HCC110cc163

17454FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations1ThePPACA(Pub.
L.
111–148)wasenactedonMarch23,2010.
TheHealthCareandEducationReconciliationActof2010(Pub.
L.
111–152),whichamendedandrevisedseveralprovisionsofthePPACA,wasenactedonMarch30,2010.
Inthisfinalrule,werefertothetwostatutescollectivelyasthe''PatientProtectionandAffordableCareAct''or''PPACA''.
DEPARTMENTOFHEALTHANDHUMANSERVICES45CFRParts146,147,148,153,155,and156[CMS–9926–F]RIN0938–AT37PatientProtectionandAffordableCareAct;HHSNoticeofBenefitandPaymentParametersfor2020AGENCY:CentersforMedicare&MedicaidServices(CMS),HHS.
ACTION:Finalrule.
SUMMARY:Thisfinalrulesetsforthpaymentparametersandprovisionsrelatedtotheriskadjustmentandriskadjustmentdatavalidationprograms;cost-sharingparameters;anduserfeesforFederally-facilitatedExchanges(FFEs)andState-basedExchangesontheFederalPlatform(SBE–FPs).
ItfinalizeschangesthatwillallowgreaterflexibilityrelatedtothedutiesandtrainingrequirementsfortheNavigatorprogramandchangesthatwillprovidegreaterflexibilityfordirectenrollmententities,whilestrengtheningprogramintegrityoversightoverthoseentities.
Itfinalizesachangeintendedtoreducethecostsofprescriptiondrugs.
ThisfinalrulealsoincludeschangestoExchangestandardsrelatedtoeligibilityandenrollment;exemptions;andotherrelatedtopics.
DATES:TheseregulationsareeffectiveonJune24,2019.
FORFURTHERINFORMATIONCONTACT:JeffWu,(301)492–4305,KiahanaBrooks,(301)492–5229,KenBuerger,(410)786–1190,orAbigailWalker,(410)786–1725,forgeneralinformation.
DavidMlawsky,(410)786–6851,formattersrelatedtoguaranteedrenewability.
AvareenaCropper,(410)786–3794,formattersrelatedtosequestration.
AllisonYadsko,(410)786–1740,formattersrelatedtoriskadjustment.
JacalynBoyce,(301)492–5122,formattersrelatedtoFederally-facilitatedExchangeandState-basedExchangeontheFederalPlatformuserfees.
AbigailWalker,(410)786–1725,AlperOzinal,(301)492–4178,AllisonYadsko,(410)786–1740,orAdamShaw,(410)786–1091,formattersrelatedtoriskadjustmentdatavalidation.
KenBuerger,(410)786–1190,orLeAnnBrodhead,(410)786–3943,formattersrelatedtotheopioidcrisis.
AmirAl-Kourainy,(301)492–5210,formattersrelatedtoNavigators.
CarlyRhyne,(301)492–4188,formattersrelatedtospecialenrollmentperiods.
AmandaBrander,(202)690–7892,formattersrelatedtoexemptions.
DanielBrown,(434)995–5886,formattersrelatedtodirectenrollment.
LeighaBasini,(301)492–4380,formattersrelatedtohealthinsuranceissuerdrugpolicy,essentialhealthbenefits,andqualifiedhealthplancertificationrequirements.
AbigailWalker,(410)786–1725,formattersrelatedtotherequiredcontributionpercentage,cost-sharingparameters,andthepremiumadjustmentpercentage.
SUPPLEMENTARYINFORMATION:TableofContentsI.
ExecutiveSummaryII.
BackgroundA.
LegislativeandRegulatoryOverviewB.
StakeholderConsultationandInputC.
StructureofFinalRuleIII.
ProvisionsoftheFinalRegulationsandAnalysisandResponsestoPublicCommentsA.
Part146—RequirementsfortheGroupHealthInsuranceMarketB.
Part147—HealthInsuranceReformRequirementsfortheGroupandIndividualHealthInsuranceMarketsC.
Part148—RequirementsfortheIndividualHealthInsuranceMarketD.
Part153—StandardsRelatedtoReinsurance,RiskCorridors,andRiskAdjustmentUndertheAffordableCareActE.
Part155—ExchangeEstablishmentStandardsandOtherRelatedStandardsundertheAffordableCareActF.
Part156—HealthInsuranceIssuerStandardsundertheAffordableCareAct,IncludingStandardsRelatedtoExchangesIV.
CollectionofInformationRequirementsA.
WageEstimatesB.
ICRsRegardingRiskAdjustmentDataValidationExemptionsC.
ICRsRegardingAgentorBrokerTerminationandWebBrokerDataCollectionD.
ICRsRegardingDirectEnrollmentEntityStandardizedDisclaimerE.
ICRsRegardingSpecialEnrollmentPeriodsF.
ICRsRegardingEligibilityStandardsforExemptionsG.
SummaryofAnnualBurdenEstimatesforRequirementsH.
SubmissionofPRA-RelatedCommentsV.
RegulatoryImpactAnalysisA.
StatementofNeedB.
OverallImpactC.
ImpactEstimatesofthePaymentNoticeProvisionsandAccountingTableD.
RegulatoryAlternativesConsideredE.
RegulatoryFlexibilityActF.
UnfundedMandatesG.
FederalismH.
CongressionalReviewActI.
ReducingRegulationandControllingRegulatoryCostsJ.
ConclusionI.
ExecutiveSummaryAmericanHealthBenefitExchanges,or''Exchanges''areentitiesestablishedunderthePatientProtectionandAffordableCareAct1(PPACA)throughwhichqualifiedindividualsandqualifiedemployerscanpurchasehealthinsurancecoverage.
Manyindividualswhoenrollinqualifiedhealthplans(QHPs)throughindividualmarketExchangesareeligibletoreceiveapremiumtaxcredittoreducetheircostsforhealthinsurancepremiumsandtoreceivereductionsinrequiredcost-sharingpaymentstoreduceout-of-pocketexpensesforhealthcareservices.
ThePPACAalsoestablishedtheriskadjustmentprogram.
OnJanuary20,2017,thePresidentissuedanExecutiveOrderwhichstatedthat,tothemaximumextentpermittedbylaw,theSecretaryofHHSandheadsofallotherexecutivedepartmentsandagencieswithauthoritiesandresponsibilitiesunderthePPACAshouldexerciseallauthorityanddiscretionavailabletothemtowaive,defer,grantexemptionsfrom,ordelaytheimplementationofanyprovisionorrequirementofthePPACAthatwouldimposeafiscalburdenonanystateoracost,fee,tax,penalty,orregulatoryburdenonindividuals,families,healthcareproviders,healthinsurers,patients,recipientsofhealthcareservices,purchasersofhealthinsurance,ormakersofmedicaldevices,products,ormedications.
Thisrulewill,withinthelimitationsofthecurrentstatute,reducefiscalandregulatoryburdensacrossdifferentprogramareasandprovidestakeholderswithgreaterflexibility.
Overtime,issuermarketexitsandincreasinginsurancerateshavethreatenedthestabilityoftheindividualandsmallgroupmarketExchangesinmanygeographicareas.
Thesedynamicshaveputcoverageoutofreachformany,notablythoseconsumersenrollingoutsideoftheExchanges,whodonotbenefitfromthePPACA'sadvancepaymentsofthepremiumtaxcredit(APTC).
Inpreviousrulemaking,wehaveestablishedprovisionsandparameterstoimplementmanyPPACArequirementsandprograms.
Inthisrule,weamendtheseprovisionsandparameters,withafocusonmaintainingastableregulatoryenvironmenttoprovideissuerswithgreaterVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00002Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217455FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationspredictabilityforupcomingplanyears,whilesimultaneouslyenhancingtheroleofstatesintheseprogramsandprovidingstateswithadditionalflexibilities,reducingunnecessaryregulatoryburdensonstakeholders,empoweringconsumers,andimprovingaffordability.
RiskadjustmentcontinuestobeacoreprogramintheindividualandsmallgroupmarketsbothonandofftheExchanges,andwearefinalizingrecalibratedparametersfortheHHS-operatedriskadjustmentmethodology.
Wearefinalizingseveralchangesrelatedtotheriskadjustmentdatavalidationprogramthatareintendedtoensuretheintegrityoftheresultsofriskadjustment,andothersintendedtoalleviateissuerburdenassociatedwithcomplyingwithriskadjustmentdatavalidationrequirements.
AswedoeveryyearintheHHSnoticeofbenefitandpaymentparameters,wearefinalizingupdatedparametersapplicableintheindividualandsmallgroupmarkets.
WearefinalizingtheuserfeerateforissuersparticipatingonFederally-facilitatedExchanges(FFEs)andState-basedExchangesontheFederalplatform(SBE–FPs)for2020tobe3.
0and2.
5percentofpremiums,respectively.
Theseratesareadecreasefrompastyears,whichwillincreaseaffordabilityforconsumers.
Wearefinalizingupdatestothepremiumadjustmentpercentagemethodologyandamount,andconsequentlythemaximumannuallimitationsoncostsharingforthe2020benefityear,includingthoseforcost-sharingreductionplanvariations.
WearefinalizingchangestotherequirementsregardingNavigatorstoreduceburden,increaseflexibility,andenableExchangestomoreeasilyandcost-effectivelyoperateNavigatorprograms.
StreamliningtheNavigatortrainingrequirementsandauthorizingbutnotrequiringassisterstoprovidecertaintypesofassistance,includingpost-enrollmentassistance,willallowassisterstoallocatetheirresourcesinamannerthatbestmeetscommunityneeds,consumerdemands,andorganizationalresources.
WearefinalizinganumberofchangesinthisrulethatareintendedtoreducetheburdenforconsumersbymakingiteasiertoenrollinaffordablecoveragethroughtheExchanges.
First,wearefinalizingapolicythatwouldprovideadditionalflexibilitytothoseinneedofahardshipexemptionthatcurrentlymustbeobtainedbyfilinganapplicationwithanExchange,byexpandingthetypesofhardshipexemptionsthatconsumersmayclaimfor2018throughthetaxfilingprocess.
Second,webelieveconsumersshouldhavegreaterflexibilityinhowtheyshopforcoverage,includingtheavenuesthroughwhichtheyenrollinQHPs.
Assuch,wehavebeenworkingtoexpandopportunitiesforindividualstodirectlyenrollinExchangecoveragethroughthewebsitesofcertainthirdparties,calleddirectenrollmententities,ratherthanhavingtovisitHealthCare.
gov.
Third,wearefinalizingseveralregulatorychangestostreamlinetheregulatoryrequirementsapplicabletothesedirectenrollmententities.
Fourth,wearefinalizingaproposaltocreateaspecialenrollmentperiodforoff-ExchangeenrolleeswhoexperienceadecreaseinhouseholdincomeandaredeterminedtobeeligibleforAPTCbytheExchange.
Thiswillallowenrolleestoenrollinamoreaffordableon-Exchangeproductwhenaconsumer'shouseholdincomedecreasesmid-year.
Werequestedcommentonautomaticre-enrollmentprocessesandcapabilities,aswellasadditionalpoliciesorprogrammeasuresthatwouldreduceeligibilityerrorsandpotentialgovernmentmisspendingforpotentialactioninfuturerulemakingapplicablenotsoonerthanplanyear2021.
Intheproposedrule,wediscussedwhywebelieveincreasedtransparencyisacriticalcomponentofaconsumerdrivenhealthcaresystem,andexpressedourinteresttoreceivecommentsdiscussingwaystoprovideconsumerswithgreatertransparencywithregardstotheirownhealthcaredata,QHPofferingsontheFFEs,andthecostofhealthcareservices.
Wecontinuetobelievethatwhenconsumershaveaccesstorelevant,meaningful,andconsumer-friendlyinformation,theyareempoweredtomakemoreinformeddecisionswithregardstotheircare.
Theproposedrulediscussedafutureopportunityforpublicinputonwaystoincreasetheinteroperabilityofpatient-mediatedhealthcaredataacrosshealthcareprograms,includingincoveragepurchasedthroughtheExchanges.
Tothatend,intheMarch4,2019FederalRegister,wepublishedthe''InteroperabilityandPatientAccessProposedRule''witha60-daypubliccommentperiod.
TheInteroperabilityandPatientAccessProposedRuleincludespolicyproposalstomakecertainhealthcaredataeasilyaccessiblethroughcommontechnologiesinaconvenient,timely,andportableway.
Weencouragepublicinputonthatproposedrule.
Additionally,wesoughtcommentonwaystofurtherimplementsection1311(e)(3)ofthePPACA,asimplementedby45CFR156.
220(d),whereaQHPissuermustmakeavailabletheamountofenrolleecostsharingundertheindividual'splanorcoverageforthefurnishingofaspecificitemorservicebyaparticipatingproviderinatimelymannerupontherequestoftheindividual.
Wewereparticularlyinterestedininputregardingwhattypesofdatawillbemostusefultoimprovingconsumers'abilitiestomakeinformedhealthcaredecisions,includingdecisionsrelatedtotheircoverage.
Wealsoexpressedourinterestinwaystoimproveconsumers'accesstoinformationabouthealthcarecosts.
Westatedthatwebelievethatconsumerswouldbenefitfromagreaterunderstandingofwhattheirpotentialout-of-pocketcostswouldbeforvariousservices,basedonwhichQHPtheyareenrolledinandwhichprovidertheysee.
