlier in the preamble, we 
planned to implement a pilot program to conduct pre-enrollment 
verification for a sample of 50 percent of consumers attempting to 
enroll in coverage through certain special enrollment periods. Under 
the proposed rule, we propose to expand pre-enrollment verification to 
all new consumers for certain categories of special enrollment periods, 
so that enrollment would be delayed or ``pended'' until verification of 
eligibility is completed. Individuals would have to provide supporting 
documentation within 30 days. Where applicable, the FFE would make 
every effort to verify an individual's eligibility for the applicable 
special enrollment period through automated electronic means instead of 
through documentation. Since consumers currently provide required 
supporting documentation, the proposed provisions would not impose any 
additional burden. We seek comment on this impact.
    Based on enrollment data, we estimate that HHS Eligibility Support 
Staff members would conduct pre-enrollment verification for an 
additional 650,000 individuals. Once individuals have submitted the 
required verification documents, we estimate that it will take a staff 
member approximately 12 minutes (at an hourly cost of $40.82) to review 
and verify submitted verification

[[Page 10992]]

documents. The verification process would result in an additional 
annual burden for the federal government of 130,000 hours with an 
equivalent cost of $5,306,600. We will revise the information 
collection currently approved under OMB control number 0938-1207 
(Medicaid and Children's Health Insurance Programs: Essential Health 
Benefits in Alternative Benefit Plans, Eligibility Notices, Fair 
Hearing and Appeal Processes, and Premiums and Cost Sharing; Exchanges: 
Eligibility and Enrollment) to account for this additional burden.
    State-based Exchanges that currently do not conduct pre-enrollment 
verification for special enrollment periods would be encouraged to 
follow the same approach. States that choose to do so would change 
their current approach. Under 5 CFR 1320.3(c)(4), this ICR is not 
subject to the PRA as it would affect fewer than 10 entities in a 12-
month period.

B. ICRs Regarding Network Adequacy Reviews and Essential Community 
Providers (Sec.  156.230, Sec.  156.235)

    In this proposed rule, we are proposing that, for the 2018 plan 
year, HHS would defer to the State's reviews in States with authority 
and means to assess issuer network adequacy; while in States without 
authority and means to conduct sufficient network adequacy reviews, HHS 
would rely on an issuer's accreditation (commercial or Medicaid) from 
an HHS-recognized accrediting entity. This would reduce the burden 
related to the time and distance evaluation for issuers. Unaccredited 
issuers would be required to submit an access plan as part of the QHP 
Application. We are not aware of any unaccredited issuer that plans to 
enter the market in 2018, therefore we expect that none of the issuers 
will need to submit an access plan. We estimate that this would reduce 
the burden related to the review by 15 hours per issuer on average. The 
total annual reduction in burden for 450 QHP issuers and would be 6,750 
hours with an equivalent reduction in cost of $519,750 (at an hourly 
cost of $77). For stand-alone dental issuers, the estimated reduction 
in burden would be 10 hours on average annually for each issuer. For 
250 issuers, the total annual reduction in burden would be 2,500 hours 
with an equivalent reduction in cost of $192,500 (at an hourly rate of 
$77).
    We expect to collect access plans from all stand-alone dental 
issuers in states without adequate review. We assume that approximately 
125 stand-alone dental issuers would need to submit access plans, and 
each issuer would require approximately 1 hour to prepare and submit a 
plan. For all 125 issuers, the total annual burden would be 125 hours, 
with an annual equivalent cost of $9,625 (at an hourly rate of $77).
    The proposed change in the ECP standard would reduce the burden for 
issuers that previously needed to submit a justification to prove that 
they include in their provider networks a sufficient number and 
geographic distribution of ECPs to meet the standard in Sec.  156.235. 
We estimate that in the absence of this change, approximately 20 QHP 
and stand-alone dental plan issuers would have each spent 45 minutes on 
average to prepare an submit a justification. The total reduction in 
burden for 20 issuers would be 15 hours with an equivalent reduction in 
cost of $1,155 (at an hourly rate of $77).
    We will revise the information collection currently approved under 
OMB control number 0938-1187 (Continuation of Data Collection to 
Support QHP Certification and other Financial Management and Exchange 
Operations) to account for this reduction in burden.

                                             TABLE 1--Annual Reporting, Recordkeeping and Disclosure Burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        Hourly       Total
                                                                                             Burden per     Total     labor cost  labor cost
                 Regulation section                   OMB control   Number of    Responses    response     annual         of          of      Total cost
                                                         number    respondents                (hours)      burden     reporting    reporting      ($)
                                                                                                           (hours)       ($)          ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Network Adequacy-Access Plan (Sec.   156.230).......    0938-1187          125         125            1         125           77       9,625       9,625
Network Adequacy-QHP issuers (Sec.   156.230).......    0938-1187          450         450         (15)     (6,750)           77   (519,750)   (519,750)
Network Adequacy-Stand-alone dental plan issuers        0938-1187          250         250         (10)     (2,500)           77   (192,500)   (192,500)
 (Sec.   156.230)...................................
ECP justification (Sec.   156.235)..................    0938-1187           20          20       (0.75)        (15)           77     (1,155)     (1,155)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: There are no capital/maintenance costs associated with the information collection requirements contained in this rule; therefore, we have removed
  the associated column from Table 1.

V. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

VI. Regulatory Impact Analysis

A. Statement of Need

    As noted previously in the preamble, the Exchanges have experienced 
a decrease in the number of participating issuers and many States have 
recently seen increases in premiums. This proposed rule, which is being 
published as issuers develop their proposed plan benefit structures and 
premiums for 2018, aims to ensure market stability and issuer 
participation in the Exchanges for the 2018 benefit year. This proposed 
rule also aims to reduce the fiscal and regulatory burden on 
individuals, families, health insurers, patients, recipients of health 
care services, and purchasers of health insurance. This proposed rule 
seeks to lower insurance rates and ensure a dynamic and competitive 
market in part by preventing and curbing potential abuses associated 
with special enrollment periods and gaming by individuals taking 
advantage of the current regulations on grace periods and termination 
of coverage due to the non-payment of premiums.
    This proposed rule would address these issues by changing a number 
of requirements that HHS believes will provide needed flexibility to 
issuers and help stabilize the individual insurance market, allowing 
consumers in many State or local markets to retain or obtain health 
insurance while incentivizing issuers to enter, or remain, in these 
markets while returning autonomy to the States for a number of issues.

[[Page 10993]]

B. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 202 of the Unfunded Mandates Reform Act 
of 1995 (March 22, 1995, Pub. L. 104-4), Executive Order 13132 on 
Federalism (August 4, 1999), the Congressional Review Act (5 U.S.C. 
804(2)), and Executive Order 13771 on Reducing Regulation and 
Controlling Regulatory Costs (January 30, 2017).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility.
    Section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action that is likely to result in a proposed 
rule--(1) having an annual effect on the economy of $100 million or 
more in any one year, or adversely and materially affecting a sector of 
the economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local or tribal governments or communities 
(also referred to as ``economically significant''); (2) creating a 
serious inconsistency or otherwise interfering with an action taken or 
planned by another agency; (3) materially altering the budgetary 
impacts of entitlement grants, user fees, or loan programs or the 
rights and obligations of recipients thereof; or (4) raising novel 
legal or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in the Executive Order.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with economically significant effects ($100 million or more in any 1 
year), and a ``significant'' regulatory action is subject to review by 
the OMB. HHS has concluded that this rule is likely to have economic 
impacts of $100 million or more in at least one year, and therefore 
meets the definition of ``significant rule'' under Executive Order 
12866. Therefore, HHS has provided an assessment of the potential 
costs, benefits, and transfers associated with this proposed rule.
    The provisions in this proposed rule aim to improve the health and 
stability of the Exchanges. They provide additional flexibility to 
issuers for plan designs, reduce regulatory burden, seek to improve the 
risk pool and lower premiums by reducing gaming and adverse selection 
and incentivize consumers to maintain continuous coverage. Issuers 
would experience a reduction in costs related to network adequacy 
reviews. Through the reduction in financial uncertainty for issuers and 
increased affordability for consumers, these proposed provisions are 
expected to increase access to affordable health coverage. Although 
there is some uncertainty regarding the net effect on enrollment, 
premiums and total premium tax credit payments by the government, we 
anticipate that the provisions of this proposed rule would help further 
HHS's goal of ensuring that all consumers have quality, affordable 
health care and that markets are stable and that Exchanges operate 
smoothly.
    In accordance with Executive Order 12866, HHS has determined that 
the benefits of this regulatory action justify the costs.

C. Impact Estimates and Accounting Table

    In accordance with OMB Circular A-4, Table 2 depicts an accounting 
statement summarizing HHS's assessment of the benefits, costs, and 
transfers associated with this regulatory action.
    The proposed provisions in this rule would have a number of 
effects, including reducing regulatory burden for issuers, reducing the 
impact of adverse selection, stabilizing premiums in the individual 
insurance market, and providing consumers with more affordable health 
insurance coverage. The effects in Table 2 reflect qualitative impacts 
and estimated direct monetary costs and transfers resulting from the 
provisions of this proposed rule.

