Proposed Rule2023-25576
Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment Parameters for 2025; Updating Section 1332 Waiver Public Notice Procedures; Medicaid; Consumer Operated and Oriented Plan (CO-OP) Program; and Basic Health Program
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 24, 2023
Issuing agencies
Treasury DepartmentHealth and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This proposed rule includes payment parameters and provisions related to the HHS-operated risk adjustment program, as well as 2025 user fee rates for issuers offering qualified health plans (QHPs) through Federally-facilitated Exchanges (FFEs) and State-based Exchanges on the Federal platform (SBE-FPs). This proposed rule also includes proposed requirements related to the auto re-enrollment hierarchy; essential health benefits; failure to file and reconcile; non-standardized plan option limits and an exceptions process; standardized plan options; special enrollment periods (SEPs); direct enrollment (DE) entities; Insurance Affordability Program enrollment eligibility verification process; requirements for agents, brokers, web-brokers, and DE entities assisting Exchange consumers; network adequacy; public notice procedures for section 1332 waivers; prescription drug benefits; updates to the Consumer Operated and Oriented Plan (CO-OP) Program; State flexibility on the financial methodology used for Medicaid eligibility determinations for non- modified adjusted gross income (MAGI) populations; and State flexibility on the effective date of coverage in the Basic Health Program (BHP). A summary of this proposed rule may be found at https:// www.regulations.gov/.
Full Text
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[Federal Register Volume 88, Number 225 (Friday, November 24, 2023)]
[Proposed Rules]
[Pages 82510-82655]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-25576]
[[Page 82509]]
Vol. 88
Friday,
No. 225
November 24, 2023
Part II
Department of the Treasury
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31 CFR Part 33
Department of Health & Human Services
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Centers for Medicare & Medicaid Services
Office of the Secretary
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42 CFR Parts 435 and 600
45 CFR Parts 153, 155, and 156
Patient Protection and Affordable Care Act, HHS Notice of Benefit and
Payment Parameters for 2025; Updating Section 1332 Waiver Public Notice
Procedures; Medicaid; Consumer Operated and Oriented Plan (CO-OP)
Program; and Basic Health Program; Proposed Rule
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 /
Proposed Rules
[[Page 82510]]
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DEPARTMENT OF THE TREASURY
31 CFR Part 33
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 435 and 600
Office of the Secretary
45 CFR Parts 153, 155, and 156
[CMS-9895-P]
RIN 0938-AV22
Patient Protection and Affordable Care Act, HHS Notice of Benefit
and Payment Parameters for 2025; Updating Section 1332 Waiver Public
Notice Procedures; Medicaid; Consumer Operated and Oriented Plan (CO-
OP) Program; and Basic Health Program
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS); Department of the Treasury.
ACTION: Proposed rule.
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SUMMARY: This proposed rule includes payment parameters and provisions
related to the HHS-operated risk adjustment program, as well as 2025
user fee rates for issuers offering qualified health plans (QHPs)
through Federally-facilitated Exchanges (FFEs) and State-based
Exchanges on the Federal platform (SBE-FPs). This proposed rule also
includes proposed requirements related to the auto re-enrollment
hierarchy; essential health benefits; failure to file and reconcile;
non-standardized plan option limits and an exceptions process;
standardized plan options; special enrollment periods (SEPs); direct
enrollment (DE) entities; Insurance Affordability Program enrollment
eligibility verification process; requirements for agents, brokers,
web-brokers, and DE entities assisting Exchange consumers; network
adequacy; public notice procedures for section 1332 waivers;
prescription drug benefits; updates to the Consumer Operated and
Oriented Plan (CO-OP) Program; State flexibility on the financial
methodology used for Medicaid eligibility determinations for non-
modified adjusted gross income (MAGI) populations; and State
flexibility on the effective date of coverage in the Basic Health
Program (BHP). A summary of this proposed rule may be found at <a href="https://www.regulations.gov/">https://www.regulations.gov/</a>.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, by January 8, 2024.
ADDRESSES: In commenting, please refer to file code CMS-9895-P.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to <a href="http://www.regulations.gov">http://www.regulations.gov</a>. 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-9895-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-9895-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Jeff Wu, (301) 492-4305, Rogelyn McLean, (301) 492-4229, Grace
Bristol, (410) 786-8437, for general information.
Joshua Paul, (301) 492-4347, Jackie Wilson, (301) 492-4286, or John
Barfield, (301) 492-4433, for matters related to HHS-operated risk
adjustment.
John Barfield, (301) 492-4433, or Leanne Scott, (410) 786-1045, for
matters related to user fees.
Brian Gubin, (410) 786-1659, for matters related to agent, broker,
and web-broker guidelines.
Marisa Beatley, (301) 492-4307, for matters related to the
verification process related to eligibility for insurance affordability
programs and current sources of income.
Carolyn Kraemer, (301) 492-4197, for matters related to auto re-
enrollment in the Exchanges.
Nicholas Eckart, (301) 492-4452, for matters related to enrollment
of qualified individuals into QHPs and termination of Exchange
enrollment or coverage for qualified individuals.
Hollynd Boyden, (667) 414-0105, for matters related to the monthly
150 percent Federal poverty level special enrollment period.
Alexandra Gribbin, (667) 290-9977, for matters related to dental
coverage.
Nikolas Berkobien, (667) 290-9903, for matters related to
standardized plan options and non-standardized plan option limits.
LeAnn Brodhead, (667) 290-8805, for matters related to the
essential health benefits prescription drug benefit.
Carolyn Sabini, (667) 290-9750, for matters related to the
essential health benefits benchmark plan policy.
Agata Pelka, (667) 290-9979, for matters related to mandates in
addition to the essential health benefits.
Emily Martin, (301) 492-4423, or Deborah Hunter, (443) 386-3651,
for matters related to network adequacy and ECPs.
Shilpa Gogna, (301) 492-4257, or Jenny Chen, (301) 492-5156, for
matters related to approval of a State Exchange and State Exchange
Blueprint requirements.
Lina Rashid, (443) 902-2823, or Kimberly Koch (202) 381-6934, for
matters related to section 1332 waivers.
Jacquelyn Rudich, (301) 492-5211, for matters related to netting of
payments.
Kevin Kendrick, (301) 509-6612, for matters related to the CO-OP
program.
Carrie Grubert, (410) 786-8319, for matters related to the Basic
Health Program (BHP) provision.
Gene Coffey, (410) 786-2234, for matters related to Medicaid
eligibility.
Arshdeep Dhanoa, (301) 492-4400, for matters related to
incarceration verification for QHP eligibility and periodic data
matching for dual and deceased enrollees.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive Summary
II. Background
A. Legislative and Regulatory Overview
B. Summary of Major Provisions
III. Provisions of the Proposed Regulations
A. 31 CFR Part 33 and 45 CFR Part 155--Section 1332 Waivers
B. 42 CFR Parts 435 and 600--Medicaid Eligibility for the
States, District of Columbia, the Northern Mariana Islands and
American Samoa, and Administrative Practice and Procedure, Health
Care, Health insurance, Intergovernmental Relations, Penalties,
Reporting and Recordkeeping Requirements.
C. 45 CFR Part 153--Standards Related to Reinsurance, Risk
Corridors, and HHS Risk Adjustment
D. 45 CFR Part 155--Exchange Establishment Standards and Other
Related Standards Under the Affordable Care Act
E. 45 CFR Part 156--Health Insurance Issuer Standards Under the
Affordable Care Act, Including Standards Related to Exchanges
[[Page 82511]]
IV. Collection of Information Requirements
A. Wage Estimates
B. ICRs Regarding Proposed Amendments to Normal Public Notice
Requirements (31 CFR 33.112, 31 CFR 33.120 and 45 CFR Part 155.1312,
and 45 CFR 155.1320)
C. ICRs Regarding Basic Health Program Regulations (42 CFR
600.320)
D. ICRs Regarding Election To Operate an Exchange After 2014 (45
CFR 155.106)
E. ICRs Regarding Adding and Amending Language To Ensure Web-
Brokers Operating in State Exchanges Meet Certain Requirements
Applicable in the FFEs and SBE-FPs (45 CFR 155.220)
F. ICRs Regarding Establishing Requirements for DE Entities
Mandating <a href="http://HealthCare.gov">HealthCare.gov</a> Changes To Be Reflected on DE Entity Non-
Exchange Websites Within a Notice Period Set by HHS (45 CFR
155.221(b)(6))
G. ICRs Regarding Adding and Amending Language To Ensure DE
Entities Operating in State Exchanges Meet Certain Standards
Applicable in the FFEs and SBE-FPs (45 CFR 155.221)
H. ICRs Regarding Failure To File and Reconcile Process (45 CFR
155.305(f)(4))
I. ICRs Regarding Verification Process Related to Eligibility
for Enrollment in a QHP Through the Exchange (45 CFR 155.315(e))
K. ICRs Regarding Eligibility Redetermination During a Benefit
Year (45 CFR 155.330(d))
L. ICRs Regarding Establishment of Exchange Network Adequacy
Standards (45 CFR 155.1050)
M. ICRs Regarding the State Selection of EHB-Benchmark Plans for
Plan Years Beginning on or After January 1, 2027 (45 CFR 156.111)
N. ICRs Regarding Non-Standardized Plan Option Limits (45 CFR
156.202)
O. Summary of Annual Burden Estimates for Proposed Requirements
P. Submission of PRA-Related Comments
V. Response to Comments
VI. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Impact Estimates of the Payment Notice Provisions and
Accounting Table
D. Regulatory Alternatives Considered
E. Regulatory Flexibility Act (RFA)
F. Unfunded Mandates Reform Act (UMRA)
G. Federalism
I. Executive Summary
We propose changes to the provisions and parameters implemented
through prior rulemaking to implement the Patient Protection and
Affordable Care Act (ACA).\1\ These proposals are published under the
authority granted to the Secretary by the ACA and the Public Health
Service (PHS) Act.\2\ In this proposed rule, we propose changes related
to some of the ACA provisions and parameters we previously implemented
and propose to implement new provisions. We also propose a change to
Medicaid financial eligibility provisions to provide States with
greater flexibility to extend Medicaid eligibility to specific
populations based on the State's circumstances. Our goal with these
proposals is providing quality, affordable coverage to consumers while
minimizing administrative burden and ensuring program integrity. The
changes proposed in this rule are also intended to help advance health
equity and mitigate health disparities.
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\1\ The Patient Protection and Affordable Care Act (Pub. L. 111-
148) was enacted on March 23, 2010. The Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152), which amended and
revised several provisions of the Patient Protection and Affordable
Care Act, was enacted on March 30, 2010. In this rulemaking, the two
statutes are referred to collectively as the ``Patient Protection
and Affordable Care Act,'' ``Affordable Care Act,'' or ``ACA.''
\2\ See sections 1311, 1312, 1313, 1321, 1332, and 1343 of the
ACA and section 2792 of the PHS Act.
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II. Background
A. Legislative and Regulatory Overview
Title I of the Health Insurance Portability and Accountability Act
of 1996 (HIPAA) added a new title XXVII to the Public Health Service
Act (PHS Act) to establish various reforms to the group and individual
health insurance markets.
These provisions of the PHS Act were later augmented by other laws,
including the ACA.
Subtitles A and C of title I of the ACA reorganized, amended, and
added to the provisions of part A of title XXVII of the PHS Act
relating to group health plans and health insurance issuers in the
group and individual markets. The term ``group health plan'' includes
both insured and self-insured group health plans.
Section 2702 of the PHS Act, as added by the ACA, establishes
requirements for guaranteed availability of coverage in the group and
individual markets.
Section 1301(a)(1)(B) of the ACA directs all issuers of qualified
health plans (QHPs) to cover the essential health benefit (EHB) package
described in section 1302(a) of the ACA, including coverage of the
services described in section 1302(b) of the ACA, adherence to the
cost-sharing limits described in section 1302(c) of the ACA, and
meeting the Actuarial Value (AV) levels established in section 1302(d)
of the ACA. Section 2707(a) of the PHS Act, which is effective for plan
or policy years beginning on or after January 1, 2014, extends the
requirement to cover the EHB package to non-grandfathered individual
and small group health insurance coverage, irrespective of whether such
coverage is offered through an Exchange. In addition, section 2707(b)
of the PHS Act directs non-grandfathered group health plans to ensure
that cost sharing under the plan does not exceed the limitations
described in section 1302(c)(1) of the ACA.
Section 1302 of the ACA provides for the establishment of an EHB
package that includes coverage of EHBs (as defined by the Secretary of
HHS), cost-sharing limits, and AV requirements. The law directs that
EHBs be equal in scope to the benefits provided under a typical
employer plan, and that they cover at least the following 10 general
categories: ambulatory patient services; emergency services;
hospitalization; maternity and newborn care; mental health and
substance use disorder services, including behavioral health treatment;
prescription drugs; rehabilitative and habilitative services and
devices; laboratory services; preventive and wellness services and
chronic disease management; and pediatric services, including oral and
vision care. Section 1302(d) of the ACA describes the various levels of
coverage based on AV. Consistent with section 1302(d)(2)(A) of the ACA,
AV is calculated based on the provision of EHB to a standard
population. Section 1302(d)(3) of the ACA directs the Secretary of HHS
to develop guidelines that allow for de minimis variation in AV
calculations. Sections 1302(b)(4)(A) through (D) of the ACA establish
that the Secretary must define EHB in a manner that: (1) reflects
appropriate balance among the 10 categories; (2) is not designed in
such a way as to discriminate based on age, disability, or expected
length of life; (3) takes into account the health care needs of diverse
segments of the population; and (4) does not allow denials of EHBs
based on age, life expectancy, disability, degree of medical
dependency, or quality of life.
Section 1311(c) of the ACA provides the Secretary the authority to
issue regulations to establish criteria for the certification of QHPs.
Section 1311(c)(1)(B) of the ACA requires, among the criteria for
certification that the Secretary must establish by regulation, that
QHPs ensure a sufficient choice of providers. Section 1311(e)(1) of the
ACA grants the Exchange the authority to certify a health plan as a QHP
if the health plan meets the Secretary's requirements for certification
issued under section 1311(c) of the ACA, and the Exchange determines
that making the plan available through the Exchange is in the interests
of qualified individuals and qualified employers in the State. Section
1311(c)(6)(C) of the ACA directs the Secretary of HHS to require an
Exchange
[[Page 82512]]
to provide for special enrollment periods and section 1311(c)(6)(D) of
the ACA directs the Secretary of HHS to require an Exchange to provide
for a monthly enrollment period for Indians, as defined by section 4 of
the Indian Health Care Improvement Act.
Section 1311(d)(3)(B) of the ACA permits a State, at its option, to
require QHPs to cover benefits in addition to EHB. This section also
requires a State to make payments, either to the individual enrollee or
to the issuer on behalf of the enrollee, to defray the cost of these
additional State-required benefits.
Section 1312(c) of the ACA generally requires a health insurance
issuer to consider all enrollees in all health plans (except
grandfathered health plans) offered by such issuer to be members of a
single risk pool for each of its individual and small group markets.
States have the option to merge the individual and small group market
risk pools under section 1312(c)(3) of the ACA.
Section 1312(e) of the ACA provides the Secretary with the
authority to establish procedures under which a State may allow agents
or brokers to (1) enroll qualified individuals and qualified employers
in QHPs offered through Exchanges and (2) assist individuals in
applying for advance payments of the premium tax credit (APTC) and
cost-sharing reductions (CSRs) for QHPs sold through an Exchange.
Section 1312(f)(1)(B) of the ACA provides that an individual shall
not be treated as a qualified individual for enrollment in a QHP if, at
the time of enrollment, the individual is incarcerated, other than
incarceration pending the disposition of charges.
Sections 1313 and 1321 of the ACA provide the Secretary with the
authority to oversee the financial integrity of State Exchanges, their
compliance with HHS standards, and the efficient and non-discriminatory
administration of State Exchange activities. Section 1313(a)(5)(A) of
the ACA provides the Secretary with the authority to implement any
measure or procedure that the Secretary determines is appropriate to
reduce fraud and abuse in the administration of the Exchanges. Section
1321 of the ACA provides for State flexibility in the operation and
enforcement of Exchanges and related requirements.
Section 1321(a) of the ACA provides broad authority for the
Secretary to establish standards and regulations to implement the
statutory requirements related to Exchanges, QHPs and other components
of title I of the ACA, including such other requirements as the
Secretary determines appropriate. When operating an FFE under section
1321(c)(1) of the ACA, HHS has the authority under sections 1321(c)(1)
and 1311(d)(5)(A) of the ACA to collect and spend user fees. Office of
Management and Budget (OMB) Circular A-25 Revised establishes Federal
policy regarding user fees and specifies that a user charge will be
assessed against each identifiable recipient for special benefits
derived from Federal activities beyond those received by the public.
Section 1321(d) of the ACA provides that nothing in title I of the
ACA must be construed to preempt any State law that does not prevent
the application of title I of the ACA. Section 1311(k) of the ACA
specifies that Exchanges may not establish rules that conflict with or
prevent the application of regulations issued by the Secretary.
Section 1322 of the ACA establishes the Consumer Operated and
Oriented Plan (CO-OP) program, which is a loan program that funds the
establishment of private, non-profit, consumer-operated, consumer-
oriented health plan issuers of QHPs. The ACA requires, among other
requirements, that substantially all of a CO-OP's activities consist of
issuing QHPs in the individual and small group markets, and that a CO-
OP be governed by a board of directors where a majority is elected by
members covered by policies issued by the CO-OP.
Section 1331 of the ACA provides States with the option to operate
a Basic Health Program (BHP).
Section 1332 of the ACA provides the Secretary of HHS and the
Secretary of the Treasury (collectively, the Secretaries) with the
discretion to approve a State's proposal to waive specific provisions
of the ACA, provided the State's section 1332 waiver plan meets certain
requirements. Section 1332(a)(4)(B) of the ACA requires the Secretaries
to issue regulations regarding procedures for the application and
approval of section 1332 waivers.
Section 1343 of the ACA establishes a permanent risk adjustment
program to provide payments to health insurance issuers that attract
higher-than-average risk populations, such as those with chronic
conditions, funded by charges collected from those issuers that attract
lower-than-average risk populations, thereby reducing incentives for
issuers to avoid higher-risk enrollees. Section 1343(b) of the ACA
provides that the Secretary, in consultation with States, shall
establish criteria and methods to be used in carrying out the risk
adjustment activities under this section. Consistent with section
1321(c) of the ACA, the Secretary is responsible for operating the HHS
risk adjustment program in any State that fails to do so.\3\
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\3\ In the 2014 through 2016 benefit years, HHS operated the
risk adjustment program in every State and the District of Columbia,
except Massachusetts. Beginning with the 2017 benefit year, HHS has
operated the risk adjustment program in all 50 States and the
District of Columbia.
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Section 1401(a) of the ACA added section 36B to the Internal
Revenue Code (the Code), which, among other things, requires that a
taxpayer reconcile APTC for a year of coverage with the amount of the
premium tax credit (PTC) the taxpayer is allowed for the year.
Section 1402 of the ACA provides for, among other things,
reductions in cost sharing for EHB for qualified low- and moderate-
income enrollees in silver level QHPs offered through the individual
market Exchanges. This section also provides for reductions in cost
sharing for Indians enrolled in QHPs at any metal level.
Section 1411(c) of the ACA requires the Secretary to submit certain
information provided by applicants under section 1411(b) of the ACA to
other Federal officials for verification, including income and family
size information to the Secretary of the Treasury. Section 1411(d) of
the ACA provides that the Secretary must verify the accuracy of
information provided by applicants under section 1411(b) of the ACA,
for which section 1411(c) of the ACA does not prescribe a specific
verification procedure, in such manner as the Secretary determines
appropriate.
Section 1411(f) of the ACA requires the Secretary, in consultation
with the Treasury and Homeland Security Department Secretaries and the
Commissioner of Social Security, to establish procedures for hearing
and making decisions governing appeals of Exchange eligibility
determinations. Section 1411(f)(1)(B) of the ACA requires the Secretary
to establish procedures to redetermine eligibility on a periodic basis,
in appropriate circumstances, including eligibility to purchase a QHP
through the Exchange and for APTC and CSRs.
