[Federal Register Volume 85, Number 25 (Thursday, February 6, 2020)]
[Proposed Rules]
[Pages 7088-7159]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-02021]
[[Page 7087]]
Vol. 85
Thursday,
No. 25
February 6, 2020
Part III
Department of Health and Human Services
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45 CFR Parts 146, 149, 155, et al.
Patient Protection and Affordable Care Act; HHS Notice of Benefit and
Payment Parameters for 2021; Notice Requirement for Non-Federal
Governmental Plans; Proposed Rule
Federal Register / Vol. 85, No. 25 / Thursday, February 6, 2020 /
Proposed Rules
[[Page 7088]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Parts 146, 149, 155, 156, and 158
[CMS-9916-P]
RIN 0938-AT98
Patient Protection and Affordable Care Act; HHS Notice of Benefit
and Payment Parameters for 2021; Notice Requirement for Non-Federal
Governmental Plans
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule sets forth payment parameters and
provisions related to the risk adjustment and risk adjustment data
validation programs; cost-sharing parameters and cost-sharing
reductions; and user fees for federally-facilitated Exchanges and
State-based Exchanges on the Federal platform. It also proposes changes
related to essential health benefits and would provide states with
additional flexibility in the operation and establishment of Exchanges.
It includes proposed changes related to cost-sharing for prescription
drugs; excepted benefit health reimbursement arrangements offered by
non-Federal governmental plan sponsors; the medical loss ratio program;
Exchange eligibility and enrollment; exemptions from the requirement to
maintain coverage; quality rating information display standards for
Exchanges; and other related topics. It also proposes to repeal
regulations relating to the Early Retiree Reinsurance Program.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on March 2, 2020.
ADDRESSES: In commenting, please refer to file code CMS-9916-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of three ways (please choose only
one of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-9916-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-9916-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: Usree Bandyopadhyay, (410) 786-6650,
Kiahana Brooks, (301) 492-5229, or Evonne Muoneke (301) 492-4402, for
general information.
David Mlawsky, (410) 786-6851, for matters related to excepted
benefit health reimbursement arrangements (HRAs).
Allison Yadsko, (410) 786-1740, Joshua Paul, (301) 492-4347, or
Krutika Amin, (301) 492-5153, for matters related to risk adjustment.
Aaron Franz, (410) 786-8027, for matters related to federally-
facilitated Exchange (FFE) and State-based Exchange on the Federal
platform (SBE-FP) user fees and sequestration.
Joshua Paul, (301) 492-4347, or Allison Yadsko, (410) 786-1740, for
matters related to risk adjustment data validation (RADV).
Joshua Paul, (301) 492-4347, for matters related to the premium
adjustment percentage.
Rebecca Zimmermann, (301) 492-4396, for matters related to value-
based insurance plan design.
Becca Bucchieri, (301) 492-4341, for matters related to essential
health benefit (EHB)-benchmark plans and defrayal of state-required
benefits.
Jill Gotts, (202) 603-0480, for matters related to eligibility
appeals.
Emily Ames, (301) 492-4246, for matters related to coverage
effective dates and termination notices.
Marisa Beatley, (301) 492-4307, for matters related to employer-
sponsored coverage verification and periodic data matching (PDM).
Carolyn Kraemer, (301) 492-4197, for matters related to special
enrollment periods under part 155.
Kendra May, (301) 492-4477, for matters related to terminations.
Ken Buerger, (410) 786-1190, for matters related to cost-sharing
requirements.
Christina Whitefield, (301) 492-4172, for matters related to the
medical loss ratio (MLR) program.
Kevin Kendrick, (301) 492-4127, for matters related to the Early
Retiree Reinsurance Program (ERRP).
Jenny Chen, (301) 492-5156, Shilpa Gogna, (301) 492-4257 or Nidhi
Singh Shah, (301) 492-5110), for matters related to quality rating
information display standards for Exchanges.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to
view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
Table of Contents
I. Executive Summary
II. Background
A. Legislative and Regulatory Overview
B. Stakeholder Consultation and Input
C. Structure of Proposed Rule
III. Provisions of the Proposed HHS Notice of Benefit and Payment
Parameters for 2021
A. Part 146--Requirements for the Group Health Insurance Market:
Excepted Benefit HRAs Offered by Non-Federal Governmental Plan
Sponsors
B. Part 149--Requirements for the Early Retiree Reinsurance
Program
C. Part 153--Standards Related to Reinsurance, Risk Corridors,
and Risk Adjustment
D. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
E. Part 156--Health Insurance Issuer Standards Under the
Affordable Care Act, Including Standards Related to Exchanges
F. Part 158--Issuer Use of Premium Revenue: Reporting and Rebate
Requirements
IV. Collection of Information Requirements
A. Wage Estimates
B. ICRs Regarding Notice Requirement for Excepted Benefit HRAs
C. ICRs Regarding Special Enrollment Periods
D. ICRs Regarding Quality Rating Information Display Standards
for Plan Years Beginning On or After January 1, 2021
E. ICRs Regarding State Selection of EHB-Benchmark Plan for Plan
Years Beginning On or After January 1, 2020
[[Page 7089]]
F. ICRs Regarding Termination of Coverage for Enrollment for
Qualified Individuals
G. ICRs Regarding Medical Loss Ratio (MLR)
H. Summary of Annual Burden Estimate for Proposed Requirements
I. 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
F. Unfunded Mandates
G. Federalism
H. Congressional Review Act
I. Reducing Regulation and Controlling Regulatory Costs
I. Executive Summary
American Health Benefit Exchanges, or ``Exchanges,'' are entities
established under the Patient Protection and Affordable Care Act \1\
(PPACA) through which qualified individuals and qualified employers can
purchase health insurance coverage in qualified health plans (QHPs).
Many individuals who enroll in QHPs through individual market Exchanges
are eligible to receive a premium tax credit (PTC) to reduce their
costs for health insurance premiums and to receive reductions in
required cost-sharing payments to reduce out-of-pocket expenses for
health care services. The PPACA also established the risk adjustment
program, which is intended to increase the workability of the PPACA
regulatory changes in the individual and small group markets, both on
and off Exchanges.
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\1\ The PPACA (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 PPACA,
was enacted on March 30, 2010. In this proposed rule, we refer to
the two statutes collectively as the ``Patient Protection and
Affordable Care Act'' or ``PPACA''.
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On January 20, 2017, the President issued an Executive Order which
stated that, to the maximum extent permitted by law, the Secretary of
HHS and heads of all other executive departments and agencies with
authorities and responsibilities under the PPACA should exercise all
authority and discretion available to them to waive, defer, grant
exemptions from, or delay the implementation of any provision or
requirement of the PPACA that would impose a fiscal burden on any state
or a cost, fee, tax, penalty, or regulatory burden on individuals,
families, health care providers, health insurers, patients, recipients
of health care services, purchasers of health insurance, or makers of
medical devices, products, or medications. In this proposed rule, we
propose, within the limitations of current law, to reduce fiscal and
regulatory burdens across different program areas and to provide
stakeholders with greater flexibility.
In previous rulemakings, we established provisions and parameters
to implement many PPACA requirements and programs. In this proposed
rule, we propose to amend some of these provisions and parameters, with
a focus on maintaining a stable regulatory environment. These proposed
changes are intended to provide issuers with greater predictability for
upcoming plan years, while simultaneously enhancing the role of states
in these programs. The proposals would also provide states with
additional flexibilities, reduce unnecessary regulatory burdens on
stakeholders, empower consumers, ensure program integrity, and improve
affordability. In addition, we solicit comment on modifying the
automatic re-enrollment process for enrollees who would be
automatically re-enrolled with advance payments of the premium tax
credit (APTC) that would cover the enrollee's entire premium. Finally,
we discuss an alternative to the current requirement that Exchanges use
random sampling as part of their methods for verifying eligibility for
or enrollment in an eligible employer-sponsored plan that we are
considering for future rulemaking. We also announce that, pending such
future rulemaking, HHS will not take enforcement action against
Exchanges that do not implement a random sampling methodology during
plan years 2020 and 2021.
Risk adjustment continues to be a core program in the individual
and small group markets both on and off Exchanges, and we propose
recalibrated parameters for the HHS-operated risk adjustment
methodology. To reduce issuer burden in participating in the risk
adjustment program, we also propose changes intended to alleviate
burden for small issuers associated with participating in risk
adjustment data validation (RADV).
As we do every year in the HHS notice of benefit and payment
parameters, we propose updated parameters applicable in the individual
and small group markets. We propose the 2021 plan year user fee rates
for issuers offering plans through the Exchanges using the Federal
platform. We propose maintaining the Federal-facilitated Exchange (FFE)
and State-based Exchange on the Federal platform (SBE-FP) user fees at
the current 2020 plan year rates, 3.0 and 2.5 percent of total monthly
premiums, respectively, in order to preserve and ensure that the FFE
has sufficient funding to cover the cost of all special benefits
provided to FFE issuers during the 2021 plan year. Alternatively, we
are considering and seek comment on reducing the FFE and SBE-FP user
fee rates below 2020 plan year levels. We are also seeking information
on trends in usage of Federal platform functions and services,
potential efficiencies in Federal platform operations, and premium and
enrollment projections, all of which might inform a change in the user
fee level in the final rule.
As we do every year, we also propose to update the maximum annual
limitations on cost sharing for the 2021 benefit year, including those
for CSR plan variations. These updates, which are required by law, will
raise the annual limit on cost sharing, thereby increasing cost sharing
and out-of-pocket spending for consumers who are close to the annual
cost-sharing limit.
We are committed to promoting a consumer-driven health care system
in which consumers are empowered to select and maintain health care
coverage of their choosing. To this end, we provide detailed options to
QHP issuers on ways in which they can implement value-based insurance
plan designs that would empower consumers to receive high value
services at lower costs. These value-based insurance plan designs will
empower consumers and their providers to make evidence-based health
decisions.
We also propose new rules related to special enrollment periods. We
propose to allow Exchange enrollees and their dependents who are
enrolled in silver plans and become newly ineligible for CSRs to change
to a QHP one metal level higher or lower, if they choose. We propose to
require Exchanges to apply plan category limitations to dependents who
are currently enrolled in Exchange coverage and whose non-dependent
household member qualifies for a special enrollment period to newly
enroll in coverage. We also propose to shorten the time between the
date a consumer enrolls in a plan through certain special enrollment
periods and the effective date of that plan. We further propose to
allow all enrollees granted retroactive coverage through a special
enrollment period the option to select a later effective date and pay
for only prospective coverage. We propose to allow individuals and
their dependents who are provided a qualified small employer health
reimbursement arrangement (QSEHRA) on a non-calendar year basis to
qualify for the existing special enrollment period for individuals
enrolled in any
[[Page 7090]]
non-calendar year group health plan or individual health insurance
coverage. We also propose to allow enrollees whose requests for
termination of their coverage were not implemented due to an Exchange
technical error to terminate their coverage retroactive to the date
they attempted the termination, at the option of the Exchange.
We also propose new notice requirements. To increase transparency
in terminations of Exchange coverage or enrollment, we propose to
require termination notices be provided in all scenarios where Exchange
coverage or enrollment is terminated. We also propose to require
excepted benefit health reimbursement arrangements (HRAs) sponsored by
non-Federal governmental plan entities to provide a notice to
participants that contains specified information about the benefits
available under the excepted benefit HRA.
We also propose changes to the quality rating information display
requirements for Exchanges. To continue providing flexibility for State
Exchanges, we propose to codify in regulation the option for State
Exchanges that operate their own eligibility and enrollment platforms
to display the quality rating information provided by HHS or to display
quality rating information based upon certain permissible state-
specific customizations of the quality rating information provided by
HHS.
Stable and affordable Exchanges with healthy risk pools are
necessary for ensuring consumers maintain stable access to health
insurance options. In order to minimize the potential for adverse
selection in the Exchanges, we are sharing our future plans for
rulemaking to allow Exchanges to conduct risk-based employer sponsored
coverage verification and to remove the requirement that Exchanges
select a statistically random sample of applicants when no electronic
data sources are available. In order to make it easier for issuers to
offer wellness incentives to enrollees and promote a healthier risk
pool, we propose to allow issuers to include wellness incentives as
quality improvement activities (QIA) in the individual market for MLR
reporting and calculation purposes.
We propose annual state reporting of state-required benefits that
are in addition to essential health benefits (EHB) for which states are
required to defray the costs. This will help to ensure that Federal
APTC dollars are protected and states are appropriately compensating
enrollees or issuers for services that are in addition to EHB.
We propose changes to the policy regarding how drug manufacturer
coupons accrue towards the annual limitation on cost sharing.
Specifically, we propose to revise Sec. 156.130(h) to state that, to
the extent consistent with applicable state law, amounts paid toward
reducing the cost sharing incurred by an enrollee using any form of
direct support offered by drug manufacturers for specific prescription
drugs may be, but are not required to be, counted toward the annual
limitation on cost sharing. We propose to interpret the definition of
cost sharing not to include expenditures covered by drug manufacturer
coupons.
We propose additional steps to ensure the proper execution of
Federal requirements and to safeguard and conserve Federal funds. To
protect against unnecessary overpayments of APTC funds, we propose to
streamline the process for terminating coverage of enrollees who die
while enrolled in Exchange coverage. In order to ensure that MLR
reporting and rebate calculations are accurate, we propose that issuers
must report expenses for functions outsourced to or services provided
by other entities consistently with issuers' non-outsourced expenses,
and require issuers to deduct prescription drug rebates from MLR
incurred claims not only when such rebates are received by the issuer,
but also when they are received and retained by an entity that provides
pharmacy benefit management services to the issuer. We further propose
that where enrollees provide consent for the Exchange to end their QHP
coverage if they are found to be dually enrolled in other qualifying
coverage during the Exchange's periodic data matching (PDM) process,
the Exchange will not be required to redetermine the enrollee's
eligibility for financial assistance and may discontinue coverage
consistent with the consent given by the enrollee.
Finally, we propose to repeal regulations currently set forth at 45
CFR part 149, governing the Early Retiree Reinsurance Program (ERRP)
program and its implementation. The program sunset by law as of January
1, 2014.
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 PPACA. Subtitles A and C of title I of the PPACA
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.\2\
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\2\ The term ``group health plan'' is used in title XXVII of the
PHS Act and is distinct from the term ``health plan'' as used in
other provisions of title I of PPACA. The term ``health plan'' does
not include self-insured group health plans.
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Section 1301(a)(1)(B) of the PPACA directs all issuers of QHPs to
cover the EHB package described in section 1302(a) of the PPACA,
including coverage of the services described in section 1302(b) of the
PPACA, adherence to the cost-sharing limits described in section
1302(c) of the PPACA, and meeting the AV levels established in section
1302(d) of the PPACA. 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 sections 1302(c)(1) of the PPACA.
Section 1302 of the PPACA provides for the establishment of an EHB
package that includes coverage of EHBs (as defined by the Secretary),
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 PPACA describes the various levels of coverage
based on their AV. Consistent with section 1302(d)(2)(A) of the PPACA,
AV is calculated based on the provision of EHB to a standard
population. Section 1302(d)(3) of the PPACA directs the Secretary to
develop guidelines that
[[Page 7091]]
allow for de minimis variation in AV calculations.
Section 1311(c) of the PPACA provides the Secretary the authority
to issue regulations to establish criteria for the certification of
QHPs. Section 1311(e)(1) of the PPACA 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 PPACA, 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 PPACA establishes special enrollment periods and section
1311(c)(6)(D) of the PPACA establishes the monthly enrollment period
for Indians, as defined by section 4 of the Indian Health Care
Improvement Act.\3\
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\3\ The Indian Health Care Improvement Act (IHCIA), the
cornerstone legal authority for the provision of health care to
American Indians and Alaska Natives, was made permanent when
President Obama signed the bill on March 23, 2010, as part of the
Patient Protection and Affordable Care Act.
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Section 1311(c)(3) of the PPACA provides the Secretary with
authority to develop a system to rate QHPs offered through an Exchange,
based on relative quality and price. Section 1311(c)(4) of the PPACA
authorizes the Secretary to establish an enrollee satisfaction survey
that evaluates the level of enrollee satisfaction of members with QHPs
offered through an Exchange, for each QHP with more than 500 enrollees
in the prior year. Further, sections 1311(c)(3) and 1311(c)(4) of the
PPACA require an Exchange to provide this quality rating information
\4\ to individuals and employers on the Exchange's website.
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\4\ The term ``quality rating information'' includes the QRS
scores and ratings and the results of the enrollee satisfaction
survey (which is also known as the ``Qualified Health Plan (QHP)
Enrollee Experience Survey'').
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Section 1311(d)(3)(B) of the PPACA permits a state, at its option,
to require QHPs to cover benefits in addition to the 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 PPACA 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 PPACA.
Sections 1313 and 1321 of the PPACA 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 1321 of the PPACA
provides for state flexibility in the operation and enforcement of
Exchanges and related requirements.
Section 1321(a) of the PPACA 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 PPACA. Section 1321(a)(1) of the PPACA directs the
Secretary to issue regulations that set standards for meeting the
requirements of title I of the PPACA for, among other things, the
establishment and operation of Exchanges. When operating an FFE under
section 1321(c)(1) of the PPACA, HHS has the authority under sections
1321(c)(1) and 1311(d)(5)(A) of the PPACA 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 general public.
Section 1321(d) of the PPACA provides that nothing in title I of
the PPACA must be construed to preempt any state law that does not
prevent the application of title I of the PPACA. Section 1311(k) of the
PPACA specifies that Exchanges may not establish rules that conflict
with or prevent the application of regulations issued by the Secretary.
Section 1343 of the PPACA 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 payments from those that attract lower-than-
average risk populations, thereby reducing incentives for issuers to
avoid higher-risk enrollees.
Section 1402 of the PPACA provides for, among other things,
reductions in cost-sharing for EHB for qualified low- and moderate-
income enrollees in silver level health plans 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 PPACA requires the Secretary to submit
certain information provided by applicants under section 1411(b) of the
PPACA to other Federal officials for verification, including income and
family size information to the Secretary of the Treasury.
Section 1411(d) of the PPACA provides that the Secretary must
verify the accuracy of information provided by applicants under section
1411(b) of the PPACA for which section 1411(c) does not prescribe a
specific verification procedure, in such manner as the Secretary
determines appropriate.
Section 1411(f) of the PPACA 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 PPACA 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 PPACA allows the exchange of applicant
information only for the limited purposes of, and to the extent
necessary to, ensure the efficient operation of the Exchange, including
by verifying eligibility to enroll through the Exchange and for APTC
and CSRs.
Sections 2722 and 2763 of the PHS Act provide that the requirements
of title XXVII of the PHS Act generally do not apply to excepted
benefits. Excepted benefits are described in section 2791 of the PHS
Act. This provision establishes four categories of excepted benefits.
One such category is limited excepted benefits, which may include
limited scope vision or dental benefits, and benefits for long-term
care, nursing home care, home health care, or community based care.
Section 2791(c)(2)(C) of the PHS Act, section 733(c)(2)(C) of the
Employee Retirement Income Security Act (ERISA), and section
9832(c)(2)(C) of the Internal Revenue Code (the Code) authorize the
Secretary of Health and Human Services, with the Secretaries of Labor
and the Treasury (collectively, the Secretaries), to issue regulations
establishing other, similar limited benefits as excepted benefits. To
be excepted under the category of limited excepted benefits, section
2722(c)(1) of the PHS Act provides that limited benefits must either:
(1) Be provided under a separate policy, certificate, or contract of
insurance; or (2) otherwise not be an integral part of the plan.
Section 2718 of the PHS Act, as added by the PPACA, generally
requires health
[[Page 7092]]
insurance issuers to submit an annual MLR report to HHS, and provide
rebates to enrollees if the issuers do not achieve specified MLR
thresholds.
Section 5000A of the Code, as added by section 1501(b) of the PPACA
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.\5\ Notwithstanding that reduction, certain exemptions are
still relevant to determine whether individuals age 30 and above
qualify to enroll in catastrophic coverage under Sec. 155.305(h).
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\5\ Public Law 115-97, 131 Stat. 2054 (2017).
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1. Premium Stabilization Programs 6
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\6\ The term premium stabilization programs refers to the risk
adjustment, risk corridors, and reinsurance programs established by
the PPACA. See 42 U.S.C. 18061, 18062, and 18063.
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In the July 15, 2011 Federal Register (76 FR 41929), we published a
proposed rule outlining the framework for the premium stabilization
programs. We implemented the premium stabilization programs in a final
rule, published in the March 23, 2012 Federal Register (77 FR 17219)
(Premium Stabilization Rule). In the December 7, 2012 Federal Register
(77 FR 73117), we published a proposed rule outlining 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 (proposed 2014 Payment Notice). We
published the 2014 Payment Notice final rule in the March 11, 2013
Federal Register (78 FR 15409). In the June 19, 2013 Federal Register
(78 FR 37032), we proposed a modification to the HHS-operated
methodology related to community rating states. In the October 30, 2013
Federal Register (78 FR 65046), we finalized the proposed modification
to the HHS-operated methodology related to community rating states. We
published a correcting amendment to the 2014 Payment Notice final rule
in the November 6, 2013 Federal Register (78 FR 66653) to address how
an enrollee's age for the risk score calculation would be determined
under the HHS-operated risk adjustment methodology.
In the December 2, 2013 Federal Register (78 FR 72321), we
published a proposed rule outlining the benefit and payment parameters
for the 2015 benefit year to expand the provisions related to the
premium stabilization programs, setting forth certain oversight
provisions and establishing the payment parameters in those programs
(proposed 2015 Payment Notice). We published the 2015 Payment Notice
final rule in the March 11, 2014 Federal Register (79 FR 13743). In the
May 27, 2014 Federal Register (79 FR 30240), the 2015 fiscal year
sequestration rate for the risk adjustment program was announced.
In the November 26, 2014 Federal Register (79 FR 70673), we
published a proposed rule outlining the benefit and payment parameters
for the 2016 benefit year to expand the provisions related to the
premium stabilization programs, setting forth certain oversight
provisions and establishing the payment parameters in those programs
(proposed 2016 Payment Notice). We published the 2016 Payment Notice
final rule in the February 27, 2015 Federal Register (80 FR 10749).
In the December 2, 2015 Federal Register (80 FR 75487), we
published a proposed rule outlining the benefit and payment parameters
for the 2017 benefit year to expand the provisions related to the
premium stabilization programs, setting forth certain oversight
provisions and establishing the payment parameters in those programs
(proposed 2017 Payment Notice). We published the 2017 Payment Notice
final rule in the March 8, 2016 Federal Register (81 FR 12203).
In the September 6, 2016 Federal Register (81 FR 61455), we
published a proposed rule outlining the benefit and payment parameters
for the 2018 benefit year and to further promote stable premiums in the
individual and small group markets. We proposed updates to the risk
adjustment methodology, new policies around the use of external data
for recalibration of our risk adjustment models, and amendments to the
RADV process (proposed 2018 Payment Notice). We published the 2018
Payment Notice final rule in the December 22, 2016 Federal Register (81
FR 94058).
In the November 2, 2017 Federal Register (82 FR 51042), we
published a proposed rule outlining the benefit and payment parameters
for the 2019 benefit year, and to further promote stable premiums in
the individual and small group markets. We proposed updates to the risk
adjustment methodology and amendments to the RADV process (proposed
2019 Payment Notice). We published the 2019 Payment Notice final rule
in the April 17, 2018 Federal Register (83 FR 16930). We published a
correction to the 2019 risk adjustment coefficients in the 2019 Payment
Notice final rule in the May 11, 2018 Federal Register (83 FR 21925).
On July 27, 2018, consistent with 45 CFR 153.320(b)(1)(i), we updated
the 2019 benefit year final risk adjustment model coefficients to
reflect an additional recalibration related to an update to the 2016
enrollee-level External Data Gathering Environment (EDGE) dataset.\7\
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\7\ ``Updated 2019 Benefit Year Final HHS Risk Adjustment Model
Coefficients.'' July 27, 2018. Available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2019-Updtd-Final-HHS-RA-Model-Coefficients.pdf.
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In the July 30, 2018 Federal Register (83 FR 36456), we published a
final rule that adopted the 2017 benefit year risk adjustment
methodology as established in the final rules published in the March
23, 2012 (77 FR 17220 through 17252) and in the March 8, 2016 editions
of the Federal Register (81 FR 12204 through 12352). This final rule
set forth additional explanation of the rationale supporting use of
statewide average premium in the HHS-operated risk adjustment state
payment transfer formula for the 2017 benefit year, including the
reasons why the program is operated in a budget-neutral manner. This
final rule permitted HHS to resume 2017 benefit year 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 publication of this final rule.\8\
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\8\ ``Update on the HHS-operated Risk Adjustment Program for the
2017 Benefit Year.'' July 27, 2018. Available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2017-RA-Final-Rule-Resumption-RAOps.pdf.
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In the August 10, 2018 Federal Register (83 FR 39644), we published
a proposed rule seeking comment on adopting the 2018 benefit year risk
adjustment methodology in the final rules published in the March 23,
2012 (77 FR 17219) and in the December 22, 2016 editions of the Federal
Register (81 FR 94058). The proposed rule set forth additional
explanation of the rationale supporting use of statewide average
premium in the HHS-operated risk adjustment state payment transfer
formula for the 2018 benefit year, including the reasons why the
program is operated in a budget-neutral manner. In the December 10,
2018 Federal Register (83 FR 63419), we issued a final rule adopting
the 2018 benefit year HHS-operated 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. This final rule sets forth additional explanation of the
rationale supporting use of statewide
[[Page 7093]]
average premium in the HHS-operated risk adjustment state payment
transfer formula for the 2018 benefit year, including the reasons why
the program is operated in a budget-neutral manner.
In the January 24, 2019, Federal Register (84 FR 227), we published
a proposed rule outlining updates to the calibration of the risk
adjustment methodology, the use of EDGE data for research purposes, and
updates to RADV audits. We published the 2020 Payment Notice final rule
in the April 25, 2019, Federal Register (84 FR 17454)
2. Program Integrity
In the June 19, 2013 Federal Register (78 FR 37031), we published a
proposed rule that proposed certain program integrity standards related
to Exchanges and the premium stabilization programs (proposed Program
Integrity Rule). The provisions of that proposed rule were finalized 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).
3. Market Rules
An interim final rule relating to the HIPAA health insurance
reforms was published in the April 8, 1997 Federal Register (62 FR
16894). A proposed rule relating to the 2014 health insurance market
rules was published in the November 26, 2012 Federal Register (77 FR
70584). A final rule implementing the health insurance market rules was
published in the February 27, 2013 Federal Register (78 FR 13406) (2014
Market Rules).
A proposed rule relating to Exchanges and Insurance Market
Standards for 2015 and beyond was published in the March 21, 2014
Federal Register (79 FR 15808) (2015 Market Standards Proposed Rule). A
final rule implementing the Exchange and Insurance Market Standards for
2015 and Beyond was published in the May 27, 2014 Federal Register (79
FR 30240) (2015 Market Standards Rule). The 2018 Payment Notice final
rule in the December 22, 2016 Federal Register (81 FR 94058) provided
additional guidance on guaranteed availability and guaranteed
renewability. In the Market Stabilization final rule that was published
in the April 18, 2017 Federal Register (82 FR 18346), we released
further guidance related to guaranteed availability.
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. We proposed a
rule in the July 15, 2011 Federal Register (76 FR 41865) to implement
components of the Exchanges, and a rule in the August 17, 2011 Federal
Register (76 FR 51201) regarding Exchange functions in the individual
market and Small Business Health Options Program (SHOP), eligibility
determinations, and Exchange standards for employers. A final rule
implementing components of the Exchanges and setting forth standards
for eligibility for Exchanges was published in the March 27, 2012
Federal Register (77 FR 18309) (Exchange Establishment Rule).
In the 2014 Payment Notice and in 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 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 final rule, published in the December
22, 2016 Federal Register (81 FR 94058). In the April 18, 2017 Market
Stabilization final rule Federal Register (82 FR 18346), we amended
standards relating to special enrollment periods and QHP certification.
In the 2019 Payment Notice final rule, 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 final 2020 Payment Notice established a new special
enrollment period.
5. Essential Health Benefits
On December 16, 2011, HHS released a bulletin \9\ that outlined an
intended regulatory approach for defining EHB, including a benchmark-
based framework. A proposed rule relating to EHBs was published in the
November 26, 2012 Federal Register (77 FR 70643). 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 years 2020 and beyond.
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\9\ ``Essential Health Benefits Bulletin.'' December 16, 2011.
Available at https://www.cms.gov/CCIIO/Resources/Files/Downloads/essential_health_benefits_bulletin.pdf.
---------------------------------------------------------------------------
6. Cost-Sharing Requirements
In the 2020 Payment Notice, published on April 25, 2019 (84 FR
17454), we added Sec. 156.130(h)(1) to clarify that issuers are not
required to count toward the annual limitation on cost sharing any
forms of direct support offered by drug manufacturers to reduce out-of-
pocket costs for brand drugs when a generic drug is available and
medically appropriate.
7. Excepted Benefit Health Reimbursement Arrangements
In the October 29, 2018 Federal Register (83 FR 54420), the
Departments of Health and Human Services, Labor, and the Treasury (the
Departments) published proposed regulations on HRAs and other account-
based group health plans, including a new excepted benefit referred to
as an excepted benefit HRA. In the June 20, 2019 Federal Register (84
FR 28888), the Departments published final regulations on HRAs and
other account-based group health plans, including excepted benefit HRAs
(the HRA rule).
8. Medical Loss Ratio (MLR)
We published a request for comment on section 2718 of the PHS Act
in the April 14, 2010 Federal Register (75 FR 19297), and published an
interim final rule with a 60-day comment period relating to the MLR
program on December 1, 2010 (75 FR 74863). A final rule with a 30-day
comment period was published in the December 7, 2011 Federal Register
(76 FR 76573). An interim final rule with a 60-day comment period was
published in the December 7, 2011 Federal Register (76 FR 76595). A
final rule was published in the Federal Register on May 16, 2012 (77 FR
28790). The MLR program requirements were amended in final rules
published in the March 11, 2014 Federal Register (79 FR 13743), the May
27, 2014 Federal Register (79 FR 30339), the February 27, 2015 Federal
Register (80 FR 10749), the March 8, 2016 Federal Register (81 FR
12203), the December 22, 2016 Federal Register (81 FR 94183), and the
April 17, 2018 Federal Register (83 FR 16930).
[[Page 7094]]
9. Early Retiree Reinsurance Program (ERRP)
In the May 5, 2010 Federal Register (75 FR 24450), we published an
interim final rule with comment period governing the ERRP. In the April
5, 2011 Federal Register (76 FR 18766), we published a notice informing
the public that as of May 5, 2011, the ERRP would stop accepting
applications for new participants in the program due to the
availability of funds. In the December 13, 2011 Federal Register (76 FR
77537), we published a notice informing the public that, due to the
availability of funds, the ERRP would deny reimbursement requests that
include claims incurred after December 31, 2011. In the March 21, 2012
Federal Register (77 FR 16551), we published a notice establishing a
timeframe within which plan sponsors participating in the program were
expected to use ERRP reimbursement funds. Specifically, the notice
informed participating plan sponsors that reimbursement funds should be
used as early as possible, but not later than January 1, 2014.
10. Quality Rating System (QRS) and Enrollee Satisfaction Survey
Sections 1311(c)(3) of the PPACA directs the Secretary of HHS to
develop a quality rating for each QHP offered through an Exchange,
based on relative quality and price. Further, section 1311(c)(4) of the
PPACA requires the Secretary to establish an enrollee satisfaction
survey that evaluates the level of enrollee satisfaction of members
with QHPs offered through the Exchanges for each QHP with more than 500
enrollees in the prior year. Exchanges are also required to make
quality rating and enrollee satisfaction information available to
individuals and employers on their respective websites. Consistent with
these statutory provisions, in May 2014, HHS issued regulation at
Sec. Sec. 155.1400 and 155.1405 to establish the Quality Rating System
(QRS) and the QHP Enrollee Experience Survey display requirements for
Exchanges and has worked towards requiring nationwide the prominent
display of quality rating information on Exchange websites.\10\ As a
condition of certification and participation in the Exchanges, HHS
requires that QHP issuers submit QRS clinical measure data and QHP
Enrollee Survey response data for their respective QHPs offered through
an Exchange in accordance with HHS guidance, which has been issued
annually for each forthcoming plan year.\11\
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\10\ Patient Protection and Affordable Care Act; Exchange and
Insurance Market Standards for 2015 and Beyond, Final Rule, 79 FR
30240 at 30352 (May 27, 2014). Also see the CMS Bulletin on display
of QRS star ratings and Qualified Health Plan (QHP) Enrollee Survey
results for QHPs offered through Exchanges (August 15, 2019),
available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/QualityRatingInformationBulletinforPlanYear2020.pdf.
\11\ See, for example, Center for Clinical Standards & Quality,
CMS, The Quality Rating System and Qualified Health Plan Enrollee
Experience Survey: Technical Guidance for 2020 (October 2019),
available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/Downloads/QRS-and-QHP-Enrollee-Survey-Technical-Guidance-for-2020-508.pdf.
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B. Stakeholder Consultation and Input
HHS has consulted with stakeholders on policies related to the
operation of Exchanges and the risk adjustment and RADV programs. We
have held a number of listening sessions with consumers, providers,
employers, health plans, advocacy groups and the actuarial community to
gather public input. We have solicited input from state representatives
on numerous topics, particularly EHBs, state mandates and risk
adjustment. We consulted with stakeholders through regular meetings
with the National Association of Insurance Commissioners (NAIC),
regular contact with states through the Exchange Establishment grant
and Exchange Blueprint approval processes, and meetings with Tribal
leaders and representatives, health insurance issuers, trade groups,
consumer advocates, employers, and other interested parties. We
considered all public input we received as we developed the policies in
this proposed rule.
C. Structure of Proposed Rule
The regulations outlined in this proposed rule would be codified in
45 CFR parts 146, 149, 153, 155, 156 and 158.
The proposed changes to 45 CFR part 146 would establish a notice
requirement for non-Federal governmental plan sponsors that offer an
excepted benefit HRA.
The proposed changes to part 149 would delete the regulations
related to the ERRP, which ended on January 1, 2014.
The proposed changes to 45 CFR part 153 would recalibrate the risk
adjustment models consistent with the approach outlined in the 2020
Payment Notice to transition away from the use of MarketScan[supreg]
data and incorporate the most recent benefit years of enrollee-level
EDGE data that are available for 2021 and beyond. The proposals
regarding part 153 also relate to the risk adjustment user fee for the
2020 benefit year and modifications to RADV requirements for the states
where HHS operates the risk adjustment program.
We propose several amendments to the definitions applicable to part
155. We discuss future changes to 45 CFR part 155 that would allow
Exchanges to implement a verification process for enrollment in or
eligibility for an eligible employer-sponsored plan based on the
Exchange's assessment of risk for inappropriate payments of APTC/CSR.
We also clarify that an Exchange will not redetermine eligibility for
APTC/CSRs for Medicare dual enrollees who direct the Exchange to end
their QHP coverage; clarify that when an Exchange identifies deceased
enrollees via PDM, the Exchange will terminate coverage retroactively
to the date of death; allow enrollees and their dependents who are
eligible for a special enrollment period due to becoming newly
ineligible for CSRs, and are enrolled in a silver-level QHP, to change
to a QHP one metal level higher or lower if they elect to change their
QHP enrollment through an Exchange; establish that an Exchange must
apply plan category limitations to currently enrolled dependents whose
non-dependent household member qualifies for a special enrollment
period to newly enroll the non-dependent household member in Exchange
coverage; provide that in the FFE, special enrollment periods currently
following regular effective date rules would instead be effective on
the first of the month following plan selection; align retroactive
effective date and binder payment rules; establish that qualified
individuals and dependents who are provided a QSEHRA with a non-
calendar year plan year would qualify for the existing special
enrollment period for individuals enrolled in any non-calendar year
group health plan or individual health insurance coverage; and allow
enrollees blocked from termination due to an Exchange technical error
to terminate their coverage retroactive to the date they attempted the
termination.
As we do every year in the HHS notice of benefit and payment
parameters, we propose to update the required contribution percentage,
the maximum annual limitation on cost sharing, and the reduced maximum
annual limitation on cost sharing based on the premium adjustment
percentage. We propose to update the user fee rates for the 2021
benefit year for all issuers participating on the Exchanges using the
Federal platform. Further, a proposed change to 45 CFR part 156 would
require QHP issuers to send to enrollees a termination notice for all
termination events. We also propose to amend the
[[Page 7095]]
regulation addressing state selection of EHB-benchmark plans to require
the reporting of state-required benefits. We also propose to offer QHP
issuers the option to design value-based insurance plans that would
empower consumers to receive high value services at lower cost. We
propose to revise Sec. 156.130(h) in its entirety to address how any
direct support offered by drug manufacturers to enrollees for specific
prescription drugs are treated with regard to accrual towards the
annual limitation on cost sharing.
The proposed changes to 45 CFR part 158 would require issuers, for
MLR purposes, to report expenses for functions outsourced to or
services provided by other entities consistently with issuers' non-
outsourced expenses, and to deduct from incurred claims prescription
drug rebates and other price concessions received and retained by the
issuer or other entities providing pharmacy benefit management services
to the issuers. The proposed changes to the MLR regulations would also
explicitly allow issuers to report certain wellness incentives as QIA
in the individual market.
III. Provisions of the Proposed HHS Notice of Benefit and Payment
Parameters for 2021
A. Part 146--Requirements for the Group Health Insurance Market:
Excepted Benefit HRAs Offered by Non-Federal Governmental Plan Sponsors
HHS proposes to add a new paragraph (b)(3)(viii)(E) to Sec.
146.145 to establish notice requirements for excepted benefit HRAs
offered by non-Federal governmental plan sponsors. Excepted benefit
HRAs are a new type of excepted benefit the Departments recently
established in the HRA rule.\12\ The proposed new paragraph would
require sponsors of non-Federal governmental plans that offer excepted
benefit HRAs to provide a notice to eligible participants that contains
specified information about the benefits available under the excepted
benefit HRA.
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\12\ 84 FR 28888 (June 20, 2019).
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In the HRA rule, the Departments authorized a new form of HRA (the
individual coverage HRA), and recognized certain HRAs as limited
excepted benefits (the excepted benefit HRA), for plan years beginning
on or after January 1, 2020. The individual coverage HRA and the
excepted benefit HRA were designed to provide Americans with additional
options to obtain quality, affordable health care by expanding the
flexibility and use of HRAs. An entity may offer an individual coverage
HRA subject to the HRA meeting the applicable conditions for individual
coverage HRAs set forth in the HRA rule, including satisfying certain
notice requirements. The notice must include a description of the terms
of the individual coverage HRA, information regarding the PTC
consequences of enrollment in the individual coverage HRA, and a
statement about the ability to opt out of and waive future
reimbursement from the individual coverage HRA, among other
information.\13\ The individual coverage HRA can be used to reimburse,
among other medical care expenses, premiums for individual health
insurance coverage.
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\13\ Ibid at 28920-28924.
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Separately, under the HRA rule, benefits provided under an HRA or
other account-based group health plan (other than a health flexible
spending arrangement) will qualify as limited excepted benefits not
subject to requirements under title XXVII of the PHS Act if they: (1)
Are offered by a plan sponsor that also offers traditional group health
plan coverage for the plan year to the participant; (2) are funded with
amounts newly made available for each plan year that do not exceed
$1,800, adjusted annually in a manner set forth in the HRA rule; (3) do
not reimburse premiums for individual health insurance coverage, group
health plan coverage (other than COBRA continuation coverage or other
continuation coverage), or Medicare, except for coverage that consists
solely of excepted benefits; and (4) are made available under the same
terms to all similarly situated individuals, regardless of any health
factor.
Commenters on the proposed HRA rule \14\ suggested that the
Departments provide certain notice requirements for excepted benefit
HRAs. The commenters suggested that the required notice should be
similar to the notice required for individual coverage HRAs as
described above, or should, at a minimum, inform participants and
beneficiaries of the annual dollar limit for benefits under the
excepted benefit HRA, and participants' and beneficiaries' rights under
the excepted benefit HRA.\15\
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\14\ 83 FR 54420 (October 29, 2018). This proposed rule was
subsequently finalized, with some revisions in response to comments,
by the final rule referenced in this preamble as the HRA rule.
\15\ 84 FR 28888 at 28941.
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In the preamble to the HRA rule, the Departments noted that long-
standing notice requirements under Part 1 of the ERISA already apply to
private-sector, employment-based plans. The Departments explained that
under those notice requirements, excepted benefit HRAs that are subject
to ERISA generally should provide information on eligibility to receive
benefits, annual or lifetime caps or other limits on benefits under the
plan, and a description or summary of the benefits. Accordingly, the
HRA rule included a cross-reference to existing ERISA notice provisions
for excepted benefit HRAs that are subject to ERISA, to help ensure
that excepted benefit HRA plan sponsors are aware of their obligations
under those provisions. However, the HRA rule did not finalize any
notice requirements in addition to those ERISA already imposes on
ERISA-covered plans. It also did not subject plans that are not subject
to ERISA, such as excepted benefit HRAs sponsored by non-Federal
governmental employers, to similar notice requirements.
HHS believes individuals offered excepted benefit HRAs by non-
Federal governmental plan sponsors should also have access to clear
information about their excepted benefit HRAs. Therefore, in the HRA
rule, HHS announced its intent to propose notice requirements with
respect to excepted benefit HRAs offered by non-Federal governmental
plan sponsors in future notice and comment rulemaking. HHS indicated
that it anticipated proposing that a non-Federal governmental plan
excepted benefit HRA would be required to provide a notice that
describes conditions pertaining to eligibility to receive benefits,
annual or lifetime caps or other limits on benefits under the plan, and
a description or summary of the benefits consistent with the
requirements of Department of Labor (DOL) summary plan description
regulations at 29 CFR 2520.102-3(j)(2) and (3). Further, HHS indicated
that, under its anticipated proposal, this notice would be required to
be provided in a time and manner consistent with the requirements of
DOL regulations at 29 CFR 2520.104b-2(a).\16\
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\16\ 84 FR 28888 at 28941.
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In this proposed rule, HHS proposes to add a new paragraph
(b)(3)(viii)(E) to Sec. 146.145 that would require excepted benefit
HRAs sponsored by non-Federal governmental entities to provide notice
consistent with the discussion in the preamble to the HRA rule.\17\
Specifically, under this proposal, an excepted benefit HRA offered by a
non-Federal governmental plan sponsor would be required to provide a
notice that describes conditions pertaining to eligibility to receive
benefits, annual or lifetime caps or other limits on benefits under the
excepted benefit HRA, and a description or summary of the benefits
[[Page 7096]]
available under the excepted benefit HRA. This is generally consistent
with the content requirements of DOL summary plan description
regulations at 29 CFR 2520.102-3(j)(2) and (3), although the excepted
benefit HRA notice provided by a non-Federal governmental plan sponsor
would be required to be provided annually and would not necessarily
have to include every data element specified in those DOL regulations.
We also propose that the notice must be provided in a manner reasonably
calculated to ensure actual receipt by participants eligible for the
excepted benefit HRA, such as by providing the notice in the same
manner in which the plan sponsor provides other notices or plan
documents to plan participants.
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\17\ Ibid.
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We propose that this notice must be provided no later than 90 days
after the employee becomes a participant in the excepted benefit HRA
and annually thereafter. Under applicable rules at 45 CFR 144.103,
``participant'' is defined as having the meaning given the term under
section 3(7) of the ERISA, which states, any employee or former
employee of an employer, or any member or former member of an employee
organization, who is or may become eligible to receive a benefit of any
type from an employee benefit plan which covers employees of such
employer or members of such organization, or whose beneficiaries may be
eligible to receive any such benefit. Furthermore, under existing DOL
regulations at 29 CFR 2520.104b-2(a), ERISA-covered plans, including
ERISA-covered excepted benefit HRAs, generally are required to furnish
a copy of the notice to each participant no later than 90 days after
the employee becomes a participant in the plan. Given that ERISA-
covered plans and non-Federal governmental plans often contract with
the same service providers to administer their health plans, to
increase efficiencies, and minimize costs and confusion, we propose
that the notice provided by non-Federal governmental plans must be
provided on an annual basis no later than 90 days after the first day
of the excepted benefit HRA plan year, or in the case of an employee
who becomes a participant after the start of the plan year, no later
than 90 days after the employee becomes a participant in the plan.
We propose this notice requirement would be applicable to excepted
benefit HRA plan years beginning on or after 30 days following the
effective date of the final rule.
We seek comment on all aspects of this proposal, including whether
to apply a different timing standard than the one proposed for the
notices for non-Federal governmental excepted benefit HRAs, and any
logistical, cost, and other challenges that would ensue from applying a
different timing standard for the notice for such excepted benefit HRAs
than for those regulated by ERISA. We also solicit comments on the
proposed applicability date and on ways to mitigate the potential costs
and burdens this notice requirement may impose on non-Federal
governmental plan sponsors interested in offering excepted benefit
HRAs. For example, if, after the first year, this notice would be
required only for plan years for which the terms of the excepted
benefit HRA change from the previous plan year, sponsors of non-Federal
governmental excepted benefit HRAs would incur lower costs to provide
this notice to eligible participants. Therefore, we also seek comment
on whether sponsors of non-Federal governmental excepted benefit HRAs
should be required to provide the notice annually after the initial
notice, or whether, after providing the initial notice, they should
only be required to provide the notice with respect to plan years for
which the terms of the excepted benefit HRA change from the previous
plan year, and if so, what type or magnitude of change should trigger
such a subsequent notice. For example, should a change in the dollar
amount of the excepted benefit HRA trigger such a notice, and if so,
what magnitude of increase or decrease? Should a change in just one
type of medical care expense that may or may not be reimbursed by the
excepted benefit HRA trigger such a subsequent notice, or would a
subsequent notice be required only if more than one type of
reimbursable medical care expense is added or eliminated?
B. Part 149--Requirements for the Early Retiree Reinsurance Program
(ERRP)
We propose to delete part 149 of title 45 of the CFR, which sets
forth requirements for participating in the ERRP, established by
section 1102 of the PPACA. The ERRP provided financial assistance in
the form of reinsurance to employment-based health plan sponsors--
including for-profit companies, schools and educational institutions,
unions, state and local governments, religious organizations, and other
nonprofit plan sponsors--that made coverage available to early
retirees, their spouses or surviving spouses, and dependents, for
specified claims incurred prior to January 1, 2014, or until funding
was depleted, whichever were to occur sooner. The goal of the program
was to encourage and support comprehensive, quality health care for
early retirees at least 55 years of age, and their spouses and
dependents, not otherwise eligible for Medicare during the period
preceding the effective date of the Exchanges and many of the market-
wide rules created by the PPACA.
Under section 1102(a)(1) of the PPACA, the ERRP expired January 1,
2014. All ERRP payments have been made and there are no outstanding
claims or disputes. A portion of the original appropriation remains,
and will be returned to the Treasury when the appropriation is closed
out in due course.
Repealing the ERRP regulations would reduce the volume of Federal
regulations. Therefore, we propose to delete the regulations in part
149, and reserve part 149. We seek comment on this proposal.
C. Part 153--Standards Related to Reinsurance, Risk Corridors, and Risk
Adjustment
1. Sequestration
In accordance with the OMB Report to Congress on the Joint
Committee Reductions for Fiscal Year 2020,\18\ both the transitional
reinsurance program and the permanent risk adjustment program are
subject to the fiscal year 2020 sequestration. The Federal Government's
2020 fiscal year began October 1, 2019. While the 2016 benefit year was
the final year of the transitional reinsurance program, there might be
reinsurance payments in the 2020 fiscal year for close-out activities.
Therefore, the risk adjustment and reinsurance programs will be
sequestered at a rate of 5.9 percent for payments made from fiscal year
2020 resources (that is, funds collected during the 2020 fiscal year).
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\18\ Available at https://www.whitehouse.gov/wp-content/uploads/2019/03/2020_JC_Sequestration_Report_3-18-19.pdf.
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HHS, in coordination with the OMB, has determined that, under
section 256(k)(6) of the Balanced Budget and Emergency Deficit Control
Act of 1985 (Pub. L. 99-177, enacted December 12, 1985), as amended,
and the underlying authority for the reinsurance and risk adjustment
program, the funds that are sequestered in fiscal year 2020 from the
risk adjustment or reinsurance programs will become available for
payment to issuers in fiscal year 2021 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
[[Page 7097]]
would become available in the fiscal year following that in which it
was sequestered.
2. Provisions and Parameters for the Risk Adjustment Program
In subparts A, B, 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 PPACA that transfers funds from lower-than-average risk, risk
adjustment covered plans to higher-than-average risk, risk adjustment
covered plans in the individual and small group markets (including
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. HHS did not receive any
requests from states to operate risk adjustment for the 2021 benefit
year. Therefore, HHS will operate risk adjustment in every state and
the District of Columbia for the 2021 benefit year.
We propose changes in this rule to recalibrate the risk adjustment
models consistent with the methodology we finalized for the 2020
benefit year. For the 2021 benefit year, we propose to incorporate the
most recent benefit years of enrollee-level EDGE data that are
available, and to rely only on enrollee-level EDGE data for 2021 and
beyond for purposes of recalibrating the HHS risk adjustment models. We
also propose the risk adjustment user fee for the 2020 benefit year and
modifications to certain RADV requirements.
a. 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 current structure of these models is described in the
2020 Payment Notice.\19\ The HHS risk adjustment methodology utilizes
separate models for adults, children, and infants to account for 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 beginning with the 2017 benefit year, and prescription
drug categories (RXCs) beginning with the 2018 benefit year. 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 CSR adjustment that accounts for differences in induced
demand at various levels of cost sharing.
---------------------------------------------------------------------------
\19\ See 84 FR 17454 at 17463.
---------------------------------------------------------------------------
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) within a geographic rating area is one of the
inputs into the risk adjustment state payment transfer formula, which
determines the payment or charge that an issuer will receive or be
required to pay for that plan for the applicable state market risk
pool. 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.
(1) Updates to Data Used for Risk Adjustment Model Recalibration
We propose to discontinue our reliance on MarketScan[supreg] data
to recalibrate the risk adjustment models. Previously, we used the 3
most recent years of MarketScan[supreg] data available to recalibrate
the 2016, 2017, and 2018 benefit year risk adjustment models. For the
2019 benefit year, we recalibrated the models using 2 years of
MarketScan[supreg] data (2014 and 2015) with 2016 enrollee-level EDGE
data. The 2019 benefit year was the first recalibration year that
enrollee-level EDGE data was used for this purpose. In keeping with our
previously-stated intention to transition away from the
MarketScan[supreg] commercial database, we further reduced our use of
MarketScan[supreg] data in 2020 benefit year model recalibration by
using only 1 year of MarketScan[supreg] data (2015), and the 2 most
recent years of available enrollee-level EDGE data (2016 and 2017).
During all prior recalibrations, we implemented an approach that used
blended, or averaged, coefficients from 3 years of separately solved
models to provide stability for the risk adjustment coefficients year-
to-year, while reflecting the most recent years' claims experience
available.
Consistent with the policy announced in the 2020 Payment
Notice,\20\ we propose in this rule to no longer incorporate
MarketScan[supreg] data in the recalibration process beginning with the
2021 benefit year. Rather, we propose for the 2021 benefit year and
beyond to blend the 3 most recent years of available enrollee-level
EDGE data. This approach would incorporate the most recent years'
claims experience that is available without resulting in drastic year-
to-year changes to risk scores, as the recalibration of the models for
the applicable benefit year would maintain 2 years of EDGE data that
were used in the previous years' models. It also would continue our
efforts to recalibrate the risk adjustment models using actual data
from issuers' individual and small group populations and complete the
transition from the MarketScan[supreg] commercial database that merely
approximates individual and small group (including merged) market
populations. For the 2021 benefit year, we propose to use 2016, 2017,
and 2018 enrollee-level EDGE data to recalibrate the risk adjustment
models. We propose to maintain the approach of using the 3 most recent
years of available enrollee-level EDGE data for recalibration of the
risk adjustment models for future benefit years beyond 2021, unless
changed through rulemaking.
---------------------------------------------------------------------------
\20\ 84 FR 17454 at 17464.
---------------------------------------------------------------------------
We seek comment on our proposal to determine coefficients for the
2021 benefit year based on a blend of separately solved coefficients
from the 2016, 2017, and 2018 benefit years' enrollee-level EDGE data.
We also seek comment on maintaining the approach of using the 3 most
recent years of available enrollee-level EDGE data for recalibration of
the risk adjustment models for future benefit years beyond 2021.
Due to the timing of this proposed rule, we are unable to
incorporate the 2018 benefit year enrollee-level EDGE data in the
calculation of the proposed coefficients in this rule. Therefore,
consistent with prior years' proposed payment notices (2017 and 2019),
the coefficients listed below are based on the 2 most recent years of
data available at the time the proposed rule was drafted--the 2016 and
2017 benefit year enrollee-level EDGE data. Considering that 2 of the 3
years of enrollee-level EDGE data that we plan to use to recalibrate
the 2021 risk adjustment models are reflected in the coefficients that
we are publishing in this proposed rule, we believe that the draft
coefficients listed below provide a reasonably close approximation of
what could be anticipated from blending the 2016, 2017, and 2018
benefit years' enrollee-level EDGE data. If we finalize the proposed
recalibration approach and are unable to incorporate the 2018 benefit
year EDGE data in time to publish updated coefficients in the final
rule, we will publish the final coefficients for the 2021 benefit year
in guidance after the publication of the
[[Page 7098]]
final rule, consistent with our approach in previous benefit years.\21\
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\21\ For example, see the HHS Notice of Benefit and Payment
Parameters for 2018 Final Rule (the 2018 Payment Notice), 81 FR
94058 (December 22, 2016). Also see 45 CFR 153.320(b)(1)(i).