                                            Table 2--Accounting Table
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
                                                    Benefits
----------------------------------------------------------------------------------------------------------------
Qualitative:
     Improved health and protection from the risk of catastrophic medical expenditures for the
     previously uninsured, especially individuals with medical conditions (if health insurance enrollment
     increases) a...............................................................................................
     Cost savings due to reduction in medical service provision (if health insurance enrollment
     decreases) a b.............................................................................................
     Cost savings to issuers from not having to process claims while enrollment is ``pended'' during pre-
     enrollment verification of eligibility for special enrollment periods......................................
     Cost savings to the government and plans associated with the reduced open enrollment period;.......
----------------------------------------------------------------------------------------------------------------
                      Costs                          Estimate          Year          Discount         Period
                                                       (million)          dollar    rate percent         covered
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($millions/year)...........          ($0.7)            2016               7       2017-2021
                                                          ($0.7)            2016               3       2017-2021
----------------------------------------------------------------------------------------------------------------
Includes costs incurred by stand-alone dental issuers for preparing access plans and costs savings to issuers
 due to reduction in administrative costs related to network adequacy review for QHP certification
----------------------------------------------------------------------------------------------------------------
Qualitative:
     Harms to health and reduced protection from the risk of catastrophic medical expenditures for the
     previously uninsured, especially individuals with medical conditions (if health insurance enrollment
     decreases) a...............................................................................................
     Cost due to increases in medical service provision (if health insurance enrollment increases) a b..
     Decreased quality of medical services (for example, reductions in continuity of care due to lower
     ECP threshold).............................................................................................
     Administrative costs incurred by the federal government and by States that start conducting
     verification of special enrollment period eligibility......................................................
     Costs to issuers of redesigning plans..............................................................
     Costs to the federal government and issuers of outreach activities associated with shortened open
     enrollment period..........................................................................................
----------------------------------------------------------------------------------------------------------------

[[Page 10994]]

 
                                                    Transfers
----------------------------------------------------------------------------------------------------------------
Qualitative:
     Transfers, via premium reductions, from special enrollment period abusers to all other enrollees...
     Transfers related to changes in actuarial value from enrollees to issuers and, via possible
     reductions in subsidies, from some combination of enrollees and issuers to the federal government..........
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Enrollment could increase due to decreases in premiums resulting from pass-through of administrative cost
  savings (as listed) and savings associated with reductions in special enrollment period abuse. Enrollment
  could decrease due to lessened consumer appeal of insurance with reduced actuarial value and less access to
  ECPs, increases in premiums resulting from pass-through of administrative costs (as listed), former special
  enrollment period users discontinuing participation, or due to shortened enrollment periods. The net effect on
  enrollment is ambiguous.
\b\ These cost and cost savings generalizations are somewhat oversimplified because uninsured individuals are
  relatively likely to obtain health care through high-cost providers (for example, visiting an emergency room
  for preventive services).

1. Guaranteed Availability of Coverage
    The proposed regulation would allow issuers to apply a premium 
payment made for new coverage under the same or a different product to 
the outstanding debt associated with non-payment of premiums for 
coverage from the same issuer enrolled in within the prior 12 months. 
This means that issuers would be able to require a policyholder whose 
coverage is terminated for non-payment of premium in the individual or 
group market to pay all past due premium owed to that issuer after the 
applicable due date for coverage in the prior 12-month period in order 
to resume coverage from that same issuer. Individuals with past due 
premium would generally owe no more than 1 to 3 months of past-due 
premiums. The issuer would have to apply its premium payment policy 
uniformly to all employers or individuals regardless of health status. 
This would reduce the risk of gaming and adverse selection by consumers 
while likely also discouraging some individuals from obtaining 
coverage.
    A recent study \21\ surveying consumers with individual market 
plans concluded that approximately 21 percent of consumers stopped 
premium payments in 2015. Approximately 87 percent of those individuals 
repurchased plans in 2016, while 49 percent of these consumers 
purchased the same plan they had previously stopped payment on.
---------------------------------------------------------------------------

    \21\ 2016 OEP: Reflection on enrollment, Center for U.S. Health 
System Reform, McKinsey&Company, May 2016, available at http://healthcare.mckinsey.com/2016-oep-consumer-survey-findings.
---------------------------------------------------------------------------