Westatedthatwebelievethatsuchapolicywouldpromoteconsumers'abilitytoshopforcoveredservices,andtoplayamoreactiveroleintheirhealthcare.
Wealsoarefinalizingourproposaltocreatealimiteddatasetfileusingmaskedenrollee-leveldatasubmittedtoHHSfromtheExternalDataGatheringEnvironment(EDGE)serversforissuersofriskadjustmentcoveredplansintheindividualandsmallgroup(includingmerged)markets,withonemodification:Wewillnotmakethislimiteddatasetavailableforpublichealthorhealthcareoperationspurposes.
Thus,wearefinalizingourproposaltomakethisfileavailabletorequestorswhoseekthedataforresearchpurposesonly.
Inaddition,wearefinalizingourproposaltobroadenthepermissibleHHSusesoftheenrollee-levelEDGEdatacurrentlysubmittedforpurposesofriskadjustment.
Webelievethiswillincreaseunderstandingofthesemarketsandcontributetogreatertransparency.
Wesoughtcommentonwaysthatwecanpromotetheofferingandtake-upofhighdeductiblehealthplans(HDHPs)thatcanbepairedwithhealthsavingsaccounts(HSAs),whichcanserveasaneffectiveandtax-advantageousmethodforcertainconsumerstomanagetheirhealthcareexpenditures.
WealsosoughtcommentsforwaystoincreasethevisibilityofHSA-eligibleHDHPsonHealthCare.
gov.
InfurtheranceoftheAdministration'sprioritytoreduceprescriptiondrugcostsandtoalignwiththePresident'sAmericanPatientsFirstblueprint,weproposedaseriesofchangesregardingprescriptiondrugbenefits,totheextentpermittedbyapplicablestatelaw.
Theseproposalsincludedprovisionsthatwouldallowissuerstoadoptmid-yearformularychangestoincentivizegreaterVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00003Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217456FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations2Ifastateelectsthisoption,theratingrulesinsection2701ofthePHSActanditsimplementingregulationswillapplytoallcoverageofferedinsuchstate'slargegroupmarket(exceptforself-insuredgrouphealthplans)undersection2701(a)(5)ofthePHSAct.
enrolleeuseoflower-costgenericdrugsandthatwouldallowissuerstonotcountcertaincostsharingtowardtheannuallimitationoncostsharingifaconsumerselectsabranddrugwhenamedicallyappropriategenericdrugisavailable.
Basedonissuesraisedbycommenters,wearenotfinalizingtheseproposals.
However,wearefinalizingachangethatwouldallowissuersandplanstoexcludedrugmanufacturercouponsfromcountingtowardtheannuallimitationoncostsharingwhenamedicallyappropriategenericdrugisavailable.
Weexpectthischangetosupportissuers'andplans'abilitytolowerthecostofcoverageandgeneratecostsavingswhilealsoensuringefficientuseoffederalfundsandsufficientcoverageforpeoplewithdiversehealthneeds.
II.
BackgroundA.
LegislativeandRegulatoryOverviewTitleIoftheHealthInsurancePortabilityandAccountabilityActof1996(HIPAA)addedanewtitleXXVIItothePublicHealthServiceAct(PHSAct)toestablishvariousreformstothegroupandindividualhealthinsurancemarkets,includingaguaranteedrenewabilityrequirementintheindividual,smallgroup,andlargegroupmarkets.
SubtitlesAandCoftitleIofthePPACAreorganized,amended,andaddedtotheprovisionsofpartAoftitleXXVIIofthePHSActrelatingtogrouphealthplansandhealthinsuranceissuersinthegroupandindividualmarkets.
Section1302ofthePPACAprovidesfortheestablishmentofanessentialhealthbenefits(EHB)packagethatincludescoverageofEHB(asdefinedbytheSecretary),cost-sharinglimits,andactuarialvaluerequirements.
ThelawdirectsthatEHBsbeequalinscopetothebenefitsprovidedunderatypicalemployerplan,andthattheycoveratleastthefollowing10generalcategories:Ambulatorypatientservices;emergencyservices;hospitalization;maternityandnewborncare;mentalhealthandsubstanceusedisorderservices,includingbehavioralhealthtreatment;prescriptiondrugs;rehabilitativeandhabilitativeservicesanddevices;laboratoryservices;preventiveandwellnessservicesandchronicdiseasemanagement;andpediatricservices,includingoralandvisioncare.
Section1301(a)(1)(B)ofthePPACAdirectsallissuersofQHPstocovertheEHBpackagedescribedinsection1302(a)ofthePPACA,includingcoverageoftheservicesdescribedinsection1302(b)ofthePPACA,adherencetothecost-sharinglimitsdescribedinsection1302(c)ofthePPACA,andmeetingtheactuarialvalue(AV)levelsestablishedinsection1302(d)ofthePPACA.
Section2707(a)ofthePHSAct,whichiseffectiveforplanorpolicyyearsbeginningonorafterJanuary1,2014,extendstherequirementtocovertheEHBpackagetonon-grandfatheredindividualandsmallgrouphealthinsurancecoverage,irrespectiveofwhethersuchcoverageisofferedthroughanExchange.
Inaddition,section2707(b)ofthePHSActdirectsnon-grandfatheredgrouphealthplanstoensurethatcostsharingundertheplandoesnotexceedthelimitationsdescribedinsections1302(c)(1)ofthePPACA.
Section1311(d)(3)(B)ofthePPACApermitsastate,atitsoption,torequireQHPstocoverbenefitsinadditiontotheEHB.
Thissectionalsorequiresastatetomakepayments,eithertotheindividualenrolleeortotheissueronbehalfoftheenrollee,todefraythecostoftheseadditionalstate-requiredbenefits.
Section1302(d)ofthePPACAdescribesthevariouslevelsofcoveragebasedonAV.
Consistentwithsection1302(d)(2)(A)ofthePPACA,AViscalculatedbasedontheprovisionofEHBtoastandardpopulation.
Section1302(d)(3)ofthePPACAdirectstheSecretarytodevelopguidelinesthatallowfordeminimisvariationinAVcalculations.
Section1311(b)(1)(B)ofthePPACAdirectsthattheSmallBusinessHealthOptionsProgramassistqualifiedsmallemployersinfacilitatingtheenrollmentoftheiremployeesinQHPsofferedinthesmallgroupmarket.
Sections1312(f)(1)and(2)ofthePPACAdefinequalifiedindividualsandqualifiedemployers.
Undersection1312(f)(2)(B)ofthePPACA,beginningin2017,stateshavetheoptiontoallowissuerstoofferQHPsinthelargegroupmarketthroughanExchange.
2Section1311(d)(4)(B)ofthePPACArequiresanExchangetoprovidefortheoperationofatoll-freetelephonehotlinetorespondtorequestsforassistance.
Sections1311(d)(4)(K)and1311(i)ofthePPACAdirectallExchangestoestablishaNavigatorprogram.
Section1311(c)(6)(C)ofthePPACAestablishesspecialenrollmentperiodsandsection1311(c)(6)(D)ofthePPACAestablishesthemonthlyenrollmentperiodforIndians,asdefinedbysection4oftheIndianHealthCareImprovementAct.
Section1312(c)ofthePPACAgenerallyrequiresahealthinsuranceissuertoconsiderallenrolleesinallhealthplans(exceptgrandfatheredhealthplans)offeredbysuchissuertobemembersofasingleriskpoolforeachofitsindividualandsmallgroupmarkets.
Stateshavetheoptiontomergetheindividualandsmallgroupmarketriskpoolsundersection1312(c)(3)ofthePPACA.
Section1312(e)ofthePPACAdirectstheSecretarytoestablishproceduresunderwhichastatemaypermitagentsandbrokerstoenrollqualifiedindividualsandqualifiedemployersinQHPsthroughanExchangeandtoassistindividualsinapplyingforpremiumtaxcreditsandcost-sharingreductionsforQHPssoldthroughanExchange.
Section1321(a)ofthePPACAprovidesbroadauthorityfortheSecretarytoestablishstandardsandregulationstoimplementthestatutoryrequirementsrelatedtoExchanges,QHPsandothercomponentsoftitleIofthePPACA.
Section1321(a)(1)ofthePPACAdirectstheSecretarytoissueregulationsthatsetstandardsformeetingtherequirementsoftitleIofthePPACAfor,amongotherthings,theestablishmentandoperationofExchanges.
Section1311(c)ofthePPACAprovidestheSecretarytheauthoritytoissueregulationstoestablishcriteriaforthecertificationofQHPs.
Section1311(e)(1)ofthePPACAgrantstheExchangetheauthoritytocertifyahealthplanasaQHPifthehealthplanmeetstheSecretary'srequirementsforcertificationissuedundersection1311(c)ofthePPACA,andtheExchangedeterminesthatmakingtheplanavailablethroughtheExchangeisintheinterestsofindividualsandemployersinthestate.
Sections1313and1321ofthePPACAprovidetheSecretarywiththeauthoritytooverseethefinancialintegrityofStateExchanges,theircompliancewithHHSstandards,andtheefficientandnon-discriminatoryadministrationofStateExchangeactivities.
Section1321ofthePPACAprovidesforstateflexibilityintheoperationandenforcementofExchangesandrelatedrequirements.
WhenoperatinganFFEundersection1321(c)(1)ofthePPACA,HHShastheauthorityundersections1321(c)(1)and1311(d)(5)(A)ofthePPACAtocollectandspenduserfees.
OfficeofManagementandBudget(OMB)CircularA–25establishesfederalpolicyregardinguserfeesandspecifiesthatauserchargewillbeassessedagainsteachidentifiablerecipientforspecialVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00004Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217457FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations3PublicLaw115–97,131Stat.
2054(2017).
4Thetermpremiumstabilizationprogramsreferstotheriskadjustment,riskcorridors,andreinsuranceprogramsestablishedbythePPACA.
See42U.
S.
C.
18061,18062,and18063.
benefitsderivedfromfederalactivitiesbeyondthosereceivedbythegeneralpublic.
Section1321(d)ofthePPACAprovidesthatnothingintitleIofthePPACAshouldbeconstruedtopreemptanystatelawthatdoesnotpreventtheapplicationoftitleIofthePPACA.
Section1311(k)ofthePPACAspecifiesthatExchangesmaynotestablishrulesthatconflictwithorpreventtheapplicationofregulationsissuedbytheSecretary.
Section1343ofthePPACAestablishesapermanentriskadjustmentprogramtoprovidepaymentstohealthinsuranceissuersthatattracthigher-thanaverageriskpopulations,suchasthosewithchronicconditions,fundedbypaymentsfromthosethatattractlower-than-averageriskpopulations,therebyreducingincentivesforissuerstoavoidhigher-riskenrollees.
Section1402ofthePPACAprovidesfor,amongotherthings,reductionsincostsharingforEHBforqualifiedlow-andmoderate-incomeenrolleesinsilverlevelhealthplansofferedthroughtheindividualmarketExchanges.
ThissectionalsoprovidesforreductionsincostsharingforIndiansenrolledinQHPsatanymetallevel.
Section5000AoftheInternalRevenueCode(theCode),asaddedbysection1501(b)ofthePPACA,requiresindividualstohaveminimumessentialcoverage(MEC)foreachmonth,qualifyforanexemption,ormakeanindividualsharedresponsibilitypayment.
UndertheTaxCutsandJobsAct,whichwasenactedonDecember22,2017,theindividualsharedresponsibilitypaymentisreducedto$0,effectiveformonthsbeginningafterDecember31,2018.
3Notwithstandingthatreduction,certainexemptionsarestillrelevanttodeterminewhetherindividualsabovetheageof30qualifytoenrollincatastrophiccoverageunder§155.
305(h).
TheProtectingAffordableCoverageforEmployeesAct(Pub.
L.
114–60,enactedonOctober7,2015)amendedthedefinitionofsmallemployerinsection1304(b)ofthePPACAandsection2791(e)ofthePHSActtomean,inconnectionwithagrouphealthplanforacalendaryearandaplanyear,anemployerwhoemployedanaverageofatleast1butnotmorethan50employeesonbusinessdaysduringtheprecedingcalendaryearandwhoemploysatleast1employeeonthefirstdayoftheplanyear.
Italsoamendedthesestatutestomakeconformingchangestothedefinitionoflargeemployer,andtoprovidethatastatemaytreatasasmallemployer,foracalendaryearandaplanyear,anemployerwhoemployedanaverageofatleast1butnotmorethan100employeesonbusinessdaysduringtheprecedingcalendaryearandwhoemploysatleast1employeeonthefirstdayoftheplanyear.
1.
PremiumStabilizationPrograms4IntheJuly15,2011FederalRegister(76FR41929),wepublishedaproposedruleoutliningtheframeworkforthepremiumstabilizationprograms.
Weimplementedthepremiumstabilizationprogramsinafinalrule,publishedintheMarch23,2012FederalRegister(77FR17219)(PremiumStabilizationRule).
IntheDecember7,2012FederalRegister(77FR73117),wepublishedaproposedruleoutliningthebenefitandpaymentparametersforthe2014benefityeartoexpandtheprovisionsrelatedtothepremiumstabilizationprogramsandsetforthpaymentparametersinthoseprograms(proposed2014PaymentNotice).