Section 1411(g) of the ACA allows the use of applicant information
only for the limited purpose of, and to the extent necessary for
ensuring the efficient operation of the Exchange, including by
verifying eligibility to enroll through the Exchange and for APTC and
CSRs, and limits the disclosure of such information.
Section 1413 of the ACA directs the Secretary to establish, subject
to minimum requirements, a streamlined enrollment process for
enrollment in
[[Page 82513]]
QHPs and all insurance affordability programs.
Section 5000A of the Code, as added by section 1501(b) of the ACA,
requires individuals to have minimum essential coverage (MEC) for each
month, qualify for an exemption, or make an individual shared
responsibility payment. Under the Tax Cuts and Jobs Act, which was
enacted on December 22, 2017, the individual shared responsibility
payment is reduced to $0, effective for months beginning after December
31, 2018. Notwithstanding that reduction, certain exemptions are still
relevant to determine whether individuals aged 30 and above qualify to
enroll in catastrophic coverage under Sec. Sec. 155.305(h) and
156.155(a)(5).
Section 1902(r)(2)(A) of the Social Security Act (the Act), which
permits States to apply less restrictive methodologies than cash
assistance program methodologies in determining eligibility for certain
eligibility groups.
1. Premium Stabilization Programs
The premium stabilization programs refer to the HHS risk
adjustment, risk corridors, and reinsurance programs established by the
ACA.\4\ For past rulemaking, we refer readers to the following rules:
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\4\ See ACA section 1341 (transitional reinsurance program), ACA
section 1342 (risk corridors program), and ACA section 1343 (HHS
risk adjustment program).
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<bullet> In the March 23, 2012 Federal Register (77 FR 17219)
(Premium Stabilization Rule), we implemented the premium stabilization
programs.
<bullet> In the March 11, 2013 Federal Register (78 FR 15409) (2014
Payment Notice), we finalized the benefit and payment parameters for
the 2014 benefit year to expand the provisions related to the premium
stabilization programs and set forth payment parameters in those
programs.
<bullet> In the October 30, 2013 Federal Register (78 FR 65046), we
finalized the modification to the HHS risk adjustment methodology
related to community rating States.
<bullet> In the November 6, 2013 Federal Register (78 FR 66653), we
published a correcting amendment to the 2014 Payment Notice to address
how an enrollee's age for the risk score calculation would be
determined under the HHS risk adjustment methodology.
<bullet> In the March 11, 2014 Federal Register (79 FR 13743) (2015
Payment Notice), we finalized the benefit and payment parameters for
the 2015 benefit year to expand the provisions related to the premium
stabilization programs, set forth certain oversight provisions, and
establish payment parameters in those programs.
<bullet> In the May 27, 2014 Federal Register (79 FR 30240), we
announced the 2015 fiscal year sequestration rate for the HHS-operated
risk adjustment program.
<bullet> In the February 27, 2015 Federal Register (80 FR 10749)
(2016 Payment Notice), we finalized the benefit and payment parameters
for the 2016 benefit year to expand the provisions related to the
premium stabilization programs, set forth certain oversight provisions,
and establish the payment parameters in those programs.
<bullet> In the March 8, 2016 Federal Register (81 FR 12203) (2017
Payment Notice), we finalized the benefit and payment parameters for
the 2017 benefit year to expand the provisions related to the premium
stabilization programs, set forth certain oversight provisions, and
establish the payment parameters in those programs.
<bullet> In the December 22, 2016 Federal Register (81 FR 94058)
(2018 Payment Notice), we finalized the benefit and payment parameters
for the 2018 benefit year, added the high-cost risk pool parameters to
the HHS risk adjustment methodology, incorporated prescription drug
factors in the adult models, established enrollment duration factors
for the adult models, and finalized policies related to the collection
and use of enrollee-level External Data Gathering Environment (EDGE)
data.
<bullet> In the April 17, 2018 Federal Register (83 FR 16930) (2019
Payment Notice), we finalized the benefit and payment parameters for
the 2019 benefit year, created the State flexibility framework
permitting States to request a reduction in risk adjustment State
transfers calculated by HHS, and adopted a new error rate methodology
for HHS-RADV adjustments to transfers.
<bullet> In the May 11, 2018 Federal Register (83 FR 21925), we
published a correction to the 2019 HHS risk adjustment coefficients in
the 2019 Payment Notice.
<bullet> On July 27, 2018, consistent with 45 CFR 153.320(b)(1)(i),
we updated the 2019 benefit year final HHS risk adjustment model
coefficients to reflect an additional recalibration related to an
update to the 2016 enrollee-level EDGE data set.\5\
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\5\ CMS. (2018, July 27). Updated 2019 Benefit Year Final HHS
Risk Adjustment Model Coefficients. <a href="https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2019-Updtd-Final-HHS-RA-Model-Coefficients.pdf">https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2019-Updtd-Final-HHS-RA-Model-Coefficients.pdf</a>.
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<bullet> In the July 30, 2018 Federal Register (83 FR 36456), we
adopted the 2017 benefit year HHS risk adjustment methodology as
established in the final rules published in the March 23, 2012 (77 FR
17220 through 17252) and March 8, 2016 (81 FR 12204 through 12352)
editions of the Federal Register. The final rule set forth an
additional explanation of the rationale supporting the use of Statewide
average premium in the State payment transfer formula for the 2017
benefit year, including the reasons why the program is operated by HHS
in a budget-neutral manner. The final rule also permitted HHS to resume
2017 benefit year HHS risk adjustment payments and charges. HHS also
provided guidance as to the operation of the HHS-operated risk
adjustment program for the 2017 benefit year in light of the
publication of the final rule.
<bullet> In the December 10, 2018 Federal Register (83 FR 63419),
we adopted the 2018 benefit year HHS risk adjustment methodology as
established in the final rules published in the March 23, 2012 (77 FR
17219) and the December 22, 2016 (81 FR 94058) editions of the Federal
Register. In the rule, we set forth an additional explanation of the
rationale supporting the use of Statewide average premium in the State
payment transfer formula for the 2018 benefit year, including the
reasons why the program is operated by HHS in a budget-neutral manner.
<bullet> In the April 25, 2019 Federal Register (84 FR 17454) (2020
Payment Notice), we finalized the benefit and payment parameters for
the 2020 benefit year, as well as the policies related to making the
enrollee-level EDGE data available as a limited data set for research
purposes and expanding the HHS uses of the enrollee-level EDGE data,
approval of the request from Alabama to reduce HHS risk adjustment
transfers by 50 percent in the small group market for the 2020 benefit
year, and updates to HHS-RADV program requirements.
<bullet> On May 12, 2020, consistent with Sec. 153.320(b)(1)(i),
we published the 2021 Benefit Year Final HHS Risk Adjustment Model
Coefficients on the CCIIO website.\6\
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\6\ CMS. (2020, May 12). Final 2021 Benefit Year Final HHS Risk
Adjustment Model Coefficients.https://<a href="http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-2021-Benefit-Year-Final-HHS-Risk-Adjustment-Model-Coefficients.pdf">www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-2021-Benefit-Year-Final-HHS-Risk-Adjustment-Model-Coefficients.pdf</a>.
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<bullet> In the May 14, 2020 Federal Register (85 FR 29164) (2021
Payment Notice), we finalized the benefit and payment parameters for
the 2021 benefit year, as well as adopted updates to the HHS risk
adjustment models' hierarchical condition categories (HCCs) to
transition to ICD-10 codes, approved the request from Alabama to reduce
HHS risk adjustment transfers by 50
[[Page 82514]]
percent in the small group market for the 2021 benefit year, and
modified the outlier identification process under the HHS-RADV program.
<bullet> In the December 1, 2020 Federal Register (85 FR 76979)
(Amendments to the HHS-Operated Risk Adjustment Data Validation Under
the Patient Protection and Affordable Care Act's HHS-Operated Risk
Adjustment Program (2020 HHS-RADV Amendments Rule)), we adopted the
creation and application of Super HCCs in the sorting step that assigns
HCCs to failure rate groups, finalized a sliding scale adjustment in
HHS-RADV error rate calculation, and added a constraint for negative
error rate outliers with a negative error rate. We also established a
transition from the prospective application of HHS-RADV adjustments to
apply HHS-RADV results to risk scores from the same benefit year as
that being audited.
<bullet> In the September 2, 2020 Federal Register (85 FR 54820),
we issued an interim final rule containing certain policy and
regulatory revisions in response to the COVID-19 public health
emergency (PHE), wherein we set forth HHS risk adjustment reporting
requirements for issuers offering temporary premium credits in the 2020
benefit year.
<bullet> In the May 5, 2021 Federal Register (86 FR 24140) (part 2
of the 2022 Payment Notice), we finalized a subset of proposals from
the 2022 Payment Notice proposed rule, including policy and regulatory
revisions related to the HHS-operated risk adjustment program,
finalization of the benefit and payment parameters for the 2022 benefit
year, and approval of the request from Alabama to reduce HHS risk
adjustment transfers by 50 percent in the individual and small group
markets for the 2022 benefit year. In addition, this final rule
established a revised schedule of collections for HHS-RADV and updated
the provisions regulating second validation audit (SVA) and initial
validation audit (IVA) entities.
<bullet> On July 19, 2021, consistent with Sec. 153.320(b)(1)(i),
we released Updated 2022 Benefit Year Final HHS Risk Adjustment Model
Coefficients on the CCIIO website, announcing some minor revisions to
the 2022 benefit year final HHS risk adjustment adult model
coefficients.\7\
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\7\ See CMS. (2021, July 19). 2022 Benefit Year Final HHS Risk
Adjustment Model Coefficients. <a href="https://www.cms.gov/files/document/updated-2022-benefit-year-final-hhs-risk-adjustment-model-coefficients-clean-version-508.pdf">https://www.cms.gov/files/document/updated-2022-benefit-year-final-hhs-risk-adjustment-model-coefficients-clean-version-508.pdf</a>.
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<bullet> In the May 6, 2022 Federal Register (87 FR 27208) (2023
Payment Notice), we finalized revisions related to the HHS-operated
risk adjustment program, including the benefit and payment parameters
for the 2023 benefit year, HHS risk adjustment model recalibration, and
policies related to the collection and extraction of enrollee-level
EDGE data. We also finalized the adoption of the interacted HCC count
specification for the adult and child models, along with modified
enrollment duration factors for the adult model models, beginning with
the 2023 benefit year.\8\ We also repealed the ability for States,
other than prior participants, to request a reduction in HHS risk
adjustment State transfers starting with the 2024 benefit year. In
addition, we approved a 25 percent reduction to 2023 benefit year HHS
risk adjustment transfers in Alabama's individual market and a 10
percent reduction to 2023 benefit year HHS risk adjustment transfers in
Alabama's small group market. We also finalized further refinements to
the HHS-RADV error rate calculation methodology beginning with the 2021
benefit year.
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\8\ On May 6, 2022, we also published the 2023 Benefit Year
Final HHS Risk Adjustment Model Coefficients at <a href="https://www.cms.gov/files/document/2023-benefit-year-final-hhs-risk-adjustment-model-coefficients.pdf">https://www.cms.gov/files/document/2023-benefit-year-final-hhs-risk-adjustment-model-coefficients.pdf</a>.
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<bullet> In the April 27, 2023 Federal Register (88 FR 25740) (2024
Payment Notice), we finalized the benefit and payment parameters for
the 2024 benefit year, amended the EDGE discrepancy materiality
threshold and data collection requirements, and reduced the risk
adjustment user fee. For the 2024 benefit year, we repealed the State
flexibility policy, including for prior participant States, and
approved 50 percent reductions to HHS risk adjustment transfers for
Alabama's individual and small group markets. In addition, we finalized
several refinements to HHS-RADV program requirements, such as
shortening the window to confirm SVA findings or file a discrepancy
report, changing the HHS-RADV materiality threshold for random and
targeted sampling, and no longer exempting exiting issuers from
adjustments to risk scores and HHS risk adjustment transfers when they
are negative error rate outliers. We also announced the discontinuance
of the Lifelong Permanent Condition List (LLPC) and Non-EDGE Claims
(NEC) in HHS-RADV beginning with the 2022 benefit year.
2. Program Integrity
We have finalized program integrity standards related to the
Exchanges and premium stabilization programs in two rules: the ``first
Program Integrity Rule'' published in the August 30, 2013 Federal
Register (78 FR 54069), and the ``second Program Integrity Rule''
published in the October 30, 2013 Federal Register (78 FR 65045). We
also refer readers to the 2019 Patient Protection and Affordable Care
Act; Exchange Program Integrity final rule (2019 Program Integrity
Rule) published in the December 27, 2019 Federal Register (84 FR
71674).
In the April 27, 2023 Federal Register (88 FR 25740) (2024 Payment
Notice), we finalized a policy to implement improper payment pre-
testing and assessment (IPPTA) requirements for State Exchanges to
ensure adherence to the Payment Integrity Information Act of 2019. In
addition, we finalized allowing additional time for HHS to review
evidence submitted by agents and brokers to rebut allegations
pertaining to Exchange agreement suspensions or terminations. We also
introduced consent and eligibility documentation requirements for
agents and brokers.
3. Market Rules
For past rulemaking related to the market rules, we refer readers
to the following rules:
<bullet> In the April 8, 1997 Federal Register (62 FR 16894), HHS,
with the Department of Labor and Department of the Treasury, published
an interim final rule relating to the HIPAA health insurance reforms.
In the February 27, 2013 Federal Register (78 FR 13406) (2014 Market
Rules), we published the health insurance market rules.
<bullet> In the May 27, 2014 Federal Register (79 FR 30240) (2015
Market Standards Rule), we published the exchange and insurance market
standards for 2015 and beyond.
<bullet> In the December 22, 2016 Federal Register (81 FR 94058),
we provided additional guidance on guaranteed availability and
guaranteed renewability.
<bullet> In the April 18, 2017 Federal Register (82 FR 18346)
(Market Stabilization final rule), we further interpreted the
guaranteed availability provision.
<bullet> In the April 17, 2018 Federal Register (83 FR 17058) (2019
Payment Notice), we clarified that certain exceptions to the special
enrollment periods only apply to coverage offered outside of the
Exchange in the individual market.
<bullet> In the June 19, 2020 Federal Register (85 FR 37160) (2020
section 1557 final rule), in which HHS discussed section 1557 of the
ACA, HHS removed nondiscrimination protections based on gender identity
and sexual orientation from the guaranteed availability regulation.
[[Page 82515]]
<bullet> In part 2 of the 2022 Payment Notice, in the May 5, 2021
Federal Register (86 FR 24140), we made additional amendments to the
guaranteed availability regulation regarding special enrollment periods
and finalized new special enrollment periods related to untimely notice
of triggering events, cessation of employer contributions or government
subsidies to COBRA continuation coverage, and loss of APTC eligibility.
<bullet> In the September 27, 2021 Federal Register (86 FR 53412)
(part 3 of the 2022 Payment Notice), which was published by HHS and the
Department of the Treasury, we finalized additional amendments to the
guaranteed availability regulations regarding special enrollment
periods.
<bullet> In the May 6, 2022 Federal Register (87 FR 27208), we
finalized a revision to our interpretation of the guaranteed
availability requirement to prohibit issuers from applying a premium
payment to an individual's or employer's past debt owed for coverage
and refusing to effectuate enrollment in new coverage.
4. Exchanges
We published a request for comment relating to Exchanges in the
August 3, 2010 Federal Register (75 FR 45584). We issued initial
guidance to States on Exchanges on November 18, 2010. In the March 27,
2012 Federal Register (77 FR 18310) (Exchange Establishment Rule), we
implemented the Affordable Insurance Exchanges (Exchanges), consistent
with title I of the ACA, to provide competitive marketplaces for
individuals and small employers to directly compare available private
health insurance options on the basis of price, quality, and other
factors. This included implementation of components of the Exchanges
and standards for eligibility for Exchanges, as well as network
adequacy and essential community provider (ECP) certification
standards.
In the August 17, 2011, Federal Register (76 FR 51201) we published
a proposed rule regarding eligibility determinations, including the
regulatory requirement to verify incarceration status. In the March 27,
2012, Federal Register (77 FR 18309) we finalized the regulatory
requirement to verify incarceration attestation using an approved
electronic data source that is current and accurate, and when
attestations are not reasonably compatible with information in an
approved data source, to resolve the inconsistency.
In the 2014 Payment Notice and the Amendments to the HHS Notice of
Benefit and Payment Parameters for 2014 interim final rule, published
in the March 11, 2013 Federal Register (78 FR 15541), we set forth
standards related to Exchange user fees. We established an adjustment
to the FFE user fee in the Coverage of Certain Preventive Services
under the Affordable Care Act final rule, published in the July 2, 2013
Federal Register (78 FR 39869) (Preventive Services Rule).
In the 2016 Payment Notice, we also set forth the ECP certification
standard at Sec. 156.235, with revisions in the 2017 Payment Notice in
the March 8, 2016 Federal Register (81 FR 12203) and the 2018 Payment
Notice in the December 22, 2016 Federal Register (81 FR 94058).
In an interim final rule, published in the May 11, 2016 Federal
Register (81 FR 29146), we made amendments to the parameters of certain
special enrollment periods (2016 Interim Final Rule). We finalized
these in the 2018 Payment Notice, published in the December 22, 2016
Federal Register (81 FR 94058).
In the Market Stabilization final rule, published in the April 18,
2017 Federal Register (82 FR 18346), we amended standards relating to
special enrollment periods and QHP certification. In the 2019 Payment
Notice, published in the April 17, 2018 Federal Register (83 FR 16930),
we modified parameters around certain special enrollment periods. In
the April 25, 2019 Federal Register (84 FR 17454), the 2020 Payment
Notice established a new special enrollment period.
We published the final rule in the May 14, 2020 Federal Register
(85 FR 29164) (2021 Payment Notice).
In the January 19, 2021 Federal Register (86 FR 6138) (part 1 of
the 2022 Payment Notice), we finalized only a subset of the proposals
in the 2022 Payment Notice proposed rule. In the May 5, 2021 Federal
Register (86 FR 24140), we published part 2 of the 2022 Payment Notice.
In the September 27, 2021 Federal Register (86 FR 53412) (part 3 of the
2022 Payment Notice), in conjunction with the Department of the
Treasury, we finalized amendments to certain policies in part 1 of the
2022 Payment Notice.
In the May 6, 2022 Federal Register (87 FR 27208), we finalized
changes to maintain the user fee rate for issuers offering plans
through the FFEs and maintain the user fee rate for issuers offering
plans through the SBE-FPs for the 2023 benefit year. We also finalized
various policies to address certain agent, broker, and web-broker
practices and conduct. We also finalized updates to the requirement
that all Exchanges conduct special enrollment period verifications.
In the April 27, 2023 Federal Register (88 FR 25740) (2024 Payment
Notice), we revised Exchange Blueprint approval timelines, lowered the
user rate fee for QHPs, and amended re-enrollment hierarchies for
enrollees. We also finalized policies to update standardized plan
options, reduce the risk of plan choice overload by limiting the number
of non-standardized plan options that issuers can offer, and ensure
correct QHP information. In addition, to prevent gaps in coverage, we
amended coverage effective date rules, lengthened the special
enrollment period from 60 to 90 days to those who lose Medicaid
coverage, and prohibited QHPs on the Federal platform from mid-year
coverage terminations for dependent children who reach the applicable
maximum age. We also finalized policies on verifying consumer income
and permitting door-to-door assisters to solicit consumers. To ensure
provider network adequacy, we finalized provider network and ECP
policies for QHPs.
5. Essential Health Benefits
We established requirements relating to EHBs in the Standards
Related to Essential Health Benefits, Actuarial Value, and
Accreditation Final Rule, which was published in the February 25, 2013
Federal Register (78 FR 12833) (EHB Rule). In the 2019 Payment Notice,
published in the April 17, 2018 Federal Register (83 FR 16930), we
added Sec. 156.111 to provide States with additional options from
which to select an EHB-benchmark plan for plan year (PY) 2020 and
subsequent plan years. In the 2023 Payment Notice, published in the May
6, 2022 Federal Register (87 FR 27208), we revised Sec. 156.111 to
require States to notify HHS of the selection of a new EHB-benchmark
plan by the first Wednesday in May of the year that is 2 years before
the effective date of the new EHB-benchmark plan, otherwise the State's
EHB-benchmark plan for the applicable plan year will be that State's
EHB-benchmark plan applicable for the prior year. We displayed the
Request for Information; Essential Health Benefits (EHB RFI), published
in the December 2, 2022 Federal Register (87 FR 74097) to solicit
public comment on a variety of topics related to the coverage of
benefits in health plans subject to the EHB requirements of the ACA.