    Based on available data, we estimate that approximately one in ten 
enrollees had their coverage terminated due to non-payment of premiums 
in 2016. We estimated that approximately 86,000 (or 16 percent) of 
those individuals terminated due to non-payment of premium in 2016 and 
living in an area where their 2016 issuer was available in 2017 had an 
active 2017 plan selection with the same issuer at the end of the open 
enrollment period. Additionally, for those individuals living in an 
area were their 2016 issuer was the only issuer available in 2017, 23 
percent of those individuals terminated due to non-payment in 2016 had 
an active 2017 plan selection this issuer at the end of the open 
enrollment period--equating to approximately 21,000 individuals. In the 
absence of data, we are unable to determine the amount of past due 
amounts that consumers would have to pay in order to resume coverage 
with the same issuer, though individuals would generally owe no more 
than 3 months of premiums. We are seeking comments on this impact.
2. Open Enrollment Periods
    The proposed regulation proposes to amend Sec.  155.410(e) and 
change the annual open enrollment period for coverage year 2018 to 
begin on November 1, 2017 and end on December 15, 2017. This is 
expected to have a positive impact on the risk pool by reducing the 
risk of adverse selection. However, the shortened enrollment period 
could lead to a reduction in enrollees, primarily younger and healthier 
enrollees who usually enroll late in the enrollment period. The change 
in the open enrollment period could lead to additional reductions in 
enrollment if Exchanges and enrollment assisters do not have adequate 
support, which could lead to potential enrollees facing longer wait 
times. In addition, this change is expected to simplify operational 
processes for issuers and the Exchanges. However, the Federal 
government, State-based Exchanges, and issuers may incur costs if 
additional consumer outreach is needed.
    We are seeking comments regarding the potential effects of the 
shortening of the open enrollment period on all stakeholders.
3. Special Enrollment Periods
    Special enrollment periods ensure that people who lose health 
insurance during the year (for example, through non-voluntary loss of 
minimum essential coverage provided through an employer), or who 
experience other qualifying events such as marriage or birth or 
adoption of a child, have the opportunity to enroll in new coverage or 
make changes to their existing coverage. While the annual open 
enrollment period allows previously uninsured individuals to enroll in 
new insurance coverage, special enrollment periods are intended to 
promote continuous enrollment in health insurance coverage during the 
plan year by allowing those who were previously enrolled in coverage to 
obtain new coverage without a lapse or gap in coverage.
    However, allowing previously uninsured individuals to enroll in 
coverage via a special enrollment period that they would not otherwise 
qualify for can increase the risk of adverse selection, negatively 
impact the risk pool, contribute to gaps in coverage, and contribute to 
market instability and reduced issuer participation.
    Currently, in many cases, individuals self-attest to their 
eligibility for most special enrollment periods and submit supporting 
documentation, but enroll in coverage through the Exchanges without 
further pre-enrollment verification. As mentioned earlier in the 
preamble, in 2016 we took several steps to further verify eligibility 
for special enrollment periods and planned to implement a pilot program 
to conduct pre-enrollment verification for a sample of 50 percent of 
consumers attempting to enroll in coverage through certain special 
enrollment periods. The provisions in this proposed rule would increase 
the scope of pre-enrollment verification, strengthen and streamline the 
parameters of several existing special enrollment periods, and limit 
several other special enrollment periods. Starting in June 2017, 
individuals attempting to enroll through certain special enrollment 
periods would have to undergo pre-enrollment verification of 
eligibility, so that their enrollment would be delayed or ``pended'' 
until verification of eligibility is completed. Where applicable, the 
FFE would make

[[Page 10995]]