Wepublishedthe2014PaymentNoticefinalruleintheMarch11,2013FederalRegister(78FR15409).
IntheJune19,2013FederalRegister(78FR37032),weproposedamodificationtotheHHS-operatedmethodologyrelatedtocommunityratingstates.
IntheOctober30,2013FederalRegister(78FR65046),wefinalizedtheproposedmodificationtotheHHS-operatedmethodologyrelatedtocommunityratingstates.
Wepublishedacorrectingamendmenttothe2014PaymentNoticefinalruleintheNovember6,2013FederalRegister(78FR66653)toaddresshowanenrollee'sagefortheriskscorecalculationwouldbedeterminedundertheHHS-operatedriskadjustmentmethodology.
IntheDecember2,2013FederalRegister(78FR72321),wepublishedaproposedruleoutliningthebenefitandpaymentparametersforthe2015benefityeartoexpandtheprovisionsrelatedtothepremiumstabilizationprograms,settingforthcertainoversightprovisionsandestablishingthepaymentparametersinthoseprograms(proposed2015PaymentNotice).
Wepublishedthe2015PaymentNoticefinalruleintheMarch11,2014FederalRegister(79FR13743).
IntheMay27,2014FederalRegister(79FR30240),the2015fiscalyearsequestrationratesfortheriskadjustmentandreinsuranceprogramswereannounced.
IntheNovember26,2014FederalRegister(79FR70673),wepublishedaproposedruleoutliningthebenefitandpaymentparametersforthe2016benefityeartoexpandtheprovisionsrelatedtothepremiumstabilizationprograms,settingforthcertainoversightprovisionsandestablishingthepaymentparametersinthoseprograms(proposed2016PaymentNotice).
Wepublishedthe2016PaymentNoticefinalruleintheFebruary27,2015FederalRegister(80FR10749).
IntheDecember2,2015FederalRegister(80FR75487),wepublishedaproposedruleoutliningthebenefitandpaymentparametersforthe2017benefityeartoexpandtheprovisionsrelatedtothepremiumstabilizationprograms,settingforthcertainoversightprovisionsandestablishingthepaymentparametersinthoseprograms(proposed2017PaymentNotice).
Wepublishedthe2017PaymentNoticefinalruleintheMarch8,2016FederalRegister(81FR12203).
IntheSeptember6,2016FederalRegister(81FR61455),wepublishedaproposedruleoutliningthebenefitandpaymentparametersforthe2018benefityear,andtofurtherpromotestablepremiumsintheindividualandsmallgroupmarkets.
Weproposedupdatestotheriskadjustmentmethodology,newpoliciesaroundtheuseofexternaldataforrecalibrationoftheHHSriskadjustmentmodels,andamendmentstotheriskadjustmentdatavalidationprocess(proposed2018PaymentNotice).
Wepublishedthe2018PaymentNoticefinalruleintheDecember22,2016FederalRegister(81FR94058).
IntheNovember2,2017FederalRegister(82FR51042),wepublishedaproposedruleoutliningthebenefitandpaymentparametersforthe2019benefityear,andtofurtherpromotestablepremiumsintheindividualandsmallgroupmarkets.
Weproposedupdatestotheriskadjustmentmethodologyandamendmentstotheriskadjustmentdatavalidationprocess(proposed2019PaymentNotice).
Wepublishedthe2019PaymentNoticefinalruleintheApril17,2018FederalRegister(83FR16930).
Wepublishedacorrectiontothe2019benefityearriskadjustmentcoefficientsinthe2019PaymentNoticefinalruleintheMay11,2018FederalRegister(83FR21925).
OnJuly27,2018,consistentwith45CFR153.
320(b)(1)(i),weupdatedthe2019benefityearfinalriskadjustmentmodelcoefficientstoreflectanadditionalVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00005Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217458FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations5''Updated2019BenefitYearFinalHHSRiskAdjustmentModelCoefficients.
''July27,2018.
Availableathttps://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2019-Updtd-Final-HHS-RA-Model-Coefficients.
pdf.
6''UpdateontheHHS-operatedRiskAdjustmentProgramforthe2017BenefitYear.
''July27,2018.
Availableathttps://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2017-RA-Final-Rule-Resumption-RAOps.
pdf.
recalibrationrelatedtoanupdatetothe2016enrollee-levelEDGEdataset.
5IntheJuly30,2018FederalRegister(83FR36456),wepublishedafinalrulethatadoptedthe2017benefityearriskadjustmentmethodologyasestablishedinthefinalrulespublishedintheMarch23,2012(77FR17220through17252)andintheMarch8,2016editionsoftheFederalRegister(81FR12204through12352).
ThisfinalrulesetsforthadditionalexplanationoftherationalesupportingtheuseofthestatewideaveragepremiumintheHHS-operatedriskadjustmentstatepaymenttransfercalculationforthe2017benefityear,includingthereasonswhytheprogramisoperatedinabudget-neutralmanner.
ThisfinalrulepermittedHHStoresume2017benefityearriskadjustmentpaymentsandcharges.
HHSalsoprovidedguidanceastotheoperationoftheHHS-operatedriskadjustmentprogramforthe2017benefityearinlightofpublicationofthisfinalrule.
6IntheAugust10,2018FederalRegister(83FR39644),wepublishedaproposedruleseekingcommentonadoptingthe2018benefityearriskadjustmentmethodologyinthefinalrulespublishedintheMarch23,2012(77FR17219)andintheDecember22,2016editionsoftheFederalRegister(81FR94058).
TheproposedrulesetforthadditionalexplanationoftherationalesupportinguseofstatewideaveragepremiumintheHHS-operatedriskadjustmentstatepaymenttransferformulaforthe2018benefityear,includingthereasonswhytheprogramisoperatedinabudget-neutralmanner.
IntheDecember10,2018FederalRegister(83FR63419),weissuedafinalruleadoptingthe2018benefityearHHS-operatedriskadjustmentmethodologyasestablishedinthefinalrulespublishedintheMarch23,2012(77FR17219)andtheDecember22,2016(81FR94058)editionsoftheFederalRegister.
ThisfinalrulesetsforthadditionalexplanationoftherationalesupportinguseofstatewideaveragepremiumintheHHS-operatedriskadjustmentstatepaymenttransferformulaforthe2018benefityear,includingthereasonswhytheprogramisoperatedinabudget-neutralmanner.
2.
ProgramIntegrityIntheJune19,2013FederalRegister(78FR37031),wepublishedaproposedrulethatproposedcertainprogramintegritystandardsrelatedtoExchangesandthepremiumstabilizationprograms(proposedProgramIntegrityRule).
Theprovisionsofthatproposedrulewerefinalizedintworules,the''firstProgramIntegrityRule''publishedintheAugust30,2013FederalRegister(78FR54069)andthe''secondProgramIntegrityRule''publishedintheOctober30,2013FederalRegister(78FR65045).
3.
MarketRulesAninterimfinalrulerelatingtotheHIPAAhealthinsurancereformswaspublishedintheApril8,1997FederalRegister(62FR16894).
Aproposedrulerelatingtothe2014healthinsurancemarketruleswaspublishedintheNovember26,2012FederalRegister(77FR70584).
AfinalruleimplementingthehealthinsurancemarketruleswaspublishedintheFebruary27,2013FederalRegister(78FR13406)(2014MarketRules).
AproposedrulerelatingtoExchangesandInsuranceMarketStandardsfor2015andBeyondwaspublishedintheMarch21,2014FederalRegister(79FR15808)(2015MarketStandardsProposedRule).
AfinalruleimplementingtheExchangeandInsuranceMarketStandardsfor2015andBeyondwaspublishedintheMay27,2014FederalRegister(79FR30240)(2015MarketStandardsRule).
The2018PaymentNoticefinalruleintheDecember22,2016FederalRegister(81FR94058)providedadditionalguidanceonguaranteedavailabilityandguaranteedrenewability.
IntheApril18,2017MarketStabilizationfinalrule(82FR18346),wereleasedfurtherguidancerelatedtoguaranteedavailability.
4.
ExchangesWepublishedarequestforcommentrelatingtoExchangesintheAugust3,2010FederalRegister(75FR45584).
WeissuedinitialguidancetostatesonExchangesonNovember18,2010.
WeproposedaruleintheJuly15,2011FederalRegister(76FR41865)toimplementcomponentsoftheExchanges,andaruleintheAugust17,2011FederalRegister(76FR51201)regardingExchangefunctionsintheindividualmarketandSHOP,eligibilitydeterminations,andExchangestandardsforemployers.
AfinalruleimplementingcomponentsoftheExchangesandsettingforthstandardsforeligibilityforExchangeswaspublishedintheMarch27,2012FederalRegister(77FR18309)(ExchangeEstablishmentRule).
WeestablishedadditionalstandardsforSHOPinthe2014PaymentNoticeandintheAmendmentstotheHHSNoticeofBenefitandPaymentParametersfor2014interimfinalrule,publishedintheMarch11,2013FederalRegister(78FR15541).
TheprovisionsestablishedintheinterimfinalrulewerefinalizedinthesecondProgramIntegrityRule.
WealsosetforthstandardsrelatedtoExchangeuserfeesinthe2014PaymentNotice.
WeestablishedanadjustmenttotheFFEuserfeeintheCoverageofCertainPreventiveServicesUndertheAffordableCareActfinalrule,publishedintheJuly2,2013FederalRegister(78FR39869)(PreventiveServicesRule).
InafinalrulepublishedintheMarch27,2012FederalRegister(77FR18309),weestablishedtheoriginalregulatoryNavigatordutiesandtrainingrequirements.
InafinalrulepublishedintheJuly17,2013FederalRegister(78FR42823),weestablishedstandardsforNavigatorsandnon-NavigatorassistancepersonnelinFFEsandfornon-NavigatorassistancepersonnelfundedthroughanExchangeestablishmentgrant.
ThisfinalrulealsoestablishedacertifiedapplicationcounselorprogramforExchangesandsetstandardsforthatprogram.
Inthe2017PaymentNoticefinalrule,publishedintheMarch8,2016FederalRegister(81FR12204),weexpandedNavigatordutiesandtrainingrequirements.
Inthe2019PaymentNoticefinalrule,publishedintheApril17,2018FederalRegister(83FR16930),weremovedtherequirementsthateachExchangemusthaveatleasttwoNavigatorentities;thatoneoftheseentitiesmustbeacommunityandconsumer-focusednonprofitgroup;andthateachNavigatorentitymustmaintainaphysicalpresenceintheExchangeservicearea.
Inaninterimfinalrule,publishedintheMay11,2016FederalRegister(81FR29146),wemadeamendmentstotheparametersofcertainspecialenrollmentperiods(2016InterimFinalRule).
Wefinalizedtheseinthe2018PaymentNoticefinalrule,publishedintheDecember22,2016FederalRegister(81FR94058).
IntheApril18,2017MarketStabilizationfinalruleFederalRegister(82FR18346),weamendedstandardsrelatingtospecialenrollmentperiodsandQHPcertification.
Inthe2019PaymentNoticefinalrule,publishedintheApril17,2018FederalRegister(83FR16930),wemodifiedparametersaroundcertainspecialenrollmentperiods.
VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00006Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217459FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations7''EssentialHealthBenefitsBulletin.
''December16,2011.
Availableathttps://www.
cms.
gov/CCIIO/Resources/Files/Downloads/essential_health_benefits_bulletin.
pdf.
8Thisassistanceincludes:UnderstandingtheprocessoffilingExchangeeligibilityappeals;understandingandapplyingforexemptionsfromtheindividualsharedresponsibilitypaymentthataregrantedthroughtheExchange;understandingtheavailabilityofexemptionsfromtherequirementtomaintainMECandfromtheindividualsharedresponsibilitypaymentthatareclaimedthroughthetaxfilingprocessandhowtoclaimthem;theExchange-relatedcomponentsofthepremiumtaxcreditreconciliationprocess;understandingbasicconceptsandrightsrelatedtohealthcoverageandhowtouseit;andreferralstolicensedtaxadvisers,taxpreparers,orotherresourcesforassistancewithtaxpreparationandtaxadviceoncertainExchange-relatedtopics.
5.
EssentialHealthBenefitsOnDecember16,2011,HHSreleasedabulletin7thatoutlinedourintendedregulatoryapproachfordefiningEHB,includingabenchmark-basedframework.
AproposedrulerelatingtoEHBswaspublishedintheNovember26,2012FederalRegister(77FR70643).
WeestablishedrequirementsrelatingtoEHBsintheStandardsRelatedtoEssentialHealthBenefits,ActuarialValue,andAccreditationFinalRule,whichwaspublishedintheFebruary25,2013FederalRegister(78FR12833)(EHBRule).
Inthe2019PaymentNotice,publishedintheApril17,2018FederalRegister(83FR16930),weadded§156.
111toprovidestateswithadditionaloptionsfromwhichtoselectanEHB-benchmarkplanforplanyears2020andbeyond.
6.
MinimumEssentialCoverageIntheFebruary1,2013FederalRegister(78FR7348),wepublishedaproposedrulethatdesignatesotherhealthbenefitscoverageasMECandoutlinessubstantiveandproceduralrequirementsthatothertypesofcoveragemustfulfilltoberecognizedasMEC.
TheprovisionswerefinalizedintheJuly1,2013FederalRegister(78FR39494).