---------------------------------------------------------------------------
(2) Updates to the Risk Adjustment Model Recalibration Hierarchical
Condition Categories (HCCs)
We propose to incorporate the HCC changes identified below
beginning with the 2021 benefit year risk adjustment models. The main
purpose of these proposed HCC changes is to update the HCCs based on
availability of more recent diagnosis code information and the
availability of more recent claims data. To provide risk adjustment
factors that best reflect more recent treatment patterns and costs, we
propose to update the HHS-HCC clinical classification in the current
HHS-HCC risk adjustment models by using more recent claims data to
develop updated risk factors, as part of our continued assessment of
modifications to the HHS-operated risk adjustment program for the
individual and small group markets.
The HHS-HCC clinical classification is the foundation of the models
used in calculating transfers under the state payment transfer formula
in the HHS-operated risk adjustment program established under section
1343 of the PPACA. Except for annual diagnosis code updates and the
reconfiguration of one HCC,\22\ the HHS-HCC clinical classification has
not been modified since it was implemented in the 2014 benefit year.
---------------------------------------------------------------------------
\22\ As detailed in the 2018 Payment Notice, beginning with the
2018 benefit year, HCC 37--Chronic Hepatitis--was split into two
HCCs to distinguish the treatment costs of chronic hepatitis C into
HCC 37_1--Chronic Viral Hepatits and HCC 37_2--Chronic Hepatitis,
Other/Unspecified. See 81 FR 94058 at 94085 (December 22, 2016).
---------------------------------------------------------------------------
The HHS-HCC clinical classification, in place since 2014, was based
on the International Classification of Diseases, 9th Edition, Clinical
Modification (ICD-9-CM) diagnosis codes, an approved U.S. modification
of the World Health Organization's classification system that was
currently in use at the time. That system was subsequently replaced by
the International Classification of Diseases, 10th Revision (ICD-10-
PCS) and International Classification of Diseases, 10th Revision,
Clinical Modification (a corresponding U.S. clinical modification)
(ICD-10-CM). When ICD-10-CM was implemented in the U.S. on October 1,
2015, ICD-10 codes were cross-walked to ICD-9 codes and to the existing
ICD-9-based HHS-HCC clinical classification.
In preparation for proposing these changes in this rulemaking, we
released a paper on June 17, 2019 entitled ``Potential Updates to the
HHS-HCCs for the HHS-operated Risk Adjustment Program'' (HHS-HCCs
Update Paper).\23\ This paper described our methodology for reviewing
and restructuring the HHS-HCC classification to incorporate ICD-10
diagnosis codes, and our intention to evaluate potential changes to the
HHS-HCC model classification using enrollee-level EDGE data, which is
representative of the population for which the models are targeted. Our
main goal for reclassifying HHS-HCCs is to use them to update the HHS-
HCC models to better incorporate coding changes made in the transition
to ICD-10 diagnosis classification system. We also used this
opportunity to review and use the newly available 2016 and 2017 benefit
years enrollee-level EDGE claims data, which reflect the first 2 full
years of ICD-10 diagnosis coding on claims. While this analysis did not
consider updates to the RXCs,\24\ it examined other components of the
clinical classification, including payment and non-payment HCCs,
certain clinical hierarchies, HCC groups and a priori constraints on
HCC coefficients, and other HCC interactions affected by potential
changes.
---------------------------------------------------------------------------
\23\ The Potential Updates to HHS-HCCs for the HHS-operated Risk
Adjustment Program (June 17, 2019) paper is available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Potential-Updates-to-HHS-HCCs-HHS-operated-Risk-Adjustment-Program.pdf.
\24\ RXCs were not implemented in the HHS-operated risk
adjustment models until the 2018 benefit year and they currently
only apply to the adult models.
---------------------------------------------------------------------------
In the HHS-HCCs Update Paper, we explained our considerations for
examining potential changes to HCCs and in determining which diagnosis
codes should be included, how they should be grouped, and how the
diagnostic groupings should interact for risk adjustment purposes,
which is a critical step in the development of the HHS-HCC risk
adjustment models. To guide the reclassification process, we used 10
principles that were discussed in the proposed 2014 Payment Notice that
guided the creation of the original HHS-HCC diagnostic classification
system,\25\ and that were used to develop the HCC classification system
for the Medicare risk adjustment model.\26\ These principles included:
---------------------------------------------------------------------------
\25\ See the HHS Notice of Benefit and Payment Parameters for
2014, Proposed Rule, 77 FR 73118 at 73128 (December 7, 2012).
\26\ Report to Congress: Risk Adjustment in Medicare Advantage
(December 2018) also discusses these principles in Section 2.3 under
``Principle for Risk Adjustment Models'' from pages 14-16 and is
available at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/RTC-Dec2018.pdf.
---------------------------------------------------------------------------
Principle 1--Diagnostic categories should be
clinically meaningful.
Principle 2--Diagnostic categories should
predict medical (including drug) expenditures.
Principle 3--Diagnostic categories that will
affect payments should have adequate sample sizes to permit accurate
and stable estimates of expenditures.
Principle 4--In creating an individual's
clinical profile, hierarchies should be used to characterize the
person's illness level within each disease process, while the effects
of unrelated disease processes accumulate.
Principle 5--The diagnostic classification
should encourage specific coding.
Principle 6--The diagnostic classification
should not reward coding proliferation.
Principle 7--Providers should not be penalized
for recording additional diagnoses (monotonicity).
Principle 8--The classification system should be
internally consistent (transitive).
Principle 9--The diagnostic classification
should assign all diagnosis codes (exhaustive classification).
Principle 10--Discretionary diagnostic
categories should be excluded from payment models.
Using these principles, we conducted a multi-step analysis of the
current HHS-HCC classification to develop the list of HCC changes that
we propose to reclassify.
We began by conducting a comprehensive review of the current HHS-
HCC full classification and risk adjustment model classification,
including an examination of disease groups with extensive ICD-10 code
classification changes, HCCs whose counts had changed considerably
following ICD-10 implementation, clinical areas of interest (for
example, substance use disorders), and model under-prediction or over-
prediction as identified by predictive ratios. We then examined HCC
reconfigurations, payment HCC designation, HCC Groups, and hierarchies
to develop the preliminary regression analyses using 2016 data.\27\ We
also conducted a series of clinical reviews to inform potential
changes. Next, we reviewed the payment model and full classification
[[Page 7099]]
regressions to compare frequencies and predicted incremental costs of
HCCs. Then, we repeated the preliminary regression analyses using 2017
data, reviewed regression results, and developed the new potential HHS-
HCC reclassification.\28\
---------------------------------------------------------------------------
\27\ Payment HCCs are those included in the HHS-HCC risk
adjustment models. The full classification includes both payment and
non-payment HCCs. HCC Groups refers to payment HCCs that are grouped
together in the HHS-HCC risk adjustment model.
\28\ To further clarify, in the HHS-HCCs Update Paper V05
reflects the current classification model, V06 is the initial
assessment of potential revisions to the classification model
developed using the 2016 benefit year data, and V06a is the
reassessment of potential revisions to the classification model that
included 2017 benefit year data.
---------------------------------------------------------------------------
During our analysis, for some disease groups, such as substance use
disorders and pregnancy, we explored multiple model variations. For
substance use disorders, we tested different configurations to add new
drug use disorder HCCs and alcohol use disorder HCCs to the HHS-HCC
risk adjustment model--a single hierarchy approach; two hierarchies
(drug and alcohol HCCs being additive); interaction terms; and for each
of these iterations, grouping HCCs or leaving them ungrouped. For
pregnancy, we tested different configurations for adding ongoing
pregnancy HCCs to the model, which already includes miscarriage HCCs
and completed pregnancy HCCs. These configurations included a single
hierarchy or separate additive HCCs to distinguish pregnancy care from
delivery; interactions between completed and ongoing pregnancy HCCs to
account for when in the episode of care complications occur; and
removal of or changes to HCC groups to better reflect cost
distinctions.
In evaluating options for reclassification, we considered their
predictive power, model complexity, and coding incentives. Based on
this reclassification analysis, we propose to incorporate the changes
presented in Table 1 to payment HCCs beginning with the 2021 benefit
year risk adjustment models.
---------------------------------------------------------------------------
\29\ References to ``all models'' in Table 1 refers to the
adult, child and infants models.
\30\ In a priori constraints, the HCC estimates are constrained
to be equal to each other. These are applied to stabilize high cost
estimates that may vary greatly due to small sample size.
Table 1--Summary of Proposed Payment HCC Risk Adjustment Model Changes
----------------------------------------------------------------------------------------------------------------
Payment HCC proposed
Condition change Summary of proposed payment HCC changes
----------------------------------------------------------------------------------------------------------------
Payment HCC Changes
----------------------------------------------------------------------------------------------------------------
Substance Use Disorders............. +3........................ Add 2 new HCCs for alcohol use
disorders and one new HCC for lower severity
drug use disorders to risk adjust for a
larger number of substance use diagnoses for
all models.\29\
Reconfigure drug dependence HCC to
include drug use disorders with non-psychotic
complications and a subset of drug poisoning
(overdose) codes to reflect the revised
conceptualization of substance use disorders
in ICD-10 for all models.
Impose a new combined hierarchy on
drug use and alcohol use HCCs due to the high
prevalence of both drugs and alcohol use
among those with alcohol or drug use
disorders for all models.
Pregnancy........................... +3........................ Add 3 (ongoing) pregnancy-without-
delivery HCCs, leaving them ungrouped in the
adult models (to reflect differences in costs
by level of complications) and grouping them
in the child models (to address small sample
sizes and unstable estimates).
Revise two existing pregnancy HCC
Groups in both adult and child models,
separating out the ectopic/molar pregnancy
HCC and the uncomplicated pregnancy-with-
delivery HCC to better distinguish
incremental costs.
Diabetes: Type 1.................... +1........................ Add a diabetes type 1 additive HCC to
the adult models to distinguish additional
costs for diabetes type 1.
Remap hyperglycemia and hypoglycemia
codes in the adult model from the ``chronic
complications'' HCC to the ``without
complication'' HCC based on clinical input.
Asthma.............................. +1........................ Split current asthma HCC into two
severity-specific HCCs given new clinical
distinctions for severity levels in the ICD-
10 and to distinguish costs by severity for
all models.
Continue to group asthma HCCs with
chronic obstructive pulmonary disease HCC in
adult model and leave the 3 HCCs ungrouped to
distinguish costs in child models.
Fractures........................... -1, +1.................... Delete an HCC (pathological
fractures) to address a clinical distinction
that may be inconsistently diagnosed/coded
for all models.
Reconfigure an existing HCC (hip
fractures) to better distinguish fracture
codes by site for all models.
Add a new HCC (vertebral fractures)
to better predict vertebral fractures, which
may be indicative of chronic disease and
frailty for all models.
Third Degree Burns and Major Skin +2........................ Reconfigure and add 2 HCCs (extensive
Conditions. third degree burns; major skin burns or
conditions) in an imposed hierarchy because
these HCCs are currently being under-
predicted, contain chronic conditions or are
burns that involve long-term follow up care
for all models.
Impose an a priori constraint \30\
between extensive third degree burns and
severe head injury in child models due to
small sample size.
Coma and Severe Head Injury......... +1........................ Add a new severe head injury HCC
(represents a condition with ongoing care
costs; similar to the inclusion of other
injury HCCs) in a hierarchy above the coma/
brain compression for all models.
Impose an a priori constraint between
extensive third degree burns and severe head
injury in the child models due to small
sample size.
Traumatic Amputations............... +1........................ Add a new HCC in a hierarchy with the
current amputation status HCC and reconfigure
codes between the new HCC and current
amputation status HCC to better distinguish
early treatment and complication costs from
long-term costs for all models.
Leave HCCs ungrouped in the adult
models; group them in the child model for
coefficient stability purposes due to small
sample size.
Narcolepsy and Cataplexy............ +1........................ Add a new HCC to both child and adult
models because these conditions are currently
under-predicted and have associated treatment
costs.
Exudative Macular Degeneration...... +1........................ Add a new HCC to adult models because
the condition is currently under-predicted;
costs are primarily related to drug
treatments.
Congenital Heart Anomalies.......... new to adult.............. Add 3 new HCCs to adult models
(already in the child and infant models)
because the conditions are currently under-
predicted. Group them in the adult models
only.
----------------------------------------------------------------------------------------------------------------
Changes in HCC Groups, Hierarchies
----------------------------------------------------------------------------------------------------------------
Metabolic and Endocrine Disorders... N/A....................... Group HCCs 26 and 27 together in both
the child and adult models to distinguish
their significantly higher incremental costs
from other HCCs (HCCs 28-30) previously in
the full group (HCCs 26 and 27 are currently
under-predicted in the models due to
grouping).
Ungroup HCCs 29 and 30 in the adult
models as they have adequate sample sizes and
clinical and cost distinctions.
[[Page 7100]]
Group HCCs 28 and 29 in the child
models due to small sample sizes, clinical
similarity, and similar predicted costs.
Leave HCC 30 ungrouped in the child
models because it is clinically distinct from
HCCs 28 and 29.
Necrotizing Fasciitis............... N/A....................... Ungroup the necrotizing fasciitis HCC
(HCC 54) in the adult models to better
predict higher incremental costs compared to
HCC 55 (the condition that is currently
grouped with this HCC).
Blood Disorders..................... N/A....................... Revise groups in both adult and child
models to move HCC 69 from its previous
grouping with HCCs 70 and 71 to the group
with HCCs 67 and 68 to better reflect
clinical severity and associated costs.
Reconfigure HCCs 69 and 71 in both
adult and child models based on clinical
input.
Mental Health....................... N/A....................... Move delusional disorders/psychosis
HCC above major depressive disorders/bipolar
disorders HCC in the hierarchy and renumber
the HCCs (that is, HCCs 88 and 89 switch
positions) because the costs and diagnoses
associated with the HCC are more aligned with
HCC 87 (Schizophrenia) for all models.
Relabel HCCs to align with ICD-10
categorizations for all models.
Cerebral Palsy and Spina Bifida..... N/A....................... Refine hierarchies to exclude
paralysis HCCs for enrollees with cerebral
palsy HCCs, as ICD-10 coding guidelines
prohibit these conditions from coding
together for all models.
Refine hierarchies to exclude
hydrocephalus HCC for enrollees with spina
bifida HCC for similar coding restriction
purposes for all models.
Pancreatitis........................ N/A....................... Reconfigure the acute pancreatitis
HCC to move pancreatic disorders and
intestinal malabsorption out of the acute
pancreatitis HCC to differentiate higher cost
conditions for all models.
Revise the hierarchy for pancreas
transplant HCC to remove exclusion of
pancreatitis HCCs because pancreas
transplants are done primarily for diabetes
and insulin conditions rather than
pancreatitis for all models.
Liver............................... N/A....................... Reconfigure codes in liver HCCs to
reflect clinical distinctions for all models.
Move acute liver failure HCC above
chronic liver failure HCC in the hierarchy
and renumber HCCs to address cost
implications of chronic versus acute liver
failure for all models.
----------------------------------------------------------------------------------------------------------------
Summary of the Adult Model Specific Changes
----------------------------------------------------------------------------------------------------------------
Payment HCC change.................. +17....................... Net change of 17 HCCs; 18 HCCs added
and 1 HCC deleted (for details see the above
portion of this table).
Severe Illness Interactions......... -1 (other model variable). Remove medium cost severe illness
interaction term from model because its
parameter estimate is usually very low or
negative.
----------------------------------------------------------------------------------------------------------------
Summary of the Child Model Specific Changes
----------------------------------------------------------------------------------------------------------------
Payment HCC change.................. +12....................... Net change of 12 HCCs; 13 HCCs added
and 1 HCC deleted (for details see the above
portion of this table).
Transplant A Priori Constraints..... N/A....................... Revise a priori constraints applied
to the transplant HCCs to better distinguish
costs while improving estimate stability due
to small sample sizes and unconstrained HCC
129 Cystic Fibrosis from HCC 158 Lung
Transplant Status/Complications due to the
high associated drug costs and higher
predicted costs.
----------------------------------------------------------------------------------------------------------------
Summary of the Infant Model Specific Changes
----------------------------------------------------------------------------------------------------------------
Payment HCC change.................. +8........................ Net change of 8; 9 HCCs added and 1
HCC deleted (for details see the above
portion of this table).
Categorical Model................... N/A....................... Revise severity level assignments of
a subset of HCCs to better reflect clinical
severity and costs and assign new HCCs to
severity levels.
Reconfigure code assignments to
newborn HCCs for subset of codes whose weeks
gestation classification in ICD-10 differed
from ICD-9.
----------------------------------------------------------------------------------------------------------------
We propose to incorporate these changes into the risk adjustment
coefficients beginning with the 2021 benefit year and they are
reflected in the draft factors below.\31\ Under the above-proposed HHS-
HCC updates, we made one modification to the child model from the
potential updates described in HHS-HCCs Update Paper. In the paper, we
noted that we may re-examine the hierarchy violation constraints for
non-transplant HCCs in the child model that affect the predicted costs
of the transplant set. We explained that HCC 159 Cystic Fibrosis in the
child model, which has high associated drug costs, has higher predicted
costs than HCC 158 Lung Transplant Status/Complications. For this
reason, a hierarchy violation was occurring whereby the higher-cost HCC
159 Cystic Fibrosis was being constrained to the lower-cost transplant
coefficients. To address this hierarchy violation, we propose in this
rule to not impose a hierarchy in this case beginning with the 2021
benefit year coefficients in the child models and propose to remove a
constraint for HCC 159 Cystic Fibrosis to allow it to have higher
predicted costs than HCC 158 Lung Transplant Status/Complications.
---------------------------------------------------------------------------
\31\ As noted earlier, the factors displayed in this rulemaking
reflect the equally weighted blended factors from the 2016 and 2017
enrollee-level EDGE data separately solved models, including all of
the proposed HHS-HCC updates and the proposed constraints for the
Hepatitis C RXC coefficient. If the recalibration policies are
finalized as proposed, we would incorporate the 2018 enrollee-level
EDGE data in the coefficients listed in the final rule or, if
necessary, after publication of the final rule consistent with 45
CFR 153.320(b)(1)(i).
---------------------------------------------------------------------------
We are proposing to apply all of the HHS-HCC changes at one time
for the 2021 benefit year and beyond to account for all of the ICD-10
coding changes at one time. Additionally, to assist commenters in
reviewing the code level changes, we are providing a crosswalk of ICD-
10 codes to the proposed HCCs under the ``Draft ICD-10 Crosswalk for
Potential Updates to the HHS-HCC Risk Adjustment Model for the 2021
Benefit Year'', which is available here at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/index.html.\32\ While we recognize
that the number of HHS-HCC changes proposed in this rule is
significantly higher than in previous annual Payment Notice
rulemakings, we do not expect to make significant HHS-HCC changes each
year. We solicit comment on all of the proposed HHS-HCC updates.
---------------------------------------------------------------------------
\32\ The Draft ICD-10 Crosswalk for Potential Updates to the
HHS-HCC Risk Adjustment Model for the 2021 Benefit Year includes
Table 3, which crosswalks ICD-10 codes to the Condition Categories
(CCs) in the risk adjustment models, and Table 4, which provides the
hierarchy rules to apply to the CCs to create HCCs. These Tables are
similar to the Tables 3 and 4 that CMS includes as part of the HHS-
Developed Risk Adjustment Model Algorithm ``Do It Yourself (DIY)''
Software.
---------------------------------------------------------------------------
For the 2020 benefit year adult models, we made a pricing
adjustment for one RXC coefficient for Hepatitis C drugs.\33\ In the
2020 Payment Notice, we stated that we intend to reassess this pricing
adjustment in future benefit years' model recalibrations with
additional years of enrollee-level EDGE
[[Page 7101]]
data.\34\ For the 2021 benefit year model recalibration, we reassessed
the Hepatitis C RXC to consider whether the adjustment was still
needed, or needed to be modified. We found that the current data for
the Hepatitis C RXC still does not take into account the significant
pricing changes due to the introduction of new Hepatitis C drugs, and
therefore, it does not precisely reflect the average cost of Hepatitis
C treatments applicable to the benefit year in question. We also
continue to be cognizant that issuers might seek to influence provider
prescribing patterns if a drug claim can trigger a large increase in an
enrollee's risk score, and therefore, make the risk adjustment transfer
results more favorable for the issuer. For these reasons, we continue
to believe that a pricing adjustment is needed for this RXC coefficient
and are proposing to adjust the Hepatitis C RXC for the 2021 benefit
year model recalibration. For the proposed RXC coefficients listed in
Table 2 of this proposed rule, we constrained the Hepatitis C
coefficient to the average expected costs of Hepatitis C drugs. Similar
to the adjustment for the 2020 benefit year model recalibration, this
has the material effect of reducing the Hepatitis C RXC, and the RXC-
HCC interaction coefficients. For the final 2021 benefit year Hepatitis
C factors in the adult models, we propose to make an adjustment to the
plan liability associated with Hepatitis C drugs to reflect future
market pricing of these drugs before solving for the adult model
coefficients. Applying an adjustment to the plan liability would ensure
that enrollees can continue to receive incremental credit for having
both the RXC and HCC for Hepatitis C, and allow for differential plan
liability across metal levels.
---------------------------------------------------------------------------
\33\ 84 FR 17454 at 17463 through 17466.
\34\ Ibid.
---------------------------------------------------------------------------
In light of the recent recommendation by the U.S. Preventive
Service Task Force to expand the use of pre-exposure prophylaxis (PrEP)
as a preventive service that must be covered by applicable health plans
for persons who are at high risk of HIV acquisition,\35\ we also
propose to incorporate PrEP as a preventive service in the simulation
of plan liability for HHS's adult and child risk adjustment models in
the final 2021 benefit year model recalibration.\36\ Currently, PrEP is
not incorporated into RXC 1 (Anti-HIV) because PrEP does not indicate
an HIV/AIDS diagnosis.\37\ As a general principle, RXCs are
incorporated into the HHS risk adjustment adult models to impute a
missing diagnosis or indicate severity of a diagnosis.\38\ Although
preventive services are incorporated in the simulation of plan
liability, they do not directly affect specific HCCs. We incorporate
preventive services into the models to ensure that 100 percent of the
cost of those services are reflected in the simulation of plan
liability; preventive services are applied under relevant recommended
conditions or groups. We propose including PrEP as a preventive service
along with our general updates to preventive services in the simulation
of plan liability for the HHS risk adjustment models in the final 2021
benefit year adult and child models. We seek comment on this proposal.
---------------------------------------------------------------------------
\35\ Final Recommendation Statement on ``Prevention of Human
Immunodeficiency Virus (HIV) Infection: Preexposure Prophylaxis.
U.S. Preventive Services Task Force. June 2019. https://www.uspreventiveservicestaskforce.org/Page/Document/RecommendationStatementFinal/prevention-of-human-immunodeficiency-virus-hiv-infection-pre-exposure-prophylaxis.
\36\ The June 11, 2019 ``Preexposure Prophylaxis for the
Prevention of HIV Infection: US Preventive Services Task Force
Recommendations Statement'' published in JAMA states that
adolescents at high risk of HIV acquisition could benefit from PrEP
and it is approved for adolescents who weigh at least 35kg (~77
pounds). https://jamanetwork.com/journals/jama/fullarticle/2735509.
\37\ https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Draft-RxC-Crosswalk-Memo-9-18-17.pdf.
\38\ See 81 FR 94058 at 94075. Also see March 31, 2016, HHS-
Operated Risk Adjustment Methodology Meeting Questions & Answers.
June 8, 2016. Available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/RA-OnsiteQA-060816.pdf.
---------------------------------------------------------------------------
As part of the proposed 2021 model recalibration, we also
considered whether to add an additional age-sex category for enrollees
age 65 and over as part of the recalibration of the adult models.
MarketScan[supreg] data does not include enrollees who are age 65 and
over, but the enrollee-level EDGE data does. Currently, the risk
adjustment program incorporates the risk and costs of enrollees age 65
and over using the 60-64 age-sex coefficients. We originally excluded
enrollees age 65 and over from recalibration to prevent having
different methodologies for the MarketScan[supreg] and the enrollee-
level EDGE datasets that were used to solve for the blended
coefficients for the risk adjustment models.
Given that we are proposing to no longer use the MarketScan[supreg]
data to recalibrate the risk adjustment models beginning with the 2021
benefit year, we considered whether new age-sex coefficients should be
created for enrollees age 65 and over beginning with the 2021 benefit
year adult models. In reviewing the enrollee-level EDGE data, we found
that over 70 percent of the enrollees age 65 and over are within the
65-66 age range, and we believe these enrollees are likely transferring
into Medicare coverage once eligible. Our analysis also found that the
enrollees ages 65-66 have lower average annual expenditures than those
enrollees between ages 60 and 64. In contrast, we found that enrollees
age 67 and over have higher average annual expenditures than those
between ages 60 and 64. Due to these two different trends in the age 65
and over population, we are not proposing to add new age-sex
coefficients to the adult models at this time, and would continue to
exclude enrollees age 65 and over in the adult models' calibration.
However, we intend to continue to monitor expenditures for enrollees
age 65 and over to determine whether the addition of new age-sex
coefficients to the adult models in a future year is appropriate.
(3) Improving Risk Adjustment Model Predictions
In addition to the aforementioned updates to the HHS-HCCs, we are
soliciting comment on different options to modify the risk adjustment
models to improve model prediction for enrollees without HCCs or
enrollees with low actual expenditures. In the 2018 Payment Notice, we
stated that based on the commercial MarketScan[supreg] data, the HHS
risk adjustment models slightly under-predict risk for low-cost
enrollees and slightly over-predict risk for high-cost enrollees.\39\
More precisely, the current HHS-HCC models under predict for enrollees
without HCCs, slightly over-predict for enrollees with low HCC counts
and under predict for enrollees with the highest HCC counts. In the
2018 Payment Notice, we also sought comments on ways to address these
issues in response to feedback from stakeholders that HHS should adjust
the risk adjustment models to address the under-prediction of risk for
low cost enrollees and the over-prediction of risk for enrollees with
higher expenditures, which affects the plan liability risk scores of
plans that enroll more healthy individuals or plans that enroll more
individuals with the most extreme chronic health conditions.\40\ While
we did not implement changes to address these issues, we indicated we
would continue to explore different options to improve the models'
predictive power for certain subgroups of enrollees, including analyses
of these issues using enrollee-level EDGE data once available,
[[Page 7102]]
and consider changes for future benefit years.\41\
---------------------------------------------------------------------------
\39\ See 81 FR 61455 at 61472 through 61473. Also see 81 FR
94058 at 94082 through 94083.
\40\ 81 FR 94058 at 94082 through 94083.
\41\ Ibid.
---------------------------------------------------------------------------
As detailed below, we are still evaluating the tradeoffs that would
need to be made in model predictive power among subgroups of enrollees.
We continue to believe that further evaluation is appropriate before
pursuing these options; however, we also recognize that additional
stakeholder comment is a critical aspect to this analysis. Therefore,
in this rule, we outline and solicit comment on the different options
that we continue to consider to improve the models' predictive ability
for certain subgroups of enrollees in light of experience and currently
available information.
As detailed in the 2018 Payment Notice,\42\ we previously
considered implementing a constrained regression approach, under which
we would estimate the adult risk adjustment model using only the age-
sex variables, and then, we would re-estimate the model using the full
set of HCCs, while constraining the value of the age-sex coefficients
to be the same as those from the first estimation. At the time, we
believed that this two-step estimation approach would result in age-sex
coefficients of greater magnitude, potentially helping us predict the
risk of the healthiest subpopulations more accurately. However, upon
further analysis, we also found that the mean expenditures of
individual HCCs under this approach were under-predicted compared to
the current adult models. In particular, the mean expenditures of
extremely expensive enrollees are more under-predicted under this
approach than in the current adult models.
---------------------------------------------------------------------------
\42\ Ibid.
---------------------------------------------------------------------------
Another option we previously evaluated was directly adjusting plan
liability risk scores outside of the models for these
subpopulations.\43\ Specifically, we evaluated using a post-estimation
adjustment to the current models' individual-level risk scores in order
to correct for the patterns of over- and under-prediction. Under this
approach, we would adjust individual-level plan liability risk scores
by directly increasing underestimated plan liability risk scores or
reducing overestimated plan liability risk scores in an attempt to
better match the relative risks of these sub-populations. These
adjustments would be based on predictive ratios calculated from the
models. This approach would estimate the models for all five metal
levels, and within each metal level, predictive ratios for each decile
of predicted expenditures would be calculated to generate a
``predicted'' predictive ratio based on metal level, predictive ratio,
and risk score. In theory, this approach should have the advantages of
retaining the current models. We noted that, while we believed
modifications of this type could improve the model's performance along
this specific dimension (deciles of predicted expenditures), there is a
risk that such modifications could unintentionally worsen model
performance along other dimensions on which the model currently
performs well. One possible problem is that the scores are being
adjusted by the average predictive ratio of the predicted expenditure
level they are in, not their own over- or under-prediction.
---------------------------------------------------------------------------
\43\ Ibid.
---------------------------------------------------------------------------
We recently reassessed this adjustment option given the
availability of the more recent enrollee-level EDGE data and the
implementation of several updates beginning with the 2018 benefit
year.\44\ We did not find improvements in the predictive ratios when
compared to the predictive ratios of the current approach. Our analysis
of this adjustment option showed that the estimates for the lowest-cost
decile and top two highest-cost deciles of enrollees were more
underpredicted under this approach as compared to the current model.
Additionally, this approach results in worse prediction along other
dimensions, such as for subgroups of enrollees with no HCCs and those
with 1 or more payment HCCs.
---------------------------------------------------------------------------
\44\ For example, we incorporated the high costs risk pool
parameters into the HHS risk adjustment methodology, added RXCs into
the adult risk adjustment models, and applied an administrative cost
reduction to the statewide average premiums in the state payment
transfer formula starting with the 2018 benefit year. See the 2018
Payment Notice, 81 FR 94058 (December 22, 2016).
---------------------------------------------------------------------------
Given the shortcomings with both of these approaches, we ultimately
did not adopt either of them. However, we have continued to consider
other potential approaches to address the under-prediction of risk for
low-cost enrollees and over-prediction for high-cost enrollees. In
particular, we are examining non-linear and count model specifications
and whether these options could be used to improve the current adult
models' predictive power. Our initial analysis of these options has
shown that these alternatives can improve prediction in the adult
models.
For the non-linear model, we have been considering an option that
would add a coefficient-weighted sum of payment HCCs raised to a power
to the linear specification. Under this approach, the non-linear term
would be added as the exponentiated p term as shown in the following
formula:
Plan liability = Current Model +
([Sigma][beta]iHCCi)\p\
Where:
[Sigma][beta]iHCCi = the sum of payment HCCs
weighted by their parameter estimates;
p = an exponential factor estimated by the model.
The non-linear term could be interpreted as a measure of overall
disease burden for the enrollee in which having combinations of
conditions can have a larger effect than the sum of the individual
conditions. This type of non-linear model would measure the total
disease burden by a weighted count of HCCs rather than a simple count
of the payment HCCs, while only requiring one additional parameter.
This approach allows the demographic terms for enrollees with no
payment HCCs to be better estimated, while using a nonlinearity for the
disease burden that could keep the model reasonably simple. As such, we
believe that adding a non-linear term to the models could be a
reasonable approach to potentially improve the prediction of the
models. However, the non-linear model may not improve the prediction
for all subpopulations in the models.
Under the count model that we have been considering, we would add
eight indicator variables corresponding to 1 to 8-or-more payment HCCs.
Under this option, the incremental predictions would vary with a
person's count of HCCs (from 1 to 8-or-more payment HCCs) as the
incremental predictions for HCCs in a HCC count model have two
components, the HCC coefficient and the change in the number of HCCs
(from 1 to 8-or-more payment HCCs). We are considering using 1 to 8 or
more payment HCCs based on reviewing the information on enrollees with
HCCs in the 2017 benefit year enrollee-level EDGE data. We found that
the population size of enrollees with a given count of HCCs begins to
drop off around 8 HCCs per enrollee. In general, the count model that
we are considering is similar to the recently finalized Medicare
Advantage risk adjustment model incorporating payment HCC counts.\45\
Even though the Medicare Advantage count model has variables that use
more than 8 HCCs in its model, this option would be generally more
consistent with other programs than the non-linear model, and has
yielded
[[Page 7103]]
similar results in model performance and improving the prediction in
the adult models as the non-linear model. However, similar to the non-
linear model, the count model may not improve the prediction for all
subpopulations in the models.
---------------------------------------------------------------------------
\45\ Announcement of Calendar Year (CY) 2020 Medicare Advantage
Capitation Rates and Medicare Advantage and Part D Payment Policies
and Final Call Letter. April 1, 2019. https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf.
---------------------------------------------------------------------------
In short, both the non-linear and count models could allow the
incremental effect of payment HCCs on plan liability to vary with the
total number of payment HCCs (or overall disease burden). Our recent
analyses on the enrollee-level EDGE data suggest that the non-linear
and count models may yield considerable gains in the adult models for
predictive accuracy across several groups when compared to the current
linear model.
To further assess these approaches, we have been testing the impact
of the count and non-linear model specifications on subpopulations
within the adult model using the silver metal tier level and examining
the model fit using the R-squared of the models and predictive ratios
for various subgroups. As part of our analysis, we have been assessing
the models based on subpopulations that can be determined by the age-
sex categories, the number of HCCs an enrollee has, the applicable
enrollment duration and other relevant criteria.
Based on the initial testing of both the count and non-linear
models' impact on the adult silver model, we found that the enrollees
with the lowest costs have better predictive ratios under both the
count and non-linear models than under the current model, with the non-
linear model slightly over-predicting the costs of those enrollees.
Unlike the current model and the count model, the non-linear model does
not over-predict for enrollees with higher costs. While both the count
and non-linear models show promise in terms of improving the HHS risk
adjustment models' predictive power, we are not proposing to adopt
either of these options as part of the 2021 benefit year recalibration.
We believe further evaluation is needed of the model performance before
choosing to implement such an approach. For example, we would like to
assess these options using additional data and applying the options to
different metal levels beyond the silver metal level to consider
whether the results on subpopulations persist across metal levels, and
whether the adoption of one or more of these options would necessitate
adjustments to other model specifications. We also have concerns about
making these changes concurrent with the numerous changes to the HCCs
being proposed in this rule for the adult, child and infant models for
the 2021 benefit year. As such, we intend to test the model
specifications with an additional year of data before considering these
model changes for future years.
As noted above, we continue to evaluate all of these alternative
modeling approaches while considering several important trade-offs in
making improvements to risk prediction and providing consistency year-
to-year for issuers in the HHS-operated risk adjustment program.
Although we do not propose to incorporate any of these options in the
2021 benefit year risk adjustment model recalibration in this rule, we
are generally soliciting comments on these options. We also solicit
comments on the incorporation of one (or more) of these approaches as
part of the 2022 benefit year risk adjustment model recalibration or
for other future benefit years, whether one of these approaches is
preferable to the other and why, and any considerations that should be
made to implement either model and to analyze the resulting factors.
For example, we are interested in comments on the model specifications
of the count and non-linear variables described in this rule (such as
whether the described 8 HCC variables should be used for the count
model). While we do not believe that the count or non-linear models
would impact incentives to code additional HCCs in comparison to the
current model, we are also interested in comments about whether and
what considerations should be made about count and non-linear models'
impact on coding incentives.
In addition to considering the non-linear and count model
approaches for future benefit years, we are also considering potential
adjustments to the enrollment duration factors in the adult models, as
well as assessing whether such factors should be incorporated into the
child and infant models. In the past, we found that partial-year
enrollment is more common in the individual and small group markets
than in the MarketScan[supreg] data, which generally reflects the large
group market, that we had been using to recalibrate the risk adjustment
models in prior years. Using the 2016 and 2017 enrollee-level EDGE data
that recently became available, we have investigated heterogeneity
(variations) in the relationship between partial-year enrollment and
predicted expenditures. We have explored heterogeneity according to the
presence of certain diagnoses, market (individual or small group),\46\
and enrollment circumstances, such as enrollment beginning later in the
year or ending before the end of the year. Our preliminary analysis of
2017 enrollee-level EDGE data found that current enrollment duration
factors are driven mainly by enrollees with HCCs, that is, partial year
enrollees with HCCs have higher per member per month (PMPM)
expenditures on average as compared to full year enrollees with HCCs,
whereas partial year enrollees without HCCs have similar PMPM
expenditures compared to their full year counterparts. In comparison to
the effect of the presence of HCCs on enrollment duration factors,
enrollment timing (for example, enrollment at the beginning of the year
compared to enrollment after open enrollment period, or drop in
enrollment before the end of the year) does not appear to affect PMPM
expenditures on average. Our analysis also found that separate
enrollment duration factors by market in the adult models may be
warranted, given the differences in risk profiles of partial year
enrollees between the individual and small group markets.\47\ However,
due to limitations with the extracted enrollee-level EDGE data for the
2016 and 2017 benefit years that do not permit us to connect non-
calendar year enrollees in the small group market across plan years
within the same calendar year, we are unable to develop and propose
separate enrollment duration factors by market at this time. Based on
these analyses, because partial-year enrollees with HCCs seem to have
the most distinctive additional expenditures, we believe that
eliminating the enrollment duration factors and replacing them with
monthly enrollment duration factors (up to 6-months), for those with
HCCs, would most improve model prediction.
---------------------------------------------------------------------------
\46\ In the enrollee-level EDGE data, merged market enrollees
are assigned to the individual or small group market indicator based
on their plan.
\47\ In the enrollee-level EDGE data, merged market enrollees
are assigned to the individual or small group market indicator based
on their plan.
---------------------------------------------------------------------------
For the child and infant models, we analyzed incorporating
enrollment duration factors in the same manner as the adult models. We
found that partial year enrollees in the child models did not have the
same risk differences as partial year enrollees in the adult models,
and partial year enrollees in the child models tended to have similar
risk to full year enrollees in the child models. In the infant models,
we found that partial year infants have higher expenditures on average
compared to their full year counterparts. However, we found that the
incorporation of
[[Page 7104]]
enrollment duration factors created interaction issues with the current
severity and maturity factors in the infant models and did not have a
meaningful impact on the general predictive accuracy of the infant
models. As such, we are not proposing to add partial year factors to
the child or infant models.
We are not proposing any changes to the current enrollment duration
factors for the adult models at this time given the aforementioned data
limitation in the extracted enrollee-level EDGE data and the numerous
changes to the HCCs being proposed in this rule for the 2021 benefit
year. As previously mentioned, we intend to review the enrollment
duration factor assumptions seen in the 2016 and 2017 benefit year
enrollee-level EDGE data before considering changes for future benefit
years. Although we do not propose any changes to enrollment duration
factors as part of this rulemaking, we generally solicit comments on
these options and potential changes to the enrollment duration factors
for future benefit years.
Finally, as we analyzed the count and non-linear models and the
enrollment duration factors (including potential changes to such
factors) and evaluated the interaction of such changes, we also found
that enrollment duration factors may no longer be needed if a count or
non-linear model specification is applied to the HHS risk adjustment
adult models. We intend to continue to conduct analysis on enrollment
duration factors and the interaction of such changes on other potential
updates to the risk adjustment models, using 2018 benefit year
enrollee-level EDGE data once available, and will solicit comments on
any such proposed changes for future benefit years.
(4) List of Factors To Be Employed in the Risk Adjustment Models (Sec.
153.320)
The factors resulting from the equally weighted blended factors
from the 2016 and 2017 enrollee-level EDGE data separately solved
models, including all of the proposed HCC changes detailed in the
previous section and the proposed constraints for the Hepatitis C RXC
coefficient, are shown in Tables 2 through 7. As stated above, we
believe that the draft coefficients listed below provide a reasonably
close approximation of what could be anticipated from blending the
2016, 2017 and 2018 benefit years' enrollee-level EDGE data. If we
finalize the recalibration approach proposed in this rule, we would
incorporate the 2018 benefit year enrollee-level EDGE data in the final
rule or in guidance after publication of the final rule, consistent
with our approach in previous benefit years.\48\ 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.\49\ Table 2 contains factors for each adult model,
including the age-sex, HCCs, RXCs, RXC-HCC interactions, and enrollment
duration coefficients.
---------------------------------------------------------------------------
\48\ See 45 CFR 153.320(b)(1)(i).
\49\ As detailed below, we are not proposing changes to the
high-cost risk pool parameters for the 2021 benefit year. Therefore,
consistent with the policy finalized in the 2020 Payment Notice, we
would maintain the $1 million threshold and 60 percent coinsurance
rate for the 2021 benefit year. See 84 FR at 17466 through 17468.
---------------------------------------------------------------------------
Table 3 contains the HHS-HCCs in the severity illness indicator
variable. Table 4 contains the factors for each child model. Table 5
contains the factors for each infant model. Tables 6 and 7 contain the
HCCs included in the infant models' maturity and severity categories,
respectively.
Table 2--Proposed Adult Risk Adjustment Model Factors for 2021 Benefit Year
----------------------------------------------------------------------------------------------------------------
HCC or RXC No. Factor Platinum Gold Silver Bronze Catastrophic
----------------------------------------------------------------------------------------------------------------
Demographic Factors
----------------------------------------------------------------------------------------------------------------
Age 21-24, Male..... 0.128 0.099 0.062 0.027 0.024
Age 25-29, Male..... 0.138 0.108 0.070 0.034 0.031
Age 30-34, Male..... 0.166 0.130 0.085 0.042 0.038
Age 35-39, Male..... 0.198 0.154 0.102 0.051 0.047
Age 40-44, Male..... 0.235 0.186 0.128 0.070 0.065
Age 45-49, Male..... 0.269 0.214 0.149 0.085 0.079
Age 50-54, Male..... 0.346 0.282 0.204 0.127 0.120
Age 55-59, Male..... 0.391 0.319 0.233 0.150 0.142
Age 60-64, Male..... 0.437 0.355 0.261 0.167 0.159
Age 21-24, Female... 0.212 0.170 0.113 0.059 0.054
Age 25-29, Female... 0.239 0.193 0.130 0.071 0.065
Age 30-34, Female... 0.315 0.256 0.185 0.117 0.111
Age 35-39, Female... 0.386 0.317 0.237 0.160 0.154
Age 40-44, Female... 0.442 0.363 0.272 0.185 0.177
Age 45-49, Female... 0.453 0.369 0.272 0.177 0.168
Age 50-54, Female... 0.489 0.401 0.296 0.191 0.181
Age 55-59, Female... 0.465 0.377 0.272 0.166 0.156
Age 60-64, Female... 0.466 0.375 0.265 0.155 0.145
----------------------------------------------------------------------------------------------------------------
Diagnosis Factors
----------------------------------------------------------------------------------------------------------------
HCC001.......................... HIV/AIDS............ 5.048 4.623 4.355 4.286 4.282
HCC002.......................... Septicemia, Sepsis, 7.523 7.302 7.196 7.241 7.248
Systemic
Inflammatory
Response Syndrome/
Shock.
HCC003.......................... Central Nervous 6.357 6.266 6.212 6.226 6.228
System Infections,
Except Viral
Meningitis.
HCC004.......................... Viral or Unspecified 5.200 4.965 4.831 4.739 4.732
Meningitis.
HCC006.......................... Opportunistic 6.905 6.829 6.780 6.732 6.727
Infections.
HCC008.......................... Metastatic Cancer... 23.310 22.744 22.402 22.419 22.421
HCC009.......................... Lung, Brain, and 13.030 12.613 12.358 12.314 12.310
Other Severe
Cancers, Including
Pediatric Acute
Lymphoid Leukemia.
HCC010.......................... Non-Hodgkin 6.063 5.794 5.613 5.525 5.516
Lymphomas and Other
Cancers and Tumors.
HCC011.......................... Colorectal, Breast 4.278 4.012 3.832 3.736 3.727
(Age < 50), Kidney,
and Other Cancers.
HCC012.......................... Breast (Age 50+) and 2.860 2.667 2.529 2.439 2.431
Prostate Cancer,
Benign/Uncertain
Brain Tumors, and
Other Cancers and
Tumors.
HCC013.......................... Thyroid Cancer, 1.248 1.108 0.988 0.858 0.846
Melanoma,
Neurofibromatosis,
and Other Cancers
and Tumors.
HCC018.......................... Pancreas Transplant 2.602 2.537 2.494 2.494 2.493
Status.
HCC019.......................... Diabetes with Acute 0.481 0.414 0.349 0.282 0.276
Complications.
[[Page 7105]]
HCC020.......................... Diabetes with 0.481 0.414 0.349 0.282 0.276
Chronic
Complications.
HCC021.......................... Diabetes without 0.481 0.414 0.349 0.282 0.276
Complication.
HCC022.......................... Type 1 Diabetes 0.493 0.432 0.400 0.342 0.336
Mellitus, add-on to
Diabetes HCCs 19-21.
HCC023.......................... Protein-Calorie 11.452 11.450 11.455 11.553 11.561
Malnutrition.
HCC026.......................... Mucopolysaccharidosi 29.027 28.794 28.644 28.659 28.661
s.
HCC027.......................... Lipidoses and 29.027 28.794 28.644 28.659 28.661
Glycogenosis.
HCC029.......................... Amyloidosis, 7.542 7.410 7.320 7.287 7.284
Porphyria, and
Other Metabolic
Disorders.
HCC030.......................... Adrenal, Pituitary, 1.890 1.792 1.715 1.649 1.644
and Other
Significant
Endocrine Disorders.
HCC034.......................... Liver Transplant 10.612 10.532 10.481 10.478 10.475
Status/
Complications.
HCC035_1........................ Acute Liver Failure/ 10.010 9.944 9.902 9.941 9.941
Disease, Including
Neonatal Hepatitis.
HCC035_2........................ Chronic Liver 3.346 3.145 3.034 3.023 3.021
Failure/End-Stage
Liver Disorders.
HCC036.......................... Cirrhosis of Liver.. 1.189 1.066 0.984 0.917 0.910
HCC037_1........................ Chronic Viral 0.967 0.852 0.775 0.707 0.701
Hepatitis C.
HCC037_2........................ Chronic Hepatitis, 0.967 0.852 0.775 0.707 0.701
Except Chronic
Viral Hepatitis C.
HCC041.......................... Intestine Transplant 37.750 37.652 37.589 37.563 37.564
Status/
Complications.
HCC042.......................... Peritonitis/ 9.512 9.264 9.117 9.131 9.133
Gastrointestinal
Perforation/
Necrotizing
Enterocolitis.
HCC045.......................... Intestinal 5.721 5.459 5.315 5.286 5.284
Obstruction.
HCC046.......................... Chronic Pancreatitis 4.065 3.860 3.754 3.762 3.764
HCC047.......................... Acute Pancreatitis.. 3.357 3.091 2.947 2.876 2.872
HCC048.......................... Inflammatory Bowel 2.466 2.283 2.148 2.037 2.026
Disease.
HCC054.......................... Necrotizing 11.372 11.264 11.191 11.262 11.266
Fasciitis.
HCC055.......................... Bone/Joint/Muscle 5.586 5.381 5.258 5.277 5.279
Infections/Necrosis.
HCC056.......................... Rheumatoid Arthritis 4.212 3.966 3.797 3.735 3.729
and Specified
Autoimmune
Disorders.
HCC057.......................... Systemic Lupus 0.841 0.716 0.607 0.477 0.464
Erythematosus and
Other Autoimmune
Disorders.
HCC061.......................... Osteogenesis 2.728 2.522 2.381 2.295 2.287
Imperfecta and
Other
Osteodystrophies.
HCC062.......................... Congenital/ 2.728 2.522 2.381 2.295 2.287
Developmental
Skeletal and
Connective Tissue
Disorders.
HCC063.......................... Cleft Lip/Cleft 2.077 1.912 1.798 1.715 1.709
Palate.
HCC066.......................... Hemophilia.......... 70.505 70.072 69.794 69.809 69.810
HCC067.......................... Myelodysplastic 14.381 14.246 14.162 14.150 14.149
Syndromes and
Myelofibrosis.
HCC068.......................... Aplastic Anemia..... 14.381 14.246 14.162 14.150 14.149
HCC069.......................... Acquired Hemolytic 14.381 14.246 14.162 14.150 14.149
Anemia, Including
Hemolytic Disease
of Newborn.
HCC070.......................... Sickle Cell Anemia 2.797 2.644 2.532 2.451 2.444
(Hb-SS).
HCC071.......................... Beta Thalassemia 2.797 2.644 2.532 2.451 2.444
Major.
HCC073.......................... Combined and Other 5.580 5.432 5.343 5.334 5.334
Severe
Immunodeficiencies.
HCC074.......................... Disorders of the 5.580 5.432 5.343 5.334 5.334
Immune Mechanism.
HCC075.......................... Coagulation Defects 2.934 2.842 2.776 2.735 2.731
and Other Specified
Hematological
Disorders.
HCC081.......................... Drug Use with 5.206 4.919 4.756 4.704 4.701
Psychotic
Complications.
HCC082.......................... Drug Use Disorder, 3.098 2.855 2.681 2.523 2.507
Moderate/Severe, or
Drug Use with Non-
Psychotic
Complications.
HCC083.......................... Alcohol Use with 2.264 2.005 1.864 1.847 1.847
Psychotic
Complications.
HCC084.......................... Alcohol Use 1.390 1.218 1.097 0.989 0.980
Disorder, Moderate/
Severe, or Alcohol
Use with Specified
Non-Psychotic
Complications.
HCC085.......................... Drug Use Disorder, 0.993 0.836 0.704 0.549 0.534
Mild,
Uncomplicated,
Except Cannabis.
HCC087.......................... Schizophrenia....... 2.734 2.500 2.349 2.238 2.229
HCC088.......................... Delusional and Other 2.724 2.500 2.349 2.238 2.229
Specified Psychotic
Disorders,
Unspecified
Psychosis.
HCC089.......................... Major Depressive 1.546 1.382 1.254 1.121 1.108
Disorder, Severe,
and Bipolar
Disorders.
HCC090.......................... Personality 1.178 1.055 0.940 0.802 0.788
Disorders.
HCC094.......................... Anorexia/Bulimia 2.787 2.612 2.484 2.399 2.391
Nervosa.
HCC096.......................... Prader-Willi, Patau, 7.260 7.189 7.142 7.098 7.092
Edwards, and
Autosomal Deletion
Syndromes.
HCC097.......................... Down Syndrome, 1.413 1.319 1.243 1.175 1.168
Fragile X, Other
Chromosomal
Anomalies, and
Congenital
Malformation
Syndromes.
HCC102.......................... Autistic Disorder... 1.235 1.125 1.010 0.877 0.864
HCC103.......................... Pervasive 1.178 1.055 0.940 0.802 0.788
Developmental
Disorders, Except
Autistic Disorder.
HCC106.......................... Traumatic Complete 12.545 12.385 12.284 12.256 12.253
Lesion Cervical
Spinal Cord.
HCC107.......................... Quadriplegia........ 12.545 12.385 12.284 12.256 12.253
HCC108.......................... Traumatic Complete 8.420 8.227 8.104 8.059 8.054
Lesion Dorsal
Spinal Cord.
HCC109.......................... Paraplegia.......... 8.420 8.227 8.104 8.059 8.054
HCC110.......................... Spinal Cord 5.728 5.472 5.313 5.264 5.259
Disorders/Injuries.
HCC111.......................... Amyotrophic Lateral 2.500 2.272 2.124 2.001 1.990
Sclerosis and Other
Anterior Horn Cell
Disease.
HCC112.......................... Quadriplegic 1.461 1.226 1.079 0.993 0.985
Cerebral Palsy.
HCC113.......................... Cerebral Palsy, 0.766 0.661 0.577 0.485 0.476
Except Quadriplegic.
HCC114.......................... Spina Bifida and 1.640 1.497 1.399 1.326 1.319
Other Brain/Spinal/
Nervous System
Congenital
Anomalies.
HCC115.......................... Myasthenia Gravis/ 5.608 5.480 5.403 5.388 5.386
Myoneural Disorders
and Guillain-Barre
Syndrome/
Inflammatory and
Toxic Neuropathy.
HCC117.......................... Muscular Dystrophy.. 1.871 1.723 1.615 1.502 1.490
HCC118.......................... Multiple Sclerosis.. 4.312 4.071 3.906 3.814 3.805
HCC119.......................... Parkinson's, 1.871 1.723 1.615 1.502 1.490
Huntington's, and
Spinocerebellar
Disease, and Other
Neurodegenerative
Disorders.
HCC120.......................... Seizure Disorders 1.176 1.031 0.925 0.824 0.815
and Convulsions.
HCC121.......................... Hydrocephalus....... 8.731 8.600 8.508 8.481 8.479
HCC122.......................... Coma, Brain 8.322 8.162 8.060 8.059 8.058
Compression/Anoxic
Damage.
