[Federal Register Volume 78, Number 186 (Wednesday, September 25, 2013)]
[Proposed Rules]
[Pages 59122-59151]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-23292]
[[Page 59121]]
Vol. 78
Wednesday,
No. 186
September 25, 2013
Part III
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 600
Office of the Secretary
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45 CFR Part 144
Basic Health Program: State Administration of Basic Health Programs;
Eligibility and Enrollment in Standard Health Plans; Essential Health
Benefits in Standard Health Plans; Performance Standards for Basic
Health Programs; Premium and Cost Sharing for Basic Health Programs;
Federal Funding Process; Trust Fund and Financial Integrity; Proposed
Rule
Federal Register / Vol. 78 , No. 186 / Wednesday, September 25, 2013
/ Proposed Rules
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 600
Office of the Secretary
45 CFR Part 144
[CMS-2380-P]
RIN 0938-AR93
Basic Health Program: State Administration of Basic Health
Programs; Eligibility and Enrollment in Standard Health Plans;
Essential Health Benefits in Standard Health Plans; Performance
Standards for Basic Health Programs; Premium and Cost Sharing for Basic
Health Programs; Federal Funding Process; Trust Fund and Financial
Integrity
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would establish the Basic Health Program,
as required by section 1331 of the Affordable Care Act. The Basic
Health Program provides states the flexibility to establish a health
benefits coverage program for low-income individuals who would
otherwise be eligible to purchase coverage through the state's
Affordable Insurance Exchange (Exchange, also called a Health Insurance
Marketplace). The Basic Health Program would complement and coordinate
with enrollment in a QHP through the Exchange, as well as with
enrollment in Medicaid and the Children's Health Insurance Program
(CHIP). This proposed rule sets forth a framework for Basic Health
Program eligibility and enrollment, benefits, delivery of health care
services, transfer of funds to participating states, and federal
oversight. Additionally, this rule would amend other rules issued by
the Secretary of the Department of Health and Human Services
(Secretary) in order to clarify the applicability of those rules to the
Basic Health Program.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on November 25,
2013.
ADDRESSES: In commenting, please refer to file code CMS-2380-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-2380-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-2380-P, Mail Stop C4-26-05, 7500
Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments before the close of the comment period
to either of the following addresses:
a. For delivery in Washington, DC--
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Room 445-G, Hubert H. Humphrey Building, 200
Independence Avenue SW., Washington, DC 20201
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call telephone number (410) 786-7195 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.
Submission of comments on paperwork requirements. You may submit
comments on this document's paperwork requirements by following the
instructions at the end of the ``Collection of Information
Requirements'' section in this document.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Jessica Schubel (410) 786-3032 or
Carey Appold (410) 786-2117.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
Table of Contents
To assist readers in referencing sections contained in this
document, we are providing the following table of contents.
I. Executive Summary
II. Background
A. Introduction
B. Stakeholder Consultation and Input
III. Provisions of the Proposed Rule
A. Scope and definitions (Sec. 600.5)
B. Establishment of a Basic Health Program
1. Program description (Sec. 600.100)
2. Basis, scope and applicability (Sec. 600.105)
3. Basic Health Program Blueprint (Sec. 600.110)
4. Development and submission of a BHP Blueprint (Sec. 600.115)
5. Certification of a BHP Blueprint (Sec. 600.120)
6. Revisions to a certified Blueprint (Sec. 600.125)
7. Withdrawal of a Blueprint prior to implementation (Sec.
600.130)
8. Notice of timing of HHS action on a BHP Blueprint (Sec.
600.135)
9. State termination of BHP (Sec. 600.140)
10. HHS withdrawal of certification and termination of a BHP
(Sec. 600.142)
11. State program administration and program operations (Sec.
600.145)
12. Enrollment assistance and information requirements (Sec.
600.150)
13. Tribal Consultation (Sec. 600.155)
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14. Provision of BHP to American Indians and Alaskan Natives
(Sec. 600.160)
15. Nondiscrimination standards (Sec. 600.165)
16. Annual report content and timing (Sec. 600.170)
C. Federal Program Administration
1. Federal program reviews and audits (Sec. 600.200)
D. Eligibility and Enrollment
1. Basis, scope and applicability (Sec. 600.300)
2. Eligible individuals (Sec. 600.305)
3. Application (Sec. 600.310)
4. Certified Application Counselors (Sec. 600.315)
5. Determination of eligibility for and enrollment in BHP (Sec.
600.320)
6. Coordination with other insurance affordability programs
(Sec. 600.330)
7. Appeals (Sec. 600.335)
8. Periodic renewal of BHP eligibility (Sec. 600.340)
9. Eligibility verification (Sec. 600.345)
10. Privacy and security of information (Sec. 600.350)
E. Standard Health Plan
1. Basis, scope and applicability (Sec. 600.400)
2. Standard health plan coverage (Sec. 600.405)
3. Competitive contracting process (Sec. 600.410)
4. Contracting qualifications and requirements (Sec. 600.415)
5. Enhanced availability of standard health plans (Sec.
600.420)
6. Coordination with other insurance affordability programs
(Sec. 600.425)
F. Enrollee Financial Responsibilities
1. Basis, scope and applicability (Sec. 600.500)
2. Premiums (Sec. 600.505)
3. Cost sharing (Sec. 600.510)
4. Public schedule of enrollee premium and cost-sharing (Sec.
600.515)
5. General cost-sharing protections (Sec. 600.520)
6. Disenrollment procedures and consequences for nonpayment of
premiums (Sec. 600.525)
G. Payment to States
1. Basis, scope and applicability (Sec. 600.600)
2. BHP payment methodology (Sec. 600.605)
3. Secretarial determination of BHP payment amount (Sec.
600.610)
4. Deposit of federal BHP payment (Sec. 600.615)
H. BHP Trust Fund
1. Basis, scope and applicability (Sec. 600.700)
2. BHP trust fund (Sec. 600.705)
3. Fiscal policies and accountability (Sec. 600.710)
4. Corrective action, restitution and disallowance of questioned
BHP transactions (Sec. 600.715)
IV. Collection of Information Requirements
V. Response to Comments
VI. Regulatory Impact Analysis
Acronyms
Because of the many organizations and terms to which we refer by
acronym in this proposed rule, we are listing these acronyms and their
corresponding terms in alphabetical order below:
[the] Act Social Security Act
Affordable Care Act The collective term for the Patient Protection
and Affordable Care Act (Pub. L. 111-148) and the Health Care and
Education Reconciliation Act of 2010 (Pub. L. 111-152))
APTC Advance Payments of the Premium Tax Credit
BHP Basic Health Program
CHIP Children's Health Insurance Program
CMS Centers for Medicare & Medicaid Services
[the] Code Internal Revenue Code of 1986
EHBs Essential Health Benefits
FEHBP Federal Employees Health Benefits Program (5 U.S.C 8901, et
seq.)
FPL Federal poverty level
HCERA Health Care and Education Reconciliation Act of 2010 (Pub. L.
111-152, enacted March 30, 2010)
HHS [U.S. Department of] Health and Human Services
IHS Indian Health Service
MAGI Modified adjusted gross income
PHS Act Public Health Service Act
PRA Paperwork Reduction Act of 1995
QHP Qualified Health Plan
SHOP Small Business Health Options Program
I. Executive Summary
This proposed rule would implement section 1331 of the Patient
Protection and Affordable Care Act (Pub. L. 111-148, enacted on March
23, 2010) and the Health Care and Education Reconciliation Act of 2010
(Pub. L. 111.152, enacted on March 30, 2010), which are collectively
referred to as the Affordable Care Act. Section 1331 directs the
Secretary to establish the Basic Health Program (BHP). In addition,
this proposed rule would amend certain other federal regulations,
clarifying their applicability to the new program.
Beginning in 2014, individuals and small businesses will be able to
purchase private health insurance coverage through competitive
marketplaces, also termed ``Exchanges'' (or the Health Insurance
Marketplace). At the same time, states will have the opportunity to
provide coverage under Medicaid for a broader range of low-income
individuals. New administrative procedures discussed in prior
rulemaking establishes a system for coordinating coverage across all
insurance affordability programs. Beginning January 1, 2015, under this
proposed rule, states will have an additional option to establish a
Basic Health Program for certain low-income individuals who would
otherwise be eligible to obtain coverage through the Exchange.
This proposed rule: (1) Establishes requirements for certification
of state submitted BHP Blueprints, and state administration of the BHP
consistent with that Blueprint; (2) establishes eligibility and
enrollment requirements for standard health plan coverage offered
through the BHP; (3) establishes requirements for the benefits covered
by such standard health plans; (4) provides for federal funding of
certified state BHPs; (5) establishes the purposes for which states can
use such federal funding; (6) sets forth parameters for enrollee
financial participation; and (7) establishes requirements for state and
federal administration and oversight of BHP funds. This issuance
addresses everything that we believe to be essential to the
establishment and operation of the BHP, with the specific exception of
details on payment which will be issued separately. We continue to
review existing regulations to identify areas for further development
and coordination and we invite comment on additional areas that might
be included.
II. Background
A. Introduction
Section 1331 of the Affordable Care Act provides states with a new
coverage option, the Basic Health Program (BHP), for individuals who do
not qualify for Medicaid but whose income does not exceed 200 percent
of the federal poverty level (FPL). This proposed rule implements
statutory provisions of the BHP and other provisions necessary to
ensure coordination with the other coverage options that, along with
BHP, are collectively referred to as ``insurance affordability
programs'' (coverage obtained through an Exchange, Medicaid, and the
Children's Health Insurance Program, along with premium tax credits and
cost sharing reductions). Coordination is necessary to ensure that
consumers are determined eligible for the appropriate program through a
streamlined and seamless process and are enrolled in appropriate
coverage without unnecessary paperwork or delay. This proposed rule
also describes standards for state administration and federal oversight
of the BHP.
To maximize the coordination between BHP and other insurance
affordability programs, rather than establish new and different rules
for the BHP, we have proposed, when possible, to align BHP rules with
existing rules governing coverage through the Exchange, Medicaid, or
CHIP. This approach is supported by the statutory linkage between the
minimum benefit coverage, maximum cost sharing, and overall funding for
the BHP with the Exchange. It is also advisable in most instances to
promote simplification and
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coordination among programs. Where necessary to accommodate unique
features of the BHP, we have adapted existing regulations or
established specific rules for the new program. Recognizing that states
may choose different ways to structure their BHP, when possible, we
offer states flexibility in choosing to administer the program in
accordance with Exchange rules or those governing Medicaid or CHIP. In
those sections in which we propose to offer states the choice, states
must adopt all of the standards in the referenced Medicaid or Exchange
regulations.
B. Stakeholder Consultation and Input
HHS has consulted extensively with interested states and
stakeholders on policies related to the BHP.
On September 14, 2011 (76 FR 56767), HHS published a Request for
Information (RFI) inviting the public to provide input regarding the
development of standards for the establishment and operation of a BHP.
In particular, HHS asked states, tribal representatives, consumer
advocates, and other interested stakeholders to comment on the general
establishment of the BHP, standard health plan requirements and
contracting process, the coordination between the BHP and other state
programs, eligibility and enrollment, amount of payment, and
Secretarial oversight. The comment period closed on October 31, 2011.
The public response to the RFI yielded comments from states,
consumer advocacy organizations, health plans, and provider
associations. The majority of the comments were related to the general
administrative functions and standards for the BHP, the financial
methodology used to determine a state's BHP payment amount,
coordination between insurance affordability programs, benefit package,
health plan selection and delivery systems, and the effect that the BHP
may have on a state's Exchange.
The comments received are described, where applicable, in
discussing specific regulatory proposals.
HHS also held a number of listening sessions with state
representatives, consumer groups and health plans to gather input, and
has directly engaged with interested states by establishing a
``learning collaborative'' to seek state input related to operations
and coordination of the BHP with other insurance affordability
programs. We considered input from these stakeholder meetings and
responses to the RFI as we developed the policies in this proposed
rule.
This proposed rule may be of interest to, and affect, American
Indians/Alaska Natives. Therefore, we plan to consult with Tribes
during the comment period and prior to publishing a final rule.
III. Provisions of the Proposed Rule
A. Scope and Definitions (Sec. 600.1 and Sec. 600.5)
In Sec. 600.1, we set forth the overall design of the BHP
established under the authority of section 1331 of the Affordable Care
Act. Generally, this provision authorizes federal funding for states
that elect to operate an alternative program for eligible low-income
individuals instead of offering such coverage through qualified health
plans in the Exchange, if the Secretary certifies that the alternative
program meets certain requirements. This proposed rule would implement
that authority.
In proposed Sec. 600.5, we set forth definitions for terms that
are used throughout this part. Where a term used in this part has been
defined in section 36B of the Internal Revenue Code (the Code) or in
published regulations codifying the Affordable Care Act as related to
operation of the Exchange, the Medicaid program and CHIP, we have
adopted those definitions here consistent with the explicit statutory
direction at section 1331(h) of the Affordable Care Act that terms used
in section 36B of the Code shall have the same meaning under BHP. These
definitions would incorporate interpretations, guidance and operating
methodologies applicable under section 36B of the Code, to ensure a
coordinated approach. Definitions for ``Basic Health Program
Blueprint,'' ``program year,'' ``certification,'' ``enrollee,''
``standard health plan,'' and ``standard health plan offeror'' are
created for the purpose of this proposed rule. We propose to define a
regional compact to mean an agreement between two or more states to
jointly procure and enter into contracts with standard health plans
covering eligible individuals in those states.
We propose to adopt the definition of the ``single streamlined
application'' used by both Medicaid and the Exchange, and found in 42
CFR 431.907(b)(1) of this chapter and 45 CFR 155.405(a) and (b) .
We propose to adopt the Exchange definitions of ``family and family
size,'' ``household income,'' ``qualified health plan,'' ``residency,''
and ``modified adjusted gross income'' in accordance with 26 CFR 1.36B-
1. We are proposing to define ``Minimum essential coverage'' to have
the meaning set forth in 26 CFR 1.5000A-2, including any coverage
recognized by the Secretary under 26 CFR 1.5000A-2(f). Under that
authority, we are also proposing to recognize BHP coverage as minimum
essential coverage, and would specifically include BHP coverage in our
definition. It is our intention to clarify that BHP meets the
requirements for the individual mandate, and, as such, we invite
comment on the placement of this provision.
The proposed definition of ``Indian'' is the same as used in the
Exchange for eligibility for cost-sharing reductions codified at 45CFR
155.300(a). This definition means any individual defined in section
4(d) of the Indian Self-Determination and Education Assistance Act
(Pub. L. 93-638, 88 Stat. 2203), in accordance with section 1402(d)(1)
of the Affordable Care Act. The definition of ``lawfully present''
found in 45 CFR 152.2 is also applied to BHP.
B. Establishment of a Basic Health Program
We propose adding subpart B consisting of Sec. 600.100 through
Sec. 600.170 to specify the general requirements for certification of
a state BHP. In this subpart, we propose required elements of the BHP
Blueprint and procedures for development and submission of the BHP
Blueprint. We would then require that states operate the BHP in
accordance with a BHP Blueprint that has been certified by the
Secretary. We also set forth certain overall principles for operation
of the BHP. When possible, we have drawn on definitions and standards
applied to other insurance affordability programs to promote state
flexibility and reduce administrative burden.
1. Program description (Sec. 600.100)
Section 600.100 contains a general description of a state BHP that
is operated in accordance with a BHP Blueprint certified by the
Secretary to meet the requirements of this Part.
2. Basis, scope and applicability of subpart B (Sec. 600.105)
Proposed Sec. 600.105 of subpart B specifies the general authority
for and scope of standards proposed in part 600 that establish minimum
requirements for the state option to operate a BHP.
3. Basic Health Program Blueprint (Sec. 600.110)
This section sets forth standards related to the content of a BHP
Blueprint. We are proposing to adopt the construct of the Exchange
blueprint for the BHP and are using the Blueprint as the mechanism by
which the
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Secretary will certify a state's proposed BHP and grant operational
authority for the program. The Blueprint will include information
necessary to establish compliance with many of the standards of the
program. We further propose that the Blueprint be accompanied by a
funding plan that identifies the funding sources, if any, beyond the
BHP trust fund used to cover projected expenditures over a 12 month
period. We recognize that it may be difficult to complete all sections
of the Blueprint with certainty prior to finalizing contracts with
standard health plan offerors or receiving notification of final
funding amounts. Therefore, we intend to accept certain parts of the
Blueprint in draft or proposed form, and provide states with a
certification in principle, pending submission of final Blueprint
provisions. We welcome comment on which aspects of the Blueprint will
need to be submitted in draft or proposed form given the operational
realities of program establishment.
Finally, we propose in this section that HHS will post submitted
Blueprints on-line in the interest of public transparency.
4. Development and submission of a BHP Blueprint (Sec. 600.115)
We propose that the Governor or the Governor's designee must sign
the state's Blueprint which must identify, by position or title, the
agency and officials within that agency with responsibility for program
operations, administration and finances.
In Sec. 600.115 we propose to adopt the Exchange standard that a
state must seek public comment on the BHP Blueprints, including
significant revisions, before submission to the Secretary for
certification. Unlike the Exchange process, which appears in statute,
we have not proposed a specific list of stakeholders, with the
exception of federally recognized tribes residing in the state, who
must be addressed with public notification. We are extending
flexibility to the state to contact stakeholders that may be affected.
We welcome comment on any need to further require notification to
particular interested parties.
5. Certification of a BHP Blueprint (Sec. 600.120)
We propose to have the date of signature by the Secretary be the
effective date of certification, before which no payments may be made
under this part. Once certified, we propose that Blueprints remain in
effect unless revised by the state, terminated by the state, or the
Secretary withdraws certification.
We propose standards for certification, which include sufficient
information for the Secretary to establish compliance with the
requirements of section 1331 of the Affordable Care Act and this Part,
adequate planning for the integration of BHP with other insurance
affordability programs, and sufficient planning to demonstrate
operational readiness.
6. Revisions to a certified Blueprint (Sec. 600.125)
At Sec. 600.125(a) we propose that a state wishing to make
significant changes to the terms of its Blueprint must submit changes
to the Secretary for review and certification. While not exhaustive,
significant changes within this scope include changes that have a
direct impact on the enrollee experience in BHP or the program
financing.
7. Withdrawal of a BHP Blueprint prior to implementation (Sec.
600.130)
We propose in this section a process for withdrawing a BHP
Blueprint, whether certified or not, as long as the state has not begun
enrollment. If a state has begun enrollment, we consider the action a
state would be taking as a program termination and the state would need
to follow procedures as proposed in Sec. 600.140.
8. Notice and timing of HHS action on a BHP Blueprint (Sec. 600.135)
We recognize that HHS has a responsibility to respond timely to a
state requesting certification of a BHP Blueprint, or approval for
revision of a certified Blueprint, to enable states to offer BHP as a
part of the continuum of insurance affordability programs. We therefore
propose at Sec. 600.135(a) that HHS will act on all certification
requests, including revisions, in a timely manner. We propose at Sec.
600.135(b) that a state will receive a response from HHS to a complete
certification request that includes information on impediments to
approval.
9. State termination of a BHP (Sec. 600.140)
At Sec. 600.140 we propose that for a certified program that is
operational, or has begun enrollment, a state wishing to cease the
operation of their BHP must follow specific termination procedures. We
propose that a state must submit notification to the Secretary to
terminate its BHP 120 days in advance of the planned termination date
along with a transition plan. Proposed termination procedures also
include written notice to participating standard health plan offerors
and enrollees at least 90 days in advance, as well as other enrollee
protections to facilitate an orderly transition to other coverage
without gaps in coverage. Section 600.140 further proposes that a state
terminating its BHP will fulfill contractual obligations to standard
health plans offerors, data reporting requirements to HHS, and the
completion of any necessary financial reconciliation with the federal
government. Notices to standard health plan offerors and enrollees must
meet accessibility and readability standards set by the Exchange at
Sec. 155.230(b).
10. HHS Withdrawal of Certification and Termination of a BHP (Sec.
600.142)
We propose standards and conditions for a Secretarial finding that
a BHP Blueprint no longer meets certification standards based on
findings in an annual review, a program review conducted in accordance
with proposed Sec. 600.200, or from evidence of beneficiary harm,
financial malfeasance or fraud. We propose that a state receive notice
prior to withdrawal of certification and that all reasonable efforts
are made to resolve the findings. Timing standards for notice to the
state and eventual decertification are proposed. The effective date of
an HHS determination withdrawing BHP certification is proposed as not
earlier than 120 days following the finding of non-compliance.