IntheNovember26,2014FederalRegister(79FR70674),wepublishedaproposedruleseekingcommentsonwhetherstatehighriskpoolsshouldbepermanentlydesignatedasMECorwhetherthedesignationshouldbetime-limited.
IntheFebruary27,2015FederalRegister(80FR10750),wedesignatedstatehighriskpoolsestablishedonorbeforeNovember26,2014asMEC.
B.
StakeholderConsultationandInputHHSconsultedwithstakeholdersonpoliciesrelatedtotheoperationofExchanges,includingtheSHOP,andtheriskadjustmentandriskadjustmentdatavalidationprograms.
Weheldanumberoflisteningsessionswithconsumers,providers,employers,healthplans,andtheactuarialcommunitytogatherpublicinput.
Wesolicitedinputfromstaterepresentativesonnumeroustopics,particularlyessentialhealthbenefits,QHPcertification,Exchangeestablishment,andriskadjustment.
WeconsultedwithstakeholdersthroughregularmeetingswiththeNationalAssociationofInsuranceCommissioners(NAIC),regularcontactwithstatesthroughtheExchangeEstablishmentgrantandExchangeBlueprintapprovalprocesses,andmeetingswithTriballeadersandrepresentatives,healthinsuranceissuers,tradegroups,consumeradvocates,employers,andotherinterestedparties.
Weconsideredallpublicinputwereceivedaswedevelopedthepoliciesinthisfinalrule.
C.
StructureofFinalRuleTheregulationsoutlinedinthisfinalrulewillbecodifiedin45CFRparts146,147,148,153,155,and156.
Thechangesto45CFRparts146,147,and148makeanon-substantivetechnicalcorrectiontotheguaranteedrenewabilityregulations.
ThechangestotheHHSriskadjustmentprogramestablishedunder45CFRpart153relatetothedeterminationofthefinalcoefficientsforthe2020benefityear,andthedatasourcesusedtocalculatethosecoefficients.
Thisfinalruleaddresseshigh-costriskpooling,wherewefinalizethesameparametersthatappliedtothe2018and2019benefityearstothe2020benefityearandfuturebenefityearsunlesschangedinfuturerulemaking.
Thefinalizedprovisionsinpart153alsorelatetotheriskadjustmentuserfeeforthe2020benefityearandmodificationstoriskadjustmentdatavalidationrequirements.
Thefinalregulationsin45CFRpart155willprovidemoreflexibilityrelatedtothetrainingrequirementsforNavigatorsbystreamlining20existingspecifictrainingtopicsinto4broadcategories.
TheyalsoprovidemoreflexibilitytoFFENavigatorsbymakingtheprovisionofcertaintypesofassistance,includingpost-enrollmentassistance,permissibleforFFENavigators,butnotrequired.
8Theyamendandstreamlineourregulationsrelatedtodirectenrollment.
Theyalsoestablishanewspecialenrollmentperiod,attheoptionoftheExchange,foroff-ExchangeenrolleeswhoexperienceadecreaseinincomeandarenewlydeterminedtobeeligibleforAPTCbytheExchange.
Theyalsoincreaseflexibilityforindividualsseekingthegeneralhardshipexemptionbyallowingthemtoclaimtheexemptionontheirfederalincometaxreturnfor2018withoutobtaininganexemptioncertificatenumberfromtheExchange.
Finally,theyincludeseveralamendmentstothedefinitionsapplicabletopart155.
Thefinalregulationsin45CFRpart156setforthprovisionsrelatedtocostsharing,includingthepremiumadjustmentpercentage,themaximumannuallimitationoncostsharing,andthereductionsinthemaximumannuallimitationforcost-sharingplanvariationsfor2020.
AswedoeveryyearintheHHSnoticeofbenefitandpaymentparameters,wearefinalizingupdatestothepremiumadjustmentpercentage,whichhelpsdeterminetherequiredcontributionpercentage,themaximumannuallimitationoncostsharing,andthereducedmaximumannuallimitationoncostsharingbasedonthepremiumadjustmentpercentage.
WefinalizetheFFEandSBE–FPuserfeeratesfor2020tobe3.
0and2.
5percentofpremiums,respectively.
Thefinalregulationsinpart156alsoincludeapolicytoincentivizetheuseofgenericdrugs.
Inaddition,thefinalruleatpart156includeschangesrelatedtodirectenrollmenttoconformtothechangesfinalizedto45CFRpart155.
III.
ProvisionsoftheFinalRegulationsandAnalysisandResponsestoPublicCommentsIntheJanuary24,2019FederalRegister(84FR227),wepublishedthe''PatientProtectionandAffordableCareAct;HHSNoticeofBenefitandPaymentParametersfor2020''proposedrule(proposed2020PaymentNoticeorproposedrule).
Wereceived26,129comments,including25,632commentsthatweresubstantiallysimilartooneofeightdifferentletters.
Commentswerereceivedfromstateentities,suchasdepartmentsofinsuranceandstateExchanges;healthinsuranceissuers;providersandprovidergroups;consumergroups;industrygroups;nationalinterestgroups;andotherstakeholders.
Thecommentsrangedfromgeneralsupportoforoppositiontotheproposedprovisionstospecificquestionsorcommentsregardingproposedchanges.
Wereceivedanumberofcommentsandsuggestionsthatwereoutsidethescopeoftheproposedrulethatwillnotbeaddressedinthisfinalrule.
Inthisfinalrule,weprovideasummaryofcertainproposedprovisions,asummaryofthepubliccommentsreceivedthatdirectlyrelatedtothoseproposals,ourresponsestoVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00007Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217460FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsthem,andadescriptionoftheprovisionswearefinalizing.
Comment:Wereceivedmultiplecommentscriticizingtheshortcommentperiod,statingthatthelengthofthecommentperiodmadeitdifficultforstakeholderstoconductanin-depthanalysisoftheproposedrule.
CommenterssuggestedthatHHSadoptacommentperiodofatleast30daysfromrulepublication,andtofullycomplywithnotice-and-commentrequirementsundertheAdministrativeProcedureAct.
Response:Thetimelineforpublicationofthisfinalruleaccommodatesissuerfilingdeadlinesforthe2020planyear.
Alongercommentperiodwouldhavedelayedthepublicationofthisfinalrule,andcreatedsignificantchallengesforstates,Exchanges,issuers,andotherentitiesinmeetingdeadlinesrelatedtoimplementingtheserules.
Wecontinuetotrytoexpandthecommentperiodwhilealsoprovidingindustrystakeholderswithmoretimetoimplementthefinalrule.
Comment:Wereceivedmultiplecommentscriticizingthetimingofthereleaseoftheproposedrule,statingthatpublishingtheproposalforthisannualruleinJanuary2019createschallengesforstates,Exchanges,issuers,andotherentitiesinimplementingchangesforplanyear2020.
Response:Werecognizetheimportanceofatimelyreleaseofupdatestoourregulations,andmakeeveryefforttodosoefficiently.
Afterthecommentperiodclosed,wetookstepstoexpeditethepublicationofthisfinalrule.
Wewillcontinuetosupportconsumersandstakeholderstoimplementthechangesinthisfinalruleinatimelyfashion.
Comment:WereceivednumerouscommentscautioningusaboutmakingchangesthatwouldweakenthePPACA.
Response:OurtoppriorityatHHSisputtingpatientsfirst.
Whilewehavemadegreatstridesforward,thereisstillworktobedone,includingensuringthatcoverageisaffordabletoallconsumers.
Wehavealreadymadegreatstridesinworkingtostreamlineourregulationsandouroperationswiththegoalofreducingunnecessaryburden,increasingefficienciesandimprovingthepatientexperience.
WewillcontinuetoseekinnovativewaystoreducecostsandburdenwhilemeetingthehealthneedsofallAmericans,withintheconstraintsofthelaw.
Wearecontinuingtoaddressfeedbackwereceivefromstakeholdersandthepublic,andinturnwearemakingchangesthatwillbetterservepatientsandallowstatestoaddresstheuniquehealthneedsoftheirpopulations.
Wesoughtcommentonwaystofurtherimplementsection1311(e)(3)ofthePPACA,asimplementedby§156.
220(d),toenhanceenrolleecost-sharingtransparency.
Wealsosoughtcommentonwhetherthereareanyexistingregulatorybarriersthatstandinthewayofprivatelyledeffortsatpricetransparency,andwaysthatwecanfacilitateorsupportincreasedprivateinnovationinpricetransparency.
Werequestedcommentonautomaticre-enrollmentprocessesandcapabilities,aswellasadditionalpoliciesorprogrammeasuresthatwouldreduceeligibilityerrorsandpotentialgovernmentmisspendingforpotentialactioninfuturerulemaking.
Comment:Commenterswhoaddressedthistopicunanimouslysupportedretainingautomaticre-enrollmentprocesses.
Supporterscitedbenefitssuchasthestabilizationoftheriskpoolduetotheretentionoflower-riskenrolleeswhoareleastlikelytoactivelyre-enroll,theincreasedefficienciesandreducedadministrativecostsforissuers,thereductionofthenumbersofuninsured,andlowerpremiums.
Commentersstatedthatexistingprocesses,suchaseligibilityredeterminations,electronicanddocument-basedverificationofeligibilityinformation,periodicdatamatching,andpremiumtaxcreditreconciliations,aresufficientsafeguardsagainstpotentialeligibilityerrorsandincreasedfederalspending.
Response:Weappreciatecommenters'feedbackandwilltakeitintoconsiderationaswecontinuetoexploreoptionstoimproveExchangeprogramintegritygoingforward.
Aswediscussedinthepreambletotheproposedrule,weagreethatautomaticre-enrollmentsignificantlyreducesissueradministrativeexpenses,makesenrollinginhealthinsurancemoreconvenientforconsumers,andisconsistentwithbroaderindustrypractices.
Wearenotmakingchangesfortheseprocessesinthisrulebutwillcontinuetoconsiderthefeedbackprovidedforpotentialactioninfuturerulemakingapplicablenotsoonerthanplanyear2021.
Comment:Allcommentersthatcommentedoneffortstoincreasepricetransparencysupportedtheideaofincreasedpricetransparency.
Manycommentersprovidedsuggestionsforhowtodisclosehealthcarecoststoconsumers,suchasprovidingcostsforcommon,shoppableservices,includingcostsforbothin-andout-of-networkhealthcare,andaccountingforconsumer-specificbenefitinformationsuchasprogresstowardsmeetingadeductible,out-of-pocketlimitandvisitlimitsinhealthcarecostestimates.
Onecommentersupportedimplementingpricetransparencyrequirementsacrossallprivatemarkets.
Anothercommentersuggestedthatpricetransparencyeffortsbeapartofalargerpaymentreform,providerempowerment,andpatientengagementstrategy.
Somecommentersexpressedcautionforhowsuchpoliciesshouldbeimplemented,warningagainstduplicatingstateeffortsandpassingalongadministrativecoststoconsumers,andcautioningthattheproprietaryandcompetitivenatureofpaymentdatashouldbeprotected.
Response:Wearenotmakingchangestofurtherimplementtheenrolleecost-sharingtransparencyrequirementsunder§156.
220(d)aspartofthisrule.
Wewilltakethisinputintoaccountaswecontinueoureffortstopromotepricetransparencyinhealthcaremarkets.
Wesoughtcommentonwaysthatwecanpromotetheofferingandtake-upofHDHPsthatcanbepairedwithHSAs.
WealsosoughtcommentsforwaystoincreasethevisibilityofHSA-eligibleHDHPsonHealthCare.
gov.
Comment:ManycommentersprovidedsuggestionsonhowtoimprovetheeducationalcontentaboutHSAsonHealthCare.
gov,andmethodstoimprovethetechnicalaspectsofHealthCare.
govtoincorporateHSAsintotheQHPshoppingexperience.
CommentersalsoencouragedHHS'involvementintheincorporationofvalue-basedinsurancedesignprinciplesintoHSA-eligibleHDHPdesigns.
Response:Weappreciatethesecomments,andwilltakethemunderconsiderationshouldwemakeanyfuturechangestoourapproachtowardsHSAsonHealthCare.
gov.
WenotethattherulesforHSAsandHSA-eligibleHDHPsaresetforthinsection223oftheCodeandareunderthejurisdictionoftheDepartmentoftheTreasuryandtheInternalRevenueService(IRS).
A.
Part146—RequirementsfortheGroupHealthInsuranceMarketForadiscussionoftheprovisionsinthisfinalrulerelatedtopart146,pleaseseethepreambletopart147.
B.
Part147—HealthInsuranceReformRequirementsfortheGroupandIndividualHealthInsuranceMarketsSection147.
106implementstheguaranteedrenewabilityrequirementsunderthePPACA(applicabletonon-grandfatheredplans),and§§146.
152and148.
122implementtheguaranteedrenewabilityrequirementsenactedbyHIPAA(applicabletobothgrandfatheredandnon-grandfatheredVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00008Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217461FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations980FRat10822.
1080FR10822.
plans).
Weproposedamendmentsin§147.
106,andconformingamendmentsto§§146.
152and148.
122,which,takentogetherwithproposedamendmentsto§§156.
122and156.
130,aimedtoreduceprescriptiondrugexpenditures.
Inthe2016PaymentNotice,weexpressedconcernsabouttheimpactonconsumersofmid-yearformularychanges.