HCC123.......................... Narcolepsy and 5.216 5.016 4.864 4.746 4.733
Cataplexy.
HCC125.......................... Respirator 24.309 24.275 24.263 24.371 24.379
Dependence/
Tracheostomy Status.
HCC126.......................... Respiratory Arrest.. 7.162 6.991 6.911 7.005 7.016
HCC127.......................... Cardio-Respiratory 7.162 6.991 6.911 7.005 7.016
Failure and Shock,
Including
Respiratory
Distress Syndromes.
HCC128.......................... Heart Assistive 29.666 29.439 29.311 29.335 29.338
Device/Artificial
Heart.
HCC129.......................... Heart Transplant 29.666 29.439 29.311 29.335 29.338
Status/
Complications.
HCC130.......................... Heart Failure....... 2.668 2.560 2.494 2.480 2.479
[[Page 7106]]
HCC131.......................... Acute Myocardial 7.022 6.720 6.551 6.599 6.605
Infarction.
HCC132.......................... Unstable Angina and 5.250 4.924 4.756 4.734 4.734
Other Acute
Ischemic Heart
Disease.
HCC135.......................... Heart Infection/ 5.986 5.859 5.779 5.747 5.745
Inflammation,
Except Rheumatic.
HCC137.......................... Hypoplastic Left 2.826 2.703 2.606 2.538 2.532
Heart Syndrome and
Other Severe
Congenital Heart
Disorders.
HCC138.......................... Major Congenital 2.826 2.703 2.606 2.538 2.532
Heart/Circulatory
Disorders.
HCC139.......................... Atrial and 2.826 2.703 2.606 2.538 2.532
Ventricular Septal
Defects, Patent
Ductus Arteriosus,
and Other
Congenital Heart/
Circulatory
Disorders.
HCC142.......................... Specified Heart 2.569 2.423 2.318 2.237 2.231
Arrhythmias.
HCC145.......................... Intracranial 7.001 6.724 6.563 6.520 6.517
Hemorrhage.
HCC146.......................... Ischemic or 1.669 1.516 1.434 1.391 1.388
Unspecified Stroke.
HCC149.......................... Cerebral Aneurysm 2.891 2.700 2.577 2.495 2.488
and Arteriovenous
Malformation.
HCC150.......................... Hemiplegia/ 4.722 4.595 4.532 4.576 4.582
Hemiparesis.
HCC151.......................... Monoplegia, Other 3.044 2.909 2.822 2.767 2.762
Paralytic Syndromes.
HCC153.......................... Atherosclerosis of 9.241 9.131 9.079 9.187 9.198
the Extremities
with Ulceration or
Gangrene.
HCC154.......................... Vascular Disease 6.988 6.834 6.742 6.742 6.741
with Complications.
HCC156.......................... Pulmonary Embolism 3.767 3.608 3.503 3.431 3.424
and Deep Vein
Thrombosis.
HCC158.......................... Lung Transplant 24.105 23.953 23.866 23.912 23.916
Status/
Complications.
HCC159.......................... Cystic Fibrosis..... 8.916 8.553 8.315 8.257 8.253
HCC160.......................... Chronic Obstructive 0.887 0.771 0.669 0.560 0.550
Pulmonary Disease,
Including
Bronchiectasis.
HCC161_1........................ Severe Asthma....... 0.887 0.771 0.669 0.560 0.550
HCC161_2........................ Asthma, Except 0.887 0.771 0.669 0.560 0.550
Severe.
HCC162.......................... Fibrosis of Lung and 2.069 1.953 1.877 1.816 1.809
Other Lung
Disorders.
HCC163.......................... Aspiration and 6.983 6.979 6.977 7.024 7.028
Specified Bacterial
Pneumonias and
Other Severe Lung
Infections.
HCC174.......................... Exudative Macular 1.623 1.444 1.322 1.195 1.183
Degeneration.
HCC183.......................... Kidney Transplant 6.450 6.230 6.091 6.009 6.013
Status/
Complications.
HCC184.......................... End Stage Renal 25.460 25.135 24.947 25.122 25.210
Disease.
HCC187.......................... Chronic Kidney 1.310 1.251 1.219 1.234 1.242
Disease, Stage 5.
HCC188.......................... Chronic Kidney 1.310 1.251 1.219 1.234 1.242
Disease, Severe
(Stage 4).
HCC203.......................... Ectopic and Molar 2.232 1.929 1.728 1.468 1.445
Pregnancy.
HCC204.......................... Miscarriage with 0.878 0.754 0.613 0.392 0.367
Complications.
HCC205.......................... Miscarriage with No 0.878 0.754 0.613 0.392 0.367
or Minor
Complications.
HCC207.......................... Pregnancy with 4.401 3.896 3.635 3.286 3.259
Delivery with Major
Complications.
HCC208.......................... Pregnancy with 4.401 3.896 3.635 3.286 3.259
Delivery with
Complications.
HCC209.......................... Pregnancy with 3.125 2.749 2.526 2.092 2.046
Delivery with No or
Minor Complications.
HCC210.......................... (Ongoing) Pregnancy 1.343 1.158 0.962 0.699 0.672
without Delivery
with Major
Complications.
HCC211.......................... (Ongoing) Pregnancy 0.854 0.730 0.560 0.356 0.337
without Delivery
with Complications.
HCC212.......................... (Ongoing) Pregnancy 0.356 0.297 0.195 0.105 0.097
without Delivery
with No or Minor
Complications.
HCC217.......................... Chronic Ulcer of 2.067 1.946 1.874 1.848 1.846
Skin, Except
Pressure.
HCC218.......................... Extensive Third 19.316 18.987 18.771 18.723 18.719
Degree Burns.
HCC219.......................... Major Skin Burn or 2.976 2.833 2.729 2.663 2.657
Condition.
HCC223.......................... Severe Head Injury.. 17.344 17.207 17.106 17.069 17.064
HCC226.......................... Hip and Pelvic 8.859 8.562 8.388 8.418 8.421
Fractures.
HCC228.......................... Vertebral Fractures 5.295 5.072 4.928 4.846 4.838
without Spinal Cord
Injury.
HCC234.......................... Traumatic 5.657 5.468 5.362 5.374 5.377
Amputations and
Amputation
Complications.
HCC251.......................... Stem Cell, Including 27.223 27.219 27.217 27.250 27.253
Bone Marrow,
Transplant Status/
Complications.
HCC253.......................... Artificial Openings 8.573 8.481 8.432 8.485 8.489
for Feeding or
Elimination.
HCC254.......................... Amputation Status, 2.358 2.206 2.120 2.095 2.095
Upper Limb or Lower
Limb.
----------------------------------------------------------------------------------------------------------------
Interaction Factors
----------------------------------------------------------------------------------------------------------------
SEVERE x HCC006................. Severe illness x 6.705 6.924 7.064 7.208 7.220
Opportunistic
Infections.
SEVERE x HCC008................. Severe illness x 6.705 6.924 7.064 7.208 7.220
Metastatic Cancer.
SEVERE x HCC009................. Severe illness x 6.705 6.924 7.064 7.208 7.220
Lung, Brain, and
Other Severe
Cancers, Including
Pediatric Acute
Lymphoid Leukemia.
SEVERE x HCC010................. Severe illness x Non- 6.705 6.924 7.064 7.208 7.220
Hodgkin Lymphomas
and Other Cancers
and Tumors.
SEVERE x HCC115................. Severe illness x 6.705 6.924 7.064 7.208 7.220
Myasthenia Gravis/
Myoneural Disorders
and Guillain-Barre
Syndrome/
Inflammatory and
Toxic Neuropathy.
SEVERE x HCC135................. Severe illness x 6.705 6.924 7.064 7.208 7.220
Heart Infection/
Inflammation,
Except Rheumatic.
SEVERE x HCC145................. Severe illness x 6.705 6.924 7.064 7.208 7.220
Intracranial
Hemorrhage.
SEVERE x _G06A.................. Severe illness x HCC 6.705 6.924 7.064 7.208 7.220
group G06A (HCC 67
Myelodysplastic
Syndromes and
Myelofibrosis or
HCC 68 Aplastic
Anemia or HCC 69
Acquired Hemolytic
Anemia, Including
Hemolytic Disease
of Newborn).
SEVERE x G08.................... Severe illness x HCC 6.705 6.924 7.064 7.208 7.220
group G08 (HCC 73
Combined and Other
Severe
Immunodeficiencies
or HCC 74 Disorders
of the Immune
Mechanism).
----------------------------------------------------------------------------------------------------------------
Enrollment Duration Factors
----------------------------------------------------------------------------------------------------------------
1 month of 0.252 0.219 0.196 0.183 0.182
enrollment.
2 months of 0.252 0.219 0.196 0.183 0.182
enrollment.
3 months of 0.252 0.219 0.196 0.183 0.182
enrollment.
4 months of 0.215 0.184 0.159 0.147 0.146
enrollment.
5 months of 0.201 0.174 0.149 0.135 0.134
enrollment.
6 months of 0.176 0.152 0.128 0.115 0.114
enrollment.
7 months of 0.123 0.105 0.087 0.076 0.075
enrollment.
8 months of 0.085 0.073 0.059 0.051 0.051
enrollment.
9 months of 0.051 0.042 0.033 0.028 0.027
enrollment.
10 months of 0.000 0.000 0.000 0.000 0.000
enrollment.
11 months of 0.000 0.000 0.000 0.000 0.000
enrollment.
----------------------------------------------------------------------------------------------------------------
[[Page 7107]]
Prescription Drug Factors
----------------------------------------------------------------------------------------------------------------
RXC 01.......................... Anti-HIV Agents..... 7.913 7.213 6.737 6.388 6.360
RXC 02.......................... Anti-Hepatitis C 10.016 9.334 8.948 9.021 9.034
(HCV) Agents.
RXC 03.......................... Antiarrhythmics..... 0.127 0.116 0.114 0.073 0.058
RXC 04.......................... Phosphate Binders... 1.998 1.987 1.980 1.913 1.775
RXC 05.......................... Inflammatory Bowel 1.688 1.537 1.409 1.222 1.202
Disease Agents.
RXC 06.......................... Insulin............. 1.940 1.753 1.549 1.315 1.293
RXC 07.......................... Anti-Diabetic 0.793 0.676 0.563 0.399 0.382
Agents, Except
Insulin and
Metformin Only.
RXC 08.......................... Multiple Sclerosis 21.606 20.549 19.915 19.748 19.731
Agents.
RXC 09.......................... Immune Suppressants 13.848 13.192 12.820 12.893 12.902
and
Immunomodulators.
RXC 10.......................... Cystic Fibrosis 18.151 17.703 17.461 17.511 17.519
Agents.
RXC 01 x HCC001................. Additional effect -2.152 -1.718 -1.385 -0.930 -0.891
for enrollees with
RXC 01 (Anti-HIV
Agents) and HCC 001
(HIV/AIDS).
RXC 02 x HCC037_1, 036, 035, 034 Additional effect -0.412 -0.208 -0.082 0.034 0.040
for enrollees with
RXC 02 (Anti-
Hepatitis C (HCV)
Agents) and (HCC
037_1 (Chronic
Viral Hepatitis C)
or 036 (Cirrhosis
of Liver) or 035
(End-Stage Liver
Disease) or 034
(Liver Transplant
Status/
Complications)).
RXC 03 x HCC142................. Additional effect 0.000 0.000 0.000 0.000 0.000
for enrollees with
RxC 03
(Antiarrhythmics)
and HCC 142
(Specified Heart
Arrhythmias).
RXC 04 x HCC184, 183, 187, 188.. Additional effect 0.000 0.000 0.000 0.000 0.000
for enrollees with
RxC 04 (Phosphate
Binders) and (HCC
184 (End Stage
Renal Disease) or
183 (Kidney
Transplant Status)
or 187 (Chronic
Kidney Disease,
Stage 5) or 188
(Chronic Kidney
Disease, Severe
Stage 4)).
RXC 05 x HCC048, 041............ Additional effect -0.676 -0.629 -0.565 -0.520 -0.515
for enrollees with
RxC 05
(Inflammatory Bowel
Disease Agents) and
(HCC 048
(Inflammatory Bowel
Disease) or 041
(Intestine
Transplant Status/
Complications)).
RXC 06 x HCC018, 019, 020, 021.. Additional effect 0.049 0.038 0.129 0.208 0.214
for enrollees with
RxC 06 (Insulin)
and (HCC 018
(Pancreas
Transplant Status/
Complications) or
019 (Diabetes with
Acute
Complications) or
020 (Diabetes with
Chronic
Complications) or
021 (Diabetes
without
Complication)).
RXC 07 x HCC018, 019, 020, 021.. Additional effect -0.481 -0.414 -0.349 -0.282 -0.276
for enrollees with
RxC 07 (Anti-
Diabetic Agents,
Except Insulin and
Metformin Only) and
(HCC 018 (Pancreas
Transplant Status/
Complications) or
019 (Diabetes with
Acute
Complications) or
020 (Diabetes with
Chronic
Complications) or
021 (Diabetes
without
Complication)).
RXC 08 x HCC118................. Additional effect -2.347 -1.771 -1.399 -1.043 -1.007
for enrollees with
RxC 08 (Multiple
Sclerosis Agents)
and HCC 118
(Multiple
Sclerosis).
RXC 09 x HCC056 or 057 and 048 Additional effect 1.001 1.149 1.262 1.390 1.402
or 041. for enrollees with
RxC 09 (Immune
Suppressants and
Immunomodulators)
and (HCC 048
(Inflammatory Bowel
Disease) or 041
(Intestine
Transplant Status/
Complications)) and
(HCC 056
(Rheumatoid
Arthritis and
Specified
Autoimmune
Disorders) or 057
(Systemic Lupus
Erythematosus and
Other Autoimmune
Disorders)).
RXC 09 x HCC056................. Additional effect -4.212 -3.966 -3.797 -3.735 -3.729
for enrollees with
RxC 09 (Immune
Suppressants and
Immunomodulators)
and HCC 056
(Rheumatoid
Arthritis and
Specified
Autoimmune
Disorders).
RXC 09 x HCC057................. Additional effect -0.841 -0.716 -0.607 -0.477 -0.464
for enrollees with
RxC 09 (Immune
Suppressants and
Immunomodulators)
and HCC 057
(Systemic Lupus
Erythematosus and
Other Autoimmune
Disorders).
RXC 09 x HCC048, 041............ Additional effect -1.791 -1.655 -1.583 -1.517 -1.511
for enrollees with
RxC 09 (Immune
Suppressants and
Immunomodulators)
and (HCC 048
(Inflammatory Bowel
Disease) or 041
(Intestine
Transplant Status/
Complications)).
RXC 10 x HCC159, 158............ Additional effect 43.951 44.137 44.226 44.340 44.347
for enrollees with
RxC 10 (Cystic
Fibrosis Agents)
and (HCC 159
(Cystic Fibrosis)
or 158 (Lung
Transplant Status/
Complications)).
----------------------------------------------------------------------------------------------------------------
Table 3--HHS HCCs in the Severity Illness Indicator Variable
------------------------------------------------------------------------
HCC/description
-------------------------------------------------------------------------
Septicemia, Sepsis, Systemic Inflammatory Response Syndrome/Shock.
Peritonitis/Gastrointestinal Perforation/Necrotizing Enterocolitis.
Seizure Disorders and Convulsions.
Coma, Brain Compression/Anoxic Damage.
Respirator Dependence/Tracheostomy Status.
Respiratory Arrest.
Cardio-Respiratory Failure and Shock, Including Respiratory Distress
Syndromes.
Pulmonary Embolism and Deep Vein Thrombosis.
------------------------------------------------------------------------
Table 4--Proposed Child Risk Adjustment Model Factors for 2021 Benefit Year
----------------------------------------------------------------------------------------------------------------
Factor Platinum Gold Silver Bronze Catastrophic
----------------------------------------------------------------------------------------------------------------
Demographic Factors
----------------------------------------------------------------------------------------------------------------
Age 2-4, Male................... 0.217 0.175 0.126 0.082 0.078
Age 5-9, Male................... 0.159 0.125 0.084 0.052 0.049
[[Page 7108]]
Age 10-14, Male................. 0.187 0.152 0.106 0.073 0.070
Age 15-20, Male................. 0.229 0.186 0.133 0.087 0.083
Age 2-4, Female................. 0.164 0.130 0.091 0.060 0.057
Age 5-9, Female................. 0.106 0.077 0.044 0.020 0.017
Age 10-14, Female............... 0.175 0.141 0.100 0.069 0.067
Age 15-20, Female............... 0.251 0.199 0.134 0.077 0.072
----------------------------------------------------------------------------------------------------------------
Diagnosis Factors
----------------------------------------------------------------------------------------------------------------
HIV/AIDS........................ 4.963 4.448 4.125 3.974 3.961
Septicemia, Sepsis, Systemic 13.606 13.374 13.257 13.250 13.252
Inflammatory Response Syndrome/
Shock..........................
Central Nervous System 8.979 8.793 8.685 8.692 8.692
Infections, Except Viral
Meningitis.....................
Viral or Unspecified Meningitis. 3.297 3.038 2.882 2.694 2.676
Opportunistic Infections........ 15.380 15.343 15.312 15.287 15.283
Metastatic Cancer............... 38.340 38.034 37.827 37.835 37.835
Lung, Brain, and Other Severe 9.944 9.643 9.433 9.331 9.322
Cancers, Including Pediatric
Acute Lymphoid Leukemia........
Non-Hodgkin Lymphomas and Other 8.185 7.898 7.693 7.569 7.557
Cancers and Tumors.............
Colorectal, Breast (Age <50), 4.162 3.968 3.822 3.694 3.681
Kidney, and Other Cancers......
Breast (Age 50+) and Prostate 4.162 3.968 3.822 3.694 3.681
Cancer, Benign/Uncertain Brain
Tumors, and Other Cancers and
Tumors.........................
Thyroid Cancer, Melanoma, 1.089 0.955 0.840 0.717 0.706
Neurofibromatosis, and Other
Cancers and Tumors.............
Pancreas Transplant Status...... 11.602 11.388 11.260 11.196 11.191
Diabetes with Acute 2.923 2.541 2.309 1.978 1.949
Complications..................
Diabetes with Chronic 2.923 2.541 2.309 1.978 1.949
Complications..................
Diabetes without Complication... 2.923 2.541 2.309 1.978 1.949
Protein-Calorie Malnutrition.... 15.462 15.352 15.286 15.324 15.327
Mucopolysaccharidosis........... 40.368 40.041 39.835 39.821 39.820
Lipidoses and Glycogenosis...... 40.368 40.041 39.835 39.821 39.820
Congenital Metabolic Disorders, 5.342 5.207 5.103 5.035 5.028
Not Elsewhere Classified.......
Amyloidosis, Porphyria, and 5.342 5.207 5.103 5.035 5.028
Other Metabolic Disorders......
Adrenal, Pituitary, and Other 6.403 6.133 5.947 5.901 5.897
Significant Endocrine Disorders
Liver Transplant Status/ 11.602 11.388 11.260 11.196 11.191
Complications..................
Acute Liver Failure/Disease, 11.602 11.388 11.260 11.196 11.191
Including Neonatal Hepatitis...
Chronic Liver Failure/End-Stage 11.602 11.388 11.260 11.196 11.191
Liver Disorders................
Cirrhosis of Liver.............. 3.872 3.780 3.730 3.705 3.707
Chronic Viral Hepatitis C....... 3.654 3.477 3.370 3.375 3.379
Chronic Hepatitis, Except 0.171 0.103 0.045 0.000 0.000
Chronic Viral Hepatitis C......
Intestine Transplant Status/ 18.843 18.775 18.746 18.763 18.763
Complications..................
Peritonitis/Gastrointestinal 13.335 13.022 12.831 12.820 12.821
Perforation/Necrotizing
Enterocolitis..................
Intestinal Obstruction.......... 5.279 5.057 4.899 4.788 4.777
Chronic Pancreatitis............ 12.466 12.206 12.054 12.051 12.051
Acute Pancreatitis.............. 7.967 7.708 7.549 7.452 7.443
Inflammatory Bowel Disease...... 8.630 8.166 7.866 7.739 7.727
Necrotizing Fasciitis........... 3.865 3.630 3.462 3.372 3.364
Bone/Joint/Muscle Infections/ 3.865 3.630 3.462 3.372 3.364
Necrosis.......................
Rheumatoid Arthritis and 4.660 4.380 4.177 4.082 4.074
Specified Autoimmune Disorders.
Systemic Lupus Erythematosus and 0.853 0.719 0.594 0.457 0.443
Other Autoimmune Disorders.....
Osteogenesis Imperfecta and 1.303 1.185 1.085 1.002 0.994
Other Osteodystrophies.........
Congenital/Developmental 1.303 1.185 1.085 1.002 0.994
Skeletal and Connective Tissue
Disorders......................
Cleft Lip/Cleft Palate.......... 1.305 1.118 0.981 0.846 0.834
Major Congenital Anomalies of 0.000 0.000 0.000 0.000 0.000
Diaphragm, Abdominal Wall, and
Esophagus, Age <2..............
Hemophilia...................... 72.963 72.352 71.961 71.927 71.924
Myelodysplastic Syndromes and 15.864 15.660 15.531 15.503 15.502
Myelofibrosis..................
Aplastic Anemia................. 15.864 15.660 15.531 15.503 15.502
Acquired Hemolytic Anemia, 15.864 15.660 15.531 15.503 15.502
Including Hemolytic Disease of
Newborn........................
Sickle Cell Anemia (Hb-SS)...... 6.184 5.903 5.700 5.560 5.547
Beta Thalassemia Major.......... 6.184 5.903 5.700 5.560 5.547
Combined and Other Severe 6.330 6.151 6.031 5.981 5.976
Immunodeficiencies.............
Disorders of the Immune 6.330 6.151 6.031 5.981 5.976
Mechanism......................
Coagulation Defects and Other 4.965 4.828 4.724 4.642 4.635
Specified Hematological
Disorders......................
Drug Use with Psychotic 3.275 3.036 2.876 2.745 2.734
Complications..................
[[Page 7109]]
Drug Use Disorder, Moderate/ 3.275 3.036 2.876 2.745 2.734
Severe, or Drug Use with Non-
Psychotic Complications........
Alcohol Use with Psychotic 0.831 0.688 0.565 0.410 0.396
Complications..................
Alcohol Use Disorder, Moderate/ 0.831 0.688 0.565 0.410 0.396
Severe, or Alcohol Use with
Specified Non-Psychotic
Complications..................
Drug Use Disorder, Mild, 0.831 0.688 0.565 0.410 0.396
Uncomplicated, Except Cannabis.
Schizophrenia................... 5.241 4.864 4.620 4.470 4.455
Delusional and Other Specified 3.493 3.209 3.007 2.832 2.817
Psychotic Disorders,
Unspecified Psychosis..........
Major Depressive Disorder, 2.952 2.706 2.515 2.341 2.325
Severe, and Bipolar Disorders..
Personality Disorders........... 0.497 0.396 0.283 0.145 0.131
Anorexia/Bulimia Nervosa........ 2.438 2.226 2.065 1.954 1.943
Prader-Willi, Patau, Edwards, 1.556 1.402 1.294 1.202 1.193
and Autosomal Deletion
Syndromes......................
Down Syndrome, Fragile X, Other 1.556 1.402 1.294 1.202 1.193
Chromosomal Anomalies, and
Congenital Malformation
Syndromes......................
Autistic Disorder............... 2.952 2.706 2.515 2.341 2.325
Pervasive Developmental 0.527 0.442 0.341 0.226 0.216
Disorders, Except Autistic
Disorder.......................
Traumatic Complete Lesion 10.660 10.444 10.322 10.337 10.341
Cervical Spinal Cord...........
Quadriplegia.................... 10.660 10.444 10.322 10.337 10.341
Traumatic Complete Lesion Dorsal 7.948 7.672 7.503 7.436 7.428
Spinal Cord....................
Paraplegia...................... 7.948 7.672 7.503 7.436 7.428
Spinal Cord Disorders/Injuries.. 4.052 3.825 3.665 3.547 3.536
Amyotrophic Lateral Sclerosis 25.035 24.747 24.542 24.466 24.460
and Other Anterior Horn Cell
Disease........................
Quadriplegic Cerebral Palsy..... 4.502 4.268 4.155 4.153 4.155
Cerebral Palsy, Except 0.887 0.724 0.606 0.476 0.463
Quadriplegic...................
Spina Bifida and Other Brain/ 2.436 2.284 2.181 2.112 2.106
Spinal/Nervous System
Congenital Anomalies...........
Myasthenia Gravis/Myoneural 11.304 11.122 11.009 11.018 11.020
Disorders and Guillain-Barre
Syndrome/Inflammatory and Toxic
Neuropathy.....................
Muscular Dystrophy.............. 3.484 3.273 3.131 3.013 3.004
Multiple Sclerosis.............. 12.435 11.963 11.675 11.652 11.650
Parkinson's, Huntington's, and 3.484 3.273 3.131 3.013 3.004
Spinocerebellar Disease, and
Other Neurodegenerative
Disorders......................
Seizure Disorders and 2.304 2.137 1.992 1.844 1.830
Convulsions....................
Hydrocephalus................... 5.235 5.125 5.045 5.012 5.009
Coma, Brain Compression/Anoxic 5.348 5.203 5.104 5.056 5.051
Damage.........................
Narcolepsy and Cataplexy........ 4.262 4.066 3.904 3.739 3.720
Respirator Dependence/ 33.399 33.291 33.254 33.422 33.437
Tracheostomy Status............
Respiratory Arrest.............. 10.466 10.201 10.058 10.029 10.027
Cardio-Respiratory Failure and 10.466 10.201 10.058 10.029 10.027
Shock, Including Respiratory
Distress Syndromes.............
Heart Assistive Device/ 18.843 18.775 18.746 18.763 18.763
Artificial Heart...............
Heart Transplant Status/ 18.843 18.775 18.746 18.763 18.763
Complications..................
Heart Failure................... 6.428 6.307 6.223 6.181 6.177
Acute Myocardial Infarction..... 5.114 4.984 4.935 4.944 4.947
Unstable Angina and Other Acute 2.526 2.378 2.302 2.284 2.288
Ischemic Heart Disease.........
Heart Infection/Inflammation, 13.717 13.595 13.518 13.514 13.513
Except Rheumatic...............
Hypoplastic Left Heart Syndrome 4.066 3.895 3.736 3.623 3.612
and Other Severe Congenital
Heart Disorders................
Major Congenital Heart/ 1.226 1.120 0.994 0.876 0.866
Circulatory Disorders..........
Atrial and Ventricular Septal 0.831 0.735 0.632 0.543 0.536
Defects, Patent Ductus
Arteriosus, and Other
Congenital Heart/Circulatory
Disorders......................
Specified Heart Arrhythmias..... 3.957 3.782 3.644 3.563 3.556
Intracranial Hemorrhage......... 11.763 11.547 11.426 11.425 11.426
Ischemic or Unspecified Stroke.. 3.610 3.533 3.497 3.498 3.501
Cerebral Aneurysm and 3.322 3.116 2.986 2.900 2.892
Arteriovenous Malformation.....
Hemiplegia/Hemiparesis.......... 7.246 7.110 7.024 6.991 6.987
Monoplegia, Other Paralytic 3.285 3.098 2.978 2.898 2.890
Syndromes......................
Atherosclerosis of the 14.234 13.963 13.796 13.739 13.735
Extremities with Ulceration or
Gangrene.......................
Vascular Disease with 10.519 10.396 10.319 10.348 10.349
Complications..................
Pulmonary Embolism and Deep Vein 17.678 17.551 17.486 17.500 17.501
Thrombosis.....................
Lung Transplant Status/ 18.843 18.775 18.746 18.763 18.763
Complications..................
Cystic Fibrosis................. 40.080 39.483 39.100 39.106 39.106
Chronic Obstructive Pulmonary 3.156 2.986 2.856 2.739 2.729
Disease, Including
Bronchiectasis.................
Severe Asthma................... 0.818 0.633 0.468 0.270 0.251
Asthma, Except Severe........... 0.354 0.289 0.200 0.113 0.106
[[Page 7110]]
Fibrosis of Lung and Other Lung 1.708 1.621 1.529 1.444 1.436
Disorders......................
Aspiration and Specified 6.676 6.622 6.585 6.603 6.605
Bacterial Pneumonias and Other
Severe Lung Infections.........
Exudative Macular Degeneration.. 0.000 0.000 0.000 0.000 0.000
Kidney Transplant Status/ 11.602 11.388 11.260 11.196 11.191
Complications..................
End Stage Renal Disease......... 41.286 41.057 40.934 41.046 41.057
Chronic Kidney Disease, Stage 5. 5.961 5.857 5.771 5.679 5.670
Chronic Kidney Disease, Severe 5.961 5.857 5.771 5.679 5.670
(Stage 4)......................
Ectopic and Molar Pregnancy..... 1.847 1.546 1.348 1.100 1.080
Miscarriage with Complications.. 0.834 0.700 0.534 0.292 0.266
Miscarriage with No or Minor 0.834 0.700 0.534 0.292 0.266
Complications..................
Pregnancy with Delivery with 3.796 3.315 3.047 2.628 2.585
Major Complications............
Pregnancy with Delivery with 3.796 3.315 3.047 2.628 2.585
Complications..................
Pregnancy with Delivery with No 2.681 2.342 2.111 1.635 1.578
or Minor Complications.........
(Ongoing) Pregnancy without 0.403 0.313 0.179 0.035 0.028
Delivery with Major
Complications..................
(Ongoing) Pregnancy without 0.403 0.313 0.179 0.035 0.028
Delivery with Complications....
(Ongoing) Pregnancy without 0.403 0.313 0.179 0.035 0.028
Delivery with No or Minor
Complications..................
Chronic Ulcer of Skin, Except 2.956 2.861 2.771 2.695 2.690
Pressure.......................
Extensive Third Degree Burns.... 16.269 16.040 15.884 15.865 15.864
Major Skin Burn or Condition.... 2.467 2.297 2.168 2.059 2.050
Severe Head Injury.............. 16.269 16.040 15.884 15.865 15.864
Hip and Pelvic Fractures........ 4.925 4.669 4.475 4.362 4.354
Vertebral Fractures without 4.052 3.820 3.642 3.495 3.480
Spinal Cord Injury.............
Traumatic Amputations and 5.553 5.291 5.118 4.987 4.971
Amputation Complications.......
Stem Cell, Including Bone 18.843 18.775 18.746 18.763 18.763
Marrow, Transplant Status/
Complications..................
Artificial Openings for Feeding 11.570 11.418 11.359 11.471 11.484
or Elimination.................
Amputation Status, Upper Limb or 5.553 5.291 5.118 4.987 4.971
Lower Limb.....................
----------------------------------------------------------------------------------------------------------------
Table 5--Proposed Infant Risk Adjustment Model Factors for 2021 Benefit Year
----------------------------------------------------------------------------------------------------------------
Group Platinum Gold Silver Bronze Catastrophic
----------------------------------------------------------------------------------------------------------------
Extremely Immature * Severity 225.321 223.595 222.465 222.451 222.455
Level 5 (Highest)..............
Extremely Immature * Severity 144.819 142.871 141.573 141.365 141.352
Level 4........................
Extremely Immature * Severity 33.455 32.014 31.032 30.738 30.717
Level 3........................
Extremely Immature * Severity 33.455 32.014 31.032 30.738 30.717
Level 2........................
Extremely Immature * Severity 33.455 32.014 31.032 30.738 30.717
Level 1 (Lowest)...............
Immature *Severity Level 5 142.379 140.578 139.388 139.305 139.299
(Highest)......................
Immature *Severity Level 4...... 71.986 70.220 69.038 68.884 68.870
Immature *Severity Level 3...... 33.455 32.014 31.032 30.738 30.717
Immature *Severity Level 2...... 25.570 24.161 23.190 22.827 22.795
Immature *Severity Level 1 25.570 24.161 23.190 22.827 22.795
(Lowest).......................
Premature/Multiples * Severity 110.794 109.215 108.168 108.011 107.996
Level 5 (Highest)..............
Premature/Multiples * Severity 29.484 27.938 26.919 26.632 26.612
Level 4........................
Premature/Multiples * Severity 14.338 13.201 12.389 11.819 11.768
Level 3........................
Premature/Multiples * Severity 8.284 7.501 6.838 6.107 6.031
Level 2........................
Premature/Multiples * Severity 5.769 5.196 4.607 4.019 3.967
Level 1 (Lowest)...............
Term *Severity Level 5 (Highest) 86.802 85.471 84.564 84.347 84.329
Term *Severity Level 4.......... 17.042 15.936 15.163 14.630 14.588
Term *Severity Level 3.......... 6.318 5.730 5.154 4.524 4.466
Term *Severity Level 2.......... 3.559 3.136 2.604 1.944 1.884
Term *Severity Level 1 (Lowest). 1.698 1.477 1.054 0.712 0.691
Age1 *Severity Level 5 (Highest) 65.628 64.812 64.248 64.124 64.114
Age1 *Severity Level 4.......... 12.979 12.412 12.003 11.748 11.726
Age1 *Severity Level 3.......... 3.335 3.059 2.809 2.602 2.585
Age1 *Severity Level 2.......... 2.054 1.841 1.620 1.396 1.376
Age1 *Severity Level 1 (Lowest). 0.545 0.501 0.447 0.404 0.400
Age 0 Male...................... 0.645 0.597 0.560 0.489 0.481
Age 1 Male...................... 0.115 0.099 0.083 0.062 0.060
----------------------------------------------------------------------------------------------------------------
Table 6--HHS HCCs Included in Infant Model Maturity Categories
------------------------------------------------------------------------
Maturity category HCC/description
------------------------------------------------------------------------
Extremely Immature........... Extremely Immature Newborns, Birth weight
<500 Grams.
Extremely Immature........... Extremely Immature Newborns, Including
Birth weight 500-749 Grams.
Extremely Immature........... Extremely Immature Newborns, Including
Birth weight 750-999 Grams.
[[Page 7111]]
Immature..................... Premature Newborns, Including Birth
weight 1000-1499 Grams.
Immature..................... Premature Newborns, Including Birth
weight 1500-1999 Grams.
Premature/Multiples.......... Premature Newborns, Including Birth
weight 2000-2499 Grams.
Premature/Multiples.......... Other Premature, Low Birth weight,
Malnourished, or Multiple Birth
Newborns.
Term......................... Term or Post-Term Singleton Newborn,
Normal or High Birth weight.
Age 1........................ All age 1 infants.
------------------------------------------------------------------------
Table 7--HHS HCCs Included in Infant Model Severity Categories
------------------------------------------------------------------------
Severity category HCC/description
------------------------------------------------------------------------
Severity Level 5 (Highest)... Metastatic Cancer.
Severity Level 5............. Pancreas Transplant Status.
Severity Level 5............. Liver Transplant Status/Complications.
Severity Level 5............. Intestine Transplant Status/
Complications.
Severity Level 5............. Peritonitis/Gastrointestinal Perforation/
Necrotizing Enterocolitis.
Severity Level 5............. Respirator Dependence/Tracheostomy
Status.
Severity Level 5............. Heart Assistive Device/Artificial Heart.
Severity Level 5............. Heart Transplant Status/Complications.
Severity Level 5............. Heart Failure.
Severity Level 5............. Hypoplastic Left Heart Syndrome and Other
Severe Congenital Heart Disorders.
Severity Level 5............. Lung Transplant Status/Complications.
Severity Level 5............. Kidney Transplant Status/Complications.
Severity Level 5............. End Stage Renal Disease.
Severity Level 5............. Stem Cell, Including Bone Marrow,
Transplant Status/Complications.
Severity Level 4............. Septicemia, Sepsis, Systemic Inflammatory
Response Syndrome/Shock.
Severity Level 4............. Lung, Brain, and Other Severe Cancers,
Including Pediatric Acute Lymphoid
Leukemia.
Severity Level 4............. Mucopolysaccharidosis.
Severity Level 4............. Acute Liver Failure/Disease, Including
Neonatal Hepatitis.
Severity Level 4............. Chronic Liver Failure/End-Stage Liver
Disorders.
Severity Level 4............. Major Congenital Anomalies of Diaphragm,
Abdominal Wall, and Esophagus, Age <2.
Severity Level 4............. Myelodysplastic Syndromes and
Myelofibrosis.
Severity Level 4............. Aplastic Anemia.
Severity Level 4............. Traumatic Complete Lesion Cervical Spinal
Cord.
Severity Level 4............. Quadriplegia.
Severity Level 4............. Amyotrophic Lateral Sclerosis and Other
Anterior Horn Cell Disease.
Severity Level 4............. Quadriplegic Cerebral Palsy.
Severity Level 4............. Myasthenia Gravis/Myoneural Disorders and
Guillain-Barre Syndrome/Inflammatory and
Toxic Neuropathy.
Severity Level 4............. Coma, Brain Compression/Anoxic Damage.
Severity Level 4............. Respiratory Arrest.
Severity Level 4............. Cardio-Respiratory Failure and Shock,
Including Respiratory Distress
Syndromes.
Severity Level 4............. Acute Myocardial Infarction.
Severity Level 4............. Heart Infection/Inflammation, Except
Rheumatic.
Severity Level 4............. Major Congenital Heart/Circulatory
Disorders.
Severity Level 4............. Intracranial Hemorrhage.
Severity Level 4............. Ischemic or Unspecified Stroke.
Severity Level 4............. Vascular Disease with Complications.
Severity Level 4............. Pulmonary Embolism and Deep Vein
Thrombosis.
Severity Level 4............. Aspiration and Specified Bacterial
Pneumonias and Other Severe Lung
Infections.
Severity Level 4............. Chronic Kidney Disease, Stage 5.
Severity Level 4............. Artificial Openings for Feeding or
Elimination.
Severity Level 3............. HIV/AIDS.
Severity Level 3............. Central Nervous System Infections, Except
Viral Meningitis.
Severity Level 3............. Opportunistic Infections.
Severity Level 3............. Non-Hodgkin Lymphomas and Other Cancers
and Tumors.
Severity Level 3............. Colorectal, Breast (Age <50), Kidney and
Other Cancers.
Severity Level 3............. Breast (Age 50+), Prostate Cancer, Benign/
Uncertain Brain Tumors, and Other
Cancers and Tumors.
Severity Level 3............. Lipidoses and Glycogenosis.
Severity Level 3............. Adrenal, Pituitary, and Other Significant
Endocrine Disorders.
Severity Level 3............. Intestinal Obstruction.
Severity Level 3............. Necrotizing Fasciitis.
Severity Level 3............. Bone/Joint/Muscle Infections/Necrosis.
Severity Level 3............. Osteogenesis Imperfecta and Other
Osteodystrophies.
Severity Level 3............. Cleft Lip/Cleft Palate.
Severity Level 3............. Hemophilia.
Severity Level 3............. Combined and Other Severe
Immunodeficiencies.
Severity Level 3............. Disorders of the Immune Mechanism.
Severity Level 3............. Coagulation Defects and Other Specified
Hematological Disorders.
Severity Level 3............. Drug Use with Psychotic Complications.
[[Page 7112]]
Severity Level 3............. Drug Use Disorder, Moderate/Severe, or
Drug Use with Non-Psychotic
Complications.
Severity Level 3............. Alcohol Use with Psychotic Complications.
Severity Level 3............. Alcohol Use Disorder, Moderate/Severe, or
Alcohol Use with Specified Non-Psychotic
Complications.
Severity Level 3............. Drug Use Disorder, Mild, Uncomplicated,
Except Cannabis.
Severity Level 3............. Prader-Willi, Patau, Edwards, and
Autosomal Deletion Syndromes.
Severity Level 3............. Traumatic Complete Lesion Dorsal Spinal
Cord.
Severity Level 3............. Paraplegia.
Severity Level 3............. Spinal Cord Disorders/Injuries.
Severity Level 3............. Cerebral Palsy, Except Quadriplegic.
Severity Level 3............. Spina Bifida and Other Brain/Spinal/
Nervous System Congenital Anomalies.
Severity Level 3............. Muscular Dystrophy.
Severity Level 3............. Parkinson's, Huntington's, and
Spinocerebellar Disease, and Other
Neurodegenerative Disorders.
Severity Level 3............. Hydrocephalus.
Severity Level 3............. Unstable Angina and Other Acute Ischemic
Heart Disease.
Severity Level 3............. Atrial and Ventricular Septal Defects,
Patent Ductus Arteriosus, and Other
Congenital Heart/Circulatory Disorders.
Severity Level 3............. Specified Heart Arrhythmias.
Severity Level 3............. Cerebral Aneurysm and Arteriovenous
Malformation.
Severity Level 3............. Hemiplegia/Hemiparesis.
Severity Level 3............. Cystic Fibrosis.
Severity Level 3............. Extensive Third Degree Burns.
Severity Level 3............. Severe Head Injury.
Severity Level 3............. Hip and Pelvic Fractures.
Severity Level 3............. Vertebral Fractures without Spinal Cord
Injury.
Severity Level 2............. Viral or Unspecified Meningitis.
Severity Level 2............. Thyroid Cancer, Melanoma,
Neurofibromatosis, and Other Cancers and
Tumors.
Severity Level 2............. Diabetes with Acute Complications.
Severity Level 2............. Diabetes with Chronic Complications.
Severity Level 2............. Diabetes without Complication.
Severity Level 2............. Protein-Calorie Malnutrition.
Severity Level 2............. Congenital Metabolic Disorders, Not
Elsewhere Classified.
Severity Level 2............. Amyloidosis, Porphyria, and Other
Metabolic Disorders.
Severity Level 2............. Cirrhosis of Liver.
Severity Level 2............. Chronic Pancreatitis.
Severity Level 2............. Acute Pancreatitis.
Severity Level 2............. Inflammatory Bowel Disease.
Severity Level 2............. Rheumatoid Arthritis and Specified
Autoimmune Disorders.
Severity Level 2............. Systemic Lupus Erythematosus and Other
Autoimmune Disorders.
Severity Level 2............. Congenital/Developmental Skeletal and
Connective Tissue Disorders.
Severity Level 2............. Acquired Hemolytic Anemia, Including
Hemolytic Disease of Newborn.
Severity Level 2............. Sickle Cell Anemia (Hb-SS).
Severity Level 2............. Down Syndrome, Fragile X, Other
Chromosomal Anomalies, and Congenital
Malformation Syndromes.
Severity Level 2............. Seizure Disorders and Convulsions.
Severity Level 2............. Monoplegia, Other Paralytic Syndromes.
Severity Level 2............. Atherosclerosis of the Extremities with
Ulceration or Gangrene.
Severity Level 2............. Chronic Obstructive Pulmonary Disease,
Including Bronchiectasis.
Severity Level 2............. Severe Asthma.
Severity Level 2............. Fibrosis of Lung and Other Lung
Disorders.
Severity Level 2............. Chronic Kidney Disease, Severe (Stage 4).
Severity Level 2............. Chronic Ulcer of Skin, Except Pressure.
Severity Level 2............. Major Skin Burn or Condition.
Severity Level 1 (Lowest).... Chronic Viral Hepatitis C.
Severity Level 1............. Chronic Hepatitis, Except Chronic Viral
Hepatitis C.
Severity Level 1............. Beta Thalassemia Major.
Severity Level 1............. Autistic Disorder.
Severity Level 1............. Pervasive Developmental Disorders, Except
Autistic Disorder.
Severity Level 1............. Multiple Sclerosis.
Severity Level 1............. Asthma, Except Severe.
Severity Level 1............. Traumatic Amputations and Amputation
Complications.
Severity Level 1............. Amputation Status, Upper Limb or Lower
Limb.
------------------------------------------------------------------------
(5) Cost-Sharing Reduction Adjustments
We propose to continue including an adjustment for the receipt of
CSRs in the risk adjustment models to account for increased plan
liability due to increased utilization of health care services by
enrollees receiving CSRs in all 50 states and the District of Columbia.
For the 2021 benefit year, to maintain stability and certainty for
issuers, we are proposing to maintain the CSR factors
[[Page 7113]]
finalized in the 2019 and 2020 Payment Notices.\50\ See Table 8.
---------------------------------------------------------------------------
\50\ See 83 FR 16930 at 16953 and 84 FR 17454 at 17478 through
17479.
---------------------------------------------------------------------------
Consistent with the approach finalized in the 2017 Payment
Notice,\51\ we will continue to use a CSR adjustment factor of 1.12 for
all Massachusetts wrap-around plans in the risk adjustment plan
liability risk score calculation, as all of Massachusetts' cost-sharing
plan variations have AVs above 94 percent.
---------------------------------------------------------------------------
\51\ See 81 FR 12203 at 12228.
---------------------------------------------------------------------------
We seek comment on these proposals.
Table 8--Cost-Sharing Reduction Adjustment
------------------------------------------------------------------------
Induced
Household income Plan AV utilization
factor
------------------------------------------------------------------------
Silver Plan Variant Recipients
------------------------------------------------------------------------
100-150% of FPL.................. Plan Variation 94%...... 1.12
150-200% of FPL.................. Plan Variation 87%...... 1.12
200-250% of FPL.................. Plan Variation 73%...... 1.00
>250% of FPL..................... Standard Plan 70%....... 1.00
------------------------------------------------------------------------
Zero Cost Sharing Recipients
------------------------------------------------------------------------
<300% of FPL..................... Platinum (90%).......... 1.00
<300% of FPL..................... Gold (80%).............. 1.07
<300% of FPL..................... Silver (70%)............ 1.12
<300% of FPL..................... Bronze (60%)............ 1.15
------------------------------------------------------------------------
Limited Cost Sharing Recipients
------------------------------------------------------------------------
>300% of FPL..................... Platinum (90%).......... 1.00
>300% of FPL..................... Gold (80%).............. 1.07
>300% of FPL..................... Silver (70%)............ 1.12
>300% of FPL..................... Bronze (60%)............ 1.15
------------------------------------------------------------------------
(6) Model Performance Statistics
To evaluate risk adjustment model performance, we examined each
model's R-squared statistic and predictive ratios. The R-squared
statistic, which calculates the percentage of individual variation
explained by a model, measures the predictive accuracy of the model
overall. The predictive ratio 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 predictive ratio represents how
well the model does on average at predicting plan liability for that
subpopulation.
A subpopulation that is predicted perfectly would have a predictive
ratio of 1.0. For each of the HHS risk adjustment models, the R-squared
statistic and the predictive ratios are in the range of published
estimates for concurrent risk adjustment models.\52\ Because we blended
the coefficients from separately solved models based on the 2016 and
2017 benefit years' enrollee-level EDGE data that were available at the
time of this proposed rule, we are publishing the R-squared statistic
for each model separately to verify their statistical validity. The R-
squared statistic for each model is shown in Table 9. If the proposed
2021 benefit year model recalibration data is finalized, we intend to
publish updated R-squared statistics to reflect results from the
blending of the 2016, 2017, and 2018 benefit years' enrollee-level EDGE
datasets used to recalibrate the models for the 2021 benefit year.
---------------------------------------------------------------------------
\52\ Winkleman, Ross and Syed Mehmud. ``A Comparative Analysis
of Claims-Based Tools for Health Risk Assessment.'' Society of
Actuaries. April 2007.
Table 9--R-Squared Statistic for Proposed HHS Risk Adjustment Models
------------------------------------------------------------------------
R-Squared statistic
-------------------------------------------------------------------------
2016 2017
enrollee- enrollee-
Models level EDGE level EDGE
data data
------------------------------------------------------------------------
Platinum Adult................................ 0.4256 0.4210
Gold Adult.................................... 0.4198 0.4148
Silver Adult.................................. 0.4154 0.4101
Bronze Adult.................................. 0.4123 0.4068
Catastrophic Adult............................ 0.4119 0.4064
Platinum Child................................ 0.3212 0.3382
Gold Child.................................... 0.3166 0.3336
Silver Child.................................. 0.3129 0.3299
Bronze Child.................................. 0.3095 0.3267
Catastrophic Child............................ 0.3091 0.3263
Platinum Infant............................... 0.3283 0.3303
Gold Infant................................... 0.3245 0.3263
Silver Infant................................. 0.3218 0.3235
Bronze Infant................................. 0.3203 0.3220
Catastrophic Infant........................... 0.3201 0.3218
------------------------------------------------------------------------
b. Overview of the Risk Adjustment Transfer Methodology (Sec. 153.320)
We are proposing to continue to use the HHS state payment transfer
formula that was finalized in the 2020 Payment Notice.\53\ Although the
proposed HHS state payment transfer formula for the 2021 benefit year
is unchanged from what was finalized for the previous benefit year, we
believe it is useful to republish the formula in its entirety in this
proposed rule. Additionally, we are republishing the description of the
administrative cost reduction to the statewide average premium and
high-cost risk pool factors, although these factors and terms also
remain unchanged in this proposed rule.\54\
---------------------------------------------------------------------------
\53\ 84 FR 17454 at 17480 and 17485.
\54\ Ibid.
---------------------------------------------------------------------------
We previously defined the calculation of plan average actuarial
risk and the calculation of payments and charges in the Premium
Stabilization Rule. In the 2014 Payment Notice, we combined those
concepts into a risk adjustment state payment transfer formula.\55\
This formula generally calculates the difference between the revenues
required by a plan, based on the health risk of the plan's enrollees,
and the revenues that the plan can generate for those enrollees. These
differences are then compared across plans in the state market risk
pool and converted to a dollar amount via a cost scaling factor. In the
absence of additional funding, we established, through notice and
comment rulemaking,\56\ the HHS-operated risk adjustment program as a
budget-neutral program to provide certainty to issuers regarding risk
adjustment payments and charges, which allows issuers to set rates
based on those expectations. In light of the budget-neutral framework,
HHS uses statewide average premium as the cost-scaling factor in the
state payment transfer formula under the HHS-operated risk adjustment
methodology, rather than a different parameter, such as each plan's own
premium, which would not have automatically achieved equality between
risk adjustment payments and charges in each benefit year.\57\
---------------------------------------------------------------------------
\55\ The state payment transfer formula refers to the part of
the HHS risk adjustment methodology that 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.
\56\ For example, see Standards Related to Reinsurance, Risk
Corridors, and Risk Adjustment, Proposed Rule, 76 FR 41938 (July 15,
2011); Standards Related to Reinsurance, Risk Corridors, and Risk
Adjustment, Final Rule, 77 FR 17232 (March 23, 2012); and the 2014
Payment Notice, Final Rule, 78 FR 15441 (March 11, 2013). Also see,
the 2018 Payment Notice, Final Rule, 81 FR 94058 (December 22,
2016); and the 2019 Payment Notice, Final Rule, 83 FR 16930 (April
17, 2018). Also see the Adoption of the Methodology for the HHS-
Operated Permanent Risk Adjustment Program Under the Patient
Protection and Affordable Care Act for the 2017 Benefit Year, Final
Rule, 83 FR 36456 (July 30, 2018) and the Patient Protection and
Affordable Care Act; and Adoption of the Methodology for the HHS-
Operated Permanent Risk Adjustment Program for the 2018 Benefit Year
Final Rule, 83 FR 63419 (December 10, 2018).
\57\ See the 2020 Payment Notice for further details on why
statewide average premium is the cost-scaling factor in the state
payment transfer formula. See 84 FR 17454 at 17480 through 17484.
---------------------------------------------------------------------------
Risk adjustment transfers (total payments and charges, including
high-cost risk pool payments and charges) are calculated after issuers
have completed their risk adjustment EDGE data submissions for the
applicable benefit year. Transfers (payments and charges) under the
state payment transfer formula are calculated as the difference between
the plan premium estimate reflecting risk selection and the plan
premium estimate not reflecting risk selection. The state payment
transfer calculation that is part of the HHS risk
[[Page 7114]]
adjustment transfer methodology follows the formula:
[GRAPHIC] [TIFF OMITTED] TP06FE20.004
Where:
PS = statewide average premium;
PLRSi = plan i's plan liability risk score;
AVi = plan i's metal level AV;
ARFi = allowable rating factor;
IDFi = plan i's induced demand factor;
GCFi = plan i's geographic cost factor;
si = plan i's share of state enrollment.
The denominators are summed across all risk adjustment covered plans in
the risk pool in the market in the state.
The difference between the two premium estimates in the state
payment transfer formula determines whether a plan pays a risk
adjustment charge or receives a risk adjustment payment. The value of
the plan average risk score by itself does not determine whether a plan
would be assessed a charge or receive a payment--even if the risk score
is greater than 1.0, it is possible that the plan would be assessed a
charge if the premium compensation that the plan may receive through
its rating (as measured through the allowable rating factor) exceeds
the plan's predicted liability associated with risk selection. Risk
adjustment transfers under the state payment transfer formula are
calculated at the risk pool level, and catastrophic plans are treated
as a separate risk pool for purposes of the risk adjustment state
payment transfer calculations.\58\ This resulting PMPM plan payment or
charge is multiplied by the number of billable member months to
determine the plan payment or charge based on plan liability risk
scores for a plan's geographic rating area for the risk pool market
within the state. The payment or charge under the state payment
transfer formula is thus calculated to balance the state market risk
pool in question.
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\58\ As detailed elsewhere in this proposed rule, catastrophic
plans are considered part of the individual market for purposes of
the national high-cost risk pool payment and charge calculations.