11. State Program Administration and Program Operations (Sec. 600.145)
We propose at Sec. 600.145(a) the requirements under which a state
must operate its BHP.
At Sec. 600.145(b) through (d), we propose certain principles to
apply once a state has elected to implement a BHP. Specifically, the
state must ensure that all persons have a right to apply, and if found
eligible, to be enrolled into coverage that conforms to this part, and
the state must operate the program statewide. The state would not be
permitted to limit enrollment to a lower income level than prescribed
in the statute, cap enrollment or impose waiting lists. These
principles are set forth because individuals eligible for BHP in a
state operating BHP are specifically excluded from receipt of the
premium tax credit or cost-sharing reductions through the Exchange
under section 1331(e)(2) of the Affordable Care Act and the
establishment of a BHP must not leave individuals without an option for
affordable coverage.
Additionally, at Sec. 600.145(e) we propose a group of core
operating functions that states must be able to perform to operate a
BHP. These functions include making eligibility
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determinations using the single streamlined application, processing
appeals, contracting with standard health plan offerors, performing
oversight and financial integrity functions, providing consumer
assistance, extending essential protections to American Indians and
Alaska Natives, ensuring civil rights protections, and collecting and
reporting data necessary for program operations and oversight. Finally,
terminating the program, if necessary, in accordance with proposed
Sec. 600.140 is also defined as a core operation. We solicit comment
on whether these are, in fact, the core operating functions or whether
there are other functions that should be recognized and considered
essential to the successful establishment and operation of a BHP.
12. Enrollment Assistance and Information Requirements (Sec. 600.150)
Section 600.150(a)(1), (2), (3) and (4) set forth proposed
requirements for the provision of information to consumers that is
accessible and explanatory, aiding individuals' knowledge about the
program, enrollment choices, and covered benefits, including additional
benefits provided outside of standard health plan coverage, as well as
other benefit options and limitations. This information should
facilitate enrollment and participation in BHP. We are proposing that
information provided to consumers by participating standard health plan
offerors should be publically available, be clear and informative
regarding premiums, covered services, and cost-sharing and should
follow state specifications for format. We propose that such
information be provided in a manner that complies with accessibility
and readability standards of the Exchange. Further, we propose that
states require participating standard health plan offerors to make
current provider lists available.
13. Tribal Consultation (Sec. 600.155)
The BHP as proposed uses many Exchange concepts such as the
development of a Blueprint to attain certification. Similarly, we
extend in this rule many of the protections for American Indian/Alaska
Native populations as are extended in the Exchange. To further this
alignment, we propose in this section to use the tribal consultation
agreements used by the state or federal Exchange for the BHP. We invite
comment on this policy.
14. Basic Health Program Protections for American Indians and Alaska
Natives (Sec. 600.160)
We propose that states adopt the same protections for American
Indian and Alaska Native populations as they would receive in an
Exchange. In Sec. 600.160(a) we propose to apply the same special
enrollment status for enrollment in standard health plans as
established in 45 CFR 155.420, which permits Indians to enroll in
Qualified Health Plans (QHPs) or change QHPs once per month. This
status is independent of policies set by the state for open enrollment
generally. We propose at Sec. 600.160(b) that a state permit tribal
organizations to pay premiums on behalf of enrolled individuals as is
permitted in the Exchange at 45 CFR 155.240. At Sec. 600.160(c) we
propose that cost sharing may not be imposed on Indians to further
align the Exchange's cost-sharing protections for Indians with
household incomes at BHP levels. We also propose that BHP standard
health plans must pay primary to Indian health programs for covered
services; in other words, Indian health programs shall be the ``payers
of last resort'' for services received through such programs that are
covered by a standard health plan (with respect to the standard health
plan).
15. Nondiscrimination standards (Sec. 600.165)
We propose that the BHP and standard health plans must comply with
all applicable non-discrimination statutes and the nondiscrimination
requirements applicable to the Exchange and recipients of federal
assistance.
16. Annual report content and timing (Sec. 600.170)
In compliance with section 1331(f) of the Affordable Care Act,
which substantially conforms to Exchange functions codified at 45 CFR
155.200(c) through (f), we propose at Sec. 600.170(a) requirements for
an annual report on the state's BHP. This report is both a mechanism to
report state knowledge of any program fraud, waste or abuse, and to
ensure compliance with eligibility verification requirements, the use
of federal funds, and quality and performance standards. We continue to
work towards aligning quality and performance expectations across all
insurance affordability programs. We intend to issue additional
guidance with respect to quality and performance standards, harmonizing
the BHP to the maximum extent possible with requirements of QHPs in the
Exchange, including quality ratings assigned under section 1311(c)(3)
of the Affordable Care Act and consumer satisfaction surveys under
section 1311(c)(4) of the Affordable Care Act, which will also align
with our efforts for Medicaid and CHIP. We invite public comment on
this approach.
Finally, at Sec. 600.170(b) we propose a timing standard for
annual reports, due 60 days prior to the end of each operational year.
The annual report confirms the appropriate use of federal funds, as
well as key operational features, confirming that the release of
federal funding for the subsequent year is appropriate.
C. Federal Program Administration
We propose to add subpart C consisting of Sec. 600.200 to specify
the provisions for federal program administration of the BHP. In adding
this proposed subpart, we have drawn from the administrative standards
established for the other health insurance affordability programs to
promote program efficiencies.
1. Federal program reviews and audits (Sec. 600.200)
The proposed BHP review standards at Sec. 600.200(a) and (b)
specify that HHS may review state administration of the BHP, as needed,
but no less frequently than annually, to determine whether the state is
complying with the federal requirements and provisions of its BHP
Blueprint. We provide that the federal compliance review may either be
based on the state's annual report, or on a separate direct federal
review. We anticipate that separate federal reviews will generally be
conducted only when there is a specific federal concern about program
compliance. We then provide a protocol for identifying and resolving
compliance concerns, providing opportunities for the state to
substantiate compliance or develop corrective actions to address
compliance. We also set forth a protocol for raising and resolving
concerns about the improper use of BHP trust fund resources. Finally,
the proposed audit standards in Sec. 600.200(c) provide that the HHS
Office of Inspector General (OIG) may periodically audit state
operations and standard health plan practices consistent with the
purpose and processes applied in Medicaid, as described in Sec.
430.33(a).
D. Eligibility and Enrollment
As with other sections of this proposed rule, subpart D, which
consists of Sec. 600.300 through Sec. 600.350, adopts eligibility and
enrollment provisions from other insurance affordability programs
wherever
[[Page 59127]]
possible. We have done this to prevent gaps in coverage, promote
simplicity and continuity for consumers if they move from one insurance
affordability program to another, or have family members eligible for
different programs, to simplify program administration, promote reuse
of administrative processes and infrastructure, and promote
administrative simplification for states. In some instances we have
adopted, with modification, standards from other insurance
affordability programs or are proposing new rules to fit the
eligibility and enrollment provisions of the BHP.
1. Basis, scope and applicability (Sec. 600.300)
Section 600.300 of subpart D specifies the general authority for
and scope of standards proposed in this subpart that establishes
eligibility requirements for the BHP.
2. Eligible individuals (Sec. 600.305)
We propose to implement the eligibility standards for the BHP in
accordance with sections 1331(e)(1) and (e)(2) of the Affordable Care
Act. Because BHP provides coverage in lieu of coverage through the
Exchange that is supported by advanced payment of premium tax credits
(APTC) and cost sharing reductions (CSR), we have adopted many of the
eligibility rules used to determine eligibility for APTC and CSR in the
Exchange and applied them to BHP. In some circumstances, particularly
around eligibility processes, we propose to adopt Medicaid or CHIP
rules, or to offer a state the option to apply either Exchange or
Medicaid/CHIP rules. Where a state is given choice between applying
Exchange standards or Medicaid standards, it is our intention that it
chooses all the standards of Medicaid or the Exchange within one
particular area.
At Sec. 600.305(a) we propose to codify the eligibility
requirements established in section 1331(e)(1) of the Affordable Care
Act. With narrow exceptions, as reflected in the regulation text,
individuals eligible for BHP would be eligible for premium tax credit
support to enroll in a QHP in the Exchange if the state did not offer a
BHP.
In situations in which an individual is enrolled in both limited-
benefits Medicaid (because the Medicaid coverage does not meet the
definition of minimum essential coverage (MEC) or because it does not
include the 10 essential health benefits) and in the BHP, standard
coordination of benefits rules set forth in Sec. 433.139(b)(1) of the
Medicaid regulations would apply, with Medicaid serving as the
secondary payer.
3. Application (Sec. 600.310)
The Affordable Care Act requires the use of a single, streamlined
application, developed by the Secretary, for all insurance
affordability programs. We propose to codify at Sec. 600.310 this
requirement for BHP by adopting by reference the regulations at Sec.
431.907(b)(1) and 45 CFR 155.405(a) and (b). We further propose to
adopt the Medicaid rule relating to an individual's opportunity to
apply without delay (Sec. 435.906) and for assistance with an
application at Sec. 435.908. We note that call centers required of the
Exchange (Sec. 155.205(a)) are encouraged to provide information on
all insurance affordability programs.
The state may permit the use of authorized representatives to
assist individuals with their applications or renewal of eligibility.
If the state permits authorized representatives we propose that they
follow the standards of either the Exchange (Sec. 155.227) or Medicaid
(Sec. 435.923).
4. Certified Application Counselors (600.315)
Some individuals may need assistance with completing applications,
enrolling in coverage, or with ongoing communications once determined
eligible. State Medicaid and CHIP agencies have long allowed
beneficiaries to use application counselors to promote enrollment and
assist with application preparation, and current regulations at Sec.
435.908 provides for states to certify Medicaid application counselors
to ensure that they are properly trained in applicable rules and
requirements. Similarly, 45 CFR 155.225 provides for Exchanges to
certify application counselors to help individuals apply for enrollment
in QHPs. We propose at Sec. 600.315 to give a state the option to
certify application counselors to assist individuals in applying for
enrollment in in BHP, and to adopt the standards for a certification
program found in either Sec. 155.225 (relating to the Exchange) or
Sec. 435.908 (relating to Medicaid/CHIP). We expect the state to adopt
all of either the Exchange of Medicaid standards.
5. Determination of eligibility for and enrollment in a BHP (Sec.
600.320)
At Sec. 600.320(a) we propose to allow BHPs to determine
eligibility directly or to have eligibility determined by any
governmental entity that determines eligibility for Medicaid, or the
Exchange.
At Sec. 600.320(b) we propose that the state adopt standards to
conform with Sec. 435.912, similar to both Medicaid and CHIP,
regarding the timeliness of eligibility determinations.
At Sec. 600.320(c) we propose that the state determine the
effective date for eligibility using the method in place for either the
Exchange or Medicaid.
Finally, at Sec. 600.320(d), we propose that the state choose
between the enrollment policies of the Exchange or the continuous
enrollment of Medicaid. If choosing the Exchange enrollment policies,
the state must adopt open and special enrollment periods equivalent to
those specified for the Exchange at 45 CFR 155.410 and Sec. 155.420 to
minimize gaps in coverage for eligible individuals. Specifically,
consistent with the Exchange provisions at 45 CFR 155.420(d), we
propose to require the state to allow eligible individuals to enroll in
BHP outside of the annual open enrollment period if, for example, they
experience a triggering event including: the loss of minimum essential
coverage; gaining a dependent or becoming a dependent; gaining status
as a citizen, national or as lawfully present when previously he/she
did not have such status; or making a permanent move. Additionally,
Indians are provided one special enrollment per month.
6. Coordination with other Insurance Affordability Programs (Sec.
600.330)
We propose standards of coordination between insurance
affordability programs in accordance with section 1331(c)(4) of the
Affordable Care Act by adopting applicable provisions of 45 CFR
155.345(a) and incorporating Sec. 435.1200 which pertain to
coordination options and responsibilities for the Exchange and Medicaid
respectively. Under existing regulations, Medicaid and CHIP agencies
may make final Medicaid and CHIP eligibility determinations based on
the BHP's assessment; or the state Medicaid or CHIP agency may accept a
final eligibility determination made by a BHP that uses state Medicaid
and CHIP eligibility rules and standards. Further, the Exchange may
contract eligibility determinations to eligible entities. We propose to
adapt the provisions of Sec. 435.1200(c) through (e) to BHP to reflect
this flexibility and to establish the standards and guidelines to
ensure a simple, coordinated and timely eligibility determination
process and accurate eligibility determinations regardless of the
option elected by the state.
Specifically, we propose to require an agreement between the
Medicaid/CHIP
[[Page 59128]]
agency, the Exchange, and the BHP, that includes the same elements as
those required in Sec. 155.345(a) and Sec. 435.1200(b)(3), to include
a delineation of the responsibilities of each agency to minimize burden
on individuals, as well as to ensure timely determinations of
eligibility and enrollment in the appropriate program.
Because all insurance affordability programs will be collecting the
same information, the state will have the information necessary to
evaluate MAGI based eligibility across programs. We propose to require
that the state operate in full compliance with 45 CFR 155.345(a) and
(h) regarding agreements with the Exchange, Medicaid and CHIP agencies,
as well as the secure exchange of information including electronic
account transfers.
Similarly, we propose to require the BHP agency to notify any
referring agency of final eligibility determinations in accordance with
Sec. 600.330.
An effective notification process is important to ensure a high
quality consumer experience and a coordinated eligibility and
enrollment system as provided under section 1413 of the Affordable Care
Act and section 1943 of the Act. We propose to adopt the standards for
notices, in accordance with Sec. 435.913 and Sec. 155.230, and the
requirement for electronic notices in Sec. 435.918 for the BHP.
Consistent with the provisions of the Affordable Care Act for a
coordinated system across insurance affordability programs, we further
propose to adopt the provisions for coordinated and combined notices at
Sec. 435.1200.
7. Appeals (Sec. 600.335)
Eligibility for BHP is largely based upon eligibility for
participation in the Exchange, within applicable income limits. As
such, many of the eligibility processes for BHP will be substantially
the same as those for the Exchange. We propose that individuals will
have an opportunity to appeal BHP eligibility determinations but that
opportunity cannot be modeled on the Exchange appeal process because a
core component of the Exchange appeals process is the federal level
appeal. There is no independent authority for a federal level appeals
process for BHP like the federal level appeal for the Exchange.
Therefore, we propose that the state use the Medicaid appeals process
for BHP, under an agreement with the Medicaid program. We appreciate
that some state Medicaid programs may choose to delegate Medicaid
appeals to the Exchange. In these states, there will not be complete
alignment between appeals processes for Medicaid and BHP, since BHP
appeals will not be inclusive of the federal process. We invite comment
on this proposal.
8. Periodic Renewal of BHP eligibility (Sec. 600.340)
Consistent with the Exchange, Medicaid and CHIP, we propose at
Sec. 600.340(b) that the state shall re-determine an individual's
eligibility every 12 months. If a state has chosen to match the
Exchange policies on enrollment at Sec. 600.320(d), the
redetermination process will occur as part of the annual open
enrollment. If the state has chosen the 12 month renewal process of
Medicaid, the redetermination process will occur 12 months from the
initial determination. Consistent with the rules established for the
Exchange, we propose to adopt the Exchange provisions at 45 CFR
155.330(b) that the state require enrollees to report changes that
could affect eligibility within 30 days, and must redetermine
eligibility based on verified information received, or updated
information from data sources.
For purposes of encouraging continuity of care, we have also
proposed that, if an enrollee remains eligible at annual
redetermination, the state must maintain the individual's enrollment in
the current standard health plan under BHP unless the individual
affirmatively takes action to choose a different standard health plan.
9. Eligibility verification (Sec. 600.345)
We propose that the state establish verification plans that are
practical for all agencies determining eligibility for BHP. We propose
to give the state the option to apply to BHP the same eligibility
verification processes used by either the Exchange at 45 CFR 155.315
and 320 or the Medicaid agency at Sec. 435.945 through Sec. 435.956.
Regardless of which approach is chosen, the verification process
must include verification of citizenship and lawfully present status.
Self-attestation is not an acceptable verification method for
citizenship and immigration status. The state may choose to verify
additional factors and adopt reasonable verification procedures, and
specify those factors for which self-attestation will be accepted.
10. Privacy and security of information (Sec. 600.350)
The state must comply with all requirements on the use and
disclosure of personally identifiable information in operating BHP that
are applicable to the operation of an Exchange. We propose to apply to
the BHP 45 CFR 155.260(b) which sets limits on the use and disclosure
of personally identifiable information. We also propose to apply Sec.
155.260(c), which clarifies that data sharing agreements made between
BHP and other agencies must comply with other applicable law including
section 1942 of the Act.
E. Standard Health Plan
We propose to add subpart E consisting of Sec. 600.400 through
Sec. 600.425 to specify the standard health plan coverage and the
delivery of such coverage.
Section 1331(b) of the Affordable Care Act provides that a standard
health plan is a benefits plan which, at a minimum, provides essential
health benefits described in section 1302(b) of the Affordable Care Act
to BHP enrollees and, if offered by a health insurance issuer, has a
medical loss ratio of at least 85 percent. Standard health plan
offerors, as provided for in section 1331(g) of the Affordable Care
Act, may include a licensed health maintenance organization, a licensed
health insurance insurer, or a network of health providers.
Section 1331(c) of the Affordable Care Act provides for the
establishment of a competitive process for the state to contract with
standard health plan offerors to provide standard health plan coverage.
The statute requires that the competitive process include the selection
of standard health plans, the negotiation of premiums, cost sharing and
benefits, as well as the consideration of innovative features such as
care coordination and incentives to encourage the use of preventive
services and appropriate utilization of health care services. The
competitive process must also take into account the health and resource
differences of the BHP population and participating providers,
techniques to manage service utilization, establishment of performance
measures, enhancement of standard health plan availability to BHP
enrollees and coordination with other insurance affordability programs.
While much that is proposed in this subpart is new, given the need
to set forth parameters in the establishment of a new program, we have
adopted, where appropriate, existing Exchange or Medicaid standards
consistent with our goal to create coordination across all insurance
affordability programs, promote efficiencies and reduce administrative
costs. This includes adopting the Exchange's coverage standards and
protections at proposed Sec. 600.405. In light of the specific
statutory requirement for a competitive
[[Page 59129]]
procurement process, we propose to require that the state adopt
contracting processes consistent with the procurement standards and
competition requirements set forth in 45 CFR 92.36(b) through (i). We
have further adapted standards from the Exchange and Medicaid with
respect to the contract requirements that apply when the state
contracts for the provision of standard health plans.
1. Basis, scope and applicability (Sec. 600.400)
Proposed Sec. 600.400(a) specifies the statutory basis, scope, and
applicability for the provisions regarding the minimum coverage
standards included in BHP's standard health plans as well as the
delivery of such coverage, the competitive contracting process and
contract requirements the state must use when contracting for the
provision of standard health plans, and other applicable requirements
to enhance the availability of standard health plan coverage.
2. Standard health plan coverage (Sec. 600.405)
We propose in this section to align the minimum benefit BHP
standard with 45 CFR 156.110 and 45 CFR 156.122 regarding prescription
drug coverage, which defines the EHBs for the Exchange and includes any
subsequent changes resulting from periodic reviews by the Secretary
specified in 1302(b)(4)(G) and (H) of the Affordable Care Act. As
required by statute, the minimum benefit standard must include at least
the ten general EHB categories: Ambulatory patient services; emergency
services; hospitalization; maternity and newborn care; mental health
and substance use disorder services, including behavioral health
treatment; prescription drugs; rehabilitative and habilitative services
and devices; laboratory services; preventive and wellness services and
chronic disease management; and pediatric services including oral and
vision care. Provision of essential health benefits means that the
standard health plan coverage provided by the BHP will not include any
limitations on coverage that are not substantially equal to the EHB-
benchmark or reference plan. Nothing in this proposed rule should be
interpreted to preclude a state from offering additional benefits
within the state's standard health plan or in addition to the state's
standard health plan.
Additionally, section 1302(b)(4) of the Affordable Care Act
requires that benefit design or implementation of benefit design cannot
discriminate ``on the basis of an individual's age, expected length of
life, or of an individual's present or predicted disability, degree of
medical dependency, or quality of life or other health conditions.'' We
further propose to implement this section by adopting the coverage
protections set forth at 45 CFR 156.125, applicable to the Exchange.
Within the construct of the required coverage of essential health
benefits, there is no requirement in BHP that all enrollees receive the
same or comparable benefits (known in Medicaid as the comparability
requirement). States may have reason to provide specialized standard
health plans to targeted populations to the extent that the targeting
criteria are not based on pre-existing conditions or health status-
related factors, and the proposed regulation offers states that option.