6. State Innovation Waivers
In the March 14, 2011 Federal Register (76 FR 13553), HHS and the
Department of the Treasury (collectively, the Departments)
[[Page 82516]]
published the ``Application, Review, and Reporting Process for Waivers
for State Innovation'' proposed rule to implement section 1332(a)(4)(B)
of the ACA.
In the February 27, 2012 Federal Register (77 FR 11700), the
Departments published the ``Application, Review, and Reporting Process
for Waivers for State Innovation'' final rule (2012 Final Rule).
In the October 24, 2018 Federal Register (83 FR 53575), the
Departments issued the 2018 Guidance, which superseded the previous
guidance published in the December 16, 2015 Federal Register (80 FR
78131) (2015 Guidance) and set forth requirements that States must meet
for waivers, application review procedures, pass-through funding
determinations, certain analytical requirements, and operational
considerations.
In the November 6, 2020 Federal Register (85 FR 71142), the
Departments issued an interim final rule (November 2020 IFC), which set
forth flexibilities for waivers under section 1332 during the COVID-19
Public Health Emergency.
In the December 4, 2020 Federal Register (85 FR 78572), the
Departments published the ``Patient Protection and Affordable Care Act;
HHS Notice of Benefit and Payment Parameters for 2022 and Pharmacy
Benefit Manager Standards; Updates to State Innovation Waiver (Section
1332 Waiver) Implementing Regulations'' proposed rule (2022 Payment
Notice proposed rule) which proposed to codify certain policies and
interpretations of the 2018 Guidance.
In the January 19, 2021 Federal Register (86 FR 6138), the
Departments published the ``Patient Protection and Affordable Care Act;
HHS Notice of Benefit and Payment Parameters for 2022; Updates to State
Innovation Waiver (Section 1332 Waiver) Implementing Regulations''
final rule (part 1 of the 2022 Payment Notice) which codified many of
the policies and interpretations of the 2018 Guidance.
In the September 27, 2021 Federal Register (86 FR 53412), part 3 of
the 2022 Payment Notice, the Departments published the ``Patient
Protection and Affordable Care Act; Updating Payment Parameters,
Section 1332 Waiver Implementing Regulations, and Improving Health
Insurance Markets for 2022 and Beyond'' final rule, which superseded
and rescinded the policies and interpretations outlined in the 2018
Guidance and repealed the previous codification of the interpretations
of statutory guidelines in part 1 of the 2022 Payment Notice. The
Departments also finalized flexibilities in the public notice
requirements and post-award public participation requirements for
section 1332 waivers under certain emergent situations and processes
and procedures for amendments and extensions for approved waiver plans.
7. Consumer Operated and Oriented Plans (CO-OPs)
In the December 13, 2011 Federal Register (76 FR 77392), we
published the ``Patient Protection and Affordable Care Act;
Establishment of Consumer Operated and Oriented Plan (CO-OP) Program''
final rule (2011 CO-OP Rule), which established the rules governing the
CO-OP program to make loans to capitalize eligible prospective CO-OPs.
In the May 11, 2016 Federal Register (81 FR 29146), we amended several
CO-OP standards related to governance requirements to provide greater
flexibility, and to facilitate private market transactions that would
assist efforts of CO-OPs to arrange access to new sources of needed
capital.
8. Basic Health Program (BHP)
In the March 12, 2014, Federal Register (79 FR 14111), we published
a final rule entitled ``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,'' implementing section 1331 of the ACA, which governs the
establishment of BHPs.
9. State Flexibility in the Use of Income and Resource Disregards in
Medicaid Eligibility
In the January 19, 1993 Federal Register (58 FR 4929), we published
a final rule with comment period entitled ``Medicaid Program;
Eligibility and Coverage Requirements,'' in which we prescribed, at 42
CFR 435.601, the financial methodologies State Medicaid agencies must
apply in determining eligibility for Medicaid, with options to apply
less restrictive income and resource methodologies for the eligibility
groups specified in section 1902(r)(2) of the Act.
In the August 22, 1994 Federal Register (59 FR 43052), we published
a final rule entitled ``Medicaid Program; Eligibility and Coverage
Requirements,'' in which we amended 42 CFR 435.601(f)(1) to delete
cross-references to other regulatory provisions that had been removed
from the CFR.
In the November 30, 2016 Federal Register (81 FR 86456), we
published a final rule entitled ``Medicaid and Children's Health
Insurance Programs: Eligibility Notices, Fair Hearing and Appeal
Processes for Medicaid and Other Provisions Related to Eligibility and
Enrollment for Medicaid and CHIP,'' in which we amended 42 CFR
435.601(b) to confirm that its provisions govern only individuals who
are excepted from application of modified adjusted gross income
financial methodologies (MAGI) in accordance with 42 CFR 435.603(j)
(relating to ``Eligibility Groups for which MAGI-based methods do not
apply''). We also established in 42 CFR 435.601(d)(1) the authority for
States to apply less restrictive methodologies for medically needy
individuals whose income eligibility is determined under 42 CFR
435.831(b)(1) (including medically needy individuals whose eligibility
is determined under MAGI-based methodologies that comply with certain
rules relating to the financial responsibility of relatives and other
individuals described in 42 CFR 435.602).
B. Summary of Major Provisions
The regulations outlined in this proposed rule would be codified in
31 CFR part 33, 42 CFR parts 435 and 600, and 45 CFR parts 153, 155,
and 156.
1. 31 CFR Part 33 and 45 CFR Part 155
This proposed rule would amend section 1332 Waivers for State
Innovation (referred to throughout this proposed rule as section 1332
waivers) implementing regulations regarding State public notice and
comment procedures. The Departments propose changes in 31 CFR part 33
and 45 CFR part 155 that would allow States the flexibility to hold a
State public hearing or post-award forum in a virtual format (that is,
one that uses telephonic, digital, and/or web-based platforms), or
hybrid format (that is, one that provides for both in-person and
virtual attendance), which would be considered as the equivalent of
holding an in-person meeting. Specifically, the Departments propose
changes to 31 CFR 33.112(c) and 45 CFR 155.1312(c) and 31 CFR 33.120(c)
and 45 CFR 155.1320(c). The Departments propose that these changes go
into effect upon finalization of this rule. Because these changes would
relieve a regulatory restriction, the Departments anticipate that they
would be made effective immediately upon publication of a final rule.
[[Page 82517]]
2. 42 CFR Part 435
We propose to amend 42 CFR 435.601(d) to remove paragraph (d)(4),
which would provide States with greater flexibility to adopt income
and/or resource disregards in determining Medicaid financial
eligibility for individuals excepted from application of financial
methodologies based on MAGI (``non-MAGI'' methodologies). States are
permitted to expand eligibility for individuals who are subject to non-
MAGI methodologies by disregarding income and/or resources that would
otherwise be required to be considered in the individual's eligibility
determination. However, under current rules, States must apply such
income and/or resource disregards to all individuals within each
Medicaid eligibility group. Removing paragraph (d)(4) would allow
States, when considering expanding eligibility for non-MAGI
individuals, to target disregards at discrete members of individuals
within an eligibility group.
3. 42 CFR Part 600
We propose to amend 42 CFR 600.320(c) to allow States a third
option when choosing the effective date of eligibility for BHP
applicants. Under current rules, States have the option to choose
between following: either the Medicaid rules at 42 CFR 435.915 or the
Exchange rules at 45 CFR 155.420(b)(1). We propose to add an option to
the effective date of coverage rules that would allow States to start
coverage on the first day of the month following the date of
application.
4. 45 CFR Part 153
In accordance with the OMB Report to Congress on the Joint
Committee Reductions for Fiscal Year 2024, the HHS-operated risk
adjustment program is subject to the fiscal year 2024 sequestration.\9\
Therefore, the HHS-operated risk adjustment program will be sequestered
at a rate of 5.7 percent for payments made from fiscal year 2024
resources (that is, funds collected during the 2024 fiscal year).
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\9\ OMB. (2023, March 13). OMB Report to the Congress on the
BBEDCA 251A Sequestration for Fiscal Year 2024. <a href="https://www.whitehouse.gov/wp-content/uploads/2023/03/BBEDCA_Sequestration_Report_and_Letter_3-13-2024.pdf">https://www.whitehouse.gov/wp-content/uploads/2023/03/BBEDCA_Sequestration_Report_and_Letter_3-13-2024.pdf</a>.
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We propose to recalibrate the 2025 benefit year HHS risk adjustment
models using the 2019, 2020, and 2021 benefit year enrollee-level EDGE
data. For the 2025 benefit year, we propose to continue applying a
market pricing adjustment to the plan liability associated with
Hepatitis C drugs in the HHS risk adjustment models (see, for example,
84 FR 17463 through 17466). We propose a modification to the adjustment
for the receipt of CSRs in the HHS risk adjustment models to improve
predictive accuracy for the American Indian and Alaska Native (AI/AN)
subpopulation who are enrolled in zero and limited cost-sharing plans
and to retain the other CSR adjustment factors in the HHS risk
adjustment models. We also propose a risk adjustment user fee for the
2025 benefit year of $0.20 per member per month (PMPM). Additionally,
we propose that in certain cases we may require a corrective action
plan to address an observation identified in an HHS risk adjustment
audit.
5. 45 CFR Part 155
In part 155, we propose to amend Sec. 155.105(b) to require that a
State seeking to operate a State Exchange must first operate an SBE-FP
for at least one plan year, including its open enrollment period. We
believe this requirement would give States sufficient time to create,
staff, and structure a State Exchange that could transition to
operating its own platform and establish relationships with interested
parties critical to a State Exchange's success in operating a Navigator
and consumer outreach program, assuming plan management
responsibilities, and communicating effectively with consumers to
support enrollment and avoid health care coverage gaps.
We propose to revise Sec. 155.106(a)(2) as it pertains to Exchange
Blueprint requirements for States transitioning to a State Exchange.
Specifically, we propose to add that we may require that a State
submitting a Blueprint Application seeking to operate a State Exchange
provide upon request, supplemental documentation to HHS detailing the
State's implementation of its State Exchange functionality as laid out
in the State Exchange Blueprint. This could include a State submitting
detailed plans regarding its State Exchange consumer assistance
programs and activities, such as information on its direct outreach
plans. Further, we propose to require that a State applying to
transition to a State Exchange must provide the public with a notice
and copy of its State Exchange Blueprint Application, as well as
conduct periodic public engagements whereby interested parties can
learn about the status of a State's transition to a State Exchange and
provide input on that transition.
We propose to amend Sec. 155.170(a)(2) to codify that benefits
covered in a State's EHB benchmark plan would not be considered in
addition to EHB, even if they had been required by State action taking
place after December 31, 2011, other than for purposes of compliance
with Federal requirements. Under this proposal, there would be no
obligation for the State to defray the cost of a State mandate enacted
after December 31, 2011 that requires coverage of a benefit if that
benefit is included in the State's EHB-benchmark plan. Benefits that
are covered in a State's EHB-benchmark plan would not be considered in
addition to EHB and would remain subject to the various rules
applicable to the EHB, including the prohibition on discrimination in
accordance with Sec. 156.125, limitations on cost sharing in
accordance with Sec. 156.130, and restrictions on annual or lifetime
dollar limits in accordance with Sec. 147.126. We believe that this
change would promote consumer protections and facilitate compliance
with the defrayal requirement by making the identification of benefits
in addition to EHB more intuitive.
At Sec. 155.205(a), we propose to establish additional minimum
standards for Exchange call center operations. Specifically, we propose
to require that all Exchange call centers, other than those of SBE-FPs
and Small Business Health Options Program (SHOP) Exchanges that do not
provide for enrollment in SHOP coverage through an online SHOP
enrollment platform, provide consumer access to a live call center
representative during an Exchange's published hours of operation to
assist with submitting their QHP application. We believe speaking to a
live representative would help troubleshoot consumer QHP application
issues, provide in real time an opportunity for a live representative
to explain QHP application terminology to a consumer, provide a live
representative to ensure the consumer provides the most correct
information to the QHP application--alleviating unnecessary follow-up,
and provide greater overall consumer satisfaction.
We propose to amend Sec. 155.205(b)(4) to require that an Exchange
operate a centralized eligibility and enrollment platform on the
Exchange's website (or, for an SBE-FP, the Federal eligibility and
enrollment platform) such that the Exchange allows for the submission
of the single, streamlined application for enrollment in a QHP and
insurance affordability programs through the Exchange's website and
performs eligibility determinations for all consumers based on
submissions of the single, streamlined application. Further, we propose
to amend Sec. 155.302(a)(1) to clarify that the Exchange, through the
centralized eligibility and enrollment platform operated on the
Exchange's
[[Page 82518]]
website (or, for an SBE-FP, the Federal eligibility and enrollment
platform), is the entity that is responsible for making all
determinations regarding the eligibility for QHP coverage and insurance
affordability programs regardless of whether an individual files an
application for enrollment in a QHP on the Exchange's website (or, for
SBE-FPs, on the Federal eligibility and enrollment platform), or on a
website operated by a non-Exchange website allowed for under Sec.
155.220 or Sec. 155.221. We also clarify that only entities that an
Exchange elects to contract with to operate its centralized eligibility
and enrollment platform can perform this function on behalf of an
Exchange, such that Exchanges would not be able to solely rely on non-
Exchange entities, including a web-broker (defined at Sec. 155.20) or
other entities under Sec. 155.220 or Sec. 155.221, from making such
eligibility determinations on behalf on the Exchanges.
We also propose to amend Sec. 155.205(b)(5) to require that an
Exchange operate a centralized eligibility and enrollment platform on
the Exchange's website (or, for an SBE-FP, the Federal eligibility and
enrollment platform) so that the Exchange (or, for an SBE-FP, the
Federal eligibility and enrollment platform) meets the requirement
under Sec. 155.400(c) to maintain record of all effectuated
enrollments in QHPs, including changes in effectuated QHP enrollments.
We propose to amend Sec. 155.220(h) to specify that the HHS
reconsideration entity is the CMS Administrator, who is a principal
officer. This proposal would ensure agents, brokers, and web-brokers
utilizing the FFEs and SBE-FPs can submit a request to the CMS
Administrator to reconsider HHS' decision to terminate their Exchange
agreement(s) for cause.
We propose changes to Sec. Sec. 155.220 and 155.221 to apply
certain standards to web-brokers and Direct Enrollment (DE) entities
assisting consumers and applicants across all Exchanges, including in
States with State Exchanges. We seek to ensure that certain current
minimum Federal standards applicable in the FFEs and SBE-FPs, related
to web-broker website display of standardized QHP comparative
information, disclaimer language, information on eligibility for APTC/
CSRs, operational readiness, and access by downstream agents and
brokers, also apply to web-brokers in States with State Exchanges. We
similarly propose to extend certain DE entity requirements applicable
in the FFEs and SBE-FPs related to marketing and display of QHPs,
providing consumers with correct information and refraining from
certain conduct, marketing of non-QHPs, website disclaimer language,
and operational readiness to DE entities across all Exchanges, to newly
apply to DE entities in States with State Exchanges. These proposals
would help establish greater general uniformity with respect to these
requirements for web-brokers and DE entities operating in the Exchanges
and establish minimum Federal consumer protections in all States,
regardless of the Exchange model.
We propose to update regulations in Sec. 155.221(b) to mandate
<a href="http://HealthCare.gov">HealthCare.gov</a> changes be reflected on DE entity non-Exchange websites
within a notice period set by HHS. We also propose requiring that DE
entities make these display changes in a manner consistent with what is
adopted by HHS for display on <a href="http://HealthCare.gov">HealthCare.gov</a> by meeting standards
defined by HHS, unless HHS approves a deviation from those standards.
This proposal would codify our existing practice of communicating
important changes to the <a href="http://HealthCare.gov">HealthCare.gov</a> display to EDE entities, expand
our existing change request processes to permit entities to request
deviations from the required display changes, and require DE entities
that do not participate in EDE to comply with these practices.
Additionally, this proposal would also require that all display changes
which affect the visual aspects of the website that users see and
interact with must be prominently displayed on the non-Exchange website
such that the changes are clear, noticeable, and understandable to
consumers. Finally, this proposal would also require State Exchanges to
require their DE entities to implement and prominently display changes
adopted for display on the State Exchanges' websites on their non-
Exchange websites for purposes of assisting consumers with DE in QHPs
offered through the Exchange.
We propose in connection with the failure to file and reconcile
process at Sec. 155.305(f)(4) that Exchanges be required to send
notices to tax filers for the first year in which they have been
determined to have failed to reconcile APTC as an initial warning to
inform and educate tax filers that they need to file and reconcile, or
risk being determined ineligible for APTC if they fail to file and
reconcile for a second consecutive year. Currently, the regulation does
not describe notification procedures for tax filers who have failed to
reconcile for 1 year. We propose to require that all Exchanges be
required to send informative notices at least annually to tax filers
who have failed to reconcile.
We propose to amend Sec. 155.315(e) to provide that all Exchanges
can accept applicant incarceration status attestations without further
verification, and Exchanges may verify applicant incarceration status
using an HHS-approved verification data source. HHS would approve an
alternative electronic data source for State Exchanges to use for
incarceration verification if it provides data that are current and
accurate, and if its use minimizes administrative costs and burdens.
We propose to reinterpret State Exchange and State Medicaid and
Children's Health Insurance Program (CHIP) agency use of the Federal
Data Services Hub to access and use the income data provided by the
Verify Current Income (VCI) Hub service as a State Exchange or a State
Medicaid and CHIP agency function because these State entities use this
optional service to implement eligibility verification requirements
applicable to them. More specifically, State Exchanges and State
Medicaid and CHIP agencies have the option to use this information to
verify a tax household's annual income attestation for Exchange QHP
eligibility and the Medicaid applicant's current household income as
required to make insurance affordability program eligibility
determinations. We propose to amend Sec. 155.320(c) to reflect this
reinterpretation for the Exchanges but are not proposing to amend the
Medicaid regulations as the Medicaid regulations already address
Medicaid agency verification requirements and are not typically used to
delineate Medicaid agency operations in this manner.
We propose to revise Sec. 155.330(d) to require Exchanges to
conduct periodic checks for deceased enrollees twice yearly and
subsequently end deceased enrollees' QHP coverage. Additionally, we
propose to revise Sec. 155.330(d)(3) to grant the Secretary the
authority to temporarily suspend the periodic data matching (PDM)
requirement during certain situations (for example, a declared national
public health emergency). These proposals would align Sec. 155.330(d)
with current Federal Exchange policy and operations, prevent
overpayment of QHP premiums, and accurately capture household QHP
eligibility based on household size.
We propose to amend Sec. 155.335(j)(1) and (2) to require
Exchanges to re-enroll individuals who are enrolled in catastrophic
coverage, as defined in section 1302(e) of the ACA, into a new
[[Page 82519]]
QHP for the coming plan year. Incorporating these individuals enrolled
in catastrophic coverage into the auto re-enrollment hierarchy rules at
Sec. 155.335(j) would help ensure continuity of coverage in cases
where the issuer does not continue to offer a catastrophic plan for the
new plan year, or these individuals are no longer eligible for
enrollment in a catastrophic plan for the new year, and these
individuals do not actively select a different QHP. We also propose to
add a new paragraph (j)(5) to Sec. 155.335 to establish that an
Exchange may not newly auto re-enroll into catastrophic coverage an
enrollee who is currently enrolled in coverage of a metal level as
defined in section 1302(d) of the ACA. This change reflects our current
practice for Exchanges on the Federal platform.
We propose to amend Sec. 155.400(e)(2) to codify that the
flexibility for issuers experiencing billing or enrollment problems due
to high volume or technical errors is not limited to extensions of the
binder payment.