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We are maintaining the 14 percent administrative cost reduction to
the statewide average premium for the 2021 benefit year and are not
proposing to modify the adjustment at this time.\59\
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\59\ See 84 FR 17454 at 17486 for a visual illustration of the
equation for this adjustment.
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To account for costs associated with exceptionally high-risk
enrollees we previously added a high-cost risk pool adjustment to the
HHS risk adjustment transfer methodology. As finalized in the 2020
Payment Notice, \60\ we intend to maintain the high-cost risk pool
parameters with a threshold of $1 million and a coinsurance rate of 60
percent for benefit years 2020 and onward, unless amended through
notice-and-comment rulemaking. We are not proposing any changes to the
high-cost risk pool parameters as part of this rulemaking, so would
maintain the threshold of $1 million and coinsurance rate of 60 percent
for the 2021 benefit year.
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\60\ 84 FR 17454 at 17466 through 17468.
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The high-cost risk pool adjustment amount is added to the state
payment transfer formula to account for: (1) The payment term,
representing the portion of costs above the threshold reimbursed to the
issuer for high-cost risk pool payments (HRPi), if applicable; and (2)
the charge term, representing a percentage of premium adjustment, which
is the product of the high-cost risk pool adjustment factor (HRPCm) for
the respective national high-cost risk pool m (one for the individual
market, including catastrophic, non-catastrophic and merged market
plans, and another for the small group market), and the plan's total
premiums (TPi). For this calculation, we use a percent of premium
adjustment factor that is applied to each plan's total premium amount.
The total plan transfers for a given benefit year are calculated as
the product of the plan's PMPM transfer amount (Ti)
multiplied by the plan's billable member months (Mi), plus
the high-cost risk pool adjustments. The total plan transfer (payment
or charge) amounts under the HHS risk adjustment payment transfer
formula are calculated as follows:
Total transferi = (Ti [middot] Mi) + HRPi-(HRPCm [middot] TPi)
Where:
Total Transferi = Plan i's total HHS risk adjustment program
transfer amount;
Ti = Plan i's PMPM transfer amount based on the state transfer
calculation;
Mi = Plan i's billable member months;
HRPi = Plan i's total high-cost risk pool payment;
HRPCm = High-cost risk pool percent of premium adjustment factor for
the respective national high-cost risk pool m;
TPi = Plan i's total premium amounts.
(1) State Flexibility Requests (Sec. 153.320(d))
In the 2019 Payment Notice, we provided states the flexibility to
request a reduction to the otherwise applicable risk adjustment
transfers calculated under the HHS-operated risk adjustment
methodology, which is calibrated on a national dataset, for the state's
individual, small group, or merged markets by up to 50 percent to more
precisely account for differences in actuarial risk in the applicable
state's market(s). We finalized that any requests received would be
published in the respective benefit year's proposed notice of benefit
and payment parameters, and the supporting evidence would be made
available for public comment.\61\
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\61\ 2019 Payment Notice Final Rule, 83 FR 16930 (April 17,
2018) and 45 CFR 153.320(d)(3).
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As finalized in the 2020 Payment Notice, if the state requests that
HHS not make publicly available certain supporting evidence and
analysis because it contains trade secrets or confidential commercial
or financial information within the meaning of the HHS FOIA regulations
at 45 CFR 5.31(d), HHS will make available on the CMS website only the
supporting evidence submitted by the state that is not a trade secret
or confidential commercial or financial information by posting a
redacted version of the state's supporting evidence.\62\
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\62\ See 45 CFR 153.320(d)(3).
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In accordance with Sec. 153.320(d)(2), beginning with the 2020
benefit year, states must submit such requests with the supporting
evidence and analysis outlined under Sec. 153.320(d)(1) by August 1st
of the calendar year that is 2 calendar years prior to the beginning of
the applicable benefit year. If approved by HHS, state reduction
requests will be applied to the plan PMPM payment or charge transfer
amount (Ti in the state payment transfer calculation).
For the 2021 benefit year, HHS received a request to reduce risk
adjustment transfers for the Alabama small group market by 50 percent.
Alabama's request states that the presence of a dominant carrier in the
small group market precludes the HHS-operated risk adjustment program
from
[[Page 7115]]
working as precisely as it would with a more balanced distribution of
market share. The state regulators stated that their review of the risk
adjustment payment issuers' financial data suggested that any premium
increase resulting from a reduction to risk adjustment payments of 50
percent in the small group market for the 2021 benefit year would not
exceed 1 percent, the de minimis premium increase threshold set forth
in Sec. 153.320(d)(1)(iii) and (d)(4)(i)(B). We seek comment on this
request to reduce risk adjustment transfers in the Alabama small group
market by 50 percent for the 2021 benefit year. The request and
additional documentation submitted by Alabama are posted under the
``State Flexibility Requests'' heading at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/index.html.
c. Risk Adjustment User Fee for 2021 Benefit Year (Sec. 153.610(f))
As noted above, 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 2021 benefit year, HHS will be
operating a risk adjustment program in every state and the District of
Columbia. As described in the 2014 Payment Notice, HHS's operation of
risk adjustment on behalf of states is funded through a risk adjustment
user fee. Section 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-25R 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. The risk
adjustment program will provide special benefits as defined in section
6(a)(1)(B) of Circular No. A-25R to issuers of risk adjustment covered
plans because it mitigates the financial instability associated with
potential adverse risk selection. The 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.
In the 2020 Payment Notice, we calculated the Federal
administrative expenses of operating the risk adjustment program for
the 2020 benefit year to result in a risk adjustment user fee rate of
$0.18 PMPM based on our estimated contract costs for risk adjustment
operations and estimated billable member months for individuals
enrolled in risk adjustment covered plans. For the 2021 benefit year,
we propose to use the same methodology to estimate our administrative
expenses to operate the program. These costs cover development of the
model and methodology, collections, payments, account management, data
collection, data validation, program integrity and audit functions,
operational and fraud analytics, stakeholder training, operational
support, and administrative and personnel costs dedicated to risk
adjustment program activities. To calculate the user fee, we divided
HHS's projected total costs for administering the risk adjustment
programs on behalf of states by the expected number of billable member
months in risk adjustment covered plans in states where the HHS-
operated risk adjustment program will apply in the 2021 benefit year.
We estimate that the total cost for HHS to operate the risk
adjustment program on behalf of states for 2021 will be approximately
$50 million, and the risk adjustment user fee would be $0.19 PMPM. The
risk adjustment user fee costs for the 2021 benefit year are expected
to remain steady from the prior 2020 benefit year estimates. However,
we project a small decline in billable member months in the individual
and small group markets overall in the 2021 benefit year based on the
declines observed in the 2018 benefit year. We seek comment on the
proposed risk adjustment user fee for the 2021 benefit year.
3. Risk Adjustment Data Validation Requirements When HHS Operates Risk
Adjustment (Sec. 153.630)
We conduct RADV under Sec. Sec. 153.630 and 153.350 in any state
where HHS is operating risk adjustment on a state's behalf, which for
the 2021 benefit year includes all 50 states and the District of
Columbia. The purpose of RADV is to ensure issuers are providing
accurate and complete risk adjustment data to HHS, which is crucial to
the purpose and proper functioning of the HHS-operated risk adjustment
program. The HHS RADV program also ensures that risk adjustment
transfers reflect verifiable actuarial risk differences among issuers,
rather than risk score calculations that are based on poor data
quality, thereby helping to ensure that the HHS-operated risk
adjustment program assesses charges to issuers with plans with lower-
than-average actuarial risk while making payments to issuers with plans
with higher-than-average actuarial risk.
RADV consists of an initial validation audit and a second
validation audit. Under Sec. 153.630, each issuer of a risk adjustment
covered plan must engage an independent initial validation auditor. The
issuer provides demographic, enrollment, and medical record
documentation for a sample of enrollees selected by HHS to the issuer's
initial validation auditor for data validation. Each issuer's initial
validation audit is followed by a second validation audit, which is
conducted by an entity HHS retains to verify the accuracy of the
findings of the initial validation audit. Set forth below are proposed
amendments and clarifications to the RADV program that stem from issuer
feedback and HHS's examination of results from during the first 2 pilot
years and first transfer adjustment year of the program. None of the
policy options discussed in the ``HHS Risk Adjustment Data Validation
(HHS-RADV) White Paper'',\63\ published on December 6th, 2019, preclude
or supersede the proposals in this proposed rule.
---------------------------------------------------------------------------
\63\ See https://www.cms.gov/files/document/2019-hhs-risk-adjustment-data-validation-hhs-radv-white-paper.
---------------------------------------------------------------------------
a. Application of Risk Adjustment Data Validation Adjustments in Cases
Where HCC Count is Low
Beginning with the 2019 benefit year RADV, we propose to amend the
outlier identification process when an issuer has fewer HCCs within an
HCC group than are necessary to determine statistical significance.
Specifically, we propose not to consider as an outlier any issuer's
failure rate for an HCC group in which that issuer has fewer than 30
HCCs recorded on the issuer's EDGE server. Under this proposed
approach, an issuer with fewer than 30 HCCs recorded on its EDGE server
in an HCC group would have its data included in the calculation of the
overall national metrics, but would not have its risk score adjusted
for that group, even if the magnitude of its failure rate appeared to
otherwise be very large relative to other issuers. Such an issuer could
still be considered an outlier, and have its risk score adjusted, in
another HCC group in which it had at least 30 HCCs recorded.
In the 2019 Payment Notice,\64\ to avoid adjusting all issuers'
risk
[[Page 7116]]
adjustment transfers for expected variation and error, we finalized a
proposal to evaluate material statistical deviation in data validation
failure rates beginning with 2017 benefit year RADV. When an issuer's
failure rate within a group of HCCs materially deviates from the mean
of the failure rate for that HCC group, we apply the difference between
the mean group failure rate and the issuer's calculated failure rate.
If all failure rates in a state market risk pool do not materially
deviate from the national mean failure rates, we do not apply any
adjustments to issuers' risk scores for that benefit year in the
respective state market risk pool.\65\
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\64\ 83 FR 16930.
\65\ When an issuer is determined to be an outlier in an HCC
group, the transfers for other issuers in the state market risk pool
(including those who are not outliers in any HCC group) will also be
adjusted due to the budget neutral nature of the HHS-operated risk
adjustment program.
---------------------------------------------------------------------------
Consistent with the methodology finalized in the 2019 Payment
Notice, for RADV for 2017 and 2018 benefit years, we currently
calculate the data validation failure rate for each HCC in issuers'
initial validation audit samples as:
[GRAPHIC] [TIFF OMITTED] TP06FE20.005
Where:
Freq_EDGEh is the frequency of HCC code h occurring on EDGE, which
is the number of sampled enrollees recording HCC code h on EDGE.
Freq_IVAh is the frequency of HCC code h occurring in initial
validation audit results, which is the number of sampled enrollees
with HCC code h on in initial validation audit results.
FRh is the failure rate of HCC code h.
HHS then creates three HCC groups based on the HCC failure rates
derived in the calculation above. These HCC groups are determined by
first ranking all HCC failure rates and then dividing the rankings into
three groups, weighted by total observations or frequencies, of that
HCC across all issuers' initial validation audit samples, to assign
each unique HCC in the initial validation audit samples to a high,
medium, or low failure rate group with an approximately even number of
observations in each group. That is, each HCC group may have an unequal
number of unique HCCs, but the total observations in each group are
approximately equal based on total observations of HCCs reflected in
EDGE data for all issuers' initial validation audit sample enrollees,
which prevents small sample sizes for an HCC group for any issuer.
HHS then compares each issuer's failure rate for each HCC group
based on the number of HCCs validated in the initial validation audit,
compared to the number of HCCs recorded on EDGE within that HCC group
for the initial validation audit sample enrollees. The issuer's HCC
group failure rate is compared to the weighted mean failure rate for
that HCC group. We calculate an issuer's HCC group failure rate as:
[GRAPHIC] [TIFF OMITTED] TP06FE20.006
Where:
Freq_EDGEiG is the number of HCCs in group G in the EDGE sample of
issuer i.
Freq_IVAiG is the number of HCCs in group G in the initial
validation audit sample of issuer i.
GFRiG is i's group failure rate for the HCC group G.
We also calculate the weighted mean failure rate and the standard
deviation of each HCC group as:
[GRAPHIC] [TIFF OMITTED] TP06FE20.007
Where:
[mu](GFRG) is the weighted mean of GFRiG of all issuers for the HCC
group G weighted by all issuers' sample observations in each group.
Sd(GFRG) is the standard deviation of GFRiG of all issuers for the
HCC group G.
If an issuer's failure rate for an HCC group falls outside the
confidence interval for the weighted mean failure rate for the HCC
group, the failure rate for the issuer's HCCs in that group is
considered an outlier. We use a 1.96 standard deviation cutoff, for a
95 percent confidence interval, to identify outliers. To calculate the
thresholds to classify an issuer's group failure rate as outliers or
not, the lower and upper limits are computed as:
LBG = [mu](GFRG)-sigma_cutoff * Sd(GFRG)
UBG = [mu](GFRG) + sigma_cutoff * Sd(GFRG)
Where:
sigma_cutoff is the parameter used to set the threshold for the
outlier detection as the number of standard deviations away from the
mean.
LBG, UBG are the lower and upper thresholds to classify issuers as
outliers or not outliers for group G.
When an issuer's HCC group failure rate is an outlier, we reduce
(or increase) each of the applicable initial validation audit sample
enrollees' HCC coefficients by the difference between the outlier
issuer's failure rate for the HCC group and the weighted mean failure
rate for the HCC group. Specifically, this results in the sample
enrollees' applicable HCC risk score components being reduced (or
increased) by a partial value, or percentage, calculated as the
difference between the outlier failure rate for the HCC group and the
weighted mean failure rate for the applicable HCC group. The adjustment
amount for outliers is the distance between issuer i's Group Failure
Rate GFRiG and the weighted mean [mu](GFRG calculated as:
If GFRiG > UBG or GFRiG < LBG:
Then FlagiG = ``outlier'' and AdjustmentiG = GFRiG-[mu](GFRG)
If GFRiG <= UBG and GFRiG >= LBG:
Then FlagiG = ``not outlier'' and AdjustmentiG = 0
Where:
FlagiG is the indicator if issuer i's group failure rate for group G
locates beyond a calculated threshold that we are using to classify
issuers into ``outliers'' or ``not outliers'' for group G.
AdjustmentiG is the calculated adjustment amount to adjust issuer
i's EDGE risk scores for all sampled HCCs in group G.
We then compute total adjustments and risk adjustment transfer
error rates
[[Page 7117]]
for each issuer based on the sums of the AdjustmentiG.\66\
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\66\ See, for example, the 2018 Benefit Year Protocols: PPACA
HHS Risk Adjustment Data Validation, Version 7.0 (June 24, 2019)
that are available at https://www.regtap.info/uploads/library/HRADV_2018Protocols_070319_5CR_070519.pdf.
---------------------------------------------------------------------------
Although the failure rate and error estimation methodology
described above are based on the number of HCCs within a sample, our
sampling methodology samples individual enrollees and varies in size
for issuers with fewer than 4,000 enrollees,\67\ rather than sampling
HCCs directly. This difference in unit of analysis between the error
estimation methodology--which applies to all non-exempt RADV issuers,
regardless of their size--and the sampling methodology may lead to
fewer HCCs in an HCC group than are necessary to reliably determine, at
the targeted precision and confidence levels, whether an issuer is an
outlier--that is, whether an issuer is statistically different from the
national (average) HCC failure rate, as defined by an unadjusted 95
percent confidence interval.
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\67\ For issuers with fewer than 4,000 enrollees, the sample
size varies according to a finite population correction (FPC) such
that , nadjusted = noriginal * FPC, where nadjusted is the adjusted
sample size and noriginal is the original sample size of 200
enrollees. The FPC is determined by the equation FPC = (N-
n_original)/N, where N is the population size. By these formulae, if
an issuer's adjusted sample size would be smaller than 50 enrollees,
that issuer should sample either a minimum of 50 enrollees or their
entire population of enrollees, whichever is smaller. See Ibid at
37.
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Standard statistical theorems \68\ state that, as sample sizes
increase, the sampling distribution of the means of those samples (in
this case, the distribution of mean HCC group failure rates) will more
closely approximate a normal distribution. Lower sample sizes are more
likely to lead to non-normal distributions of sample summary
statistics--for example, the means of multiple samples--if the
distribution of the underlying population is non-normal. The divergence
from a normally distributed distribution of sample means that can occur
at lower sample sizes may result in violations of the assumptions of
statistical testing, which may lead to the detection of more apparent
outliers than would be desirable.
---------------------------------------------------------------------------
\68\ In other words, the Central Limit Theorem (CLT). For
background regarding the CLT, see Ivo D. Dinov, Nicolas Christou,
and Juana Sanchez. ``Central limit theorem: New SOCR applet and
demonstration activity.'' Journal of Statistics Education 16, no. 2
(2008). DOI: 10.1080/10691898.2008.11889560.
---------------------------------------------------------------------------
Taking all of these points into consideration, we conducted an
analysis in which we simulated the selection of samples from an average
issuer using progressively smaller HCC counts. By this process, we
identified a threshold of 30 HCCs per sample of enrollees below which
the implied alpha of our statistical tests for outliers was higher than
5 percent. Moreover, statistical practice often relies on a standard
recommendation regarding the determination of sample size, which states
that sample sizes below 30 observations are often insufficient to
assume that the sampling distribution is normally distributed.\69\
---------------------------------------------------------------------------
\69\ For example, David C. Howell, ``Hypothesis Tests Applied to
Means'' In Statistical Methods for Psychology (8th Ed.), 177-228.
Belmont, CA: Wadsworth, 2010.
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Based on these findings, beginning with 2019 benefit year RADV, we
propose to not consider as an outlier any issuer's failure rate for an
HCC group in which that issuer has fewer than 30 HCCs. Such an issuer's
data would be included in the calculation of national metrics for that
HCC group, including the national mean failure rate, standard
deviation, and upper and lower confidence interval bounds. In addition,
this issuer may be considered an outlier in other HCC groups in which
it has 30 or more HCCs. Under this proposal, the adjustment amount for
outliers will continue to be the distance between issuer i's Group
Failure Rate GFRiG and the weighted mean [mu](GFRG), now calculated as:
If GFRiG > UBG or GFRiG < LBG,
And if Freq_EDGEiG >= 30:
Then FlagiG = ``outlier'' and AdjustmentiG = GFRiG-[mu](GFRG)
If GFRiG <= UBG and GFRiG >= LBG,
Or if Freq_EDGEiG:
Then FlagiG = ``not outlier'' and AdjustmentiG = 0
We are committed to monitoring and improving the RADV methodology
as we gain experience with years for which we make transfer adjustments
under the program, and believe that this proposed change will improve
the precision and reliability of RADV results, while mitigating the
burden on smaller issuers. We may explore additional methodological
changes for future benefit years.
We solicit comments on this proposal.
b. Prescription Drugs for the 2019 Benefit Year Risk Adjustment Data
Validation
We propose that the 2019 benefit year RADV will serve as a second
pilot year for the purposes of prescription drug data validation, in
addition to the 2018 benefit year RADV pilot for prescription drugs.
This proposal is intended to give HHS and issuers more time and
experience with the prescription drug data validation process before
those results would be used to adjust risk scores and transfers. The
proposed second pilot year is consistent with the two pilot years
provided for the 2015 and 2016 benefit years of the HHS RADV program.
This proposal is also responsive to issuer concerns that were
previously expressed in comments to the 2020 Payment Notice.\70\
---------------------------------------------------------------------------
\70\ See, for example, America's Health Insurance Plans comment
on HHS Notice of Benefit and Payment Parameters for 2020 Proposed
Rule, February 19, 2019, https://www.regulations.gov/contentStreamer?documentId=CMS-2019-0006-23013&attachmentNumber=1&contentType=pdf, and BlueCross BlueShield
Association comment on HHS Notice of Benefit and Payment Parameters
for 2020 Proposed Rule, February 19, 2019, https://www.regulations.gov/contentStreamer?documentId=CMS-2019-0006-23345&attachmentNumber=1&contentType=pdf.
---------------------------------------------------------------------------
In the 2020 Payment Notice,\71\ we finalized an approach to
incorporate RXCs into RADV as a method of discovering materially
incorrect EDGE server data submissions in a manner similar to how we
address demographic and enrollment errors discovered during RADV. We
also finalized an approach to pilot the incorporation of these drugs
into the RADV process for 2018 benefit year RADV, and stated that RXC
errors that we identified during 2018 benefit year RADV RXC pilot will
not be used to adjust risk scores or transfers. We stated that we
finalized this policy to treat the incorporation of RXCs into 2018
benefit year RADV as a pilot year to allow HHS and issuers to gain
experience in validating RXCs before RXCs are used to adjust issuers'
risk scores. Through continued analysis of this issue after publication
of the 2020 Payment Notice, we have recognized that there may be more
differences between validating HCCs and RXCs that need to be considered
when incorporating RXCs into RADV than initially anticipated and that
the metrics to validate a RXC are not the same as coding a HCC. A
second pilot year for validation of RXCs provides additional time to
examine these issues and any potential mitigating strategies (as may be
necessary). Therefore, after further consideration, we are proposing a
second pilot year (2019 benefit year) for RXC validation.
---------------------------------------------------------------------------
\71\ 84 FR 17454 at 17498 through 17503.
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We solicit comments on this proposal.
[[Page 7118]]
D. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
1. Verification Process Related to Eligibility for Insurance
Affordability Programs
a. Employer-sponsored Plan Verification
Strengthening program integrity with respect to subsidy payments in
the individual market continues to be a top priority. Currently,
Exchanges must verify whether an applicant is eligible for or enrolled
in an eligible employer-sponsored plan for the benefit year for which
coverage is requested using available data sources, if applicable, as
described in Sec. 155.320(d). For any coverage year that an Exchange
does not reasonably expect to obtain sufficient verification data as
described in Sec. 155.320(d)(2)(i) through (iii), an alternate
procedure applies. Specifically, Exchanges must select a statistically
significant random sample of applicants and meet the requirements of
Sec. 155.320(d)(4)(i). For benefit years 2016 through 2019, Exchanges
also could use an alternative process approved by HHS. We are exploring
a new alternative approach to replace the current procedures in Sec.
155.320(d)(4)(i), under which an Exchange may design its verification
process based on the Exchange's assessment of risk for inappropriate
eligibility or payment for APTC or CSRs.
HHS's experience conducting random sampling revealed that employer
response rates to HHS's request for information were low. The manual
verification process described in Sec. 155.320(d)(4)(i) requires
significant resources and government funds, and the value of the
results ultimately does not appear to outweigh the costs of conducting
the work because only a small percentage of sample enrollees have been
determined by HHS to have received APTC/CSRs inappropriately. We
believe an approach to verifying an applicant's attestation regarding
access to an employer-sponsored plan should be rigorous, while posing
the least amount of burden on states, employers, consumers, and
taxpayers. Based on our experiences with random sampling methodology
under Sec. 155.320(d)(4)(i), HHS now believes that this methodology
may not be the best approach for all Exchanges to assess the associated
risk for inappropriate payment of APTC/CSRs. As such, HHS is currently
conducting a study to (1) determine the unique characteristics of the
population with offers of employer-sponsored coverage that meets
minimum value and affordability standards, (2) compare premium and out-
of-pocket costs for consumers enrolled in affordable employer-sponsored
coverage to Exchange coverage, and (3) identify the incentives, if any,
that drive consumers to enroll in Exchange coverage rather than
coverage offered through their current employer. The results of this
study, which HHS expects to be finalized in early 2020, will inform the
risk assessment of potential inappropriate payments of APTC/CSRs to
those with offers of affordable employer-sponsored coverage for
Exchanges using the Federal eligibility and enrollment platform. HHS
encourages State Exchanges to conduct similar research of their past
and current enrolled populations in anticipation of this future
rulemaking.
As HHS continues to explore the best options for verification of
employer-sponsored coverage, we will not take enforcement action
against Exchanges that do not perform random sampling as required by
Sec. 155.320(d)(4) for plan years 2020 and 2021. HHS will exercise
such discretion in anticipation of receiving the results of the
employer verification study described above and of the future changes
discussed earlier in this preamble.
2. Eligibility Redetermination During a Benefit Year (Sec. 155.330)
a. Process for Voluntary Termination Upon a Finding of Dual Enrollment
via Periodic Data Matching (PDM)
In accordance with Sec. 155.330(d), Exchanges must periodically
examine available data sources to determine whether enrollees in a QHP
through an Exchange who are receiving APTC or CSRs have been determined
eligible for or are enrolled in other qualifying coverage through
Medicare, Medicaid, CHIP, or the Basic Health Program (BHP), if a BHP
is operating in the service area of the Exchange. Individuals enrolled
in one of these forms of MEC and Exchange coverage are referred to as
dually enrolled consumers and are identified through periodic checks
known as PDM.
Section 155.430(b)(1)(ii) requires an Exchange to provide an
opportunity at the time of plan selection for an enrollee to choose to
remain enrolled in QHP coverage or have their QHP coverage terminated
if the Exchange finds that he or she has become eligible for or
enrolled in other MEC, or to terminate QHP coverage if the enrollee
does not choose to remain enrolled in the QHP upon completion of the
redetermination process. As such, for plan year 2018 and thereafter,
HHS added language to the single streamlined application generally used
by the Exchanges using the Federal platform to allow consumers to
authorize the Exchange to obtain eligibility and enrollment data and,
if so desired by the consumer, to end their QHP coverage if the
Exchange finds during periodic checks that the consumer has become
eligible for or enrolled in other MEC. This consumer authorization to
provide written consent for the Exchange to end QHP coverage is
voluntary, as consumers may opt-in to or opt-out of permitting the
Exchange to process a voluntary termination of QHP coverage if the
consumers are found to be also enrolled in other MEC, via PDM. We note
that the PDM operational processes described above pertain only to
those Exchange enrollees receiving APTC/CSRs in accordance with Sec.
155.330(d).
We further note that for plan year 2019, the Exchanges using the
Federal platform will continue to end QHP coverage or subsidies for
Medicare PDM only; terminations of Exchange coverage based on consumer
pre-authorization resulting from Medicaid/CHIP PDM will be implemented
at a time deemed appropriate by CMS to ensure the accuracy of the
Medicaid/CHIP data before it is utilized for Exchange coverage
terminations. Additionally, because the Medicaid/CHIP population may
become eligible or ineligible for Medicaid/CHIP throughout a plan year
as eligibility for the program is directly tied to fluctuations in
income, HHS will continue to evaluate the best manner by which to
implement this process for Medicaid/CHIP PDM to ensure that Exchange
enrollees do not experience unnecessary gaps in coverage. Similarly, we
expect that the two State Exchanges that operate their own eligibility
and enrollment platform and that currently offer BHP coverage--New York
and Minnesota--consider adding the option for consumer pre-
authorization of terminations of Exchange coverage resulting from BHP
PDM.
Given that enrollees may permit the Exchanges to terminate their
QHP enrollment upon finding that they are dually eligible for or
enrolled in other MEC, in accordance with Sec. 155.330(d), discussed
above, we are proposing to amend Sec. 155.330(e)(2)(i)(D) to provide
that Exchanges need not redetermine eligibility for APTC or CSRs for
enrollees who (1) are found to be dually enrolled in QHP coverage and
MEC consisting of Medicare, Medicaid/CHIP, or, if applicable, the BHP,
(2) have not responded to the Exchange notice to provide updated
information within 30-days, as required by Sec. 155.330(e)(2)(i) and
(e)(3) have provided written consent to the Exchange to act to end
[[Page 7119]]
their QHP coverage via PDM in the event of dual enrollment or
eligibility. We believe that this revision would ensure more efficient
Exchange operations and would make clear that a voluntary QHP
termination conducted as part of PDM under Sec. 155.430(b)(1)(ii)
follows the same process as other enrollee-initiated voluntary
terminations of QHP coverage. Furthermore, we believe these changes
would support HHS's program integrity efforts by helping to ensure that
APTC or CSRs are not paid inappropriately to those enrollees who are
ineligible to receive subsidies. Finally, we believe this change would
also ensure more efficient termination of unnecessary or duplicative
coverage for consumers who have opted to have their coverage terminated
in such circumstances.
We seek comment on this proposal.
b. Effective Date for Termination via Death PDM
In accordance with Sec. 155.330(e)(2), Exchanges must periodically
check available data sources to identify Exchange enrollees who may
have become deceased during a plan year and subsequently terminate QHP
coverage after following the process outlined at Sec. 155.330(e)(2)(i)
and following a redetermination of eligibility in accordance with Sec.
155.330(e)(1).
In late 2019, Exchanges using the Federal platform will conduct
periodic checks for enrollees who are enrolled in QHP coverage and may
have become deceased during plan year 2019. Additionally, the Exchange
will follow the termination process outlined at Sec. 155.430(d)(7)
that requires the Exchange to terminate QHP coverage retroactively to
the date of death when the Exchange initiates a termination due to the
death of an enrollee during a plan year. As such, we are proposing to
further amend Sec. 155.330(e)(2)(i)(D) by adding new language that
clarifies when the Exchange identifies deceased enrollees via PDM,
specifically for enrollees who do not respond or contest the updated
information within the 30-day period specified in paragraph
(e)(2)(i)(B), the Exchange will follow the process outlined in Sec.
155.430(d)(7) and terminate coverage retroactively to the date of
death, without a need to redetermine the eligibility of the deceased
enrollee. We believe that these changes clarify the Exchange's
operations when conducting periodic checks for deceased enrollees as
part of PDM and would serve to strengthen the integrity of the
individual market by mitigating the risk of unnecessary funds leaving
the Treasury in the form of APTC or CSRs for enrollees identified as
deceased during a plan year.
We seek comment on this proposal.
3. Automatic Re-Enrollment Process
In the proposed rule titled, ``Patient Protection and Affordable
Care Act; HHS Notice of Benefit and Payment Parameters for 2020'' (84
FR 227) (proposed 2020 Payment Notice) we noted that enrollees in plans
offered through Exchanges using the Federal platform can take action to
re-enroll in their current plan, can take action to select a new plan,
or can take no action and be re-enrolled in their current plan (or if
their current plan is no longer available, a plan selected under a
hierarchy designed to identify a plan that is similar to their current
plan).
Since the program's inception, Exchanges using the Federal platform
have maintained an automatic re-enrollment process which generally
continues enrollment for current enrollees who do not notify the
Exchange of eligibility changes or take action to actively select the
same or different plan. Automatic re-enrollment significantly reduces
issuer administrative expenses, makes enrolling in health insurance
more convenient for the consumer, and is consistent with general health
insurance industry practice. In the open enrollment period for 2019
coverage, 1.8 million people in FFE and SBE-FP states were
automatically re-enrolled in coverage, including about 270,000 persons
who were enrolled in a plan with zero premium after application of
APTC.
We continue to believe that while allowing auto-re-enrollment was
designed to be consistent with broader industry practices, this market
is different because most current enrollees receive significant
government subsidies, making them potentially less sensitive to
premiums and premium changes.
The proposed 2020 Payment Notice sought comment on automatic re-
enrollment processes and capabilities, as well as additional policies
or program measures that would reduce eligibility errors and potential
government misspending for potential action in future rulemaking
applicable not sooner than plan year 2021. As we noted in the final
rule, ``Patient Protection and Affordable Care Act; HHS Notice of
Benefit and Payment Parameters for 2020'' (84 FR 17454) (final 2020
Payment Notice), commenters unanimously supported retaining automatic
re-enrollment processes. Supporters cited benefits such as the
stabilization of the risk pool due to the retention of lower-risk
enrollees who are least likely to actively re-enroll, the increased
efficiencies and reduced administrative costs for issuers, the
reduction of the numbers of uninsured, and lower premiums. Commenters
stated that existing processes, such as eligibility redeterminations,
electronic and document-based verification of eligibility information,
PDM, and PTC reconciliations, are sufficient safeguards against
potential eligibility errors and increased Federal spending.
We also noted in the final 2020 Payment Notice that we would
continue to explore options to improve Exchange program integrity. To
that end, we remain concerned that automatic re-enrollment may lead to
incorrect expenditures of APTC, some of which cannot be recovered
through the reconciliation process due to statutory caps. We believe
that there may be particular risk associated with enrollees who are
automatically re-enrolled with APTC that cover the entire plan premium,
since such enrollees do not need to make payments to continue coverage.
As such, we solicit comment on modifying the automatic re-
enrollment process such that any enrollee who would be automatically
re-enrolled with APTC that would cover the enrollee's entire premium
would instead be automatically re-enrolled without APTC. This would
ensure that any enrollee in this situation would need to return to the
Exchange and obtain an updated eligibility determination prior to
having APTC paid on his or her behalf for the upcoming year. We also
request comments on a variation on this approach that we are
considering finalizing in a final rule, where APTC for this population
would be reduced to a level that would result in an enrollee premium
that is greater than zero dollars, but not eliminated entirely. This
variation would be designed to ensure a consumer's active involvement
in re-enrollment, because any enrollment in a plan with an enrollee
premium that is greater than zero would require the enrollee to take an
action by making the premium payment to effectuate or maintain
coverage, or else face eventual termination of coverage for non-
payment. We would also appreciate commenters' perspectives on whether
there are other approaches that could help limit risk in connection
with automatic re-enrollment into plans with APTC that cover the entire
plan premium. If we were to implement such a change, we would conduct
consumer outreach and education alerting consumers to the new process
and emphasizing the importance of
[[Page 7120]]
returning to the Exchange during open enrollment to update their
application to ensure that their income and other information is
correct and that they are still in the best plan for their needs. This
outreach could include fact sheets, email or mail outreach depending on
preference, and education among issuers, agents, brokers, Navigators,
and other assisters.
We note that under current regulations at Sec. 155.335, each
Exchange has some flexibility to define its own annual redetermination
procedures. We solicit comment on whether the approaches discussed
above should be adopted only for Exchanges using the Federal platform,
or whether they should also be required for State Exchanges that
operate their own eligibility and enrollment platforms.
On December 20, 2019, section 1311(c) of PPACA was amended to
require the Secretary to establish a process to re-enroll persons
enrolled in QHP coverage through an FFE during the 2020 plan year who
do not actively re-enroll for plan year 2021 and who do not elect to
disenroll for 2021 coverage during the open enrollment period for 2021
coverage in a QHP for the 2021 plan year.\72\ We believe the current
auto-reenrollment process under Sec. 155.335(j) (that was in place
during the 2020 open enrollment period and prior years) aligns with
this requirement.
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\72\ Further Consolidated Appropriations Act, 2020, Division N,
title I, subtitle F, section 608 (Pub. L. 116-94: December 20, 2019,
enacting H.R. 1865).
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4. Enrollment of Qualified Individuals Into QHPs (Sec. 155.400)
For a discussion of the proposals related to prospective binder
payment rules at Sec. 155.400(e)(1)(i) and (ii), and retroactive
binder payment rules at Sec. 155.400(e)(1)(iii) and (iv), please see
the preamble to Sec. 155.420 of this proposed rule.
5. Special Enrollment Periods (Sec. 155.420)
a. Exchange Enrollees Newly Ineligible for Cost-Sharing Reductions
In 2017, the HHS Market Stabilization Rule preamble explained that
HHS would move forward with a pre-enrollment verification of
eligibility for certain special enrollment periods in all states served
by the Federal platform. This practice was part of an effort to
stabilize the individual market, and addressed concerns that allowing
individuals to enroll in coverage through a special enrollment period
without electronic or document-based verification could negatively
affect the individual market risk pool by allowing individuals to newly
enroll in coverage based on health needs during the coverage year as
opposed to enrolling during open enrollment and maintaining coverage
for a full year.
To address related concerns that Exchange enrollees were utilizing
special enrollment periods to change plan metal levels based on ongoing
health needs during the coverage year, negatively affecting the
individual market risk pool, the Market Stabilization Rule also set
forth requirements at Sec. 155.420(a)(4) to limit Exchange enrollees'
ability to change to a QHP of a different metal level when they qualify
for, or when a dependent(s) newly enrolls, in Exchange coverage through
most types of special enrollment periods.\73\
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\73\ These limitations do not apply to enrollees who qualify for
certain types of special enrollment period, including those under
Sec. Sec. 155.420(d)(4), (8), (9), (10), (12), and (14). While
special enrollment periods under Sec. Sec. 155.420(d)(2)(i) and
(d)(6)(i) and (ii) are excepted from Sec. 155.420(a)(4)(iii), Sec.
155.420(a)(4)(i) and (ii) apply other plan category limitations to
them. See also the proposals about applicability of plan category
limitations to certain special enrollment periods in this section of
this proposed rule.
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Generally, Sec. 155.420(a)(4) provides that enrollees who newly
add a dependent through most types of special enrollment periods may
add the dependent to their current QHP or enroll the dependent in a
separate QHP,\74\ and that if an enrollee qualifies for certain special
enrollment periods, the Exchange must allow the enrollee and his or her
dependents to change to another QHP within the same level of coverage
(or one metal level higher or lower, if no such QHP is available), as
outlined in Sec. 156.140(b). To ensure that individuals who are newly
eligible for CSRs can access this benefit, Sec. 155.420(a)(4)(ii)
provides that if an enrollee and his or her dependents become newly
eligible for CSRs in accordance with paragraph (d)(6)(i) or (ii) of
this section and are not enrolled in a silver-level QHP, the Exchange
must allow them to change to a silver-level QHP if they elect to change
their QHP enrollment so that they may access CSRs they are eligible
for.
---------------------------------------------------------------------------
\74\ Section 155.420(a)(4)(i) and (a)(4)(iii)(B) also provide
that alternatively, if the QHP's business rules do not allow the
dependent to enroll, the Exchange must allow the enrollee and his or
her dependents to change to another QHP within the same level of
coverage (or one metal level higher or lower, if no such QHP is
available), as outlined in 45 CFR 156.140(b).
---------------------------------------------------------------------------
However, there is no corresponding provision to permit enrollees
and their dependents who become newly ineligible for CSRs in accordance
with Sec. 155.420(d)(6)(i) or (ii), and who are enrolled in a silver-
level QHP, to change to a QHP of a different metal level in order to
account for their change in financial assistance. Instead, if they wish
to change plans, Sec. 155.420(a)(4)(iii)(A) limits them to changing to
another QHP within the same level of coverage (or one metal level
higher or lower, if no such QHP is available) because Sec.
155.420(a)(4)(ii) does not include them and the provision at Sec.
155.420(a)(4)(iii) that excepts the special enrollment period
triggering events at Sec. 155.420(d)(6)(i) and (ii) from this
limitation only applies to individuals becoming newly eligible for
CSRs, not those becoming newly ineligible for CSRs. Since the
implementation of Sec. 155.420(a)(4) in states served by the Federal
platform, HHS has received questions and concerns about this issue from
HHS Navigators and other enrollment assisters, as well as from agents
and brokers, based on their experiences with consumers who, upon losing
eligibility for CSRs, are unable to afford cost sharing for their
current silver-level QHP and therefore wish to change to a lower-cost
QHP in order to maintain their coverage.
Therefore, we propose to redesignate Sec. 155.420(a)(4)(ii) as
(a)(4)(ii)(A) and add a new Sec. 155.420(a)(4)(ii)(B) in order to
allow enrollees and their dependents who become newly ineligible for
CSRs in accordance with paragraph (d)(6)(i) or (ii) of this section,
and are enrolled in a silver-level QHP, to change to a QHP one metal
level higher or lower if they elect to change their QHP enrollment in
an Exchange. We further propose to modify Sec. 155.420(a)(4)(iii) to
include Sec. 155.420(d)(6)(i) and (ii) for becoming newly ineligible
for CSRs in the list of trigger events excepted from the limitations at
Sec. 155.420(a)(3)(iii). This proposal may help impacted enrollees'
ability to maintain continuous coverage for themselves and for their
dependents in spite of a potentially significant change to their out of
pocket costs. For example, an enrollee impacted by an increase to his
or her monthly premium payment could change to a bronze-level plan,
while an enrollee who has concerns about higher copayment or co-
insurance cost sharing requirements could change to a gold-level plan.
HHS requests comment on this proposal. Current regulations at 45 CFR
147.104(b)(2)(iii) establish that plan category limitations do not
apply off-Exchange. Therefore, in the case of an individual who loses
eligibility for CSRs and wishes to use his or her special enrollment
period to purchase coverage
[[Page 7121]]
off-Exchange, he or she is not limited to any specific metal level(s)
of coverage.
We seek comments on these proposals.
b. Special Enrollment Period Limitations for Enrollees Who Are
Dependents
As discussed in the preceding section of this preamble, per Sec.
155.420(a)(4)(i) and (a)(4)(iii)(B), enrollees who newly add a
dependent through most types of special enrollment periods may add the
dependent to their current QHP or enroll the dependent in a separate
QHP.\75\ Specifically, Sec. 155.420(a)(4)(i) establishes that if an
enrollee has gained a dependent in accordance with Sec.
155.420(d)(2)(i), the Exchange must allow the enrollee to add the
dependent to his or her current QHP, or, if the current QHP's business
rules do not allow the dependent to enroll, the Exchange must allow the
enrollee and his or her dependents to change to another QHP within the
same level of coverage (or one metal level higher or lower, if no such
QHP is available), as outlined in Sec. 156.140(b), or, at the option
of the enrollee or dependent, enroll the dependent in any separate
QHP.\76\ Per Sec. 155.420(a)(4)(iii)(B), if a dependent qualifies for
a special enrollment period not related to becoming a new dependent,
and an enrollee is adding the dependent to his or her QHP, the Exchange
must allow the enrollee to add the dependent to his or her current QHP;
or, if the QHP's business rules do not allow the dependent to enroll in
that plan, the Exchange must allow the enrollee and his or her
dependents to change to another QHP within the same level of coverage
(or one metal level higher or lower, if no such QHP is available), as
outlined in Sec. 156.140(b), or enroll the new qualified individual in
a separate QHP. Finally, Sec. 155.420(a)(4)(iii)(A) requires that if
an enrollee qualifies for certain special enrollment periods, the
Exchange must allow the enrollee and his or her dependents to change to
another QHP within the same level of coverage (or one metal level
higher or lower, if no such QHP is available), as outlined in Sec.
156.140(b).
---------------------------------------------------------------------------
\75\ Section 155.420(a)(4)(i) and (a)(4)(iii)(B) also provide
that alternatively, if the QHP's business rules do not allow the
dependent to enroll, the Exchange must allow the enrollee and his or
her dependents to change to another QHP within the same level of
coverage (or one metal level higher or lower, if no such QHP is
available), as outlined in 45 CFR 156.140(b).
\76\ Per Sec. 155.420(a)(2), ``dependent'' has the same meaning
as it does in 26 CFR 54.9801-2, referring to any individual who is
or who may become eligible for coverage under the terms of a QHP
because of a relationship to a qualified individual or enrollee.
---------------------------------------------------------------------------
Per Sec. 155.420(a)(2), a dependent refers to any individual who
is or who may become eligible for coverage under the terms of a QHP
because of a relationship to a qualified individual or enrollee. The
current rules do not explicitly address all situations in which a
current enrollee is a dependent of a qualified individual who is newly
enrolling in Exchange coverage through a special enrollment period. For
example, the rules do not currently explicitly address what limitations
apply when a mother loses her self-only employer-sponsored coverage,
thereby gaining eligibility for a special enrollment period for loss of
MEC, and seeks to be added as an enrollee to the Exchange coverage in
which her two young children are currently enrolled. Applying the
limitations at Sec. 155.420(a)(4) to such circumstances is consistent
with HHS's goals of establishing equivalent treatment for all special
enrollment period eligible qualified individuals, and preventing
enrollees from changing plans in the middle of the coverage year based
on ongoing or newly emerging health issues. In fact, preamble language
from the 2017 Market Stabilization Proposed Rule explains that the
requirement at Sec. 155.420(a)(4)(iii) would extend to enrollees who
are on an application where a new applicant is enrolling in coverage
through a special enrollment period, using general terms to convey that
restrictions should apply to enrollees and newly-enrolling individuals
regardless of whether the new enrollee is a dependent.\77\
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\77\ 82 FR at 10986.
---------------------------------------------------------------------------
Therefore, we are proposing to apply the same limitations to
dependents who are currently enrolled in Exchange coverage that applies
to current, non-dependent Exchange enrollees by adding a new Sec.
155.420(a)(4)(iii)(C) to establish that the Exchange must allow a
qualified individual who is not an enrollee, who qualifies for a
special enrollment period and has one or more dependents who are
enrollees, to add him or herself to a dependent's current QHP; or, per
similar existing rules at Sec. 155.420(a)(4)(iii)(B), if the QHP's
business rules do not allow the qualified individual to enroll in such
coverage, to enroll with his or her dependent(s) in another QHP within
the same level of coverage (or one metal level higher or lower, if no
such QHP is available), as outlined in Sec. 156.140(b), or enroll him
or herself in a separate QHP.
Proposed Sec. 155.420(a)(4)(iii)(C) would be parallel to Sec.
155.420(a)(4)(iii)(B), which applies plan category limitations to
current enrollees whose dependent(s) qualify for a special enrollment
period to newly enroll in coverage, and specifies that the Exchange
must permit the enrollee to change plans in order to add the dependent
when the enrollee's current plan's business rules do not permit adding
the dependent, notwithstanding whether the enrollee also qualifies for
a special enrollment period. In other words, proposed Sec.
155.420(a)(4)(iii)(C) would apply plan category limitations in allowing
currently enrolled dependents who are enrolled in a plan that has
business rules that do not permit the non-dependent to be added to the
enrollment, to change plans in order to enroll together with the non-
dependent.
Current regulations at Sec. 147.104(b)(2)(iii) establish that
Sec. 155.420(a)(4) does not apply off-Exchange. Therefore, the
existing and proposed requirements and restrictions of that section,
including the proposed requirements that would require an issuer to
newly enroll a non-dependent household member(s) who qualifies for a
special enrollment period, with currently enrolled dependents, and the
plan category limitations associated with that requirement, do not
apply off-Exchange. However, our regulations do not prohibit issuers
off-Exchange from newly enrolling with currently enrolled dependents a
non-dependent household member(s) who qualifies for a special
enrollment period, or from newly enrolling dependent household members
who qualify for a special enrollment period with currently enrolled
individuals of whom they are a dependent, to the extent consistent with
applicable state law.
We seek comments on these proposals.
c. Special Enrollment Period Prospective Coverage Effective Dates
Under regular special enrollment period effective date rules at
Sec. 155.420(b)(1), the Exchange must ensure a coverage effective date
of the first day of the following month for individuals who select a
QHP between the 1st and the 15th day of any month. The Exchange must
ensure a coverage effective date of the first day of the second
following month for individuals who select a QHP between the 16th and
the last day of any month. Under these rules, it could take as many as
47 days from plan selection to effectuate coverage under a special
enrollment period (that is, from the 16th of a month to the first of
the next following month; or for example, from July 16 to September 1).
In the Exchanges using the Federal platform, these rules apply
[[Page 7122]]
to special enrollment periods provided under Sec. 155.420(d)(3),
(d)(6)(i), (ii), (iv), and (v), and (d)(7), (8), (10), and (12). Under
other special enrollment periods, such as those under Sec.
155.420(d)(4), (5), and (9), in the Exchanges using the Federal
platform, the consumer is generally offered a choice of regular
effective dates that would apply under Sec. 155.420(b)(1), or an
effective date that is retroactive to the date that would have applied
if not for the harm to the individual per the trigger event. In
addition, under Sec. 147.104(b)(5), the coverage effective date rules
in Sec. 155.420(b) apply to each of those special enrollment periods
to the extent they apply off-Exchange, as specified in Sec.
147.104(b)(2)(i).
These regular special enrollment period effective date rules under
Sec. 155.420(b)(1), along with the initial open enrollment period
effective date rules under Sec. 155.410(c), were originally designed
to provide issuers several weeks to collect binder payments, mail
identification cards, and complete other administrative actions prior
to the policy's start date. However, all issuers already effectuate
coverage and process changes in circumstance using first-of-the-month
rules. In 2017, issuers processed 88 percent of special enrollment
periods for individuals newly enrolling in coverage through Exchanges
using the Federal platform under accelerated or retroactive effective
date rules.\78\ HHS internal data on enrollments through Exchanges
using the Federal platform in 2018 indicates that issuers processed a
majority of changes in circumstances (including those resulting in
special enrollment periods) under accelerated or faster effective date
rules. Because issuers in Exchanges using the Federal platform
routinely effectuate coverage on a shorter timeframe, we do not
anticipate that this change would be difficult for issuers to
implement.
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\78\ Centers for Medicare & Medicaid Services, The Exchanges
Trends Report (July 2, 2018), available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Marketplaces/Downloads/2018-07-02-Trends-Report-3.pdf.
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Additionally, as a program integrity measure, we believe any
changes in enrollment related to changes in eligibility for coverage
through the Exchange or for insurance affordability programs should be
implemented as soon as practicably possible. This is particularly
important for consumers with special enrollment periods based on
changes in eligibility for APTC under Sec. 155.420(d)(6)(i) and (ii),
which currently follow regular effective date rules in the Exchanges
using the Federal platform. Therefore, we propose that in the Exchanges
using the Federal platform, special enrollment periods currently
following regular effective date rules would instead be effective on
the first of the month following plan selection. Specifically, we
propose to amend Sec. 155.420(b)(3) for improved clarity and to
specify how Exchanges using the Federal platform would implement this
proposal.
This proposal would permit Exchanges, including those using the
Federal platform, and issuers to more rapidly implement changes in QHP
enrollment, particularly those related to changes in financial
assistance eligibility, and would standardize prospective special
enrollment period effective dates across the Exchanges using the
Federal platform. It would also help reduce consumer confusion
regarding different effective date rules and minimize gaps in coverage.
For example, under current rules, a consumer in off-Exchange coverage
who is eligible for a special enrollment period because she gains
access to new QHPs as a result of a permanent move under Sec.
155.420(d)(7) would be subject to regular effective date rules under
Sec. 155.420(b)(1) (because the Exchanges using the Federal platform
have not adopted the option under Sec. 155.420(c)(2) to provide
advanced availability of the special enrollment period under Sec.
155.420(d)(7)). This means that if she moved out of her current plan's
service area on May 10 and selected a QHP on May 16, the FFE would set
an effective date for her new coverage of July 1; she could therefore
be with limited coverage in her new service area--or no coverage, if
her current issuer terminates her coverage based on her moving outside
the issuer's service area--for almost 2 months. Instead, under our
proposal to modify prospective special enrollment period effective
dates so that coverage is effective the first of the month following
plan selection, this enrollee would have coverage beginning June 1,
minimizing any unintended gap in coverage.
This proposal would also allow State Exchanges the flexibility to
retain current special enrollment period regular effective date rules
or to adopt the approach that would be taken in the Exchanges using the
Federal platform. State Exchanges already have flexibility under Sec.
155.420(b)(3) to effectuate coverage in a shorter timeframe if their
issuers agree. Several State Exchanges have already transitioned to
faster than regular effective date rules for special enrollment
periods. Under our proposed changes, State Exchanges could retain their
current effective date rules or implement faster ones without needing
to demonstrate issuer concurrence.
By reference, the effective-date-of-coverage rules at Sec.
155.420(b) apply off-Exchange, under Sec. 147.104(b)(5). This proposal
would continue to provide the applicable state authority with
flexibility regarding the options for effective dates under current
rules for off-Exchange coverage.
We note that many special enrollment periods already have effective
date rules that provide Exchanges and/or qualified individuals or
enrollees with discretion regarding effective dates, regardless of
issuer concurrence. Under Sec. 155.420(b)(2)(i), (iv), and (v),
Exchanges and/or qualified individuals or enrollees have the option to
apply regular effective date rules or provide an effective date on the
first of the month following plan selection for special enrollment
periods provided under Sec. 155.420(d)(1) and (3), (d)(6)(iii) and
(iv), and (d)(7), and certain triggering events under (d)(2). Under
Sec. 155.420(b)(2)(iii), Exchanges have discretion to ensure that
coverage is effective on an appropriate date based on the circumstances
of the special enrollment period, for special enrollment periods
provided under Sec. 155.420(d)(4), (5), (9), (10), (12), and (13).
Since regulations already allow Exchanges and/or qualified individuals
or enrollees discretion regarding which effective date rules to use for
many special enrollment periods, we do not believe issuers will
experience difficulty implementing this proposal.
This proposal would also help reduce confusion around binder
payment deadlines, since these deadlines depend on a policy's coverage
effective date. Accordingly, we propose to make updates to binder
payment deadlines in Sec. 155.400(e)(1)(ii) to ensure that special
enrollment periods using effective dates under revised Sec.
155.420(b)(3) would also be subject to the same binder payment rules as
other special enrollment periods that are effective the first of the
month following plan selection. Because the Exchanges using the Federal
platform would no longer be following regular coverage effective dates
for special enrollment periods under Sec. 155.420(b)(1), we also
propose to remove reference to that provision in Sec. 155.400(e)(1)(i)
and to replace ``regular effective dates'' in Sec. 155.400(e)(1)(iii)
with a reference to Sec. 155.420(b)(3). This latter change would
provide that in the Exchanges using the Federal platform, coverage
would be effective on the first of the month following plan selection
for consumers who are eligible for retroactive coverage but just pay 1
month's premium and receive only
[[Page 7123]]
prospective coverage. This change would help ensure that prospective
effective dates across the Exchanges using the Federal platform are
streamlined under one rule.