We are also proposing to adopt the Exchange's substitution and
supplementation of coverage standards described at 45 CFR 156.115(b)
and 45 CFR 156.110(b)(1) for the BHP. Additionally, we are proposing to
adopt the Medicaid model permitting the selection of more than one
option for establishing essential health benefits using a base
benchmark or reference plan. We are proposing these policies, in
combination, to provide states flexibility in benefit definition and
configuration, while assuring that all standard health plans cover all
ten essential health benefits, as well as other benefits based on the
state's selected base benchmark plan.
The intent of the reference plan is to reflect both the scope of
services and limits offered by a typical employer plan in the state and
set a reference or benchmark by which to measure the provision of
substantially equal benefits. The permitted reference, or base
benchmark plans as defined in 45 CFR 156.100(a)(1) through (4) are: the
largest plan by enrollment in any of the three largest small group
insurance products in the state's small group insurance market as
defined in 45 CFR 155.20; any of the largest three state employee
health benefit plans by enrollment; any of the largest three national
Federal Employees Health Benefits Program (FEHBP) plan options by
enrollment that are open to federal employees; or the largest insured
commercial non-Medicaid HMO operating in the state. By permitting
states to choose more than one base benchmark or reference plan in
combination with substitution of benefits we are proposing to provide
states flexibility to achieve similar plan structures as under
alternative benefit plan structures in Medicaid. Substitution of
benefits does not preclude states from drawing benefits from the
Medicaid state plan to meet the EHB benchmark benefit package as long
as they are actuarially equivalent and in the same EHB category, with
the exception of prescription drugs for which substitution is not
permitted.
Plans providing essential health benefits in BHP must meet all the
requirements in 45 CFR 156.115(a) defining substantially equal,
prohibiting the exclusion of individuals from coverage in any benefit
category, and complying with all the specific requirements for the
provision of prescription drugs, mental health, substance abuse,
preventive health services, and habilitative services.
In addition to the essential health benefits described in detail
previously, we propose to set forth conditions applicable when the
standard health plan is subject to state insurance mandates requiring
additional benefits. (This is not the same as a state choosing to add
additional benefits only to its standard health plan(s).) We propose
that the state adopt the determination of the Exchange at 45 CFR
155.170(a)(3) in deciding which benefits, enacted after December 31,
2011, are in addition to the EHBs and are, therefore, outside of the
reference premium structure that will be used to determine the amount
of the premium tax credit and cost sharing reductions forming the basis
for federal payments to states. Payment for these benefits would come
from either state funds or trust fund surplus.
Finally, section 1303 of the Affordable Care Act sets forth special
rules relating to coverage of abortion services and the segregation of
funding for those services. Abortion services are prohibited from
inclusion as essential health benefits and federal funding for abortion
services, except in the case of endangerment of the woman's life, rape
or incest, is prohibited. If states provide abortion services for which
public funding is prohibited, the state is not eligible for any federal
contribution, and payments for those services must be kept in separate
allocation accounts.
3. Competitive contracting process (Sec. 600.410)
The competitive contracting process is a unique feature to BHP, and
while we have aligned, to the greatest extent possible, with existing
standards for the Exchange, Medicaid, and CHIP, this section also
proposes new standards specific to BHP consistent with the statute. To
receive HHS certification, we propose that the state assure in its BHP
Blueprint that it follows a competitive contracting process that
includes a negotiation of the elements described in Sec. 600.410(d) as
well as consideration of
[[Page 59130]]
the elements described in Sec. 600.410(e). We are interpreting the
requirement for a competitive process to permit any state procedures
that are consistent with the standards set out in section 45 CFR
92.36(b) through (i). These standards provide a state considerable
flexibility in how they solicit bids, how bids are evaluated, and how
contracts are awarded, while ensuring that the competition will be open
and free of unnecessary restrictions. While we understand that a state
may be interested in joint procurements for BHP and other programs
(such as Medicaid or other state health programs), the state must
ensure that such a joint procurement meets the highest standards for
competition of any of the involved programs, involves negotiation of at
least the elements required under the BHP statute, does not
unnecessarily restrict competition, and ensures that there is no cross-
subsidization of costs between programs. We invite comments on this
approach as we are interested in ensuring both state flexibility and
free and open competition for the provision of standard health plans.
In Sec. 600.410(c), we propose exceptions to the initial
implementation of a competitive contracting process in the event that
the state is unable to implement such a process for program year 2015.
The proposed exceptions are subject to HHS approval during the
certification process as proposed in Sec. 600.120. We are seeking
comment on this provision as we anticipate that a state may be
interested in leveraging existing Medicaid managed care contracts to
ensure an efficient and quick implementation of BHP effective January
1, 2015. As these contracts may not have been procured consistent with
the procedures proposed in this section, we have proposed this
exception to help promote coordination and continuity of care during
the initial implementation of BHP in 2015.
We have proposed in Sec. 600.410(d) three elements specified in
the statute that a state must negotiate during its competitive
contracting process. In addition to proposing the negotiation of
premiums, cost sharing and benefits, we propose that a state ensure the
inclusion of innovative features in the negotiation process, such as
care coordination, case management, the use of incentives to promote
preventive services and encourage enrollee involvement in health care
decision making, such as the ability for enrollees to select their
providers. We further propose in paragraph (e) of this section that a
state also include in its competitive process the consideration of
health and resources differences of enrollees and health care
providers. We also proposed in paragraph (e) that a state also include
in its competitive process the use of managed care, or a similar
process to improve the quality, accessibility, appropriate utilization,
and efficiency costs and prices of services provided to enrollees as
well as measures to prevent, identify theft, and address fraud, waste
and abuse and ensure consumer protections. We share the goal of states
to focus on improving the quality of care and health outcomes, and as
such, have proposed that the state consider specific measures and
standards that focus on these important objectives as well as consider
how to coordinate with other health insurance affordability programs.
We seek comment on the specific measures to consider and include in the
final rule. Specifically, we are considering the use of measures that
ensure enrollee protection, such as tracking and monitoring grievance
and claims appeals while, at the same time, balancing our goals of
state flexibility and effective contracting. Finally, in paragraph (f)
of this section, we propose that nothing in this competitive process
shall permit or encourage discrimination in enrollment based on pre-
existing conditions or other health status-related factors.
4. Contracting qualifications and requirements (Sec. 600.415)
In Sec. 600.415(a), we propose the criteria by which an offeror is
eligible to contract with a state for the administration and provision
of one or more standard health plans under BHP. In addition to the
criteria specified in statute, we propose that an eligible offeror also
include a non-licensed health maintenance organization to the extent
that the offeror participates in Medicaid or CHIP.
The proposed eligible offeror criteria include a network of health
care providers with the capacity to administer and provide standard
health plan coverage. We do not anticipate that individual providers
would be eligible to administer and provide a standard health plan. A
network of providers, such as an independent physician association, or
a large health system that provides, for example, both inpatient and
outpatient health care services, or an accountable care organization,
is necessary to not only deliver the coverage specified under the
program but also to provide care coordination and case management as
required by statute.
Finally, we have proposed including a non-licensed health
maintenance organization that participates in Medicaid or CHIP to
provide the state with the flexibility to contract with Medicaid or
CHIP managed care organizations that may not meet the requirements of a
qualified health plan on the Exchange. We believe providing such
flexibility furthers the objective of the program by encouraging
continuity of care for BHP enrollees, who may frequently enroll and
disenroll between the state's Medicaid program and BHP. We believe that
the proposed requirements assure that non-licensed standard health plan
offerors have the capacity to deliver high quality care to enrollees in
a manner that is consistent with Medicaid standards; however, we invite
comments on this approach.
During the October 2011 RFI process, we received several comments
regarding the use of managed care under BHP, and whether a state must
contract with managed care organizations for the provision of standard
health plans. While the statute directs that the state contract for the
provision of a standard health plan under BHP, it does not restrict the
state's option to contract with qualified health plans operating in the
Exchange or with Medicaid managed care organizations. We believe the
statute also provides a state with the flexibility to operate its BHP
under an integrated care model as the state has the option to contract
with a network of providers to provide a standard health plan to
enrollees to the extent that the network of providers meet the elements
specified in statute.
With respect to the specific contract requirements for a standard
health plan, we propose requiring that the state establish specific
contract provisions that are unique to its BHP and applicable state
laws to the extent needed to address network adequacy, service
provision and authorization, quality and performance, enrollment
procedures, disenrollment procedures, noticing, provisions protecting
the privacy and security of personally identifiable information, and
other applicable contract requirements as determined by the Secretary.
We anticipate providing future guidance that will further describe the
minimum contract requirements needed for HHS certification of a state's
BHP; however, at this time, we will apply a ``safe harbor'' approach to
a state incorporating the contract requirements from either 45 CFR part
156 (the Exchange's qualified health plan requirements) or 42 CFR part
438 (Medicaid managed care requirements). This ``safe harbor'' approach
means that a state modeling its contract requirements off of the
Exchange or Medicaid will meet the contract requirements for purposes
of HHS
[[Page 59131]]
certification unless and until the next contract cycle after HHS issues
additional guidance. We believe that the contract requirements under
the Exchange and Medicaid assure the provision of high quality care
while maintaining sufficient consumer protections; however, we invite
comments on this approach to determine whether it accomplishes the
objectives of promoting program efficiencies and promoting
administrative simplicity.
We further propose that a state include in its standard health plan
contracts provisions that define a sound and complete procurement
contract, as required by 45 CFR part 92(i), which is consistent with
existing federal procurement guidance. Also under paragraph (b), we
propose that contracts with standard health plans that provide health
insurance coverage offered by a health insurance issuer must comply
with the requirement at section 1331(b)(3) of the Affordable Care Act
for a medical loss ratio of at least 85 percent. Finally, the state
must, as proposed at Sec. 600.415(c), include in its BHP Blueprint the
standard set of contract requirements that will be incorporated into
its standard health plan contracts in order to receive HHS
certification.
5. Enhanced availability of Standard Health Plans (Sec. 600.420)
Section 1331(c)(3)(A) of the Affordable Care Act specifies that, to
the maximum extent feasible, a state should seek to make multiple
standard health plans available to individuals to ensure choice of
standard health plans. While we recognize the number of standard health
plans may not equal the number of QHPs offered in the Exchange, we
believe that BHP applicants and enrollees should have not only choice
of standard health plans, but also a similar experience to consumers
purchasing coverage in the Exchange, including the ability to compare
the benefits packages, premiums, cost-sharing charges, etc. between the
available plans (this includes different standard health plans offered
by the same standard health plan offeror). In order to ensure that BHP
applicants and enrollees are afforded the opportunity to compare
available standard health plans, we believe that a state must ensure
that there are at least two standard health plans offered under the
program. In addition to ensuring a similar coverage purchasing
experience for BHP enrollees, we believe that offering at least two
standard health plans will ensure there is always one standard health
plan available in the event that the availability of the second
standard health plan is affected. We understand that while choice of
health plan may not always occur in Medicaid, BHP, unlike Medicaid,
does not have a fee-for-service program available in the event that a
single standard health plan suddenly becomes unavailable. We invite
comment on the proposal to assure that at least two standard health
plans are offered under the program.
A state has the option, as defined in section 1331(c)(3)(B) of the
Affordable Care Act, to enter into a regional compact with other states
for the joint procurement of standard health plans. As this is a new
option afforded to states operating a BHP, we propose in Sec. 600.420
that a state may enter into a regional compact to provide standard
health plans statewide, or in geographically specific areas within the
states. If the state contracts for the provision of a geographically
specific standard health plan, the state must assure in its BHP
Blueprint that enrollees, regardless of residency within the State,
continue to have choice of at least two standard health plans. The
state must include in its BHP Blueprint which state(s) will participate
in the regional compact; the specific areas within the participating
states in which the standard health plans will operate, if applicable;
an assurance that the competitive contracting process used in the joint
procurement complies with proposed Sec. 600.410; and any variations in
benefits, premiums and/or cost sharing that may result due to regional
differences within the participating states. A state operating a
geographically specific standard health plan under a regional compact
must still operate a BHP statewide.
6. Coordination with other Insurance Affordability Programs (Sec.
600.425)
Due to income or household composition changes that may occur,
coverage for some individuals will shift from BHP to the Exchange,
Medicaid or CHIP coverage during open enrollment or in special
enrollment periods during the year as well as possible shifts of
coverage for some individuals from those other programs to BHP. Section
1331(c)(4) of the Affordable Care Act requires that BHP coordinate with
Medicaid, CHIP, the Exchange and any other state-administered health
insurance program. This coordination is important not only for
eligibility and enrollment, but also with respect to the provision of
health care benefits as enrollees transition in or out of BHP. Our goal
is to ensure that enrollees do not experience a disruption in care and
that coordination exists between all insurance affordability programs
to promote continuity of care. As such, we are proposing in Sec.
600.425 that a state describe such coordination to prevent disruptions
in care for transitioning enrollees. Examples of how a state can ensure
coordination across the insurance affordability programs include, but
are not limited to, describing how the state will:
(1) Ensure that individuals who are undergoing an ongoing course of
treatment can continue receiving such treatment and have access to
their provider(s) through the duration of their prescribed treatment
(or, as appropriate, until a transition can be made without disruption,
inconvenience or burden for the enrollee);
(2) Promote the sharing of data through the use of health
information technology;
(3) Promote access to the same providers and services through BHP
available through other insurance affordability programs, through
coordinated provider enrollment procedures, coordinated coverage
procurement procedures, or similar coverage definitions and protocols;
and
(4) Use auto-enrollment protocols in BHP, Medicaid and CHIP that
seek to maximize continuity with a provider.
F. Enrollee Financial Responsibilities
We propose adding subpart F consisting of Sec. 600.500 through
600.525 to specify the monthly premium and cost-sharing standards
applicable to BHP.
1. Basis, scope and applicability (Sec. 600.500)
Section 1331(a)(2)(A)(i) of the Affordable Care Act permits a state
operating a BHP to collect monthly premiums to the extent that they do
not exceed the amount of the monthly premium that the enrollee would
have been required to pay if he or she had enrolled in the applicable
second lowest cost silver plan, as defined in section 36B(b)(3)(B) of
the Code, offered to the individual through an Exchange. The amount of
the required monthly premium, either under BHP or under the applicable
second lowest cost silver plan, will be determined after accounting for
any premium tax credit and cost-sharing reduction.
Section 1331(a)(2)(A)(ii) of the Affordable Care Act limits cost
sharing for BHP enrollees with incomes at or below 150 percent of the
FPL to the amount required under a platinum plan and for BHP enrollees
with incomes above 150 percent of the FPL, the amount required under a
gold plan.
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At Sec. 600.520, we propose to adopt three cost-sharing provisions
that are directly based on Exchange requirements related to cost-
sharing protections for preventive health services, Indians, and the
cost-sharing standards in QHPs that enroll consumers with similar
incomes as BHP enrollees. Finally, at Sec. 600.525, we propose
disenrollment procedures and consequences for nonpayment of premiums.
2. Premiums (Sec. 600.505)
As discussed previously, the statute requires that a BHP enrollee's
monthly premium not exceed the monthly premium the individual would
have paid had he or she enrolled in a plan with a premium equal to the
premium of the applicable benchmark plan, as defined in 26 CFR 1.36B-
3(f). In Sec. 600.505(a), we propose that a state assure in its BHP
Blueprint that the BHP monthly premium does not exceed what an
otherwise qualified enrollee would receive through the Exchange. The
state must also assure that when determining the amount of the
enrollee's monthly premium, it took into account reductions for the
premium tax credit that would otherwise be available to the enrollee.
As currently proposed, we are not requiring that the state assure that
it accounted for the cost-sharing reduction when determining the
enrollee's monthly premium as it is already assumed in the actuarial
values of the applicable standard health plan. We further propose in
this section that the state include in its BHP Blueprint the proposed
enrollee monthly premium amounts for each group or groups of enrollees
subject to the applicable premiums, the collection method and procedure
for an enrollee to make his or her premium payment, and the
consequences for nonpayment of premium.
3. Cost sharing (Sec. 600.510)
We propose that the state include in its BHP Blueprint the group or
groups of enrollees subject to cost sharing, and to assure that cost-
sharing standards, including the establishment of an effective system
to ensure compliance, are in accordance with Sec. 600.520.
We propose to adopt at Sec. 600.510(b) the Exchange's approach
(which is also consistent with Medicaid's approach) to cost sharing for
preventive health services as described at 45 CFR 147.130 and 45 CFR
155.115(a)(4). These provisions establish that preventive services
without cost sharing are a required element of the provision of
essential health benefits. By cross referencing to these provisions, we
propose to incorporate the same prohibition on the imposition of
copayments, deductibles, coinsurance or other forms of cost sharing
with respect to recommended preventive health services or items in BHP
that applies to the provision of essential health benefits in other
insurance affordability programs and in the overall marketplace. We
believe that this approach is both required by the statutory provision
that standard health plans offer essential health benefits, and also
accomplishes the goal of not exceeding the cost sharing that would have
otherwise occurred if the individual had been enrolled on the Exchange.
Furthermore, this policy promotes consistent treatment and continuity
of care for consumers who may move between BHP, the Exchange and
Medicaid in a given coverage year.
4. Public schedule of enrollee premiums and cost sharing (Sec.
600.515)
Under Sec. 600.515(a), we propose that the state must ensure that
applicants and enrollees have access to information concerning premiums
and cost-sharing amounts for a specific item or service under a
standard health plan that would apply for individuals at different
income levels. We propose to align with the Exchange's minimum standard
of publishing such information through an Internet Web site as well as
through other means for individuals who do not have Internet access. In
addition to the publication of the premiums and cost-sharing amounts,
we propose that the state make publicly available information regarding
the nonpayment of premiums. Under paragraph (b), we propose that the
premium and cost sharing information must be made available to
applicants for standard health plan coverage and for enrollees in such
coverage at time of enrollment, re-enrollment, determination of
eligibility, when premium and/or cost-sharing amounts change, and upon
request by the individual. We believe that applying similar
transparency standards utilized in the Exchange (and consistent with
Medicaid and CHIP) will ensure efficiencies between insurance
affordability programs as well as provide a more seamless experience
for consumers who may transition out of, or into, the BHP.
5. General cost-sharing protections (Sec. 600.520)
We propose at Sec. 600.520(a) to adopt similar cost-sharing
protections for lower income enrollees that currently apply in CHIP at
Sec. 457.530 and the Exchange at 45 CFR 156.420(e). In both insurance
affordability programs, premiums and cost sharing may vary to the
extent that they do not favor enrollees with higher incomes over those
with lower incomes. At proposed Sec. 600.520(b), we have adopted the
Exchange standards set forth at 45 CFR 156.420(b)(1) and (d) regarding
the cost-sharing protections applied to Indians, which are also
consistent with the rules in Medicaid and CHIP. Specifically, states
will not be permitted to impose cost sharing on Indians enrolled in BHP
for essential health benefits. We believe that these protections are
legally required to ensure that this population does not experience
higher cost sharing than what would otherwise have been required had
they enrolled on the Exchange.
As noted previously, section 1331(a)(2)(A)(ii) of the Affordable
Care Act provides that the cost sharing required for individuals under
150 percent of the FPL not exceed what is required under a platinum
plan offered through the Exchange. Similarly, the statute specifies
that the cost sharing required for individuals above 150 percent of the
FPL not exceed what is required under a gold plan offered through the
Exchange. We received many comments on this particular section of the
statute during our October 2011 request for information. Specifically,
we received questions regarding the actuarial value of the platinum and
gold plans HHS would use to align BHP's on cost-sharing reduction
standards. Actuarial value is a measure of the percentage of expected
health care costs a health plan will cover, and can be considered a
general summary measure of health plan generosity. Section 1302(d)(2)
of the Affordable Care Act defines actuarial value relative to coverage
of the EHB for a standard population, and is generally calculated by
computing the ratio of the total expected payments by the plan for EHB
over the total costs for the EHB the standard population is expected to
incur. For example, a plan with an 80 percent actuarial value would be
expected to pay, on average, 80 percent of a standard population's
expected medical expenses for the EHB. The individuals covered by the
plan would be expected to pay, on average, the remaining 20 percent of
the expected expenses in the form of deductibles, co-payments, and
coinsurance.
We considered two options to ensure that BHP enrollees do not
experience higher cost sharing when enrolled in BHP relative to what
they would have experienced had they been enrolled through the
Exchange. The first option we considered required BHP plans to meet the
same actuarial value standards
[[Page 59133]]
applicable to Exchange plans for this population pursuant to the
revisions made by section 1001(b)(1)(A) of HCERA to section
1402(c)(2)(B) of the Affordable Care Act. The second option would be
based on a comparison of the BHP plan to a selected model gold or
platinum plan available under the Exchange. Under the first option,
required cost sharing, on average, would not be more than 6 percent of
the cost of coverage for the lowest income BHP population, and not more
than 13 percent of the cost of coverage for other BHP enrollees. Under
the second option, required cost sharing could exceed such levels but
could not exceed the levels that would be required under the model
Exchange plans.