Wenotedthat,underguaranteedrenewabilityrequirementsandthedefinitionsof''product''and''plan,''issuersgenerallymaynotmakeplandesignchanges,otherthanatthetimeofplanrenewal.
However,wealsostatedthatcertainmid-yearchangestodrugformulariesrelatedtotheavailabilityofdrugsinthemarketmaybenecessaryandappropriate.
9Intheproposedrule,weproposedtoadd§147.
106(e)(5)tosetparametersintheindividual,smallgroup,andlargegroupmarkets,forplanyearsbeginningonorafterJanuary1,2020,forcertainmid-yearformularychanges,ifpermittedbyapplicablestatelaw.
At§147.
106(e)(5),weproposedallowingissuers,forplanyearsbeginningonorafterJanuary1,2020,tomakeformularychangesduringtheplanyearwhenagenericequivalentofaprescriptiondrugbecomesavailableonthemarket,withinareasonabletimeafterthatdrugbecomesavailable.
Weproposedthattheissuerbepermittedtomodifyitsplans'formulariestoaddthegenericequivalentdrug.
Atthattime,theissuerwouldalsobepermittedtoremovetheequivalentbranddrugfromtheformularyormovetheequivalentbranddrugtoadifferentcost-sharingtierontheformulary.
Weproposedthatanymid-yearformularychangeswouldhavetobeconsistentwiththestandardsapplicabletouniformmodificationsinparagraph(e)(2)or(e)(3).
Weproposedthatissuers,includingissuersofgrandfatheredplans,wouldalsoberequiredtoprovideenrolleestheoptiontorequestcoverageforabranddrugthatwasremovedfromtheformularythroughtheapplicablecoverageappealprocessunder§147.
136orthedrugexceptionrequestprocessunder§156.
122(c).
Underourproposal,beforeremovingabranddrugfromtheformularyormovingittoadifferentcost-sharingtier,ahealthinsuranceissuerwouldberequiredtonotifyallplanenrolleesofthechangeinwritingaminimumof60dayspriortoinitiatingthechange.
Thisnoticewouldidentifythenameofthebranddrugthatisthesubjectofthechange,disclosewhetherthebranddrugwillberemovedfromtheformularyorplacedonadifferentcost-sharingtier,providethenameofthegenericequivalentthatwillbemadeavailable,specifythedatethechangeswillbecomeeffective,andstatethatundertheappealsprocessesoutlinedin§147.
136ortheexceptionsprocessesoutlinedin§156.
122(c),enrolleesanddependentsmayrequestandgainaccesstothebranddrugwhenclinicallyappropriateandnototherwisecoveredbythehealthplan.
Wealsoproposedchangesto§147.
106(a)toreflectthatparagraph(e)currentlyprovidesanexceptiontothegeneralruleonguaranteedrenewability.
Thisismerelyatechnicalcorrection,notasubstantivechange.
Wesimilarlyproposedtechnicalcorrectionsto§§146.
152(a)and148.
122(b).
Wesoughtcommentontheseproposalsrelatedtoprescriptiondrugbenefitsandcoverage,includingwhethertolimittheproposalrelatedtomid-yearformularychangestotheindividualandsmallgroupmarkets,andwhetheradifferentadvancenoticeperiod,suchas90daysor120days,wouldbemoreappropriate.
Comment:Whilesomecommentersgenerallysupportedtheproposal,manycommentersopposedit,becausetheynoteditinappropriatelyexpandedornarrowedissuers'abilitytomakedrugformularychangesmid-year.
Severalcommentersopposedtheproposalasoverlyrestrictive.
Thesecommentersstatedthatfederallawdoesnotprohibitmid-yearformularychanges,andthatitisacurrentpracticethatoccursmuchmorebroadlythanwhattheproposalwouldpermit.
Forexample,thesecommentersstatedthatformulariesarechangedwhenabiosimilardrug,alower-pricedbrandnametherapeuticequivalent,anewdrugthatisclinicallyeffective,oranover-the-counterversionofadrugbecomesavailable;whenthereisashortageofapreferredgenericdrug;whenthereisnewevidenceoftheefficacyofadrug;orwhenthereareexpandedindicationsforadrug.
Onecommenterstatedthatmoststatesdonotprohibitmid-yearformularychanges,regardlessofthefederalguaranteedrenewabilityrequirementsandstatedthatmid-yearformularychangesshouldbeallowedforalldrugsaslongasthechangesareapprovedbytheissuer'spharmacyandtherapeuticscommittee,andnoticeisprovided.
Severalcommentersstatedthatapprovalbyapharmacyandtherapeuticscommittee,noticetoenrollees,andprovidinganexceptionsprocesstorequestandgainaccesstoremoveddrugswhenmedicallyappropriateandnecessary,areallcurrentindustrypractice.
Manyothercommentersstatedtheproposalwouldimproperlyallowmid-yearformularychangesandopposedtheproposalbecausetheynoteditwouldhurtconsumers.
Thesecommentersstated,forexample,thatconsumerschoosetheirplansbasedontheformularycompositionatthebeginningoftheplanyearandthatchangingformulariescouldresultinpatientsafetyandhealthissuessuchasadditionalemergencyroomvisits,additionaloutpatientappointments,andhighermedicalcosts.
Afewcommentersstatedthatthesedangerscouldoccurnotwithstandingtheavailabilityofanexceptionsorappealsprocess.
Manycommentersstatedthatmid-yearformularychangesarbitrarilyeliminateanEHB.
Response:Inthe2016PaymentNotice,westatedthatcertainmid-yearchangestodrugformulariesrelatedtotheavailabilityofdrugsinthemarketmaybenecessaryandappropriate.
Commentstothisrulesupportedthatbelief.
Atthesametime,inthe2016PaymentNotice,wealsoexpressedconcernsabouttheimpactonconsumersofmid-yearformularychanges.
10Weappreciatethecommentstothisruleidentifyingpotentialnegativeimpactsonconsumers.
Giventhecomplexityofthisissue,andthechallengesofbalancingtheinterestsofconsumerswiththeimportanceofmitigatingtheeffectsofrisingprescriptiondrugcosts,wearenotfinalizingtheproposalatthistime.
Rather,wewillcontinuetoexaminetheissueofmid-yearformularychanges,andmayprovideguidanceonthisissueinthefuture.
Inthemeantime,totheextentissuersmakemid-yearformularychangesconsistentwithapplicablestatelaw,ourexpectationisthatallissuers(intheindividual,smallgroupandlargegroupmarkets)willcontinuetoprovidecertainconsumerprotectionsthat,ascommentershavestated,aregenerallyconsistentwithcurrentindustrypractice.
Theseprotectionsincludepre-approvalbyapharmacyandtherapeuticscommittee,andreasonableadvancenoticetoaffectedindividualsofthemid-yearremovalofanydrugfromaformulary(ortheplacementofanydrugonahighercost-sharingtier).
Additionally,weexpectthataffectedindividualswillgenerallyhaveaccesstotheappealsprocessesoutlinedin§147.
136ortheexceptionsprocessesoutlinedin§156.
122(c),underwhichenrolleesanddependentsmayrequestandgainaccesstoanon-formularydrugwhenclinicallyappropriateandnototherwisecoveredbythehealthplan.
VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00009Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217462FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsSeveralcommentersspecificallynotedthatissuerscurrentlyofferanexceptionsprocesswhenmakingmid-yearformularychanges.
Therefore,ourexpectationisthatissuerswillalsoofferanappealsprocessorexceptionsprocesswhenmakingmid-yearformularychanges.
Wedonotagreethatmid-yearformularychangesarbitrarilyeliminateanEHB.
Rather,weremindissuersthatallrequirementsin§156.
122relatedtoEHBasappliedtoprescriptiondrugcoveragecontinuetoapplyinthecontextofmid-yearformularychanges.
Forexample,ahealthplandoesnotprovideEHBunlessitcoversthegreaterofonedrugineveryUnitedStatesPharmacopeia(USP)categoryandclassorthesamenumberofprescriptiondrugsineachcategoryandclassastheEHB-benchmarkplan.
Additionally,theEHBregulationsat§156.
122(a)(3)requiretheuseofapharmacyandtherapeuticscommitteetoestablishandmanagetheformularydruglistthroughouttheyear.
IssuersrequiredtoprovideEHBmustcontinuetomeettheserequirements.
Comment:Manycommenters,includingthosewhogenerallysupportandthosewhogenerallyopposetheproposal,requestedspecificchangestotheproposal.
Onecommenterfavoredapplyingmid-yearformularyrestrictionstoissuersinthelargegroupmarket,whileafewopposeddoingso.
Onecommenterstatedthattheuniform-modification-of-coveragerequirementsshouldnotapplytomid-yearformularychangesinthelargegroupmarket,whileanotherstatedtheyshouldnotapplyinanymarket.
Onecommenterraisedwhatitbelievedtobepracticalconcernswithanyrestrictionsonmid-yearformularychangesinthegroupmarkets,sinceplanyearsinthosemarketsarenotrequiredtoalignwiththecalendaryear.
Manycommentersstatedthatmid-yearformularychangesshouldbepermittedasawaytoadddrugs,butnottoremovedrugsormovedrugstoadifferenttier.
Afewcommentersstatedtheformularychangesshouldnotapply,fortherestoftheplanyear,topeoplealreadytakingtheaffecteddrugs.
Severalcommentersnotedthatwedidnotdefine''genericdrug,''andoffereddefinitions.
Response:Asstatedinthisrule,wearenotfinalizingtheproposalatthistime,andinsteadintendtocontinuetoexaminetheissueofmid-yearformularychanges.
Weappreciatetheimportantconsiderationsraisedbycommenters,inparticularregardingthepracticalconcernswithrestrictionsonmid-yearformularychanges,andbelieveitisimportantforustomorefullyexploretheseissuesandotherissuesraisedbycommenterspriortoissuingfurtherguidance.
Wewillconsiderallofthesecommentsasweconsiderfutureguidanceinthisarea.
Wealsoarenotfinalizinganychangestothedefinitionsof''plan''and''product''at§144.
103—whichincorporatebyreferencetheuniformmodificationstandards—withregardtodeterminingwhetheraproductandplanthathaveundergoneformularychangesareconsideredthesameproductandplan.
Thisdefinitionprovidesthat,amongotherthings,withinaproduct,eachplanmusthavethesamecost-sharingstructureasbeforethemodification,exceptforanyvariationincostsharingsolelyrelatedtochangesincostandutilizationofmedicalcare,ortomaintainthesamemetallevelofcoverage.
Weinterpretthisprovisiontomeanthatformodificationsofprescriptiondrugformularies,eachtiermustcontinuetohavethesamecost-sharingstructure,oranychangestothetierstructuremustberelatedtochangesincostorutilizationofmedicalcare,ortomaintainthesamemetallevel,tobeconsideredauniformmodificationofcoverage,regardlessofanychangesmadetotheplacementofdrugswithintheformulary.
Additionally,theproductmustprovidethesamecoveredbenefits,exceptforanychangesinbenefitsthatcumulativelyimpacttheplan-adjustedindexrateforanyplanwithintheproductwithinanallowablevariationof±2percentagepoints(notincludingchangespursuanttoapplicablefederalorstaterequirements).
Giventhenatureofformularychanges,ourexpectationisthatgenerally,anychangestowhichdrugsarecoveredundertheformularywouldnotbeofamagnitudethatwouldexceedtheallowablevariationof±2percentagepointsoftheplan-adjustedindexrate.
However,ifformularychangesdoresultinachangetotheplan-adjustedindexrateoutsidethispermittedvariation,suchchangeswouldresultintheproductbeingconsideredtohavebeendiscontinued,andanewproducttohavebeenissued.
Comment:Whilemanycommentersgenerallysupportedtherequirementforissuerstoprovideanappealsorexceptionsprocess,afewcommentersrecommendedrequiringanexceptionsprocessofallissuers,suggestingitismoreprotectivethantheappealsprocess.
Wedidnotreceiveanycommentsthatgenerallyopposedsucharequirement.
Indescribingcurrentindustrypractice,multiplecommenterspointedoutthatissuersmakingmid-yearformularychangesalreadyregularlyprovideaffectedconsumerswithaccesstotheexceptionsprocess.
Response:Weagreewithcommentersthataccesstoanappealsorexceptionsprocesswhenamid-yearformularychangeoccursisanimportantconsumerprotection.
Althoughwearenotfinalizingourproposal,wenotethatissuersofferingnon-grandfatheredgrouporindividualhealthinsurancecoveragearerequiredtoprovideanappealsorexceptionsprocessunderwhichenrolleesanddependentsmayrequestandgainaccesstoanon-covereddrug,includingonethatwasremovedfromtheformulary(otherthanoneremovedforsafetyreasons)whenclinicallyappropriateandnototherwisecoveredbythehealthplan,under§§147.
136or156.
122(c),asapplicable.
Weexpectissuerstocontinuetodoso,withrespecttomid-yearformularychanges.
Comment:Fortheproposednoticerequirement,manycommentersgenerallyagreedthatanoticerequirementisnecessary,whileonlyonestatedotherwise.
Manycommentersagreedwiththeproposed60-dayadvancenoticerequirement,whilemanyadvocatedfora90-dayor120-dayrequirement.
Afewcommentersstateditshouldbe30days,consistentwiththenoticeMedicarerequiresundersomecircumstances.