We propose to amend Sec. 155.410(e)(4)(ii) to revise parameters
around the adoption of an alternative open enrollment period by a State
Exchange. Specifically, we propose for benefit years beginning on or
after January 1, 2025, State Exchanges must adopt an open enrollment
period that begins on November 1 of the calendar year preceding the
benefit year and ends no earlier than January 15 of the applicable
benefit year, with the option to extend the open enrollment period
beyond January 15 of the applicable benefit year. We believe this
proposal would ensure consumers are not subjected to plan cost
increases that they may not be notified about until after open
enrollment ends, give Navigators, certified application counselors, and
agents and brokers ample time to assist all interested applicants,
provide State Exchanges with additional flexibility, reduce consumer
confusion, and improve access to health coverage.
At Sec. 155.420(b), we propose to align the effective dates of
coverage after selecting a plan during certain special enrollment
periods across all Exchanges, including State Exchanges. We would
require all State Exchanges to provide coverage that is effective on
the first day of the month following plan selection, if a consumer
enrolls in a QHP during certain special enrollment periods. This
proposal would prevent coverage gaps, particularly for consumers
transitioning between different Exchanges or from other insurance
coverage.
We propose to amend paragraph Sec. 155.420(d)(16) to revise the
parameters around the availability of a special enrollment period for
APTC-eligible qualified individuals with a projected household income
no greater than 150 percent of the Federal Poverty Level (FPL).
Specifically, we are proposing to remove the limitation that this
special enrollment period is only available during periods of time when
APTC benefits are available such that the applicable taxpayers'
applicable percentage is set to zero and that Exchanges have the option
to permanently provide this special enrollment period. We believe this
proposal would provide affordable coverage available to more uninsured
people and additional enrollment opportunities to low-income consumers.
We propose to add Sec. 155.430(b)(1)(iv)(D) to permit an enrollee
to retroactively terminate the enrollee's enrollment in a QHP through
an Exchange on the Federal platform when the enrollee enrolls in
Medicare Parts A or B, and the termination date would be retroactively
effective to the day before Medicare coverage begins. This proposal
would allow consumers to avoid overlapping coverage and paying
unnecessary premiums. State Exchanges would have the option of
implementing this proposal, and we seek comment on whether this
proposal should instead be mandatory for State Exchanges.
We propose to revise Sec. 155.1050 to require that State Exchanges
and SBE-FPs establish and impose quantitative time and distance network
adequacy standards for QHPs that are at least as stringent as the FFEs'
network adequacy standards established for QHPs under Sec. 156.230. We
also propose that State Exchanges and SBE-FPs be required to conduct
quantitative network adequacy reviews prior to certifying any plan as a
QHP, consistent with the reviews conducted by the FFEs under Sec.
156.230. We further propose to require State Exchanges and SBE-FPs to
permit issuers that are unable to meet the specified network adequacy
standards to participate in a justification process after submitting
their initial network adequacy data to account for variances and
potentially earn QHP certification. Finally, we propose to mandate that
State Exchanges and SBE-FPs require all issuers seeking QHP
certification to submit information to the State Exchange or SBE-FP
about whether network providers offer telehealth services. These
proposals would be effective for plan years beginning on or after
January 1, 2025.
6. 45 CFR part 156
In part 156, we propose user fee rates for the 2025 benefit year
for all issuers participating on the Exchanges using the Federal
platform. For the 2025 benefit year, we propose an FFE user fee rate of
2.2 percent of total monthly premiums and an SBE-FP user fee rate of
1.8 percent of total monthly premiums. We will issue the 2025 benefit
year premium adjustment percentage index and related payment parameters
in guidance, consistent with the policy finalized in part 2 of the 2022
Payment Notice.
For benefit years beginning on or after January 1, 2027, we propose
three revisions to the standards for State selection of EHB-benchmark
plans at Sec. 156.111. First, we propose to consolidate the options
for States to change EHB-benchmark plans at Sec. 156.111(a) to reduce
the burden on States to decide between three functionally identical
choices. Second, we propose to revise the typicality standard at Sec.
156.111(b)(2) so that, in demonstrating that a State's new EHB-
benchmark plan provides a scope of benefits that is equal to the scope
of benefits of a typical employer plan in the State, the scope of
benefits of a typical employer plan in the State would be defined as
any scope of benefits that is as or more generous than the scope of
benefits in the State's least generous typical employer plan
(supplemented by the State as necessary to provide coverage within each
EHB category at Sec. 156.110(a)), and as or less generous than the
scope of benefits in the State's most generous typical employer plan
(supplemented by the State as necessary to provide coverage within each
EHB category at Sec. 156.110(a)), among the typical employer plans
currently defined at Sec. 156.111(b)(2)(i)(A) and (B). We also propose
to remove the generosity standard at Sec. 156.111(b)(2)(ii) and to
make a technical revision to the language regarding supplementation at
Sec. 156.111(b)(2)(i). Third, we propose to revise Sec. 156.111(e)(3)
to require States to submit a formulary drug list as part of their
application to change EHB-benchmark plans only if the State is seeking
to change their prescription drug EHB.
We propose to remove the regulatory prohibition at Sec. 156.115(d)
on issuers from including routine non-pediatric dental services as an
EHB, which would provide States the option to add routine adult dental
services as an EHB by updating their EHB-benchmark plans pursuant to
Sec. 156.111.
[[Page 82520]]
We propose to amend Sec. 156.122 to codify that prescription drugs
in excess of those covered by a State's EHB-benchmark plan are
considered EHB. As a result, they would be subject to requirements
including the annual limitation on cost sharing and the restriction on
annual and lifetime dollar limits, consistent with Sec. 156.130,
unless the coverage of the drug is mandated by State action and is in
addition to EHB pursuant to Sec. 155.170, in which case the drug would
not be considered EHB. In addition, for plan years beginning on or
after January 1, 2026, we propose to amend Sec. 156.122 to provide
that the Pharmacy & Therapeutics (P&T) committee must include a
consumer representative. We also seek comment on a possible future
policy proposal to replace the United States Pharmacopeia (USP)
Medicare Model Guidelines (MMG) with the USP Drug Classification system
(DC) to classify the prescription drugs required to be covered as EHB
under Sec. 156.122(a)(1). In particular, we seek public comment to
confirm or further expand our understanding of the risks and benefits
associated with replacing the USP MMG with the USP DC in this context.
For PY 2025, we propose to follow the approach finalized in the
2024 Payment Notice concerning standardized plan option metal levels,
and to otherwise maintain continuity with our approach to standardized
plan options finalized in the 2023 and 2024 Payment Notices.\10\ We
propose to make only minor updates to the plan designs for PY 2025 to
ensure these plans have AVs within the permissible de minimis range for
each metal level. Our proposed updates to plan designs for PY 2025 are
detailed in Sec. 156.201 of the preamble of this proposed rule,
specifically in Tables 12 and 13.
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\10\ This includes continuation of the differential display of
standardized plan options on <a href="http://HealthCare.gov">HealthCare.gov</a> and enforcement of the
standardized plan options display requirements for approved web-
brokers and QHP issuers using a direct enrollment pathway to
facilitate enrollment through an FFE or SBE-FP-- including both the
Classic Direct Enrollment (Classic DE) and Enhanced Direct
Enrollment (EDE) Pathways.
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In the 2024 Payment Notice (88 FR 25858), we announced our intent
to propose an exceptions process that would allow issuers to offer non-
standardized plan options in excess of the limit of two per product
network type, metal level, inclusion of dental and vision benefit
coverage, and service area for PY 2025 and subsequent years. We propose
an exceptions process at Sec. 156.202 that would allow issuers to
offer more than two non-standardized plan options per product network
type, metal level, inclusion of dental and vision benefit coverage, and
service area for PY 2025 and subsequent plan years, if the issuer can
demonstrate that these additional non-standardized plans have specific
design features that would substantially benefit consumers with chronic
and high-cost conditions.
We propose a new regulatory provision that would permit us to allow
a CO-OP loan recipient to voluntarily terminate its loan agreement with
us and cease to constitute a qualified non-profit health insurance
issuer (QNHII), for the purpose of pursuing innovative business plans
that are not otherwise consistent with the governance requirements and
business standards applicable to a CO-OP borrower. Under the proposed
new regulatory provision, we would be able to consider a request by a
CO-OP to voluntarily terminate its loan agreement for reasons other
than financial viability, provided all outstanding CO-OP loans issued
to the loan recipient are repaid in full prior to termination, and we
believe granting the request would meaningfully enhance consumer access
to quality, affordable, member-focused, non-profit health care options
in affected markets.
We propose conforming amendments to the payment and collections
process set forth at Sec. 156.1215 to align with the policies and
regulations proposed in the Federal Independent Dispute Resolution
Operations proposed rule (88 FR 75744). This proposal would provide
that administrative fees for utilizing the No Surprises Act Federal
independent dispute resolution (IDR) process for health insurance
issuers that participate in financial programs under the ACA would be
subject to netting as part of HHS' integrated monthly payment and
collections cycle. Additionally, we propose to amend Sec. 156.1215 to
provide that any amount owed to the Federal government by an issuer and
its affiliates for unpaid administrative fees due to the Federal
government from these issuers and their affiliates for utilizing the
Federal IDR process in accordance with Sec. 149.510(d)(2), after HHS
nets amounts owed by the Federal government under these programs, would
be the basis for calculating a debt owed to the Federal government.
III. Provisions of the Proposed Regulations
A. 31 CFR part 33 and 45 CFR Part 155--Section 1332 Waivers
1. Background
Section 1332 of the ACA permits States to apply for a section 1332
waiver to pursue innovative strategies for providing their residents
with access to higher value, more affordable health insurance coverage.
To allow for greater flexibility in communicating with the public, we
are proposing updates to the public hearing process requirements for
section 1332 waivers.
Under section 1332(b) of the ACA, the Secretary of HHS and the
Secretary of the Treasury (collectively, the Secretaries) may exercise
their discretion to approve a request for a section 1332 waiver only if
the Secretaries determine that the proposal for the section 1332 waiver
meets the following four requirements, referred to as the statutory
guardrails: (1) the proposal will provide coverage that is at least as
comprehensive as coverage defined in section 1302(b) of the ACA and
offered through Exchanges established under title I of the ACA, as
certified by the Office of the Actuary of CMS, based on sufficient data
from the State and from comparable States about their experience with
programs created by the ACA and the provisions of the ACA that would be
waived; (2) the proposal will provide coverage and cost-sharing
protections against excessive out-of-pocket spending that are at least
as affordable for the State's residents as would be provided under
title I of the ACA; (3) the proposal will provide coverage to at least
a comparable number of the State's residents as would be provided under
title I of the ACA; and (4) the proposal will not increase the Federal
deficit. The Secretaries retain their discretionary authority to deny
requested section 1332 waivers when appropriate given consideration of
the application, as a whole, even if a proposal for a section 1332
waiver meets the four statutory guardrails.
The Departments are responsible for monitoring an approved section
1332 waiver's compliance with the statutory guardrails and for
conducting evaluations to determine the impact of the section 1332
waiver. Specifically, section 1332(a)(4)(B)(v) of the ACA requires the
Secretaries to promulgate regulations that provide for a process for
the periodic evaluation of approved section 1332 waivers. The
Secretaries must also promulgate regulations that provide for a process
under which States with approved section 1332 waivers submit to the
Secretaries periodic reports concerning the implementation of the
State's waiver program.\11\
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\11\ See ACA section 1332(a)(4)(B)(iv).
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[[Page 82521]]
2. Proposed Amendments to Normal Public Notice Requirements (31 CFR
33.112, 31 CFR 33.120, 45 CFR 155.1312, and 45 CFR 155.1320)
Sections 1332(a)(4)(B)(i) and (iii) of the ACA provide that the
Secretaries shall promulgate regulations that provide for a process for
public notice and comment at the State level, including public
hearings, and a process for providing public notice and comment at the
Federal level after the section 1332 waiver application is received by
the Secretaries, respectively, that are both sufficient to ensure a
meaningful level of public input. Current regulations at 31 CFR 33.112
and 45 CFR 155.1312 specify State public notice and comment period and
participation requirements for proposed section 1332 waiver requests,
and 31 CFR 33.116(b) and 45 CFR 155.1316(b) specify the public notice
and comment period and approval requirements under the accompanying
Federal process.
In the November 2020 interim final rule (85 FR 71142), the
Departments revised regulations to set forth flexibilities in the
public notice requirements and post-award public participation
requirements for section 1332 waivers during the COVID-19 PHE. In the
September 2021 final rule (86 FR 53502), the Departments extended those
changes beyond the COVID-19 PHE to allow similar flexibilities in the
event of future natural disasters; PHEs; or other emergent situations
that threaten consumers' access to health insurance coverage,
consumers' access to health care, or human life. Currently, in such an
event, States may submit a request to the Departments to modify, in
part, the State public notice requirements specified in 31 CFR
33.112(a)(1), (b), (c), and (d) and 45 CFR 155.1312(a)(1), (b), (c),
and (d), and the Federal public notice requirement specified in 31 CFR
33.116(b) and 45 CFR 155.1316(b), pursuant to 31 CFR 33.118(a) and 45
CFR 155.1318(a).
The criteria to request a modification from the normal public
notice requirements during an emergent situation are set forth in 31
CFR 33.118(b)(1) through (5) and 45 CFR 155.1318(b)(1) through (5).
Pursuant to 31 CFR 33.118(b)(3) and 45 CFR 155.1318(b)(3), the State's
request to modify normal public notice procedures is required to
include: the justification for the requested modification from the
State public notice procedures as it relates to the emergent situation
and the alternative public notice procedures, including public
hearings, that it proposes to implement at the State level and that are
designed to provide the greatest opportunity for and level of
meaningful public input from impacted interested parties that is
practicable given the emergent circumstances motivating the State's
request for a modification.
Since the finalization of the flexibilities in 31 CFR 33.118(b)(1)
through (5) and 45 CFR 155.1318(b)(1) through (5), almost all States
with approved section 1332 waivers (``section 1332 waiver States'')
submitted requests that were granted by the Departments to conduct
their annual post-award forums virtually instead of in-person during
the COVID-19 PHE to reduce the risk of transmission of COVID-19.
Similarly, during the COVID-19 PHE, States submitting new section 1332
waiver applications, waiver extension requests, or waiver amendment
requests also requested to host their State public hearings virtually
and these requests were also granted by the Departments. However, with
the recent expiration of the Federal COVID-19 PHE \12\ (and many State
COVID-19 PHEs) \13\ and in line with the requirements of 31 CFR
33.120(c) and 45 CFR 155.1320(c) and 31 CFR 33.112(c) and 45 CFR
155.1312(c), the Departments have ceased granting States' requests to
hold public hearings or post-award forums virtually instead of in-
person on the basis of the Federal COVID-19 PHE.
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\12\ The Federal COVID-19 PHE ended on May 11, 2023. https://
www.hhs.gov/about/news/2023/05/09/fact-sheet-end-of-the-covid-19-
public-health-
emergency.html#:~:text=That%20means%20with%20the%20COVID,the%20expira
tion%20of%20the%20PHE.
\13\ For example, in Alaska the State's PHE ended on July 1,
2022 (<a href="https://health.alaska.gov/PHE/Pages/default.aspx">https://health.alaska.gov/PHE/Pages/default.aspx</a>); in Colorado
the Disaster Recovery Order ended on April 27, 2023 (<a href="https://hcpf.colorado.gov/covid-19-phe-planning">https://hcpf.colorado.gov/covid-19-phe-planning</a>); in Georgia the State of
Emergency ended on May 11, 2023 (<a href="https://dph.georgia.gov/press-releases/2023-05-11/dph-news-release-end-public-health-emergency-declaration">https://dph.georgia.gov/press-releases/2023-05-11/dph-news-release-end-public-health-emergency-declaration</a>); and in Rhode Island the State's COVID-19 Disaster
Emergency ended on May 11, 2023 (<a href="https://governor.ri.gov/executive-orders/executive-order-23-05">https://governor.ri.gov/executive-orders/executive-order-23-05</a>).
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Upon review and consideration of the lessons learned during the
COVID-19 PHE, the Departments have determined that some current
provisions regarding normal State public notice procedures are outdated
given the increased accessibility that technology has provided for
virtual and telephonic meetings. States have shared that their
residents benefitted from the States' opportunity to host public
hearings and post-award forums virtually, and that they would like to
continue doing so to facilitate attendance. States have also reported
to the Departments that hosting meetings virtually during the COVID-19
PHE did not decrease the amount or quality of meaningful input
received. States' experience during this time demonstrated that
interested parties were able to virtually attend meetings and submit
public comments verbally or in-writing, and States did not report any
significant issues relating to virtual platforms that impeded public
attendance or participation. States continued to share with the
Departments summaries of their post-award forums, as well as all public
comments received and actions taken in response to concerns or
comments, in accordance with section 1332 waiver annual reporting
requirements. In States' new waiver applications, waiver extension
requests, and waiver amendment requests, States also shared with the
Departments summaries of virtually conducted hearings from their State
public comment periods and addressed public comments or concerns
received.
Beyond mitigating the spread of COVID-19, information shared by
section 1332 waiver States has demonstrated that the opportunity to
host post-award forums and public hearings on virtual platforms
facilitated comparable or higher levels of public attendance when
compared to previously held in-person meetings. For example, at
Maryland's annual post-award forums held in 2019 (in-person) and 2020-
2022 (virtual), the State saw comparable participation across the years
from interested parties. Minnesota also reported comparable attendance
at its post-award forums across the years: 4 attendees in 2018 (in-
person), 1 in 2019 (in-person), 4 in 2020 (virtual), 9 in 2021
(virtual),\14\ and 2 in 2022 (virtual). Likewise, Wisconsin had 6
attendees at its post-award forum in 2019 (in-person), 24 in 2020
(virtual),\15\ 11 in 2021 (virtual), and 7 in 2022 (virtual). Wisconsin
noted that using a virtual format has allowed individuals who would
otherwise not be able to attend in-person to view the State's
presentation and that this has proven to be a convenient means for
individuals to attend the forum.
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\14\ Note that this post-award hearing was also a hearing for
the State's waiver extension application, which likely increased
attendance.
\15\ Note that attendance was relatively higher in 2020 likely
due to the forum following the State's first full year of
implementing its reinsurance program.
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States that began waiver implementation after the start of the
COVID-19 PHE have also reported successfully hosting virtual post-award
forums. For example, Colorado conducted its first post-award forum
entirely virtually in 2020 and reported
[[Page 82522]]
79 attendees.\16\ Pennsylvania had 2 attendees at its first post-award
forum in 2021 (virtual) and 4 in 2022 (virtual). Pennsylvania noted
that due to the expansiveness of the State's geography, there has
historically been low in-person attendance, as observed at its in-
person public hearings in 2019 for its waiver application, where no
members of the public attended the first meeting, and two members of
the public attended the second meeting.
---------------------------------------------------------------------------
\16\ Note that this post-award forum was also a hearing for the
State's waiver extension application, which likely increased
attendance.
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States submitting new waiver applications, waiver extension
requests, or waiver amendment requests during the COVID-19 PHE also
reported successfully conducting their public hearings on virtual
platforms. For example, in January 2022, Alaska held a combined post-
award forum and State public hearing for its waiver extension
application both in-person and with a telephonic option, which 3
members of the public attended either in-person or virtually. In April
2022, Washington held two State public hearings virtually, in which 9
representatives from organizations attended and shared public comments.
There are other Federal programs and agencies that permitted a
virtual option in place of in-person public hearings prior to the
COVID-19 PHE or that have more recently amended their policies for
public input to continue virtual and telephonic options that were first
implemented during the COVID-19 PHE. For example, States that are
applying for Medicaid section 1115 demonstrations are permitted to use
telephonic and web-based conference capabilities for public meetings.
In fact, per 42 CFR 431.408(a)(3), a State must use telephonic and/or
web conference capabilities for at least one of the two required public
hearings to ensure statewide accessibility to the public hearing,
unless it can document it has afforded the public throughout the State
the opportunity to provide comment, such as holding the two public
hearings in geographically distinct areas of the State.
As another example, during the COVID-19 PHE, the Internal Revenue
Service (IRS) began holding public hearings on notices of proposed
rulemaking telephonically instead of in-person. Following the end of
the Federal COVID-19 PHE, the IRS recently announced that, for proposed
regulations published in the Federal Register after May 11, 2023,\17\
public hearings would be conducted in-person but that a telephonic
option would remain available for those who prefer to attend or testify
by telephone.