In our proposed rule, we have elected the first option as we have
interpreted the revisions made by section 1001(b)(1)(A) of HCERA to the
actuarial values described in section 1402(c)(2)(B) of the Affordable
Care Act to apply to the applicable populations enrolled in BHP;
therefore, proposed Sec. 600.520(c) adopts the cost-sharing standards
set forth at 45 CFR 156.420(a)(1) and (2), (c) and (e). As proposed at
Sec. 600.520(c), the cost-sharing standard for non-Indian enrollees
with income below 150 percent of the FPL cannot exceed what is required
under a platinum plan with an actuarial value of 94 percent. The cost-
sharing standard for non-Indian enrollees with incomes above 150
percent of the FPL cannot exceed what is required under a gold plan
with an actuarial value of 87 percent. By incorporating the Exchange
cost-sharing standards at 45 CFR 156.420(a)(1) and (2), the out-of-
pocket cost-sharing maximums also apply to individuals enrolled in BHP.
We invite comment on our proposed approach.
6. Disenrollment Procedures and Consequences for Nonpayment of Premiums
(Sec. 600.525)
We propose in paragraph (a)(1) of this section that a state assure
compliance with the disenrollment procedures for nonpayment of premiums
set forth at 45 CFR 155.430. At paragraph (a)(2), we propose that a
state aligning its enrollment policy to 45 CFR 155.410 and Sec.
155.420 comply with the premium grace period standards set forth at 45
CFR 156.270 for required premium payment prior to disenrollment. We
believe aligning the Exchange standards will ensure consistency for a
state electing to model its BHP enrollment policies after the
Exchange's. Should a state elect to implement a continuous enrollment
policy similar to Medicaid, we propose in paragraph (b)(3), a 30-day
premium grace period, which is consistent with the premium grace period
standard that is applied in CHIP.
At Sec. 600.525(b), we propose to again base consequences of
nonpayment of premium to the state's enrollment policies. Specifically,
in paragraph (b)(1), we propose that a state applying the Exchange
enrollment policies to its BHP may not restrict reenrollment to BHP
beyond the next open enrollment period, or if applicable, the next
special enrollment period. At paragraph (b)(2), we propose that a state
implementing a continuous enrollment policy apply the CHIP reenrollment
standards set forth in Sec. 457.570(c). Specifically, a state would be
prohibited from imposing a lockout period of more than 90 days, from
continuing to impose a lockout period after an enrollee has paid past
due premiums, and could not require collection of past due premiums as
a condition of eligibility for reenrollment upon the expiration of the
lockout period. Nothing in this proposed rule would preclude a state
from continuing to seek past due premiums from an individual. Should a
state elect to implement a premium lockout period, it must define the
length of such a period in its BHP Blueprint. As with the disenrollment
requirements described in paragraph (a), we believe that aligning the
consequences of nonpayment of premiums to the state's enrollment
policies with ensure program continuity and consistency.
G. Payments to States
We propose adding subpart G consisting of Sec. 600.600 through
Sec. 600.615 to specify the BHP payment methodology and the procedures
by which HHS will determine a state's BHP payment amount.
1. Basis, scope and applicability (Sec. 600.600)
Section 1331(d)(1) of the Affordable Care Act specifies that the
Secretary must transfer each fiscal year federal funds to a state's BHP
trust fund in the amount determined by the Secretary in accordance with
the requirements set forth in section 1331(d)(3). Specifically, the
statute requires the Secretary determine a per enrollee payment amount
based on 95 percent of the premium tax credit under section 36B of the
Code, and the cost-sharing reductions under section 1402 of the
Affordable Care Act, that would have been provided to the enrollee in
that fiscal year if he or she had been enrolled in a qualified health
plan through an Exchange. When determining this payment amount, the
statute further directs the Secretary to consider additional factors,
such as age and income of the enrollee as well as geographic rating
differences.
Given the unique statutory requirements regarding the transfer and
determination of a state's BHP payment amount, we propose, at Sec.
600.605, the two components (the premium tax credit component and the
cost-sharing reduction component) used in the general calculation of
the state's federal payment. At Sec. 600.610, we propose the process
by which the Secretary will determine the state's BHP amount, and in
Sec. 600.615, we propose that HHS make quarterly federal deposits into
the state's BHP trust fund.
2. BHP payment methodology (Sec. 600.605)
As described previously, section 1331(d)(3) of the Affordable Care
Act directs the Secretary to determine the amount of payment to equal
95 percent of the premium tax credit and the cost-sharing reductions
that the enrollee would have received had he or she enrolled in a
qualified health plan through the Exchange. We received numerous
comments during our October 2011 RFI process requesting clarity
regarding the amount of the cost-sharing reductions that the Secretary
will use when determining the BHP payment amount. Commenters expressed
confusion by the placement of the comma in the statutory language and
requested that HHS specify whether it would use 100 percent of the
cost-sharing reductions, or 95 percent, which would coincide with the
percentage of the premium tax credit. We have carefully considered this
issue, and have interpreted the statute to read that the payment amount
equals 95 percent of the cost-sharing reductions.
We are interpreting the statutory language directing the Secretary
to make payments on a fiscal year to apply to a federal fiscal year. In
addition, while payments to states will be made based on the federal
fiscal year, the determination of payment rates will be made consistent
with the calendar year operations utilized on the Exchange. Given that
the determination of BHP payment rates requires data from the Exchange,
we believe that utilizing calendar year based data will provide a more
accurate determination of the payment rate.
We propose codifying in Sec. 600.605(b) the seven factors
specified in statute that must be considered when determining a state's
BHP payment amount. We anticipate that these seven factors will be
included in the funding formula which will be published on an annual
basis in the proposed payment
[[Page 59134]]
notice process as described further in Sec. 600.610.
We are also seeking specific comments on our proposed approach to
address the statutory requirement that the federal payment take into
account the health status of the enrollee for purposes of determining
risk adjustment and reinsurance payments that would have been made had
the individual enrolled in a QHP through the Exchange. As finalized in
the March 11, 2013 Federal Register notice of benefit and payment
parameters for 2014, 45 CFR 153.400(a)(2)(iv) excludes BHP
participating plans from contributions to the reinsurance program. As
such, BHP plans are not eligible to receive reinsurance payments since
they are not contributing to the program; therefore, we are proposing
to exclude reinsurance payments from consideration in the BHP funding
formula.
With respect to risk adjustment, we have carefully considered this
issue as we have received several comments from both states and
stakeholders emphasizing the importance risk adjustment can have on not
only a state's decision to elect BHP as an alternative source of
coverage for low income adults, but also to the program's
sustainability. Given the challenges associated with applying risk
adjustment in the early years of both BHP and the individual market, we
considered two possible approaches to recognize that BHP enrollees
might differ from consumers in the individual market with respect to
health status, associated health care service utilization, and program
uptake. One possible approach we considered was to include BHP plans in
risk adjustment as well as require that BHP enrollees and plans be
included in the individual market risk pool. Under this approach, the
funding mechanism would take into account the actual payments that
would be made from that risk pool. The second approach was to account
for the various differences between BHP enrollees and individual market
enrollees in the BHP funding methodology only. We also considered under
this approach the most appropriate time to include a risk adjustment
factor in the BHP funding methodology; that is, whether we should
address risk adjustment for year one or in the future, as well as the
potential consequences of such timing.
We have carefully considered both approaches, and have decided that
the most appropriate approach is to develop a risk adjustment factor to
include in the BHP funding methodology rather than include BHP in the
individual market risk pool. Our rationale for this approach is
twofold. Specifically, potential differences may exist between BHP and
Exchange benefit packages and the market reform rules in the Affordable
Care Act, such as the requirements for guaranteed issue, standard
premium rating, and other such requirements may not apply to some
standard health plan offerors. We believe that developing an
appropriate factor in the BHP funding formula that accounts for the
potential difference in health status between BHP enrollees and
individual market enrollees would ensure that the BHP payment
accurately reflects the statute's requirement to consider the impact of
risk adjustment. In addition, we believe that this would provide a
level of funding to BHP that more accurately reflects the expected
health care costs for BHP enrollees.
Finally, the risk adjustment method being applied in the individual
market is a concurrent model, which means that a current year's
experience is applied retrospectively to premiums; however, we are
proposing, as discussed further below, to limit the retrospective
adjustments in calculating the federal payment amount for BHP to a
small set, including enrollment, to improve predictability for states
in the amount of federal funding they will receive in a given fiscal
year. In so doing, we are not proposing to retrospectively apply risk
adjustment to the federal payment amount.
While we seek comment on this approach, we will provide additional
guidance that will further address this factor in our proposed Payment
Notice which will be published in the fall of 2013 and will provide an
additional opportunity for comment. Finally, we are not proposing to
consider the issue of risk corridors in the BHP funding methodology as
section 1342 of the Affordable Care Act specifically limits the program
to QHPs.
Section 1331(d)(3)(B) of the Affordable Care Act directs the
Secretary to adjust the payment for any fiscal year to reflect any
error in the determination of the payment amount in the preceding
fiscal year. We believe that the statutory language supports the idea
that an adjustment that would trigger a repayment obligation is limited
to ``errors'' in the determination of payment, and does not include
adjustments to improve the underlying methodology for the per member
per month payment rates. Specifically, the statute does not appear to
contemplate adjustment to the certified methodology as an error;
instead, it appears to contemplate that adjustments to the methodology
are only made prospectively and do not include retroactive corrections/
repayment. Section 1331(d)(3)(A) of the Affordable Care Act specifies
that the Secretary must determine the payment based on a certified
methodology, and to the extent that the determination accurately
reflects that methodology, there would be no error. Furthermore, we
believe that the statute supports the idea that no retrospective
adjustment would be necessary, subsequent to certification of the
methodology, if the adjustment is an improvement in the methodology
(for example, based on new data or analysis that would improve the
accuracy of that methodology). The following list includes several
examples of when a retrospective adjustment may or may not occur:
Retrospective adjustment would be warranted for
mathematical errors in applying the certified methodology.
Retrospective adjustment in aggregate payments would be
warranted if based on incorrect enrollment data.
Retrospective adjustment would not appear to be warranted
if the determination accurately reflected the certified methodology,
and thus was consistent with the requirements of section 1331(d)(3)(A)
of the Affordable Care Act, even if, based on new data or analysis, the
same methodology would not be certified for subsequent fiscal years.
The interpretation of a prospective annual adjustment, except in
the case of an error, means that the payment methodology published in
accordance with the process set forth in Sec. 600.610 will remain in
effect for an entire fiscal year. The Secretary will only change the
methodology for the following fiscal year in order to improve the
accuracy of the methodology or to reflect more accurate data sources
and assumptions. Should a change in methodology occur, the change will
be applied on a prospective basis only. In addition to limiting
retrospective adjustments to error, we also propose, as described
further below, to adjust a state's preceding fiscal year payment
amounts based on actual enrollment in that year. We believe that this
process will ensure the financial stability of the program as well as
provide fiscal certainty for states as they develop their budgets each
year.
3. Secretarial determination of BHP payment amount (Sec. 600.610)
Section 1331(d)(3)(B) of the Affordable Care Act requires that the
Chief Actuary of CMS, in consultation with the Department of Treasury's
Office of Tax Analysis, certify the methodology to ensure that it meets
the requirements set forth in the statute. The statute further provides
that the certification must be based on sufficient
[[Page 59135]]
data from the state and from comparable states regarding their
experiences with other insurance affordability programs.
We propose, at Sec. 600.610(a), that beginning in fiscal year
2015, and upon receipt of certification, HHS will determine and publish
in the Federal Register a proposed payment notice describing the BHP
payment methodology utilized to calculate the payment factors and
federal payment amount for the next fiscal year. This proposed payment
notice will be published in October of each year. For example, in
October 2014, HHS will publish the proposed BHP payment methodology
that would be used to calculate the payment rates for fiscal year 2016.
This approach is consistent with how payment parameters for Exchanges
will be determined as well as how CHIP allotments were determined
during the initial implementation of the program. In addition, we
propose that the proposed payment notice may require states to submit
data in order for the Secretary to determine and publish the BHP
payment factors and to support the calculation of an estimated federal
payment amount for the fiscal year in a subsequent Federal Register
notice. We believe that publishing a proposed payment notice that
includes the payment methodology would provide appropriate opportunity
for public comment. We believe this timing would provide a state the
information it needs to appropriately budget for BHP each year as well
as provide fiscal assurance, a concern raised during our October 2011
RFI process from both states and other stakeholder groups.
We propose in Sec. 600.610(b) that the Secretary determine and
publish the final BHP payment methodology and payment factors that
could be used to calculate an estimated federal payment amount based on
a state's projected enrollment in a subsequent Federal Register notice.
We propose publishing this notice in February of each year to provide
states sufficient time to make any necessary adjustments to their BHP
contracts well in advance of the new coverage year that begins in
January. The final BHP payment amount will be calculated quarterly, as
determined by using the final payment methodology and factors as well
as actual enrollment and other data provided at regular intervals as
specified in the notice. If needed, other applicable data will be used
as determined by the Secretary in the final notice.
Given the timing of this proposed regulation and the January 1,
2015 implementation date, we intend to modify the publication dates of
the payment notices for the first year of BHP implementation.
Specifically, because we will need to gather data from an interested
state in order to model and calibrate the payment method and associated
factors needed to determine preliminary payment amount, we intend to
determine and publish in the Federal Register a proposed payment notice
describing the BHP payment methodology for fiscal year 2015 in the fall
of 2013. This notice will include requests for data to help the
Secretary determine payment amounts. A subsequent Federal Register
notice containing the final fiscal year 2015 BHP funding methodology
and payment amounts (which will be calculated by inputting the
appropriate data into the final BHP funding methodology) will be
published concurrently with the final BHP regulation. We invite comment
on our proposed approach to the use, and publication, of the proposed
and final payment notices, especially with respect to the variation in
fiscal year 2014, to determine whether this approach ensures
administrative and financial stability for states interested in
participating in BHP.
Under Sec. 600.610(c)(1,) we propose to determine, on a quarterly
basis, state specific prospective aggregate payment amounts. This
prospective amount will be calculated using the payment methodology and
factors in the final payment notice. This prospective amount will be
determined by multiplying the payment rates described in Sec.
600.610(b) of this section by the projected number of BHP enrollees.
This calculation may include different payment rates for enrollees
related to the factors described in Sec. 600.605(b). We are proposing
this approach to quarterly prospective aggregate payments to provide
the state with financial stability and assurance.
In Sec. 600.610(c)(2), we propose retrospective adjustments to the
aggregate amount described in Sec. 600.610(c)(1) to account for any
errors and to account for actual enrollment. The adjustment to account
for actual enrollment would occur sixty days after the end of a
quarter, and we would use the same method when determining a state's
prospective aggregate payment amount; however, the enrollment numbers
used in this calculation will be based on actual enrollment for the
previous quarter rather than projected numbers. In the event that an
adjustment to the payment amount is needed to account for differences
in projected versus actual enrollment, we propose either depositing an
additional payment in the state's BHP trust fund (to account for
higher-than-projected enrollment), or a reduction in the state's
upcoming quarter's prospective aggregate payment amount (to account for
lower-than-projected enrollment). We have proposed this process given
that statute only authorizes payment on a per enrollee basis;
therefore, we have determined that payments in excess of the per
enrollee amount would not be permitted by statute. As with our proposed
approach to determining proposed and final payment notices, we seek
comment on this method of calculating and adjusting aggregate BHP
payment amounts.
Finally, in Sec. 600.615, we propose to make quarterly deposits to
the state's BHP trust fund based on the aggregate quarterly payment
amounts discussed in Sec. 600.610(c).
H. BHP Trust Fund
We propose adding subpart H consisting of Sec. 600.700 through
600.715 to specify the use of BHP trust funds, establishment of fiscal
policies and accountability, and restitution and disallowance
procedures.
1. Basis, scope and applicability (Sec. 600.700)
Section 1331(d)(2) of the Affordable Care Act specifies that a
state implementing a BHP must establish a trust for the deposit of
federal BHP payments. Because the trust fund is an integral feature of
the BHP, we propose at Sec. 600.705 to set new standards with respect
to the establishment of the trust fund as well as the standards for
allowable BHP trust fund expenditures. We propose at Sec. 600.710 that
a state establish appropriate fiscal and accountability standards to
ensure that BHP trust funds are expended in accordance with the new
standards set forth in Sec. 600.705. At Sec. 600.715, we propose
restitution and disallowance procedures in the event that a
determination is made that BHP trust funds have been improperly
expended.
2. BHP Trust Fund (Sec. 600.705)
Section 1331(d)(2) of the Affordable Care Act specifies that the
state establish a trust fund to receive federal deposits for the
provision of the BHP. The statute also provides that the state may use
unspent BHP trust funds to reduce premiums and cost sharing, or to
provide additional benefits, for BHP enrollees. Under Sec. 600.705(a),
we propose that the state establish a trust fund at an independent
entity, or as a subset account to the state's General Fund, and
identify trustees responsible for oversight of the BHP trust fund along
with individuals with the power to authorize withdrawal of funds. In
addition to the federal deposits, we are
[[Page 59136]]
proposing in paragraph (b) that a state may deposit non-federal funds
into its trust fund, which can include receipts from enrollees,
providers or other third parties for standard health coverage. However,
once non-federal funds have been deposited, such funds will be treated
in the same manner as federal funds, must remain in the BHP trust fund
and adhere to the same standards in accordance with paragraphs (c) and
(d) in this section. We propose at Sec. 600.705(c) to codify the
statutory requirement which permits the use of BHP trust funds only to
reduce premiums and cost sharing of standard health plan coverage, or
to provide additional benefits for, eligible individuals enrolled in
standard health plans within the state.
Finally, section 1331(d)(2) specifies particular limitations on the
use of BHP trust funds. Specifically, states are not permitted to use
BHP trust funds for purposes of meeting any matching or expenditure
requirement of any federally-funded program, such as Medicaid or CHIP.
We propose in Sec. 600.705(d) to specify this as well additional
situations in which the expenditure of BHP trust funds are not
permitted, including the statutory prohibition of the use of funds to
cover administrative costs. In Sec. 600.705(e), we propose that a
state may maintain in its trust fund a surplus or reserve of unexpended
funds until such time as those funds are expended in accordance with
the standards set forth in Sec. 600.705(c) and (d).
3. State fiscal policies and accountability (Sec. 600.710)
We propose at Sec. 600.710 to require the inclusion of fiscal
policies and accountability requirements in the state's BHP Blueprint
so that the state can document the use of BHP trust funds for
authorized purposes. Specifically, under Sec. 600.710(a), we propose
that the state maintain an accounting and record system to ensure that
BHP trust funds are properly maintained and expended. In accounting for
such expenditures, the state must adhere to the cost principles
applicable to governmental entities under Office of Management and
Budget (OMB) Circulars A-87 and A-133.
We propose at Sec. 600.710(b) that the state obtain an annual
certification from the BHP trustees, the chief financial officer, or
designee, certifying: (1) The program's financial statements for the
fiscal year; (2) the separation of BHP trust funds from other state
program funding to assure that BHP trust funds are not being used as
the non-federal share to meet matching or expenditure requirements of
any federally-funded program, such as Medicaid or CHIP; and (3)
compliance with all federal requirements consistent with those
specified for the administration and provision of the program. In
accounting for such expenditures, the state must adhere to the cost
principles applicable to governmental entities under Office of
Management and Budget (OMB) Circulars A-87 and A-133.
Under Sec. 600.710(c), we propose that the state conduct an
independent audit of BHP trust fund expenditures over a period of three
years to determine whether the expenditures made during this time
period were allowable and applied only to costs associated with
reducing premiums and/or cost sharing, or provision of benefits. The
independent audit may be conducted as a sub-audit of the single state
audit conducted in accordance with OMB Circular A-133, and must follow
the cost accounting principles in OMB Circular A-87. We propose that
the state conduct the independent annual audit consistent with the
standards set forth in chapter 3 of the Government Accountability
Office's Government Auditing Standards (which are also consistent with
those in Medicaid). As currently proposed, the state may elect to
contract with a third party to conduct the audit, or may elect to use a
state agency to the extent that the state can assure the audit was
conducted in an independent manner.