every effort to verify an individual's eligibility for the applicable 
special enrollment period through automated electronic means instead of 
through documentation. Based on past experience, we estimate that the 
expansion in pre-enrollment verification to all individuals seeking to 
enroll in coverage through all applicable special enrollment periods 
would result in an additional 650,000 individuals having their 
enrollment delayed or ``pended'' annually until eligibility 
verification is completed. As discussed previously in the Collection of 
Information Requirements section there would be an increase in costs to 
the federal government for conducting the additional pre-enrollment 
verifications. State-based Exchanges that begin to conduct pre-
enrollment verification would incur administrative costs to conduct 
those reviews. We anticipate that there would be a reduction in costs 
to issuers since they would not have to process any claims while the 
enrollments are ``pended''.
    The proposed changes would promote continuous coverage and allow 
individuals who qualify for a special enrollment period to obtain 
coverage, while ensuring that uninsured individuals that would not 
qualify for a special enrollment period obtain coverage during open 
enrollment instead of waiting until they get sick, which is expected to 
protect the Exchange risk pools, enhance market stability, and in doing 
so, limit rate increases. On the other hand, it is possible that the 
additional steps required to verify eligibility might discourage some 
eligible individuals from obtaining coverage, and reduce access to 
health care for those individuals, increasing their exposure to 
financial risk. If it deters younger and healthier individuals from 
obtaining coverage, it could also worsen the risk pool.
    If pre-enrollment verification causes premiums to fall and all 
individuals that inappropriately enrolled via special enrollment 
periods continue to be covered, there would be a transfer from such 
individuals to other consumers. On the other hand, if some individuals 
are no longer able to enroll via special enrollment period, they would 
experience reduced access to health care.
    The net effect of pre-enrollment verification and other proposed 
changes on premiums and enrollment is uncertain. If there is a 
significant decrease in enrollment, especially for younger and 
healthier individuals, it is possible that premiums would not fall, and 
potentially might increase. We seek comment on the impacts of these 
provisions.
4. Levels of Coverage (Actuarial Value)
    In this proposed rule, we are proposing amending the de minimis 
range included in Sec.  156.140(c), to a variation of -4/+2 percentage 
points, rather than +/-2 percentage points for all non-grandfathered 
individual and small group market plans that are required to comply 
with AV (We also propose to change the de minimis range for the 
expanded bronze plans from +5/-2 percentage points to +5/-4 percentage 
points to align with the policy in this rule) for plans beginning in 
2018. While we are proposing to modify the de minimis range for the 
metal level plans (bronze, silver, gold, and platinum), we are not 
proposing to modify the de minimis range for the silver plan variations 
(the plans with an AV of 73, 87 and 94 percent) under Sec. Sec.  
156.400 and 156.420 at this time. In the short run, the impact of this 
proposed change would be to generate a transfer from consumers to 
insurers. The proposed change in AV could reduce the value of coverage 
for consumers, which could lead to more consumers facing increases in 
out-of-pocket expenses, thus increasing their exposure to financial 
risks associated with high medical costs. However, in the longer run, 
providing issuers with additional flexibility could help stabilize 
premiums, increase issuer participation and ultimately provide some 
offsetting benefit to consumers. We estimate that the proposed change 
in AV could lead to up to a 1 to 2 percent reduction in premiums. This, 
in turn, would increase enrollment. A reduction in premiums would 
likely reduce the benchmark premium for purposes of the premium tax 
credit, leading to a transfer from credit recipients to the government. 
An increase in enrollment would likely result in an increase in total 
premium tax credit payments by the government. The net effect is 
uncertain. We seek comments on the impact of this proposed change.
5. Network Adequacy
    Section 156.230(a)(2) requires a QHP issuer to maintain a network 
that is sufficient in number and types of providers, including 
providers that specialize in mental health and substance abuse 
services, to assure that all services will be accessible without 
unreasonable delay. In this proposed rule, we are proposing that, for 
the 2018 plan year, HHS would defer to the State's reviews in States 
with authority and means to assess issuer network adequacy; while in 
States without authority and means to conduct sufficient network 
adequacy reviews, HHS would rely on an issuer's accreditation 
(commercial or Medicaid) from an HHS-recognized accrediting entity. As 
discussed previously in the Collection of Information Requirements 
section, this would reduce related administrative costs for issuers. 
Unaccredited issuers would be required to submit an access plan as part 
of the QHP Application. Reduced burden for issuers could ultimately 
lead to reduced premiums for consumers.
    Depending on the level of review by State regulators and 
accrediting entities, this could have an impact on plan design. Issuers 
could potentially use network designs to encourage enrollment into 
certain plans, exacerbating selection pressures. The net effect on 
consumers is uncertain. We are seeking comments on the potential 
impacts.
6. Essential Community Providers
    Section 156.235(2)(i) stipulates that a plan has a sufficient 
number and geographic distribution of ECPs if it demonstrates, among 
other criteria, that the network includes as participating 
practitioners at least a minimum percentage, as specified by HHS. For 
the 2014 plan year, this minimum percentage was 20 percent, but 
starting with the 2015 Letter to Issuers in the Federally-facilitated 
Marketplaces, we increased the minimum percentage to 30 percent. In 
this proposed rule, we are proposing that, for certification and 
recertification for the 2018 plan year, we would instead consider the 
issuer to have satisfied the regulatory standard if the issuer 
contracts with at least 20 percent of available ECPs in each plan's 
service area to participate in the plan's provider network. In 
addition, we are proposing to reverse our previous guidance that we 
were discontinuing the write-in process for ECPs, and would continue to 
allow this process for the 2018 plan year. If an issuer's application 
does not satisfy the ECP standard, the issuer would be required to 
include as part of its application for QHP certification a satisfactory 
narrative justification describing how the issuer's provider networks, 
as presently constituted, provide an adequate level of service for low-
income and medically underserved individuals and how the issuer plans 
to increase ECP participation in the issuer's provider networks in 
future years. We expect that issuers would be able to meet this 
requirement, with the exception of issuers that do not have any ECPs in 
their service area.

[[Page 10996]]

    Less expansive requirements for network size would lead to both 
costs and cost savings. Costs could take the form of increased travel 
time and wait time for appointments or reductions in continuity of care 
for those patients whose providers have been removed from their 
insurance issuers' networks.
    Cost savings for issuers would be associated with reductions in 
administrative costs of arranging contracts and, if issuers focus their 
networks on relatively low-cost providers to the extent possible, 
reductions in the cost of health care provision. In addition, fewer 
issuers would need to submit a justification to prove that they include 
in their provider networks a sufficient number and geographic 
distribution of ECPs to meet the standard, as discussed previously in 
the Collection of Information Requirements section.
    We seek comments on the impacts of this proposed change.
7. Uncertainty
    The net effect of these proposed provisions on enrollment, premiums 
and total premium tax credit payments are ambiguous. On the one hand, 
premiums would tend to fall if more young and healthy individuals 
obtain coverage, adverse selection is reduced and issuers are able to 
lower costs due to reduced regulatory burden, and offer greater 
flexibility in plan design. On the other hand, if changes such as 
shortened open enrollment period, pre-enrollment verification for 
special enrollment periods, reduced actuarial value of plans, less 
expansive provider networks result in lower enrollment, especially for 
younger, healthier adults, it would tend to increase premiums. Lower 
premiums in turn would increase enrollment, while higher premiums would 
have the opposite effect. In addition, lower premiums would tend to 
decrease total premium tax credit payments, which could be offset by an 
increase in enrollment. Increased enrollment would lead to an overall 
increase in healthcare spending by issuers, while a decrease in 
enrollment would lower it, although the effect on total healthcare 
spending is uncertain, since uninsured individuals are more likely to 
obtain health care through high cost providers such as emergency rooms.