Manycommentersstatedthatthenoticeshouldbesentonlytoaffectedenrollees,whileothersstatedthenoticeshouldalsobesenttoprescribersandpharmacies.
Afewcommentersrequestedeitheratemplateorspecificlanguage.
Afewcommentersstatedthatatwo-stepnoticeshouldbeprovided:Thefirstnoticeshouldappriseenrolleesoftheavailabilityofthegenericdrug,aswellasanycostadvantagetoswitching;atleast90dayslater,theissuermustprovideasecondnotice,statingthatchangestothebranddrug'scostsharingwilloccur;andonly60daysafterthesecondnoticeissent,couldtheissuerchangethebranddrug'scostsharing.
Afewcommentersstatedthatstatelawshoulddeterminethetimingandcontentofnotices.
Severalcommentersstatedthatnoticetoenrolleesiscommonindustrypracticewhenmid-yearformularychangesoccur.
Response:Weagreewiththemanycommenterswhostatedthatprovidingadvancenoticetoaffectedconsumersisimportant,andalthoughwearenotfinalizingtheproposalatthistime,weexpectissuerswillcontinuetoprovidereasonablenoticetoaffectedconsumers,pendinganyfurtherguidanceonmid-yearformularychanges.
Wewillcontinuetoexaminethisissue.
WereceivednocommentsontheproposedtechnicalcorrectionstoVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00010Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217463FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations11''OMBReporttoCongressontheJointCommitteeReductionsforFiscalYear2019'',p.
6.
February12,2018.
Availableathttps://www.
whitehouse.
gov/wp-content/uploads/2018/02/Sequestration_Report_February_2018.
pdf.
12See83FR16930at16939.
1377FR17220(March23,2012).
1478FR65046(October30,2013).
15Forexample,see2018PaymentNoticefinalrule,81FR94058(December22,2016).
Alsoseehttps://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2019-Final-HHS-RA-Model-Coefficients.
pdf.
§§146.
152,147.
106,and148.
122,andarefinalizingthemasproposed.
C.
Part148—RequirementsfortheIndividualHealthInsuranceMarketForadiscussionoftheprovisionsinthisfinalrulerelatedtopart148,pleaseseethepreambletopart147.
D.
Part153—StandardsRelatedtoReinsurance,RiskCorridors,andRiskAdjustmentUndertheAffordableCareAct1.
SequestrationInaccordancewiththeOMBReporttoCongressontheJointCommitteeReductionsforFiscalYear2019,11boththetransitionalreinsuranceprogramandpermanentriskadjustmentprogramaresubjecttothefiscalyear2019sequestration.
Thefederalgovernment's2019fiscalyearbeganOctober1,2018.
Althoughthe2016benefityearwasthefinalyearofthetransitionalreinsuranceprogram,wecontinuetomakereinsurancepaymentsinthe2019fiscalyearforclose-outactivities.
Therefore,theriskadjustmentandreinsuranceprogramswillbesequesteredatarateof6.
2percentforpaymentsmadefromfiscalyear2019resources(thatis,fundscollectedduringthe2019fiscalyear).
HHS,incoordinationwiththeOMB,hasdeterminedthat,undersection256(k)(6)oftheBalancedBudgetandEmergencyDeficitControlActof1985(Pub.
L.
99–177,enactedonDecember12,1985),asamended,andtheunderlyingauthorityforthereinsuranceandriskadjustmentprograms,thefundsthataresequesteredinfiscalyear2019fromthereinsuranceandriskadjustmentprogramswillbecomeavailableforpaymenttoissuersinfiscalyear2020withoutfurtherCongressionalaction.
IfCongressdoesnotenactdeficitreductionprovisionsthatreplacetheJointCommitteereductions,theseprogramswillbesequesteredinfuturefiscalyears,andanysequesteredfundingwillbecomeavailableinthefiscalyearfollowingthatinwhichitwassequestered.
2.
ProvisionsandParametersfortheRiskAdjustmentProgramInsubpartsA,B,D,G,andHofpart153,weestablishedstandardsfortheadministrationoftheriskadjustmentprogram.
Theriskadjustmentprogramisapermanentprogramcreatedbysection1343ofthePPACAthattransfersfundsfromlower-than-averagerisk,riskadjustmentcoveredplanstohigher-than-averagerisk,riskadjustmentcoveredplansintheindividualandsmallgroupmarkets(includingmergedmarkets),insideandoutsidetheExchanges.
Inaccordancewith§153.
310(a),astatethatisapprovedorconditionallyapprovedbytheSecretarytooperateanExchangemayestablishariskadjustmentprogram,orhaveHHSdosoonitsbehalf.
HHSdidnotreceiveanyrequestsfromstatestooperateriskadjustmentforthe2020benefityear.
Therefore,HHSwilloperateriskadjustmentineverystateandtheDistrictofColumbiaforthe2020benefityear.
a.
HHSRiskAdjustment(§153.
320)TheHHSriskadjustmentmodelspredictplanliabilityforanaverageenrolleebasedonthatperson'sage,sex,anddiagnoses(alsoreferredtoashierarchicalconditioncategories(HCCs)),producingariskscore.
Thecurrentstructureofthesemodelsisdescribedinthe2019PaymentNotice.
12TheHHSriskadjustmentmethodologyutilizesseparatemodelsforadults,children,andinfantstoaccountforcostdifferencesineachagegroup.
Intheadultandchildmodels,therelativeriskassignedtoanindividual'sage,sex,anddiagnosesareaddedtogethertoproduceanindividualriskscore.
Additionally,tocalculateenrolleeriskscoresintheadultmodels,weaddedenrollmentdurationfactorsbeginningwiththe2017benefityear,andprescriptiondrugcategories(RXCs)beginningwiththe2018benefityear.
Infantriskscoresaredeterminedbyinclusioninoneof25mutuallyexclusivegroups,basedontheinfant'smaturityandtheseverityofdiagnoses.
Ifapplicable,theriskscoreforadults,children,orinfantsismultipliedbyacost-sharingreductionadjustmentthataccountsfordifferencesininduceddemandatvariouslevelsofcostsharing.
Theenrollment-weightedaverageriskscoreofallenrolleesinaparticularriskadjustmentcoveredplan(alsoreferredtoastheplanliabilityriskscoreorPLRS)withinageographicratingareaisoneoftheinputsintotheriskadjustmentstatepaymenttransferformula,whichdeterminesthestatepaymentorchargethatanissuerwillreceiveorberequiredtopayforthatplan.
Thus,theHHSriskadjustmentmodelspredictaveragegroupcoststoaccountforriskacrossplans,inkeepingwiththeActuarialStandardsBoard'sActuarialStandardsofPracticeforriskclassification.
i.
Definitions(§153.
20)Inthisfinalrule,wearemakingatechnicalcorrectiontothedefinitionofariskadjustmentcoveredplanunder§153.
20bycorrectingacitationinthedefinitionof''riskadjustmentcoveredplan''from§146.
145(c)to§146.
145(b).
Specifically,thisdefinitionwasfinalizedinthefinalruleentitledStandardsRelatedtoReinsurance,RiskCorridorsandRiskAdjustment,13andafterthatrulewasfinalized,thefinalruleentitledAmendmentstotheHHSNoticeofBenefitandPaymentParametersfor201414amendedandredesignatedthenumberingunder§146.
145.
Amongotherthings,theseamendmentsmovedtheexceptedbenefitprovisionfromparagraph(c)toparagraph(b)of§146.
145.
Thus,thepurposeofthistechnicalcorrectionistoupdatethiscitationtorefertotheparagraphonexceptedbenefitplansunder§146.
145,consistentwiththeoriginalintentofthisdefinitionwhenitwasfirstadopted.
ii.
UpdatestotheRiskAdjustmentModelRecalibrationWeusedthe3mostrecentyearsofMarketScandataavailabletorecalibratethe2016,2017,and2018benefityearriskadjustmentmodels.
Forthe2019benefityear,werecalibratedthemodelsusing2yearsofMarketScandata(2014and2015)and2016enrollee-levelEDGEdata.
The2019benefityearwasthefirstrecalibrationyearinwhichenrollee-levelEDGEdatawasusedforthispurpose.
Thisapproachusedblended(averaged)coefficientsfrom3yearsofseparatelysolvedmodelstoprovidestabilityfortheriskadjustmentcoefficientsyear-to-year,whilereflectingthemostrecentyears'claimsexperienceavailable.
Forthe2020benefityear,weproposedtoblendthe2mostrecentyearsofenrollee-levelEDGEdataavailable(2016and2017)withthemostrecentyearofMarketScandataavailable(2017).
Wealsonotedthatifweareunabletopublishthefinalcoefficientsinthefinalrule,consistentwith§153.
320(b)(1)(i),andaswehavedoneforcertainpriorbenefityears,15wewouldpublishthefinalcoefficientsforthe2020benefityearinguidanceafterthepublicationofthefinalrule.
Wesoughtcommentsontheseproposals.
VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00011Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217464FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations16See83FR16939.
17SeeSection4.
0,''ConstraintsonRXCCoefficientstoLimitIncentivesforInappropriatePrescribing''oftheCreationofthe2018BenefitYearHHS-OperatedRiskAdjustmentAdultModelsDraftPrescriptionDrug(RXCUIs)toHHSDrugClasses(RXCs)CrosswalkMemo.
Availableathttps://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Draft-RxC-Crosswalk-Memo-9-18-17.
pdf.
WedidnotproposetomakeanychangestothecategoriesincludedintheHHSriskadjustmentmodelsforthe2020benefityearfromthosefinalizedinthe2019benefityearmodels.
Thatis,weproposedtomaintainthesameage,sex,enrollmentduration,HCC,RXC,andseveritycategoriesforthe2020benefityearmodelsasthoseusedforthe2019benefityearmodels.
16However,weproposedtomakeapricingadjustmentforoneRXCcoefficientforthe2020benefityearadultmodels.
ConsistentwithourtreatmentofotherRXCswhereweconstraintheRXCcoefficienttotheaveragecostofthedrugsinthecategory,17weproposedtomakeapricingadjustmenttotheHepatitisCRXCtomitigateoverprescribingincentivesinthe2020benefityearadultmodels.
FortheRXCcoefficientslistedinTable1oftheproposedrule,weconstrainedtheHepatitisCcoefficienttotheaverageexpectedcostsofHepatitisCdrugs.
ThishadthematerialeffectofreducingtheHepatitisCRXCandtheRXC–HCCinteractioncoefficients.
Forthefinal2020benefityearHepatitisCfactorsintheadultmodels,weproposedtoadjusttheplanliabilityassociatedwithHepatitisCdrugstoreflectfuturemarketpricingofHepatitisCdrugsbeforesolvingfortheadultmodels'coefficients.
WeproposedapplyinganadjustmenttotheplanliabilitytoensurethatplanscancontinuetoreceiveincrementalcreditforenrolleeshavingboththeRXCandHCCforHepatitisC,andallowfordifferentialplanliabilityacrossmetallevels.
Wesoughtcommentontheseproposals.
WearenotfinalizingourproposaltoblendthemostrecentyearofMarketScandata(2017)withthe2mostrecentyearsofenrollee-levelEDGEdata(2016and2017)for2020riskadjustmentmodelrecalibration.
Weareinsteadfinalizinganapproachthatwouldblend3consecutiveyearsofdata—oneyearofdatafromMarketScan(2015)withthe2mostrecentyearsofenrollee-levelEDGEdata(2016and2017),anapproachthatmorecloselyalignswiththeapproachweusedtorecalibrateriskadjustmentmodelsforthe2016,2017,2018,and2019benefityears.
Thisapproachmaintainsourpreviouslyfinalizedpolicyofblendingcoefficientsfrom3yearsofseparatelysolvedmodelsandpromotesstabilityfortheriskadjustmentcoefficientsyear-to-year.
Accordingly,wehaveincorporatedthe2015MarketScandatawith2016and2017benefityearenrollee-levelEDGEdataforthefinal2020benefityearriskadjustmentcoefficientspresentedinthisfinalrule.
Additionally,wearefinalizingthepricingadjustmenttotheplanliabilitysimulationfortheHepatitisCRXC,asproposed,andarenototherwisemakingchangestothecategoriesincludedintheHHSriskadjustmentmodelsforthe2020benefityearfromthosefinalizedforthe2019benefityearmodels.
Thefollowingisasummaryofthepubliccommentswereceivedontheriskadjustmentmodelrecalibrationproposals.
Comment:Mostcommenterssupportedusingenrollee-levelEDGEdatatorecalibratetheriskadjustmentmodels,withsomecommentersespeciallysupportingtheblendingof2016and2017enrollee-levelEDGEdataand2017MarketScandatafortherecalibrationofthe2020riskadjustmentmodels.
Somecommentersstatedthattheyhadexpectedthe2020benefityearmodelstoincorporatecoefficientssolvedfromthe2015MarketScandatatomaintain2ofthesamedatayears(2015MarketScanand2016enrollee-levelEDGE)asthoseusedinthe2019benefityearmodels.
Thesecommentersraisedconcernsthatusing2017MarketScanand2017enrollee-levelEDGEdatamayresultindoublecountingcertainenrolleestotheextenttheindividualandsmallgroupmarketplanscontributedatatoMarketScan,andsuggestedthatusingcurrentlyavailable2015MarketScandatawith2016–2017enrollee-levelEDGEdatatorecalibratethe2020riskadjustmentmodelswouldallowthefinalcoefficientstobepublishedwiththefinalrule.