We further propose in Sec. 600.710(d) that the state publish
annual reports on the use of funds, including a separate line item that
tracks the use of funds described in Sec. 600.705(e) to further reduce
premiums and cost sharing, or for the provision of additional benefits,
within 10 days of approval by the trustees. If applicable for the
reporting year, the annual report must also contain the findings for
the audit conducted in accordance with paragraph (c) of this section.
At Sec. 600.710(e), we propose that the BHP Blueprint establish and
maintain BHP trust fund restitution procedures, in the event that the
state or trustees must restore funds to the trust fund due to
unallowable expenditures. We propose that the state maintain records
for three years after the date of submission of a final expenditure
report, or beyond, in instances where audit findings have not been
resolved, consistent with the current standards in CHIP.
4. Resolution of questions about BHP transactions: Corrective action,
restitution and disallowance of improper expenditures from the BHP
Trust Fund (Sec. 600.715)
We propose at Sec. Sec. 600.715(a) and (b) that when a question
about the proper use of trust fund resources arises through the
application of state fiscal policies, or through state or federal
review and audit processes, the state and BHP trustees shall review
those questions, and develop a written response to the questions raised
no later than 60 days upon receipt of such a report, unless otherwise
specified in the report, review or audit. In addition, based on that
review, the state and BHP trustees shall take corrective action to
ensure proper use of funds and restitution of questioned funds, as
appropriate, to the state's trust fund. We further propose in paragraph
(b) of this section, to the extent that the state and the BHP trustees
determine that BHP trust funds may not have been properly spent, they
shall ensure restitution to the BHP trust fund of amounts questioned by
HHS, OIG or state auditors or reviewers. These policies are consistent
with the normal business operations and proper management of a trust
fund, with the possibility of ongoing reconciliation and correction of
expenditures in the context of ongoing relationships with contractors
and other business associates.
As proposed in Sec. 600.715(b), to the extent that the state and
BHP trustees determine that BHP trust funds may not have been properly
spent, they must ensure restitution to the trust fund of the amounts in
question. This is consistent with the nature of a trust fund, and the
fiduciary relationship that trustees and other controlling entities
have in the management of a trust fund. Restitution may be made
directly, or by a liable third party (which could include the recipient
of the improper expenditures, or an indemnifying insurer). Trustees may
be the beneficiaries of indemnification agreements entered into by the
state, the BHP trustees or an insurer.
We propose in Sec. 600.715(c) to provide considerable flexibility
in the timing of such restitution; restitutions may occur in a lump sum
amount, or in equal installments. Restitution to the BHP trust fund
cannot exceed a two year period from the date of the written response
in accordance with paragraph (a) of this section. We propose providing
a state with flexibility to determine the restitution option that best
fits the circumstances so as to ensure the
[[Page 59137]]
viability and sustainability of its program.
We believe that most questioned expenditures will be resolved
through these steps based on preliminary findings prior to any final
determination that there has been an improper or unauthorized
expenditure. To the extent that the BHP trustees and the state assure
restitution of questioned BHP expenditures, the result will be that
there will be no net improper or unauthorized expenditure. But if
questioned funding is not restored to the BHP trust fund, and the
questions are not otherwise resolved, then there would be an improper
expenditure of federal funds. The state is not entitled to retain
federal grant funding expended for purposes not statutorily authorized,
and would need to return any such amounts.
To provide for the return of federal funding not expended for
statutory authorized purposes, we propose at Sec. 600.715(d) a
procedure for HHS to disallow federal BHP funding that the Secretary
(or a designated hearing officer) determines to have been improperly
expended, after taking into account provisions for restitution of funds
(other than when the restitution schedule elected by the BHP trustees
and state has not been maintained). While we believe such disallowances
will be rare in light of the oversight that we expect will be exercised
on a state level through the trustees and the state audit process,
disallowances are a necessary part of the federal oversight process and
ensure that the statutory conditions for BHP funding are met.
Because we believe that the issues underlying a federal
disallowance will generally have been fully developed in these state
level audit and reviews, or through federal audit and review processes
that will provide ample opportunity for resolution by the BHP trustees
and the state questions through corrective action and restitution, we
provide for a simplified disallowance process. After notice of an
initial finding that contains a written explanation of the basis for
the determination, the state will have an opportunity to submit
information and argument for administrative reconsideration. Upon
receipt of such a submission, the Secretary (or designated hearing
officer) will determine if further information or procedures are
necessary. The Secretary will then issue a final decision within 90
days after the later of the date of receipt of the reconsideration
request or the date of the last scheduled proceeding or submission.
In Sec. 600.715(f), we set forth the timing of the return of
disallowed federal BHP funding. Disallowed federal BHP funding must be
returned to HHS within 60 days after the later of the date of the
disallowance notice or the final administrative reconsideration
upholding the disallowance. Such repayment cannot be made from BHP
trust funds, but must be made with other, non-federal, funds.
Finally, we propose to revise the definition of ``individual
market'' as described in 45 CFR 144.103 to clarify that Medicaid, CHIP
and BHP coverage is not considered health insurance coverage available
on the individual market.
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 (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
To derive average costs, we used data from the U.S. Bureau of Labor
Statistics for all salary estimates. The salary estimates include the
cost of fringe benefits, calculated at 35 percent of salary, which is
based on the March 2011 Employer Costs for Employee Compensation report
by the Bureau.
We are soliciting public comment on each of the section
3506(c)(2)(A)-required issues for the following information collection
requirements (ICRs):
A. ICRs Regarding the BHP Blueprint (Sec. Sec. 600.110, 600,115,
600.125, 600.305, 600.320, 600.345, 600.405, 600.410, 600.415, 600.420,
600.425, 600.505, 600.510, 600.525, 600.530, and 600.710)
In Sec. 600.110, states wishing to participate in the BHP would
prepare and submit a ``Blueprint'' to the Secretary for certification
of the state's program. Although we intend to issue a template
outlining the required components of a Blueprint, that template will be
made available at a later time. In the meantime, we are setting out the
Blueprint's burden estimates since its requirements are proposed in
this proposed rule.
Section 600.115, specifies that the Blueprint must be signed by the
state's governor or signed by an official delegated by the governor.
The Blueprint must identify the agency and officials, by position or
title, who are responsible for program administration, operations, and
financial oversight. The Blueprint would also be required to identify
the required characteristics for all BHP Trust Fund trustees.
In Sec. 600.305, the Blueprint would be required to be consistent
with the standards used to determine BHP eligibility. The state may not
impose conditions of eligibility other than those identified in this
section.
In Sec. Sec. 600.320 and 600.345, the Blueprint would be required
to ensure that the state's enrollment, disenrollment, and verification
policies are consistent with these sections. It must also include a
plan to ensure coordination with and eliminate gaps in coverage for
individuals transitioning between other insurance affordability
programs.
In Sec. 600.405, the Blueprint would be required to ensure that
standard health plan coverage include (at a minimum) EHBs including any
changes resulting from periodic reviews. While states have the option
to allow benefits in addition to the EHBs, standard health plan
coverage must be in compliance with 45 CFR 156.280 regarding abortion
services.
In Sec. 600.410, states would be required to assure that they
comply with competitive contracting provisions in Sec. 600.410(b),
(c), and (d). This includes but is not limited to a justification for
states unable to implement a competitive contracting process for
benefit year 2015 as well as a description of the process it will use
to enter into contracts for standard health plans. The state must also
include a proposed timeline for implementing a competitive contracting
process and provide assurance that the process includes specific
negotiation criteria.
In Sec. 600.415, states would be required to enter into a contract
(with an offeror) for the administration and provision of standard
health plans. A standard set of contract requirements would be included
in the Blueprint.
In Sec. 600.420, the Blueprint would be required to include a
description of how the state will ensure (to the greatest extent
possible) enrollee choice of standard health plans. States may also
enter into a joint procurement with
[[Page 59138]]
other states. States electing this option must address the Blueprint
provisions in Sec. 600.420(b)(2).
In Sec. 600.425, the Blueprint would be required to demonstrate
how the state will ensure coordination with other insurance
affordability programs.
In Sec. 600.505, the Blueprint would be required to describe: the
amount of the premium imposed on enrollees; the group or groups that
are subject to the applicable premium; the collection method and
procedure for the payment of an enrollee's premium; the disenrollment
procedures and consequences of nonpayment of premiums. The Blueprint
must also ensure that the total premium liability for an enrollee does
not exceed the monthly premium that the enrollee would have paid had
he/she enrolled in the second lowest cost silver plan offered through
an Exchange.
With regard to cost sharing imposed on enrollees, Sec. 600.510
would require that the Blueprint identifies the group or groups of
enrollees that may be subject to the cost sharing, and an assurance
that the state has established a system to monitor and track the cost-
sharing standards specified in Sec. 600.520.
In Sec. 600.525(a), the Blueprint would be required to assure that
the state is in compliance with the disenrollment procedures described
in 45 CFR 155.430.
If a state has elected to implement a continuous enrollment policy,
the state may also impose a lockout period after an enrollee has been
disenrolled from the program. The Blueprint must define the length of
the state's lockout period and assure that it will not continue to
impose a premium lockout period after an enrollee's past due premiums
have been paid and will not require the collection of past due premiums
as a condition of eligibility for reenrollment once the state-defined
lockout period has expired.
In Sec. 600.710, the Blueprint would be required to ensure that
the state's fiscal policies and accountability standards are consistent
with this section. In this regard, the Blueprint must ensure that the
BHP administering agency will maintain an accounting system and support
fiscal records to assure that the trust funds are maintained and
expended in accordance with federal requirements. The Blueprint would
also be required to assure that the administering agency will obtain an
annual certification from the state's BHP trustees, or chief financial
officer (or designee), certifying the state's trust fund financial
statements for the fiscal year, that the trust funds are not being used
as the non-federal share to meet matching or expenditure requirements
of any federally-funded program, and that the trust fund is used in
accordance with federal requirements.
The Blueprint would include an assurance that the administering
agency will conduct an audit of trust fund expenditures, publish annual
reports on the use of funds and audit findings (if applicable),
establish and maintain trust fund restitution procedures, and retain
records. The Blueprint must also be accompanied by a funding plan that
describes the enrollment and cost projections for the first 12 months
of operation and funding sources beyond the trust fund (if any). The
plan must demonstrate that federal funds will only be used to reduce
premiums and cost-sharing or to provide additional benefits.
Finally, the Blueprint would be required to describe how the state
will ensure program integrity, including how the state will address
potential issues of fraud, waste, and abuse and ensure consumer
protections.
While a few states have expressed interest in pursuing the Basic
Health Program in their state, HHS does not have an estimate of how
many states will pursue this option. As such, we provide the burden
estimate for one state and seek comment on the number of likely states
to pursue this option. We estimate that it will take a state
approximately 100 hours to develop the Blueprint and submit to the
Secretary.
For purposes of this estimate, we assume that meeting these
requirements will take a health policy analyst 80 hours (at an average
wage rate of $43 an hour) and a senior manager 20 hours (at an average
wage rate of $77 an hour). The estimated cost burden for one state is
$4,980.
As described in Sec. 600.125, a state must notify HHS of any
significant changes to its Blueprint. We estimate that it will take one
state 12 hours to revise its Blueprint and submit it to HHS. We presume
that it will take a health policy analyst 10 hours at $43 an hour and a
senior manager 2 hours at $77 an hour to submit the change. The
estimated cost burden for one state is $584.
Since we estimate less than 10 annual respondents, the
requirements/burden are exempt from formal OMB review and approval
under 5 CFR 1320.3(c). Consequently, a PRA package is not applicable.
B. ICRs Regarding the Operation of a Basic Health Program (Sec. Sec.
600.145, 600.150, and 600.170, and Subpart E)
The ongoing burden associated with the requirements under Sec.
600.145 is the time and effort it would take each participating State
Medicaid Program to perform the recordkeeping and reporting portions of
the core operating functions of a BHP including eligibility
determinations and appeals as well as enrollment and disenrollment,
health plan contracting, oversight and financial integrity, consumer
assistance, and if necessary program termination.
BHPs would function as part of a coordinated eligibility and
enrollment structure over all insurance affordability programs. They
need to maintain and transfer eligibility accounts with equal accuracy
and efficiency as the Exchange, as well as maintain enrollment data
reported monthly to HHS. As such, we are estimating equal burden to the
Exchange for this function. We estimate that it will take 52 hours
annually to ensure the collection of enrollment data. Additionally we
estimate it will take 12 hours to submit monthly enrollment data and 12
hours to reconcile data monthly.
The BHP will issue notices to applicants and eligible individuals
regarding eligibility status. These notices must be developed and
processed in a coordinated fashion with other insurance affordability
programs. The burden estimates here are only for added burden of
customizing to the BHP. We estimate that it will take a state 16 hours
annually to customize notices and processes for the BHP.
We estimate that is will take 356 hours ((24 x 12) + 52 + 16) for a
BHP to meet these reporting requirements for eligibility and enrollment
functions. We presume that it will take an operations analyst 220 hours
(at $55 an hour), a health policy analyst 80 hours (at $43 and hour)
and a senior manager 56 hours (at $77 an hour). To carry out the
requirements for this function, we estimate the total cost of the
reporting burden to be $19,852 per state.
Part 600, subpart E, describes reporting requirements associated
with the core function of standard health plan contracting and
operations. Each state BHP must contract with standard health plan
offerors and require participating standard health plans to provide
transparency in covered benefits, cost-sharing and participating
providers by reporting and making public such information annually. We
estimate that it will take a state 120 hours to create and evaluate the
request for proposals for participating standard health plans. Using
the same estimates as the Exchange, we presume that it will take an
additional 24 hours to collect the information necessary to ensure that
coverage and transparency requirements
[[Page 59139]]
are met for a total annual burden per state of 144 hours. We presume
that it will take a health policy analyst 100 hours (at $43 an hour),
an operations analyst 20 hours (at $55 an hour) and a senior manager 24
hours (at $77 an hour). The cost burden per state is $7,248.
Oversight and financial integrity are core functions of the BHP
that include annual reporting requirements to HHS on the operation of
the trust fund, providing annual data necessary to acquire and
reconcile federal funding and complete financial sections of the annual
report in Sec. 600.170. We estimate that it will take a state
operating a BHP 24 hours annually to complete these reporting
requirements. We presume that it will take an operations analyst 10
hours (at $55 an hour), a financial analyst 10 hours (at $62 and hour)
and a senior manager 4 hours (at $77 an hour) for cost burden of $1,478
for one state.
Finally, BHPs are required in Sec. 600.150 to ensure that there is
enrollment assistance and information readily available to understand
the program and any choices a consumer would have. We estimate that it
will take a state 48 hours annually to create and share its format for
required information with participating health plan offerors and to
provide the necessary oversight to ensure that each offeror has
complied with the specifications. Additionally, the state must publish
enrollment choices, covered services and any options and limitations in
a manner that meets accessibility and readability standards.
The total burden estimate for program termination is 48 hours per
state. We presume that it would take a health policy analyst 40 hours
(at $43 an hour) and an operations analyst 8 hours (at $55 an hour) to
fulfill the enrollment assistance and information requirements burden.
The total cost burden to the state for this function is $2,160.
Since we estimate less than 10 annual respondents, the
requirements/burden are exempt from formal OMB review and approval
under 5 CFR 1320.3(c). Consequently, a PRA package is not applicable.
C. ICRs Regarding the Termination of a Basic Health Program (Sec.
600.140)
Section 600.140 would direct a state electing to terminate its BHP
to submit a notice and transition plan to the Secretary. We estimate
that it would take a state 24 hours to create and submit such
information. A state must submit written notice to all participating
standard health plans and to all enrollees regarding their plans to
terminate. Consistent with other notice estimates in the Exchange and
BHP, we estimate that it would take 16 hours to prepare and submit each
notification for a total of 32 hours per state. Finally, the state
would be required to perform eligibility account transfers on behalf of
enrollees. Due to the requirement that a state use the single
eligibility service for all insurance affordability programs, we do not
believe this requirement to necessitate much effort. We estimate that a
state can fulfill this requirement in 8 hours.
The total burden estimate for program termination is 64 hours (24 +
32 + 8) per state. We presume that it would take a health policy
analyst 44 hours (at $43 an hour), an operations analyst 10 hours (at
$55 an hour) and a senior manager 10 hours (at $77 an hour) to fulfill
the program termination reporting burden. The total cost burden to the
state for this function is $3,212.
Since we estimate less than 10 annual respondents, the
requirements/burden are exempt from formal OMB review and approval
under 5 CFR 1320.3(c). Consequently, a PRA package is not applicable.
D. Submission of PRA-Related Comments
We invite public comments on these potential information collection
requirements. If you comment on these information collection and
recordkeeping requirements, please do either of the following:
1. Submit your comments electronically as specified in the
ADDRESSES section of this proposed rule; or
2. Submit your comments to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Attention: CMS Desk Officer,
(CMS-2380-P) Fax: (202) 395-6974; or Email: [email protected].
Comments must be received on/by November 25, 2013.
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 Statement (or Analysis)
A. 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 1102(b) of the Social Security Act,
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) and the Congressional Review Act (5 U.S.C. 804(2)).
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). Section
3(f) of Executive Order 12866 defines a ``significant regulatory
action'' as an action that is likely to result in a rule: (1) Having an
annual effect on the economy of $100 million or more in any 1 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). The Basic Health Program provides states the flexibility to
establish an alternative coverage program for low-income individuals
who would otherwise be eligible to purchase coverage through Exchange.
We are uncertain as to whether the effects of this rulemaking will be
``economically significant'' as measured by the $100 million threshold,
and hence not a major rule under the Congressional Review Act. We seek
comment on the analysis provided below to help inform this assessment
by
[[Page 59140]]
the time of the final rule. In accordance with the provisions of
Executive Order 12866, this regulation was reviewed by the Office of
Management and Budget.
1. Need for the Rule
Section 1331 of the Affordable Care Act (codified at 42 USC Sec.
18051) requires the Secretary to establish a Basic Health Program. This
proposed rule implements that section.
2. Benefits
We anticipate that the Basic Health Program will provide benefits
to both consumers and states.
a. Benefits to Consumers
The Basic Health Program (BHP) targets low-income individuals who
would be eligible for premium and cost-sharing reductions, if they
purchased health insurance through an Exchange. These individuals often
have variable income that causes them to move between insurance
programs. For example, if their income drops, they may be eligible for
Medicaid, and when their income rises, they would be eligible to
purchase insurance (with premium and cost-sharing reductions) on an
Exchange. This variability in income can result in individuals moving
back and forth between Medicaid and an Exchange, a phenomenon known as
``churning.'' Because Medicaid health plans and health plans offered on
Exchanges vary in terms of benefits, provider networks, cost-sharing,
and administration, churn can be disruptive and lead to poorer health
outcomes due to lack of continuity of care. Researchers have estimated
that the Basic Health Program will significantly reduce the number of
individuals that churn between Medicaid and Exchanges.\1\
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\1\ Hwang, A., S. Rosenbaum, and B. D. Sommers. ``Creation Of
State Basic Health Programs Would Lead To 4 Percent Fewer People
Churning Between Medicaid And Exchanges.'' Health Affairs 31.6
(2012): 1314-1320.
Buettgens, M., A. Nichols, and S. Dorn. ``Churning Under the ACA
and State Policy Options for Mitigation: Timely Analysis of
Immediate Health Policy Issues.'' Urban Institute (2012). Available
at http://www.urban.org/UploadedPDF/412587-Churning-Under-the-ACA-and-State-Policy-Options-for-Mitigation.pdf.
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We request additional comments and data that would help us assess
the benefits of a Basic Health Program to consumers.
b. Benefits to States
Several states currently operate health insurance programs for low-
income adults with income above Medicaid eligibility levels. These
states believe that the programs confer benefit to their residents
beyond what those individuals could obtain by purchasing health
insurance on an Exchange. The Basic Health Program established by this
rule would give states the option to maintain these programs rather
than sending those individuals to purchase insurance on the Exchange.
We request additional comments and data that would help us assess the
benefits of a Basic Health Program to states.
3. Costs
The provisions of this rule were designed to minimize regulatory
costs. Rarely did we create new administrative structures, both because
the Basic Health Program does not include administrative funding and
because of the need for states to coordinate with other insurance
affordability programs. To the extent possible, we borrowed structures
from existing programs. We request comments and data that would help us
assess the costs of a Basic Health Program.
4. Transfers
The provisions of this rule are designed to transfer funds that
would be available to individuals for premium and cost-sharing
reductions for coverage purchased on an Exchange to states to offer
coverage through a Basic Health Program. In states that choose to
implement a Basic Health Program, eligible individuals will not be able
to purchase health insurance through the Exchange. As a result, fewer
individuals will use the Exchange to purchase health insurance. This
choice may have economic impact, and we seek comments and data that
would help us assess that impact.