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\17\ Internal Revenue Service, Public Hearings on Proposed
Regulations to Be Conducted in Person with Telephone Options
Available, Announcement 2023-16. Accessed at <a href="https://www.irs.gov/pub/irs-drop/a-23-16.pdf">https://www.irs.gov/pub/irs-drop/a-23-16.pdf</a>.
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The Departments considered whether to propose requiring States to
hold at least one of the required public hearings for waiver
applications in-person. However, as explained above, States have
successfully hosted post-award forums and public hearings for section
1332 waiver applications virtually to allow for meaningful public input
over the last several years. Furthermore, by allowing States the
ability to hold all of their meetings virtually, States may better
allow for input across different geographies, communities, and
populations. We also considered proposing the standard under section
1115 demonstrations where one hearing is required to be done virtually.
However, given the successful hosting of virtual meetings with public
participation by States for section 1332 waivers, it does not seem
necessary to continue to require in-person meetings to solicit public
input on section 1332 waivers.
The Departments believe that by allowing States the opportunity to
hold post-award forums and public hearings virtually and through
digital platforms, States would be able to continue facilitating
attendance and participation from interested parties and the public to
provide meaningful input. As such, the Departments are of the view that
updating the State public notice procedures would enhance public
participation in the section 1332 waiver review and monitoring process.
This approach would help remove barriers to participation and increase
opportunities for engagement in policymaking for communities and local
partners who may face barriers to in-person participation (for example,
those in rural areas). This approach is also consistent with Executive
Order 14094, Executive Order on Modernizing Regulatory Review, as it
would proactively engage interested or affected parties, including
members of underserved communities, and promote best practices for
information accessibility and engagement with interested or affected
parties through the use of alternative platforms and media for engaging
the public.\18\ Further, this approach may improve States' ability to
understand and eliminate barriers experienced by underserved or under-
represented communities, and identify opportunities to advance health
equity, while diminishing administrative burden related to the
integration of in-person and virtual formats.
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\18\ 88 FR 21879. <a href="https://www.govinfo.gov/content/pkg/FR-2023-04-11/pdf/2023-07760.pdf">https://www.govinfo.gov/content/pkg/FR-2023-04-11/pdf/2023-07760.pdf</a>.
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Therefore, we propose that a virtual (that is, one that uses
telephonic, digital, and/or web-based platforms) or hybrid (that is,
one that provides for both in-person and virtual attendance) public
hearing or forum be considered as the equivalent of holding an in-
person meeting. In the 2012 final rule (77 FR 11700), the Departments
noted that as set forth in 31 CFR 33.112(c)(1) and 45 CFR
155.1312(c)(1), a State must hold at least two public hearings in
distinct locations. Under the proposal in this rule to modify the
normal public notice procedures, States would still need to hold at
least two public hearings in distinct locations. For example, the
Departments clarify that under this rule's proposal to allow
flexibility to host these meetings virtually, a State would not be
permitted to count a public hearing in which there is simultaneously an
in-person location and virtual platform as two hearings (or two
locations). Instead, one virtual or hybrid meeting would still count as
one public hearing, and two virtual or hybrid meetings would count as
two public hearings.
To codify these new proposed policies, we propose to amend 31 CFR
33.112(c) and 45 CFR 155.1312(c) and 31 CFR 33.120(c) and 45 CFR
155.1320(c). More specifically, the Departments propose to amend 31 CFR
33.112(c) and 45 CFR 155.1312(c) to permit States to conduct public
hearings in a virtual (that is, one that uses telephonic, digital, and/
or web-based platforms) or hybrid (that is, one that provides for both
in-person and virtual attendance) format in lieu of conducting an in-
person meeting. The Departments also propose to amend 31 CFR 33.120(c)
and 45 CFR 155.1320(c) to provide that for a State's annual post-award
forum, the public forum shall be conducted in an in-person, virtual
(that is, one that uses telephonic, digital, and/or web-based
platforms), or hybrid (that is, one that provides for both in-person
and virtual attendance) format. The Departments propose that these
changes go into effect upon finalization of this rule. Because these
changes would relieve a regulatory restriction, the Departments
anticipate that they would be made effective immediately upon
publication of a final rule.
This proposal is limited to allowing flexibility to host required
meetings virtually. States would be required to continue to abide all
other public notice requirements, including public notice
[[Page 82523]]
procedural requirements for waiver applications, waiver extension and
waiver amendment requests, and post-award forums. For example, States
would still be required to have a process to consult and collaborate
with Federally-recognized tribes,\19\ as applicable, as well as take
reasonable steps to provide meaningful access for individuals with
limited English proficiency and appropriate steps to ensure effective
access for and communication with individuals with disabilities,
including accessibility of information and communication
technology.\20\ States should recognize that virtual meetings may
present additional accessibility challenges for people with
communications and mobility disabilities, as well as to those who lack
broadband access. Complying with the requirement to ensure effective
communication may entail providing American Sign Language
interpretation and real-time captioning and ensuring that the virtual
platform is interoperable with assistive technology for those with
mobility difficulties.
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\19\ See 31 CFR 33.112(a)(2) and 45 CFR 155.1312(a)(2).
\20\ See Title VI of the Civil Rights Act of 1964 (42 U.S.C.
2000d, 45 CFR part 80), Section 1557 of the ACA (42 U.S.C. 18116),
Section 504 of the Rehabilitation Act of 1973 (29 U.S.C 794, 45 CFR
part 84), and Title II of the Americans with Disabilities Act (42
U.S.C. 1213 et seq., 28 CFR part 35). The HHS Office for Civil
Rights enforces applicable Federal civil rights laws that prohibit
discrimination on the basis of race, color, national origin, sex,
age, or disability, as well as laws protecting the exercise of
conscience and religious freedom, including the Religious Freedom
Restoration Act (Pub. L 103-141) (42 U.S.C. 2000bb through 2000bb-
4).
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Finally, the Departments clarify that under this proposal, States
should have a process by which members of the public can request in-
person meetings for the annual post-award forum or State public
hearings on waiver applications, waiver extension requests, or waiver
amendments requests, and that States should accommodate those requests
whenever possible. In addition, States with approved section 1332
waivers and States seeking approval for proposed waivers would continue
to have flexibility to submit requests to the Departments during
emergent situations to modify certain public participation requirements
as set forth in 31 CFR 33.118(b)(1) through (5) and 45 CFR
155.1318(b)(1) through (5).
The Departments seek comment on these proposals.
B. 42 CFR Parts 435 and 600
1. Increase State Flexibility in the Use of Income and Resource
Disregards for Non-MAGI Populations (42 CFR 435.601)
We propose to provide States with greater flexibility to adopt
income and/or resource disregards in determining financial eligibility
under section 1902(r)(2) of the Act for individuals excepted from
application of financial methodologies based on modified adjusted gross
income (``MAGI-based methodologies'').
Section 1902(r)(2) of the Act requires that States, in determining
Medicaid financial eligibility, apply a methodology that may be less
restrictive, but which may not be more restrictive, than in the case of
individuals seeking eligibility on the basis of being 65 years old or
older, having blindness or a disability, under the supplemental
security income (SSI) program. In the case for other individuals, the
methodology may be less restrictive, but may not be more restrictive
than the methodology applied to determine eligibility ``under the State
plan most closely categorically related.'' For the latter populations,
prior to the enactment of the ACA, the aid to families with dependent
child AFDC program methodologies were generally used (42 CFR
435.601(a), (b), and (d)(2)(ii)). However, section 2002(a) of the ACA
amended section 1902(e) of the Act which, at paragraph (14)(A),
requires that, notwithstanding section 1902(r)(2) of the Act (or any
other provision of title XIX of the Act), States use MAGI-based
methodologies in determining individuals' Medicaid eligibility unless
the individual is excepted from such methodologies under section
1902(e)(14)(D) of the Act.\21\ Implemented in our regulations at 42 CFR
435.603(j), these exceptions include, but are not limited to,
individuals who are age 65 years old or older; have blindness or a
disability; are being evaluated for coverage as medically needy; or
request need for coverage of long-term services and supports (LTSS).
This means, for example, that in determining financial eligibility for
an optional eligibility group in which being at least 65 years old is a
requirement, SSI-based methodologies (as the most closely related cash
assistance program) and not MAGI-based methodologies apply, and States
must apply a methodology no more restrictive than the methodology of
the SSI program. Similarly, in determining eligibility for a medically
needy group of parents and caretaker relatives, States must apply a
methodology no more restrictive than the methodology of the former AFDC
program.\22\
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\21\ MAGI-based methodologies are the rules described in section
36B(d)(2)(B) of the U.S. Internal Revenue Code.
\22\ Because the AFDC program no longer exists, we have
permitted States, where AFDC methodologies otherwise apply, to use
MAGI-like methodologies instead of AFDC methodologies in determining
eligibility for the medically needy. 42 CFR 435.831(b)(1)(ii).
Disregards under section 1902(r)(2)(A) of the Act may be applied to
individuals whose eligibility is determined using these ``MAGI-
like'' methodologies. For a discussion of MAGI-like methodologies,
see 81 FR 86382, 86415-86418 (November 30, 2016). We have proposed
that States have the option to apply MAGI-like methodologies in all
circumstances in which AFDC methodologies otherwise apply. 87 FR
54842.
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Importantly, for any group to which SSI, AFDC, or MAGI-like
methodologies apply, States may utilize the authority under section
1902(r)(2)(A) of the Act to apply a ``less restrictive'' methodology;
that is, they may elect to disregard income and/or resources that would
otherwise be countable under the relevant methodology. For example,
under SSI methodologies, $20 of an individual's otherwise countable
monthly income is disregarded in determining income eligibility. A
State Medicaid agency, using the authority under section 1902(r)(2)(A)
of the Act, could adopt an additional monthly income disregard of $100
for an eligibility group to which SSI methodologies apply.\23\
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\23\ Section 1902(r)(2) of the Act does not limit the amount of
an income or a resource disregard. States could, for example,
disregard all countable income and/or resources for an eligibility
under the authority of section 1902(r)(2) of the Act. Under 42 CFR
435.1007(e), the Federal financial participation (FFP)-related
income limits are applied after application of cash assistance
income deductions and any disregards in the State plan authorized
under section 1902(r)(2) of the Act.
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In 1993, we implemented the less-restrictive methodology authority
in section 1902(r)(2)(A) of the Act at 42 CFR 435.601(d)(4) (58 FR
4908-01, 4929-4930 (January 19, 1993)). We confirmed in the regulation
the eligibility groups to which States may apply less restrictive
methodologies, which include: optional categorically needy groups
described in section 1902(a)(10)(A)(ii) of the Act; medically needy
groups described in section 1902(a)(10)(C) of the Act; the mandatory
group serving individuals 65 years old or older; who have blindness or
disabilities in States that have exercised the option in section
1902(f) of the Act to apply more restrictive criteria to these
populations than SSI (so-called ``section 209(b) States''); and
Qualified Medicare Beneficiaries described in sections
[[Page 82524]]
1902(a)(10)(E) and 1905(p) of the Act. Additionally, the current
regulation requires that any less restrictive methodologies elected by
a State must be ``comparable for all persons within each category of
assistance within an eligibility group.'' As further explained in 42
CFR 435.601(d)(4): ``For example, if the agency chooses to apply less
restrictive income or resource methodology to an eligibility group of
aged individuals, it must apply that methodology to all aged
individuals within the selected group.''
In 2001, we issued guidance on the use of less restrictive
methodologies by States (``Medicaid Eligibility Groups and Less
Restrictive Methods of Determining Countable Income and Resources
Questions and Answers,'' May 11, 2001 (May 2001 guidance)). As
explained in the May 2001 guidance, an ``eligibility group'' under
section 1902(a)(10)(A)(ii) of the Act for purposes of less restrictive
methodologies is created by applying the eligibility requirements
described in any of the clauses of section 1902(a)(10)(A)(ii) of the
Act (for example, section 1902(a)(10)(A)(ii)(I) of the Act) to one of
the categorical populations described in section 1905(a) of the Act
(for example, individuals under the age of 21, or at the option of a
State, under the age of 20, 19, or 18, as described in section
1905(a)(i) of the Act).
For example, a State could elect to apply the eligibility criteria
described in section 1902(a)(10)(A)(ii)(V) of the Act (relating to
individuals in medical institutions for at least 30 consecutive days
whose incomes do not exceed 300 percent of the SSI Federal benefit
rate) to individuals 65 years old or older (the population described in
section 1905(a)(iii) of the Act). A State similarly could apply the
eligibility criteria described in section 1902(a)(10)(A)(ii)(V) of the
Act to other categorical populations described in section 1905(a) of
the Act, such as individuals who have blindness or disabilities
(section 1905(a)(vii) of the Act) or individuals under age 21 (section
1905(a)(i) of the Act). As explained in the May 2001 guidance, the
election of the optional eligibility category at section
1902(a)(10)(A)(ii)(V) of the Act and a population in section 1905(a) of
the Act (for example, individuals 65 years old or older) forms a
singular eligibility group.\24\
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\24\ As also explained in the May 2001 guidance, medically needy
groups are created in the same manner; for example, a State that has
adopted the medically needy category in section 1902(a)(10)(C) of
the Act (that is, the medically needy) and elects to include the
population described in section 1905(a)(ii) of the Act (parents and
caretaker relatives) forms a singular medically needy group. Section
1902(a)(10)(C) of the Act requires that States that select the
medically needy category must adopt a medically needy group for
children under 18 and a medically needy group for pregnant
individuals.
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Thus, consistent with 42 CFR 435.601(d)(4), if a State that covers
an eligibility group of individuals 65 years old and older who have
been in a medical institution for at least 30 consecutive days wants to
adopt a resource disregard of $5,000 of otherwise countable resources,
the State must apply the disregard to all 65 and older individuals who
are seeking coverage under the group; the State could not target the
disregard at only certain 65 and older individuals seeking eligibility
in the group, for example individuals age 65 and older with a diagnosed
cognitive impairment.
Section 1902(r)(2)(A) of the Act does not expressly impose, and we
did not identify a specific legal rationale in the proposed or final
rule requiring, the ``comparability'' mandate that we incorporated into
42 CFR 435.601(d)(4). 54 FR 39421, 39433 (September 26, 1989); 58 FR
4908, 4919 (January 19, 1993). Section 1902 of the Act contains two
separate provisions which are commonly referred to as ``comparability''
rules: section 1902(a)(10)(B) of the Act, which requires that the
amount, duration, and scope of the medical assistance available to any
categorically needy individuals must not be less than the medical
assistance available to any other categorically needy individuals
(subject to express exceptions in the statute); and section 1902(a)(17)
of the Act, which requires that eligibility standards, subject to
certain exceptions, must be ``comparable for all groups.''
Upon further analysis, we conclude that neither section
1902(a)(10)(B) of the Act nor section 1902(a)(17) of the Act requires
that a State adopting a less restrictive methodology for a given
eligibility group apply such methodology to all individuals seeking
coverage under the group. First, a State's use of a less restrictive
methodology for an eligibility group would never alter the amount,
duration, and scope of medical assistance available within the group,
which means the comparability mandate in section 1902(a)(10)(B) of the
Act would never be implicated by a less restrictive methodology.
Second, the comparability mandate in section 1902(a)(17) of the Act
refers to standards, not methodologies, which are different terms and
which we have in the past expressly defined differently. ``Standard''
refers to the dollar level that a person's income or resources cannot
exceed to qualify for Medicaid; ``methodology'' refers to the rules for
determining what sources and amounts of income and resources will be
counted in determining whether a person's income exceeds the income and
resource standard. 54 FR 39421-01, 39430 (September 26, 1989). Thus, we
conclude that the incorporation of a comparability mandate into 42 CFR
435.601(d)(4) was a policy choice that was not mandated by Federal law.
In addition, section 3(b) of the Sustaining Excellence in Medicaid
Act (Pub. L. 116-39, enacted in 2019) directed that nothing in section
1902(a)(17) of the Act should be construed as prohibiting a State from
adopting income or resource disregards under section 1902(r)(2) of the
Act exclusively for people who need home and community-based services
(HCBS) authorized under various authorities. In other words, section
3(b) of the Sustaining Excellence in Medicaid Act confirmed that, at
least with regard to the use of section 1902(r)(2)-related authority to
target income and/or resource disregards at people who need HCBS, the
comparability mandate in section 1902(a)(17) of the Act does not impose
a bar. We believe that this provides further support for the view that
the comparability mandate in section 1902(a)(17) of the Act should not
be considered to require comparability in the use of less restrictive
methodologies under section 1902(r)(2)(A) of the Act.\25\
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\25\ For further information, see CMS State Medicaid Director
Letter 21-004, ``State Flexibilities to Determine Financial
Eligibility for Individuals in Need of Home and Community-Based
Services.'' <a href="https://www.medicaid.gov/sites/default/files/2021-12/smd21004_0.pdf">https://www.medicaid.gov/sites/default/files/2021-12/smd21004_0.pdf</a>.
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Over the years, a number of States also have sought to target
income and/or resource disregards to other populations within an
eligibility group without applying the disregard to all, including, for
example, individuals with disabilities who have accumulated resources
through saving their earned income. Under this example, the eligibility
group serving individuals with disabilities who have earned income has
comparatively higher resource standard than other eligibility groups
with a resource standard to allow these individuals to save their
earned income. When these individuals stop working and must qualify in
a separate eligibility group to maintain their Medicaid, most typically
one with a much lower resource standard, they may be faced with the
choice of forgoing Medicaid coverage or exhausting the savings they
were effectively incentivized to accumulate in their
[[Page 82525]]
original eligibility group in order to retain their Medicaid
eligibility. States cannot address this predicament without effectively
increasing the resource standard for everyone in the new group because
States currently cannot, consistent with the comparability mandate in
42 CFR 435.601(d)(4), target a resource disregard at applicants for a
particular eligibility group based on their previous eligibility in a
separate group.
For these reasons, we are proposing to eliminate paragraph (d)(4)
from 42 CFR 435.601, which would allow States to target income and/or
resource disregards at discrete subpopulations in the same eligibility
group, provided the subpopulation is reasonable and does not violate
other Federal statutes (for example, it does not discriminate based on
race, gender, sexual orientation or disability). We believe this would
increase State flexibility and provide States more options to extend
eligibility to specific populations based on the State's circumstances.
As noted above, this proposed regulatory change would not be applicable
to eligibility groups to which MAGI-based financial methodologies apply
but could be applied to most non-MAGI eligibility groups. In enacting
the Sustaining Excellence in Medicaid Act, Congress recognized that the
ability to target income and resource disregards at people who need
HCBS provides States a critical tool in their efforts to ``rebalance''
their LTSS programs and move institutionalized individuals to
community-based care. We similarly believe that more broadly
eliminating the comparability rule in the use of income and/or resource
disregards would enable States to achieve targeted expansions of
coverage that best meet their needs, in contrast to the all-or-nothing
approach that is effectively required by the current regulation.
It is possible that, in eliminating the comparability rule from 42
CFR 435.601(d), a State might narrow an existing disregard that is
broadly available to an eligibility group to discrete members of the
group. However, CMS has not received inquiries from States on the
feasibility of such an approach to the same extent that we have
received questions from States on whether they may use income and/or
resource disregards to expand eligibility in a targeted manner. CMS
believes that, in the absence of a comparability rule in 42 CFR
435.601(d), States would on the whole utilize disregard-related
authority to expand eligibility instead of contracting it.
Consistent with 42 CFR 435.601(f)(2), under the proposed revisions
to 42 CFR 435.601(d), States would continue to be required to submit a
State plan amendment describing any new less restrictive methodologies
the State seeks to apply and the groups to which it seeks to apply such
methodologies. We also confirm that eliminating paragraph (d)(4) from
42 CFR 435.601 would not mean that States would be required to target
any new income or resource disregards or modify any existing ones. The
proposed change simply provides States with additional flexibility to
do so.
We propose to amend 42 CFR 435.601 to: eliminate the current
language of paragraph (d)(4); and redesignate the current paragraph
(d)(5) as paragraph (d)(4). We seek comment on our proposal.