D. Regulatory Alternatives Considered

    In developing the policies contained in this proposed rule, we 
considered maintaining the status quo with respect to our 
interpretation of guaranteed availability, network adequacy 
requirements and essential community provider requirements. However, we 
determined that the changes are urgently needed to stabilize markets, 
to incentivize issuers to enter or remain in the market and to ensure 
premium stability and consumer choice.
    With respect to our proposal regarding essential community 
providers, we considered proposing a minimum threshold other than 20 
percent, but believe that reverting to the previously used 20 percent 
threshold that issuers were used to would better help stabilize the 
markets, while adequately protecting access to ECPs.
    We also considered keeping the original open enrollment period for 
2018 coverage, but determined that an immediate change would have a 
positive impact on the risk pool by reducing the risk of adverse 
selection and that the market is mature enough for an immediate 
transition.
    In addition, we considered increasing the scope of pre-enrollment 
verification for certain special enrollment periods to 90 percent 
instead of 100 percent. This would have allowed us to maximize the 
verification of eligibility while providing some population for claims 
comparison as envisioned by the scaled pilot. We are seeking comment on 
the issue, but believe that in order to minimize the risk of adverse 
selection, complete pre-enrollment verification for certain special 
enrollment periods is necessary. We also considered maintain the 
existing parameters around special enrollment periods so that the 
individual market special enrollment periods would continue to align 
with group market policies. However, HHS determined that aspects of the 
individual market and the unique threats of adverse selection in this 
market justified a departure from the group market policies.
    With respect to our proposal regarding AV, we considered proposing 
that the change would be effective for the 2019 plan year. However, 
given input from stakeholders regarding the 2018 AV Calculator, we 
determined it was better to make the proposal effective for the 2018 
plan year.

E. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601, et seq.) 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.'' HHS uses a change in revenues of more than 3 to 5 
percent as its measure of significant economic impact on a substantial 
number of small entities.
    This proposed rule would affect health insurance issuers. We 
believe that health insurance issuers would be classified under the 
North American Industry Classification System code 524114 (Direct 
Health and Medical Insurance Carriers). According to SBA size 
standards, entities with average annual receipts of $38.5 million or 
less would be considered small entities for these North American 
Industry Classification System codes. Issuers could possibly be 
classified in 621491 (HMO Medical Centers) and, if this is the case, 
the SBA size standard would be $32.5 million or less.\22\ We believe 
that few, if any, insurance companies underwriting comprehensive health 
insurance policies (in contrast, for example, to travel insurance 
policies or dental discount policies) fall below these size thresholds. 
Based on data from MLR annual report submissions for the 2015 MLR 
reporting year, approximately 97 out of 528 issuers of health insurance 
coverage nationwide had total premium revenue of $38.5 million or less. 
This estimate may overstate the actual number of small health insurance 
companies that would be affected, since almost 74 percent of these 
small companies belong to larger holding groups, and many, if not all, 
of these small companies are likely to have non-health lines of 
business that would result in their revenues exceeding $38.5 million.
---------------------------------------------------------------------------

    \22\ ``Table of Small Business Size Standards Matched to North 
American Industry Classification System Codes'', effective February 
26, 2016, U.S. Small Business Administration, available at https://www.sba.gov/contracting/getting-started-contractor/make-sure-you-meet-sba-size-standards/table-small-business-size-standards.
---------------------------------------------------------------------------

F. Unfunded Mandates

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires that agencies assess anticipated costs and benefits and take 
certain other actions before issuing a proposed rule that includes any 
Federal mandate that may result in expenditures in any 1 year by State, 
local, or Tribal governments, in the aggregate, or by the private 
sector, of $100 million in 1995 dollars, updated annually for 
inflation. Currently, that threshold is approximately $146

[[Page 10997]]

million. Although we have not been able to quantify all costs, we 
expect the combined impact on State, local, or Tribal governments and 
the private sector to be below the threshold.

G. Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule that imposes 
substantial direct costs on State and local governments, preempts State 
law, or otherwise has Federalism implications.
    In HHS's view, while this proposed rule would not impose 
substantial direct requirement costs on State and local governments, 
this proposed regulation has Federalism implications due to direct 
effects on the distribution of power and responsibilities among the 
State and Federal governments relating to determining standards 
relating to health insurance that is offered in the individual and 
small group markets. However, HHS anticipates that the Federalism 
implications (if any) are substantially mitigated because under the 
statute and our proposals, States have choices regarding the structure, 
governance, and operations of their Exchanges. This rule strives to 
increase flexibility for States-based Exchanges. For example, we 
recommend, but would not require, that State-based Exchanges engage in 
pre-enrollment verification with respect to special enrollment periods; 
and we would defer to State network adequacy reviews provided the 
States have the authority and the means to conduct network adequacy 
reviews. Additionally, the Affordable Care Act does not require States 
to establish these programs; if a State elects not to establish any of 
these programs or is not approved to do so, HHS must establish and 
operate the programs in that State.
    In compliance with the requirement of Executive Order 13132 that 
agencies examine closely any policies that may have Federalism 
implications or limit the policy making discretion of the States, HHS 
has engaged in efforts to consult with and work cooperatively with 
affected States, including participating in conference calls with and 
attending conferences of the National Association of Insurance 
Commissioners, and consulting with State insurance officials on an 
individual basis.
    While developing this proposed rule, HHS has attempted to balance 
the States' interests in regulating health insurance issuers with the 
need to ensure market stability. By doing so, it is HHS's view that we 
have complied with the requirements of Executive Order 13132.