5. Regulatory Alternatives
Many of the structures of the Basic Health Program are set out in
statute, and therefore we were limited in the alternatives we could
consider. When we had options, we attempted to limit the number of new
regulatory structures we created. To make the program easier for states
to implement, we adopt or adapt regulations from existing programs--
Medicaid, the Children's Health Insurance Program, and the Exchanges--
whenever possible, rather than create new structures. Two areas in
which we had choices are reporting compliance with federal rules and
contracting with standard health plans.
a. Reporting compliance with federal rules to HHS
We followed the paradigm of adopting or adapting existing
structures when creating a process for reporting state compliance with
federal rules. Two existing structures we considered were the Exchange
model of Blueprints and the Medicaid model of state plans. We chose to
use the Blueprint model, which we believe will be less burdensome to
states than the state plan model. We seek comments, data, and
suggestions for alternative methods for states to report to HHS.
b. Contracting requirements
Similarly when choosing how to regulate state contracts with
standard health plans, we looked to models in the Exchange and Medicaid
rather than creating new regulatory schemes. We have adopted, where
possible, existing procurement requirements in order to minimize the
burden on states. In addition, we have allowed states the option to
seek an exemption from competitive contracting requirements for program
year 2015 if they are unable to meet the requirements in the first year
of the program. We seek comments, data, and suggestions for other
alternatives to the contracting process we propose.
B. Unfunded Mandates Reform Act
Section 2 02 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation, by state,
local, or tribal governments, in the aggregate, or by the private
sector. In 2013, that threshold is approximately $141 million. States
have the option, but are not required, to establish a BHP. Thus, this
proposed rules does not mandate expenditures by state governments,
local governments, or tribal governments
C. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA)
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 will not have a
significant economic impact on a substantial number of small entities.
The Act generally defines a ``small entity'' as (1) a proprietary firm
meeting the size standards of the Small Business Administration (SBA);
(2 ) a not-for-profit organization that is not dominant in its field;
or (3) a small government jurisdiction with a population of less than
50,000. Individuals and states are not included in the definition of a
small entity. Few of the entities that meet the definition of a small
entity as that term is used in the RFA would be impacted directly by
this proposed rule.
[[Page 59141]]
Because this proposed rule is focused on eligibility and enrollment
in public programs, it does not contain provisions that would have a
significant direct impact on hospitals, and other health care providers
that are designated as small entities under the RFA. However, the
provisions in this proposed rule may have a substantial, positive
indirect effect on hospitals and other health care providers due to the
substantial increase in the prevalence of health coverage among
populations who are currently unable to pay for needed health care,
leading to lower rates of uncompensated care at hospitals. The
Department cannot determine whether this proposed rule would have a
significant economic impact on a substantial number of small entities,
and we request public comment on this issue.
Section 1102(b) of the Act requires us to prepare a regulatory
impact analysis if a proposed rule may have a significant economic
impact on the operations of a substantial number of small rural
hospitals. For purposes of section 1102 (b) of the Act, we define a
small rural hospital as a hospital that is located outside of a
metropolitan statistical area and has fewer than 100 beds. As indicated
in the preceding discussion, there may be indirect positive effects
from reductions in uncompensated care. Again, the Department cannot
determine whether this proposed rule would have a significant economic
impact on a substantial number of small rural hospitals, and we request
public comment on this issue.
D. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct effects on States, preempts
State law, or otherwise has Federalism implications. The BHP is
entirely optional for states, and if implemented in a state, provides
access to a pool of funding that would not otherwise be available to
the state.
We have consulted with states to receive input on how the
Affordable Care Act provisions codified in this proposed rule would
affect States. We have participated in a number of conference calls and
in person meetings with state officials.
We continue to engage in ongoing consultations with states that
have expressed interest in implementing a BHP through the BHP Learning
Collaborative, which serves as a staff level policy and technical
exchange of information between CMS and the States. Through
consultations with this Learning Collaborative, we have been able to
get input from States on many of the specific issues addressed in this
rule.
List of Subjects
42 CFR Part 600
Administrative practice and procedure, Health care, Health
insurance, Penalties, and Reporting and recordkeeping requirements,
State and local governments.
45 CFR Part 144
Health care, Health insurance, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, under the authority at
section 1331(a)(1) of the Affordable Care Act, the Centers for Medicare
& Medicaid Services and the Office of the Secretary propose to amend 42
CFR chapter IV and 45 CFR subtitle A, respectively, as set forth below.
Title 42
0
1. Subchapter I, consisting of part 600, is added to read as follows:
Subchapter I-- Basic Health Program
PART 600--ADMINISTRATION, ELIGIBILITY, ESSENTIAL HEALTH BENEFITS,
PERFORMANCE STANDARDS, SERVICE DELIVERY REQUIREMENTS, PREMIUM AND
COST SHARING, ALLOTMENTS, AND RECONCILATION
Subpart A--General Provisions and Definitions
Sec.
600.1 Scope.
600.5 Definitions and use of terms.
Subpart B-- Establishment and Certification of State Basic Health
Programs
600.100 Program description.
600.105 Basis, scope, and applicability of subpart B.
600.110 BHP Blueprint.
600.115 Development and submission of the BHP Blueprint.
600.120 Certification of a BHP Blueprint.
600.125 Revisions to a certified BHP Blueprint.
600.130 Withdrawal of a BHP Blueprint prior to implementation.
600.135 Notice and timing of HHS action on a BHP Blueprint.
600.140 State termination of a BHP.
600.142 HHS withdrawal of certification and termination of a BHP.
600.145 State program administration and operation.
600.150 Enrollment assistance and information requirements.
600.155 Tribal consultation.
600.160 Protections for American Indian and Alaskan Natives.
600.165 Nondiscrimination standards.
600.170 Annual report content and timing.
Subpart C--Federal Program Administration
600.200 Federal program reviews and audits.
Subpart D--Eligibility and Enrollment
600.300 Basis, scope, and applicability.
600.305 Eligible individuals.
600.310 Application.
600.315 Certified application counselors.
600.320 Determination of eligibility for and enrollment in a
standard health plan.
600.330 Coordination with other insurance affordability programs.
600.335 Appeals.
600.340 Periodic determination and renewal of BHP eligibility.
600.345 Eligibility verification.
600.350 Privacy and security of information.
Subpart E--Standard Health Plan
600.400 Basis, scope, and applicability.
600.405 Standard health plan coverage.
600.410 Competitive contracting process.
600.415 Contracting qualifications and requirements.
600.420 Enhanced availability of standard health plans.
600.425 Coordination with other insurance affordability programs.
Subpart F--Enrollee Financial Responsibilities
600.500 Basis, scope, and applicability.
600.505 Premiums.
600.510 Cost-sharing.
600.515 Public schedule of enrollee premium and cost sharing.
600.520 General cost-sharing protections.
600.525 Disenrollment procedures and consequences for nonpayment of
premiums.
Subpart G--Payment to States
600.600 Basis, scope, and applicability.
600.605 BHP payment methodology.
600.610 Secretarial determination of BHP payment amount.
600.615 Deposit of Federal BHP payment.
Subpart H--BHP Trust Fund
600.700 Basis, scope, and applicability.
600.705 BHP trust fund.
600.710 Fiscal policies and accountability.
600.715 Corrective action, restitution, and disallowance of
questioned BHP transactions
Authority: Section 1331 of the Patient Protection and Affordable
Care Act of 2010 (Pub. L. 111-148, 124 Stat. 119), as amended by the
Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-
152, 124 Stat 1029).
Subpart A--General Provisions and Definitions
Sec. 600.1 Scope.
Section 1331 of the Patient Protection and Affordable Care Act,
provides for the establishment of the Basic Health Program (BHP) under
which a State may enter into contracts to offer two or more standard
health plans providing at least
[[Page 59142]]
essential health benefits to eligible individuals in lieu of offering
such individuals the opportunity to enroll in coverage through an
Affordable Insurance Exchange. States that elect to operate a BHP will
receive federal funding based on the amount of premium tax credits and
cost-sharing reductions that would have been available if enrollees had
obtained coverage through the Exchange.
Sec. 600.5 Definitions and use of terms.
For purposes of this part, the following definitions apply:
Advance payments of the premium tax credit means payment of the tax
credits authorized by 26 U.S.C. 36B and its implementing regulations,
which are provided on an advance basis to an eligible individual
enrolled in a QHP through an Exchange in accordance with sections 1402
and 1412 of the Affordable Care Act.
Affordable Care Act is the Patient Protection and Affordable Care
Act of 2010 (Pub. L. 111-148) as amended by the Health Care and
Education Reconciliation Act of 2010 (Pub. L. 111-152).
Basic Health Program (BHP) Blueprint is the operational plan that a
State must submit to the Secretary of Health and Human Services (HHS)
for certification to operate a BHP.
Certification means authority to operate the program which is
required for program operations but it does not create an obligation on
the part of the State to implement a BHP.
Code means the Internal Revenue Code of 1986.
Cost sharing means any expenditure required by or on behalf of an
enrollee with respect to covered health benefits; such term includes
deductibles, coinsurance, copayments, or similar charges, but excludes
premiums, balance billing amounts for non-network providers and
spending for non-covered services.
Enrollee means an eligible individual who is enrolled in a standard
health plan contracted to operate as part of a BHP.
Essential health benefits means the benefits described under
section 1302(b) of the Affordable Care Act.
Family and family size is as defined at 26 CFR 1.36B-1(d).
Federal fiscal year means the time period beginning October 1st and
ending September 30th.
Federal poverty level or FPL means the most recently published
Federal poverty level, updated periodically in the Federal Register by
the secretary of Health and Human Services under the authority of 42
U.S.C. 9902(2.
Household income is as defined in 26 CFR 1.36B-1(e)(1).
Indian means any individual as defined in section 4 (d) of the
Indian Self-Determination and Education Assistance Act (Pub. L 93-638).
Lawfully present has the meaning given in 45 CFR 152.2
Minimum essential coverage has the meaning set forth at 26 CFR
1.5000A-2, including coverage recognized by the Secretary as minimum
essential coverage pursuant to 26 CFR 1.5000A-2(f). Under that
authority, the Secretary recognizes coverage through a BHP standard
health plan as minimum essential coverage.
Modified adjusted gross income is as defined in 26 CFR 1-36B-
1(e)(2).
Premium means any enrollment fee, premium, or other similar charge
paid to the standard health plan offeror.
Preventive health services and items includes those services and
items specified in 45 CFR 147.130(a).
Program year means a calendar year for which a standard health plan
provides coverage for eligible BHP enrollees.
Qualified health plan or QHP means a health plan that has in effect
a certification that it meets the standards described in subpart C of
45 CFR part 156 issued or recognized by each Exchange through which
such plan is offered in accordance with the process described in
subpart K of 45 CFR, except that such term must not include a qualified
health plan which is a catastrophic plan described in 45 CFR 155.20
Reference plan is a synonym for the EHB benchmark plan and is
defined at 45 CFR 156.100.
Regional compact means an agreement between two or more States to
jointly procure and enter into contracts with standard health plan
offeror(s) for the administration and provision of a standard health
plan under the BHP to eligible individuals in such States.
Residency is determined in accordance with 45 CFR 155.305(a)(3).
Single streamlined application has the same meaning as application
defined at 42 CFR 431.907(b)(1) of this chapter and 45 CFR 155.405(a)
and (b) .
Standard health plan means a health benefits package, or product,
that is provided by the standard health plan offeror.
Standard health plan offeror means an entity that is eligible to
enter into contracts with the State for the administration and
provision of a standard health plan under the BHP.
State means each of the 50 states and the District of Columbia as
defined by section 1304 of the Act.
Subpart B--Establishment and Certification of State Basic Health
Programs
Sec. 600.100 Program description.
A State Basic Health Program (BHP) is operated consistent with a
BHP Blueprint that has been certified by the Secretary to meet the
requirements of this part. The BHP Blueprint is developed by the State
for certification by the Secretary in accordance with the processes
described in this subpart.
Sec. 600.105 Basis, scope, and applicability of subpart B.
(a) Statutory basis. This subpart implements the following sections
of the Act:
(1) Section 1331(a)(1) which defines a Basic Health Program.
(2) Section 1331(a)(2) which requires the Secretary to certify a
Basic Health Program before it may become operational.
(3) Section 1331(f) which requires Secretarial oversight through
annual reviews.
(b) Scope and applicability. (1) This subpart sets forth provisions
governing the administration of the BHP, the general requirements for
development of a BHP Blueprint required for certification, for program
operations and for voluntary program termination.
(2) This subpart applies to all States that submit a BHP Blueprint
and request certification to operate a BHP.
Sec. 600.110 BHP Blueprint.
The BHP Blueprint is a comprehensive written document submitted by
the State to the Secretary for certification of a BHP in the form and
manner specified by HHS. The program must be administered in accordance
with all aspects of section 1331 of the Affordable Care Act and other
applicable law, this chapter, and the certified BHP Blueprint.
(a) Content of a Blueprint. The Blueprint will establish compliance
with applicable requirements by including a description, or if
applicable, an assurance of the following:
(1) The minimum benefits offered under a standard health plan that
assures inclusion of essential health benefits as described in section
1302(b) of the Affordable Care Act, in accordance with Sec. 600.405.
(2) The competitive process, consistent with Sec. 600.410, that
the State will undertake to contract for the provision of standard
health plans.
[[Page 59143]]
(3) The standard contract requirements, consistent with Sec.
600.415, that the State will incorporate in its standard health plan
contracts.
(4) The methods by which the State will enhance the availability of
standard health plan coverage as described in Sec. 600.420.
(5) The methods by which the State will ensure and promote
coordination with other insurance affordability programs as described
in Sec. 600.425.
(6) The premium imposed under the BHP, consistent with the
standards set forth in Sec. 600.505.
(7) The cost sharing imposed under the BHP, consistent with the
standards described in Sec. 600.510.
(8) The disenrollment procedures and consequences for nonpayment of
premiums consistent with Sec. 600.525, respectively.
(9) The standards, consistent with Sec. 600.305 used to determine
eligibility for the program.
(10) The State's policies regarding enrollment, disenrollment and
verification consistent with Sec. Sec. 600.320 and 600.345, along with
a plan to ensure coordination with and eliminate gaps in coverage for
individuals transitioning to other insurance affordability programs.
(11) The fiscal policies and accountability procedures, consistent
with Sec. 600.710.
(12) The process by which BHP trust fund trustees shall be
appointed, the qualifications and responsibilities of such trustees,
and any arrangements to insure or indemnify such trustees against
claims for breaches of their fiduciary responsibilities.
(13) A description of how the State will ensure program integrity,
including how it will address potential fraud, waste, and abuse and
ensure consumer protections.
(14) An operational assessment establishing operating agency
readiness.
(b) Funding plan. (1) The BHP Blueprint must be accompanied by a
funding plan that describes the enrollment and cost projections for the
first 12 months of operation and the funding sources, if any, beyond
the BHP trust fund.
(2) The funding plan must demonstrate that Federal funds will only
be used to reduce premiums and cost-sharing or to provide additional
benefits.
(c) Transparency. HHS shall make a State's BHP Blueprint available
on line.
Sec. 600.115 Development and submission of the BHP Blueprint.
(a) State authority to submit the State Blueprint. A State BHP
Blueprint must be signed by the State's Governor or by the official
with delegated authority from the Governor to sign it.
(b) State Basic Health Program officials. The State must identify
in the BHP Blueprint the agency and officials within that agency, by
position or title, who are responsible for program administration,
operations, and financial oversight.
(c) Opportunity for public comment. The State must provide an
opportunity for public comment on the BHP Blueprint content described
in Sec. 600.110 before submission to the Secretary for certification.
(1) The State must seek public comment on any significant
subsequent revisions prior to submission of those revisions to the
Secretary for certification. Significant revisions are those that alter
core program operations required by Sec. 600.145(e).
(2) The process of seeking public comment must include Federally-
recognized tribes as defined in the Federally Recognized Indian Tribe
List Act of 1994, 25 U.S.C. 479a, located in the State.
(d) Submission and timing. The BHP Blueprint must be submitted in a
manner and format specified by HHS. States may not implement the BHP
prior to receiving certification. The date of implementation for this
purpose is the first day enrollees would receive coverage under the
BHP.
Sec. 600.120 Certification of a BHP Blueprint.
(a) Effective date of certification. The effective date of the
certification is the date of signature by the Secretary.
(b) Payments for periods prior to certification. No payment may be
made under this part for periods of BHP operation prior to the date of
certification.
(c) Period in which a certified Blueprint remains in effect. The
certified Blueprint remains in effect until:
(1) The Blueprint is replaced by Secretarial certification of an
updated Blueprint containing revisions submitted by the State.
(2) The State terminates the program consistent with Sec. 600.140.
(3) The Secretary makes a finding that the BHP Blueprint no longer
meets the standards for certification based on findings in the annual
review, or reports significant evidence of beneficiary harm, financial
malfeasance, fraud, waste or abuse by the BHP agency or the State
consistent with Sec. 600.142.
(d) Blueprint approval standards for certification. The Secretary
will certify a BHP Blueprint provided it meets all of the following
standards:
(1) The Blueprint contains sufficient information for the Secretary
to determine that the BHP will comply with the requirements of section
1331 of the Affordable Care Act and this Part.
(2) The BHP Blueprint demonstrates adequate planning for the
integration of BHP with other insurance affordability programs in a
manner that will permit a seamless, coordinated experience for a
potentially eligible individual.
(3) The Blueprint is a complete and comprehensive description of
the BHP and its operations, demonstrating thorough planning and a
concrete program design, without contingencies or reserved decisions on
operational features.
Sec. 600.125 Revisions to a certified BHP Blueprint.
(a) Submission of revisions. In the event that a State seeks to
make significant change(s) that alter program operations described in
the certified BHP Blueprint, the State must submit a revised Blueprint
to the Secretary for review and certification.
(b) Continued operation. The State is responsible for continuing to
operate under the terms of the existing certified Blueprint until and
unless a revised Blueprint is certified.
Sec. 600.130 Withdrawal of a BHP Blueprint prior to implementation.
To the extent that a State has not enrolled eligible individuals
into the BHP:
(a) The State may submit a written request to stop any further
consideration of a previously submitted BHP Blueprint, whether
certified or not.
(b) The written request must be signed by the governor, or the
State official delegated to sign the BHP Blueprint by the governor.
(c) HHS will respond with a written confirmation that the State has
withdrawn the Blueprint.
Sec. 600.135 Notice and timing of HHS action on a BHP Blueprint.
(a) Timely response. HHS will act on all certification and revision
requests in a timely manner.
(b) Issues preventing certification. HHS will notify the State in
writing of any impediments to certification that arise in reviewing a
proposed BHP Blueprint.
Sec. 600.140 State termination of a BHP.
(a) If a State decides to terminate its BHP, the State must
complete all of the following prior to the effective date of the
termination or the indicated dates:
(1) Submit written notice to the Secretary no later than 120 days
prior to the proposed termination date accompanied by a proposed
transition plan that describes procedures to assist
[[Page 59144]]
consumers with transitioning to other insurance affordability programs.
(2) Resolve concerns expressed by the Secretary and obtain approval
by the Secretary of the transition plan.
(3) Submit written notice to all participating standard health plan
offerors, and enrollees that it intends to terminate the program at
least 90 days prior to the termination date. The notices to enrollees
must include information regarding the State's assessment of their
eligibility for all other insurance affordability programs in the
State. Notices must meet the accessibility and readability standards at
45 CFR 155.230(b).
(4) Transmit all information provided as part of an application,
and any information obtained or verified by the State or other agencies
administering insurance affordability programs via secure electronic
interface, promptly and without undue delay to the agency administering
the Exchange and the Medicaid agency as appropriate.
(5) Fulfill its contractual obligations to participating standard
health plan offerors including the payment of all negotiated rates for
participants, as well as plan oversight ensuring that participating
standard health plan offerors fulfill their obligation to cover
benefits for each enrollee.
(6) Fulfill data reporting requirements to HHS.
(7) Complete the annual financial reconciliation process with HHS
to ensure full compliance with Federal financial obligations.
(8) Refund any remaining balance in the BHP trust fund.
(b) [Reserved]
Sec. 600.142 HHS withdrawal of certification and termination of a
BHP.
(a) The Secretary may withdraw certification for a BHP Blueprint
based on a finding that the BHP Blueprint no longer meets the standards
for certification based on findings in the annual review, findings from
a program review conducted in accordance with Sec. 600.200 or from
significant evidence of beneficiary harm, financial malfeasance, fraud,
waste or abuse.