2. Changes to the Basic Health Program Regulations (42 CFR 600.320)
Section 1331 of the Patient Protection and Affordable Care Act, as
amended by the Health Care and Education Reconciliation Act of 2010
(Pub. L. 111-152, enacted March 30, 2010), provides States with the
option to operate a Basic Health Program (BHP). In the States that
elect to operate a BHP, the State's BHP makes affordable health
benefits coverage available for lawfully present individuals under age
65 with household incomes between 133 and 200 percent of the Federal
poverty level (FPL) (or in the case of a lawfully present non-citizen,
ineligible for Medicaid or the Children's Health Insurance Program
(CHIP) due to immigration status, with household incomes between zero
and 200 percent of the FPL) who are not eligible for Medicaid, CHIP, or
other minimum essential coverage. As of the date of this proposed rule,
only New York and Minnesota have implemented a BHP.
Under current 42 CFR 600.320(c), States must establish a uniform
method of determining the effective date of eligibility for enrollment
in a standard health plan following either the Medicaid process at 42
CFR 435.915 exclusive of Sec. 435.915(a) or the Exchange standards at
45 CFR 155.420(b)(1).
Under the Medicaid rules at Sec. 435.915, the effective date of an
individual's eligibility is also the effective date of coverage. Under
the Exchange rules at 45 CFR 155.420(b)(1), an individual must first be
determined to be a qualified individual (that is, eligible to enroll in
a QHP through an Exchange). After that determination is made, the
individual can make a plan selection. The Exchange coverage effective
date is then determined based on when the qualified individual selects
their plan. If the plan selection is made between the first and
fifteenth day of the month, coverage will be effective the first day of
the month following the plan selection month. If the plan selection is
made between the sixteenth and the last day of the month, coverage will
be effective the first day of the second month following the plan
selection month.
In States selecting the Medicaid process at 42 CFR 435.915
exclusive of Sec. 435.915(a), eligibility for enrollment in a standard
health plan in the BHP can be effective on either the date the
application was submitted or the first day of the month of such month.
In States selecting the Exchange standards at 45 CFR 155.420(b)(1), an
individual is eligible to enroll in a standard health plan in the BHP
on the first day of the month following the month of application if
that individual is found eligible to enroll in a standard health plan
between the first and the fifteenth of such month. Furthermore, under
the Exchange standards if an individual is found eligible to enroll in
a standard health plan between the sixteenth and the last day of any
month, the individual will have an eligibility effective date of the
first day of the second following month. A State operating a BHP may
require an eligible individual to select a plan and/or pay a premium
prior to the coverage.
Although the current BHP regulation provides States with some
flexibility in establishing an effective eligibility date, it does not
permit a State to select a standard in which all applicants who meet
all requirements are eligible to enroll in a standard health plan in
the BHP effective the first day of the month following the month of
application or eligibility determination regardless of when they apply
or are found eligible to enroll in a standard health plan in the BHP.
As an example, to help to illustrate this point, if an individual
applied on July 7, Medicaid rules would allow a BHP to determine an
individual eligible for enrollment in a standard health plan on July 1
or July 7. If an individual applied on July 7 and was determined BHP-
eligible on July 15, in a State that follows Exchange rules, the
individual would be eligible for enrollment in a standard health plan
on August 1. If the individual was determined BHP-eligible on July 23
in a State that follows Exchange rules, the individual would be
eligible for enrollment in a standard health plan on September 1; the
State could not choose to have coverage start on August 1, regardless
of the date of application.
[[Page 82526]]
Even in a State with real-time eligibility determinations, if the State
follows Exchange rules and the application is on July 23, the
individual would be eligible for enrollment in a standard health plan
on September 1.
We believe eligible individuals should have access to coverage as
soon as is feasible. Since the BHP and Exchange standards were first
established, HHS has taken steps to provide further flexibility for
States to reduce barriers to enrollment and eliminate coverage gaps.
Additionally, system improvements have provided faster and more
accurate eligibility determinations. For example, in practice, all
special enrollment periods on the FFEs now allow coverage to start at
the beginning of the month after the qualifying individual's triggering
event regardless of the plan selection date.
While the Medicaid process at 42 CFR 435.915, exclusive of Sec.
435.915(a), allows for a State operating a BHP to have the earliest
possible effective date for its enrollees, we understand that some
States may have operational or regulatory constraints that do not allow
them to follow the Medicaid process, but may be able to implement an
effective date for all eligible applicants the first day of the month
after the month in which the eligibility determination is made,
regardless of which day of the month such determination occurs.
Therefore, we propose to revise Sec. 600.320(c) to add a third
option at paragraph (c)(iii) that would allow a State operating a BHP
to follow an effective date of eligibility for all enrollees on the
first day of the month following the month in which BHP eligibility is
determined. Because States can require individuals to pay their first
month's premium prior to enrolling in a standard health plan, Sec.
600.320(c)(iii) also reflects this State option. Under Sec.
600.320(c)(i), States will continue to have the option to follow the
Exchange standards at 45 CFR 155.420(b)(1) and under Sec.
600.320(c)(ii), a State may follow Medicaid standards at 42 CFR 435.915
exclusive of Sec. 435.915(a).
We considered an alternative option of whether to instead allow a
State to establish its own uniform effective date policy, outside of
following the three options in this proposed rule, subject to CMS
approval and as long as it is no later than the first day of the second
month following the date that an individual has been determined BHP-
eligible. This alternative option, however, may cause delays in
coverage even further. We seek comment on the proposed additional
option for determining the effective date of eligibility for enrollment
in a standard health plan as well as the alternative option.
C. 45 CFR Part 153--Standards Related to Reinsurance, Risk Corridors,
and HHS Risk Adjustment
In subparts A, D, G, and H of part 153, we established standards
for the administration of the risk adjustment program. The risk
adjustment program is a permanent program created by section 1343 of
the ACA that transfers funds from lower-than-average risk, risk
adjustment covered plans to higher-than-average risk, risk adjustment
covered plans in the individual, small group markets, or merged
markets, inside and outside the Exchanges. In accordance with Sec.
153.310(a), a State that is approved or conditionally approved by the
Secretary to operate an Exchange may establish a risk adjustment
program or have HHS do so on its behalf.\26\ We did not receive any
requests from States to establish and operate a risk adjustment program
for the 2025 benefit year. Therefore, HHS will operate risk adjustment
in every State and the District of Columbia for the 2025 benefit year.
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\26\ See also 42 U.S.C. 18041(c)(1).
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1. Sequestration
In accordance with the OMB Report to Congress on the Joint
Committee Reductions for Fiscal Year 2024, the HHS-operated risk
adjustment program is subject to the fiscal year 2024
sequestration.\27\ The Federal Government's 2024 fiscal year began on
October 1, 2023. Therefore, the HHS-operated risk adjustment program
will be sequestered at a rate of 5.7 percent for payments made from
fiscal year 2024 resources (that is, funds collected during the 2024
fiscal year).
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\27\ OMB. (2023, March 13). OMB Report to the Congress on the
BBEDCA 251A Sequestration for Fiscal Year 2024. <a href="https://www.whitehouse.gov/wp-content/uploads/2023/03/BBEDCA_Sequestration_Report_and_Letter_3-13-2024.pdf">https://www.whitehouse.gov/wp-content/uploads/2023/03/BBEDCA_Sequestration_Report_and_Letter_3-13-2024.pdf</a>.
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HHS, in coordination with OMB, has determined that, under section
256(k)(6) of the Balanced Budget and Emergency Deficit Control Act of
1985,\28\ as amended, and the underlying authority for the HHS-operated
risk adjustment program, the funds that are sequestered in fiscal year
2024 from the HHS-operated risk adjustment program will become
available for payment to issuers in fiscal year 2025 without further
Congressional action. If Congress does not enact deficit reduction
provisions that replace the Joint Committee reductions, the program
would be sequestered in future fiscal years, and any sequestered
funding would become available in the fiscal year following that in
which it was sequestered.
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\28\ Public Law 99-177 (1985).
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Additionally, we note that the Infrastructure Investment and Jobs
Act \29\ amended section 251A(6) of the Balanced Budget and Emergency
Deficit Control Act of 1985 and extended sequestration for the HHS-
operated risk adjustment program through fiscal year 2031 at a rate of
5.7 percent per fiscal year.<SUP>30 31</SUP>
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\29\ Public Law 117-58, 135 Stat. 429 (2021).
\30\ 2 U.S.C. 901a.
\31\ The Infrastructure Investment and Jobs Act (Pub. L. 117-58)
extended sequestration for the HHS-operated risk adjustment program
through 2031 at a rate of 5.7 percent per fiscal year.
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2. HHS Risk Adjustment (Sec. 153.320)
The HHS risk adjustment models predict plan liability for an
average enrollee based on that person's age, sex, and diagnoses (also
referred to as hierarchical condition categories (HCCs)), producing a
risk score. The HHS risk adjustment methodology utilizes separate
models for adults, children, and infants to account for clinical and
cost differences in each age group. In the adult and child models, the
relative risk assigned to an individual's age, sex, and diagnoses are
added together to produce an individual risk score. Additionally, to
calculate enrollee risk scores in the adult models, we added enrollment
duration factors
[[Page 82527]]
beginning with the 2017 benefit year,\32\ and prescription drug
categories (RXCs) beginning with the 2018 benefit year.\33\ Starting
with the 2023 benefit year, we removed the severity illness factors in
the adult models and added interacted HCC count factors (that is,
additional factors that express the presence of a severity or
transplant HCC in combination with a specified number of total payment
HCCs or HCC groups on the enrollee's record) to the adult and child
models \34\ applicable to certain severity and transplant HCCs.\35\
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\32\ For the 2017 through 2022 benefit years, there is a set of
11 binary enrollment duration factors in the adult models that
decrease monotonically from one to 11 months, reflecting the
increased annualized costs associated with fewer months of
enrollments. See, for example, 81 FR 94071 through 94074. These
enrollment duration factors were replaced beginning with the 2023
benefit year with HCC-contingent enrollment duration factors for up
to 6 months in the adult models. See, for example, 87 FR 27228
through 27230.
\33\ For the 2018 benefit year, there were 12 RXCs, but starting
with the 2019 benefit year, the two severity-only RXCs were removed
from the adult models. See, for example, 83 FR 16941.
\34\ See Table 1 for a list of factors in the adult models, and
Table 2 for a list of factors in the child models.
\35\ See 87 FR 27224 through 27228.
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Infant risk scores are determined by inclusion in one of 25
mutually exclusive groups, based on the infant's maturity and the
severity of diagnoses. If applicable, the risk score for adults,
children, or infants is multiplied by a cost sharing reduction (CSR)
adjustment factor. The enrollment-weighted average risk score of all
enrollees in a particular risk adjustment covered plan (also referred
to as the plan liability risk score (PLRS)) within a geographic rating
area is one of the inputs into the State payment transfer formula,\36\
which determines the State transfer payment or charge that an issuer
will receive or be required to pay for that plan for the applicable
State market risk pool for a given benefit year. Thus, the HHS risk
adjustment models predict average group costs to account for risk
across plans, in keeping with the Actuarial Standards Board's Actuarial
Standards of Practice for risk classification.
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\36\ The State payment transfer formula refers to the part of
the Federally certified risk adjustment methodology that applies in
States where HHS is responsible for operating the program. The
formula calculates payments and charges at the State market risk
pool level (prior to the calculation of the high-cost risk pool
payment and charge terms that apply beginning with the 2018 benefit
year). See, for example, 81 FR 94080.
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a. Data for HHS Risk Adjustment Model Recalibration for the 2025
Benefit Year
We are proposing to recalibrate the 2025 benefit year HHS risk
adjustment models with the 2019, 2020, and 2021 enrollee-level EDGE
data. Consistent with the approach outlined in the 2020 Payment Notice
to no longer use MarketScan[supreg] data for recalibrating the HHS risk
adjustment models, we propose to recalibrate the HHS risk adjustment
models for the 2025 benefit year using only enrollee-level EDGE data,
and we would continue to use blended, or averaged, coefficients from
the 3 years of separately solved models for the 2025 benefit year model
recalibration.\37\ Additionally, as outlined in the 2022 Payment Notice
(86 FR 24140, 24152), we propose to use the 3 most recent consecutive
years of enrollee-level EDGE data that are available at the time we
incorporate the data in the draft recalibrated coefficients published
in the proposed rule for the applicable benefit year,\38\ and would not
update the coefficients between the proposed and final rules if an
additional year of enrollee-level EDGE data becomes available for
incorporation. We believe this promotes stability, better meets the
goal of the HHS-operated risk adjustment program and allows issuers
more time to incorporate this information when pricing their plans for
the upcoming benefit year.
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\37\ 84 FR 17463 through 17466.
\38\ Although we do receive the next year of enrollee-level EDGE
data prior to the proposed rule, that data must go through several
quality and analysis checks before it is useable for HHS risk
adjustment model recalibration.
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In the 2024 Payment Notice (88 FR 25740 through 25749), we
finalized the use of 2018, 2019 and 2020 benefit year enrollee-level
EDGE data for recalibration of the 2024 benefit year HHS risk
adjustment models for all model coefficients, with no exceptions. As
explained in the 2024 Payment Notice proposed rule \39\ and final
rule,\40\ we analyzed the 2020 benefit year data to identify possible
impacts of the COVID-19 PHE and our analysis generally found that the
2020 enrollee-level EDGE data were anomalous primarily in the volume
and frequencies of certain types of claims, but that the relative costs
of specific services, at least those associated with payment HCCs in
the HHS risk adjustment models, were largely unaffected. Because the
HHS risk adjustment models predict relative costs of care for specific
conditions on an enrollee-level basis and tend not to rely on overall
patterns of utilization, the minimal impacts to relative costs of care
for payment HCCs likewise resulted in minimal impacts on the
coefficients fitted by the 2020 enrollee-level EDGE recalibration data.
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\39\ 87 FR 78215 through 78216.
\40\ 88 FR 25749 through 25753.
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Considering that the COVID-19 PHE was still in effect throughout
the 2021 benefit year,\41\ we recognize that some interested parties
may continue to be concerned about the use of either the 2020 or 2021
enrollee-level EDGE data for the purposes of HHS risk adjustment model
recalibration. In this regard, we conducted additional analyses to
determine whether any anomalies in the 2021 benefit year enrollee-level
EDGE data were present beyond expected year-to-year variation and
whether the use of two years of PHE-impacted data presented any
additional concerns. We did not identify any such anomalies and note
that all draft coefficients for the 2025 benefit year HHS risk
adjustment models in this proposed rule vary from their values in the
2024 HHS risk adjustment models within the range of previous year-to-
year coefficient changes.
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\41\ See, for example, the Renewal of Determination that a
Public Health Emergency Exists dated February 9, 2023. <a href="https://aspr.hhs.gov/legal/PHE/Pages/COVID19-9Feb2023.aspx">https://aspr.hhs.gov/legal/PHE/Pages/COVID19-9Feb2023.aspx</a>.
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As such, we propose to determine coefficients for the 2025 benefit
year based on a blend of separately solved coefficients from the 2019,
2020, and 2021 benefit years' enrollee-level EDGE data, with the costs
of services identified from the data trended between the relevant year
of data and the 2025 benefit year.\42\ The draft coefficients listed in
Tables 1 through 6 reflect the use of trended 2019, 2020, and 2021
benefit year enrollee-level EDGE data, as well as other HHS risk
adjustment model updates proposed in this proposed rule (including, for
example, the proposed pricing adjustment for Hepatitis C drugs).
However, we note that the draft coefficients could change between the
proposed and final rules if we identify an error after publication of
this proposed rule or if any proposed model parameters are modified in
response to comments. In addition, consistent with
[[Page 82528]]
Sec. 153.320(b)(1)(i), if we are unable to finalize the final
coefficients in time for publication in the final rule, we would
publish the final coefficients for the 2025 benefit year in guidance
soon after the publication of the final rule.
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\42\ As described in the 2016 Risk Adjustment White Paper
(<a href="https://www.cms.gov/cciio/resources/forms-reports-and-other-resources/downloads/ra-march-31-white-paper-032416.pdf">https://www.cms.gov/cciio/resources/forms-reports-and-other-resources/downloads/ra-march-31-white-paper-032416.pdf</a>) and the 2017
Payment Notice (81 FR at 12218), we subdivide expenditures into
traditional drugs, specialty drugs, medical services, and preventive
services and determine trend factors separately for each category of
expenditure. In determining these trend factors, we consult our
actuarial experts, review relevant Unified Rate Review Template
(URRT) submission data, analyze multiple years of enrollee-level
EDGE data, and consult National Health Expenditure Accounts (NHEA)
data as well as external reports and documents published by third
parties. In this process, we aim to determine trends that reflect
changes in cost of care rather than gross growth in expenditures. As
such, we believe the trend factors we used for each expenditure
category for the 2025 benefit year are appropriate for the most
recent changes in cost of care that we have seen in the market.
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We seek comment on the proposal to determine 2025 benefit year
coefficients for the HHS risk adjustment models based on a blend of
separately solved coefficients from the 2019, 2020, and 2021 enrollee-
level EDGE data.
b. Pricing Adjustment for the Hepatitis C Drugs
For the 2025 benefit year, we propose to continue applying a market
pricing adjustment to the plan liability associated with Hepatitis C
drugs in the HHS risk adjustment models.\43\ Since the 2020 benefit
year HHS risk adjustment models, we have been making a market pricing
adjustment to the plan liability associated with Hepatitis C drugs to
reflect future market pricing prior to solving for coefficients for the
models.\44\ The purpose of this market pricing adjustment is to account
for significant pricing changes between the data years used for
recalibrating the models and the applicable benefit year of HHS risk
adjustment as a result of the introduction of new and generic Hepatitis
C drugs.\45\
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\43\ See for example, 84 FR 17463 through 17466.
\44\ The Hepatitis C drugs market pricing adjustment to plan
liability is applied for all enrollees taking Hepatitis C drugs in
the data used for recalibration.
\45\ Silseth, S., & Shaw, H. (2021). Analysis of prescription
drugs for the treatment of hepatitis C in the United States.
Milliman White Paper. <a href="https://www.milliman.com/-/media/milliman/pdfs/2021-articles/6-11-21-analysis-prescription-drugs-treatment-hepatitis-c-us.ashx">https://www.milliman.com/-/media/milliman/pdfs/2021-articles/6-11-21-analysis-prescription-drugs-treatment-hepatitis-c-us.ashx</a>.
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We have committed to reassessing this pricing adjustment with
additional years of enrollee-level EDGE data, as data becomes
available. As part of the 2025 benefit year model recalibration
analysis, we reassessed the cost trend for Hepatitis C drugs using
available enrollee-level EDGE data (including 2021 benefit year data)
to consider whether the adjustment was still needed and if it is still
needed, whether it should be modified. We found that the data for the
Hepatitis C RXC that would be used for the 2025 benefit year
recalibration still do not account for the significant pricing changes
due to the introduction of new and generic Hepatitis C drugs, and
therefore, do not precisely reflect the average cost of Hepatitis C
treatments applicable to the benefit year in question.
Specifically, although generic Hepatitis C drugs became available
on the market in 2019,\46\ and therefore were available for all 3 years
of data proposed to be used for the 2025 benefit year model
recalibration, our analysis of the data continued to observe that costs
for Hepatitis C drugs are not increasing at the same rate as other drug
costs between the data years and the applicable benefit year of HHS
risk adjustment, likely due to continued increases in the proportion of
Hepatitis C drug prescriptions for generic versions of the drugs. As
such, we do not believe that the trends used to reflect growth in the
cost of prescription drugs due to inflation and related factors for
recalibrating the models will appropriately reflect the average cost of
Hepatitis C treatments expected in the 2025 benefit year. Therefore, we
continue to believe a market pricing adjustment specific to Hepatitis C
drugs in the HHS risk adjustment models for the 2025 benefit year is
necessary to account for the lack of growth in Hepatitis C drug prices
relative to other prescription drugs in the market between the data
years used for recalibrating the models and the applicable benefit year
of HHS risk adjustment due to the introduction of new and generic
Hepatitis C drugs in recent years. We intend to continue to assess this
pricing adjustment as part of future benefit year model recalibrations
using available additional years of enrollee-level EDGE data.