H. Congressional Review Act

    This proposed rule is subject to the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801, et seq.), which specifies that before a rule can 
take effect, the Federal agency promulgating the rule shall submit to 
each House of the Congress and to the Comptroller General a report 
containing a copy of the rule along with other specified information, 
and has been transmitted to Congress and the Comptroller for review.

I. Reducing Regulation and Controlling Regulatory Costs

    Executive Order 13771, entitled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017. Section 2(a) of 
Executive Order 13771 requires an agency, unless prohibited by law, to 
identify at least two existing regulations to be repealed when the 
agency publicly proposes for notice and comment or otherwise 
promulgates a new regulation. In furtherance of this requirement, 
section 2(c) of Executive Order 13771 requires that the new incremental 
costs associated with new regulations shall, to the extent permitted by 
law, be offset by the elimination of existing costs associated with at 
least two prior regulations. OMB's interim guidance issued on February 
2, 2017, explains that for Fiscal Year 2017 the above requirements only 
apply to each new ``significant regulatory action that imposes costs.'' 
It has been determined that this proposed rule is not a ``significant 
regulatory action that imposes costs'' and thus does not trigger the 
above requirements of Executive Order 13771.''

List of Subjects

45 CFR Part 147

    Health care, Health insurance, Reporting and recordkeeping 
requirements.

45 CFR Part 155

    Administrative practice and procedure, Advertising, Brokers, 
Conflict of interest, Consumer protection, Grant administration, Grant 
programs--health, Health care, Health insurance, Health maintenance 
organizations (HMO), Health records, Hospitals, Indians, Individuals 
with disabilities, Intergovernmental relations, Loan programs--health, 
Medicaid, Organization and functions (Government agencies), Public 
assistance programs, Reporting and recordkeeping requirements, 
Technical assistance, Women and youth.

45 CFR Part 156

    Administrative practice and procedure, Advertising, American 
Indian/Alaska Natives, Conflict of interest, Consumer protection, Cost-
sharing reductions, Grant programs--health, Grants administration, 
Health care, Health insurance, Health maintenance organization (HMO), 
Health records, Hospitals, Individuals with disabilities, Loan 
programs--health, Medicaid, Organization and functions (Government 
agencies), Public assistance programs, Reporting and recordkeeping 
requirements, State and local governments, Sunshine Act, Technical 
assistance, Women, Youth.

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

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

0
1. The authority citation for part 147 continues to read as follows:

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

0
2. Section 147.104 is amended by revising paragraph (b)(2)(i) 
introductory text to read as follows:


Sec.  147.104  Guaranteed availability of coverage.

* * * * *
    (b) * * *
    (2) * * *
    (i) Subject to Sec.  155.420(a)(4) and (5) of this subchapter, a 
health insurance issuer in the individual market must provide a limited 
open enrollment period for the triggering events described in Sec.  
155.420(d) of this subchapter, excluding the following:
* * * * *

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

0
3. The authority citation for part 155 continues to read as follows:

    Authority: Title I of the Affordable Care Act, sections 1301, 
1302, 1303, 1304, 1311, 1312, 1313, 1321, 1322, 1331, 1332, 1334, 
1402, 1411, 1412, 1413, Pub. L. 111-148, 124 Stat. 119 (42 U.S.C. 
18021-18024, 18031-18033, 18041-18042, 18051, 18054, 18071, and 
18081-18083).

0
4. Section 155.410 is amended by revising paragraphs (e)(2) and (3) to 
read as follows:

[[Page 10998]]

Sec.  155. 410  Initial and annual open enrollment periods.

* * * * *
    (e) * * *
    (2) For the benefit years beginning on January 1, 2016 and January 
1, 2017, the annual open enrollment period begins on November 1 of the 
calendar year preceding the benefit year, and extends through January 
31 of the benefit year.
    (3) For the benefit years beginning on January 1, 2018 and beyond, 
the annual open enrollment period begins on November 1 and extends 
through December 15 of the calendar year preceding the benefit year.
* * * * *
0
5. Section 155.420 is amended by:
0
a. Adding paragraphs (a)(3) through (5);
0
b. Revising paragraphs (b)(5) and (d) introductory text;
0
c. Adding paragraph (d)(2)(i)(A) and reserved paragraph (d)(2)(i)(B); 
and
0
d. Removing and reserving paragraph (d)(7)(ii).
    The additions and revisions read as follows:


Sec.  155.420  Special enrollment periods.