Oneofthesecommenterswasconcernedaboutvolatilityincoefficientsrelativetoprioryears,whichblended3consecutiveyearsofdata(ratherthan2datasetsfromthesameyear),wantingmoreinformationonwhetherthisvolatilitywouldbereducedif2015MarketScandatawereused.
SomecommenterssupportedHHS'intenttoproposeuseof3consecutiveyearsofenrollee-levelEDGEdatatorecalibratetheriskadjustmentsmodelsforthe2021benefityearandbeyond.
OnecommentersupportedmaintainingthecategoriesincludedintheHHSriskadjustmentmodelsforthe2020benefityear.
Response:Webelieveblendingmultipleyearsofdatapromotesstabilityandcertaintyforissuersinratesetting,helpingtosmoothsignificantdifferencesincoefficientssolvedfromanyoneyear'sdataset,particularlyforconditionswithsmallsamplesizes.
BecausetheMarketScandatagenerallyrepresentenrolleesinthelargeself-insuredemployermarketandtheenrollee-levelEDGEdatarepresentsenrolleesinthesmallgroupandindividualmarkets,usingtwodatasetsfromthesameyear(2017MarketScanand2017enrollee-levelEDGE)wouldnotsignificantlydoublecountenrolleesbetweenthedifferentdatasetsforthe2017benefityear.
However,weagreewithcommenterswhonotedthatmaintaining2yearsofdatafromonerecalibrationyeartothenexthasastabilizingeffectbyspreadingtheimpactofnewexperienceover3years.
Werecognizeandagreewiththeconcernsthatrecalibratingthe2020benefityearriskadjustmentmodelsblending2017MarketScandatawith2016and2017enrollee-levelEDGEdatamaycreateunintentionalvolatility,asitwouldonlymaintainoneofthethreedatasetsthatwereusedinthe2019benefityearrecalibration.
Basedoncommentsreceived,wearefinalizingthe2020benefityearriskadjustmentmodelsusingblendedcoefficientsfrom2015MarketScandata,and2016and2017enrollee-levelEDGEdata.
Weintendtocontinueoureffortstorecalibratetheriskadjustmentmodelsusingenrollee-levelEDGEdatafromissuers'individualandsmallgroupormergedmarketpopulations,andtransitionawayfromtheMarketScancommercialdatabase.
Specifically,beginningwiththe2021benefityear,weintendtoproposetousethe3mostrecentyearsofenrollee-levelEDGEdataavailabletorecalibratetheriskadjustmentmodels.
Comment:SeveralcommentersrequestedthatHHSprovidethefinalcoefficientsinthefinalruleandtheactualproposedcoefficientstobeproposedinproposedrulesinfutureyears.
However,onecommenterrequestedthatthefinalcoefficientsbemadeavailablebyMarch31,2019duetostatefilingdeadlines.
Response:Weappreciatethecommenter'sconcernthatthefinalcoefficientsbemadeavailablebythetimeofinitialstateratefilingsubmissions.
Ourabilitytoprovidetheproposedandfinalcoefficientsintheproposedandfinalrulesdependsontheavailabilityofdataandourabilitytoexecutethemodelregressionswiththatdatatosolvethecoefficientsfortheriskadjustmentmodelsforagivenbenefityear,reflectinganyapplicableVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00012Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217465FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations18See§153.
320(b)(1)(i).
19Ibid.
20April4,2019,wasourlastupdateofthe2018BenefitYearRiskAdjustment(RA):UpdatedHHS-DevelopedRiskAdjustmentModelAlgorithm''DoItYourself(DIY)''Software—TechnicalDetailsthatincludestheRXCCrosswalk.
TheRXCCrosswalkisavailableathttps://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Updated-DIY-Tables-2018.
xlsx.
21Seehttps://www.
gilead.
com/news-and-press/press-room/press-releases/2018/9/gilead-subsidiary-to-launch-authorized-generics-of-epclusa-sofosbuvirvelpatasvir-and-harvoni-ledipasvirsofosbuvir-for-the-treatment-of-chronic.
Alsoseehttps://news.
abbvie.
com/news/abbvie-receives-us-fda-approval-mavyret-glecaprevirpibrentasvir-for-treatment-chronic-hepatitis-c-in-all-major-genotypes-gt-1-6-in-as-short-as-8-weeks.
htm.
modificationsadoptedaspartoftherulemakingprocess.
Duetotheavailabilityofdataandourabilitytoexecutethemodelregressions,thisyear,weareabletoprovidethefinalrecalibratedcoefficientsfor2020benefityearinthetablesbelow.
Inthefuture,wewillcontinuetolookforopportunitiestoupdateourprocessestoobtainandprocesstherecalibratedcoefficientsassoonaspractical.
However,ifdataisnotavailableorifweareunabletocalculatethecoefficientsfortheriskadjustmentmodelsforabenefityearintimeforpublicationintheapplicablefinalannualHHSnoticeofbenefitandpaymentparameters,thenwewillpublishthedraftfactorstobeemployedinthemodelsinthefinalrule,includingdemographicfactors,diagnosticfactors,andutilizationfactors,andthedatasetstobeusedtocalculatethefinalcoefficients.
18Insuchcircumstances,wewillalsonotifyissuersinthefinalruleofthedatebywhichfinalcoefficientswillbereleasedinguidance.
19Comment:OnecommenterencouragedHHStomonitorthevolatilityofcoefficientsyear-to-yearinswitchingtoenrollee-levelEDGEdata.
Onecommenterrecommendedevaluatingthemodelscontinuallytoensuretheyfullycapturethecostofthecurrentstandardofcareforconditions.
OnecommenterrecommendedHHScontinuetocontemplatethebestwaytoincorporatedrugpipelinedata,whileadifferentcommentersupportedcontinuingtoreevaluatedrugs.
Anothercommentersupportedmonitoringandevaluatingtheimpactonpatientaccessofchangestotheriskadjustmentprogram.
Response:Aswitheveryrecalibrationyear,wecontinuetomonitortheyear-to-yearchangesinriskscores,includingthevolatilityofthecoefficientsfromyeartoyear.
Asdiscussedintheproposedrule,wenotedthatforHCCswithcorrespondingRXCsandRXC–HCCinteractionfactorsintheadultriskadjustmentmodels,weareobservingyear-to-yearfluctuationsintheriskscoreweightsbetweentheHCC,RXC,andRXC–HCCinteractionfactors.
Thisfluctuationismainlyduetothecollinearitybetweenthesefactors,makingthestatisticalmodels,andtherefore,thecoefficientssolvedforthesefactors,sensitivetosmallchangesinthedata.
AlthoughtheHCC,RXC,andRXC–HCCinteractionfactorsmaybechangingfromyeartoyear,theaggregateimpactofthefactorshasremainedrelativelystablebetweenrecalibrationupdates.
Similarly,theaggregateimpactoftheHCC,RXCandRXC–HCCinteractionfactorsforthe2020benefityearcontinuestoberelativelystable.
Additionally,wehavebeencontinuouslyassessingtheavailabilityofdrugsinthemarketandtheassociatedmappingofthosedrugstoRXCsintheadultriskadjustmentmodel.
Asaresultsofthison-goingassessment,wemakequarterlyupdatestotheRXCCrosswalk20toensuredrugs,includingnewdrugs,arebeingmappedtoRXCswhereappropriate,andintendtocontinuetomaketheseupdatesinthefuture.
Overall,wealsocontinuetoregularlyevaluatetheindividualandsmallgroupmarkets(includingmergedmarkets)andassesswhetherupdatestotheHHS-operatedriskadjustmentprogramcouldimprovetheassessmentofplanactuarialrisk.
Wealsoregularlyreviewtheimpactoftheriskadjustmentprogramonthemarkets.
Weexpecttocontinuetoreviewtheriskadjustmentprogramandproposechangesasnecessary.
Comment:MostcommentersgenerallysupportedapricingadjustmentfortheHepatitisCRXCcoefficienttoreflectchangingdrugprices.
Afewcommenterswereconcernedthattheproposalisover-adjustingtheHepatitisCRXCcoefficient,andwantedclarificationontheapproachusedfortheadjustment.
OnecommenterstatedthatHHSshouldmodifytheHepatitisCRXCadjustmentbasedonadays'supplyvariable.
WhilesomecommentersagreedwiththeadjustmenttoHepatitisCRXCtomitigateagainstthepotentialformisalignedincentivessuchasoverprescribing,othersdisagreedwiththeimplicationthathealthplansinfluenceproviders'prescribingpatterns.
Response:WefoundsignificantpricingchangesduetotheintroductionofnewHepatitisCdrugsintothemarketuponreviewoftheHepatitisCtreatmentsthatareapprovedandexpectedtobeavailablebeforethe2020benefityear.
21Duetothelagbetweenthedatayearsusedtorecalibratetheriskadjustmentmodelsandtheapplicablebenefityear,thedatausedforrecalibratingthemodelsdonotpreciselyreflecttheaveragecostofHepatitisCtreatmentsapplicabletothebenefityearinquestion.
Inaddition,thefirstfewyearsofenrollee-levelEDGEdatadonotincludedays'supplyinformationfortheRXCs;thus,theenrollee-levelEDGEdatasetscouldnotbeusedtomodelavariableforthedays'supplyoftheHepatitisCRXC.
Sincewearefinalizingtheriskadjustmentmodelsforthe2020benefityearcoefficientswiththe2015MarketScandata,whichrepresentsevenolderandcostlierHepatitisCtrendsthanwhatisanticipatedinthe2020benefityear,wecontinuetobelievethepricingadjustmentasproposedisappropriate.
Webelievethepricingadjustment,asfinalized,isappropriatebasedonourreviewofpublishedexpectationsforplanliabilityassociatedwithHepatitisCdrugs.
Additionally,weagreewithcommentersthatduetothehighcostofthesedrugs,withoutapricingadjustmenttoplanliability,issuerswouldbeovercompensatedfortheHepatitisCRXCinthe2020benefityearandcouldbeincentivizedto''game''riskadjustmentorencourageoverprescribingpractices.
Weappreciatethecommenters'viewthatplansgenerallydonotinfluenceprescribingpatterns.
However,toavoidperverseincentivestoinfluenceoverprescribingbehavior,wearefinalizingthepricingadjustmentasproposed.
ThispricingadjustmentleadstoHepatitisCRXCcoefficientsthatbetterreflectanticipatedactual2020benefityearplanliabilityassociatedwithHepatitisCdrugs.
Assuch,wearefinalizingourproposedpricingadjustmenttomakeapricingadjustmenttomorecloselyreflecttheexpectedaverageadditionalplanliabilityoftheHepatitisCRXCforthe2020benefityear.
Inmakingthisdetermination,weconsultedourclinicalexpertstoassesswhetherthelowercostHepatitisCdrugsaresubstitutabletoensurethatplansthatcovervarioustreatmentswouldcontinuetobecompensatedfortheirincrementalplanliability.
Wefoundthatduetothegenericentrant,pricesforallvariationsofHepatitisCdrugsareexpectedtobesignificantlylowerinthe2020benefityearthanthoseobservedinthecurrentlyavailabledatasets(whichreflectpriorbenefityears).
WebelievethisapproachtoestimatingtheHepatitisVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00013Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217466FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations22U.
S.
PreventiveServicesTaskForce,''DraftRecommendationStatement:PreventionofHumanImmunodeficiencyVirus(HIV)Infection:Pre-ExposureProphylaxis''(2018)availableathttps://www.
uspreventiveservicestaskforce.
org/Page/Document/draft-recommendation-statement/prevention-of-human-immunodeficiency-virus-hiv-infection-pre-exposure-prophylaxis.
23https://www.
cms.
gov/cciio/resources/forms-reports-and-other-resources/downloads/ra-march-31-white-paper-032416.
pdfandhttps://www.
regtap.
info/uploads/library/RA_ConferenceSlides_033116_5CR_040516.
pdf.
2481FR94058at94080(December22,2016).
CplanliabilityappropriatelybalancesreflectingthechangesincostsoftheHepatitisCdrugsinthemarketinthe2020benefityearwhilelimitingthepotentialforoverprescribingincentives.
Weintendtoreassessthispricingadjustmentinfuturebenefityears'modelrecalibrationswithadditionalyearsofenrollee-levelEDGEdata.
Comment:SeveralcommenterswantedHHStoconsiderincorporatingthePre-ExposureProphylactics(PrEP)intotheriskadjustmentmodels,giventherecentdraftUnitedStatesPreventiveServicesTaskForce(USPSTF)GradeArecommendation22forclinicianstoofferPrEPwitheffectiveantiretroviraltherapytopersonswhoareathighriskofHIVacquisition,citingthatthehighcostforPrEPtherapyislikelytoleadtocostavoidancestrategiesbyissuers.
Onecommenterexpressedsupportforincludingpreventiveservicesintheriskadjustmentmodels.
Response:WeappreciatethecommentersnotingthedraftUSPSTFrecommendation,which,iffinalized,wouldrequireissuerstocoverahighcost-therapywithnocostsharing.
However,wearenotincorporatingPrEPintotheriskadjustmentmodels.