(b) Withdrawal of certification for a BHP Blueprint shall occur
only after the Secretary provides the State with notice of the proposed
finding that the standards for certification are not met or evidence of
harm or misconduct in program operations, a reasonable period for the
State to address the finding (either by substantiating compliance with
the standards for certification or submitting revisions to the
Blueprint, or securing HHS approval of a corrective action plan), and
an opportunity for a hearing before issuing a final finding.
(c) The Secretary shall make every reasonable effort to resolve
proposed findings without requiring withdrawal of BHP certification.
(d) The effective date of an HHS determination withdrawing BHP
certification shall not be earlier than 120 days following a final
finding of noncompliance with the standards for certification.
(e) Within 30 days following a final finding of noncompliance with
the standards for certification, the State shall submit a transition
plan that describes procedures to assist consumers with transitioning
to other insurance affordability programs, and shall comply with the
procedures described in Sec. 600.140(a)(2) through (8).
Sec. 600.145 State program administration and operation.
(a) Program operation. The State must implement its BHP in
accordance with the approved and certified State BHP Blueprint, any
approved modifications to the State BHP Blueprint and the requirements
of this chapter and applicable law.
(b) Eligibility. All persons have a right to apply for a
determination of eligibility and, if eligible, to be enrolled into
coverage that conforms to these regulations.
(c) Statewide program operation. A state choosing to operate a BHP
must operate it statewide.
(d) No caps on program enrollment. A State implementing a BHP must
not be permitted to limit enrollment by setting an income level below
the income standard prescribed in section 1331 of the Affordable Care
Act, having a fixed enrollment cap or imposing waiting lists.
(e) Core operations. A State operating a BHP must perform all of
the following core operating functions:
(1) Eligibility determinations as specified in Sec. 600.320.
(2) Eligibility appeals as specified in Sec. 600.335.
(3) Contracting with standard health plan offerors as specified in
Sec. 600.410.
(4) Oversight and financial integrity including, but not limited
to, operation of the Trust Fund specified at Sec. Sec. 600.705 and
600.710, compliance with annual reporting at Sec. 600.170, and
providing data required by Sec. 600.610 for Federal funding and
reconciliation processes.
(5) Consumer assistance as required in Sec. 600.150.
(6) Extending protections to American Indian/Alaska Natives
specified at Sec. 600.160, as well as comply with the Civil Rights and
nondiscrimination provisions specified at Sec. 600.165.
(7) Data collection and reporting as necessary for efficient and
effective operation of the program and as specified by HHS to support
program oversight.
(8) If necessary, program termination procedures at Sec. 600.145.
Sec. 600.150 Enrollment assistance and information requirements.
(a) Information disclosure. (1) The State must make accurate,
easily understood information available to potential applicants and
enrollees about the BHP coverage option along with information about
other insurance affordability programs.
(2) The State must provide accessible information on coverage,
including additional benefits that may be provided outside of the
standard health plan coverage, any tiers of coverage it has built into
the BHP, including who is eligible for each tier.
(3) The State must require participating standard health plans to
provide clear information on premiums; covered services including any
limits on amount, duration and scope of those services; applicable
cost-sharing using a standard format supplied by the State, and other
data specified in, and in accordance with, 45 CFR 156.220.
(4) The State must provide information in a manner consistent with
45 CFR 155.205(c).
(5) The State must require participating standard health plans to
make publicly available, and keep up to date, the names and locations
of currently participating providers.
(b) [Reserved]
Sec. 600.155 Tribal consultation.
The State must consult with Indian tribes located in the State on
the development and execution of the BHP Blueprint using the State or
Federal tribal consultation policy approved by the applicable State or
Federal Exchange.
Sec. 600.160 Protections for American Indian and Alaskan Natives.
(a) Enrollment. Indians must be extended the same special
enrollment status in BHP standard health plans as applicable to
enrollment in a QHP through the Exchange under 45 CFR 155.420(d)(8).
Indians will be allowed to enroll in, or change enrollment in, standard
health plans one time per month.
(b) Premiums. The State must permit Indian tribes, tribal
organizations and urban Indian organizations to pay standard health
plan premiums on
[[Page 59145]]
behalf of BHP eligible and enrolled individuals.
(c) Cost sharing. No cost sharing may be imposed on Indians under
the standard health plan.
(d) Requirement. Standard health plans must pay primary to health
programs operated by the Indian Health Service, Indian tribes, tribal
organizations, and urban Indian organizations for services that are
covered by a standard health plan.
Sec. 600.165 Nondiscrimination standards.
(a) The State and standard health plans, must comply with all
applicable civil rights statutes and requirements, including Title VI
of the Civil Rights Act of 1964, Title II of the Americans with
Disabilities Act of 1990, Section 504 of the Rehabilitation Act of
1973, the Age Discrimination Act of 1975, Section 1557 of the
Affordable Care Act, and 45 CFR part 80, part 84, and part 91 and 28
CFR part 35.
(b) The State must comply with the nondiscrimination provision at
45 CFR 155.120(c)(2).
Sec. 600.170 Annual report content and timing.
(a) Content. The State must submit an annual report that includes
any evidence of fraud, waste, or abuse on the part of participating
providers, plans, or the State BHP agency known to the State, and a
detailed data-driven review of compliance with the following:
(1) Eligibility verification requirements for program participation
as specified in Sec. 600.345.
(2) Limitations on the use of Federal funds received by the BHP as
specified in Sec. 600.705.
(3) Requirements to collect quality and performance measures from
all participating standard health plans focusing on quality of care and
improved health outcomes as specified in sections 1311(c)(3) and (4) of
the Affordable Care Act and as further described in Sec. 600.415.
(4) Requirements specified by the Secretary at least 120 days prior
to the date of the annual report as requiring further study to assess
continued State compliance with Federal law, regulations and the terms
of the State's certified Blueprint, based on a Federal review of the
BHP pursuant to Sec. 600.200, and/or a list of any outstanding
recommendations from any audit or evaluation conducted by the HHS
Office of Inspector General that have not been fully implemented,
including a statement describing the status of implementation and why
implementation is not complete,
(b) Timing. The annual reports, in the format specified by the
Secretary, are due 60 days before the end of each operational year.
Subpart C--Federal Program Administration
Sec. 600.200 Federal program reviews and audits.
(a) Federal compliance review of the State BHP. To determine
whether the State is complying with the Federal requirements and the
provision of its BHP Blueprint, HHS may review, as needed, but no less
frequently than annually, the compliance of the State BHP with
applicable laws, regulations and interpretive guidance. This review may
be based on the State's annual report submitted under Sec. 600.170, or
may be based on direct Federal review of State administration of the
BHP Blueprint through analysis of the State's policies and procedures,
reviews of agency operation, examination of samples of individual case
records, and additional reports and/or data as determined by the
Secretary.
(b) Action on compliance review findings. The compliance review
will identify the following action items:
(1) Requirements that need further study or data to assess
continued State compliance with Federal law, regulations and the terms
of the State's certified Blueprint. Such findings must be addressed in
the next State annual report due no more than 120 days after the date
of the issuance of the Federal compliance review.
(2) Requirements with which the State BHP does not appear to be in
compliance that could be the basis for withdrawal of BHP certification.
Such findings must be resolved by the State (either by substantiating
compliance with the standards for certification or submitting revisions
to the Blueprint) If not resolved, such action items can be the basis
for a proposed finding for withdrawal of BHP certification.
(3) Requirements with which the State BHP does not appear to be in
compliance that are not a basis for withdrawal of BHP certification but
require revision to the Blueprint must be resolved by the State. If not
resolved, such action items can be the basis for denial of other
Blueprint revisions.
(4) Improper use of BHP trust fund resources. The State and the BHP
trustees shall be given an opportunity to review and resolve concerns
regarding improper use of BHP trust funds as indicated in Sec.
600.715(a) through (c): either by substantiating the proper use of
trust fund resources or by taking corrective action which include
changes to procedures to ensure proper use of trust fund resources, and
restitution of improperly used resources to the trust fund.
(c) The HHS Office of Inspector General (OIG) may periodically
audit State operations and standard health plan practices as described
in Sec. 430.33(a) of this chapter. The State and the BHP trustees
shall be given an opportunity to review and resolve concerns about
improper use of BHP trust funds as indicated in Sec. 600.715(a)
through (c): either by substantiating the proper use of trust fund, or
by taking corrective action that includes changes to procedures to
ensure proper use of trust fund resources, and restitution of
improperly used resources to the trust fund. Final reports on those
audits shall be transmitted to both the State and the Secretary for
actions on findings.
Subpart D--Eligibility and Enrollment
Sec. 600.300 Basis, scope, and applicability.
(a) Statutory basis. This subpart interprets and implements section
1331(e) of the Affordable Care Act which sets forth eligibility
standards for the BHP and prohibits eligible individuals from being
treated as qualified individuals and enrolling in qualified health
plans offered through the Exchange.
(b) Scope and applicability. This subpart sets forth the
requirements for all BHPs established under section 1331 of the
Affordable Care Act regarding eligibility standards and application
screening and enrollment procedures.
Sec. 600.305 Eligible individuals.
(a) Eligibility standards The State must determine individuals
eligible to enroll in a standard health plan if they:
(1) Are residents of the State not eligible for the State's
Medicaid program consisting of at least the essential health benefits
codified in Sec. 600.405.
(2) Have household income which exceeds 133 percent but does not
exceed 200 percent of the FPL for the applicable family size, or, in
the case of an individual who is a lawfully present non-citizen,
ineligible for Medicaid due to such non-citizen status, whose household
income does not exceed 200 percent of the FPL for the applicable family
size.
(3) Are not eligible to enroll in affordable minimum essential
coverage. If an individual meets all other eligibility standards, and--
(i) Is eligible for, or enrolled in, Medicaid or CHIP that does not
meet the minimum essential coverage definition, the individual is
eligible to enroll in a standard health plan without regard to
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eligibility or enrollment in such other programs; or
(ii) Is eligible for Employer Sponsored Insurance (ESI) that is
unaffordable (as determined under section 5000A of the Internal Revenue
Code), the individual is eligible to enroll in a standard health plan.
(4) Are 64 years of age or younger.
(5) Are either a citizen or lawfully present non-citizen.
(6) Are not incarcerated, other than during a period pending
disposition of charges.
(b) Eligibility restrictions. The State may not impose conditions
of eligibility other than those identified in this section, including,
but not limited to, restrictions on eligibility based on geographic
location or imposition of an enrollment cap or waiting period for
individuals previously eligible for or enrolled in other coverage.
Sec. 600.310 Application.
(a) Single streamlined application. The State must use the single
streamlined application used by the State in accordance with Sec.
435.907(b) of this chapter and 45 CFR 155.405(a) and (b).
(b) Opportunity to apply and assistance with application. The terms
of Sec. Sec. 435.906 and 435.908 of this chapter, requiring the State
to provide individuals the opportunity to apply and receive assistance
with an application in the Medicaid program, apply in the same manner
to States in the administration of the BHP.
(c) Authorized representatives. The State may choose to permit the
use of an authorized representative designated by an applicant or
beneficiary to assist with the individual's application, eligibility
renewal and other ongoing communication with the BHP. If the State
chooses this option, the State must follow the standards set forth at
either 45 CFR 155.227 or 42 CFR 435.923.
Sec. 600.315 Certified application counselors.
The State may have a program to certify application counselors to
assist individuals to apply for enrollment in the BHP and other
insurance affordability programs. If the State chooses this option, the
State must follow the procedures and standards for such a program set
forth in the regulations at either 45 CFR 155.225 or 42 CFR 435.908.
Sec. 600.320 Determination of eligibility for and enrollment in a
standard health plan.
(a) Determining eligibility to enroll in a standard health plan may
be performed by a State or local governmental entity, including a
governmental entity that determines eligibility for Medicaid or CHIP,
and may be delegated by the state to an Exchange that is a government
agency.
(b) Timely determinations. The terms of 42 CFR 435.912 (relating to
timely determinations of eligibility under the Medicaid program) apply
to eligibility determinations for enrollment in a standard health plan
exclusive of Sec. 435.912(c)(3)(i). The standards established by the
State must be included in the BHP Blueprint.
(c) Effective date of eligibility. The State must establish a
uniform method of determining the effective date of eligibility for
enrollment in a standard health plan following either the Exchange
standards at 45 CFR 155.420(b)(1) or the Medicaid process at 42 CFR
435.915.
(d) Enrollment periods. The State must offer enrollment and special
enrollment periods equivalent to the Exchange at 45 CFR 155.410 and
155.420 or the State may follow the continuous eligibility standard of
Medicaid.
Sec. 600.330 Coordination with other insurance affordability
programs.
(a) Coordination. The State must establish eligibility and
enrollment mechanisms and procedures to maximize coordination with the
Exchange, Medicaid and CHIP. The terms of 45 CFR 155.345(a) regarding
the agreements between insurance affordability programs apply to a BHP.
The State BHP agency must fulfill the requirements of 42 CFR
435.1200(d) and (e) and, if applicable, paragraph (c) for BHP eligible
individuals.
(b) Coordinated determinations of eligibility. The agency
administering BHP must establish and maintain processes to make income
eligibility determinations using modified adjusted gross income (MAGI),
and to ensure that applications received by the agency, to the extent
warranted and permitted under delegations from other agencies
administering insurance affordability programs, also result in
eligibility assessments or determinations for those other programs. The
BHP must also accept applications transferred from other agencies
administering insurance affordability programs, and ensure that
individuals assessed or determined eligible for BHP by such other
agencies are afforded the opportunity to enroll in a standard health
plan without undue delay. Individuals submitting applications to any of
the aforementioned agencies must not be required to duplicate the
submission of information.
(c) Account transfers. The agency administering the BHP must
participate in the secure exchange of information with agencies
administering other insurance affordability programs, using the
standards set forth under 45 CFR 155.345(h) regarding electronic
account transfers.
(d) Notification to referring agency. The terms in Sec.
435.1200(d)(5) regarding the notification to other programs of the
final determination of eligibility apply equally to States
administering a BHP.
(e) Notice of decision concerning eligibility. Every application
for BHP shall result in a determination of eligibility or
ineligibility, unless the application has been withdrawn, the applicant
has died, or the applicant cannot be located. Notices of eligibility
determinations shall be coordinated with other insurance affordability
programs and Medicaid. Electronic notices shall be provided to the
extent consistent with Sec. 435.918(b).
Sec. 600.335 Appeals.
(a) Notice of eligibility appeal rights. Eligibility determinations
must include a notice of the right to appeal the determination, and
instructions regarding how to file an appeal.
(b) Appeals process. Individuals must be given the opportunity to
appeal BHP eligibility determinations through the appeals process of
the state's Medicaid program, as set forth in an agreement with the
Medicaid agency, however, this process may not confer a second level
appeal or an appeal to the federal Department of Health and Human
Services.
(c) Accessibility. The appeals process must be conducted in a
manner accessible to individuals with limited English proficiency and
persons with disabilities.
Sec. 600.340 Periodic redetermination and renewal of BHP eligibility.
(a) Period of eligibility. An individual is determined eligible for
a period of 12 months unless the eligibility is redetermined based on
new information received and verified from enrollee reports or data
sources. The State must require enrollees to report changes in
circumstances, at least to the extent that they would be required to
report such changes if enrolled in coverage through the Exchange,
consistent with 45 CFR 155.330(b).
(b) Renewal of coverage. If an enrollee remains eligible for
coverage in the BHP, the enrollee will be afforded notice of a
reasonable opportunity to change plans to the extent the BHP offers a
choice of plans, and shall remain in the plan selected for the
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previous year unless such enrollee terminates coverage from the plan by
selecting a new plan or withdrawing from a plan.
(c) Procedures. The State shall choose to apply equally all the
redetermination procedures described in either 45 CFR 155.335 or 42 CFR
435.916(a) in administering a BHP.
(d) Verification. The State must verify information needed to
redetermine and renew eligibility in accordance with Sec. 600.345 and
comply with the requirements set forth in Sec. 600.330 relating to
screening individuals for other insurance affordability programs and
transmitting such individuals' electronic accounts and other relevant
information to the other program, as appropriate.
(e) Notice to enrollee. The State must provide an enrollee with an
annual notice of redetermination of eligibility. The annual notice
should include all current information used for the most recent
eligibility determination. The enrollee is required to report any
changes with respect to information listed within the notice within 30
days of the date of the notice. The State must verify information in
accordance with Sec. 600.345.
Sec. 600.345 Eligibility verification.
(a) The State must verify the eligibility of an applicant or
beneficiary for BHP consistent either with the standards and procedures
set forth in--
(1) Medicaid regulations at Sec. Sec. 435.945 through 435.956 of
this chapter; or
(2) Exchange regulations at 45 CFR 155.315 and 155.320.
(b) [Reserved]
Sec. 600.350 Privacy and security of information.
The State must comply with the standards and procedures set forth
in 45 CFR 155.260(b) and (c) as are applicable to the operation of the
BHP.
Subpart E--Standard Health Plan
Sec. 600.400 Basis, scope, and applicability.
(a) Statutory basis. This subpart implements sections 1331(b), (c),
and (g) of the Affordable Care Act, which set forth provisions
regarding the minimum coverage standards under BHP, as well as the
delivery of such coverage, including the contracting process for
standard health plan offerors participating in the BHP.
(b) Scope and applicability. This subpart consists of provisions
relating to all BHPs for the delivery of, at a minimum, the ten
essential health benefits as described in section 1302(b) of the
Affordable Care Act, the contracting process by which States must
contract for the provision of standard health plans, the minimum
requirements States must include in their standard health plan
contracts, the minimum coverage standards provided by the standard
health plan offeror, and other applicable requirements to enhance the
coordination of the provision of standard health plan coverage.
Sec. 600.405 Standard health plan coverage.
(a) Essential Health Benefits (EHBs). Standard health plan coverage
must include, at a minimum, the essential health benefits as determined
and specified under 45 CFR 156.110, and 45 CFR 156.122 regarding
prescription drugs, except that States may select more than one base
benchmark option from those codified at 45 CFR 156.100 for establishing
essential health benefits for standard health plans. Additionally,
States must comply with 45 CFR 156.122(a)(2) by requiring participating
plans to submit their drug list to the State.
(b) Additional required benefits. Where the standard health plan
for BHP is subject to State insurance mandates, the State shall adopt
the determination of the Exchange at 45 CFR 155.170(a)(3) in
determining which benefits enacted after December 31, 2011 are in
addition to the EHBs.
(c) Periodic review. Essential health benefits must include any
changes resulting from periodic reviews required by section
1302(b)(4)(G) of the Affordable Care Act. The provision of such
essential health benefits must meet all the requirements of 45 CFR
156.115.
(d) Non-discrimination in benefit design. The terms of 45 CFR
156.125 apply to standard health plans offered under the BHP.
(e) Compliance. The State must comply with prohibitions on federal
funding for abortion services equivalent to the Exchange at 45 CFR
156.280.
Sec. 600.410 Competitive contracting process.
(a) General requirement. In order to receive initial HHS
certification as described in Sec. 600.120, the State must assure in
its BHP Blueprint that it complies with the requirements set forth in
this section.
(b) Contracting process. The State must:
(1) Conduct the contracting process in a manner providing full and
open competition consistent with the standards of 45 CFR 92.36(b)
through (i);
(2) Include a negotiation of the elements described in paragraph
(d) of this section on a fair and adequate basis; and
(3) Consider the additional elements described in paragraph (e) of
this section.
(c) Initial implementation exceptions. (1) If a State is not able
to implement a competitive contracting process described in paragraph
(b) of this section for program year 2015, the State must include a
justification as to why it cannot meet the conditions in paragraph (b),
as well as a description of the process it will use to enter into
contracts for the provision of standard health plans under BHP.
(2) The State must include a proposed timeline that implements a
competitive contracting process, as described in paragraph (b) of this
section, for program year 2016.
(3) Initial implementation exceptions are subject to HHS approval
consistent with the BHP Blueprint review process established in Sec.
600.120, and may only be in effect for benefit year 2015.
(d) Negotiation criteria. The State must assure that its
competitive contracting process includes the negotiation of:
(1) Premiums and cost sharing, consistent with the requirements at
Sec. Sec. 600.505(e) and 600.510(e);
(2) Benefits, consistent with the requirements at Sec. 600.405;
(3) Inclusion of innovative features, such as:
(i) Care coordination and care management for enrollees, with a
particular focus on enrollees with chronic health conditions;
(ii) Incentives for the use of preventive services; and
(iii) Establishment of provider-patient relationships that maximize
patient involvement in their health care decision-making, including the
use of incentives for appropriate health care utilization and patient
choice of provider.