We seek comments on these proposals.
d. Special Enrollment Period Retroactive Coverage Effective Dates
Section 155.400(e)(1)(iii) states that for coverage to be
effectuated under retroactive special enrollment period effective
dates, as provided for in Sec. 155.420(b)(2), a consumer's binder
payment must include the premium due for all months of retroactive
coverage through the first prospective month of coverage. If only the
premium for 1 month of coverage is paid, only prospective coverage
should be effectuated, in accordance with regular effective dates. As
an example, a consumer has a special enrollment period that is not
subject to verification with a March 1 effective date, but the
enrollment is delayed due to an Exchange error. The issuer does not
receive the transaction until April 15. Under this rule, to effectuate
retroactive coverage beginning March 1, the issuer must receive
premiums for March, April, and May. If the issuer only receives a
premium payment for 1 or 2 months of coverage, it must effectuate only
prospective coverage beginning May 1. This rule was designed to allow
consumers who might have difficulty paying for retroactive coverage
through a special enrollment period or a favorable eligibility appeal
decision to enroll with prospective coverage only.\79\
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\79\ If the enrollee pays some, but not all, months of
retroactive premium due (two months in the example above), then the
issuer would effectuate coverage prospectively. See 2017 Payment
Notice, 81 FR at 12272. The issuer could then apply any amount paid
in excess of 1 month's premium but less than the full amount needed
to effectuate retroactive coverage to the next month's premium, or
refund the excess amount to the enrollee, at the enrollee's request.
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The Market Stabilization Rule added a different set of binder
payment rules at Sec. 155.400(e)(1)(iv) for retroactive effective
dates after an enrollment has been delayed due to a prolonged special
enrollment period verification under Sec. 155.420(b)(5).\80\ If a
consumer's enrollment is delayed until after the verification of the
consumer's eligibility for a special enrollment period, and the
assigned effective date would require the consumer to pay 2 or more
months of retroactive premium to effectuate coverage or avoid
cancellation, the consumer has the option to choose a coverage
effective date that is no more than 1 month later than had previously
been assigned. If the consumer does not move her effective date, her
binder payment would be the premium due for all months of retroactive
coverage through the first prospective month of coverage, consistent
with other binder payment rules. For instance, if the consumer's
special enrollment period in the above example were subject to
verification, and, as above, the March 1 effective date were pended
until April 15 due to pre-enrollment verification, the consumer's only
effective date options require payment for retroactive months, unlike
the previous example. To effectuate coverage under the special
enrollment period verification rules in Sec. Sec. 155.400(e)(1)(iv)
and 155.420(b)(5), she could either pay the premiums for March, April,
and May; or move her effective date forward only 1 month to April 1,
and must still pay for April and May coverage.
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\80\ Market Stabilization Rule, 82 FR at 18346.
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HHS established the special enrollment period verification
effective date rules in response to issuer concerns that delays in
special enrollment period verification and an un-checked ability of
consumers to move their effective date later (as contemplated in the
original version of that paragraph in the 2018 Payment Notice) would
result in adverse selection, with healthier enrollees requesting a
later effective date and sicker enrollees keeping the original
retroactive date. However, we have been able to manage our operational
processes so that delays in special enrollment period verification
processing have not materialized. In 2017, HHS averaged a response time
of 1 to 3 days to review consumer-submitted special enrollment period
verification documents and provide consumers a response.\81\ The
response time in 2018 was substantially similar. Additionally, in 2018
and 2019, CMS resolved over 800,000 special enrollment period
verifications, and fewer than 300 enrollees subject to special
enrollment period verification have requested to move forward their
effective date under Sec. Sec. 155.400(e)(1)(iv) and 155.420(b)(5).
This indicates that these rules are largely unnecessary.
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\81\ Centers for Medicare & Medicaid Services, The Exchanges
Trends Report (July 2, 2018), available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Marketplaces/Downloads/2018-07-02-Trends-Report-3.pdf.
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Therefore, we propose to eliminate the option to move forward by no
more than 1 month the effective date of enrollments that have been
pended due to special enrollment period verification, aligning the
retroactive effective date and binder payment rules so that any
consumer who is eligible to receive retroactive coverage, whether due
to a special enrollment period, a favorable eligibility appeal
decision, or a special enrollment period verification processing delay,
has the option to pay the premium due for all months of retroactive
coverage through the first prospective month of coverage, or only the
premium for 1 month of coverage and receive prospective coverage only.
Specifically, we propose to eliminate Sec. 155.420(b)(5).
We also propose to remove the corresponding cross-reference at
Sec. 155.420(b)(1) and the special enrollment period verification
binder payment rule at Sec. 155.400(e)(1)(iv). Finally, we propose to
amend Sec. 155.400(e)(1)(iii) to state more explicitly that any
consumer who can effectuate coverage with a retroactive effective date,
including those whose enrollment is delayed until after special
enrollment period verification, also has the option to effectuate
coverage with the applicable prospective coverage date by choosing to
only pay for 1 month of coverage by the applicable deadline,
notwithstanding the retroactive effective date that the Exchange
otherwise would be required to ensure.
Standardizing a single binder payment rule for retroactive
effective dates would improve operational efficiency for issuers and
Exchanges using the Federal platform. Issuers have indicated that it is
difficult to determine the appropriate binder payment rule to apply to
an enrollment with a retroactive effective date when they receive fewer
than all retroactive months of premium, as they need to discern whether
the consumer's eligibility stems from an appeal, a non-verified special
enrollment period, or a special enrollment period with a delay in
verification processing. For example, if on March 5, an issuer receives
a plan selection for a mother and child enrolling through an adoption
special enrollment period with a January 10 effective date, and neither
the mother nor child are current enrollees with the issuer, the issuer
has no way of knowing whether this transaction was subject to
verification. If the issuer in this case only receives 1 month's
premium, it would not know whether to cancel the enrollment or
effectuate prospective-only coverage. This change would simplify issuer
operations by eliminating that complexity.
Implementing a single set of binder payment rules would help ensure
all enrollees (including those subject to special enrollment period
verification) can access affordable coverage without being required to
pay for months of retroactive coverage that may be prohibitively
expensive, and during
[[Page 7124]]
which most providers would have insisted on direct payment in order to
provide health care services.
Finally, by reference, the effective-date-of-coverage rules at
Sec. 155.420(b) apply off-Exchange, in accordance with Sec.
147.104(b)(5). Therefore, our proposal to remove Sec. 155.420(b)(5)
would also remove this requirement off-Exchange.
We seek comments on these proposals, including alternative
approaches to streamlining retroactive effective date rules.
e. Enrollees Covered by a Non-Calendar Year Plan Year QSEHRA
The HRA rule allows employers to offer HRAs and other account-based
group health plans integrated with individual health insurance coverage
or Medicare Part A and B or Part C, if certain conditions are
satisfied.\82\ These are called individual coverage HRAs. Among other
conditions, an individual coverage HRA must require that the
participant and any covered dependent(s) be enrolled in individual
health insurance coverage (either on or off-Exchange) or Medicare Part
A and B or Part C, for each month that they are covered by the
individual coverage HRA.\83\
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\82\ 84 FR 28888 (June 20, 2019).
\83\ For purposes of individual coverage HRAs, references to
individual health insurance coverage do not include individual
health insurance coverage that consists solely of excepted benefits.
See 45 CFR 146.123(c)(1)(i).
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The HRA rule provides a special enrollment period to employees and
dependents who newly gain access to an individual coverage HRA to
enroll in individual health insurance coverage, or to change to other
individual health insurance coverage in order to maximize the use of
their individual coverage HRA.\84\ In addition, because employees and
dependents with a qualified small employer health reimbursement
arrangement (QSEHRA) \85\ generally must be enrolled in MEC,\86\ and
one category of MEC is individual health insurance coverage, the HRA
rule provides that individuals who are newly provided a QSEHRA also
qualify for the new special enrollment period.\87\
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\84\ See Sec. 155.420(d)(14).
\85\ Section 18001 of the Cures Act amends the Code, ERISA, and
the PHS Act to permit an eligible employer to provide a QSEHRA to
its eligible employees. See IRS Notice 2017-67, 2017-11 IRB 1010,
for related guidance: https://www.irs.gov/pub/irs-drop/n-17-67.pdf.
\86\ Generally, payments from a QSEHRA to reimburse an eligible
employee's medical care expenses are not includible in the
employee's gross income if the employee has coverage that provides
MEC as defined in Code section 5000A(f), which includes individual
health insurance coverage.
\87\ This preamble refers to a QSEHRA being ``provided'' as
opposed to being ``offered'' because, per Sec. 146.123(c)(4), an
individual coverage HRA eligible employee has an annual opportunity
to opt out of and forfeit future payments from the HRA. However,
this is not the case for employees and dependents with a QSEHRA.
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The HRA rule also solicited and addressed public comments on
whether the new special enrollment period should be available on an
annual basis at the beginning of each new plan year of the employee's
individual coverage HRA or QSEHRA, particularly if the new plan year is
not aligned with the calendar year.\88\ In the preamble to the HRA
rule, HHS stated that it had determined that individual coverage HRA or
QSEHRA enrollees should have the option to re-evaluate their individual
health insurance coverage for each new HRA plan year, regardless of
whether the HRA is provided on a calendar year basis. Therefore, while
the HRA rule did not make the new individual coverage HRA and QSEHRA
special enrollment period available on an annual basis, it clarified
that those who are enrolled in an individual coverage HRA with a non-
calendar year plan year--that is, the HRA's plan year begins on a day
other than January 1--will be eligible annually for the special
enrollment period under existing regulations at Sec.
155.420(d)(1)(ii), because individual coverage HRAs are group health
plans. While the HRA rule did not make any changes to Sec.
155.420(d)(1)(ii), the preamble of the rule expressed HHS's intention
to treat a QSEHRA with a non-calendar year plan year as a group health
plan for the limited purpose of qualifying for this special enrollment
period, and to codify this interpretation in future rulemaking.\89\
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\88\ 84 FR at 28955 through 28956.
\89\ Id. at 28956.
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As HHS explained in the HRA rule, we believe making the non-
calendar year plan year special enrollment period available annually to
individual market enrollees with a non-calendar year plan year
individual coverage HRA or QSEHRA appropriately provides employers with
flexibility to offer individual coverage HRAs or provide QSEHRAs on a
12-month cycle that meets their needs. The expansion also allows
employees and their dependents the flexibility to re-assess their
individual health insurance coverage options at the same time that the
terms of their individual coverage HRA or QSEHRA may change. We believe
accessing this non-calendar year plan year special enrollment period
may be important to some individuals, including those who wish to
change their individual health insurance plan due to a change in the
terms of their individual coverage HRA or QSEHRA. However, we
anticipate that most individuals with an individual coverage HRA or a
QSEHRA would not seek to change their individual coverage outside of
the individual market open enrollment period when their new HRA plan
year starts since doing so would generally cause their accumulators to
reset. Therefore, we do not anticipate significant additional
administrative burden for issuers or a significant increase in the
potential for adverse selection in the individual market associated
with this special enrollment period. In addition, because the non-
calendar year plan year special enrollment period is subject to plan
category limitations for Exchange enrollees, HHS determined these
limitations will further mitigate the potential risk of adverse
selection in the Exchanges.
As discussed in the HRA rule preamble,\90\ under section 2791 of
the PHS Act, section 733 of the ERISA, and section 9831 of the Code,
QSEHRAs are not group health plans \91\ and so employees and their
dependents with a QSEHRA do not qualify for the non-calendar year
special enrollment period as currently written. Therefore, we propose
to amend Sec. 155.420(d)(1)(ii) to codify that individuals and
dependents who are provided a QSEHRA with a non-calendar year plan year
may qualify for this special enrollment period. We note that this
special enrollment period also is incorporated by reference in the
guaranteed availability regulations at Sec. 147.104(b)(2). Therefore,
if this approach is finalized as proposed, individuals provided a non-
calendar year plan year QSEHRA would be entitled to a special
enrollment period to enroll in or change their individual health
insurance coverage through or outside of an Exchange.
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\90\ 84 FR at 28956.
\91\ One exception to this general rule is that a QSEHRA
continues to be treated as a group health plan under the PHS Act for
purpose of Part C Title XI of the Social Security Act. See section
2791(a)(1) of the PHS Act.
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We seek comment on this proposal.
6. Termination of Exchange Enrollment or Coverage (Sec. 155.430)
a. Enrollee-Initiated Terminations Upon a Finding of Dual Enrollment in
Medicare via PDM
Consistent with our discussion of voluntary terminations upon a
finding of dual enrollment in the preamble to Sec. 155.330, we propose
to revise paragraph (b)(1)(ii) by removing the requirement that the
Exchange must initiate termination of a Medicare dual
[[Page 7125]]
enrollee's QHP coverage upon completion of the redetermination process
specified in Sec. 155.330. We also propose to add to Sec.
155.330(b)(1)(ii) a reference to the process and authority outlined in
Sec. 155.330(e)(2) to align with the proposed changes to Sec.
155.330(e)(2)(i)(D), discussed in the preamble to Sec. 155.330. For
more detailed discussions of these proposals, please see the preamble
discussion under Sec. 155.330.
b. Effective Dates for Retroactive Termination of Coverage or
Enrollment Due to Exchange Error
The 2019 Payment Notice amended Sec. 155.430(d)(2) to allow
additional flexibility regarding the effective date for enrollee-
initiated terminations. This flexibility included permitting
Exchanges--at the option of the Exchange--to provide for enrollee-
initiated terminations to be effective on the date on which the
termination was requested by the enrollee, or on another prospective
date selected by the enrollee. Previously, enrollees generally had to
provide 14-days advance notice before termination became effective.
Corresponding updates to reflect the new flexibilities were not made to
Sec. 155.430(d)(9), which defines the effective date for retroactive
terminations due to a technical error as described in paragraph
(b)(1)(iv)(A). The current provision specifies that termination in
these circumstances will be no sooner than 14 days after the date that
the enrollee can demonstrate he or she contacted the Exchange to
terminate his or her coverage or enrollment through the Exchange,
unless the issuer agrees to an earlier effective date as set forth in
Sec. 155.430(d)(2)(iii).
To ensure that enrollees who suffered technical errors are put in
the position they would have been absent the technical error, we
propose to align Sec. 155.430(d)(9) with the provisions for enrollee-
initiated terminations at Sec. 155.430(d)(2).
We seek comment on this proposal.
7. Eligibility Pending Appeal (Sec. 155.525)
a. Retroactive Applicability of Eligibility Pending Appeal
We are considering whether changes to Sec. 155.525 governing
eligibility pending appeals are necessary or prudent to provide greater
clarity to Exchanges, issuers, and consumers who appeal Exchange
determinations. Under Sec. 155.525, when an appellant accepts
eligibility pending appeal, an Exchange must continue the appellant's
eligibility for enrollment in a QHP, APTC, and CSR, as applicable, in
accordance with the level of eligibility that was in effect immediately
before the eligibility redetermination that the consumer is appealing.
Based on the experience of the FFEs and HHS appeals entity in
administering this provision, we are considering changes for future
rulemaking that would provide greater clarity to Exchanges, issuers,
and appellants. We identify in the discussion that follows examples to
illustrate issues that are not explicitly addressed in the current
regulations and invite comment on them.
Should appellants who request and are granted eligibility pending
appeal be permitted to enroll in any plan or otherwise be limited in
any way to a particular issuer or plan category? For example, an
enrollee who had been receiving APTC and CSR is redetermined ineligible
for APTC and CSR for the subsequent plan year. This enrollee might
select a bronze plan during open enrollment because it is the most
affordable option available. However, this same enrollee may end up
submitting the appeal request well after the date on which the
enrollment in the bronze plan became effective. In the course of filing
an appeal, the appellant may ask for eligibility pending appeal; if the
request is granted, the appellant may wish to remain enrolled in the
bronze plan. However, there is no ability to continue the appellant's
eligibility for CSRs in such a plan.
We generally believe the appellant should have the option to remain
enrolled in the bronze plan to allow for the continuation of APTC only,
as well as the option to be enrolled in a silver plan offered by the
same or a different issuer to allow for the continuation of both APTC
and CSRs. We also believe it may be appropriate for eligibility pending
appeal and the corresponding enrollment to take effect retroactively,
as if the challenged redetermination had not been made. We welcome
feedback on the value and implications of such flexibility. We would
also welcome feedback on whether there are advantages to other options,
such as allowing eligibility pending appeal and enrollment to take
effect prospectively based on the date that the request for eligibility
pending appeal is granted.
b. Timeliness of Filing for Eligibility Pending Appeal
Section 155.520(b) specifies that in general an applicant or
enrollee must request an appeal within 90 days of the date of the
eligibility determination being appealed. However, there is no similar
timeliness requirement for requesting eligibility pending appeal with
respect to Exchange coverage and eligibility. The preamble of the first
Program Integrity Rule stated that pended benefits are offered on
appeal of a redetermination, regardless of when the appellant requests
the appeal within the 90-day appeal request timeframe.\92\ If it is
unclear whether an individual is asking for eligibility pending appeal
at the time an appeal request is made; if the individual is unable to
make this request absent additional information about it; or if an
appeal request is filed on the 90th day of the appeal request
timeframe, there may be little to no time remaining in the 90-day
appeal request timeframe for the appellant to ask for eligibility
pending appeal.
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\92\ 78 FR at 54102.
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We considered for example whether a reasonable period may be 30
days from the date the Exchange appeals entity issues a notice to the
appellant acknowledging receipt of a valid appeal request consistent
with Sec. 155.520(d), provided that the appeal had not been decided or
dismissed prior to the end of that 30-day period. For example, a 30-day
period might provide an opportunity for appellants to learn about the
appeals process including their right to ask for eligibility pending
appeal, which could occur after the appeal receipt date. We also
considered whether a shorter period to make this request is preferable
in order to limit downstream impacts on issuers. The more time an
appellant has to make this request, the longer period of time over
which an issuer could be required to make retroactive adjustments to
the appellant's enrollment, premiums, and benefits. Conversely, we did
not think that it was reasonable to require appellants to make a
request for eligibility pending appeal on the date they submit their
appeal request, since they may not be aware of this option and have a
chance to weigh the financial consequences of this choice, particularly
should they ultimately receive an unfavorable decision. Finally, we
considered whether there ought to be a good cause exception for an
appellant who does not request eligibility pending appeal within a
prescribed timeframe. In the context of an untimely appeal request,
Sec. 155.520(d)(2)(i)(D) permits an applicant or enrollee to
demonstrate within a reasonable timeframe as determined by the appeals
entity that failure to timely submit was due to exceptional
circumstances. Consideration could be given to similar exceptional
circumstances such as a hospitalization, natural disaster, or another
such event should an appellant fail to make a request for eligibility
[[Page 7126]]
pending appeal within a reasonable timeframe. We solicit comment on the
advisability of establishing a timeliness standard, whether Exchanges
should have the flexibility to determine their own timeliness
standards, and what a reasonable timeliness standard should be.
c. Life Events Occurring During the Pendency of the Appeal
When an eligibility redetermination is being appealed and
eligibility pending appeal has been granted, it is possible that the
appellant may subsequently experience a life event that impacts
eligibility. For example, an appellant who is redetermined ineligible
for APTC and CSR may appeal this redetermination and request and be
granted eligibility pending appeal. If the appellant has a baby during
the pendency of the appeal and reports the change in family size to the
Exchange, the appellant would have her eligibility redetermined based
on the addition of the newborn to the household. The regulations do not
explicitly specify how an Exchange should resolve a pending appeal with
eligibility pending appeal when an appellant who is receiving APTC and,
as applicable, CSRs under eligibility pending appeal reports a change
to the Exchange, and how the resultant eligibility from this reported
change interacts with this appellant's eligibility pending appeal. We
solicit comment on ways to facilitate the administration of these
eligibility changes.
d. Impact of Eligibility Decision on Eligibility Pending Appeal
Appellants who are granted eligibility pending appeal may
ultimately have their eligibility redetermination overturned. When a
decision overturns the eligibility redetermination being appealed,
under Sec. 155.545(c)(1)(ii) the appellant has the option to have the
decision implemented retroactively, to the coverage effective date the
appellant did receive or would have received if they had enrolled in
coverage under the incorrect eligibility (re)determination that is
being appealed. In cases where the appellant is continuing to receive
APTC and CSRs under a grant of eligibility pending appeal, it is
possible that the decision determines the appellant eligible for a
higher dollar amount of APTC and/or a higher level of CSRs than what
was provided during the pendency of the appeal. We also recognize that
retroactive implementation of a decision may create additional burdens
on issuers who may have to re-process claims and recalculate cost-
sharing amounts and out-of-pocket maximums, as well as refund premiums
in excess of what the appellant paid, which an issuer may be
experiencing for a second time, following implementation of a request
for eligibility pending appeal. We solicit input on what if any
limitations on implementation of a decision when eligibility pending
appeal has been granted may be appropriate and under what
circumstances.
e. Eligibility Pending Appeal and Non-Payment of Premiums
Finally, we solicit comment on how eligibility pending appeal
interacts with the consequences of non-payment of premiums. The
preamble to the final rule establishing Sec. 155.525 stated that an
issuer may terminate coverage as provided in Sec. 155.430(b)(2)(ii);
however, the regulations are not explicit about the applicability of
the 3-month grace period as described in Sec. 156.270(d) and (g) for
appellants who are granted eligibility pending appeal. We believe that
issuers and appellants may appreciate more clarity about this issue in
general, as well as about how to treat appellants who may be in a grace
period at the time that the redetermination is made and eligibility
pending appeal request is granted. We will consider any comments we
receive on this topic for future rulemaking.
We appreciate comment on these issues, as well as any others
impacting the administration of eligibility pending appeal.
8. Eligibility Standards for Exemptions (Sec. 155.605)
a. Required Contribution Percentage (Sec. 155.605(d)(2))
HHS calculates the required contribution percentage for each
benefit year using the most recent projections and estimates of premium
growth and income growth over the period from 2013 to the preceding
calendar year. We propose to calculate the required contribution
percentage for the 2021 benefit year, using income and premium growth
data for the 2013 and 2020 calendar years.
Under section 5000A of the Code, an individual must have MEC for
each month, qualify for an exemption, or make an individual shared
responsibility payment. Under Sec. 155.605(d)(2), an individual is
exempt from the requirement to have MEC if the amount that he or she
would be required to pay for MEC (the required contribution) exceeds a
particular percentage (the required contribution percentage) of his or
her projected household income for a year. Although the Tax Cuts and
Jobs Act reduced the individual shared responsibility payment to $0 for
months beginning after December 31, 2018, the required contribution
percentage is still used to determine whether individuals above the age
of 30 qualify for an affordability exemption that would enable them to
enroll in catastrophic coverage under Sec. 155.305(h).
The initial 2014 required contribution percentage under section
5000A of the Code was 8 percent. For plan years after 2014, section
5000A(e)(1)(D) of the Code and Treasury regulations at 26 CFR 1.5000A-
3(e)(2)(ii) provide that the required contribution percentage is the
percentage determined by the Secretary of HHS that reflects the excess
of the rate of premium growth between the preceding calendar year and
2013, over the rate of income growth for that period. The excess of the
rate of premium growth over the rate of income growth is also used for
determining the applicable percentage in section 36B(b)(3)(A) of the
Code and the required contribution percentage in section 36B(c)(2)(C)
of the Code.
As discussed elsewhere in this preamble, we are proposing as the
measure for premium growth the 2021 premium adjustment percentage of
1.3542376277 (or an increase of about 35.4 percent over the period from
2013 to 2020). This reflects an increase of about 5.0 percent over the
2020 premium adjustment percentage (1.3542376277/1.2895211380).
As the measure of income growth for a calendar year, we established
in the 2017 Payment Notice that we would use per capita personal income
(PI). Under the approach finalized in the 2017 Payment Notice, using
the National Health Expenditure Accounts (NHEA) data, the rate of
income growth for 2021 is the percentage (if any) by which the most
recent projection of per capita PI for the preceding calendar year
($58,821 for 2020) exceeds per capita PI for 2013 ($44,922), carried
out to ten significant digits. The ratio of per capita PI for 2020 over
the per capita PI for 2013 is estimated to be 1.3094029651 (that is,
per capita income growth of about 30.9 percent).\93\ This rate of
income growth
[[Page 7127]]
between 2013 and 2020 reflects an increase of approximately 4.6 percent
over the rate of income growth for 2013 to 2019 (1.3094029651/
1.2524152976) that was used in the 2020 Payment Notice. Per capita PI
includes government transfers, which refers to benefits individuals
receive from Federal, state, and local governments (for example, Social
Security, Medicare, unemployment insurance, workers' compensation,
etc.).\94\
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\93\ The 2013 and 2020 per capita personal income figures used
for this calculation reflect the latest NHEA data, which was updated
between the publication of the proposed rule and this final rule, on
February 20, 2019. The series used in the determinations of the
adjustment percentages can be found in Tables 1 and 17 on the CMS
website, which can be accessed by clicking the ``NHE Projections
2018-2027--Tables'' link located in the Downloads section at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html. A detailed description of the
NHE projection methodology is available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/ProjectionsMethodology.pdf.
\94\ U.S Department of Commerce Bureau of Economic Analysis
(BEA) Table 3.12 Government Social Benefits. Available at https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=3&isuri=1&categories=survey&nipa_table_list=110.
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Thus, using the 2021 premium adjustment percentage proposed in this
rule, the excess of the rate of premium growth over the rate of income
growth for 2013 to 2020 is 1.3542376277 /1.3094029651, or 1.0342405385.
This results in a proposed required contribution percentage for 2021 of
8.00x1.0342405385 or 8.27 percent, when rounded to the nearest one-
hundredth of one percent, an increase of 0.04 percentage points from
2020 (8.27392-8.23702). We seek comment on this proposal.
9. Quality Rating Information Display Standards for Exchanges
(Sec. Sec. 155.1400 and 155.1405)
To implement sections 1311(c)(3) and 1311(c)(4) of the PPACA, we
developed the QRS and the QHP Enrollee Experience Survey (collectively
referred to as the quality rating information). In the Exchange and
Insurance Market Standards for 2015 and Beyond Final Rule,\95\ HHS
issued regulations at Sec. Sec. 155.1400 and 155.1405 to establish
quality rating information display standards for Exchanges.\96\
Consistent with these regulations, Exchanges must prominently display
on its website, in accordance with Sec. 155.205(b)(1)(iv) and (v),
quality rating information assigned for each QHP,\97\ as provided by
HHS and in a form and manner specified by HHS.
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\95\ See the Patient Protection and Affordable Care Act;
Exchange and Insurance Market Standards for 2015 and Beyond; Final
Rule; (May 27, 2014), 79 FR 30240 at 30310, available at https://www.gpo.gov/fdsys/pkg/FR-2014-05-27/pdf/2014-11657.pdf.
\96\ Patient Protection and Affordable Care Act; Exchange and
Insurance Market Standards for 2015 and Beyond, Final Rule, 79 FR
30240 at 30352 (May 27, 2014).
\97\ Exchanges can satisfy the requirement to display the QHP
Enrollee Survey results by displaying the QRS star ratings (which
incorporate member experience data from the QHP Enrollee Survey).
See 79 FR at 30310.
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To balance HHS's strategic goals of empowering consumers through
data, minimizing cost and burden on QHP issuers, and supporting state
flexibility, HHS developed a phased-in approach to display of quality
rating information across the Exchanges. In particular, during plan
years 2017, 2018, and 2019, HHS displayed quality rating information on
HealthCare.gov in a handful of select FFE states as part of a limited
pilot program. During this time, State Exchanges that operate their own
eligibility and enrollment platforms were given the option to display
their respective QHP quality rating information and several of these
State Exchanges voluntarily elected to display on their State Exchange
websites. The QRS pilot involved focused consumer testing of the
display of quality rating information to maximize the clarity of the
information provided and to assess how the information was displayed
and used on Exchange websites.
In August 2019, HHS issued a Quality Rating Information Bulletin to
announce the transition away from the QRS pilot to the public display
of quality rating information for plan year 2020 by all Exchanges,
including FFEs, SBE-FPs, and State Exchanges that operate their own
eligibility and enrollment platform.\98\ This included flexibility for
State Exchanges that operate their own eligibility and enrollment
platforms to display QHP quality rating information on their websites
in the form and manner specified by HHS or with some limited state
customizations. Based upon experience during the QRS pilot, we
recognize there are benefits to permitting some flexibility for State
Exchanges that operate their own eligibility and enrollment platforms
to customize the quality rating information for their QHPs. We
understand that during the QRS pilot, some State Exchanges that operate
their own eligibility and enrollment platforms displayed the quality
rating information as provided by HHS, while others displayed quality
rating information with certain state-specific customizations in order
to best reflect local priorities or information. Therefore, HHS
proposes to amend Sec. Sec. 155.1400 and 155.1405 to codify this
flexibility and provide State Exchanges that operate their own
eligibility and enrollment platforms some flexibility to customize the
display of quality rating information for their respective QHPs. For
example, we would allow State Exchanges that operate their own
eligibility and enrollment platform to make some state-specific
customizations, such as to incorporate additional state or local
quality information or to modify the display names of the QRS star
ratings. However, we clarify that State Exchanges that operate their
own eligibility and enrollment platform cannot develop their own
programs to replace the quality ratings calculated by HHS. Consistent
with the statute, the Secretary remains responsible for the development
of the QRS and QHP Enrollee Survey and the calculation of quality
ratings under these programs across all Exchanges.\99\ We believe this
flexibility supports the feedback we received from a Request for
Information, entitled ``Reducing Regulatory Burdens Imposed by the
Patient Protection and Affordable Care Act and Improving Healthcare
Choices to Empower Patients'', published in the June 12, 2017 Federal
Register (82 FR 26885), in identifying ways to reduce burden and
promote State Exchange flexibility. We seek comment on this proposal.
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\98\ Quality Rating Information Bulletin for Plan Year 2020.
Available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/QualityRatingInformationBulletinforPlanYear2020.pdf.
\99\ See sections 1311(c)(3) and (c)(4) of the PPACA.
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E. Part 156--Health Insurance Issuer Standards under the Affordable
Care Act, Including Standards Related to Exchanges
1. Definitions (Sec. 156.20)
We are proposing to remove the definition of the term ``generic''
at Sec. 156.20 because the proposed revision at Sec. 156.130(h) would
no longer use the term ``generic''. For a discussion of that proposal,
please see the preamble to Sec. 156.130(h).
2. FFE and SBE-FP User Fee Rates for the 2021 Benefit Year (Sec.
156.50)
Section 1311(d)(5)(A) of the PPACA permits an Exchange to charge
assessments or user fees on participating health insurance issuers as a
means of generating funding to support its operations. If a state does
not elect to operate an Exchange or does not have an approved Exchange,
section 1321(c)(1) of the PPACA directs HHS to operate an Exchange
within the state. Accordingly, in Sec. 156.50(c), we specified that a
participating issuer offering a plan through an FFE or SBE-FP must
remit a user fee to HHS each month that is equal to the product of the
annual user fee rate specified in the annual HHS notice of benefit and
payment parameters for FFEs and SBE-FPs for the applicable benefit year
and the
[[Page 7128]]
monthly premium charged by the issuer for each policy where enrollment
is through an FFE or SBE-FP. In addition, OMB Circular No. A-25R
establishes Federal policy regarding the assessment of user charges
under other statutes and applies to the extent permitted by law.
Furthermore, OMB Circular A-25R specifically provides that a user fee
charge will be assessed against each identifiable recipient of special
benefits derived from Federal activities beyond those received by the
general public. Activities performed by the Federal Government that do
not provide issuers participating in an FFE with a special benefit are
not covered by this user fee. As in benefit years 2014 through 2020,
issuers seeking to participate in an FFE in the 2021 benefit year will
receive two special benefits not available to the general public: (1)
The certification of their plans as QHPs; and (2) the ability to sell
health insurance coverage through an FFE to individuals determined
eligible for enrollment in a QHP.
For the 2021 benefit year, issuers participating in an FFE will
receive special benefits from the following Federal activities:
Provision of consumer assistance tools;
Consumer outreach and education;
Management of a Navigator program;
Regulation of agents and brokers;
Eligibility determinations;
Enrollment processes; and
Certification processes for QHPs (including ongoing
compliance verification, recertification, and decertification).
Activities through which FFE issuers receive a special benefit also
include the Health Insurance and Oversight System (HIOS) and
Multidimensional Insurance Data Analytics System (MIDAS) platforms,
which are partially funded by Exchange user fees. Based on estimated
costs, enrollment (including anticipated establishment of State
Exchanges in certain states in which FFEs currently are operating), and
premiums for the 2021 plan year, we seek comment on two alternative
proposals. First, we propose maintaining the FFE user fee for all
participating FFE issuers at 3.0 percent of total monthly premiums in
order to preserve and ensure that the FFE has sufficient funding to
cover the cost of all special benefits provided to FFE issuers during
the 2021 plan year.
Alternatively, we are considering and seek comment on reducing the
FFE user fee rate below the 2020 benefit year level. This alternative
proposal reflects our estimates of premium increases and enrollment
decreases for the 2021 benefit year, as well as potential savings
resulting from cost-saving measures implemented over the last several
years in hopes of reducing the user fee burden on consumers and
creating downward pressure on premiums. We are also seeking information
on trends in usage of Exchange functions and services, potential
efficiencies in Exchange operations, and premium and enrollment
projections, all of which might inform a change in the user fee level
in the final rule. If these savings do not materialize, CMS anticipates
having to increase user fee rates for the subsequent benefit year, to
ensure that sufficient funds would be available to cover the costs of
special benefits provided to FFE issuers. We seek comment on this
proposal.
As previously discussed, OMB Circular No. A-25R 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 general
public.
SBE-FPs enter into a Federal platform agreement with HHS to
leverage the systems established for the FFEs to perform certain
Exchange functions, and to enhance efficiency and coordination between
state and Federal programs. Accordingly, in Sec. 156.50(c)(2), we
specified that an issuer offering a plan through an SBE-FP must remit a
user fee to HHS, in the timeframe and manner established by HHS, equal
to the product of the monthly user fee rate specified in the annual HHS
notice of benefit and payment parameters for the applicable benefit
year, unless the SBE-FP and HHS agree on an alternative mechanism to
collect the funds from the SBE-FP or state. The benefits provided to
issuers in SBE-FPs by the Federal Government include use of the Federal
Exchange information technology and call center infrastructure used in
connection with eligibility determinations for enrollment in QHPs and
other applicable state health subsidy programs, as defined at section
1413(e) of the PPACA, and QHP enrollment functions under Sec. 155.400.
The user fee rate for SBE-FPs is calculated based on the proportion of
FFE costs that are associated with the FFE information technology
infrastructure, the consumer call center infrastructure, and
eligibility and enrollment services, and allocating a share of those
costs to issuers in the relevant SBE-FPs.
For the same reasons we discuss above in relation to the FFE user
fee rate, we are considering and seek comment on an alternative
proposal to ensure HHS can cover the costs of the special benefits it
will provide to SBE-FP issuers during the 2021 benefit year. First, we
are proposing a user fee rate of 2.5 percent of the monthly premium
charged by the issuer for each policy under plans offered through an
SBE-FP. Similar to our proposal to maintain the FFE user rate
applicable to benefit year 2020, maintaining the SBE-FP user rate at
2.5 percent of premium would help to ensure that user fees sufficiently
cover the costs of the special benefits HHS provides to SBE-FP issuers.
Also, for the same reasons discussed above in relation to the FFE
user fee rate, we are also considering and seek comment on lowering the
SBE-FP user fee rate below the 2020 benefit year level. In addition, we
are also seeking information on trends in usage of Federal platform
functions and services, potential efficiencies in Federal platform
operations, and premium and enrollment projections, all of which might
inform a change in the user fee level in the final rule. We seek
comment on this alternative proposal.
We will continue to examine contract cost estimates for the special
benefits provided to issuers offering QHPs on the Exchanges using the
Federal platform for the 2021 benefit year as we finalize the FFE and
SBE-FP user fee rates.
3. State Selection of EHB-Benchmark Plan for Plan Years Beginning on or
after January 1, 2020 (Sec. 156.111)
a. Annual Reporting of State-Required Benefits
We propose amending Sec. 156.111 to require states each year,
beginning in plan year 2021, to identify required benefits mandated by
state law and which of those benefits are in addition to EHB in a
format and by a date specified by HHS. If the state does not comply
with this annual reporting submission deadline, we propose that HHS
will determine which benefits are in addition to EHB for the state.
Section 1311(d)(3)(B) of the PPACA permits a state to require QHPs
offered in the state to cover benefits in addition to the EHB, but
requires the state to make payments, either to the individual enrollee
or to the issuer on behalf of the enrollee, to defray the cost of these
additional state-required benefits. In the EHB final rule,\100\ we
finalized a standard at Sec. 155.170(a)(2) that specifies benefits
mandated by state action taking place on or before December 31, 2011,
[[Page 7129]]
even if not effective until a later date, may be considered EHB, such
that the state is not required to defray costs for these state-required
benefits. Under this policy, benefits mandated by state action taking
place after December 31, 2011 are considered in addition to EHB, even
if the mandated benefits also are embedded in the state's selected EHB-
benchmark plan. In such cases, states must defray the associated costs
of QHP coverage of such benefits, and those costs should not be
included in the percentage of premium attributable to coverage of EHB
for purpose of calculating PTCs.
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\100\ Standards Related to Essential Health Benefits, Actuarial
Value, and Accreditation, 78 FR 12834, 12837 through 12838 (February
20, 2013), available at https://www.gpo.gov/fdsys/pkg/FR-2013-02-25/pdf/2013-04084.pdf.
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We also finalized in the EHB final rule that, because the Exchange
is responsible for certifying QHPs, the Exchange would be the entity
responsible for identifying which additional state-required benefits,
if any, are in addition to the EHB. We also finalized that it is the
QHP issuer's responsibility to quantify the cost attributable to each
additional required benefit based on an analysis performed in
accordance with generally accepted actuarial principles and
methodologies conducted by a member of the American Academy of
Actuaries and to then report this to the state. Although Sec. 155.170
contemplates issuers conducting the cost analysis independently from
the state, we now clarify that it would also be permissible for issuers
to choose to rely on another entity, such as the state, to produce the
cost analysis, provided the issuer remains responsible for ensuring
that the quantification has been completed in a manner that complies
with Sec. 155.170(c)(2)(i) through (iii).
We also finalized that this calculation should be done
prospectively to allow for the offset of an enrollee's share of premium
and for purposes of calculating the PTC and reduced cost sharing. We
reminded states and issuers that section 36B(b)(3)(D) of the Code
specifies that the portion of the premium allocable to state-required
benefits in addition to EHB shall not be taken into account in
determining a PTC. We also finalized that because states may wish to
take different approaches with regard to basing defrayal payments on
either a statewide average or each issuer's actual cost that we were
not establishing a standard and would permit both options for
calculating state payments, at the election of the state. We also now
clarify that we interpret actual cost to refer to the actuarial
estimate of what part of the premium is attributable to the state-
required benefit that is in addition to EHB, which is an analysis that
should be performed prospectively to the extent possible.
In the 2017 Payment Notice,\101\ we clarified that section
1311(d)(3)(B) of the PPACA governing defrayal of state-required
benefits is not specific to state statutes and we thus interpreted that
section to apply not only in cases of legislative action but also in
cases of state regulation, guidance, or other state action. We also
finalized a change to Sec. 155.170(a)(3), designating the state,
rather than the Exchange, as the entity required to identify which
benefits mandated by state action are in addition to EHB and require
defrayal. We also clarified in the 2017 Payment Notice \102\ that there
is no requirement to defray the cost of benefits added through
supplementation of the state's base-benchmark plan, as long as the
state is supplementing the base-benchmark to comply with the PPACA or
another Federal requirement. We also explained in the 2017 Payment
Notice that this means benefits mandated by state action after December
31, 2011 for purposes of compliance with new Federal requirements would
not require defrayal. Examples of such Federal requirements include:
requirements to provide benefits and services in each of the ten
categories of EHB; requirements to cover preventive services;
requirements to comply with the Paul Wellstone and Pete Domenici Mental
Health Parity and Addiction Equity Act of 2008 (MHPAEA) (Pub. L. 110-
343, enacted October 3, 2008); and the removal of discriminatory age
limits from existing benefits.
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\101\ 81 FR at 12242.
\102\ This was originally clarified in the 2016 Payment Notice,
and reiterated in the 2017 Payment Notice.
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In the 2017 Payment Notice, we also affirmed a transitional policy
originating from the 2016 Payment Notice, specifying that Sec.
156.110(f) allows states to determine services included in the
habilitative services and devices category without triggering defrayal
if the state's base-benchmark plan does not include coverage for that
category. We interpreted this to mean that, when a state has an
opportunity to reselect its EHB-benchmark plan, a state may use this as
an opportunity to also update its habilitative services category within
the applicable Federal parameters for doing so as part of EHB-benchmark
plan reselection. As such, once a state has defined its habilitative
services category under Sec. 156.110(f), state-required benefits
related to habilitative services may trigger defrayal in accordance
with Sec. 155.170 if they are in addition to EHB and/or outside of an
EHB-benchmark plan selection process.
In the 2019 Payment Notice,\103\ we finalized that, as part of the
new EHB-benchmark plan selection options for states at Sec. 156.111,
we would not make any changes to the policies governing defrayal of
state-required benefits at Sec. 155.170. That is, whether a benefit
mandated by state action could be considered EHB would continue to
depend on when the state enacted the mandate (unless the benefit
mandated was for the purposes of compliance with Federal requirements).
We reminded states of their obligations in light of the new EHB-
benchmark plan selection options for states at Sec. 156.111 in an
October 2018 FAQ.\104\ In this FAQ we also reminded states that,
although it is the state's responsibility to identify which state-
required benefits require defrayal, states must make such
determinations using the framework finalized at Sec. 155.170. For
example, a law requiring coverage of a benefit passed by a state after
December 31, 2011, is still a state-required benefit requiring defrayal
even if the text of the law says otherwise. We affirm that here. We
also noted that we are monitoring state compliance with the defrayal
requirements regarding state-required benefits in addition to EHB at
Sec. 155.170, and that we encourage states to reach out to us
concerning any state defrayal questions in advance of passing and
implementing benefit mandates.
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\103\ 83 FR 16930, at 16977.
\104\ Frequently Asked Questions on Defrayal of State Additional
Required Benefits (October 2018), available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/FAQ-Defrayal-State-Benefits.pdf.
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HHS is aware of stakeholder concerns that there may be states not
defraying the costs of their state-required benefits in addition to EHB
in accordance with Federal requirements. HHS shares these concerns.
State noncompliance with section 1311(d)(3)(B) of the PPACA, as
implemented at Sec. 155.170, may result in an increase in the percent
of premium that QHP issuers report as attributable to EHB, more
commonly referred to as the ``EHB percent of premium,'' which is used
to calculate PTCs. Issuers may be covering as EHB benefits required by
state action after December 31, 2011 that actually require defrayal
under Federal requirements, but for which the state is not actively
defraying costs. As such, to strengthen program integrity and
potentially reduce improper Federal expenditures, we are proposing to
amend Sec. 156.111(d) and add a new Sec. 156.111(f) to explicitly
require states to annually notify HHS in a form and
[[Page 7130]]
manner specified by HHS, and by a date determined by HHS, of any state-
required benefits applicable to QHPs in the individual and/or small
group market that are considered to be ``in addition to EHB'' in
accordance with Sec. 155.170(a)(3).
As part of this proposed collection at Sec. 156.111(f), we are
also proposing that states identify which state-required benefits it
has determined are not in addition to EHB and do not require defrayal
in accordance with Sec. 155.170, and provide the basis for the state's
determination. A state's submission would be required to describe all
benefits requirements under state mandates applicable to QHPs in the
individual or small group market that were imposed on or before
December 31, 2011 and that were not withdrawn or otherwise no longer
effective before December 31, 2011, as well as all benefits
requirements under state mandates that were imposed any time after
December 31, 2011 applicable to the individual or small group market.
For example, if a state benefit requirement applicable to QHPs in the
individual or small group market was imposed before December 31, 2011,
but was no longer in effect on December 31, 2011, then the state would
not be expected to include that state mandate in its report. The
state's report would also be required to describe whether any of the
state benefit requirements in the report were amended or repealed after
December 31, 2011. Information in the state's report would be required
to be accurate as of the day that is at least 60 days prior to the
annual reporting submission deadline set by HHS.
We are also proposing at Sec. 156.111(d)(2) to specify that if the
state does not notify HHS of its required benefits considered to be in
addition to EHB by the annual reporting submission deadline, or does
not do so in the form and manner specified by HHS, HHS will determine
which benefits are in addition to EHB for the state for the applicable
plan year. HHS's determination of which benefits are in addition to EHB
would become part of the definition of EHB for the applicable state for
the applicable plan year. We solicit comment on whether we should also
allow states to affirmatively decline to report, indicating to HHS that
HHS should determine which of the states' mandated benefits require
defrayal.
We believe requiring states to annually report to HHS on their
state-required benefits would also help states be diligent about their
framework for determining which mandates are in addition to EHB in
accordance with Sec. 155.170. This proposal properly aligns with
Federal requirements for defraying the cost of state-required benefits,
would generally improve transparency with regard to the types of
benefit requirements states are enacting, would provide the necessary
information to HHS for increased oversight over whether states are
appropriately determining which state-required benefits require
defrayal, whether states are correctly implementing the definition of
EHB, and whether QHP issuers are properly allocating the portion of
premiums attributable to EHB for purposes of calculating PTCs.
We propose that the annual reporting of state-required benefits
would begin in plan year 2021. We believe this would give states
sufficient time to review the proposed requirements and prepare for
submission of their annual EHB reporting package. For the first year of
reporting, we propose that the deadline for states to submit to HHS
their complete annual reporting package would be July 1, 2021. This
would mean that for the first year of reporting, states would notify
HHS in the manner specified by HHS by July 1, 2021, of any benefits in
addition to EHB that QHPs are required to cover in plan year 2021 or
after plan year 2021 by state action taken by May 2, 2021 (60 days
prior to the annual submission deadline). As specified below at Sec.
156.111(f) we are also proposing states identify which state-required
benefits are not in addition to EHB and do not require defrayal in
accordance with Sec. 155.170, and provide the basis for the state's
determination, by the annual reporting submission deadline.
We acknowledge that the start and end dates of state legislative
sessions vary greatly by state, and that many state legislative
sessions may not have concluded by May 2, 2021. However, we believe it
is important to set a cut-off date after which states are not expected
to report on their state-required benefits until the following annual
reporting deadline. We believe that setting this cut-off date at least
60 days prior to the submission deadline would allow a state sufficient
time to analyze its state benefit requirements imposed, amended, or
repealed through state action taken by that date and prepare the
required documents we are proposing that states submit to HHS. A state
where a legislative session ends after the 60-day cut-off date (for
example, after May 2, 2021) that happens to enact, amend, or repeal a
state-required benefit after this cut-off date but before the annual
reporting submission deadline (for example, before July 1, 2021) would
not be expected to report that state-required benefit in that plan
year's annual reporting submission. Instead, the state would be
expected to include that state-required benefit in the annual reporting
package for the following year. States would be permitted to submit
their reports any time between the 60-day cut-off date and the
applicable deadline.
As explained further below, this proposed annual reporting cut-off
date would not impact a state's requirement to defray the cost of
benefits in addition to EHB that result from state action taken after
the cut-off date. In other words, states must defray benefits in
addition to EHB in accordance with Sec. 155.170 regardless of whether
the state benefit requirement was imposed, amended, or repealed through
state action taken before or after the proposed 60 day cut-off date for
inclusion in that plan year's annual reporting submission.
We solicit comment on the proposed reporting deadline and 60 day
cut-off date, including on whether the window between the cut-off date
and submission deadline should be shortened to 30 days, and whether
this reporting should be required less frequently to decrease burden on
states, for example, every other year.
At Sec. 156.111(f), we propose specifying the type of information
states would be required to submit to HHS by the annual submission
deadline in a form and manner specified by HHS. We propose that for a
reporting package to be complete, it would need to comply with the
following requirements. Specifically, Sec. 156.111(f)(1) proposes that
states annually reporting to HHS would be required to provide a
document that is accurate as of the day that is at least 60 days prior
to the annual reporting submission deadline set by HHS that lists all
state benefit requirements applicable to QHPs in the individual and/or
small group market under state mandates that were imposed on or before
December 31, 2011, and that were not withdrawn or otherwise no longer
effective before December 31, 2011, as well as any state benefit
requirements under state mandates applicable to QHPs in the individual
or small group market that were imposed any time after December 31,
2011.
In the first reporting year, this document would include a
comprehensive list of all state benefit requirements applicable to QHPs
in the individual and/or small group market under state mandates that
were imposed on or before December 31, 2011 and that were not withdrawn
or otherwise no longer effective before December 31, 2011, and any
state benefit requirements under state mandates that were imposed
[[Page 7131]]
any time after December 31, 2011, regardless of whether the state
believes they require defrayal in accordance with Sec. 155.170. The
first reporting cycle is intended to set the baseline list of state-
required benefits applicable to QHPs in the individual and/or small
group market. Each annual reporting cycle thereafter, the state would
only need to update the content in its report to add any new benefit
requirements, and to indicate whether benefit requirements previously
reported to HHS have been amended or repealed. State reports for
subsequent years must be accurate as of 60 days prior to the annual
reporting submission deadline set by HHS for that year. We will
announce the annual reporting submission deadline for subsequent years
in subsequent Payment Notices. If a state has not imposed, amended, or
repealed any state benefit requirements during the applicable time
period, the state would still be required to report to HHS that there
have been no changes to state-required benefits since the previous
reporting cycle. We propose that, in such a scenario, the state submit
the same reporting package as the previous reporting cycle and
affirmatively indicate to HHS that there have been no changes. We
solicit comment on this proposal.
Section 156.111(f)(2) proposes that states annually reporting to
HHS would also be required to specify which of those state-required
benefits listed in accordance with Sec. 156.111(f)(1) the state has
identified as in addition to EHB and subject to state defrayal under
Sec. 155.170. We expect states to already be carefully considering
state benefit requirements imposed, amended, or repealed through state
action taken after December 31, 2011, to determine whether they require
state defrayal in accordance with Federal requirements. We further
expect that states are already defraying the costs of those benefits.
As such, we expect that this information will be readily accessible to
states.
Section 156.111(f)(3) proposes that states must identify in their
annual reports which of the state-required benefits listed in
accordance with Sec. 156.111(f)(1) the state has identified as not in
addition to EHB and not subject to defrayal, in accordance with Sec.
155.170, and describe the basis for the state's determination. The
justification that states would be required to provide under this
proposal should be concise and refer to applicable Federal standards
for determining whether a state-required benefit is not in addition to
EHB and does not require defrayal. For example, a state could explain
that a state-required benefit is not in addition to EHB and does not
require defrayal because the state benefit requirement was enacted on
or before December 31, 2011.
The proposal in Sec. 156.111(f)(4) would require states to submit
other information about those state-required benefits listed in
accordance with Sec. 156.111(f)(1). This information is necessary for
HHS oversight and would include information such as the following: date
of state action imposing the requirement to cover the state-required
benefit; the effective date of the applicable state action; the market
it applies to (that is, individual, small group, or both); the precise
benefit or set of benefits that QHPs in the individual and/or small
group market are required to cover; any exclusions; and the citation to
the relevant state action. In Sec. 156.111(f)(5), we propose requiring
the document to be signed by a state official with authority to make
the submission on behalf of the state, to confirm the accuracy of the
submission. In Sec. 156.111(f)(6), we propose to require states to
make updates to this list of state-required benefits annually, in a
form and manner and by a date specified by HHS, to include any new
state benefit requirements, and to indicate whether benefit
requirements previously reported to HHS under this paragraph (f) have
been amended, repealed, or otherwise affected by state regulatory or
legislative action.
We solicit comment generally on this proposal, including its
information collection requirements, specifically with regard to
whether HHS should require any additional information from states as
part of the annual reporting submission on state-required benefits.
If this proposal is finalized as proposed, HHS would provide
template(s) reflecting the form and manner of the report that states
would be required to use for reporting the required information
proposed in Sec. 156.111(f)(1) through (6). We intend to post state
submissions of these documents on the CMS website prior to the end of
the plan year during which the annual reporting takes place such that
this information is accessible to states, QHP issuers, enrollees,
stakeholders, and the general public. If the state does not notify HHS
of its state-required benefits that are in addition to EHB in
accordance with the proposed requirements at Sec. 156.111(f), HHS will
complete a similar document for the state and post it to the CMS
website. We seek comment on whether any benefit would be derived from
offering a public comment period on the aforementioned documents that
we plan to post to the CMS website. We are particularly interested in
whether the benefit to such a comment period would outweigh publishing
the final documents later in the year, as would be necessary to
accommodate such a comment period.
We emphasize for states that this proposed reporting requirement
would be independent of the state's requirement to defray the cost of
QHP coverage of state-required benefits in addition to EHB in
accordance with Sec. 155.170. The obligation for a state to defray the
cost of QHP coverage of state-required benefits in addition to EHB is
an independent statutory requirement under section 1311(d)(3)(b) of the
PPACA, as implemented at Sec. 155.170, and would remain fully
applicable to states regardless of whether they annually report state-
required benefits to HHS under this proposal or defer to HHS to make
determinations as to which state-required benefits require defrayal. We
also note that under these proposals the issuer would still be
responsible for quantifying the cost of these benefits and reporting
that to the state. States remain required to make payments to defray
the cost of additional required benefits to the enrollee or QHP issuer
on behalf of the enrollee.