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\46\ See Miligan, J, (2018). A perspective from our CEO: Gilead
Subsidiary to Launch Authorized Generics to Treat HCV. Gilead.
<a href="https://www.gilead.com/news-and-press/company-statements/authorized-generics-for-hcv">https://www.gilead.com/news-and-press/company-statements/authorized-generics-for-hcv</a>. See also AbbVie. (2017). AbbVie Receives U.S. FDA
Approval of MAVYRET<SUP>TM</SUP> (glecaprevir/pibrentasvir) for the
Treatment of Chronic Hepatitis C in All Major Genotypes (GT 1-6) in
as Short as 8 Weeks. Abbvie. <a href="https://news.abbvie.com/news/abbvie-receives-us-fda-approval-mavyret-glecaprevirpibrentasvir-for-treatment-chronic-hepatitis-c-in-all-major-genotypes-gt-1-6-in-as-short-as-8-weeks.htm">https://news.abbvie.com/news/abbvie-receives-us-fda-approval-mavyret-glecaprevirpibrentasvir-for-treatment-chronic-hepatitis-c-in-all-major-genotypes-gt-1-6-in-as-short-as-8-weeks.htm</a>.
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We seek comment on our proposal to continue applying a market
pricing adjustment to the plan liability associated with Hepatitis C
drugs for the 2025 benefit year.
c. Proposed List of Factors To Be Employed in the HHS Risk Adjustment
Models (Sec. 153.320)
The proposed 2025 benefit year HHS risk adjustment model factors
resulting from the equally weighted (averaged) blended factors from
separately solved models using the 2019, 2020, and 2021 enrollee-level
EDGE data are shown in Tables 1 through 6. The adult, child, and infant
models have been truncated to account for the high-cost risk pool
payment parameters by removing 60 percent of costs above the $1 million
threshold.\47\ Table 1 contains proposed factors for each adult model,
including the age-sex, HCCs, RXCs, RXC-HCC interactions, interacted HCC
counts, and enrollment duration coefficients. Table 2 contains the
proposed factors for each child model, including the age-sex, HCCs, and
interacted HCC counts coefficients. Table 3 lists the proposed HCCs
selected for the interacted HCC counts factors that would apply to the
adult and child models. Table 4 contains the proposed factors for each
infant model. Tables 5 and 6 contain the HCCs included in the infant
models' maturity and severity categories, respectively.
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\47\ We are not proposing changes to the high-cost risk pool
parameters for the 2025 benefit year. Therefore, we would maintain
the $1 million threshold and 60 percent coinsurance rate.
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d. Cost-Sharing Reduction Adjustments
We propose to recalibrate the CSR adjustment factors for AI/AN zero
cost sharing and limited cost sharing CSR plan variant enrollees for
the 2025 benefit year, and to retain these proposed AI/AN CSR
adjustment factors, if finalized, for all future benefit years unless
changed through notice-
[[Page 82546]]
and-comment rulemaking. We also propose to maintain the current CSR
adjustment factors for silver plan variant enrollees (70 percent, 73
percent, 87 percent, and 94 percent AV plan variants) \48\ for the 2025
benefit year and beyond, unless changed through notice-and-comment
rulemaking.
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\48\ See 83 FR 16930 at 16953; 84 FR 17478 through 17479; 85 FR
29190; 86 FR 24181; 87 FR 27235 through 27236; and 88 FR 25772
through 25774.
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Since the beginning of the HHS-operated risk adjustment program in
the 2014 benefit year, we included CSR adjustment factors in the
calculations under the State payment transfer formula to account for
anticipated increased demand for health care services due to lower cost
sharing for CSR enrollees.\49\ At that time, we did not have data
available on the individual and small group (including merged) markets'
use of services, and therefore, we based the CSR adjustment factors on
the available large group market MarketScan[supreg] data.\50\ We have
proposed and finalized the same CSR adjustment factors since they were
first established to maintain stability and certainty for issuers.\51\
At the same time, we have continued to study these issues and have
explored a range of options to update the CSR adjustments to improve
prediction.\52\ Interested parties have also repeatedly requested that
HHS re-analyze the CSR adjustment factors and consider making
updates.\53\
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\49\ 78 FR 15410 at 15421 through 15422.
\50\ See 77 FR 73117 at 73127 and 78 FR 15410 at 15419 through
15420. See also HHS-Operated Risk Adjustment Technical Paper on
Possible Model Changes. (2021, October 26). CMS. <a href="https://www.cms.gov/files/document/2021-ra-technical-paper.pdf">https://www.cms.gov/files/document/2021-ra-technical-paper.pdf</a>. Section
A.3.1.
\51\ See 83 FR 16930 at 16953; 84 FR 17478 through 17479; 85 FR
29190; 86 FR 24181; 87 FR 27235 through 27236; and 88 FR 25772
through 25774.
\52\ See, for example, the 2024 Payment Notice, 88 FR 25772-
25774. Also see Appendix A, HHS-Operated Risk Adjustment Technical
Paper on Possible Model Changes. (2021, October 26). CMS. <a href="https://www.cms.gov/files/document/2021-ra-technical-paper.pdf">https://www.cms.gov/files/document/2021-ra-technical-paper.pdf</a>.
\53\ Id.
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Because our prior analysis of the current CSR adjustment factors
was based on the extraction and use of national enrollee-level EDGE
data without issuer or geographic markers,\54\ we did not previously
have the ability to analyze the distribution of the CSR populations at
a more granular level (for example, at the issuer, State or rating area
level). However, with policies finalized in the 2023 Payment Notice (87
FR 27241 through 27243) and the 2024 Payment Notice (88 FR 25784
through 25787), we can now extract and use multiple years of enrollee-
level EDGE data with plan ID and rating area markers. This allowed for
further study of the CSR populations at a more granular level to inform
potential proposed changes to these factors, including, for example,
whether certain issuers, States, or rating areas have a high percentage
of AI/AN enrollment. We have now reconsidered the current CSR
adjustment factors using several years of EDGE data available to HHS,
including 2021 benefit year enrollee-level EDGE data with plan ID and
rating area markers, and analyzed potential changes to the CSR
adjustment factors at the State market risk pool level.
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\54\ The 2021 Risk Adjustment Technical Paper provided initial
analysis on the CSR adjustment factors and their performance with
the geographical indicators. See Appendix A, HHS-Operated Risk
Adjustment Technical Paper on Possible Model Changes. (2021, October
26). CMS. <a href="https://www.cms.gov/files/document/2021-ra-technical-paper.pdf">https://www.cms.gov/files/document/2021-ra-technical-paper.pdf</a>.
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Based on further analysis of all CSR adjustment factors, HHS is not
proposing changes to the CSR adjustment factors, with the exception of
the AI/AN CSR plan variant factors.\55\ Our continued study of these
issues found that adjustments to the CSR adjustment factors for AI/AN
CSR plan variant enrollees were needed and would be appropriate. As
described in the 2021 Risk Adjustment Technical Paper,\56\ AI/AN CSR
plan variant enrollees experienced higher expenditures than non-CSR
silver enrollees, which may reflect increased demand associated with
enrollee receipt of the AI/AN zero cost sharing or limited cost sharing
CSR plan variants or risk characteristics specific to the AI/AN
population which are not specifically captured by HCCs or other model
factors. Given these findings, we conducted additional analysis using
additional benefit years of available enrollee-level EDGE data,
including the 2021 benefit year data with the plan ID and rating area
markers, and found that AI/AN CSR plan variant enrollees were
meaningfully underpredicted in the HHS risk adjustment models.
Specifically, we evaluated the predictive accuracy of the current AI/AN
CSR plan variant adjustment factors using the risk term PRs in Table 7
to measure the accuracy of the entire risk term (including PLRS, metal
IDFs, CSR adjustment factors, and geographic cost factors) in
predicting plan liability for this cohort, as measured by actual paid
PMPM claims. Table 7 shows that in 2021 EDGE data, the risk term PRs
demonstrate underprediction for AI/AN zero cost sharing and limited
cost sharing bronze plan variants under the CSR adjustment factors for
the 2024 benefit year relative to the proposed CSR adjustment factors
for the 2025 benefit year and beyond.\57\ The risk term PRs demonstrate
similar underprediction for AI/AN zero cost sharing and limited cost
sharing bronze plan variants in other EDGE data years.\58\
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\55\ In the 2021 Risk Adjustment Technical Paper, we concluded
that, in aggregate, most of the current CSR adjustment factors
contribute to a reasonable prediction of what plans are paying for
CSR enrollees, with the exception of CSR adjustment factors for AI/
AN enrollees. Our continued study of these issues, including the
more recent analysis of 2021 benefit year data, affirmed these
initial conclusions. Therefore, we propose in this rulemaking to
update the CSR adjustment factors for AI/AN zero-cost sharing and
limited cost sharing plan variants and propose to maintain the
existing CSR adjustment factors for other enrollees. See Appendix A,
HHS-Operated Risk Adjustment Technical Paper on Possible Model
Changes. (2021, October 26). CMS. <a href="https://www.cms.gov/files/document/2021-ra-technical-paper.pdf">https://www.cms.gov/files/document/2021-ra-technical-paper.pdf</a>.
\56\ HHS-Operated Risk Adjustment Technical Paper on Possible
Model Changes. (2021, October 26). CMS. <a href="https://www.cms.gov/files/document/2021-ra-technical-paper.pdf">https://www.cms.gov/files/document/2021-ra-technical-paper.pdf</a>.
\57\ Almost 90 percent of total billable member months in AI/AN
zero-cost sharing and limited cost sharing CSR plan variants are in
bronze plans.
\58\ HHS-Operated Risk Adjustment Technical Paper on Possible
Model Changes. (2021, October 26). CMS. <a href="https://www.cms.gov/files/document/2021-ra-technical-paper.pdf">https://www.cms.gov/files/document/2021-ra-technical-paper.pdf</a>.
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To address concerns about the observed underprediction among AI/AN
CSR plan variant enrollees, we propose to update the CSR adjustment
factors for AI/AN zero-cost sharing and limited cost sharing plan
variants and use the proposed factors for these enrollees as shown in
Table 8. We recalibrated these factors such that the risk term PRs for
each CSR plan variant category equals 1.00 (accurate prediction \59\)
but constrained each CSR adjustment factor so that no CSR adjustment
factor would be less than 1.00 to avoid creating incentives for issuers
to avoid enrolling AI/AN CSR recipients. As shown in Table 7, the risk
term PRs were demonstrated through simulation to improve under the
proposed AI/AN CSR adjustment factors for the zero-cost sharing and
limited cost sharing plans.
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\59\ A subpopulation that is predicted perfectly would have a PR
of 1.0.
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We believe that these proposed changes to AI/AN CSR adjustment
factors are important to our efforts to continuously improve the HHS
risk adjustment models with incremental changes to improve model
prediction by updating the AI/AN adjustment factors to more accurately
predict plan liability for this subpopulation. We also believe that
these proposed changes would increase the incentives for issuers to
engage the AI/AN population, whose communities have been historically
underserved and who face significant health disparities. We also
believe this proposed change would help advance the agency's health
equity goals and align with the policy objectives in the January 20,
2021 Executive Order on Advancing Racial Equity and Support for
Underserved Communities Through the Federal Government.\60\
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\60\ 86 FR 7009.
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[[Page 82548]]
We also propose to retain the proposed 2025 benefit year CSR
adjustment factors, if finalized, for future benefit years (that is,
the 2026 benefit year and beyond) \61\ unless changed through notice-
and-comment rulemaking. Although we could analyze and consider
potential updates to the CSR adjustment factors every year as part of
the annual recalibration of the HHS risk adjustment models, we have
found that the implied CSR adjustment factors calculated from 2018
through 2022 plan data were stable across each year of data. We also
want to balance our approach to making changes as part of the annual
recalibration of the HHS risk adjustment models in future benefit years
with the desire to maintain stability and predictability for issuers.
With the proposed changes to the AI/AN CSR adjustment factors, we
believe the models would better predict risk for AI/AN CSR plan variant
enrollees such that we do not expect to update the CSR factors on an
annual basis.\62\ However, if we were to pursue changes to any of the
CSR adjustment factors in future benefit years, we would propose those
updates through notice-and-comment rulemaking.
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\61\ This includes the CSR adjustment factors in Table 8.
\62\ As outlined previously in this rule, the proposed changes
to the CSR adjustment factors focus on the AI/AN CSR plan variants
because our analysis found the CSR adjustment factors for other
enrollees to be adequate.
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Lastly, separate from the proposal pertaining to AI/AN CSR
adjustment factors, we note that for all plan liability risk score
calculations under the State payment transfer formula, we use the CSR
adjustment factors that align with the AV of the applicable plan for
the enrollee. Thus, for unique State-specific plans, we apply the CSR
adjustment factors that correspond to each plan's AV. Specifically,
when we identify unique State-specific plans that have higher plan
liability than the standard plan variants, we utilize the corresponding
CSR adjustment factor in the plan liability risk score calculation that
maps to the plan's AV. For example, we use a CSR adjustment factor of
1.12 for all Massachusetts wrap-around plans with AVs above 94 percent
in the plan liability risk score calculation.<SUP>63 64</SUP> This
approach does not apply in the case of States whose State-specific
plans take the form of Medicaid expansion plans offered on the Exchange
(for example, Arkansas), because these plans are identical in all their
parameters, including AV and degree of plan liability, to other plans
offered on the Exchange in those States and are differentiated from
their comparable plans only in eligibility criteria and sources of
funding.\65\ As we identify unique State-specific plans that have
higher plan liability than the standard plan variants, such as those in
Massachusetts, we work with the relevant State Department of Insurance
and other relevant State institutions to identify the applicable CSR
adjustment factor that corresponds to the unique State-specific plan's
AV.\66\ We would continue to follow this approach, working with the
State to identify the applicable CSR adjustment factor that corresponds
to that State's unique State-specific plan's AV, unless changed through
notice-and-comment rulemaking.
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\63\ See, for example, 81 FR 12203 at 12228, 85 FR 29164 at
29190 and 29191, and 88 FR 25740 at 25772 through 25774.
\64\ Massachusetts Cost Sharing Subsidies in ConnectorCare:
Design, Administration, and Impact (2021 Aug.). <a href="https://www.mahealthconnector.org/wp-content/uploads/MA-Cost-Sharing-Subsidies-in-ConnectorCare-Brief-083021.pdf">https://www.mahealthconnector.org/wp-content/uploads/MA-Cost-Sharing-Subsidies-in-ConnectorCare-Brief-083021.pdf</a>.
\65\ The structure of wrap-around plans in some States, such as
Massachusetts, differs from the coverage in States who offer
Medicaid expansion plans on the Exchange. For example, in
Massachusetts, the higher cost sharing wrap-around plans are
variations of lower cost sharing plans. As such, the Massachusetts
wrap-around plans do not have the same AVs as their comparable
plans. That is why we use a CSR adjustment factor of 1.12 for all
Massachusetts wrap-around plans with AVs above 94 percent. In
contrast, in Arkansas, its Medicaid expansion plans are identical to
other 94 percent and 100 percent AV CSR plan variants offered on the
Exchange and are distinguished from these identical plans only in
their sources of funding and eligibility criteria. As such, we
presently direct issuers in Arkansas who provide Medicaid expansion
plans with AVs of 94 percent and 100 percent to use specified plan
variant codes for their Medicaid expansion plans only to
differentiate the sources of funding and to differentiate between
populations eligible for the Medicaid expansion plans from those who
are eligible for standard 94 percent and 100 percent AV CSR plan
variants. Because the Arkansas Medicaid expansion plans are
identical to other 94 percent and 100 percent AV CSR plan variants
available in Arkansas and therefore have the same AVs, we would use
the proposed CSR adjustment factor of 1.12 for Arkansas 94 percent
AV Medicaid-expansion plans and the proposed CSR adjustment factor
that corresponds to the silver metal level zero cost sharing
variants (that is, the proposed 1.46 CSR adjustment factor for zero
cost sharing variants) for Arkansas 100 percent AV Medicaid-
expansion plans in the plan liability risk score calculation. See
CMS approval of Arkansas's section 1115(a) demonstration, ``Arkansas
Health and Opportunity for Me.'' <a href="https://www.medicaid.gov/sites/default/files/2021-12/ar-arhome-ca.pdf">https://www.medicaid.gov/sites/default/files/2021-12/ar-arhome-ca.pdf</a>.
\66\ For a list of the unique State-specific CSR levels that
have higher plan liability than the standard plan variants, for
which we utilize the corresponding CSR adjustment factor that maps
to the plan's AV, refer to the applicable benefit year's DIY
Software on the CMS website. See, for example, the Draft 2023
Benefit Year DIY Software on the CMS website (August 22, 2023).
<a href="https://www.cms.gov/files/document/cy2023-diy-instructions-08222023.pdf">https://www.cms.gov/files/document/cy2023-diy-instructions-08222023.pdf</a>.
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We seek comment on these proposals.
e. Model Performance Statistics
Each benefit year, to evaluate the HHS risk adjustment model
performance, we examine each model's R-squared statistic and predictive
ratios (PRs). The R-squared statistic, which calculates the percentage
of individual variation explained by a model, measures the predictive
accuracy of the model overall. The PR for each of the HHS risk
adjustment models is the ratio of the weighted mean predicted plan
liability for the model sample population to the weighted mean actual
plan liability for the model sample population. The PR represents how
well the model does on average at predicting plan liability for that
subpopulation.
A subpopulation that is predicted perfectly would have a PR of 1.0.
For each of the current and proposed HHS risk adjustment models, the R-
squared statistic and the PRs are in the range of published estimates
for concurrent HHS risk adjustment models.\67\ Because we propose to
blend the coefficients from separately solved models based on the 2019,
2020, and 2021 benefit years' enrollee-level EDGE data, we are
publishing the R-squared statistic for each model separately to verify
their statistical validity. The R-squared statistics for the proposed
2025 benefit models are shown in Table 9.
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\67\ Hileman, G., & Steele, S. (2016). Accuracy of Claims-Based
Risk Scoring Models. Society of Actuaries. <a href="https://www.soa.org/4937b5/globalassets/assets/files/research/research-2016-accuracy-claims-based-risk-scoring-models.pdf">https://www.soa.org/4937b5/globalassets/assets/files/research/research-2016-accuracy-claims-based-risk-scoring-models.pdf</a>.
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[[Page 82549]]
[GRAPHIC] [TIFF OMITTED] TP24NO23.021
3. Overview of the HHS Risk Adjustment Methodology (Sec. 153.320)
In part 2 of the 2022 Payment Notice (86 FR 24183 through 24186),
we finalized the proposal to continue to use the State payment transfer
formula finalized in the 2021 Payment Notice for the 2022 benefit year
and beyond, unless changed through notice-and-comment rulemaking. We
explained that under this approach, we will no longer republish these
formulas in future annual HHS notice of benefit and payment parameter
rules unless changes are being proposed. We are not proposing any
changes to the formula in this rule, and therefore, are not
republishing the formulas in this rule. We therefore would continue to
apply the formula as finalized in the 2021 Payment Notice (86 FR 24183
through 24186) \68\ in the States where HHS operates the risk
adjustment program in the 2025 benefit year. Additionally, as finalized
in the 2020 Payment Notice (84 FR 17466 through 17468), we will
maintain the high-cost risk pool parameters for the 2020 benefit year
and beyond, unless amended through notice-and-comment rulemaking. We
are not proposing any changes to the high-cost risk pool parameters for
the 2025 benefit year; therefore, we would maintain the $1 million
threshold and 60 percent coinsurance rate.\69\
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\68\ Discussion provided an illustration and further details on
the State payment transfer formula.
\69\ See 81 FR 94081. See also 84 FR 17467.
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4. HHS Risk Adjustment User Fee for the 2025 Benefit Year (Sec.
153.610(f))
We propose an HHS risk adjustment user fee for the 2025 benefit
year of $0.20 PMPM. Under Sec. 153.310, if a State is not approved to
operate, or chooses to forgo operating, its own risk adjustment
program, HHS will operate risk adjustment on its behalf. For the 2025
benefit year, HHS will operate risk adjustment in every State and the
District of Columbia. As described in the 2014 Payment Notice (78 FR
15416 through 15417), HHS' operation of risk adjustment on behalf of
States is funded through a risk adjustment user fee. 45 CFR
153.610(f)(2) provides that, where HHS operates a risk adjustment
program on behalf of a State, an issuer of a risk adjustment covered
plan must remit a user fee to HHS equal to the product of its monthly
billable member enrollment in the plan and the PMPM risk adjustment
user fee specified in the annual HHS notice of benefit and payment
parameters for the applicable benefit year.