(e) Other considerations: The State shall also include in its
competitive process criteria to ensure:
(1) Consideration of health care needs of enrollees;
(2) Local availability of, and access, to health care providers;
(3) Use of a managed care process, or a similar process to improve
the quality, accessibility, appropriate utilization, and efficiency of
services provided to enrollees;
(4) Performance measures and standards focused on quality of care
and improved health outcomes as specified in Sec. 600.415;
(5) Coordination between other health insurance affordability
programs to ensure enrollee continuity of care as described in Sec.
600.425; and
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(6) Measures to prevent, identify, and address fraud, waste and
abuse and ensure consumer protections.
(f) Discrimination. Nothing in the competitive process shall permit
or encourage discrimination in enrollment based on pre-existing
conditions or other health status-related factors.
Sec. 600.415 Contracting qualifications and requirements.
(a) Eligible offerors for standard health plan contracts. A State
may enter into contracts for the administration and provision of two or
more standard health plans under the BHP with a:
(1) Licensed health maintenance organization.
(2) Licensed health insurance insurer.
(3) Network of health care providers demonstrating capacity to meet
the criteria set forth in Sec. 600.410(d).
(4) Non-licensed health maintenance organization participating in
Medicaid and/or CHIP.
(b) General contract requirements. (1) A State contracting with
eligible standard health plan offerors described in paragraph (a) of
this section must include contract provisions addressing network
adequacy, service provision and authorization, quality and performance,
enrollment procedures, disenrollment procedures, noticing and appeals,
provisions protecting the privacy and security of personally
identifiable information, and other applicable contract requirements as
determined by the Secretary to the extent that the service delivery
model furthers the objectives of the program.
(2) All contracts under this part must include provisions that
define a sound and complete procurement contract, as required by 45 CFR
92.36(i).
(3) To the extent that the standard health plan is health insurance
coverage offered by a health insurance issuer, the contract must
provide that the medical loss ratio is at least 85 percent.
(c) Notification of State election. To receive HHS certification,
the State must include in its BHP Blueprint the standard set of
contract requirements described in paragraph (b) of this section that
will be incorporated into its standard health plan contracts.
Sec. 600.420 Enhanced availability of standard health plans.
(a) Choice of standard health plans. The State must include in its
BHP Blueprint an assurance that at least two standard health plans are
offered under BHP, and if applicable, a description of how it will
further ensure enrollee choice of standard health plans.
(b) Use of regional compacts. (1) A State may enter into a joint
procurement with other States to negotiate and contract with standard
health plan offerors to administer and provide standard health plans
statewide, or in geographically specific areas within the States, to
BHP enrollees residing in the participating regional compact States.
(2) A State electing the option described in paragraph (b)(1) of
this section must include in its BHP Blueprint all of the following:
(i) The other State(s) entering into the regional compact.
(ii) The specific areas within the participating States that the
standard health plans will operate, if applicable.
(A) If the State contracts for the provision of a geographically
specific standard health plan, the State must assure that enrollees,
regardless of residency within the State, continue to have choice of at
least two standard health plans.
(B) [Reserved]
(iii) An assurance that the competitive contracting process used in
the joint procurement of the standard health plans complies with the
requirements set forth in Sec. 600.410.
(iv) Any variations that may occur as a result of regional
differences between the participating states with respect to benefit
packages, premiums and cost sharing, contracting requirements and other
applicable elements as determined by HHS.
Sec. 600.425 Coordination with other insurance affordability
programs.
A State must describe in its BHP Blueprint how it will ensure
coordination for the provision of health care services to promote
enrollee continuity of care between Medicaid, CHIP, Exchange and any
other state-administered health insurance programs.
Subpart F--Enrollee Financial Responsibilities
Sec. 600.500 Basis, scope, and applicability.
(a) Statutory basis. This subpart implements section 1331(a) of the
Affordable Care Act, which sets forth provisions regarding the
establishment of the BHP and requirements regarding monthly premiums
and cost sharing for enrollees.
(b) Scope and applicability. This subpart consists of provisions
relating to the imposition of monthly premiums and cost-sharing under
all state BHPs.
Sec. 600.505 Premiums.
(a) BHP Blueprint requirements. For premiums imposed on enrollees,
the State must include, or if applicable, assure in its BHP Blueprint:
(1) The monthly premium imposed on any enrollee does not exceed the
monthly premium that the enrollee would have been required to pay had
he or she enrolled in a plan with a premium equal to the premium of the
applicable benchmark plan, as defined in 26 CFR 1.36B-3(f). The State
must assure that when determining the amount of the enrollee's monthly
premium, the State took into account reductions in the premium
resulting from premium tax credit that the enrollee would have been
paid on the enrollee's behalf.
(2) The group or groups of enrollees subject to premiums.
(3) The collection method and procedure for the payment of an
enrollee's premium.
(4) The consequences for an enrollee or applicant who does not pay
a premium.
(b) [Reserved]
Sec. 600.510 Cost-sharing.
(a) BHP Blueprint requirements. For cost sharing imposed on
enrollees, the State must include, or if applicable, assure in its BHP
Blueprint:
(1) The cost sharing imposed on enrollees meet the standards
detailed in Sec. 600.520(c).
(2) The group or groups of enrollees subject to the cost sharing.
(3) An assurance that the State has established an effective system
to monitor and track the cost-sharing standards consistent with Sec.
600.520(b) and (c) of this part.
(b) Cost sharing for preventive health services. A State may not
impose cost sharing with respect to the preventive health services or
items, as defined in, and in accordance with 45 CFR 147.130.
Sec. 600.515 Public schedule of enrollee premium and cost sharing.
(a) The State must ensure that applicants and enrollees have access
to information about all of the following, either upon request or
through an Internet Web site:
(1) The amount of and types of enrollee premiums and cost sharing
for each standard health plan that would apply for individuals at
different income levels.
(2) The consequences for an applicant or an enrollee who does not
pay a premium.
(b) The information described in paragraph (a) of this section must
be made available to applicants for standard health plan coverage and
enrollees in such coverage, at the time of enrollment and reenrollment,
after a redetermination of eligibility, when premiums, cost sharing,
and annual
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limitations on cost sharing are revised, and upon request by the
individual.
Sec. 600.520 General cost-sharing protections.
(a) Cost-sharing protections for lower income enrollees. The State
may vary premiums and cost sharing based on household income only in a
manner that does not favor enrollees with higher income over enrollees
with lower income.
(b) Cost-sharing protections to ensure enrollment of Indians. A
State must ensure that standard health plans meet the standards in
accordance with 45 CFR 156.420(b)(1) and (d).
(c) Cost-sharing standards. A State must ensure that standard
health plans meet:
(1) The standards in accordance with 45 CFR 156.420(c) and (e); and
(2) The cost-sharing reduction standards in accordance with 45 CFR
156.420(a)(1) for an enrollee with household income at or below 150
percent of the FPL, and 45 CFR 156.420(a)(2) for an enrollee with
household income above 150 percent of the FPL.
(3) The State must establish an effective system to monitor
compliance with the cost-sharing reduction standards in paragraph (c)
of this section, and the cost-sharing protections to ensure enrollment
of Indians in paragraph (b) of this section to ensure that enrollees
are not held responsible for such monitoring activity.
Sec. 600.525 Disenrollment procedures and consequences for nonpayment
of premiums.
(a) Disenrollment procedures due to nonpayment of premium. (1) A
State must assure in its BHP Blueprint that it is in compliance with
the disenrollment procedures described in 45 CFR 155.430.
(2) A State electing to enroll eligible individuals in accordance
with 45 CFR 155.410 and 420 must comply with the premium grace period
standards set forth in 45 CFR 156.270 for required premium payment
prior to disenrollment.
(3) A State electing to enroll eligible individuals throughout the
year must provide an enrollee a 30-day grace period to pay any required
premium prior to disenrollment.
(b) Consequences of nonpayment of premium. (1) A State electing to
enroll eligible individuals in accordance with 45 CFR 155.410 and 420
may not restrict reenrollment to BHP beyond the next open enrollment
period.
(2) A State electing to enroll eligible individuals throughout the
year must comply with the reenrollment standards set forth in Sec.
457.570(c). If applicable, the State must define the length of its
premium lockout period in its BHP Blueprint.
Subpart G--Payment to States
Sec. 600.600 Basis, scope, and applicability.
(a) Statutory basis. This subpart implements section 1331(d)(1) and
(3) of the Affordable Care Act regarding the transfer of Federal funds
to a State's BHP trust fund and the Federal payment amount to State for
the provision of BHP.
(b) Scope and applicability. This subpart consists of provisions
relating to the methodology used to calculate the amount of payment to
a state in a given Federal fiscal year for the provision of BHP and the
process and procedures by which the Secretary establishes a State's BHP
payment amount.
Sec. 600.605 BHP payment methodology.
(a) General calculation. The Federal payment for an eligible
individual in a given Federal fiscal year is the sum of the premium tax
credit component, as described in paragraph (a)(1) of this section, and
the cost-sharing reduction component, as described in paragraph (a)(2)
of this section.
(1) Premium tax credit component. The premium tax credit component
equals 95 percent of the premium tax credit for which the eligible
individual would have qualified had he or she been enrolled in a
qualified health plan through an Exchange in a given calendar year,
adjusted by the relevant factors described in paragraph (b) of this
section.
(2) Cost-sharing reduction component. The cost-sharing reduction
component equals 95 percent of the cost of the cost-sharing reductions
for which the eligible individual would have qualified had he or she
been enrolled in a qualified health plan through an Exchange in a given
calendar year adjusted by the relevant factors described in paragraph
(b) of this section.
(b) Relevant factors in the payment methodology. In determining the
premium tax credit and cost-sharing reduction components described in
paragraph (a) of this section, the Secretary will consider the
following factors to determine applicable adjustments:
(1) Age of the enrollee;
(2) Income of the enrollee;
(3) Self-only or family coverage;
(4) Geographic differences in average spending for health care
across rating areas;
(5) Health status of the enrollee for purposes of determining risk
adjustment payments and reinsurance payments had the enrollee been
enrolled in a qualified health plan through an Exchange;
(6) Reconciliation of the premium tax credit or cost-sharing
reductions had such reconciliation occurred if an enrollee had been
enrolled in a qualified health plan through an Exchange;
(7) Marketplace experience in other states with respect to Exchange
participation and the effect of the premium tax credit and cost-sharing
reductions provided to residents, particularly those residents with
income below 200 percent of the FPL; and
(8) Other factors affecting the development of the methodology as
determined by the Secretary.
(c) Annual adjustments to payment methodology. The Secretary will
adjust the payment methodology on a prospective basis to adjust for any
changes in the calculation of the premium tax credit and cost-sharing
reduction components.
Sec. 600.610 Secretarial determination of BHP payment amount.
(a) Proposed payment notice. (1) Beginning in FY 2015 and each
subsequent year thereafter, the Secretary will determine and publish in
a Federal Register notice the next fiscal year's BHP payment
methodology. The Secretary will publish this notice annually in October
upon receiving certification from the Chief Actuary of CMS.
(2) A State may be required to submit data in accordance with the
published proposed payment notice in order for the Secretary to
determine the State's payment rate as described in paragraph (b) of
this section.
(b) Final payment notice. (1) The Secretary will determine and
publish the final BHP payment methodology and BHP payment amounts
annually in February in a Federal Register notice.
(2) Calculation of payment rates. State payment rates are
determined by the Secretary using the final BHP payment methodology,
data requested in the proposed payment notice described in paragraph
(a) of this section, and, if needed, other applicable data as
determined by the Secretary.
(c) State specific aggregate BHP payment amounts. (1) Prospective
aggregate payment amount. The Secretary will determine, on a quarterly
basis, the prospective aggregate BHP payment amount by multiplying the
payment rates described in paragraph (b) of this section by the
projected number of enrollees. This calculation would be made for each
category of enrollees based on enrollee
[[Page 59150]]
characteristics and the other relevant factors considered when
determining the payment methodology. The prospective aggregate BHP
payment amount would be the sum of the payments determined for each
category of enrollees for a State.
(2) Retrospective adjustment to state specific aggregate payment
amount for enrollment and errors. (i) Sixty days after the end of each
fiscal year quarter, the Secretary will calculate a retrospective
adjustment to the previous quarter's specific aggregate payment amount
by multiplying the payment rates described in paragraph (b) of this
section by actual enrollment for the respective quarter. This
calculation would be made for each category of enrollees based on
enrollee characteristics and the other relevant factors considered when
determining the payment methodology. The adjusted BHP payment amount
would be the sum of the payments determined for each category of
enrollees for a State.
(ii) Upon determination that a mathematical error occurred during
the application of the BHP funding methodology, the Secretary will
recalculate the state's BHP payment amount and make any necessary
adjustments in accordance with paragraph (c)(2)(iii) of this section.
(iii) Any difference in the adjusted payment and the prospective
aggregate payment amount will result in either:
(A) A deposit of the difference amount into the State's BHP trust
fund; or
(B) A reduction in the upcoming quarter's prospective aggregate
payment as described in paragraph (c)(1) of this section by the
difference amount.
Sec. 600.615 Deposit of Federal BHP payment.
HHS will make quarterly deposits into the state's BHP trust fund
based on the aggregate quarterly payment amounts described in Sec.
600.610(c).
Subpart H--BHP Trust Fund
Sec. 600.700 Basis, scope, and applicability.
(a) Statutory basis. This subpart implements section 1331(d)(2) of
the Affordable Care Act, which set forth provisions regarding BHP trust
fund expenditures, fiscal policies and accountability standards and
restitution to the BHP trust fund for unallowable expenditures.
(b) Scope and applicability. This subpart sets forth a framework
for BHP trust funds and accounting, establishing sound fiscal policies
and accountability standards and procedures for the restitution of
unallowable BHP trust fund expenditures.
Sec. 600.705 BHP trust fund.
(a) Establishment of BHP trust fund. (1) The State must establish a
BHP trust fund with an independent entity, or as a subset account
within its General Fund.
(2) The State must identify trustees responsible for oversight of
the BHP trust fund.
(3) Trustees must specify individuals with the power to authorize
withdrawal of funds for allowable trust fund expenditures.
(b) Non-Federal deposits. The State may deposit non-Federal funds,
including such funds from enrollees, providers or other third parties
for standard health plan coverage, into its BHP trust fund. Upon
deposit, such funds will be considered BHP trust funds, must remain in
the BHP trust fund and meet the standards described in paragraphs (c)
and (d) of this section.
(c) Allowable trust fund expenditures. BHP trust funds may only be
used to:
(1) Reduce premiums and cost sharing for eligible individuals
enrolled in standard health plans under BHP; or
(2) Provide additional benefits for eligible individuals enrolled
in standard health plans as determined by the State.
(d) Limitations. BHP trust funds may not be expended for any
purpose other than those specified in paragraph (c) of this section. In
addition, BHP trust funds may not be used for other purposes including
but not limited to:
(1) Determining the amount of non-Federal funds for the purposes of
meeting matching or expenditure requirements for Federal funding;
(2) Program administration of BHP or any other program;
(3) Payment to providers not associated with BHP services or
requirements; or
(4) Coverage for individuals not eligible for BHP.
(e) Year-to-year carryover of trust funds. A State may maintain a
surplus, or reserve, of funds in its trust through the carryover of
unexpended funds from year-to-year. Expenditures from this surplus must
be made in accordance with paragraphs (b) and (c) of this section.
Sec. 600.710 Fiscal policies and accountability.
A BHP Blueprint must provide that the BHP administering agency
will:
(a) Accounting records. Maintain an accounting system and
supporting fiscal records to assure that the BHP trust funds are
maintained and expended in accord with applicable Federal requirements,
such as OMB Circulars A-87 and A-133.
(b) Annual certification. Obtain an annual certification from the
BHP trustees, the State's chief financial officer, or designee,
certifying all of the following:
(1) The State's BHP trust fund financial statements for the fiscal
year.
(2) The BHP trust funds are not being used as the non-Federal share
for purposes of meeting any matching or expenditure requirement of any
Federally-funded program.
(3) The use of BHP trust funds is in accordance with Federal
requirements consistent with those specified for the administration and
provision of the program.
(c) Independent audit. Conduct an independent audit of BHP trust
fund expenditures, consistent with the standards set forth in chapter 3
of the Government Accountability Office's Government Auditing
Standards, over a 3-year period to determine that the expenditures made
during the 3-year period were allowable as described in Sec.
600.705(b) and in accord with other applicable Federal requirements.
The independent audit may be conducted as a sub-audit of the single
state audit conducted in accordance with OMB Circular A-133, and must
follow the cost accounting principles in OMB Circular A-87.
(d) Annual reports. Publish annual reports on the use of funds,
including a separate line item that tracks the use of funds described
in Sec. 600.705(e) to further reduce premiums and cost sharing, or for
the provision of additional benefits within 10 days of approval by the
trustees. If applicable for the reporting year, the annual report must
also contain the findings for the audit conducted in accordance with
paragraph (c) of this section.
(e) Restitution. Establish and maintain BHP trust fund restitution
procedures.
(f) Record retention. Retain records for 3 years from date of
submission of a final expenditure report.
(g) Record retention related to audit findings. If any litigation,
claim, financial management review, or audit is started before the
expiration of the 3-year period, the records shall be retained until
all litigation, claims or audit findings involving the records have
been resolved and final action taken.
Sec. 600.715 Corrective action, restitution, and disallowance of
questioned BHP transactions.
(a) Corrective action. When a question has been raised concerning
the authority for BHP trust fund expenditures in an OIG report, other
HHS compliance review, State audit or otherwise, the BHP trustees and
the State shall review the issues and develop a written
[[Page 59151]]
response no later than 60 days upon receipt of such a report, unless
otherwise specified in the report, review or audit. To the extent
determined necessary in that review, the BHP trustees and State shall
implement changes to fiscal procedures to ensure proper use of trust
fund resources.
(b) Restitution. To the extent that the State and BHP trustees
determine that BHP trust funds may not have been properly spent, they
must ensure restitution to the BHP trust fund of the funds in question.
Restitution may be made directly by the BHP trustees, by the State, or
by a liable third party. The State or the BHP trustees may enter into
indemnification agreements assigning liability for restitution of funds
to the BHP trust fund.
(c) Timing of restitution. Restitution to the BHP trust fund for
any unallowable expenditure may occur in a lump sum amount, or in equal
installment amounts. Restitution to the BHP trust fund cannot exceed a
2-year period from the date of the written response in accordance with
paragraph (a) of this section.
(d) HHS disallowance of improper BHP trust fund expenditures. The
State shall return to HHS the amount of federal BHP funding that HHS
has determined was expended for unauthorized purposes, when no
provision has been made to restore the funding to the BHP trust fund in
accordance with paragraph (b) of this section (unless the restitution
does not comply with the timing conditions described in paragraphs (c)
of this section). When HHS determines that federal BHP funding is not
allowable, HHS will provide written notice to the state and BHP
Trustees containing:
(1) The date or dates of the improper expenditures from the BHP
trust fund;
(2) A brief written explanation of the basis for the determination
that the expenditures were improper; and
(3) Procedures for administrative reconsideration of the
disallowance based on a final determination.
(e) Administrative reconsideration of BHP trust fund disallowances.
(1) BHP Trustees or the State may request reconsideration of a
disallowance within 60 days after receipt of the disallowance notice
described in paragraph (d)(1) of this section by submitting a written
request for review, along with any relevant evidence, documentation, or
explanation, to HHS.
(2) After receipt of a reconsideration request, if the Secretary
(or a designated hearing officer) determines that further proceedings
would be warranted, the Secretary may issue a request for further
information by a specific date, or may schedule a hearing to obtain
further evidence or argument.
(3) The Secretary, or designee, shall issue a final decision within
90 days after the later of the date of receipt of the reconsideration
request or date of the last scheduled proceeding or submission.
(f) Return of disallowed BHP funding. Disallowed federal BHP
funding must be returned to HHS within 60 days after the later of the
date of the disallowance notice or the final administrative
reconsideration upholding the disallowance. Such repayment cannot be
made from BHP trust funds, but must be made with other, non-Federal
funds.
Title 45
PART 144--REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE
0
2. The authority citation for part 144 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.
0
3. Section 144.103 is amended by revising the definition of
``individual market'' to read as follows:
Sec. 144.103 Definitions.
* * * * *
Individual market means the market for health insurance coverage
offered to individuals other than in connection with a group health
plan, or other than coverage offered pursuant to a contract between the
health insurance issuer with the Medicaid, Children's Health Insurance
Program, or Basic Health programs.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical
Assistance Program)
Dated: September 3, 2013.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
Approved: September 10, 2013.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2013-23292 Filed 9-20-13; 4:15 pm]
BILLING CODE 4120-01-P