We acknowledge that each state's structure likely varies for
tracking, analyzing, and defraying state-required benefits in
accordance with Sec. 155.170. So long as the state's current structure
for identifying state-required benefits in addition to EHB and
defraying the cost of those benefits complies with Sec. 155.170, the
state may continue its current approach and need not make changes to
align with the timing of the proposed annual reporting requirements at
Sec. 156.111, provided it still reports according to the timeline
established under Sec. 156.111.
We are proposing the annual reporting requirement to strengthen
program integrity and to provide the necessary information to HHS for
increased oversight over whether states are appropriately determining
which state-required benefits require defrayal, whether states are
correctly implementing the definition of EHB, and whether QHP issuers
are properly allocating the portion of premiums attributable to EHB for
purposes of calculating PTCs. However, the annual reporting proposal is
also intended to be complementary to a state's current process for
identifying state-required benefits in addition to EHB.
For example, a state may currently have in place a structure for
identifying and defraying state-required benefits in addition to EHB
where the state works
[[Page 7132]]
in tandem with its state legislature as bills are introduced to assess
whether they contain state-required benefits that would require
defrayal if passed. The same state may be working on a continual basis
with actuaries to conduct actuarial analyses of the potential state-
required benefits in advance of the bill's passage to anticipate the
amount the state may be required to defray. If the bill passes, the
same state may then collect issuers' actuarial quantifications of the
state-required benefit and, depending on the effective date of the
state-required benefit, immediately begin making payments to the issuer
or enrollee on a monthly basis to defray the cost of the state-required
benefit. Under this example, a state that annually reports to HHS would
not be required to delay or modify the timing of any of these steps due
to the proposed annual reporting requirement and associated deadlines.
If finalized, the annual reporting requirement may function as an
additional, but complementary step to those already in place at Sec.
155.170.
Although this would remain true for a state that does not annually
report to HHS by the annual submission deadline such that HHS will
determine which benefits are in addition to EHB for the state, we
recognize it may be best for these states to wait for HHS to post the
information required in Sec. 156.111(f)(1) through (6) on the CMS
website before the state begins making payments to the enrollee or the
QHP issuer to defray the costs of state-required benefits in addition
to EHB. In other words, we recommend that where states defer to HHS the
task of identifying state-required benefits that require defrayal,
states may modify their existing timeline for defrayal as necessary to
work in tandem with HHS determinations as to which of the state-
required benefits are in addition to EHB.
We seek comment on the extent to which states are not appropriately
identifying and defraying state-required benefits in addition to EHB to
inform HHS' understanding of whether there is sufficient value in
finalizing this proposal. We also solicit comment on whether states are
the appropriate entities to continue making these determinations, or
whether HHS should amend Sec. 155.170(a)(3) to make the Exchanges
again responsible for determining which state-required benefits are in
addition to EHB, since the Exchange is responsible for certifying QHPs.
In practice, providing Exchanges with this authority would mean
that the Federal government, as operator of the FFEs, would determine
which state-required benefits are in addition to EHB in FFE states.
State Exchanges would have the authority to make that determination in
states that established their own Exchanges. We also solicit comment on
whether we should instead revise Sec. 155.170(a)(3) to make HHS the
entity responsible for determining which state-required benefits are in
addition to EHB in every state such that HHS would determine which
state-required benefits require defrayal. Regardless of whether HHS or
a state makes this determination, QHP issuers would still be
responsible for quantifying the costs for these additional mandates and
reporting them to the state, which would generally trigger the state's
duty to make defrayal payments directly to the enrollee or the QHP
issuer.
Given the proposed changes to this section, we are further
proposing to rename this section ``State selection of EHB-benchmark
plan for plan years beginning on or after January 1, 2020, and annual
reporting of state-required benefits'' to better reflect its contents.
b. States' EHB-Benchmark Plan Options
In the 2019 Payment Notice, we stated that we believe states should
have additional choices with respect to benefits and affordable
coverage. Therefore, we finalized options for states to select new EHB-
benchmark plans starting with the 2020 plan year. Under Sec.
156.111(a), a state may modify its EHB-benchmark plan by: (1) Selecting
the EHB-benchmark plan that another state used for the 2017 plan year;
(2) Replacing one or more EHB categories of benefits in its EHB-
benchmark plan used for the 2017 plan year with the same categories of
benefits from another state's EHB-benchmark plan used for the 2017 plan
year; or (3) Otherwise selecting a set of benefits that would become
the state's EHB-benchmark plan.
Under any of these three options, the EHB-benchmark plan also has
to meet additional standards, including EHB scope of benefit
requirements under Sec. 156.111(b). These requirements include
providing a scope of benefits that is equal to, or greater than, to the
extent any supplementation is required to provide coverage within each
EHB category, the scope of benefits provided under a typical employer
plan. Section 156.111(b)(2) defines a typical employer plan as either:
(1) One of the selecting state's 10 base-benchmark plan options
established at Sec. 156.100 from which the state was able to select
for the 2017 plan year; or (2) the largest health insurance plan by
enrollment in any of the five largest large group health insurance
products by enrollment in the selecting state, as product and plan are
defined at Sec. 144.103, provided that: (a) The product has at least
10 percent of the total enrollment of the five largest large group
health insurance products by enrollment in the selecting state; (b) the
plan provides minimum value; (c) the benefits are not excepted
benefits; and (d) the benefits in the plan are from a plan year
beginning after December 31, 2013. The state's EHB-benchmark plan must
also satisfy the generosity standard at Sec. 156.111(b)(2)(ii), which
specifies that a state's EHB-benchmark plan must not exceed the
generosity of the most generous among a set of comparison plans,
including the EHB-benchmark plan used by the state in 2017, and any of
the state's base-benchmark plan options for the 2017 plan year,
supplemented as necessary.
Additionally, states must document meeting these requirements
through an actuarial certification and associated actuarial report from
an actuary who is a member of the American Academy of Actuaries, in
accordance with generally accepted actuarial principles and
methodologies. We published the ``Example of an Acceptable Methodology
for Comparing Benefits of a State's EHB-benchmark Plan Selection in
Accordance with Sec. 156.111(b)(2)(i) and (ii)'' (example methodology
guidance), alongside the 2019 Payment Notice.\105\ We finalized that
the current EHB-benchmark plan selection would continue to apply for
any year for which a state does not select a new EHB-benchmark plan
from among these options.
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\105\ Example of an Acceptable Methodology for Comparing
Benefits of a State's EHB-benchmark Plan Selection in Accordance
with 45 CFR 156.111(b)(2)(i) and (ii), available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-Example-Acceptable-Methodology-for-Comparing-Benefits.pdf.
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The 2019 Payment Notice stated that we would propose EHB-benchmark
plan submission deadlines in the HHS annual Notice of Benefit and
Payment Parameters. Accordingly, we propose May 7, 2021, as the
deadline for states to submit the required documents for the state's
EHB-benchmark plan selection for the 2023 plan year. We emphasize that
this deadline would be firm, and that states should optimally have one
of their points of contact who has been predesignated to use the EHB
Plan Management Community reach out to us using the EHB Plan Management
Community well in advance of the deadline with any questions. Although
not a requirement, we recommend states submit applications at least 30
days prior to the submission deadline to
[[Page 7133]]
ensure completion of their documents by the proposed deadline. We also
remind states that they must complete the required public comment
period and submit a complete application by the deadline. We seek
comment on the proposed deadline.
In the 2019 Payment Notice, we also finalized a policy through
which states may opt to permit issuers to substitute benefits between
EHB categories. In the preamble to that rule, we stated that the
deadline applicable to state selection of a new benchmark plan would
also apply to this state opt-in process. We therefore propose May 7,
2021, as the deadline for states to notify us that they wish to permit
between-category substitution for the 2023 plan year. States wishing to
make such an election must do so via the EHB Plan Management Community.
We seek comment on the proposed deadline.
We also reiterate the scope of benefits requirements at Sec.
156.111(b)(2). We finalized the definition of a typical employer plan
to establish the minimum level of benefits for the state's EHB-
benchmark plan selection and to ensure plans that meet EHB standards
are equal in scope to a typical employer plan as required pursuant to
section 1302(2)(A) of the PPACA, and a generosity standard to establish
the maximum level of benefits for a state's EHB-benchmark plan
selection.
The generosity standard at Sec. 156.111(b)(2)(ii) balances our
goal of promoting state flexibility with the need to preserve coverage
affordability by minimizing the opportunity for a state to select EHB
in a manner that would make coverage unaffordable for patients and
increase Federal costs. As such, we clarify for states that when
selecting an updated EHB-benchmark plan from the available options
listed at Sec. 156.111(a), the new EHB-benchmark plan may not exceed
the generosity of the most generous among the set of comparison plans
listed at Sec. 156.111(b)(2)(ii) even by a de minimis amount, and that
states must clearly demonstrate in their actuarial report to HHS how
the state's updated EHB-benchmark plan satisfies the generosity test.
In other words, the generosity of the state's updated EHB-benchmark
plan may not exceed a 0.0 percentage point actuarial increase above the
most generous among the set of comparison plans listed at Sec.
156.111(b)(2)(ii).
Finally, we clarify that the typical employer plan and generosity
standard requirements are two separate tests that an EHB-benchmark plan
must satisfy. However, we recognize that there may be some instances in
which it may be difficult to design an EHB-benchmark plan that
satisfies both standards. Therefore, we remind states that, as we
stated in the example methodology guidance,\106\ states should consider
using the same plan as the comparison plan for both tests, to the
extent possible, to help minimize burden and to mitigate against any
potential conflict caused by applying each test with a different
comparison plan.
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\106\ Example of an Acceptable Methodology for Comparing
Benefits of a State's EHB-benchmark Plan Selection in Accordance
with 45 CFR 156.111(b)(2)(i) and (ii), available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-Example-Acceptable-Methodology-for-Comparing-Benefits.pdf.
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4. Essential Health Benefits Package (Sec. 156.130)
a. Premium Adjustment Percentage (Sec. 156.130)
We propose to update the annual premium adjustment percentage using
the most recent estimates and projections of per enrollee premiums for
private health insurance (excluding Medigap and property and casualty
insurance) from the NHEA, which are calculated by the CMS Office of the
Actuary. For the 2021 benefit year, the premium adjustment percentage
will represent the percentage by which this measure for 2020 exceeds
that for 2013.
Section 1302(c)(4) of the PPACA directs the Secretary to determine
an annual premium adjustment percentage, a measure of premium growth
that is used to set the rate of increase for three parameters detailed
in the PPACA: (1) The maximum annual limitation on cost sharing
(defined at Sec. 156.130(a)); (2) the required contribution percentage
used to determine eligibility for certain exemptions under section
5000A of the Code (defined at Sec. 155.605(d)(2)); and (3) the
employer shared responsibility payment amounts under section 4980H(a)
and (b) of the Code (see section 4980H(c)(5) of the Code). Section
1302(c)(4) of the PPACA and Sec. 156.130(e) provide that the premium
adjustment percentage is the percentage (if any) by which the average
per capita premium for health insurance coverage for the preceding
calendar year exceeds such average per capita premium for health
insurance for 2013, and the regulations provide that this percentage
will be published in the annual HHS notice of benefit and payment
parameters.
The 2015 Payment Notice \107\ and 2015 Market Standards Rule \108\
established a methodology for estimating the average per capita premium
for purposes of calculating the premium adjustment percentage for the
2015 benefit year and beyond. Beginning with the 2015 benefit year, the
premium adjustment percentage was calculated based on the estimates and
projections of average per enrollee employer-sponsored insurance
premiums from the NHEA. In the proposed 2015 Payment Notice, we
proposed that the premium adjustment percentage be calculated based on
the projections of average per enrollee private health insurance
premiums. Based on comments received, we finalized the 2015 Payment
Notice to instead use per enrollee employer-sponsored insurance
premiums in the methodology for calculating the premium adjustment
percentage. We chose employer-sponsored insurance premiums because they
reflected trends in health care costs without being skewed by
individual market premium fluctuations resulting from the early years
of implementation of the PPACA market reforms. We adopted this
methodology in subsequent Payment Notices for the 2016 through 2019
benefit years, but noted in the 2015 Payment Notice that we may propose
to change our methodology after the initial years of implementation of
the market reforms, once the premium trend is more stable.
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\107\ 79 FR 13743.
\108\ 79 FR 30240.
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In the 2020 Payment Notice, we adopted a modification of the
premium measure that we use to calculate the premium adjustment
percentage. This premium measure captures increases in individual
market premiums in addition to increases in employer-sponsored
insurance premiums for purposes of calculating the premium adjustment
percentage. Specifically, we calculate the premium measures for 2013
and 2020 as private health insurance premiums minus premiums paid for
Medicare supplement (Medigap) insurance and property and casualty
insurance, divided by the unrounded number of unique private health
insurance enrollees, excluding all Medigap enrollees.
This premium measure is an adjusted private individual and group
market health insurance premium measure, which is similar to NHEA's
private health insurance premium measure. NHEA's private health
insurance premium measure includes premiums for employer-sponsored
insurance; ``direct purchase insurance,'' which includes individual
market health insurance purchased directly by consumers from health
insurance issuers, both on and off the Exchanges and Medigap insurance;
and the medical portion of accident insurance (``property and
casualty'' insurance).
[[Page 7134]]
The measure we used in the 2020 Payment Notice is published by NHEA and
includes NHEA estimates and projections of employer-sponsored insurance
and direct purchase insurance premiums, but we excluded Medigap and
property and casualty insurance from the premium measure since these
types of coverage are not considered primary medical coverage for
individuals who elect to enroll. We used per enrollee premiums for
private health insurance (excluding Medigap and property and casualty
insurance) so that the premium measure more closely reflects premium
trends for all individuals primarily covered in the private health
insurance market since 2013, and we anticipated that the change to use
per enrollee premiums for private health insurance (excluding Medigap
and property and casualty insurance) would additionally reduce Federal
PTC expenditures, if the Department of the Treasury and the IRS were to
adopt the proposed change.\109\
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\109\ The Department of the Treasury and the IRS have since
adopted the premium growth measure provided in the 2020 Payment
Notice for purposes of the indexing adjustments under section 36B of
the Code. See Revenue Procedure 2019-29, 2019-32 IRB 620. https://www.irs.gov/pub/irs-drop/rp-19-29.pdf.
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We propose to continue to use the private health insurance premium
measure (excluding Medigap and property and casualty insurance) for the
2021 benefit year. As such, we propose that the premium adjustment
percentage for 2021 be the percentage (if any) by which the most recent
NHEA projection of per enrollee premiums for private health insurance
(excluding Medigap and property and casualty insurance) for 2020
($6,759) exceeds the most recent NHEA estimate of per enrollee premiums
for private health insurance (excluding Medigap and property and
casualty insurance) for 2013 ($4,991).\110\ Using this formula, the
proposed premium adjustment percentage for the 2021 benefit year is
1.3542376277 ($6,759/$4,991), which represents an increase in private
health insurance (excluding Medigap and property and casualty
insurance) premiums of approximately 35.4 percent over the period from
2013 to 2020.
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\110\ The 2013 and 2020 per enrollee premiums for private health
insurance (excluding Medigap and property and casualty insurance)
figures used for this calculation reflect the latest NHEA data. The
series used in the determinations of the adjustment percentages can
be found in Table 17 on the CMS website, which can be accessed by
clicking the ``NHE Projections 2018-2027--Tables'' link located in
the Downloads section at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html. A
detailed description of the NHE projection methodology is available
at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/ProjectionsMethodology.pdf.
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Based on the proposed 2021 premium adjustment percentage, we
propose the following cost-sharing parameters for benefit year 2021.
(1) Maximum Annual Limitation on Cost Sharing for Plan Year 2021
We propose to increase the maximum annual limitation on cost
sharing for the 2021 benefit year based on the proposed value
calculated for the premium adjustment percentage for the 2021 benefit
year. Under Sec. 156.130(a)(2), for the 2021 calendar year, cost
sharing for self-only coverage may not exceed the dollar limit for
calendar year 2014 increased by an amount equal to the product of that
amount and the premium adjustment percentage for 2021. For other than
self-only coverage, the limit is twice the dollar limit for self-only
coverage. Under Sec. 156.130(d), these amounts must be rounded down to
the next lowest multiple of $50.
Using the premium adjustment percentage of 1.3542376277 for 2021 as
proposed above, and the 2014 maximum annual limitation on cost sharing
of $6,350 for self-only coverage, which was published by the IRS on May
2, 2013,\111\ we propose that the 2021 maximum annual limitation on
cost sharing would be $8,550 for self-only coverage and $17,100 for
other than self-only coverage. This represents an approximately 4.9
percent increase above the 2020 parameters of $8,150 for self-only
coverage and $16,300 for other than self-only coverage. We seek comment
on this proposal.
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\111\ See Revenue Procedure 2013-25, 2013-21 IRB 1110. http://www.irs.gov/pub/irs-drop/rp-13-25.pdf.
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b. Reduced Maximum Annual Limitation on Cost-Sharing (Sec. 156.130)
We propose to continue to use the method we established in the 2014
Payment Notice for determining the appropriate reductions in the
maximum annual limitation on cost sharing for cost-sharing plan
variations to serve enrollees at three ranges of household income below
250 percent of FPL. Sections 1402(a) through (c) of the PPACA direct
issuers to reduce cost sharing for EHBs for eligible individuals
enrolled in a silver-level QHP. In the 2014 Payment Notice, we
established standards related to the provision of these CSRs.
Specifically, in part 156, subpart E, we specified that QHP issuers
must provide CSRs by developing plan variations, which are separate
cost-sharing structures for each eligibility category that change how
the cost sharing required under the QHP is to be shared between the
enrollee and the Federal Government. At Sec. 156.420(a), we detailed
the structure of these plan variations and specified that QHP issuers
must ensure that each silver-plan variation has an annual limitation on
cost sharing no greater than the applicable reduced maximum annual
limitation on cost sharing specified in the annual HHS notice of
benefit and payment parameters. Although the amount of the reduction in
the maximum annual limitation on cost sharing is specified in section
1402(c)(1)(A) of the PPACA, section 1402(c)(1)(B)(ii) of the PPACA
states that the Secretary may adjust the cost-sharing limits to ensure
that the resulting limits do not cause the AV of the health plans to
exceed the levels specified in section 1402(c)(1)(B)(i) of the PPACA
(that is, 73 percent, 87 percent, or 94 percent, depending on the
income of the enrollee).
As we propose above, the 2021 maximum annual limitation on cost
sharing would be $8,550 for self-only coverage and $17,100 for other
than self-only coverage. We analyzed the effect on AV of the reductions
in the maximum annual limitation on cost sharing described in the
statute to determine whether to adjust the reductions so that the AV of
a silver plan variation will not exceed the AV specified in the
statute. Below, we describe our analysis for the 2021 plan year and our
proposed results.
(1) Analysis for Determining the Reduced Maximum Annual Limitation on
Cost-Sharing
Consistent with our analysis in the 2014 through 2020 Payment
Notices, we developed three test silver level QHPs, and analyzed the
impact on AV of the reductions described in the PPACA to the proposed
estimated 2021 maximum annual limitation on cost sharing for self-only
coverage ($8,550). The test plan designs are based on data collected
for 2020 plan year QHP certification to ensure that they represent a
range of plan designs that we expect issuers to offer at the silver
level of coverage through the Exchanges. For 2021, the test silver
level QHPs included a PPO with typical cost-sharing structure ($8,550
annual limitation on cost sharing, $2,650 deductible, and 20 percent
in-network coinsurance rate); a PPO with a lower annual limitation on
cost sharing ($6,800 annual limitation on cost sharing, $3,000
deductible, and 20 percent in-network coinsurance rate); and an HMO
($8,550 annual limitation on cost sharing, $4,375 deductible, 20
percent in-network coinsurance rate,
[[Page 7135]]
and the following services with copayments that are not subject to the
deductible or coinsurance: $500 inpatient stay per day, $500 emergency
department visit, $30 primary care office visit, and $55 specialist
office visit). All three test QHPs meet the AV requirements for silver
level health plans.
We then entered these test plans into the draft version of the 2021
AV Calculator \112\ and observed how the reductions in the maximum
annual limitation on cost sharing specified in the PPACA affected the
AVs of the plans. We found that the reduction in the maximum annual
limitation on cost sharing specified in the PPACA for enrollees with a
household income between 100 and 150 percent of FPL (\2/3\ reduction in
the maximum annual limitation on cost sharing), and 150 and 200 percent
of FPL (\2/3\ reduction), would not cause the AV of any of the model
QHPs to exceed the statutorily specified AV levels (94 and 87 percent,
respectively).
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\112\ Available at https://www.cms.gov/cciio/resources/regulations-and-guidance/index.
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In contrast, the reduction in the maximum annual limitation on cost
sharing specified in the PPACA for enrollees with a household income
between 200 and 250 percent of FPL (\1/2\ reduction), would cause the
AVs of two of the test QHPs to exceed the specified AV level of 73
percent. As a result, we propose that the maximum annual limitation on
cost sharing for enrollees with a household income between 200 and 250
percent of FPL be reduced by approximately \1/5\, rather than \1/2\,
consistent with the approach taken for benefit years 2017 through 2019.
We further propose that the maximum annual limitation on cost sharing
for enrollees with a household income between 100 and 200 percent of
FPL be reduced by approximately \2/3\, as specified in the statute, and
as shown in Table 10.
These proposed reductions in the maximum annual limitation on cost
sharing must adequately account for unique plan designs that may not be
captured by our three model QHPs. We also note that selecting a
reduction for the maximum annual limitation on cost sharing that is
less than the reduction specified in the statute would not reduce the
benefit afforded to enrollees in the aggregate because QHP issuers are
required to further reduce their annual limitation on cost sharing, or
reduce other types of cost sharing, if the required reduction does not
cause the AV of the QHP to meet the specified level.
In prior years we found, and we continue to find, that for
individuals with household incomes of 250 to 400 percent of FPL,
without any change in other forms of cost sharing, the statutory
reductions in the maximum annual limitation on cost sharing will cause
an increase in AV that exceeds the maximum 70 percent level in the
statute. As a result, we do not propose to reduce the maximum annual
limitation on cost sharing for individuals with household incomes
between 250 and 400 percent of FPL. We seek comment on this analysis
and the proposed reductions in the maximum annual limitation on cost
sharing for 2021.
We note that for 2021, as described in Sec. 156.135(d), states are
permitted to submit for HHS approval state-specific datasets for use as
the standard population to calculate AV. No state submitted a dataset
by the September 1, 2019 deadline.
Table 10--Reductions in Maximum Annual Limitation on Cost Sharing for
2021
------------------------------------------------------------------------
Reduced maximum
Reduced maximum annual limitation
annual limitation on cost sharing
Eligibility category on cost sharing for other than
for self-only self-only coverage
coverage for 2020 for 2020
------------------------------------------------------------------------
Individuals eligible for CSRs $2,850 $5,700
under Sec. 155.305(g)(2)(i)
(100-150 percent of FPL).......
Individuals eligible for CSRs 2,850 5,700
under Sec. 155.305(g)(2)(ii)
(151-200 percent of FPL).......
Individuals eligible for CSRs 6,800 13,600
under Sec. 155.305(g)(2)(iii)
(201-250 percent of FPL).......
------------------------------------------------------------------------
c. Cost-Sharing Requirements (Sec. 156.130)
In the 2020 Payment Notice at Sec. 156.130(h)(1), we finalized
that, for plan years beginning on or after January 1, 2020,
notwithstanding any other provision of Sec. 156.130, and to the extent
consistent with applicable state law, amounts paid toward cost sharing
using any form of direct support offered by drug manufacturers to
enrollees to reduce or eliminate immediate out-of-pocket costs for
specific prescription brand drugs that have an available and medically
appropriate generic equivalent are not required to be counted toward
the annual limitation on cost sharing. In that rule, we expressed
concern that market distortion can exist when a consumer selects a
higher-cost brand name drug when an equally effective generic drug is
available.
Since finalizing Sec. 156.130(h)(1), we have received feedback
that indicates there is confusion about whether Sec. 156.130(h)(1), as
finalized, requires plans and issuers to count the value of drug
manufacturers' coupons toward the annual limitation on cost sharing,
other than in circumstances in which there is a medically appropriate
generic equivalent available, particularly with regard to large group
market and self-insured group health plans. On August 26, 2019, HHS and
the Departments of Labor and the Treasury released FAQ Part 40,
acknowledging the confusion among stakeholders and the possibility that
the requirement could create a conflict with certain rules for HDHPs
that are intended to allow eligible individuals to establish a health
savings account (HSA).
Specifically, Q&A-9 of IRS Notice 2004-50 states that the provision
of drug discounts will not disqualify an individual from being an
eligible individual if the individual is responsible for paying the
costs of any drugs (taking into account the discount) until the
deductible under the HDHP is satisfied. Thus, Q&A-9 of Notice 2004-50
requires an HDHP to disregard drug discounts and other manufacturer and
provider discounts when determining if the deductible for an HDHP has
been satisfied, and only allows amounts actually paid by the individual
to be taken into account for that purpose. Such a requirement could put
the issuer or sponsor of an HDHP in the position of complying with
either the requirement under the 2020 Payment Notice for limits on cost
sharing in the case of a drug manufacturer coupon for
[[Page 7136]]
a brand name drug with no available or medically appropriate generic
equivalent or the IRS rules for minimum deductibles for HDHPs, but
potentially being unable to comply with both rules simultaneously.\113\
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\113\ FAQs About Affordable Care Act Implementation Part 40.
August 26, 2019. Available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/FAQs-Part-40.pdf and https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-40.
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Accordingly, in FAQ Part 40, we explained that we intended to
undertake rulemaking in the HHS Notice of Benefit and Payment
Parameters for 2021, in consultation with the Departments of Labor and
the Treasury to address the conflict, and that until the 2021 Payment
Notice is issued and effective, the Departments will not initiate an
enforcement action if an issuer of group or individual health insurance
coverage or a group health plan excludes the value of drug
manufacturers' coupons from the annual limitation on cost sharing,
including in circumstances in which there is no medically appropriate
generic equivalent available.
Accordingly, we propose to revise Sec. 156.130(h) in its entirety
to provide that, notwithstanding any other provision of the annual
limitation on cost sharing regulation, and to the extent consistent
with applicable state law, amounts paid toward reducing the cost
sharing incurred by an enrollee using any form of direct support
offered by drug manufacturers to enrollees for specific prescription
drugs are permitted, but not required, to be counted toward the annual
limitation on cost sharing. Under this proposal, plans and issuers have
the flexibility to determine whether to include or exclude coupon
amounts from the annual limitation on cost sharing, regardless of
whether a generic equivalent is available.
Consistent with this proposal, we also propose to interpret the
definition of cost sharing to exclude expenditures covered by drug
manufacturer coupons. Therefore, the value of these coupons would not
be required to count towards the annual limitation on cost sharing.
Section 1302(c)(3)(A) of the PPACA defines the term cost sharing to
include: (1) Deductibles, coinsurance, copayments, or similar charges;
and (2) any other expenditure required of an insured individual which
is a qualified medical expense \114\ with respect to EHB covered under
the plan. Section 1302(c)(1) of the PPACA states that the cost sharing
incurred under a health plan shall not exceed the annual limitation on
cost sharing. Drug manufacturer coupon amounts reduce the costs
incurred by an enrollee under the health plan because they reduce the
amount that the enrollee is required to pay at the point-of-sale in
order to obtain coverage for the drug. The value of the coupon is not a
cost incurred by or charged to the enrollee; thus, we believe its value
should not be required to count toward the annual limitation on cost
sharing. Under this interpretation, and to the extent consistent with
applicable state law, issuers of non-grandfathered individual and group
market coverage, and all non-grandfathered group health plans subject
to section 2707(b) of the PHS Act, would have flexibility to determine
whether to include or exclude drug manufacturer coupon amounts from the
annual limitation on cost sharing, regardless of whether a medically
appropriate generic equivalent is available.\115\ This proposal would
enable issuers and group health plans to continue longstanding
practices with regard to how and whether drug manufacturer coupons
accrue towards an enrollee's annual limitation on cost sharing.
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\114\ As defined in section 223(d)(2) of the Code.
\115\ We note that an issuer or group health plan that elects to
credit coupon amounts toward the minimum deductible of an HDHP could
disqualify an individual from making HSA contributions, pursuant to
Q&A-9 of Notice 2004-50.
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The proposal would also afford issuers of non-grandfathered
individual and group market coverage, and all non-grandfathered group
health plans subject to section 2707(b) of the PHS Act, the same
opportunity as under the current Sec. 156.130(h)(1) to incentivize
generic drug usage by excluding the amounts of drug manufacturer
coupons for brand name drugs from the annual limitation on cost sharing
when a medically appropriate generic equivalent is available. We
encourage issuers and group health plans to consider utilizing this
proposed flexibility to find innovative methods to address the market
distortion that occurs when consumers select a higher-cost brand name
drug when an equally effective, medically appropriate generic drug is
available.\116\ We would expect issuers and group health plans to be
transparent with enrollees and prospective enrollees regarding whether
the value of drug manufacturer coupons accrues to the annual limitation
on cost sharing as issuers' policies would affect enrollees' out-of-
pocket liability under their plans. We would expect issuers to
prominently include this information on websites and in brochures, plan
summary documents, and other collateral material that consumers may use
to select, plan, and understand their benefits.
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\116\ We also encourage issuers and group health plans to
consider utilizing this flexibility to promote the use of
biosimilars over the use of their respective reference biological
product.
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We seek comment on this proposal.
5. Requirements for Timely Submission of Enrollment Reconciliation Data
(Sec. 156.265)
In the Establishment of Exchanges and Qualified Health Plans;
Exchange Standards interim final rule,\117\ we established standards
for the collection and transmission of enrollment information. At Sec.
156.265(f), we set forth standards on the enrollment reconciliation
process, specifying that issuers must reconcile enrollment with the
Exchange no less than once a month. Issuers in Exchanges using the
Federal platform currently update data through ongoing processes
collectively referred to as Enrollment Data Alignment, which includes
834 transactions, the monthly enrollment reconciliation cycle, and two
dispute processes (enrollment disputes and payment disputes) that are
used to make enrollment updates that cannot be handled through monthly
reconciliation. Issuers offering plans through State Exchanges update
Exchange data through processes designed by the State Exchange.
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\117\ See 77 FR 18309 at 18425.
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Although the regulations in Sec. 156.265 require issuers to
reconcile enrollment with the Exchange monthly, they do not specify
standards for the format or quality of these data exchanges, such as
the manner in which enrollment updates must be reflected in updates of
previously submitted enrollment data, or the timeframe in which issuers
should report data updates and data errors to the Exchange. If QHP
issuers fail to make or report enrollment updates accurately and
timely, the accuracy of payment, the accuracy of enrollment data that
the Exchange has available to address consumer questions, and the
accuracy of the data reported to consumers on their 1095-A tax forms
after the end of the coverage year could be affected. For example, if
an issuer does not regularly update its enrollment data to reflect
retroactive enrollment changes throughout the year, and instead submits
large volumes of changes to the Exchange well after the plan year has
ended. These late changes trigger the mailing of corrected tax forms to
consumers after tax season, creating consumer burden and confusion.
To more explicitly state requirements for issuers in the Exchanges,
we propose amending Sec. 156.265(f) to require an
[[Page 7137]]
issuer to include in its enrollment reconciliation submission to the
Exchange the most recent enrollment information that is available and
that has been verified to the best of its knowledge or belief. We also
propose to amend Sec. 156.265(g) to direct QHP issuers to update their
enrollment records as directed by the Exchange, and to inform the
Exchange if any such records contain errors, within 30 days. In State
Exchanges on the Federal platform, references in this section to the
Exchange should be understood to mean CMS, as administrator of the
Federal platform. We believe these amendments will encourage more
timely reconciliation and error reporting, resulting in an improved
consumer experience.
6. Promoting Value-Based Insurance Design
The proposals in this section seek to promote a consumer-driven
health care system in which consumers are empowered to select and
maintain health care coverage of their choosing. We are proposing to
offer QHP issuers options to assist them design value-based insurance
plans that would empower consumers to receive high value services at
lower cost.
In the 2017, 2018, and 2019 Payment Notices, we sought comment on
ways in which HHS can foster market-driven programs that can improve
the management and costs of care and that provide consumers with
quality, person-centered coverage. We also sought comment on how we may
encourage value-based insurance design within the individual and small
group markets and ways to support issuers in using cost sharing to
incentivize more cost-effective consumer behavior. We solicited
comments on how HHS can better encourage these types of plan designs,
and whether any existing regulatory provisions or practices discourage
such designs.
We also previously noted our interest in value-based insurance
designs that: focus on cost effective drug tiering structures; address
overused, higher cost health services; provide innovative network
design that incentivizes enrollees to use higher quality care; and
promote use of preventive care and wellness services. In response to
these comment solicitations we received many comments supporting HHS's
efforts to explore ways to encourage innovations and value-based
insurance design.
We are now pursuing strategies that will assist in the uptake and
offering of value-based insurance design by QHP issuers. Specifically,
we are outlining a ``value-based'' model QHP that contains consumer
cost-sharing levels aimed at driving utilization of high value services
and lowering utilization of low value services when medically
appropriate.
Currently, under our rules, issuers have considerable discretion in
the design of cost-sharing structures, subject to certain statutory AV
requirements, non-discrimination provisions,\118\ and other applicable
laws such as the MHPAEA (section 2726 of the PHS Act). We are not
proposing any changes to this flexibility. We are providing additional
specificity around value-based design and how issuers could opt to
incorporate such design into their QHPs. Offering a value-based
insurance design QHP would be voluntary and issuers are encouraged to
select services and cost sharing that work best for their consumers.
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\118\ We note that issuers are also subject to federal civil
rights laws, including Title VI of the Civil Rights Act. Section 504
of the Rehabilitation Act, the Age Discrimination Act, section 1557
of the PPACA, and conscience and religious freedom laws.
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Borrowing from work provided by the Center for Value-based
Insurance Design at the University of Michigan \119\ (the Center),
Table 11 lists high value services and drugs that an issuer may want to
consider offering with lower or zero cost sharing. Table 11 also
includes a list of low value services that issuers should consider
setting at higher consumer cost sharing. High value services are those
that most people will benefit from and have a strong clinical evidence
base demonstrating appropriate care. The high value services and drugs
identified in Table 11 are supported by strong clinical effectiveness
evidence. Low value services are those services in which the majority
of consumers would not derive a clinical benefit. The Center considered
services that have been identified by other aligned efforts, such as
the Choosing Wisely initiative, the Value-based Insurance Design Health
Task Force on Low Value Care, the Oregon Public Employee's Benefits
Board, SmarterCare CA, and the Washington State Health Authority.\120\
The Center's research has shown that a silver level of coverage base
plan could alter the cost sharing as proposed in Table 11 and could
achieve a zero impact on plan premiums, while incentivizing the
consumer to seek more appropriate care.
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\119\ For more information please see information about the
VBID-X project available at http://vbidcenter.org/initiatives/vbid-x/ and resulting white paper, available at http://vbidcenter.org/wp-content/uploads/2019/07/VBID-X-Final-Report_White-Paper-7.13.19.pdf.
\120\ Additional information on data sources considered by the
Center, please see: https://www.choosingwisely.org/;http://vbidhealth.com/low-value-care-task-force.php; https://www.oregon.gov/oha/pebb/pages/index.aspx; https://www.iha.org/our-work/insights/smart-care-california; https://www.hca.wa.gov.
TABLE 11--High and Low Value Services and Drug Classes
------------------------------------------------------------------------
-------------------------------------------------------------------------
High Value Services With Zero Cost Sharing
------------------------------------------------------------------------
Blood pressure monitors (hypertension)
Cardiac rehabilitation
Glucometers and testing strips (diabetes)
Hemoglobin a1c testing (diabetes)
INR testing (hypercoagulability)
LDL testing (hyperlipidemia)
Peak flow meters (asthma)
Pulmonary rehabilitation
------------------------------------------------------------------------
High Value Generic Drug Classes With Zero Cost Sharing
------------------------------------------------------------------------
ACE inhibitors and ARBs
Anti-depressants
Antipsychotics
Anti-resorptive therapy
Antiretrovirals
Antithrombotics/anticoagulants
Beta blockers
Buprenorphine-naloxone
Glucose lowering agents
Inhaled corticosteroids
Naloxone
Rheumatoid arthritis medications
Statins
Thyroid-related
Tobacco cessation treatments
------------------------------------------------------------------------
High Value Branded Drug Classes With Reduced Cost Sharing
------------------------------------------------------------------------
Anti-TNF (tumor necrosis factor)
Hepatitis C directing-acting combination
Pre-exposure prophylaxis for HIV (PrEP)\121\
------------------------------------------------------------------------
Specific Low Value Services Considered
------------------------------------------------------------------------
Proton beam therapy for prostate cancer
Spinal fusions
Vertebroplasty and kyphoplasty
Vitamin D testing
------------------------------------------------------------------------
Commonly Overused Service Categories With Increased Cost-Sharing
------------------------------------------------------------------------
Outpatient specialist services
Outpatient labs
High-cost imaging
X-rays and other diagnostic imaging
Outpatient surgical services
Non-preferred branded drugs
------------------------------------------------------------------------
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\121\ Per 26 CFR 54.9815-2713, 29 CFR 2590.715-2713 and 45 CFR
147.130, non-grandfathered group health plans and non-grandfathered
health insurance coverage in the group or individual markets,
including QHP issuers in the individual market, will be required to
cover PrEP without imposing any cost-sharing requirements for plan
or policy years beginning on or after June 30, 2020, in a manner
consistent with the U.S Preventive Services Task Force (USPSTF)
final recommendation at https://www.uspreventiveservicestaskforce.org/Page/Document/RecommendationStatementFinal/prevention-of-human-immunodeficiency-virus-hiv-infection-pre-exposure-prophylaxis.
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[[Page 7138]]
For issuers in Exchanges using the Federal platform, HHS is not
proposing to offer preferential display on HealthCare.gov for QHPs that
include value-based insurance design. However, we are considering ways
in which consumers could easily identify a ``value-based'' QHP. We seek
comments on ways in which these ``value-based'' QHPs could be
identified to consumers on HealthCare.gov, how best to communicate
their availability to consumers, how best demonstrate how the cost-
sharing structures who affect different consumers, and how to assist
consumers in selecting a value-based QHP if it is an appropriate
option.
We are also soliciting comment on how HHS could collect information
from issuers in Exchanges using the Federal platform to indicate that
their QHP includes value-based insurance design. This could include
collecting the information from the issuer, instructing issuers to
include ``value-based'' in the plan name, or establishing HHS-adopted
criteria that an issuer would have to meet in order to be labeled
value-based.
We also solicit comment on principles that HHS could adopt to
establish what constitutes a value-based plan, perhaps establishing
minimum standards, as well as obstacles to other obstacles to
implementation. We are interested in additional ways in which HHS could
provide operational assistance to issuers offering value-based QHPs. We
understand that some states require the use of standardized plan
designs and may not be able to certify QHPs with alternative cost
sharing structures. We solicit comment from states that believe their
cost sharing laws would not allow for this type of plan design.
Lastly, we solicit comment on other value-based insurance design
activities HHS should pursue in the future, including applicable models
for stand-alone dental plans.
7. Termination of Coverage or Enrollment for Qualified Individuals
(Sec. 156.270)
Issuers are currently required under Sec. 156.270(b)(1) to send
termination notices, including the termination effective date and
reason for termination, to enrollees only for terminations due to (1)
loss of eligibility for QHP coverage, (2) non-payment of premiums, and
(3) rescission of coverage. For this purpose, we consider a termination
of coverage of a consumer whose enrollment would violate the anti-
duplication provision of section 1882 of the Social Security Act to be
a termination because the enrollee is no longer eligible for QHP
coverage under Sec. 155.430(b)(2)(i), and therefore issuers are
required to send a termination notice under Sec. 156.270(b)(1) when
the consumer's coverage is non-renewed.\122\
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\122\ See 3.4.8 Medicare Enrollment and Non-renewals of the 2019
federally-facilitated Exchanges (FFEs) and federally-facilitated
Small Business Health Options Program (FF-SHOP) Enrollment Manual at
https://www.regtap.info/uploads/library/ENR_EnrollmentManualForFFEandFF-SHOP_5CR_071019.pdf.
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However, there are a number of scenarios where issuers are not
clearly required to send termination notices, including enrollee-
initiated terminations, the death of the enrollee, the enrollee
changing from one QHP to another during an annual open enrollment
period or special enrollment period, and terminations for dual
enrollment when an enrollee has asked the Exchange to end QHP coverage
when found in other coverage, such as through Medicare PDM. We propose
to amend Sec. 156.270(b)(1) to require QHP issuers to send to
enrollees a termination notice for all termination events described in
Sec. 155.430(b), regardless of who initiated the termination.
The original version of Sec. 156.270 required a termination notice
when an enrollee's coverage was terminated ``for any reason,'' \123\
with a 30-day advance notice requirement. This requirement was
eventually replaced with the current requirement. As bases for
termination in Sec. 155.430(b)(2) were expanded, Sec. 156.270 was not
updated in parallel. Although we currently recommend that issuers send
termination notices whenever an enrollee's coverage is terminated,
questions have arisen from issuers regarding when termination notices
are required. Updating our regulations to require issuers to send
termination notices to enrollees for all termination events, regardless
of who initiated the termination, would help streamline issuer
operations and reduce confusion. This change would also help promote
continuity of coverage by ensuring that enrollees are aware that their
coverage is ending, as well as the reason for its termination and the
termination effective date, so that they can take appropriate action to
enroll in new coverage, if eligible.
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\123\ Patient Protection and Affordable Care Act; Establishment
of Exchanges and Qualified Health Plans; Exchange Standards for
Employers; Final Rule and Interim Final Rule, March 27, 2012 (77 FR
18310).
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We request comments on this proposal.
8. Dispute of HHS Payment and Collections Reports (Sec. 156.1210)
In the 2014 Payment Notice,\124\ we established provisions related
to confirmation and dispute of payment and collection reports. These
provisions were written under the assumption that issuers would
generally be able to provide these confirmations or disputes
automatically to HHS. However, we have found that many issuers prefer
to research payment errors and use enrollment reconciliation and
disputes to update their enrollment and payment data, and may be unable
to complete this research and provide confirmation or dispute of their
payment and collection reports within 15 days, as currently required
under Sec. 156.1210. In addition, because the FFE typically reflects
enrollment reconciliation updates 1 to 2 months after they have
occurred, issuers attempting to comply with the 15-day deadline may
submit disputes that are no longer necessary after the reconciliation
updates have been processed.
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\124\ See 78 FR 65045 at 65080.
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Therefore, we propose to amend Sec. 156.1210 to lengthen the time
to report payment inaccuracies from 15 days to 90 days to allow issuers
more time to research, report, and correct inaccuracies through other
channels. The longer timeframe also allows for the processing of
reconciliation updates, which may resolve potential disputes. This is
captured in the new proposed Sec. 156.1210(a).
We also propose to remove the requirement currently captured at
Sec. 156.1210(a) that issuers actively confirm payment accuracy to HHS
each month, as well as the language currently captured at Sec.
156.1210(b) regarding late filed discrepancies. We propose to instead
require at new Sec. 156.1210(b) an annual confirmation after the end
of each payment year, in a form and manner specified by HHS. Issuers
would also have an opportunity as part of the proposed annual
confirmation process to notify HHS of disputes related to identified
inaccuracies. These changes are based on our experience with current
enrollment and payment operations, which include frequent updates to
enrollment and payment data throughout the year, and that we believe
make monthly confirmation unnecessarily burdensome.
Finally, we propose to delete the current provision at Sec.
156.1210(c)
[[Page 7139]]
related to discrepancies to be addressed in future reports. We believe
that any discrepancies would already be addressed through the payment
process described in the payment dispute paragraph as described in the
proposed new Sec. 156.1210 or through the adjustments to the
enrollment process in Sec. 156.265(f). Therefore, the current
provision at Sec. 156.1210(c) would be duplicative and unnecessary.
HHS intends to work cooperatively with issuers that make a good
faith effort to comply with these procedures. Issuers can demonstrate
that they are working in good faith cooperatively with HHS by sending
regular and accurate enrollment reconciliation files and timely
enrollment disputes throughout the applicable enrollment calendar,
submitting payment disputes within the proposed 90 day dispute window,
making timely and regular changes to enrollment reconciliation and
dispute files to correct past errors, and by reaching out to HHS and
responding timely to HHS outreach to address any issues identified.
We solicit comment on these proposed changes.
F. Part 158--Issuer Use of Premium Revenue: Reporting and Rebate
Requirements
1. Reporting Requirements Related to Premiums and Expenditures (Sec.
158.110)
We propose amending Sec. 158.110(a) to clarify requirements for
MLR purposes for issuer reporting of expenses for functions outsourced
to or services provided by other entities. Such entities include third-
party vendors, other health insurance issuers, and other entities,
whether affiliated or unaffiliated with the issuer.
Section 2718(a) of the PHS Act requires health insurance issuers to
separately report the percentage of premium revenue (after certain
adjustments) expended on reimbursement for clinical services provided
to enrollees under such coverage. Section 158.110 codifies the general
reporting requirements for issuers in the group and individual health
insurance markets. However, the current regulation does not
comprehensively address the reporting requirements for expenses for
functions outsourced to other entities that are contracted to perform
clinical and administrative activities for health insurance issuers in
the group and individual markets.
Section 158.140(b)(3)(i) through (iii) specifies that issuers may
not include in incurred claims amounts paid to third-party vendors for
secondary network savings, and administrative costs and profits, but
does not explicitly state that payment to third-party vendors for
provision of clinical services may be included in incurred claims. The
May 13, 2011 CCIIO Technical Guidance (CCIIO 2011-002) (May 2011
Guidance) \125\ Q&A #12 clarified that issuers may include payments to
third-party vendors attributable to direct provision of clinical
services to enrollees in incurred claims, and that such payments to a
third-party vendor may include an administrative cost component.
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\125\ Available at https://www.cms.gov/CCIIO/Resources/Files/Downloads/dwnlds/mlr-guidance-20110513.pdf.
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We note that the inclusion of a third-party vendor's administrative
costs as incurred claims in this scenario is only permitted to the
extent the vendor is reimbursed under a capitation arrangement, which
is consistent with how capitation payments to providers (addressed in
Q&A #8 in the May 2011 Guidance) are treated for MLR purposes. Q&A #14
in the May 2011 Guidance similarly clarified that payments to third-
party vendors for performing health care QIA expenses on behalf of the
issuer may be reported as QIA, to the extent that the issuer and the
vendor can show that these activities meet the definitions in
Sec. Sec. 158.150 and 158.151.
However, Q&A #14 also specified that third-party vendor QIA
expenses must not include the vendor's administrative costs or profits,
consistently with the treatment of reporting third-party vendor
incurred claims costs which is codified in Sec. 158.140(b)(3)(ii). We
note that this requirement applies regardless of whether QIA services
are provided under a capitation arrangement, due to the difference in
the nature of clinical services and QIA and the greater potential for
abuse.
The July 18, 2011 CCIIO Technical Guidance (CCIIO 2011-004) \126\
Q&A #19 further clarified that payments to third-party vendors may only
be included in incurred claims to the extent the vendor provides
clinical services through its own employees, and that payments to the
vendor to perform administrative functions on behalf of the issuer must
be reported as a non-claims administrative expense. As stated in the
May 2011 Guidance, Q&A #11, an issuer that needs to include payments to
third-party vendors in its MLR reporting is only required to obtain
from the third-party vendor the aggregate amounts attributable to
providing direct clinical services to enrollees and attributable to
administrative cost and profit component of the payments, and that
nothing in the regulation requires the third-party vendor to disclose
proprietary data concerning pricing arrangements.
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\126\ Available at https://www.cms.gov/CCIIO/Resources/Files/Downloads/20110718_mlr_guidance.pdf.
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In order to consolidate and clarify the MLR treatment of payments
to third-party vendors and other entities, we propose to revise Sec.
158.110(a) to capture the requirement that expenses for functions
outsourced to or services provided by other entities retained by an
issuer must be reported consistently with how expenses must be reported
when incurred directly by the issuer. We seek comments on this
proposal.
2. Reimbursement for Clinical Services Provided to Enrollees (Sec.
158.140)
Section 2718(a) of the PHS Act requires health insurance issuers
to, for MLR purposes, separately report the percentage of premium
revenue (after certain adjustments) expended on reimbursement for
clinical services provided to enrollees under such coverage, on
activities that improve health care quality, and on non-claims
(administrative) costs. Section 158.140 sets forth the MLR reporting
requirements related to the reimbursement for clinical services
provided to enrollees, including a requirement that issuers must deduct
from incurred claims prescription drug rebates received by the issuer.
We propose to amend Sec. 158.140(b)(1)(i) to require issuers to deduct
from incurred claims prescription drug rebates and other price
concessions not only when received by the issuer, but also when
received and retained by an entity providing pharmacy benefit
management services (including drug price negotiation services) to the
issuer, typically a pharmacy benefit manager (PBM). The phrase ``price
concession,'' when used in this context, is intended to capture any
time an issuer or an entity that provides pharmacy benefit management
services to the issuer receives something of value related to the
provision of a covered prescription drug (for example, manufacturer
rebate, incentive payment, direct or indirect remuneration, etc.)
regardless from whom the item of value is received (for example,
pharmaceutical manufacturer, wholesaler, retail pharmacy, vendor,
etc.).
For example, pharmaceutical drug manufacturers often provide,
either directly to issuers or indirectly through PBMs retained by
issuers, prescription drug rebates and other price concessions based
upon such considerations as securing a more favorable placement on
[[Page 7140]]
an issuer's drug formulary, increasing the drug utilization and market
share, or limiting an issuer's exposure to drug price changes. The
portion of premium revenue that an issuer expends on its enrollees'
pharmacy costs (excluding the administrative costs and profits related
to the provision of pharmacy benefits) is the actual reimbursement to
pharmacies, less the prescription drug rebates or other price
concessions secured from drug manufacturers.
For purposes of the MLR and rebate calculations, the MLR December
1, 2010 interim final rule (75 FR 74864) directed issuers to deduct
from incurred claims prescription drug rebates received by
issuers.\127\ The MLR December 1, 2010 interim final rule additionally
required issuers who outsource administration of their pharmacy
benefits to PBMs (or other third-party vendors) to exclude from
incurred claims the portion of payments they make to PBMs that exceeds
the reimbursement to providers and thus represents the PBMs'
administrative costs and profits.\128\ This approach sought to ensure
that issuers' spending on pharmacy benefits was treated consistently
regardless of whether issuers choose to administer the benefits
themselves or outsource these functions to an entity providing pharmacy
benefit management services. However, the current approach provides an
unfair advantage to issuers who utilize an entity to provide pharmacy
benefit management services and allow the entity to retain prescription
drug rebates or other price concessions.
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\127\ The MLR reporting form instructions further clarify that
prescription drug price concessions must be deducted regardless of
the specific form they take, including prescription drug rebates,
refunds, incentive payments, bonuses, discounts, charge backs,
coupons, grants, direct or indirect subsidies, direct or indirect
remuneration, upfront payments, goods in kinds, or similar benefits.
\128\ 45 CFR 158.140(b)(3)(i) through (iii).
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An issuer that chooses to retain an entity to provide pharmacy
benefit management services may incur administrative costs in the form
of paying the entity a fee, providing the entity an inflated pharmacy
reimbursement amount, and/or allowing the entity to retain a portion or
all of the prescription drug rebates and other price concessions
generated by the issuer's enrollees' drug utilization. The issuer may
realize a profit on pharmacy benefits to the extent outsourcing
pharmacy benefit management and compensating the entity in any one of
the above ways is more cost-effective than providing pharmacy benefits
directly. The current regulatory framework in Sec. 158.140(b)(1)(i)
and (b)(3)(i) through (iii) only accounts for the situation where the
administrative costs and profits related to the provision of pharmacy
benefits are comprised of an administrative fee paid by an issuer to
the entity providing pharmacy benefit management services or a
``spread'' (retained by the entity) between the amount the issuer
provides to the entity for pharmacy reimbursement and a lower amount
the entity actually reimburses to the pharmacy. The regulation does not
clearly address the situation where the administrative costs and
profits related to the provision of pharmacy benefits are comprised, in
whole or in part, of a portion or all of the prescription drug rebates
or other price concession that the issuer allows the entity providing
pharmacy benefit management services to retain. In both situations, the
net portion of premium revenue that an issuer expends on enrollees'
pharmacy costs is the actual reimbursement to pharmacies, less
prescription drug rebates or other price concessions. However, because
the regulation currently requires an issuer to deduct from incurred
claims prescription drug rebates only when received by the issuer and
does not clearly provide that rebates and price concessions retained by
an entity providing pharmacy benefit management services to the issuer
must be reported in situations where the issuer allows the entity to
retain a portion or all of such rebates and price concessions, the
portion retained by the entity is not reflected anywhere in the MLR
reporting or calculation. Consequently, under the current regulation,
enrollees fail to receive the benefit of prescription drug rebates and
price concessions to the extent these are retained by an entity other
than the issuer. In addition, the current regulation enables issuers
who compensate entities providing pharmacy benefit management services
by allowing them to retain prescription drug rebates or price
concessions to inflate the incurred claims and MLRs relative to
financially identically situated issuers who choose to compensate these
entities by paying a fee or an inflated pharmacy reimbursement amount.