OMB Circular No. A-25 established Federal policy regarding user
fees, and specifies that a user charge will be assessed against each
identifiable recipient for special benefits derived from Federal
activities beyond those received by the general public.\70\ The HHS-
operated risk adjustment program provides special benefits as defined
in section 6(a)(1)(B) of OMB Circular No. A-25 to issuers of risk
adjustment covered plans because it mitigates the financial instability
associate with potential adverse risk selection.\71\ The HHS-operated
risk adjustment program also contributes to consumer confidence in the
health insurance industry by helping to stabilize premiums across the
individual, merged, and small group markets.
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\70\ See Circular No. A-25 Revised. <a href="https://www.whitehouse.gov/wp-content/uploads/2017/11/Circular-025.pdf">https://www.whitehouse.gov/wp-content/uploads/2017/11/Circular-025.pdf</a>.
\71\ Id.
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In the 2024 Payment Notice (88 FR 25740), we calculated the Federal
administrative expenses of operating the HHS risk adjustment program
for the 2024 benefit year to result in a risk adjustment user fee rate
of $0.21 PMPM based on our estimated costs for HHS risk adjustment
operations and estimated Billable Member Months (BMM) for individuals
enrolled in risk adjustment covered plans. For the 2025 benefit year,
HHS proposes to use the same methodology to estimate our administrative
expenses to operate the HHS risk adjustment program. These costs cover
development of the models and methodology, collections, payments,
account management, data collection, data validation, program integrity
and audit functions, operational and fraud analytics, interested
parties training, operational support, and administrative and personnel
costs dedicated to HHS-operated risk adjustment program activities. To
calculate the HHS risk adjustment user fee, we divided HHS' projected
total costs for administering the HHS risk adjustment program on behalf
of States by the expected number of BMM in risk adjustment covered
plans in States where the HHS-operated risk adjustment program will
apply in the 2025 benefit year.
We estimate that the total cost for HHS to operate the risk
adjustment program on behalf of States for the 2025 benefit year will
be approximately $65 million, which is more than the approximately $60
million estimated for the 2024 benefit year. We are projecting
increased costs due to increased
[[Page 82550]]
contracting costs combined with increased labor costs.
We also project higher enrollment than our prior estimates in the
2024 and 2025 benefit years based on the increased enrollment, as
measured by BMM, between the 2021 and 2022 benefit years in the
individual non-catastrophic market risk pool in most States, likely due
to the increased PTC subsidies provided for in the American Rescue Plan
Act of 2021 (ARP).<SUP>72 73</SUP> In light of the passage of the
Inflation Reduction Act of 2022 (IRA), in which section 12001 extended
the enhanced PTC subsidies in section 9661 of the ARP through the 2025
benefit year, we project there will continue to be increased enrollment
levels through the 2025 benefit year.\74\ Because we project an
increased budget to operate the HHS-operated risk adjustment program
and estimated higher enrollment through the end of the 2025 benefit
year, we propose a HHS risk adjustment user fee of $0.20 PMPM for the
2025 benefit year.
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\72\ ARP. Public Law 117-2 (2021).
\73\ CMS. (2023, June 30). Summary Report on Permanent Risk
Adjustment Transfers for the 2022 Benefit Year. (p. 8). <a href="https://www.cms.gov/files/document/summary-report-permanent-risk-adjustment-transfers-2022-benefit-year.pdf">https://www.cms.gov/files/document/summary-report-permanent-risk-adjustment-transfers-2022-benefit-year.pdf</a>.
\74\ Inflation Reduction Act. Public Law 1217-169 (2022).
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We seek comment on the proposed HHS risk adjustment user fee for
the 2025 benefit year.
5. Audits and Compliance Reviews of Risk Adjustment Covered Plans
(Sec. 153.620(c))
We propose amending Sec. 153.620(c)(4) to require issuers of risk
adjustment covered plans to complete, implement, and provide to HHS
written documentation of any corrective action plans when required by
HHS if a high-cost risk pool audit results in the inclusion of a
finding \75\ or certain observations \76\ in the final audit report.
Currently, under Sec. 153.620(c)(4), the completion, implementation,
and submission of documentation of a corrective action plan to HHS is
only required if the audit results in the inclusion of a finding in the
final audit report. Upon completion of the first benefit year of high-
cost risk pool audits (2018 benefit year audits), HHS found that some
issuers of risk adjustment covered plans made data submission errors to
their EDGE servers that constituted instances of noncompliance but did
not result in a financial impact and were therefore only recorded as
observations in the final audit report. For example, many issuers
failed to provide adequate documentation of their policies and
procedures that demonstrate that they are in compliance with the data
submission requirements for the HHS-operated risk adjustment program,
such as the applicable benefit year's EDGE Server Business Rules.\77\
While such instances of noncompliance did not cause a financial impact,
and therefore were not identified as audit findings, fully compliant
policies and procedures, and documentation thereof, are critical to
ensuring issuer adherence to HHS requirements and the submission of
accurate data to an issuer's EDGE server.
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\75\ In the context of high-cost risk pool audits, a ``finding''
results from cases of confirmed non-compliance or discovery of
evidence suggesting noncompliance with applicable Federal
requirements related to high-cost risk pool payments, which require
a recoupment of these payments. Centers for Medicare & Medicaid
Services, Center for Consumer Information and Insurance Oversight
(CCIIO). (Dec. 2022). Best Practices Overview: Benefit Year (BY)
2018 HCRP Payment Audits and General EDGE Server Requirements.
<a href="https://regtap.cms.gov/reg_library_openfile.php?id=4234&type=l">https://regtap.cms.gov/reg_library_openfile.php?id=4234&type=l</a>
(Login Required).
\76\ In the context of high-cost risk pool audits, an
``observation'' results from the identification of areas for
improvement when there is no evidence of actual non-compliance with
applicable Federal requirements or when there may be evidence of
non-compliance with applicable Federal requirements that does not
require recoupment of these payments. Centers for Medicare &
Medicaid Services, Center for Consumer Information and Insurance
Oversight (CCIIO). (Dec. 2022). Best Practices Overview: Benefit
Year (BY) 2018 HCRP Payment Audits and General EDGE Server
Requirements. <a href="https://regtap.cms.gov/reg_library_openfile.php?id=4234&type=l">https://regtap.cms.gov/reg_library_openfile.php?id=4234&type=l</a> (Login Required). This
proposal is limited to observations where there may be evidence of
non-compliance with applicable Federal requirements.
\77\ Centers for Medicare & Medicaid Services, Center for
Consumer Information and Insurance Oversight (CCIIO). (Nov. 2022).
EDGE Server Business Rules (ESBR) Version 22.0. <a href="https://regtap.cms.gov/reg_library_openfile.php?id=3765&type=l">https://regtap.cms.gov/reg_library_openfile.php?id=3765&type=l</a> (Login
Required).
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Furthermore, in these situations, noncompliance may result from
unintentional negligence where issuers lack proper documentation or the
ability to locate data due to improper record maintenance and retention
procedures. In these cases, the accuracy of the issuer's EDGE data may
still be impacted, as EDGE claims data submission is incremental. For
example, if an issuer identified an error in one file that does not
have a financial impact and subsequently corrects the error in that
file only during the submission period, but does not perform an impact
analysis to review the accuracy of all claims file submissions and
correct all claims file submissions that included the same error, the
issuer's EDGE data will be incorrect even though there may be no
financial impact with respect to the calculation of HHS risk adjustment
State transfers or high-cost risk pool amounts. However, since
enrollee-level data that HHS extracts from issuers' EDGE servers is
also used for HHS risk adjustment model recalibration, updates to the
AV methodology and calculator, and other analyses for the commercial
individual and small group market HHS programs and other Federal HHS
related programs (for example, Medicaid expansion QHP population and
non-Federal governmental plans),\78\ it is important that issuers of
risk adjustment covered plans also take corrective action to address
instances of noncompliance, including those that result from audit
findings and audit observations, to ensure that all instances of
noncompliance identified through audits do not result in unaddressed
material impact to the enrollee-level data that HHS extracts from
issuers' EDGE servers and are not repeated in future benefit year data
submissions. As Sec. 155.620(c)(4) currently only requires corrective
action plans for findings, instances of noncompliance that result in
audit observations may be unaddressed by issuers. We are concerned that
allowing these instances of noncompliance to be unaddressed may impact
EDGE data integrity in future benefit years, and by requiring these
corrective action plans, we also intend to help prevent EDGE data
discrepancies in the future.
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\78\ See, for example, 84 FR at 17488 and 87 FR at 27243.
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For these reasons, HHS is proposing to require corrective action
plans for observations identified through HHS risk adjustment
(including high-cost risk pool) audits when there is evidence of non-
compliance with applicable Federal requirements if required by HHS to
improve program and data integrity for accurate data submissions to
issuer EDGE servers. HHS would communicate to the issuer, as part of
the final audit report, which findings and observations require
corrective action. Under this proposal, consistent with the existing
framework in Sec. 155.620(c)(4), HHS would require an issuer of a risk
adjustment covered plan to provide, within 45 calendar days of the
issuance of the final audit report, a written corrective action plan
for any audit findings, as well as audit observations when there is
evidence of non-compliance with applicable Federal requirements, to HHS
for approval, implement that plan, and provide to HHS written
documentation of the corrective actions taken to resolve the root cause
of the noncompliance identified. This is the same timeline and
framework that currently applies to corrective action plans that are
required as a result of findings included in the
[[Page 82551]]
final audit report.\79\ We propose that this change would be applicable
beginning with 2020 benefit year audits, which we anticipate beginning
in early 2024.\80\
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\79\ See 45 CFR 153.620(c)(4). Also see 86 FR at 24192 through
24194.
\80\ If 2020 benefit year audits begin in early 2024, we
anticipate the final audit reports would be completed, with findings
and observations identified, in late 2024.
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We seek comment on this proposal.
D. 45 CFR Part 155--Exchange Establishment Standards and Other Related
Standards
1. Approval of a State Exchange (Sec. 155.105)
We propose to amend Sec. 155.105(b) to require that, in addition
to meeting all other approval standards under Sec. 155.105(b), a State
seeking to operate a State Exchange must first operate a State-based
Exchange using the Federal platform (SBE-FP), meeting all requirements
under Sec. 155.200(f), for at least one plan year, including its open
enrollment period. This proposal is intended to give States sufficient
time to create, staff, and structure a State Exchange that could
transition to operating its own platform and establish relationships
with interested parties critical to a State Exchange's success in
operating a Navigator and consumer outreach program, assuming plan
management responsibilities, and communicating effectively with
consumers to support enrollment and avoid health care coverage gaps.
Sections 1311(b) and 1321(b) of the Affordable Care Act (ACA) allow
States to elect to operate their own health insurance Exchanges to
provide individuals and employers with health insurance coverage.
Section 1321(a)(1)(A) of the ACA directs the Secretary to issue
regulations setting standards with respect to the establishment and
operation of those Exchanges. Section 155.106 describes different
Exchange models that States may utilize. A State's choice of model may
depend on the State's specific needs. State Exchanges offer States the
ability to maintain more authority over policy and operational
decisions, including health insurance issuer relationships, plan
certification, and consumer assistance. However, building and
maintaining a consumer-oriented, technology-driven marketplace platform
requires extensive start-up resources, as well as investment of time
and resources in the establishment of relationships with consumers,
consumer assisters, partners in the coordination of eligibility
functions, issuers, and other interested parties.
To encourage more State authority over Exchange functions, we
provided States with the flexibility to operate a State Exchange while
relying on the Federally-facilitated Exchange (FFE) eligibility
enrollment technology and infrastructure (known as the ``Federal
platform'') to perform certain Exchange functions. Specifically, as
finalized in the 2017 Payment Notice (81 FR 12244 through 12246), the
SBE-FP model allows States to maintain their Exchange's legal status as
a State Exchange while relying on the Federal platform to perform
eligibility and enrollment functions and associated consumer call
center and casework functions. Under the SBE-FP model, States retain
authority and primary responsibility for plan management functions,
including QHP certification, and consumer support functions, such as
operating an informational website and toll-free telephone hotline.
Under this model, States are also primarily responsible for operating a
Navigator program. We charge issuers on the SBE-FPs a user fee
calculated as a percentage of the user fee charged to issuers on the
FFEs. HHS' Payment Notice final rules set forth the user fee for
issuers participating in SBE-FPs every year. SBE-FPs may assess an
additional State-level user fee on issuers for the purposes of
operating the Exchanges. For Plan Year 2023, three States operated
Exchanges under the SBE-FP model.
Over the past several years, we have observed the benefits of
States first operating an SBE-FP for at least one plan year prior to
transitioning fully from an FFE to a State Exchange. Operating an SBE-
FP for at least one plan year, including its open enrollment period,
prior to transitioning to a State Exchange gives States an opportunity
to focus on investing time and resources needed to implement key
Exchange functions that involve the establishment of critical and
necessary relationships with consumers, consumer assisters, partners in
the coordination of eligibility functions, issuers, and other
interested parties. Operating an SBE-FP for at least one plan year
prior to transitioning to a State Exchange also affords States time to
implement eligibility and enrollment functions which require
information technology platforms, call centers, and coordination with
partners, such as State Medicaid agencies. In addition, operating an
SBE-FP for at least one plan year prior to transitioning to a State
Exchange gives States more time to engage with partners and interested
parties to develop various consumer-facing content and consumer
outreach strategies, all while establishing and gaining experience
operating a consumer assistance program. Further, when States operate
an SBE-FP for at least one plan year before operating a State Exchange,
they are more likely to have the time and resources needed to
coordinate with the State Department of Insurance to establish policies
and procedures associated with carrying out plan management functions,
engage with the issuer community, and develop QHP certification
requirements and processes. Finally, operating an SBE-FP for at least
one plan year before transitioning to a State Exchange allows States
time to familiarize consumers, consumer assisters, partners in the
coordination of eligibility functions, issuers, and other interested
parties with operations of the new State Exchange organization ahead of
engaging with that Exchange, and it mitigates the risks and disruption
associated with a transition to a State Exchange and simultaneous
replacement of <a href="http://HealthCare.gov">HealthCare.gov</a> as the eligibility and enrollment pathway
for those parties.
We propose to amend Sec. 155.105(b)(4) to require that a State
seeking to operate a State Exchange must first operate an SBE-FP for at
least one plan year, including its first open enrollment period, for
the reasons explained previously in this section.
We seek comment on this proposal, including the duration of time
that a State must operate an SBE-FP prior to transitioning to a State
Exchange.
2. Election To Operate an Exchange After 2014 (Sec. 155.106)
We propose changes to the Exchange Blueprint (OMB control number:
0938-1172) requirements for States seeking to operate a State Exchange.
At Sec. 155.106(a)(2), we propose to add that, as part of a State's
activities for its establishment of a State Exchange, we would require
that the State provide supporting documentation demonstrating progress
toward meeting State Exchange Blueprint requirements, or documentation
that details a State's plans for how it intends to implement and meet
the Exchange functional requirements as laid out in the State Exchange
Blueprint. This could include a State submitting detailed plans
regarding its State Exchange consumer assistance programs and
activities, such as information on its direct-to-consumer outreach
plans, for HHS to assess comparability to the FFEs' consumer assistance
programs and activities while allowing for State flexibility in its
approach to best serve the State's
[[Page 82552]]
consumers. Over the past few years, several States have transitioned
off the Federal platform to establish and operate State Exchanges. In
our experience providing technical assistance and oversight to States
that are establishing State Exchanges, we have observed that requesting
additional detail from States on various aspects of their State
Exchange implementation plans is imperative to a successful
establishment of a State Exchange. Ultimately, we seek to support the
establishment of a successful State Exchange, and the ability to
request additional detail on a State's State Exchange implementation
plans is crucial to identifying areas the State may need to reconsider
or further develop.
The current State Exchange Blueprint Application provides that we
may require live demonstrations of Exchange functionality on the State
Exchange's platform, and/or supporting documentation from a State, as
evidence of its progress toward meeting State Exchange Blueprint
Application requirements.\81\ We propose to codify in our regulations
in order to set a clear expectation for a State establishing a State
Exchange that, as part of the State's submission of a State Exchange
Blueprint Application, we have the authority to request any evidence we
determine necessary for the State to detail its implementation of the
required State Exchange functionality. This could include HHS requiring
a State to submit detailed plans regarding its State Exchange consumer
assistance programs and activities, such as information on its direct
outreach plans. We would provide guidance and direction to each State
regarding requests for evidence, so that each State understands the
purpose of our requests as they relate directly to how the State meets
the functional requirements for operating a State Exchange. We would
request supporting documentation from States with the goal of imposing
minimal burden on States' ability to meet its State Exchange Blueprint
requirements, while maintaining the objective that our requests would
provide us with the ability to sufficiently assess a State's readiness
to operate a State Exchange and ensure that a State is sufficiently
implementing and scaling policies, procedures, operations, technology,
and administrative capacities to meet the needs of the State's
consumers. We would use the information in a State's Exchange Blueprint
Application, as well as any supporting documentation and evidence, to
make a determination of whether to grant approval for a State's
establishment and operation of a State Exchange for its intended first
open enrollment period.
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\81\ CMS. (2021, November 30). Blueprint For Approval of State-
Based Health Insurance Exchanges, Coverage Years Beginning on or
After 2019. CMS. Section I, p. iii. <a href="https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/CMS-Blueprint-Application.pdf">https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/CMS-Blueprint-Application.pdf</a>.
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We also propose to add new Sec. 155.106(a)(2)(i) and (ii) to
require that when a State submits its State Exchange Blueprint
application to HHS for approval, the State must provide the public with
notice and a copy of its State Exchange Blueprint application. To
facilitate such public notice, HHS would post a State Exchange
Blueprint application submitted by a State to its public-facing website
within 90 calendar days of receipt. Further, we propose to require that
at some point following a State's submission of its State Exchange
Blueprint application to HHS, a State must conduct at least one public
engagement (such as a townhall meeting or public hearing) in a timeline
and manner (for instance, considering whether to conduct in-person and/
or virtually) considered effective by the State, with concurrence from
HHS, at which interested parties can learn about the State's intent to
establish a State Exchange and the State's progress toward executing
that transition. We also propose to require that while a State is in
the process of establishing a State Exchange and until HHS has approved
or conditionally approved the State Exchange Blueprint application, a
State must conduct periodic public engagements at which interested
parties would continue to learn about the State's progress towards
establishing a State Exchange, in a timeline and manner considered
effective by the State with concurrence from HHS.
As we explained previously, sections 1311(b) and 1321(b) of the ACA
allow States to elect to operate their own health insurance Exchanges
to provide individuals and employers with health insurance coverage,
and section 1321(a)(1)(A) of the ACA directs the Secretary to issue
regulations setting standards with respect to the establishment and
operation of those Exchanges. The Exchange Blueprint serves as a
vehicle for a State to document its progress toward implementing its
intended Exchange operational model. Section 155.106(a)(2) requires
States to submit an Exchange Blueprint application for HHS approval at
least 15 months prior to the date on which the Exchange proposes to
begin open enrollment with a State Exchange. The submission and
approval of Exchange Blueprints is an iterative process that generally
takes place over the course of 15 months prior to a State's first open
enrollment as a State Exchange. HHS' review and approval of the
Exchange Blueprint involves providing substantial technical assistance
to States as they design, finalize, and implement their Exchange
operations. Further, the establishment of a State Exchange involves
significant collaboration between HHS and States to develop plans and
document readiness for the State to transition from an Exchange that
uses the Federal platform to one that operates its own eligibility and
enrollment platform. State activities as part of this transition
process include completing key milestones, meeting established
deadlines, and implementing contingency measures.
Certain parties, such as consumers or advocate groups, who may be
interested in a State's establishment of a State Exchange may not know
if a State applied to HHS to establish a State Exchange or is in
[…truncated; see source link]Indexed from Federal Register on November 24, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.