    (a) * * *
    (3) Use of special enrollment periods by qualified individuals. The 
Exchange must allow a qualified individual, and when specified in 
paragraph (d) of this section, his or her dependent, who are not 
enrolled in a QHP through the Exchange, to enroll in a QHP if one of 
the triggering events specified in paragraph (d) of this section occur.
    (4) Use of special enrollment periods by enrollees. (i) If an 
enrollee has gained a dependent in accordance with paragraph (d)(2)(i) 
of this section, the Exchange must allow the enrollee to add the 
dependent to his or her current QHP, or, if the QHP's business rules do 
not allow the dependent to enroll, the Exchange must allow the enrollee 
and his or her dependents to change to another QHP within the same 
level of coverage (or one metal level higher or lower, if no such QHP 
is available), as outlined in Sec.  156.140(b) of this subchapter, or 
enroll the dependent in a separate QHP.
    (ii) If an enrollee and his or her dependents become newly eligible 
for cost-sharing reductions in accordance with paragraph (d)(6)(i) or 
(ii) and are not enrolled in a silver-level QHP, the Exchange must 
allow the enrollee and his or her dependents to change to a silver-
level QHP if they elect to change their QHP enrollment.
    (iii) If an enrollee qualifies for a special enrollment period 
through another triggering event specified in paragraph (d) of this 
section, except for paragraph (d)(4), (d)(8), (d)(9), and (d)(10), the 
Exchange must allow the enrollee and his or her dependents to make 
changes to their enrollment in the same QHP or to change to another QHP 
within the same level of coverage, as outlined in Sec.  156.140(b) of 
this subchapter, provided that other QHPs at that metal level are 
available.
    (5) Prior coverage requirement. Qualified individuals who are 
required to demonstrate coverage in the 60 days prior to a qualifying 
event can either demonstrate that they had minimum essential coverage 
as described in 26 CFR 1.5000A-1(b) for 1 or more days during the 60 
days preceding the date of the qualifying event or that they lived 
outside of the United States or in a United States territory for 1 or 
more days during the 60 days preceding the date of the qualifying 
event.
    (b) * * *
    (5) Option for later coverage effective dates due to prolonged 
eligibility verification. At the option of the consumer, the Exchange 
must provide for a coverage effective date that is no more than 1 month 
later than the effective date specified in this paragraph (b) if a 
consumer's enrollment is delayed until after the verification of the 
consumer's eligibility for a special enrollment period, and the 
assignment of a coverage effective date consistent with this paragraph 
(b) would result in the consumer being required to pay 2 or more months 
of retroactive premium to effectuate coverage or avoid termination for 
non-payment.
* * * * *
    (d) Triggering events. Subject to paragraphs (a)(3) through (5) of 
this section, the Exchange must allow a qualified individual or 
enrollee, and, when specified below, his or her dependent, to enroll in 
or change from QHP to another if one of the triggering events occur:
* * * * *
    (2) * * *
    (i) * * *
    (A) In the case of marriage, at least one spouse must demonstrate 
having minimum essential coverage as described in 26 CFR 1.5000A-1(b) 
for 1 or more days during the 60 days preceding the date of marriage.
    (B) [Reserved]
* * * * *
0
6. Section 155.725 is amended by revising paragraph (j)(2)(i) to read 
as follows:


Sec.  155.725   Enrollment periods under SHOP.

* * * * *
    (j) * * *
    (2) * * *
    (i) Notwithstanding Sec.  155.420(a)(3) through (5) of this 
subchapter, experiences an event described in Sec.  155.420(d)(1) 
(other than paragraph (d)(1)(ii)), or experiences an event described in 
Sec.  155.420(d)(2), (4), (5), (7), (8), (9), (10), (11), or (12);
* * * * *

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

0
6. The authority citation for part 156 continues to read as follows:

    Authority: Title I of the Affordable Care Act, sections 1301-
1304, 1311-1313, 1321-1322, 1324, 1334, 1342-1343, 1401-1402, Pub. 
L. 111-148, 124 Stat. 119 (42 U.S.C. 18021-18024, 18031-18032, 
18041-18042, 18044, 18054, 18061, 18063, 18071, 18082, 26 U.S.C. 
36B, and 31 U.S.C. 9701).

0
7. Section 156.140 is amended by revising paragraph (c) to read as 
follows:


Sec.  156.140  Levels of coverage.

* * * * *
    (c) De minimis variation. The allowable variation in the AV of a 
health plan that does not result in a material difference in the true 
dollar value of the health plan is -4 percentage points and + 2 
percentage points, except if a health plan under paragraph (b)(1) of 
this section (a bronze health plan) either covers and pays for at least 
one major service, other than preventive services, before the 
deductible or meets the requirements to be a high deductible health 
plan within the meaning of 26 U.S.C. 223(c)(2), in which case the 
allowable variation in AV for such plan is -4 percentage points and +5 
percentage points.

    Dated: February 9, 2017.
Patrick Conway,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Dated: February 9, 2017.
Norris Cochran,
Acting Secretary, Department of Health and Human Services.
[FR Doc. 2017-03027 Filed 2-15-17; 8:45 am]
BILLING CODE 4120-01-P