Therefore, we propose to revise Sec. 158.140(b)(1)(i) to require
adjustments that must be deducted from incurred claims to include not
only prescription drug rebates received by the issuer, but also any
price concessions received by the issuer, and any prescription drug
rebates or other price concessions received and retained by an entity
providing pharmacy benefit management services (including drug price
negotiation services) to the issuer that are associated with
administering the issuer's prescription drug benefits. We also propose
to make conforming revisions to Sec. 158.160(b)(2) to require issuers
to report the prescription drug rebates and price concessions described
above as non-claims costs. These proposed revisions would not only
provide for a more equitable treatment of issuers in the commercial
health insurance markets, but also align more closely with the MLR
provisions that apply to the Medicare Advantage organizations and Part
D sponsors and Medicaid managed care organizations,\129\ both of which
require that the full amount of prescription drug rebates and price
concessions be deducted from incurred claims. We seek comments on all
aspects of these proposals.
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\129\ See the Medicare Advantage program and Prescription Drug
Benefit program May 23, 2013 final rule (78 FR 31284), as amended by
the April 16, 2018 final rule (83 FR 16440); and the Medicaid
managed care May 6, 2016 final rule (81 FR 27497) and the CMCS May
15, 2019 information bulletin available at https://www.medicaid.gov/federal-policy-guidance/downloads/cib051519.pdf.
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We propose that these amendments would be applicable beginning with
the 2021 MLR reporting year (reports due by July 31, 2022). We seek
comments regarding the applicability date to ensure that issuers have
adequate time to adjust contracts with entities that provide pharmacy
benefit management service to issuers to share information with those
issuers about rebates and other price concessions they receive (to the
extent not already required by law).
3. Activities That Improve Health Care Quality (Sec. 158.150)
We propose amending Sec. 158.150(b)(2)(iv)(A)(5) to clarify that
issuers in the individual market may include the cost of certain
wellness incentives \130\ as QIA expenses in the MLR calculation.
---------------------------------------------------------------------------
\130\ For this purpose, the term ``wellness incentive'' has the
same meaning as the term ``reward'' in Sec. 146.121(f)(1)(i).
---------------------------------------------------------------------------
Section 2718(a)(2) of the PHS Act requires health insurance issuers
to submit an annual report to the Secretary that includes information
on the percent of total premium revenue that is spent on activities
that improve health care quality. A non-exhaustive list of examples of
allowable wellness QIA in Sec. 158.150(b)(2)(iv) includes the cost of
certain wellness incentives offered by issuers in the group markets,
but does not explicitly list wellness incentives offered in the
individual market. However, issuers in the individual market are
currently permitted to offer participatory wellness programs,
[[Page 7141]]
provided such programs are consistent with applicable state law and
available to all similarly situated individuals.\131\ In addition, CMS
recently announced a new wellness program demonstration project through
the September 30, 2019 CMS Bulletin: Opportunity for States to
Participate in a Wellness Program Demonstration Project to Implement
Health-Contingent Wellness Programs in the Individual Market.\132\ This
bulletin announced the opportunity for states to apply to participate
in a 10-state wellness program demonstration project, as described in
section 2705(l) of the PHS Act. Under this demonstration project,
participating states may implement nondiscriminatory health-contingent
wellness programs in the individual market, subject to the wellness
program provisions of section 2705(j) of the PHS Act.
---------------------------------------------------------------------------
\131\ See the Incentives for Nondiscriminatory Wellness Programs
in Group Health Plans; Final Rule; 78 FR 33158 at 33167 (June 3,
2013).
\132\ https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Wellness-Program-Demonstration-Project-Bulletin.pdf. Available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Wellness-Program-Demonstration-Project-Bulletin.pdf.
---------------------------------------------------------------------------
To ensure consumer choice and access to wellness programs, we
propose to amend Sec. 158.150(b)(2)(iv)(A)(5) to clarify that issuers
in the individual market are allowed to include wellness incentives in
the same manner as is permitted for the group market, to the extent
such incentives are permitted by section 2705 of the PHS Act, as QIA in
the MLR calculation.\133\ We propose that these amendments would be
applicable beginning with the 2021 MLR reporting year (reports due by
July 31, 2022). We seek comment on this proposal.
---------------------------------------------------------------------------
\133\ Under section 2705(j) of the PHS Act and 45 CFR
146.121(f), health-contingent and participatory wellness programs
are permitted in the group market. As detailed above, HHS previously
recognized that participatory wellness programs in the individual
market do not violate section 2705 and are therefore permitted,
provided that such programs are consistent with applicable state law
and available to all similarly situated individuals enrolled in the
individual health insurance coverage. See 78 FR at 33167. In
addition, section 2705(l) of the PHS Act authorizes the Secretary to
establish a 10-state wellness program demonstration project under
which issuers may offer non-discriminatory wellness programs in the
individual market.
---------------------------------------------------------------------------
4. Other Non-Claims Costs (Sec. 158.160)
For a discussion of the proposed amendment to Sec. 158.160(b)(2)
regarding non-claims costs other than taxes and regulatory fees, please
see the preamble to Sec. 158.140.
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. This
proposed rule contains information collection requirements (ICRs) that
are subject to review by OMB. A description of these provisions is
given in the following paragraphs with an estimate of the annual
burden, summarized in Table 15. To fairly evaluate whether an
information collection should be approved by OMB, section 3506(c)(2)(A)
of the Paperwork Reduction Act of 1995 (PRA) requires that we solicit
comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of the required issues
under section 3506(c)(2)(A) of the PRA for the following information
collection requirements.
A. Wage Estimates
To derive wage estimates, we generally used data from the Bureau of
Labor Statistics to derive average labor costs (including a 100 percent
increase for fringe benefits and overhead) for estimating the burden
associated with the ICRs.\134\ Table 12 in this proposed rule presents
the mean hourly wage, the cost of fringe benefits and overhead, and the
adjusted hourly wage.
---------------------------------------------------------------------------
\134\ See May 2018 Bureau of Labor Statistics, Occupational
Employment Statistics, National Occupational Employment and Wage
Estimates. Available at https://www.bls.gov/oes/current/oes_stru.htm.
---------------------------------------------------------------------------
As indicated, employee hourly wage estimates have been adjusted by
a factor of 100 percent. This is necessarily a rough adjustment, both
because fringe benefits and overhead costs vary significantly across
employers, and because methods of estimating these costs vary widely
across studies. Nonetheless, there is no practical alternative, and we
believe that doubling the hourly wage to estimate total cost is a
reasonably accurate estimation method.
Table 12--Adjusted Hourly Wages Used in Burden Estimates
----------------------------------------------------------------------------------------------------------------
Fringe
Occupational Mean hourly benefits and Adjusted
Occupation title code wage ($/hr.) overhead ($/ hourly wage ($/
hr.) hr.)
----------------------------------------------------------------------------------------------------------------
Chief Executive *............................... 11-1011 $96.22 $96.22 $192.44
General and Operations Manager.................. 11-1021 59.56 59.56 119.12
Compensation and Benefits Manager............... 11-3111 63.87 63.87 127.74
Lawyer.......................................... 23-1011 69.34 69.34 138.68
Legal Support Worker............................ 23-2099 34.34 34.34 68.68
----------------------------------------------------------------------------------------------------------------
* Chief executive wage is used to estimate the state official wages.
B. ICRs Regarding Notice Requirement for Excepted Benefit HRAs Offered
by Non-Federal Governmental Plan Sponsors (Sec.
146.145(b)(3)(viii)(E))
In Sec. 146.145(b)(3)(viii)(E), we are proposing that an excepted
benefit HRA offered by a non-Federal governmental plan sponsor must
provide a notice that describes conditions pertaining to eligibility to
receive benefits, annual or lifetime caps or other limits on benefits
under the plan, and a description or summary of the benefits. This
notice would be provided on an annual basis no later than 90 days after
the first day of the excepted benefit HRA plan year (or, if a
participant is not eligible to participate at the beginning of the plan
year, no later than 90 days after the employee becomes a participant in
the excepted benefit HRA).
We estimate that for each excepted benefit HRA sponsored by a non-
Federal governmental plan, a compensation and
[[Page 7142]]
benefits manager would need 1 hour (at $127.74 per hour) and a lawyer
would need 0.5 hours (at $138.68 per hour) to prepare the notice. The
total burden for an HRA plan sponsor would be 1.5 hours with an
equivalent cost of approximately $197. This burden would be incurred
the first time the non-Federal governmental plan sponsor provides an
excepted benefit HRA. In subsequent years, the burden to update the
notice is expected to be minimal and therefore is not estimated.
We estimate that approximately 901 state and local government
entities will offer excepted benefit HRAs each year.\135\ The total
burden to prepare the notices would be approximately 1,352 hours with
an equivalent cost of approximately $177,569.
---------------------------------------------------------------------------
\135\ HHS assumes that only 1 percent of state and local
government entities will offer excepted benefit HRAs.
---------------------------------------------------------------------------
Non-Federal government sponsors of excepted benefit HRAs would
provide the notice to eligible participants every year. We estimate
that sponsors would provide printed copies of these notices to
approximately 193,715 eligible participants annually.\136\ We
anticipate that the notices would be approximately 1 page long and the
cost of materials and printing would be $0.05 per notice. It is assumed
that these notices would be provided along with other benefits
information with no additional mailing cost. We assume that
approximately 54 percent of notices would be provided electronically
and approximately 46 percent would be provided in print along with
other benefits information. Therefore, state and local government
entities providing excepted benefit HRAs to their employees would print
approximately 89,109 notices at a cost of approximately $4,455
annually. We are seeking comment on whether sponsors of non-Federal
governmental excepted benefit HRAs should be required to provide the
notice annually after the initial notice; or whether, after providing
the initial notice, they should only be required to provide the notice
with respect to plan years for which the terms of the excepted benefit
HRA change from the previous plan year and if so, what type or
magnitude of change should trigger such a subsequent notice. If the
requirement is finalized such that notice must be provided only for
plan years for which there is a change from the previous years, the
printing and materials costs would be lower and this estimate would
represent an upper bound for the annual cost after the first year.
---------------------------------------------------------------------------
\136\ HHS assumes that excepted benefit HRAs will be offered to
all employees of state and local government entities that offer
excepted benefit HRAs. This is an upper bound and actual number of
eligible participants is likely to be lower if excepted benefit HRAs
are offered to only some employee classes.
---------------------------------------------------------------------------
The total burden to prepare and send the notices in the first year
would be approximately $182,000. In subsequent years, under the
proposal that would require an annual notice regardless of whether
there was a change from the previous years, these employers would only
incur printing and materials costs of approximately $4,455 annually.
The average annual burden over 3 years would be 451 hours with an
equivalent annual cost of $59,190, and an average annual total cost of
$63,645.
Table 13--Annual Burden and Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated number
of non-federal Estimated number Total estimated
Year governmental of notices to Total annual Total estimated printing and
employers all eligible burden (hours) labor cost materials cost
offering HRAs participants
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020..................................................... 901 193,715 1,352 $177,569 $4,455
2021..................................................... 901 193,715 0 0 4,455
2022..................................................... 901 193,715 0 0 4,455
3 year Average........................................... 901 193,715 451 59,190 4,455
--------------------------------------------------------------------------------------------------------------------------------------------------------
C. ICRs Regarding Special Enrollment Periods (Sec. 155.420)
We propose to amend Sec. 155.420(d)(1)(ii) to codify the special
enrollment period available to qualified individuals and dependents who
are provided a QSEHRA with a non-calendar year plan year, which is
subject to pre-enrollment eligibility verification. While the FFEs make
every effort to verify an individual's special enrollment period
eligibility through automated electronic means, including when it is
verifying eligibility on behalf of SBE-FPs, the FFEs currently cannot
electronically verify whether an individual has a non-calendar year
plan year QSEHRA. Therefore, qualifying individuals would be required
to provide supporting documentation within 30 days of plan selection to
confirm their special enrollment period triggering event, which is the
end date of their QSEHRA. Acceptable documents may include a dated
letter from their employer stating when their QSEHRA plan year ends or
a copy of the notice that their employer provided them with to comply
with section 9831(d)(4) of the Code.\137\
---------------------------------------------------------------------------
\137\ Per IRS Notice 2017-67, this notice must include the date
on which the QSEHRA is first provided to the eligible employee.
Therefore, it is likely that in some cases it will also include or
imply the QSEHRA end date.
---------------------------------------------------------------------------
We estimate that this policy would result in relatively few
additional consumers being required to submit documents to verify their
eligibility to enroll through the proposed special enrollment period on
or off-Exchange, because this group consists of a subset of consumers
with a QSEHRA whose QSEHRA renews on a non-calendar year plan year
basis. Within that group, only those who are not already enrolled in
individual market health insurance coverage in order to meet their
QSEHRA's requirement to have MEC who wish to change plans mid-calendar
year would be required to submit documents to confirm SEP eligibility.
Additionally, because changing plans mid-calendar year would generally
result in these consumers' deductibles and other cost-sharing
accumulators re-setting we anticipate that few consumers will opt to do
so, which will result in a minimal increase in burden for individuals
with a QSEHRA that renews on a non-calendar year basis and wish to
change their plans mid-calendar year. We solicit comment on whether or
not this is the case.
D. ICRs Regarding Quality Rating Information Display Standards for
Exchanges (Sec. Sec. 155.1400 and 155.1405)
At Sec. Sec. 155.1400 and 155.1405, we propose to codify the
flexibility for State
[[Page 7143]]
Exchanges that operate their own eligibility and enrollment platforms
regarding the display of quality rating information for their QHPs. The
burden related to the proposed requirements was previously approved
under OMB control number 0938-1312 (Establishment of an Exchange by a
State and Qualified Health Plans PRA (CMS-10593)); the approval expired
in August 2019. We are in the process of reinstating this information
collection.
E. ICRs Regarding State Selection of EHB-Benchmark Plan for Plan Years
Beginning on or After January 1, 2020 (Sec. 156.111)
At Sec. 156.111, we propose to require states to annually report
to HHS, in a form and manner specified by HHS and by a date determined
by HHS, any state-required benefits applicable to the individual and/or
small group market that are considered in addition to EHB in accordance
with Sec. 155.170. States would be required to include in their
initial reports information of state benefit requirements under state
mandates that were imposed on or before December 31, 2011, that are
applicable to QHPs in the individual or small group market and that
were not withdrawn or otherwise no longer effective before December 31,
2011, as well as any state-required benefits under mandates that were
imposed any time after December 31, 2011, that are applicable to QHPs
in the individual or small group market. In subsequent years, states
would be required to update the content in its report to add any new
state benefit requirements imposed during the applicable reporting
period, and to indicate whether benefit requirements previously
reported to HHS were amended, repealed, or otherwise affected by state
action during the reporting period. In every report, states would be
required to identify which state-required benefits it has determined is
in addition to EHB and subject to defrayal. States would also be
required to identify which state-required benefit it has determined not
to be in addition to EHB and not subject to defrayal, and would be
required to describe the basis of such determinations. If the state
fails to notify HHS of its required benefits considered to be in
addition to EHB by applicable annual submission deadlines, or fails to
do so in the form and manner specified by HHS, we propose that HHS
would determine which benefits are in addition to EHB for the state.
At Sec. 156.111(f) we propose specifying the type of information
states would be required to submit to HHS by the annual submission
deadline in a form and manner specified by HHS. Specifically, Sec.
156.111(f)(1) proposes that states annually reporting to HHS would be
required to provide a document that is accurate as of the day that is
at least 60 days prior to the annual reporting submission deadline set
by HHS that lists state benefit requirements applicable to QHPs in the
individual and/or small group markets under state mandates that were
imposed on or before December 31, 2011 and that were not withdrawn or
otherwise no longer effective before December 31, 2011, as well as any
state benefit requirements under state mandates that were imposed any
time after December 31, 2011 that are applicable to QHPs in the
individual or small group market.
Section 156.111(f)(2) proposes that states annually reporting to
HHS would also be required to specify which of those state-required
benefits listed in accordance with Sec. 156.111(f)(1) the state has
identified as in addition to EHB and subject to state defrayal under
Sec. 155.170. Section 156.111(f)(3) proposes that states annually
reporting to HHS be required to specify which of the state mandates
listed in accordance with Sec. 156.111(f)(1) the state has identified
as not in addition to EHB and not subject to defrayal in accordance
with Sec. 155.170, and describe the basis for the state's
determination. Section 156.111(f)(4) proposes that states submit other
information about those state-required benefits listed in accordance
with Sec. 156.111(f)(1) that is necessary for HHS oversight, as
specified by HHS.
In Sec. 156.111(f)(5), we propose that this document be signed by
a state official with authority to make the submission on behalf of the
state, to confirm the accuracy of the submission. We solicit comment
generally on these document collection requirements, specifically with
regard to whether HHS should require any additional information from
states on state-required benefits as part of the annual reporting
submission. In Sec. 156.111(f)(6), we propose to require states to
make updates to this list of state-required benefits annually, in a
form and manner and by a date specified by HHS, to include any new
state benefit requirements, and to indicate whether benefit
requirements previously reported to HHS under this paragraph (f) have
been amended, repealed or are otherwise affected by state regulatory or
legislative action.
If finalized as proposed, HHS would provide the template(s) that
states would be required to use for reporting the required information
proposed in Sec. 156.111(f)(1) through (6). We would post state
submission of these documents on the EHB website prior to the end of
the plan year during which the reporting takes place. If the state does
not notify HHS of its state-required benefits that are in addition to
EHB in accordance with the proposed requirements at Sec. 156.111(f),
HHS would complete a similar document for the state and post it to the
CMS website.
We anticipate that the majority of states would choose to annually
notify HHS under this policy, as states are already required under
Sec. 155.170 to identify which state-required benefits are in addition
to EHB and to defray the cost of QHP coverage of those benefits.
Because we believe the information we are proposing that states report
to HHS as part of this annual reporting should already be readily
accessible to states, we estimate that approximately ten states would
not report and the remaining states would annually report to HHS by the
annual reporting submission deadline. Therefore, we estimate that
approximately forty-one (41) states would respond to the information
collection requirements associated with these proposals.
For the first year in which the annual reporting would take place,
states would be required to include a comprehensive list of all state-
required benefits applicable to QHPs in the individual and/or small
group markets under state mandates that were imposed on or before
December 31, 2011 and that were not withdrawn or otherwise no longer
effective before December 31, 2011, as well as those state mandates
that were imposed after December 31, 2011, regardless of whether the
state believes such state-required benefits require defrayal in
accordance with Sec. 155.170. Each annual reporting cycle thereafter,
the state would only need to update the content in its report to add
any new state benefit requirements, and to indicate whether state
benefit requirements previously reported to HHS have been amended or
repealed. Information in states' initial reports must be accurate as of
a day that is at least 60 days prior to the first reporting submission
deadline set by HHS. As such, we estimate that the burden estimates for
states in the first year of annual reporting would be higher than in
each subsequent year.
Although we estimate a higher burden in the first year of annual
reporting of state-required benefits, states are already expected to
identify which state-required benefits are in addition to EHB and to
defray the cost of QHP coverage of those benefits in accordance with
Sec. 155.170. Because we believe the information we are proposing that
states report to HHS should be readily accessible to states, we
estimate that it
[[Page 7144]]
would require a legal support worker 25 hours (at a rate of $68.68) to
pull and review all mandates, transfer this information into the HHS
provided template, and validate the information in the first year of
annual reporting. We estimate that it would require a general and
operations manager 3 hours (at a rate of $119.12) to then review the
completed template and submit it to HHS in the first year of annual
reporting. We estimate that it would require a state official 2 hours
(at a rate of $192.44) in the first year of annual reporting to review
and sign the required document(s) for submission on behalf of the
state, to confirm the accuracy of the submission. The information would
be submitted to HHS electronically at minimal cost. Therefore, we
estimate that the burden for each state to meet this reporting
requirement in the first year would be 30 hours, with an equivalent
cost of approximately $2,459, with a total first year burden for all 41
states of 1,025 hours and an associated total first year cost of
approximately $100,829.
Because the first year of annual reporting is intended to set the
baseline list of state-required benefits which states would update as
necessary in future annual reporting cycles, we believe the burden
associated with each annual reporting thereafter would be lower than
the first year. We estimate that for each annual reporting cycle after
the first year it would require a legal support worker 10 hours (at a
rate of $68.68) to transfer the information about state-required
benefits into the HHS provided template and validate the information.
We estimate that it would require a general and operations manager 2
hours (at a rate of $119.12) to review the completed template and
submit it to HHS each year after the first annual reporting. We
estimate that it would require a state official 1 hour (at a rate of
$192.44) to review and sign the required document(s) for submission on
behalf of the state, to confirm the accuracy of the submission.
Therefore, we estimate that the burden for each state to meet the
annual reporting requirement each year after the first year of annual
reporting would be 13 hours with an equivalent cost of approximately
$1,117, with a total annual burden for all 41 states of 533 hours and
an associated total annual cost of approximately $45,817. The average
annual burden over 3 years would be approximately 697 hours with an
equivalent average annual cost of approximately $64,154.
We propose to amend the information collection currently approved
under OMB control number: 0938-1174 (Essential Health Benefits
Benchmark Plans (CMS-10448)) to include this burden.
F. ICRs Regarding Termination of Coverage or Enrollment for Qualified
Individuals (Sec. 156.270)
The collection of information titled, ``Establishment of Exchanges
and Qualified Health Plans; Exchange Standards for Employers'' (OMB
control number 0938-1341 (CMS-10592)) already accounts for burden
estimates for QHP issuers to provide notice to an enrollee if the
enrollee's coverage in a QHP is terminated. Consequently, we are not
making any changes under the aforementioned control number. Subject to
renewal, the control number is currently set to expire on September 30,
2020. It was last approved on September 18, 2017, and remains active.
Since we are not proposing any changes to the submission process or
burden, we are not making any changes under the aforementioned control
number.
G. ICRs Regarding Medical Loss Ratio (Sec. Sec. 158.110, 158.140,
158,150, and 158.160)
We propose to amend Sec. 158.110(a) to clarify that issuers must
report for MLR purposes expenses for functions they outsource to or
services provided by other entities, consistent with how issuers must
report directly incurred expenses. We also propose to amend Sec.
158.140(b)(1)(i) to require issuers to deduct from incurred claims
price concessions received by the issuer and any prescription drug
rebates and other price concessions received and retained by an entity
that provides pharmacy benefit management services to the issuer
(including drug price negotiation services) that are associated with
administering the issuer's prescription drug benefits. We propose
conforming amendments to Sec. 158.160(b)(2) to require such amounts to
be reported as a non-claims cost.
Finally, we propose to amend Sec. 158.150(b)(2)(iv)(A)(5) to
explicitly allow issuers in the individual market to include the cost
of certain wellness incentives as QIA in the MLR calculation. We do not
anticipate that implementing any of these provisions would require
changes to the MLR annual reporting form or significantly change the
associated burden. The burden related to this information collection is
currently approved under OMB control number 0938-1164 (Medical Loss
Ratio Annual Reports, MLR Notices, and Recordkeeping Requirements (CMS-
10418)). The control number is currently set to expire on October 31,
2020.
H. Summary of Annual Burden Estimates for Proposed Requirements
Table 14--Proposed Annual Recordkeeping and Reporting Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Burden per Total annual
Regulation section(s) OMB control Number of Number of response burden Labor cost of Total cost ($)
No. respondents responses (hours) (hours) reporting ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. 146.145(b)(3)(viii)(E)........... 0938-1361 901 193,715 1.5 451 $59,190 $63,645
Sec. 156.111.......................... 0938-1174 41 41 15.3 697 64,154 64,154
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
Total............................... .............. 942 193,756 .............. 1,148 123,344 127,799
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: There are no capital/maintenance costs associated with the information collection requirements contained in this rule; therefore, we have removed
the associated column from Table 14.
I. Submission of PRA-Related Comments
We have submitted a copy of this proposed rule to OMB for its
review of the rule's information collection and recordkeeping
requirements. These requirements are not effective until they have been
approved by the OMB.
To obtain copies of the supporting statement and any related forms
for the proposed collections discussed above, please visit CMS's
website at www.cms.hhs.gov/PaperworkReductionActof1995, or call the
Reports Clearance Office at 410-786-1326.
We invite public comments on these potential information collection
requirements. If you wish to comment, please submit your comments
[[Page 7145]]
electronically as specified in the ADDRESSES section of this proposed
rule and identify the rule (CMS-9916-P), the ICR's CFR citation, CMS ID
number, and OMB control number.
ICR-related comments are due April 6, 2020.
V. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this proposed
rule, and, when we proceed with a subsequent document, we will respond
to the comments in the preamble to that document.
VI. Regulatory Impact Analysis
A. Statement of Need
This rule proposes standards related to the risk adjustment program
for the 2021 benefit year, clarifications and improvements to the RADV
program, as well as certain modifications that will promote
transparency, innovation in the private sector, reduce burden on
stakeholders, and improve program integrity. This rule proposes
additional standards related to eligibility redetermination, special
enrollment periods, state selection of EHB-benchmark plan and annual
reporting of state-required benefits, premium adjustment percentage,
termination of coverage, excepted benefit HRAs, the medical loss ratio
(MLR) program, and FFE and SBE-FP user fees.
B. Overall Impact
We have examined the impacts of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 202 of the Unfunded Mandates Reform Act
of 1995 (March 22, 1995, Pub. L. 104-4), Executive Order 13132 on
Federalism (August 4, 1999), the Congressional Review Act (5 U.S.C.
804(2)), and Executive Order 13771 on Reducing Regulation and
Controlling Regulatory Costs (January 30, 2017).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. A regulatory impact analysis (RIA) must be prepared for
rules with economically significant effects ($100 million or more in
any 1 year).
Section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as an action that is likely to result in a rule:
(1) Having an annual effect on the economy of $100 million or more in
any 1 year, or adversely and materially affecting a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or state, local or tribal governments or communities
(also referred to as ``economically significant''); (2) creating a
serious inconsistency or otherwise interfering with an action taken or
planned by another agency; (3) materially altering the budgetary
impacts of entitlement grants, user fees, or loan programs or the
rights and obligations of recipients thereof; or (4) raising novel
legal or policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in the Executive Order. A RIA
must be prepared for major rules with economically significant effects
($100 million or more in any 1 year), and a ``significant'' regulatory
action is subject to review by OMB. HHS has concluded that this rule is
likely to have economic impacts of $100 million or more in at least 1
year, and therefore is expected to be economically significant under
Executive Order 12866. Therefore, HHS has provided an assessment of the
potential costs, benefits, and transfers associated with this rule. In
accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
The provisions in this proposed rule aim to ensure taxpayer money
is more appropriately spent and that states have flexibility and
control over their insurance markets. They would reduce regulatory
burden, reduce administrative costs for issuers and states, and would
lower net premiums for consumers. Through the reduction in financial
uncertainty for issuers and increased affordability for consumers,
these provisions are expected to increase access to affordable health
coverage. Although there is still some uncertainty regarding the net
effect on premiums, we anticipate that the provisions of this proposed
rule would help further HHS's goal of ensuring that all consumers have
access to quality and affordable health care and are able to make
informed choices, that the insurance market offers choices, and that
states have more control and flexibility over the operation and
establishment of Exchanges.
Affected entities, such as states, would incur costs related to the
EHB reporting requirement, defrayal of the cost of state-required
benefits; implementation of new special enrollment period requirements;
and non-Federal Government plan sponsors offering excepted benefit HRAs
would incur expenses associated with providing a notice. Issuers would
experience an increase in rebates paid to consumers due to proposed
amendments to the MLR requirements. In accordance with Executive Order
12866, HHS believes that the benefits of this regulatory action justify
the costs.
C. Impact Estimates of the Payment Notice Provisions and Accounting
Table
In accordance with OMB Circular A-4, Table 15 depicts an accounting
statement summarizing HHS's assessment of the benefits, costs, and
transfers associated with this regulatory action.
This proposed rule implements standards for programs that will have
numerous effects, including providing consumers with access to
affordable health insurance coverage, reducing the impact of adverse
selection, and stabilizing premiums in the individual and small group
health insurance markets and in an Exchange. We are unable to quantify
all benefits and costs of this proposed rule. The effects in Table 15
reflect qualitative impacts and estimated direct monetary costs and
transfers resulting from the provisions of this proposed rule for
health insurance issuers and consumers. The annual monetized transfers
described in Table 15 include changes to costs associated with the risk
adjustment user fee paid to HHS by issuers and the potential increase
in rebates from issuers to consumers due to proposed amendments to MLR
requirements.
We are proposing the risk adjustment user fee of $0.19 PMPM for the
2021 benefit year to operate the risk adjustment program on behalf of
states,\138\ which we estimate to cost approximately $50 million in
benefit year 2021. We expect risk adjustment user fee transfers from
issuers to the Federal Government to remain steady at $50 million, the
same as estimated for
[[Page 7146]]
the 2020 benefit year; this is included in Table 15.
---------------------------------------------------------------------------
\138\ As noted earlier in this proposed rule, no state has
elected to operate the risk adjustment program for the 2021 benefit
year; therefore, HHS will operate the program for all 50 states and
the District of Columbia.
---------------------------------------------------------------------------
Additionally, for 2021, we are considering two alternative
proposals. First, we are proposing maintaining the FFE and the SBE-FP
user fee rates at current levels, 3.0 and 2.5 percent of premiums,
respectively. Alternatively, we are considering and seek comment on
reducing the user fee rates below the 2020 plan year levels.
TABLE 15--Accounting Table
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Benefits
----------------------------------------------------------------------------------------------------------------
Qualitative:
Greater market stability resulting from updates to the risk adjustment methodology.................
Increase in consumers' understanding of their excepted benefit HRA offer...........................
Strengthened program integrity related to proposals to terminate QHP coverage for Exchange
enrollees who have become deceased during a plan year and via processing voluntary terminations on behalf
of Medicare, Medicaid/CHIP, if applicable, BHP, dual enrollees via PDM.....................................
More plan options for Exchange enrollees newly ineligible for CSRs, resulting in increased
continuous coverage and associated benefit to risk pools...................................................
Streamlined Exchange operations by eliminating certain prospective coverage effective date rules
and retroactive payment rules for special enrollment periods...............................................
----------------------------------------------------------------------------------------------------------------
Costs Estimate Year dollar Discount rate Period covered
million (percent)
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($/year)................... -$50.48 2019 7 2020-2024
-$47.66 2019 3 2020-2024
----------------------------------------------------------------------------------------------------------------
Quantitative:
Costs incurred by sponsors of non-Federal governmental plans and states to comply with provisions
related to notice requirement for excepted benefit HRAs and reporting related to state mandated benefits,
as detailed in the Collection of Information Requirements section, estimated to be approximately $283,000
in 2020 and approximately $50,000 2021 onwards.............................................................
Reduction in potential costs to Exchanges since they would not be required to conduct random
sampling as a verification process for enrollment in or eligibility for employer-based insurance when the
Exchange reasonably expects that it will not obtain sufficient verification data, estimated to be one-time
savings of $44 million in 2020 and annual savings of $92 million in 2020 and 2021..........................
Regulatory familiarization costs of approximately $54,000 in 2020..................................
----------------------------------------------------------------------------------------------------------------
Qualitative:
Increased costs due to increases in providing medical services (if health insurance enrollment
increases).................................................................................................
Potentially minor costs to Exchanges and DE partners to update the application and logic to account
for new plan options for Exchange enrollees newly ineligible for CSRs and enrollees covered by a non-
calendar plan year QSEHRA..................................................................................
Potential reduction in costs to issuers due to elimination of duplicative coverage as part of PDM..
Potential reduction in costs to consumers due to PDM noticing efforts to notify enrollees of
duplicative coverage and risk for tax liability............................................................
Potential costs to the Exchanges and consumers to comply with the new special enrollment period
requirements...............................................................................................
Potential reduction in burden for Exchanges and issuers to comply with the proposed special
enrollment period prospective coverage effective dates.....................................................
----------------------------------------------------------------------------------------------------------------
Transfers Estimate Year dollar Discount rate Period covered
million (percent)
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($/year)................... $14.1 2019 7 2020-2024
14.3 2019 3 2020-2024
----------------------------------------------------------------------------------------------------------------
Quantitative:
Net increase in transfers from health insurance issuers to consumers in the form of rebates of
$18.2 million per year due to proposed amendments to the MLR requirements..................................
----------------------------------------------------------------------------------------------------------------
Qualitative:
Potential decreases in premiums and PTCs associated with adjustments to MLR........................
Potential decrease in APTC and CSR payments due to reduction in duplicative coverage and
retroactive termination of coverage to the date of death as part of PDM and more accurate defrayal of costs
for state mandated benefits................................................................................
Transfer of costs from issuers to states to the extent that a state would newly defray the cost of
state-required benefits it should have already been defraying..............................................
----------------------------------------------------------------------------------------------------------------
This RIA expands upon the impact analyses of previous rules and
utilizes the Congressional Budget Office's (CBO) analysis of the
PPACA's impact on Federal spending, revenue collection, and insurance
enrollment. The PPACA ends the transitional reinsurance program and
temporary risk corridors program after the benefit year 2016.
Therefore, the costs associated with those programs are not included in
Table 16 or 17. Table 16 summarizes the effects of the risk adjustment
program on the Federal budget from fiscal years 2020 through 2024, with
the additional, societal effects of this proposed rule discussed in
this RIA. We do not expect the provisions of tZhis proposed rule to
significantly alter CBO's estimates of the budget impact of the premium
stabilization programs that are described in Table 16.
In addition to utilizing CBO projections, HHS conducted an internal
analysis of the effects of its regulations on enrollment and premiums.
Based on these internal analyses, we anticipate that the quantitative
effects of the provisions proposed in this rule are consistent with our
previous estimates in the 2020 Payment Notice for the impacts
associated with the APTCs, the
[[Page 7147]]
premium stabilization programs, and FFE user fee requirements.
---------------------------------------------------------------------------
\139\ Reinsurance collections ended in FY 2018 and outlays in
subsequent years reflect remaining payments, refunds, and allowable
activities.
TABLE 16--Estimated Federal Government Outlays and Receipts for the Risk Adjustment and Reinsurance Programs
From Fiscal Year 2020-2024, in Billions of Dollars \139\
----------------------------------------------------------------------------------------------------------------
Year 2020 2021 2022 2023 2024 2020-2024
----------------------------------------------------------------------------------------------------------------
Risk Adjustment and Reinsurance 5 6 6 6 6 29
Program Payments.................
Risk Adjustment and Reinsurance 5 6 6 6 6 29
Program Collections..............
----------------------------------------------------------------------------------------------------------------
Note: Risk adjustment program payments and receipts lag by one quarter. Receipt will fully offset payments over
time.
Source: Congressional Budget Office. Federal Subsidies for Health Insurance Coverage for People Under Age 65:
Tables From CBO's May 2019 Projections Table 2. May 2, 2019. Available at https://www.cbo.gov/system/files/2019-05/51298-2019-05-healthinsurance.pdf.
1. Notice Requirement for Excepted Benefit HRAs Offered by Non-Federal
Governmental Plan Sponsors (Sec. 146.145(b)(3)(viii)(E))
In Sec. 146.145(b)(3)(viii)(E), we are proposing that an excepted
benefit HRA offered by a non-Federal governmental plan sponsor must
provide, on an annual basis, a notice that describes conditions
pertaining to eligibility to receive benefits, annual or lifetime caps
or other limits on benefits under the plan, and a description or
summary of the benefits. This notice would provide employees with clear
information regarding excepted benefit HRAs offered by their employers.
Excepted benefit HRAs sponsored by non-Federal Government entities
would incur costs to provide the notice as detailed previously in the
Collection of Information Requirements section.
2. Early Retiree Reinsurance Program (Part 149)
Our proposal to remove the regulations at part 149 of title 45
governing the ERRP would not have any direct regulatory impact since
the ERRP sunset as of January 1, 2014. However, removing the
regulations would reduce the volume of Federal regulations.
3. Risk Adjustment
The risk adjustment program is a permanent program created by
section 1343 of the PPACA that collects charges from issuers with
lower-than-average risk populations and uses those funds to make
payments to issuers with higher-than-average risk populations in the
individual, small group, and merged markets (as applicable), inside and
outside the Exchanges. We established standards for the administration
of the risk adjustment program in subparts A, B, D, G, and H of part
153.
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 2021 benefit year, HHS will operate a
risk adjustment program in every state and the District of Columbia. As
described in the 2014 Payment Notice, HHS's operation of risk
adjustment on behalf of states is funded through a risk adjustment user
fee. For the 2021 benefit year, we propose to use the same methodology
that we finalized in the 2020 Payment Notice to estimate our
administrative expenses to operate the program. Risk adjustment user
fee costs for the 2021 benefit year are expected to remain steady from
the prior 2020 benefit year estimates of approximately $50 million. We
estimate that the total cost for HHS to operate the risk adjustment
program on behalf of states and the District of Columbia for 2021 will
be approximately $50 million, and the risk adjustment user fee would be
$0.19 PMPM. Because overall risk adjustment contract costs estimated
for the 2021 benefit year are similar to 2020 benefit year costs, we do
not expect the proposed risk adjustment user fee for the 2021 benefit
year to materially impact transfers from issuers of risk adjustment
covered plans to the Federal Government.
Additionally, to use risk adjustment factors that reflect more
recent treatment patterns and costs, we propose to recalibrate the HHS
risk adjustment models for the 2021 benefit year by using more recent
claims data to develop updated risk factors, as part of our continued
assessment of modifications to the HHS-operated risk adjustment program
for the individual and small group (and merged) markets. We propose to
discontinue our reliance on MarketScan[supreg] data to recalibrate the
risk adjustment models, and to adopt and maintain an approach of using
the 3 most recent years of available enrollee-level EDGE data for
recalibration of the risk adjustment models beginning with the 2021
benefit year and beyond. We believe that the approach of blending (or
averaging) 3 years of separately solved coefficients would provide
stability within the risk adjustment program and minimize volatility in
changes to risk scores from the 2020 benefit year to the 2021 benefit
year due to differences in the datasets' underlying populations. We
also propose to incorporate several proposed HCC changes into the 2021
benefit year risk adjustment models. We do not expect these proposals
to affect the absolute value of risk adjustment transfers, or impact
issuer burden beyond what we previously estimated in the 2020 Payment
Notice.
4. Risk Adjustment Data Validation (Sec. 153.630)
Under Sec. 153.630, we are proposing changes to the requirements
for RADV. Beginning with the 2019 benefit year of RADV, we propose to
consider issuers to be outliers only if they have 30 or more HCCs
recorded on EDGE for any HCC group in which their failure rate appears
anomalous. As only a very small number of issuers would be affected by
this change, and those affected already have small total plan liability
risk scores for the affected HCC groups due to their low HCC counts, we
expect the total reduction of burden to issuers to be small.
Projections based on 2017 benefit year RADV adjustments estimate an
overall 0.7 percent reduction in absolute RADV transfer adjustments
across all issuers for benefit years to which this change may apply.
We also propose that the 2019 benefit year RADV would serve as a
second pilot year for the purposes of prescription drug data validation
in addition to the 2018 benefit year RADV. We are proposing this second
pilot year to provide HHS and issuers with 2 full years of experience
with the data validation process for prescription drugs before
adjusting transfers. We do not expect this proposal to affect the
magnitude of RADV adjustments to risk adjustment transfers, or to
impact issuer
[[Page 7148]]
burden or administrative costs beyond what we previously estimated in
the 2020 Payment Notice.
5. Verification Process Related to Eligibility for Insurance
Affordability Programs (Sec. 155.320)
In future rulemaking, we intend to propose amendments to Sec.
155.320(d)(4)(i) to remove the requirement that Exchanges use random
sampling as part of its program to verify whether an applicant for
insurance affordability programs (for example, APTC and CSRs) is
enrolled in or eligible for employer-sponsored coverage. We intend to
propose amendments under which Exchanges will have the flexibility to
design their employer-sponsored coverage verification programs based on
a fulsome assessment of the risk for inappropriate payments of APTC and
CSRs, which would be based on reliable studies, research, and analyses
of an Exchange's own enrollment data. We believe this flexibility would
benefit employers, employees, Exchanges using the Federal platform, and
State Exchanges that operate their own eligibility and enrollment
platform because it would eliminate the burden of investing resources
to conduct and respond to random sampling.
In the 2019 Payment Notice final rule, we discussed the burden
associated with sampling based in part on the alternative process used
for the Exchanges. HHS incurred approximately $750,000 in costs to
design and operationalize this study and the study indicated that
$353,581 of APTC was potentially incorrectly granted to individuals who
inaccurately attested to their enrollment in or eligibility for a
qualifying eligible employer-sponsored plan. We placed calls to
employers to verify 15,125 cases but were only able to verify 1,948
cases. A large number of employers either could not be reached or were
unable to verify a consumer's information, resulting in a verification
rate of approximately 13 percent. The sample-size involved in the 2016
study did not represent a statistically significant sample of the
target population and did not fulfill all regulatory requirements for
sampling under paragraph (d)(4)(i) of Sec. 155.320.
We estimate that the overall one-time cost of implementing sampling
would be approximately $8 million for the Exchanges using the Federal
platform, and between $2 million and $7 million for other Exchanges,
depending on their enrollment volume and existing infrastructure.
Therefore, we estimate that the average per-Exchange cost of
implementing sampling that resembles the approach taken by the
Exchanges using the Federal platform would be approximately $4.5
million for State Exchanges that operate their own eligibility and
enrollment platform, for a total cost of $54 million for the 12 State
Exchanges that operate their own eligibility and enrollment platform
(operating in 11 States and the District of Columbia).
We are aware, however, that 4 State Exchanges that operate their
own eligibility and enrollment platform, have already incurred costs to
implement sampling and estimate that they have incurred one-time costs
of approximately $4.5 million per Exchange with a total of $18 million
and would only experience savings related to recurring costs.
Therefore, the one-time savings for Exchanges using the Federal
platform and the remaining State Exchanges that operate their own
eligibility and enrollment platform would be approximately $44 million.
We estimate the annual costs to conduct sampling on a statistically
significant sample size of approximately 1 million cases to be
approximately $6 million to $8 million for the Exchanges using the
Federal platform and State Exchanges that operate their own eligibility
and enrollment platform. This estimate includes operational activities
such as noticing, inbound and outbound calls to the Marketplace call
center, and adjudicating consumer appeals. We estimate that average
recurring cost for each State Exchange that operates its own
eligibility and enrollment platform to conduct sampling would be $7
million, and the total annual cost for the Exchanges using the Federal
platform and the 12 State Exchanges that operate their own eligibility
and enrollment platform would be $92 million. Relieving Exchanges of
the requirement to conduct sampling for plan years 2020 and 2021 would
therefore result in annual savings of approximately $92 million. We
seek comment on this estimate.
In addition to significant cost savings, these future plans would
provide more flexibility for states to design and implement a
verification process for employer-sponsored coverage that is tailored
to their unique populations, and would protect the integrity of states'
respective individual markets. Furthermore, we believe that this future
change would reduce burden on employers and employees, as the current
random sampling, notification, and information gathering processes
required significant time and resources to comply with, and likely
would be reduced under the alternative approach we are exploring.
6. Eligibility Redetermination During a Benefit Year (Sec. 155.330)
We propose to amend Sec. 155.330(e)(2)(i)(D) to clarify that the
Exchanges will not redetermine eligibility for APTC/CSRs for Medicare,
Medicaid/CHIP, and, if applicable, BHP for dual enrollees who provide
written consent for Exchanges to end their QHP coverage prior to
terminating the coverage. We anticipate that this would benefit dual
enrollees, as processing a voluntary termination mitigates the risk for
future tax liability for APTC/CSRs paid inappropriately during months
of overlapping coverage. It would also streamline the termination
process. Additionally, we believe this proposal would safeguard
consumers against being enrolled in unnecessary or duplicative
coverage. The proposal could reduce burden on Exchanges by allowing
them to streamline their PDM operations since eligibility
redeterminations for APTC/CSRs are not necessary when processing a
voluntary termination of coverage for a dual enrollee who has permitted
the Exchange to do so, and would provide Exchanges with more
flexibility in their operations.
HHS requests comment on the impacts of this proposal.
We propose to further amend Sec. 155.330(e)(2)(i)(D) by adding new
language that clarifies when the Exchange identifies deceased enrollees
via PDM, the Exchange will follow the process outlined in Sec.
155.430(d)(7) and terminate coverage retroactively to the date of
death, without the need to redetermine the eligibility of the deceased
enrollee. We believe this change would reduce the amount of time a
deceased enrollee remains in QHP coverage while receiving APTC/CSRs.
Additionally, we believe this proposal would not increase burden on
State Exchanges that operate their own eligibility and enrollment
platform because we believe these changes merely clarify the
operational process when conducting checks for deceased enrollees and
would not impose new requirements on State Exchanges that operate their
own eligibility and enrollment platform. Additionally, this proposal
might help streamline Exchanges' PDM operations, as eligibility
redeterminations are not necessary when termination of coverage is for
a deceased enrollee, and would provide Exchanges with more flexibility
in their operations.
We request comment on the impacts of this proposal.
[[Page 7149]]
7. Special Enrollment Periods (Sec. 155.420)
a. Exchange Enrollees Newly Ineligible for CSRs
We propose to amend Sec. 155.420(a)(4) to allow enrollees who
qualify for a special enrollment period due to becoming newly
ineligible for CSRs to change to a QHP one metal level higher or lower.
We anticipate that this would benefit applicable enrollees and
dependents by providing them with additional flexibility to change to a
plan better suited to their needs based on changes to their premiums
and/or cost-sharing requirements. In some cases it might help impacted
enrollees to maintain continuous coverage for themselves and for their
dependents when they otherwise would have no longer been able to afford
higher premiums or increased cost sharing requirements of their current
silver-level plan. Relatedly, this proposal might also provide some
benefit to the individual market risk pool by making it easier for
applicable enrollees to maintain continuous coverage in spite of
potentially significant changes in their out-of-pocket health care
costs. Regardless, we believe that this change would not have a
negative impact on the individual market risk pool, because most
applicable enrollees would be seeking to change coverage based on
financial rather than health needs. However, this proposal would impose
a small cost to Exchanges that have implemented plan category
limitations, because it would require a change to application and plan
selection system logic to permit applicable enrollees and dependents to
change to gold or bronze level plans after having previously restricted
them to silver level plans. We solicit comments on the extent to which
Exchanges would experience burden due to this proposed change.
Finally, because it represents a change to current system logic,
this proposal might impose some burden on FFE Direct Enrollment and
Enhanced Direct Enrollment partners. We solicit comment on this matter,
as well as more generally, on the impact this proposal.
b. Special Enrollment Period Limitations for Enrollees Who Are
Dependents
We believe that our proposal to add a new Sec.
155.420(a)(4)(iii)(C) would not impose burden on Exchanges, because it
would streamline the rules at Sec. 155.420(a)(4) by ensuring that all
existing enrollees are treated in the same way, and therefore might
simplify implementation. We also anticipate that it would help mitigate
confusion on the part of issuers, Exchanges, and consumers by
clarifying that the 2017 Market Stabilization Rule's intent was to
apply the same limitations to dependents who are currently enrolled in
Exchange coverage that it applies to current, non-dependent Exchange
enrollees.
However, we seek comment from Exchanges on whether this is the
case, and if not, on the costs that this proposal would impose in terms
of updates to application system logic, as well as potential consumer
burden based on the number of enrollees who might be impacted by this
type of plan category limitation.
c. Special Enrollment Period Prospective Coverage Effective Dates
The proposal to transition special enrollment periods currently
following regular effective date rules to instead be effective on the
first of the month following plan selection in Exchanges using the
Federal platform would improve long-term operational efficiency through
standardization for issuers and the Exchanges using the Federal
platform, while reducing consumer confusion and minimizing gaps in
coverage. We do not expect issuers to incur substantial new costs by
aligning these effective dates, as issuers routinely effectuate
coverage on the first of the month following plan selection or faster.
Additionally, because billing is tied to effective dates,
transitioning to these more expedited effective dates in the Exchanges
using the Federal platform would simplify issuer billing practices.
Operationalizing the aligned prospective effective dates may reduce
system errors and related casework, as well as confusion for consumers,
issuers, and caseworker and call center staff based on different rules
applying for different scenarios. Also, we believe eliminating the
requirement that Exchanges demonstrate that all of their participating
QHP issuers agree to effectuate coverage in a shorter timeframe would
reduce burden for both issuers and Exchanges. We seek comment on these
expectations.
d. Special Enrollment Period Retroactive Coverage Effective Dates
Our proposal to eliminate the special rule for retroactive
effective dates after an enrollment has been pended due to special
enrollment period verification and to simplify applicability of
retroactive effective date and binder payment rules to clarify the
ability of consumers effectuating enrollments with retroactive
effective dates to select prospective coverage by paying only one
month's premium would improve long-term operational efficiency for
issuers and Exchanges, while reducing confusion for consumers, issuers,
and caseworker and call center staff based on different rules for
different scenarios. We do not expect issuers to incur new costs in
streamlining applicability of the retroactive effective date rule.
Under current Sec. 155.400(e)(1)(iii), issuers already receive
transactions for retroactive coverage and assign coverage effective
dates either retroactively or prospectively based on consumer payments.
Our proposed change would simply eliminate the complexity for an issuer
to have to determine the appropriate binder payment rule to apply to an
enrollment with a retroactive effective date when issuers receive only
1 month's premium. Finally, because issuers, not Exchanges using the
Federal platform, are responsible for assigning effective dates based
on premium payments received under this policy, Exchanges using the
Federal platform would not incur costs based on this change.
We seek comment on these expectations.
e. Enrollees Covered by a Non-Calendar Year Plan Year QSEHRA
We anticipate that the proposal to amend Sec. 155.420(d)(1)(ii) to
codify the special enrollment period available to qualified individuals
and dependents who are provided a QSEHRA with a non-calendar year plan
year would impose some burden on Exchanges and off-Exchange individual
health insurance issuers that implement pre-enrollment eligibility
verification for special enrollment periods due to related updates to
the application and the need to train staff that reviews documents from
applicants to verify special enrollment period eligibility. However, we
believe that this burden would be limited because the ``non-calendar
year plan year special enrollment period'' is already subject to pre-
enrollment eligibility verification, and because individuals who
qualify may already be enrolled in Exchange coverage and therefore not
subject to pre-enrollment eligibility verification. We also anticipate
that this proposal would impose limited burden on FFE Enhanced Direct
Enrollment partners, because required changes for these partners would
be limited to updating application question wording.
Additionally, while this proposal would provide QSEHRA enrollees an
opportunity to change their individual health insurance plan, we
believe that uptake would be limited as most eligible employees would
likely not want to
[[Page 7150]]
change to a new QHP during the QHP's plan year because such a change
would result in their deductibles and other accumulators re-setting.
Similarly, we believe that burden on issuers related to adverse
selection would be limited due to low uptake because of the
disadvantages to enrollees of changing their coverage during its plan
year, and because the special enrollment period at Sec.
155.420(d)(1)(ii) is subject to plan category limitations per Sec.
155.420(a)(4)(iii). We solicit comments on this proposal, including
from Exchanges, on implementation burden and costs.
8. Effective Dates for Terminations (Sec. 155.430)
As discussed earlier in the preamble to Sec. 155.430, our proposal
would align the provision for termination after an enrollee experiences
a technical error that does not allow her to terminate her coverage or
enrollment through the Exchange with all other enrollee-initiated
termination effective date rules under Sec. 155.430. Specifically, at
the option of the Exchange, the enrollee would no longer have to
provide 14-days advance notice before the termination becomes
effective. Exchanges and issuers are not expected to incur new costs by
aligning these termination dates, as Exchanges and issuers are both
well acquainted with same-day termination transactions. Further,
similar to the 2019 updates to Sec. 155.430(d)(2), this proposal would
retain State Exchange flexibility to choose whether to implement this
change. Operationalizing the aligned termination dates might reduce
system errors and related casework, as well as confusion for consumers,
issuers, and caseworker and call center staff based on contradictory
rules for different scenarios.
9. Quality Rating Information Display Standards for Exchanges
(Sec. Sec. 155.1400 and 155.1405)
We anticipate our proposal to amend Sec. Sec. 155.1400 and
155.1405 to codify the flexibility to State Exchanges that operate
their own eligibility and enrollment platforms, to customize the
display of quality rating information on their websites would impose
minimal burden on State Exchanges. In particular, these State Exchanges
have the choice to pursue this flexibility or to display the quality
rating information assigned for each QHP as provided by HHS. Further, a
few State Exchanges during the display pilot have already chosen to
display quality rating information with some state-specific
customizations to incorporate additional state or local information or
to modify the names of the QRS star ratings.
10. FFE and SBE-FP User Fees (Sec. 156.50)
For 2021, we are considering two alternative proposals. First, we
are proposing to maintain the FFE and the SBE-FP user fee rates at
current levels, 3.0 and 2.5 percent of premiums, respectively.
Alternatively, we are considering and seeking comment on reducing the
user fee rates below the 2020 benefit year levels. If the user fees are
lowered below the 2020 plan year levels, FFE and SBE-FP user fee
transfers from issuers to the Federal Government would be lower
compared to those estimated for the prior benefit year.
11. State Selection of EHB-Benchmark Plan for Plan Years Beginning on
or After January 1, 2020 (Sec. 156.111)
We are proposing to amend Sec. 156.111(d) and add a new Sec.
156.111(f) to explicitly require states to annually notify HHS in a
form and manner specified by HHS by a date determined by HHS of any
state-required benefits in addition to EHB in accordance with Sec.
155.170 that are applicable to QHPs in the individual and/or small
group markets. We are also proposing at Sec. 156.111(d)(2) to specify
that if the state does not notify HHS of its state-required benefits
considered to be in addition to EHB by the annual reporting submission
deadline, or does not do so in the form and manner specified by HHS,
HHS will determine which benefits are in addition to EHB for the state
for the applicable year. We also propose to specify at Sec.
156.111(f)(1) through (6) the type of documentation states would be
required to submit as part of the annual reporting, which among other
requirements would need to be signed by a state official with authority
to make the submission on behalf of the state, to confirm the accuracy
of the submission. We recognize that this proposal would require states
annually reporting to HHS to submit additional paperwork to HHS on an
annual basis. However, because states are already required under Sec.
155.170 to identify which state-required benefits are in addition to
EHB and to defray the cost of those benefits, we believe any burden
experienced by states would be minimal and that this reporting
requirement would be complementary to the process the state should
already have in place for tracking and analyzing state-required
benefits. Additionally, states may opt not to report this information
and instead let HHS make this determination for them.
We are proposing this annual reporting requirement because we are
concerned that there may be states not defraying the costs of their
state-required benefits in addition to EHB in accordance with Federal
requirements. We therefore acknowledge that there may be states that do
not currently have in place an effective process for tracking,
analyzing, and identifying state-required benefits applicable to QHPs
in the individual and/or small group markets for purposes of
determining whether they are in addition to EHB and require defrayal.
For such states, the burden might be higher to meet the annual
reporting requirement. However, we believe the proposed annual
reporting requirement is necessary to help states be diligent about
their framework for determining which mandates are in addition to EHB
in accordance with Sec. 155.170. This proposal properly aligns with
Federal requirements for defraying the cost of state-mandated benefits,
would generally improve transparency with regard to the types of
benefit requirements states are enacting, and would provide the
necessary information to HHS for increased oversight over whether
states are appropriately determining which state-required benefits
require defrayal, whether states are correctly implementing the
definition of EHB, and whether QHP issuers are properly allocating the
portion of premiums attributable to EHB for purposes of calculating
PTCs. Because we believe the information we are proposing that states
report to HHS as part of this annual reporting should already be
readily accessible to states, we believe any burden would be limited to
the completion of the HHS templates, validation of that information,
and submission of the templates to HHS. These costs have been discussed
previously in the Collection of Information Requirements section.
We do not anticipate these proposals would add any new burden on
states that do not notify HHS of its required benefits considered to be
in addition to EHB by the annual reporting submission deadline, or does
not do so in the form and manner specified by HHS, as they would be
relying on HHS to make these determinations and fill out these
templates for them. We acknowledge that the HHS determination of which
requirements are in addition to EHB and therefore require defrayal
might conflict with the opinion of a state that does not annually
report to HHS. Because we are also proposing that HHS's determination
of which benefits are in
[[Page 7151]]
addition to EHB would become part of the definition of EHB for the
applicable state for the applicable year, this might require states to
defray more benefits than the state currently defrays or anticipated
having to defray. As such, in the former scenario, the annual reporting
proposal might generate additional costs for a state that defers the
task of identifying state-mandated benefits that require defrayal to
HHS in order to properly align the state with Federal requirements
regarding defrayal.
To the extent that this proposal would cause a state to newly
defray the cost of state-required benefits it should have always been
defraying in accordance with Sec. 155.170 but was neglecting to do so,
this would represent a transfer of costs from the issuer to the state,
as the issuer might have been previously covering the costs of benefits
for which the state should have been defraying. We again emphasize that
section 36B(b)(3)(D) of the Code specifies that the portion of the
premium allocable to state-required benefits in addition to EHB shall
not be taken into account in determining a PTC. In the event that the
annual reporting proposal causes states to newly identify state-
required benefits as being in addition to EHB that were previously
being incorrectly covered as part of EHB, this might decrease the
amount of PTC for enrollees in the state as the percent of premium
allocable to EHB would be reduced.
12. Provisions Related to Cost-Sharing (Sec. 156.130)
The Affordable Care Act provides for the reduction or elimination
of cost sharing for certain eligible individuals enrolled in QHPs
offered through the Exchanges. This assistance is intended to help many
low- and moderate-income individuals and families obtain health
insurance.
We set forth in this proposed rule the reductions in the maximum
annual limitation on cost sharing for silver plan variations.
Consistent with our analysis in previous Payment Notices, we developed
three model silver level QHPs and analyzed the impact on their AVs of
the reductions described in the PPACA to the estimated 2021 maximum
annual limitation on cost sharing for self only coverage of $8,550. We
do not believe the proposed changes to the maximum annual limitation on
cost sharing or the reductions in this parameter for silver plan
variations would result in a significant economic impact.
We also propose the premium adjustment percentage for the 2021
benefit year. Section 156.130(e) provides that the premium adjustment
percentage is the percentage (if any) by which the average per capita
premium for health insurance coverage for the preceding calendar year
exceeds such average per capita premium for health insurance for 2013.
The annual premium adjustment percentage sets the rate of increase for
three parameters detailed in the Affordable Care Act: The annual
limitation on cost sharing (defined at Sec. 156.130(a)), the required
contribution percentage used to determine eligibility for certain
exemptions under section 5000A of the Code, and the assessable payments
under sections 4980H(a) and 4980H(b). We believe that the premium
adjustment percentage of 1.3542376277 based on average per enrollee
private health insurance premiums (excluding Medigap and property and
casualty insurance) is well within the parameters used in the modeling
of the Affordable Care Act, and we do not expect that these proposed
updated values would alter CBO's May 2018 baseline estimates of the
budget impact beyond the changes described in the 2020 Payment Notice.
13. Cost-Sharing Requirements and Drug Manufacturers' Coupons (Sec.
156.130)
In this proposed rule, we propose to revise Sec. 156.130(h) in its
entirety to state, notwithstanding any other provision of the annual
limitation on cost sharing regulation, and to the extent consistent
with state law, amounts of direct support offered by drug manufacturers
to enrollees for specific prescription drugs towards reducing the cost
sharing incurred by an enrollee using any form are not required to be
counted toward the annual limitation on cost sharing. We believe that
this proposal would impose minimal burden, as it reflects the
longstanding practice of health insurance issuers and group health
plans determining whether drug manufacturer direct support to enrollees
for specific prescription drugs counts toward the annual limitation on
cost sharing.
14. Requirements for Timely Submission of Enrollment Reconciliation
Data (Sec. 156.265)
In the Establishment of Exchanges and Qualified Health Plans;
Exchange Standards interim final rule,\140\ we established standards
for the collection and transmission of enrollment information. At Sec.
156.265(f), we set forth standards on the enrollment reconciliation
process, specifying that issuers must reconcile enrollment with the
Exchange no less than once a month. Although the regulations in Sec.
156.265 require issuers to reconcile enrollment with the Exchange
monthly, they do not specify standards for the format or quality of
these data exchanges, such as the manner in which enrollment updates
must be reflected in updates of previously submitted enrollment data,
or the timeframe in which issuers should report data updates and data
errors to the Exchange. To clarify these procedures, we propose
amending Sec. 156.265(f) to require a QHP issuer to include in its
enrollment reconciliation submission to the Exchange the most recent
enrollment information that is available and that has been verified to
the best of its knowledge or belief. We also propose to amend Sec.
156.265(g) to direct a QHP issuer to update its enrollment records as
directed by the Exchange (or for QHP issuers in SBE-FPs, the Federal
platform), and to inform the Exchange (or for QHP issuers in SBE-FPs,
the Federal platform) if any such directions are in error within 30
days. In State Exchanges on the Federal platform, referenced in this
section to the Exchange should be understood to mean CMS, as
administrator of the Federal platform. We believe these amendments
would encourage more timely reconciliation and error reporting,
resulting in an improved consumer experience. However, because we
believe that issuers are already routinely conducting verifications of
internal enrollment data at various points in the year, we do not
believe that these clarifying standards on the process for submitting
enrollment and reconciliation data would materially impact issuer
burden, beyond what we estimated in the Exchange Establishment rules.
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\140\ See 77 FR 18309 at 18425.
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15. Dispute of HHS Payment and Collections Reports (Sec. 156.1210)
In the 2014 Payment Notice,\141\ we established provisions related
to confirmation and dispute of payment and collection reports. These
provisions were written under the assumption that issuers would
generally be able to provide these confirmations or disputes
automatically to HHS. We are proposing to amend Sec. 156.1210 by
lengthening the time to report payment errors from 15 days to 90 days
to allow issuers the option of researching, reporting, and correcting
errors through other channels. We do not believe that this proposal
would have any impact on issuer burden, beyond what was
[[Page 7152]]
previously estimated in the 2014 Payment Notice.
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\141\ See 78 FR 65045 at 65080.
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16. Medical Loss Ratio (Sec. Sec. 158.110, 158.140, 158.150, and
158.160)
In this proposed rule, we propose to amend Sec. 158.110(a) to
clarify that for MLR purposes, issuers must report expenses for
functions outsourced to or services provided by other entities
consistently with how issuers must report directly incurred expenses.
We do not expect this proposal to change the impact as it does not
change the existing requirements. We also propose to amend Sec.
158.140(b)(1)(i) to require issuers to deduct from incurred claims
price concessions received by the issuer, as well as prescription drug
rebates and other price concessions attributable to the issuer's
enrollees and received and retained by an entity providing pharmacy
benefit management services (including drug price negotiation services)
to the issuer, and propose conforming amendments to Sec. 158.160(b)(2)
to require such amounts to be reported as non-claims costs. While there
does not exist comprehensive public data on the amount, prevalence, or
retention rate for prescription drug rebates and other price
concessions retained by PBMs or other entities providing pharmacy
benefit management services, based on data from the 2017 MLR reporting
year, including the data from issuers who receive and report
prescription drug rebates, we estimate that this proposal could
increase rebate payments from issuers to consumers by $18.4 million per
year. Since issuers generally prefer to set premium rates at a level
that avoids rebates, and consequently potential rebate increases create
a downward pressure on premiums, this proposal is also likely to lead
to reductions in PTC transfers (which are a function of the premium
rate for the second lowest-cost silver plan applicable to a consumer,
the premium rate for the plan purchased by the consumer, and the
consumer's income level) from the Federal Government to certain
consumers in the individual market. We additionally propose to amend
Sec. 158.150(b)(2)(iv)(A)(5) to allow issuers in the individual market
to include the cost of certain wellness incentives as QIA in the MLR
calculation. Based on data from the 2017 MLR reporting year, we
estimate that this proposal could decrease rebate payments from issuers
to consumers by $0.2 million per year.
17. Regulatory Review Costs
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this proposed rule, we
should estimate the cost associated with regulatory review. Due to the
uncertainty involved with accurately quantifying the number of entities
that will review the rule, we assume that the total number of unique
commenters on last year's proposed rule will be the number of reviewers
of this proposed rule. We acknowledge that this assumption may
understate or overstate the costs of reviewing this rule. It is
possible that not all commenters reviewed last year's rule in detail,
and it is also possible that some reviewers chose not to comment on the
proposed rule. For these reasons we thought that the number of past
commenters would be a fair estimate of the number of reviewers of this
rule. We welcome any comments on the approach in estimating the number
of entities which will review this proposed rule.
We are required to issue a substantial portion of this rule each
year under our regulations and we estimate that approximately half of
the remaining provisions would cause additional regulatory review
burden that stakeholders do not already anticipate. We also recognize
that different types of entities are in many cases affected by mutually
exclusive sections of this proposed rule, and therefore, for the
purposes of our estimate we assume that each reviewer reads
approximately 50 percent of the rule, excluding the portion of the rule
that we are required to issue each year.
Using the wage information from the BLS for medical and health
service managers (Code 11-9111), we estimate that the cost of reviewing
this rule is $109.36 per hour, including overhead and fringe
benefits.\142\ Assuming an average reading speed, we estimate that it
would take approximately 1 hours for the staff to review the relevant
portions of this proposed rule that causes unanticipated burden. We
assume that 497 entities will review this proposed rule. For each
entity that reviews the rule, the estimated cost is approximately
$109.36. Therefore, we estimate that the total cost of reviewing this
regulation is approximately $54,352 ($109.36 x 497 reviewers).
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\142\ https://www.bls.gov/oes/current/oes_nat.htm.
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D. Regulatory Alternatives Considered
In developing the policies contained in this proposed rule, we
considered numerous alternatives to the presented proposals. Below we
discuss the key regulatory alternatives that we considered.
For the proposal to amend part 146, we considered not proposing a
requirement that a notice be provided to individuals with an offer of
an excepted benefit HRA from a non-Federal governmental plan. However,
we believe that a notice would provide these consumers with important
information about their excepted benefit HRA.
Instead of proposing to delete the regulations in part 149,
governing the ERRP, we considered taking no action and leaving the
regulations in place. We believe this alternative is less desirable
than repealing the regulations, which would reduce the overall volume
of Federal regulations.
In proposing the risk adjustment model recalibration in part 153,
we considered whether to add an additional sex and age category for
enrollees age 65 and over as part of our recalibration of the HHS
models, due to our proposal to stop using MarketScan[supreg] data.
However, upon finding different trends in the age 65 and over
population, as discussed in preamble, we are not proposing to add these
additional categories.
Regarding proposed changes to Sec. Sec. 155.330 and 155.430, we
considered taking no action to clarify Exchange operations regarding
processing voluntary terminations for Exchange enrollees who provide
written consent to permit the Exchange to end QHP coverage if they are
later found to also be enrolled in Medicare via PDM. We ultimately
determined however that these revisions were necessary to clarify that
eligibility need not be redetermined as part of terminations at the
request of enrollees resulting from Medicare PDM.
Additionally, we considered taking no action and proceeding with
terminating coverage following an eligibility determination when the
Exchange conducts periodic checks for deceased enrollees rather than
retroactively terminating back to the date of death. However, we
determined that the revisions would clarify that eligibility need not
be redetermined prior to terminating deceased enrollee coverage
retroactively to the date of death.
We considered taking no action regarding our proposal to add a new
Sec. 155.420(a)(4)(ii)(B) in order to allow enrollees and their
dependents who become newly ineligible for CSRs and are enrolled in a
silver-level QHP to change to a QHP one metal level higher or lower if
they elect to change their QHP enrollment. However, based on questions
and concerns from HHS Navigators and other enrollment assisters, as
well as from agents and brokers, the current policy likely prevents
some enrollees from
[[Page 7153]]
maintaining continuous coverage for themselves and for their dependents
due to a potentially significant change to their out of pocket costs.
Under our proposal, an enrollee impacted by an increase to his or her
monthly premium payment could change to a bronze-level plan, while an
enrollee who has concerns about higher copayment or coinsurance cost
sharing requirements could change to a gold-level plan. HHS believes
that this policy would likely have minimal impact on the individual
market risk pool because most applicable enrollees would be seeking to
change coverage based on changes to their financial circumstances
rather than ongoing or emerging health needs.
We also considered making no changes regarding our proposal to
clarify the 2017 Market Stabilization Rule's intent to apply the same
limitations to dependents who are currently enrolled in Exchange
coverage that it applies to current, non-dependent Exchange enrollees.
As discussed above, preamble language from the 2017 Market
Stabilization Proposed Rule explains that the requirement at Sec.
155.420(a)(4)(iii) would extend to enrollees who are on an application
where a new applicant is enrolling in coverage through a special
enrollment period, using general terms to convey that restrictions
should apply to enrollees and newly-enrolling individuals regardless of
the dependent or parent or guardian status of a new enrollee. However,
because this intended aspect of the limitation is not articulated in
regulation, we were concerned that the rule's current wording would
cause confusion among issuers, consumers, and Exchanges. Additionally,
this proposed change is consistent with HHS's goal to establish
equivalent treatment for all special enrollment period eligible
enrollees, and with the policy goal of preventing enrollees from
changing plans in the middle of the coverage year based on ongoing or
newly emerging health issues.
In proposing that special enrollment periods currently following
regular effective date rules would instead be effective on the first of
the month following plan selection in Exchanges using the Federal
platform, we considered whether we could implement this change through
sub-regulatory guidance, since for many of these special enrollment
periods, Exchanges have discretion under Sec. 155.420(b)(2)(i), (iv),
and (v) to provide an effective date on the first of the month
following plan selection, or under Sec. 155.420(b)(3) to ensure that
coverage is effective on an appropriate date based on the circumstances
of the special enrollment period. However, Exchange discretion is not
available under current regulations for several special enrollment
periods that use regular effective dates; that is, HHS could not apply
faster effective dates in the Exchanges using the Federal platform
without regulatory changes for certain special enrollment periods.
These are the special enrollment periods available under Sec.
155.420(d)(6)(i), (ii), and (v) and (d)(8) and (10). Only applying
faster effective dates for some, but not all, special enrollment
periods that currently use regular effective date rules would not
accomplish our goals of standardization and improving long-term
operational efficiency. We believe the proposed regulatory change is
necessary to align all prospective special enrollment periods under one
effective date rule.
In proposing to align retroactive effective date and binder payment
rules under Sec. 155.400(e)(1)(iii), we considered eliminating both
Sec. 155.400(e)(1)(v) (as we propose), but revising, rather than
eliminating, Sec. 155.420(b)(5). Section 155.420(b)(5) provides that
if a consumer's enrollment is delayed until after the verification of
the consumer's eligibility for a special enrollment period, and the
assigned effective date would require the consumer to pay 2 or more
months of retroactive premium to effectuate coverage or avoid
cancellation, the consumer has the option to choose a coverage
effective date that is no more than 1 month later than had previously
been assigned. However, we determined that revising this provision
would cause more confusion than standardizing retroactive effective
date and binder payment rules under Sec. 155.400(e)(1)(iii). Instead,
we propose to amend Sec. 155.400(e)(1)(iii) to state more explicitly
that any consumer who can effectuate coverage with a retroactive
effective date, including those whose enrollment is delayed until after
special enrollment period verification, would also have the option to
effectuate coverage with the applicable prospective coverage.
Under this proposed rule, a consumer could choose to only pay for 1
month of coverage by the applicable deadline, notwithstanding the
retroactive effective date that the Exchange otherwise would be
required to ensure. Even though very few consumers wait more than a few
days for HHS to review their special enrollment period verification
documents and provide a response (as discussed in the preamble for this
proposal), we want to ensure that those few consumers whose coverage is
delayed by at least 1 month due to special enrollment period
verification would have the same options as any other consumers who are
eligible to receive coverage with a retroactive effective date.
As described in the HRA rule,\143\ HHS included consumers who are
newly provided a QSEHRA in the class of persons eligible for a new
special enrollment period established for qualified individuals,
enrollees, and dependents who newly gain access to an individual
coverage HRA. We also expressed our intent to treat a QSEHRA with a
non-calendar year plan year as a group health plan for the limited
purpose of the non-calendar year plan year special enrollment period,
and to codify this interpretation in future rulemaking. Our goal is to
ensure employees and their dependents with a non-calendar year plan
year QSEHRA have the same opportunity to change individual health
insurance coverage outside of the individual market open enrollment
period as those who are enrolled in a non-calendar year plan year
individual coverage HRA.
---------------------------------------------------------------------------
\143\ 84 FR 28888.
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In developing the proposal for annual reporting of state-required
benefits in addition to EHB, we considered a variety of alternatives,
including making no modifications. We also considered instead issuing a
toolkit or guidance for states to assist with identifying state-
required benefits in addition to EHB and properly defraying the cost of
those benefits in accordance with Sec. 155.170. However, neither of
these options would offer HHS direct insight into the frequency with
which states require benefits in addition to EHB to be covered.
Further, we believe that requiring states to annually report to HHS on
their state-required benefits applicable to QHPs in the individual and/
or small group market will also help states be diligent about their
framework for determining which mandates are in addition to EHB in
accordance with Sec. 155.170. This proposal properly aligns with
Federal requirements for defraying the cost of state-mandated benefits,
would generally improve transparency with regard to the types of
benefit requirements states are enacting, and would provide the
necessary information to HHS for increased oversight over whether
states are appropriately determining which state-required benefits
require defrayal, whether states are correctly implementing the
definition of EHB, and whether QHP issuers are properly allocating the
portion of premiums
[[Page 7154]]
attributable to EHB for purposes of calculating PTCs.
We also considered revising the policy such that Exchanges would
again be the entity responsible for identifying which additional state-
required benefits, if any, are in addition to EHB instead of the state.
However, as noted previously in the 2017 Payment Notice, we changed the
policy to make the state the entity responsible for making this
determination instead of the Exchange because we believe states are
generally more familiar with state-required benefits. We also
considered revising Sec. 155.170 to make HHS the entity responsible
for determining which state-required benefits are in addition to EHB in
every state such that HHS would always determine which mandates require
defrayal, but the QHP issuers would still be responsible for
quantifying the costs for these additional mandates and reporting them
to the state, at which point the state would be expected to make
payments directly to the enrollee or the QHP issuer. However, because
we still believe states are generally most familiar with state-required
benefits and, because we support state flexibility, we believe that so
long as the annual reporting requirement demonstrates to HHS that
states are complying with Sec. 155.170, states should remain the
entity responsible for making these determinations. We solicit comment
on all aspects of the annual reporting proposal at Sec. 156.111 and
specifically whether a different approach would be preferable.
In proposing to amend Sec. 156.270(b)(1) to require QHP issuers to
send to enrollees a termination notice for all termination events, we
considered whether to revert to the original language in the first
iteration of Sec. 156.270, which required a termination notice when an
enrollee's coverage was terminated ``for any reason.'' However, because
the termination notice requirement is triggered under this paragraph
``[i]f a QHP issuer terminates an enrollee's coverage or enrollment in
a QHP through the Exchange . . ., '' we were concerned that this could
be read to require termination notices for issuer-initiated
terminations only. To be clear that we are proposing to require
termination notices for the full range of termination events described
under Sec. 155.430(b), including those initiated by an enrollee, we
are instead proposing to refer broadly to the reasons listed in Sec.
155.430(b).
For the proposed amendments to Sec. 158.150, we considered making
no change to the current regulation that does not explicitly allow
issuers in the individual market to include the cost of certain
wellness incentives as QIA in the MLR calculation. However, we believe
that changes to this section would ensure that it is interpreted
consistently and that issuers therefore face a level playing field. We
also believe that changes to this section would generally increase
consumer choice and access to wellness programs, as well as ensure that
there would be no obstacles to HHS implementing a demonstration project
under which individual market issuers would be permitted to offer
certain health-based wellness programs.
E. Regulatory Flexibility Act
The Regulatory Flexibility Act, (5 U.S.C. 601, et seq.), requires
agencies to prepare an initial regulatory flexibility analysis to
describe the impact of the proposed rule on small entities, unless the
head of the agency can certify that the rule will not have a
significant economic impact on a substantial number of small entities.
The RFA generally defines a ``small entity'' as (1) a proprietary firm
meeting the size standards of the Small Business Administration (SBA),
(2) a not-for-profit organization that is not dominant in its field, or
(3) a small government jurisdiction with a population of less than
50,000. States and individuals are not included in the definition of
``small entity.'' HHS uses a change in revenues of more than 3 to 5
percent as its measure of significant economic impact on a substantial
number of small entities.
In this proposed rule, we propose standards for the risk adjustment
and RADV programs, which are intended to stabilize premiums and reduce
incentives for issuers to avoid higher-risk enrollees. Because we
believe that insurance firms offering comprehensive health insurance
policies generally exceed the size thresholds for ``small entities''
established by the SBA, we do not believe that an initial regulatory
flexibility analysis is required for such firms.
We believe that health insurance issuers and group health plans
would be classified under the North American Industry Classification
System code 524114 (Direct Health and Medical Insurance Carriers).
According to SBA size standards, entities with average annual receipts
of $41.5 million or less would be considered small entities for these
North American Industry Classification System codes. Issuers could
possibly be classified in 621491 (HMO Medical Centers) and, if this is
the case, the SBA size standard would be $35 million or less.\144\ We
believe that few, if any, insurance companies underwriting
comprehensive health insurance policies (in contrast, for example, to
travel insurance policies or dental discount policies) fall below these
size thresholds. Based on data from MLR annual report \145\ submissions
for the 2017 MLR reporting year, approximately 90 out of 500 issuers of
health insurance coverage nationwide had total premium revenue of $41.5
million or less. This estimate may overstate the actual number of small
health insurance companies that may be affected, since over 72 percent
of these small companies belong to larger holding groups, and many, if
not all, of these small companies are likely to have non-health lines
of business that will result in their revenues exceeding $41.5 million.
Only 10 of these 90 potentially small entities, three of them part of
larger holding groups, are estimated to experience a change in rebates
under the proposed amendments to the MLR provisions of this proposed
rule in part 158. Therefore, we do not expect the proposed MLR
provisions of this rule to affect a substantial number of small
entities.
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\144\ https://www.sba.gov/document/support--table-size-standards.
\145\ Available at https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html.
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We believe that a small number of non-Federal Government
jurisdictions with a population of less than 50,000 would offer
employees an excepted benefit HRA, and would therefore be subject to
the proposed notice requirement in part 146. Therefore, we do not
believe that an initial regulatory flexibility analysis is required for
such firms.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has fewer than 100 beds. This proposed rule would
not affect small rural hospitals. Therefore, the Secretary has
determined that this would not have a significant impact on the
operations of a substantial number of small rural hospitals.
F. Unfunded Mandates
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits and take
certain other
[[Page 7155]]
actions before issuing a proposed rule that includes any Federal
mandate that may result in expenditures in any 1 year by a state,
local, or Tribal governments, in the aggregate, or by the private
sector, of $100 million in 1995 dollars, updated annually for
inflation. Currently, that threshold is approximately $154 million.
Although we have not been able to quantify all costs, we expect the
combined impact on state, local, or Tribal governments and the private
sector to be below the threshold.
G. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it issues a proposed rule that imposes
substantial direct costs on state and local governments, preempts state
law, or otherwise has federalism implications.
In compliance with the requirement of Executive Order 13132 that
agencies examine closely any policies that may have federalism
implications or limit the policy making discretion of the states, we
have engaged in efforts to consult with and work cooperatively with
affected states, including participating in conference calls with and
attending conferences of the NAIC, and consulting with state insurance
officials on an individual basis.
While developing this rule, we attempted to balance the states'
interests in regulating health insurance issuers with the need to
ensure market stability. By doing so, we complied with the requirements
of Executive Order 13132.
Because states have flexibility in designing their Exchange and
Exchange-related programs, state decisions will ultimately influence
both administrative expenses and overall premiums. States are not
required to establish an Exchange or risk adjustment program. For
states that elected previously to operate an Exchange, those states had
the opportunity to use funds under Exchange Planning and Establishment
Grants to fund the development of data. Accordingly, some of the
initial cost of creating programs was funded by Exchange Planning and
Establishment Grants. After establishment, Exchanges must be
financially self-sustaining, with revenue sources at the discretion of
the state. Current State Exchanges charge user fees to issuers.
In our view, while this proposed rule would not impose substantial
direct requirement costs on state and local governments, this
regulation has federalism implications due to potential direct effects
on the distribution of power and responsibilities among the state and
Federal governments relating to determining standards relating to
health insurance that is offered in the individual and small group
markets. We are also proposing to require non-Federal governmental plan
sponsors to provide a notice when offering an excepted benefit HRA, but
expect state and local governments to incur minimal costs to meet the
proposed requirements in this rule.
We also believe this regulation has federalism implications due to
our proposals regarding clarifications regarding the PDM process,
specifically for QHP terminations resulting from Medicare, Medicaid/
CHIP, BHP (if applicable) or deceased enrollee PDM. In these instances,
HHS also believes that the federalism implications are substantially
mitigated because the proposed requirements merely clarify that the
Exchange is following termination guidelines that differ from the
processes when Exchanges are terminating only APTC/CSRs as part of the
standard PDM processes. Furthermore, these clarifications would not
impose new requirements on State Exchanges that operate their own
eligibility and enrollment platform, but rather provides guidance that
State Exchanges that operate their own eligibility and enrollment
platform can choose to incorporate into their current operations for
PDM.
We believe there may be federalism implications to our two
proposals related to plan category limitations: (1) Our proposal to add
a new Sec. 155.420(a)(4)(ii)(B) in order to allow enrollees and their
dependents who become newly ineligible for CSRs and are enrolled in a
silver-level QHP, to select a QHP one metal level higher or lower if
they elect to change their QHP enrollment; and (2) to add a new Sec.
155.420(a)(4)(iii)(C) to apply the same limitations to dependents who
are currently enrolled in Exchange coverage that it applies to current,
non-dependent Exchange enrollees. There might be operational costs to
State Exchanges that have already implemented plan category limitations
due to the need to update their application logic to reflect these
changes. However, given the 2017 Market Stabilization Rule preamble
language discussed above, it is possible that State Exchanges are
already in compliance with our proposal to clarify the application of
the same limitations to dependents who are currently enrolled in
Exchange coverage that apply to current, non-dependent Exchange
enrollees. We request comment on how many State Exchanges currently
implement plan category limitations, as well as estimates related to
how much time and expense would be required to update these systems to
comply with these two proposals.
Additionally, we expect that our proposal to amend Sec.
155.420(d)(1)(ii) to codify the special enrollment period for qualified
individuals and dependents who are provided a QSEHRA with a non-
calendar year plan year will have some federalism implications, because
it would require State Exchanges to update the wording of their
applications, and to update instructions for verifying a special
enrollment period due to a loss of MEC to include applicants with a
non-calendar year plan year QSEHRA. Additionally, State Exchanges, as
well as FFE Direct Enrollment and Enhanced Direct Enrollment partners,
might see a nominal increase in the number of consumers obtaining
coverage through the non-calendar year plan year special enrollment
period at Sec. 155.420(d)(1)(ii). However, we expect this number to be
low. We request comment on these expectations.
We also believe that there may be federalism implications related
to the proposed requirement for states to annually notify HHS, in a
form and manner specified by HHS, of any state-required benefits in
addition to EHB in accordance with Sec. 155.170 that are applicable to
QHPs in the individual and/or small group market. States that do not
notify HHS of its required benefits considered to be in addition to EHB
by the annual reporting submission deadline, or does not do so in the
form and manner specified by HHS, would be relying on HHS to make these
determinations. We acknowledge that the HHS determination of which
requirements are in addition to EHB and therefore require defrayal
might conflict with the opinion of a state that does not annually
report to HHS. Such concerns are mitigated however because states can
avoid such a result by submitting the proposed report.
We do not anticipate any federalism implications related to our
proposal that special enrollment periods currently following regular
effective date rules would instead be effective on the first of the
month following plan selection in the Exchanges using the Federal
platform. We believe State Exchanges are best positioned to determine
which effective date rules meet the needs of their issuers and
consumers. As such, under our proposed changes, State Exchanges could
retain their current effective date rules or implement faster ones
without needing to demonstrate issuer concurrence.
We do not expect there to be federalism implications related to our
proposal to remove the separate
[[Page 7156]]
retroactive effective date rule for enrollments pended due to special
enrollment period verification under Sec. 155.420(b)(5). Neither the
retroactive binder payment rule specific to enrollments pended due to
special enrollment period eligibility verification at Sec.
155.400(e)(1)(v), nor the original retroactive binder payment rule at
Sec. 155.400(e)(1)(iii), applies outside of Exchanges using the
Federal platform. Although current Sec. 155.420(b)(5) does apply to
State Exchanges, a State Exchange that has implemented special
enrollment period verification would retain flexibility to apply the
policy that if a consumer's enrollment is delayed until after the
verification of the consumer's eligibility for a special enrollment
period, and the assigned effective date would require the consumer to
pay 2 or more months of retroactive premium to effectuate coverage or
avoid cancellation, the consumer has the option to choose a coverage
effective date that is no more than 1 month later than had previously
been assigned.
We do not anticipate any federalism implications related to our
proposal to require QHP issuers to send to enrollees a termination
notice for all termination events described in Sec. 155.430(b).
We do not anticipate any federalism implications related to our
proposal described in Sec. 155.430(d) to align the provision for
termination after experiencing a technical error that did not allow the
enrollee to terminate his or her coverage or enrollment through the
Exchange with all other enrollee-initiated termination effective date
rules under Sec. 155.430 that, at the option of the Exchange, no
longer require 14-days advance notice.
H. Congressional Review Act
This proposed rule is subject to the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801, et seq.), which specifies that before a rule can
take effect, the Federal agency promulgating the rule shall submit to
each House of the Congress and to the Comptroller General a report
containing a copy of the rule along with other specified information,
and has been transmitted to the Congress and the Comptroller for
review. This proposed rule is a ``major rule'' as that term is defined
in 5 U.S.C. 804(2), because it is likely to result in an annual effect
on the economy of $100 million or more.
I. Reducing Regulation and Controlling Regulatory Costs
Executive Order 13771, titled Reducing Regulation and Controlling
Regulatory Costs, was issued on January 30, 2017. Section 2(a) of
Executive Order 13771 requires an agency, unless prohibited by law, to
identify at least two existing regulations to be repealed when the
agency publicly proposes for notice and comment, or otherwise issues, a
new regulation. In furtherance of this requirement, section 2(c) of
Executive Order 13771 requires that the new incremental costs
associated with new regulations shall, to the extent permitted by law,
be offset by the elimination of existing costs associated with at least
two prior regulations.
This proposed rule, if finalized as proposed, is expected to be
E.O. 13771 deregulatory action. We estimate cost savings of
approximately $135.66 million in 2020 and $91.95 million in 2021 and
annual costs of approximately $50,000 thereafter. Thus the annualized
value of cost savings, as of 2016 and calculated over a perpetual time
horizon with a 7 percent discount rate, would be 10.55 million.
List of Subjects
45 CFR Part 146
Health care, Health insurance, Reporting and recordkeeping
requirements.
45 CFR Part 149
Health care, Health insurance, Reporting and recordkeeping
requirements.
45 CFR Part 155
Administrative practice and procedure, Advertising, Brokers,
Conflict of interests, Consumer protection, Grants administration,
Grant programs-health, Health care, Health insurance, Health
maintenance organizations (HMO), Health records, Hospitals, Indians,
Individuals with disabilities, Intergovernmental relations, Loan
programs-health, Medicaid, Organization and functions (Government
agencies), Public assistance programs, Reporting and recordkeeping
requirements, Technical assistance, Women and youth.
45 CFR Part 156
Administrative practice and procedure, Advertising, Advisory
committees, Conflict of interests, Consumer protection, Grant programs-
health, Grants administration, Health care, Health insurance, Health
maintenance organization (HMO), Health records, Hospitals, Indians,
Individuals with disabilities, Loan programs-health, Medicaid,
Organization and functions (Government agencies), Public assistance
programs, Reporting and recordkeeping requirements, State and local
governments, Sunshine Act, Technical assistance, Women, Youth.
45 CFR Part 158
Administrative practice and procedure, Claims, Health care, Health
insurance, Penalties, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, under the authority at 5
U.S.C. 301, the Department of Health and Human Services proposes to
amend 45 CFR subtitle A, subchapter B, as set forth below.
PART 146--REQUIREMENTS FOR THE GROUP HEALTH INSURANCE MARKET
0
1. The authority citation for part 146 continues to read as follows:
Authority: 42 U.S.C. 300gg-1 through 300gg-5, 300gg-11 through
300gg-23, 300gg-91, and 300-gg-92.
0
2. Section 146.145 is amended by adding paragraph (b)(3)(viii)(E) to
read as follows:
Sec. 146.145 Special rules relating to group health plans.
* * * * *
(b) * * *
(3) * * *
(viii) * * *
(E) Notice requirement. For plan years beginning on or after [DATE
30-DAYS AFTER THE EFFECTIVE DATE OF THE FINAL RULE], the HRA or other
account-based group health plan must provide a notice that describes
conditions pertaining to eligibility to receive benefits, annual or
lifetime caps, or other limits on benefits under the plan, and a
description or summary of the benefits. This notice must be provided no
later than 90 days after an employee becomes a participant and annually
thereafter, in a manner reasonably calculated to ensure actual receipt
by participants eligible for the HRA or other account-based group
health plan.
* * * * *
PART 149--[REMOVED and RESERVED]
0
3. Part 149 is removed and reserved.
[[Page 7157]]
PART 155--EXCHANGE ESTABLISHMENT STANDARDS AND OTHER RELATED
STANDARDS UNDER THE AFFORDABLE CARE ACT
0
4. The authority citation for part 155 continues to read as follows:
Authority: 42 U.S.C. 18021-18024, 18031-18033, 18041-18042,
18051, 18054, 18071, and 18081-18083.
0
5. Section 155.330 is amended by revising paragraph (e)(2)(i)(D) to
read as follows:
Sec. 155.330 Eligibility redetermination during a benefit year.
* * * * *
(e) * * *
(2) * * *
(i) * * *
(D) If the enrollee does not respond contesting the updated
information within the 30-day period specified in paragraph
(e)(2)(i)(B) of this section, proceed in accordance with paragraphs
(e)(1)(i) and (ii) of this section, provided the enrollee has not
directed the Exchange to terminate his or her coverage under such
circumstances, in which case the Exchange will terminate the enrollee's
coverage in accordance with Sec. 155.430(b)(1)(ii), and provided the
enrollee has not been determined to be deceased, in which case the
Exchange will terminate the enrollee's coverage in accordance with
Sec. 155.430(d)(7).
* * * * *
0
6. Section 155.400 is amended by revising paragraphs (e)(1)(i) through
(iii) and removing paragraph (e)(1)(iv) to read as follows:
Sec. 155.400 Enrollment of qualified individuals into QHPs.
* * * * *
(e) * * *
(1) * * *
(i) For prospective coverage to be effectuated under regular
coverage effective dates, as provided for in Sec. 155.410(f), the
binder payment must consist of the first month's premium, and the
deadline for making the binder payment must be no earlier than the
coverage effective date, and no later than 30 calendar days from the
coverage effective date.
(ii) For prospective coverage to be effectuated under special
effective dates, as provided for in Sec. 155.420(b)(2) and (3), the
binder payment must consist of the first month's premium, and the
deadline for making the binder payment must be no earlier than the
coverage effective date and no later than 30 calendar days from the
date the issuer receives the enrollment transaction or the coverage
effective date, whichever is later.
(iii) For coverage to be effectuated under retroactive effective
dates, as provided for in Sec. 155.420(b)(2), including when
retroactive effective dates are due to a delay until after special
enrollment period verification, the binder payment must consist of the
premium due for all months of retroactive coverage through the first
prospective month of coverage, and the deadline for making the binder
payment must be no earlier than 30 calendar days from the date the
issuer receives the enrollment transaction. If only the premium for 1
month of coverage is paid, only prospective coverage should be
effectuated, in accordance with Sec. 155.420(b)(3).
* * * * *
0
7. Section 155.420 is amended by --
0
a. Revising paragraphs (a)(4)(ii) and (iii), (b)(1) introductory text,
and (b)(3);
0
b. Removing paragraph (b)(5); and
0
c. Revising paragraph (d)(1)(ii).
The revisions and addition read as follows:
Sec. 155.420 Special enrollment periods.
(a) * * *
(4) * * *
(ii)(A) If an enrollee and his or her dependents become newly
eligible for cost-sharing reductions in accordance with paragraph
(d)(6)(i) or (ii) of this section and are not enrolled in a silver-
level QHP, the Exchange must allow the enrollee and his or her
dependents to change to a silver-level QHP if they elect to change
their QHP enrollment; or
(B) If an enrollee and his or her dependents become newly
ineligible for cost-sharing reductions in accordance with paragraph
(d)(6)(i) or (ii) of this section and are enrolled in a silver-level
QHP, the Exchange must allow the enrollee and his or her dependents to
change to a QHP one metal level higher or lower, if they elect to
change their QHP enrollment.
(iii) For the other triggering events specified in paragraph (d) of
this section, except for paragraphs (d)(2)(i), (d)(4), and (d)(6)(i)
and (ii) of this section for becoming newly eligible or ineligible for
CSRs and paragraphs (d)(8), (9), (10), (12), and (14) of this section:
(A) If an enrollee qualifies for a special enrollment period, the
Exchange must allow the enrollee and his or her dependents, if
applicable, to change to another QHP within the same level of coverage
(or one metal level higher or lower, if no such QHP is available), as
outlined in Sec. 156.140(b) of this subchapter;
(B) If a dependent qualifies for a special enrollment period, and
an enrollee who does not also qualify for a special enrollment period
is adding the dependent to his or her QHP, the Exchange must allow the
enrollee to add the dependent to his or her current QHP; or, if the
QHP's business rules do not allow the dependent to enroll, the Exchange
must allow the enrollee and his or her dependents to change to another
QHP within the same level of coverage (or one metal level higher or
lower, if no such QHP is available), as outlined in Sec. 156.140(b) of
this subchapter, or enroll the new qualified individual in a separate
QHP; or
(C) If a qualified individual who is not an enrollee qualifies for
a special enrollment period and has one or more dependents who are
enrollees who do not also qualify for a special enrollment period, the
Exchange must allow the newly enrolling qualified individual to add him
or herself to a dependent's current QHP; or, if the QHP's business
rules do not allow the qualified individual to enroll in the
dependent's current QHP, to enroll with his or her dependent(s) in
another QHP within the same level of coverage (or one metal level
higher or lower, if no such QHP is available), as outlined in Sec.
156.140(b) of this subchapter, or enroll him or herself in a separate
QHP.
* * * * *
(b) * * *
(1) Regular effective dates. Except as specified in paragraphs
(b)(2) and (3) of this section, for a QHP selection received by the
Exchange from a qualified individual--
* * * * *
(3) Option for earlier effective dates. (i) For a QHP selection
received by the Exchange under a special enrollment period for which
regular effective dates specified in paragraph (b)(1) of this section
would apply, the Exchange may provide a coverage effective date that is
earlier than specified in such paragraph, and a federally-facilitated
Exchange or a State Exchange on the Federal platform will ensure that
coverage is effective on the first day of the month following plan
selection.
(ii) For a QHP selection received by the Exchange under a special
enrollment period for which special effective dates specified in
paragraph (b)(2)(ii) of this section would apply, the Exchange may
provide a coverage effective date that is earlier than specified in
such paragraph.
* * * * *
(d) * * *
(1) * * *
[[Page 7158]]
(ii) Is enrolled in any non-calendar year group health plan,
individual health insurance coverage, or qualified small employer
health reimbursement arrangement (as defined in section 9831(d)(2) of
the Internal Revenue Code); even if the qualified individual or his or
her dependent has the option to renew or re-enroll in such coverage.
The date of the loss of coverage is the last day of the plan year;
* * * * *
0
8. Section 155.430 is amended by revising paragraphs (b)(1)(ii) and
(d)(9) to read as follows:
Sec. 155.430 Termination of Exchange enrollment or coverage.
* * * * *
(b) * * *
(1) * * *
(ii) The Exchange must provide an opportunity at the time of plan
selection for an enrollee to choose to remain enrolled in a QHP if he
or she becomes eligible for other minimum essential coverage and the
enrollee does not request termination in accordance with paragraph
(b)(1)(i) of this section. If an enrollee does not choose to remain
enrolled in a QHP in such situation, the Exchange must initiate
termination of his or her enrollment in the QHP upon completion of the
process specified in Sec. 155.330(e)(2).
* * * * *
(d) * * *
(9) In case of a retroactive termination in accordance with
paragraph (b)(1)(iv)(A) of this section, the termination date will be
no sooner than the date that would have applied under paragraph (d)(2)
of this section, based on the date that the enrollee can demonstrate he
or she contacted the Exchange to terminate his or her coverage or
enrollment through the Exchange, had the technical error not occurred.
* * * * *
0
9. Section 155.1400 is revised to read as follows:
Sec. 155.1400 Quality rating system.
The Exchange must prominently display quality rating information
for each QHP on its website, in accordance with Sec. 155.205(b)(1)(v),
in a form and manner specified by HHS.
0
10. Section 155.1405 is revised to read as follows:
Sec. 155.1405 Enrollee satisfaction survey system.
The Exchange must prominently display results from the Enrollee
Satisfaction Survey for each QHP on its website, in accordance with
Sec. 155.205(b)(1)(iv), in a form and manner specified by HHS.
PART 156--HEALTH INSURANCE ISSUER STANDARDS UNDER THE AFFORDABLE
CARE ACT, INCLUDING STANDARDS RELATED TO EXCHANGES
0
11. The authority citation for part 156 is revised to read as follows:
Authority: 42 U.S.C. 18021-18024, 18031-18032, 18041-18042,
18044, 18054, 18061, 18063, 18071, 18082, and 26 U.S.C. 36B.
Sec. 156.20 [Amended]
0
12. Section 156.20 is amended by removing the definition of
``Generic''.
0
13. Section 156.111 is amended by--
0
a. Revising the section heading and paragraph (d) introductory text;
and
0
b. Adding paragraphs (d)(2) and (f).
The revisions and additions read as follows:
Sec. 156.111 State selection of EHB-benchmark plan for plan years
beginning on or after January 1, 2020, and annual reporting of state-
required benefits.
* * * * *
(d) A State must notify HHS of the selection of a new EHB-benchmark
plan by a date to be determined by HHS for each applicable plan year
and, in accordance with paragraph (f) of this section, of any State-
required benefits that are in addition to EHB identified under Sec.
155.170(a)(3) of this subchapter.
* * * * *
(2) If the State does not notify HHS of its State-required benefits
that are in addition to EHB identified under Sec. 155.170(a)(3) of
this subchapter in accordance with paragraph (f) of this section, HHS
will determine which benefits are in addition to EHB for the applicable
plan year in the State, consistent with Sec. 155.170(a)(3) of this
subchapter.
* * * * *
(f) A State must submit to HHS in a form and manner and by a date
specified by HHS, a document that:
(1) Is accurate as of the day that is at least 60 days prior to the
annual reporting submission deadline set by HHS and that lists all
State benefit requirements applicable to QHPs in the individual and/or
small group market under state mandates imposed on or before December
31, 2011, and that were not withdrawn or otherwise no longer effective
before December 31, 2011, and any State benefit requirements that were
imposed any time after December 31, 2011;
(2) Specifies which of those State-required benefits listed in
accordance with paragraph (f)(1) of this section the State has
identified as in addition to EHB and subject to defrayal in accordance
with Sec. 155.170 of this subchapter;
(3) Specifies which of those State-required benefits listed in
accordance with paragraph (f)(1) of this section the State has
identified as not in addition to EHB and not subject to defrayal in
accordance with Sec. 155.170 of this subchapter, and describes the
basis for the state's determination;
(4) Provides other information about those State-required benefits
listed in accordance with paragraph (f)(1) of this section that is
necessary for HHS oversight, as specified by HHS;
(5) Is signed by a state official with authority to make the
submission on behalf of the state certifying the accuracy of the
submission; and
(6) Is updated annually, in a form and manner and by a date
specified by HHS, to include any new State benefit requirements, and to
indicate whether benefit requirements previously reported to HHS under
this paragraph (f) have been amended, repealed, or otherwise affected
by state regulatory or legislative action.
0
14. Section 156.130 is amended by revising paragraph (h) to read as
follows:
Sec. 156.130 Cost-sharing requirements.
* * * * *
(h) Use of drug manufacturer coupons. Notwithstanding any other
provision of this section, and to the extent consistent with State law,
amounts paid toward reducing the cost sharing incurred by an enrollee
using any form of direct support offered by drug manufacturers for
specific prescription drugs may be, but are not required to be, counted
toward the annual limitation on cost sharing, as defined in paragraph
(a) of this section.
0
15. Section 156.265 is amended by revising paragraphs (f) and (g) to
read as follows:
Sec. 156.265 Enrollment process for qualified individuals.
* * * * *
(f) Enrollment reconciliation. A QHP issuer must reconcile
enrollment files with the Exchange in a format specified by the
Exchange (or, for QHP issuers in State Exchanges on the Federal
Platform, the Federal Platform) no less than once a month in accordance
with Sec. 155.400(d) of this subchapter, using the most recent
enrollment information that is available and that has been verified to
the best of the issuer's knowledge or belief.
(g) Timely updates to enrollment records. A QHP issuer offering
plans
[[Page 7159]]
through an Exchange must, in a format specified by the Exchange (or,
for QHP issuers in State Exchanges on the Federal Platform, the Federal
Platform), either:
(1) Confirm to the Exchange (or, for QHP issuers in State Exchanges
on the Federal Platform, the Federal Platform) that the information in
the enrollment reconciliation file received from the Exchange (or, for
QHP issuers in State Exchanges on the Federal Platform, the Federal
Platform) accurately reflects its enrollment data for the applicable
benefit year in its next enrollment reconciliation file submission to
the Exchange (or, for QHP issuers in State Exchanges on the Federal
Platform, the Federal Platform), and update its internal enrollment
records accordingly; or
(2) Describe to the Exchange (or for QHP issuers in State Exchanges
on the Federal Platform, the Federal Platform) within one
reconciliation cycle any discrepancy it identifies in the enrollment
reconciliation files it received from the Exchange (or for QHP issuers
in State Exchanges on the Federal Platform, the Federal Platform).
0
16. Section 156.270 is amended by revising paragraph (b) introductory
text to read as follows:
Sec. 156.270 Termination of coverage or enrollment for qualified
individuals.
* * * * *
(b) Termination of coverage or enrollment notice requirement. If a
QHP issuer terminates an enrollee's coverage or enrollment in a QHP
through the Exchange in accordance with Sec. 155.430(b) of this
subchapter, the QHP issuer must, promptly and without undue delay:
* * * * *
0
17. Section 156.1210 is revised to read as follows:
Sec. 156.1210 Dispute Submission.
(a) Responses to reports. Within 90 calendar days of the date of a
payment and collections report from HHS, the issuer must, in a form and
manner specified by HHS describe to HHS any inaccuracies it identifies
in the report.
(b) Confirmation of HHS payment and collections reports. At the end
of each payment year, the issuer must, in a form and manner specified
by HHS, confirm to HHS that the amounts identified in the most recent
payment and collections report for the coverage year accurately reflect
applicable payments owed by the issuer to the Federal Government and
the payments owed to the issuer by the Federal Government, or that the
issuer has disputed any identified inaccuracies.
PART 158--ISSUER USE OF PREMIUM REVENUE: REPORTING AND REBATE
REQUIREMENTS
0
18. The authority citation for part 158 is revised to read as follows:
Authority: 42 U.S.C. 300gg-18.
0
19. Section 158.110 is amended by revising paragraph (a) to read as
follows:
Sec. 158.110 Reporting requirements related to premiums and
expenditures.
(a) General requirements. For each MLR reporting year, an issuer
must submit to the Secretary a report which complies with the
requirements of this part, concerning premium revenue and expenses
related to the group and individual health insurance coverage that it
issued. Reporting requirements of this part that apply to expenses
incurred directly by the issuer also apply to expenses for functions
outsourced to or services provided by other entities retained by the
issuer.
* * * * *
0
20. Section 158.140 is amended by revising paragraph (b)(1)(i) to read
as follows:
Sec. 158.140 Reimbursement for clinical services provided to
enrollees.
* * * * *
(b) * * *
(1) * * *
(i)(A) For MLR reporting years before 2021, prescription drug
rebates received by the issuer;
(B) Beginning with the 2021 MLR reporting year, prescription drug
rebates and other price concessions received and retained by the
issuer, or prescription drug rebates and other price concessions that
are received and retained by an entity providing pharmacy benefit
management services to the issuer and are associated with administering
the issuer's prescription drug benefits.
* * * * *
0
21. Section 158.150 is amended by revising paragraph (b)(2)(iv)(A)(5)
to read as follows:
Sec. 158.150 Activities that improve health care quality.
* * * * *
(b) * * *
(2) * * *
(iv) * * *
(A) * * *
(5)(i) For MLR reporting years before 2021, actual rewards,
incentives, bonuses, and reductions in copayments (excluding
administration of such programs) that are not already reflected in
premiums or claims should be allowed as a quality improvement activity
for the group market to the extent permitted by section 2705 of the PHS
Act;
(ii) Beginning with the 2021 MLR reporting year, actual rewards,
incentives, bonuses, reductions in copayments (excluding administration
of such programs) that are not already reflected in premiums or claims,
to the extent permitted by section 2705 of the PHS Act;
* * * * *
0
22. Section 158.160 is amended by adding paragraph (b)(2)(vii) to read
as follows:
Sec. 158.160 Other non-claims costs.
* * * * *
(b) * * *
(2) * * *
(vii) Beginning with the 2021 MLR reporting year, prescription drug
rebates and other price concessions that are received and retained by
the issuer, or that are received and retained by an entity providing
pharmacy benefit management services to the issuer and are associated
with administering the issuer's prescription drug benefits.
Dated: October 24, 2019.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
Dated: November 7, 2019.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-02021 Filed 1-31-20; 8:45 am]
BILLING CODE 4120-01-P