Asageneralprinciple,RXCsareincorporatedintotheHHSriskadjustmentmodelstoimputeamissingdiagnosisorindicateseverityofadiagnosis.
Whilepreventiveservicesareincorporatedinthesimulationofplanliability,theydonotdirectlyaffectspecificdiagnoses.
Weincorporatepreventiveservicesintoourmodelstoensurethat100percentofthoseservicesarereflectedintheplan'sliability;however,manypreventiveservicesonlycountaspreventiveservicesundercertainconditions.
InthecaseofPrEPandthedraftUSPSTFrecommendation,therecommendationisonlyappliediftheenrolleemeetscertainconditionsfor''personswhoareathighrisk.
''Someoftheat-riskcategoriesarenotrecordedinclaimsdata,makingthemimpossibletoidentify.
Furthermore,theUSPSTFrecommendationforPrEPisonlyadraftrecommendation,andwedonotknowiforwhenitwouldbecomefinal.
WealsonotethatweareawareofothercurrentdrugsthatarepreventiveinnaturethatmaybesimilartoPrEPinthattheyaremedicationsrecommendedforasubsetpopulationthatisatrisk.
WhilewedonotplantomakeanadjustmentforPrEPatthistime,wemayconsidersolicitingcommentsinthefutureonwhetherandhowtoincorporatepreventivemedicationsintotheriskadjustmentmodels,andhowtoidentifyat-riskpopulationsintheenrollee-levelEDGEdatathatmaybeeligiblefordrugsclassifiedaspreventiveservices.
Comment:Somecommentersnotedconcernabouttheenrollmentdurationfactorsintheadultmodels,andwantedHHStoconsiderfurtheradjustmentstothesefactors.
Forexample,certaincommentersdiscussedthedifferencesbetweenspecialenrollmentperiodenrolleesversusopenenrollmentperiodenrolleesthatdropcoverageduringtheplanyear.
Thesecommentersnotedconcernsthatthecurrentcombinedenrolleedurationfactorsdonotadequatelyaddressbothscenarios,andwantedtheenrollmentdurationfactorstovaryforthesedifferentscenarios.
Inparticular,oneofthesecommentersexpressedconcernsaboutthechangesintheenrollmentdurationfactorsovertime,statingthatthefactorsneverseemedtocorrectlyadjustforincreasedspecialenrollmentperiodspending(particularlyforthosewiththematernityHCC),andprovidedseveralrecommendationsonpotentialmodificationstoimprovetheenrollmentdurationfactors,includingspecialconsiderationformaternityandNICU-relatedHCCs.
AnothercommenterrequestedthatHHStakeaholisticlookatthechildriskscoresandwhetherdurationfactorswouldbeappropriateforincorporationintothechildmodels,aswellastherelationshipofdurationfactorswithriskscorestoageratingfactors.
OnecommentersupportedHHSmakingadjustmentstogivegreaterweighttotheenrollee-levelEDGEdatawhenrecalibratingthemodelcoefficientsifHHSfindssignificantdemographicordistributionaldifferencesintheenrollee-levelEDGEdatacomparedtotheMarketScandata,andwassupportiveofHHScontinuingtoanalyzetheenrollee-levelEDGEdatatostudykeydifferencesbetweentheindividualandsmallgroupmarkets,includingcosts,utilizationpatterns,induceddemand,andpartialyearenrollment.
Response:WhiletherearedifferencesintotalspendinginMarketScandatacomparedtoenrollee-levelEDGEdata,wehavefoundthattherelativeriskdifferencesforage-sex,HCC,andRXCcategoriesintheenrollee-levelEDGEdataaregenerallysimilartothoseintheMarketScandata.
Therefore,wedonotbelievegivinggreaterweighttotheenrollee-levelEDGEdataisneeded.
Sincethe2016RiskAdjustmentWhitePaperandConference,23wehavecontinuedtoassessoptionstoupdatetheenrollmentdurationfactorsintheriskadjustmentadultmodelsaswestatedwewould.
Withthe2017enrollee-levelEDGEdata,wearenowabletoanalyzewhethertomodifyenrollmentdurationfactorswithalensofdifferencesbetweenindividualandsmallgroupmarkets,sincethemarketidentifierwasnotpartofthe2016enrollee-levelEDGEdata.
Ourpreliminaryanalysisof2017enrollee-levelEDGEdatafoundthatseparateenrollmentdurationfactorsfortheindividualandsmallgroupmarketsintheadultmodelsmaybewarranted,giventhedifferencesinriskprofilesofpartialyearenrolleesbetweenthetwomarkets.
Smallgroupmarketpartialyearenrolleeshadalowerincrementalriskonaveragethantheindividualmarketpartialyearenrolleesinthe2017benefityeardata.
Additionally,wedidnotobserveasignificantadditionalriskforspecialenrollmentperiodenrolleesorenrolleeswhodroppedcoveragepriortotheendofthebenefityearineithermarket.
Wedidnotproposeandarenotmakinganychangetothecurrentenrollmentdurationfactorsusedintheadultriskadjustmentmodelsatthistime.
Ourgoalistocontinuetoanalyzeenrollee-levelEDGEdata;wewillconsiderproposingchangestohowpartialyearenrolleesareaccountedforintheriskadjustmentmodelsforfuturebenefityearsinnotice-and-commentrulemaking.
Weintendtosolicitfeedbackandrecommendationsinthefutureforpotentialupdatestohowpartialyearenrolleesareaccountedforintheriskadjustmentmodels,includingadjustmentstotheenrollmentdurationfactorsandtheuseofseparateenrollmentdurationfactorsforindividualandsmallgroupmarketsandmayconsiderwhethersuchfactorsshouldbeincorporatedinthechildmodels.
iii.
High-CostRiskPooling(§153.
320)andAccountingfortheHigh-CostRiskPoolintheRiskAdjustmentTransferMethodologyHHSfinalizedahigh-costriskpooladjustmentinthe2018PaymentNoticetoaccountfortheincorporationofriskassociatedwithhigh-costenrolleesintheHHSriskadjustmentmodels.
24Specifically,wefinalizedadjustingthemodelsforhigh-costenrolleesinriskVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00014Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217467FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations25See81FR94058at94080and83FR16930at16943.
26See83FR16930at16954.
adjustmentcoveredplansbeginningwiththe2018benefityearbyexcludingapercentageofcostsaboveacertainthresholdinthecalculationofenrollee-levelplanliabilityriskscoressothatriskadjustmentfactorsarecalculatedwithoutthehigh-costrisk,sincetheaverageriskassociatedwithHCCsandRXCsisbetteraccountedforwithouttheinclusionofthehigh-costenrollees.
Inaddition,toaccountforissuers'riskassociatedwithhigh-costenrollees,issuersofriskadjustmentcoveredplanswillreceiveapercentageofcosts(coinsurancerate)abovethethreshold.
WesetthethresholdandcoinsurancerateatlevelsthatwillcontinuetoincentivizeissuerstocontrolcostswhileimprovingthepredictivenessoftheHHSriskadjustmentmodels.
Issuersofriskadjustmentcoveredplanswithhigh-costenrolleeswillreceiveapaymentforthepercentageofcostsabovethethresholdintheirrespectivetransfersfortheapplicablebenefityear.
UsingclaimsdatasubmittedtotheEDGEserversbyissuersofriskadjustmentcoveredplans,wecalculatethetotalamountofpaidclaimscostsforhigh-costenrolleesbasedonthethresholdandthecoinsurancerate.
Wethencalculateachargeasapercentageoftheissuers'totalpremiumsintheindividual(includingcatastrophicandnon-catastrophicplansandmergedmarketplans)orsmallgroupmarkets,whichisappliedtothetotaltransferamountineachmarket,thusmaintainingthebalanceofpaymentsandchargeswithintheHHS-operatedriskadjustmentprogram.
Wefinalizedathresholdof$1millionandacoinsurancerateof60percentacrossallstatesfortheindividual(includingcatastrophicandnon-catastrophicplansandmergedmarketplans)andsmallgroupmarketsforthe2018and2019benefityears.
25Forthe2020benefityearandbeyond,weproposedtomaintainthesameparametersthatapplytothe2018and2019benefityears,unlessamendedthroughnoticeandcommentrulemaking.
Additionally,beginningwiththe2018benefityear,weaddedtotheHHSriskadjustmentmethodologyadditionaltransfertermstoreflectthepaymentsandchargesassessedforthehigh-costriskpool.
Toaccountforcostsassociatedwithexceptionallyhigh-riskenrollees,weaddedtransferterms(apaymenttermandachargeterm)thatarecalculatedseparatelyfromthestatepaymenttransferformulaintheHHS-operatedriskadjustmenttransfermethodology.
Beginningforthe2018benefityear,wefinalizedtheadditionofatermthatreflects60percentofcostsabove$1million(HRPi),andanothertermthatreflectsapercentageofpremiumadjustmenttofundthehigh-costriskpoolandmaintainthebalanceofpaymentsandchargeswithintheHHS-operatedriskadjustmentprogramforagivenbenefityear.
Wedescribedindetailinthe2019PaymentNoticehowthesetermswillbecalculatedinconjunctionwiththecalculationsunderthestatepaymenttransferformulaforthe2019benefityear.
26Thesetermsaredescribedindetailinthisrule,alongwiththecalculationsunderthetotalstatepaymenttransferformula,andarealsohighlightedaspartoftheillustrationofthetotalriskadjustmenttransfermethodologybelow.
Similartothe2019benefityear,consistentwiththeproposedadoptionofthesamehigh-costriskpoolparameters(thatis,a$1millionthresholdand60percentcoinsurancerate),weproposedtoaddatermthatwouldreflect60percentofcostsabove$1million(HRPi)inthetotalplantransfercalculationandanothertermthatwouldreflectapercentageofpremiumadjustmenttofundthehigh-costriskpoolandmaintainthebalanceofpaymentandchargeswithintheHHS-operatedriskadjustmentprogramforagivenbenefityear.
Weproposedtouseapercentageofpremiumadjustmentfactorthatwouldbeappliedtoeachplan'stotalpremiumamount,ratherthanthepercentageofPMPMpremiumadjustmentfactor,consistentwiththeapproachfinalizedinthe2019PaymentNotice.
Thepercentageofpremiumadjustmentfactorappliedtoaplan'stotalpremiumamountwouldresultinthesameadjustmentasapercentageofthePMPMpremiumadjustmentfactorappliedtoaplan'sPMPMpremiumamountandmultipliedbytheplan'snumberofbillablemembermonths.
Weproposedtoapplythesesametermsforfuturebenefityearsthatmaintainthesameunderlyingparametersforthehigh-costriskpooladjustment(thatis,$1millionthresholdand60percentcoinsurancerate).
Wearefinalizingthehigh-costriskpoolparametersandtheadditionaltermstoaccountforthehigh-costriskpoolintheriskadjustmenttransfermethodologyasproposedforthe2020benefityearandforfuturebenefityearsunlesschangedinnotice-and-commentrulemaking.
Thefollowingisasummaryofthepubliccommentswereceivedonourproposalonthehigh-costriskpoolparametersandhowtoaccountforthehigh-costriskpoolintheriskadjustmenttransfermethodology.
Comment:Mostcommenterssupportedmaintainingthehigh-costriskpoolparametersatthe$1millionthresholdand60percentcoinsurancerate.
Onecommenterdisagreedwiththehigh-costriskpoolmethodologyduetoconcernsthatissuersmaytryto''game''thesystembyinflatingthecostofhighcostservicestopushpaymentsoverthethreshold,andstatedthatthemethodologycreatesanotherlevelofuncertaintythatinsurerswillneedtofactorintotheirpremiums.
ThiscommenterstatedthatifHHSwantstocontinuethereinsuranceprogram,itshouldbepursuedoutsideofriskadjustment,andsuggestedHHSshouldinsteadcreateapermanentreinsuranceprogram,usingMedicarepricingtorepriceallclaimsover$1millionandaccountforgeographicpricingvariationsinitscalculationofthehigh-costriskpoolpaymentandchargeterms.
Onecommentercautionedagainstdrasticallychangingtheparametersfromyeartoyearwhichcouldresultininstability,andsupportedthenationalfundingapproachforthisaspectoftheHHSriskadjustmentprogram,asitmaintainsabalancebetweenthelevelofassessmentsappliedtosupporttheprogramandtheallowanceforsomerisk-poolingacrossstatesorgeographicareas.
Onecommenternotedtheimportanceforstatestoconsiderthehigh-costriskpoolprogramwhendesigningstate-basedreinsuranceprograms,andthatsection1332waiverapplicationsshouldaddressthepotentialoverlapbetweenthesection1332programandthefederalriskadjustmentprogramtominimizethelikelihoodoffederaltaxpayerscompensatingissuerstwiceforthesamehighvalueclaims.
OnecommenterrecommendedHHSsolicitfeedbackonpossiblechangesinaseparaterulemakingtoincorporateahigh-costriskpoolstratificationmethodology,toconsideradoptionofmultiplehigh-costpoolthresholdswithincreasedcoinsuranceamounts,andtoadjusttheissuerchargecalculationmethodologytoavoidpenalizinglower-costissuers.
Anothercommenterrequestedtheabilitytocommentonthehigh-costriskpoolparameterseachbenefityear.
Somecommentersrequestedthatdataonthespecifictransferamountsattributabletothehigh-costriskpooladjustment,withchargesandclaimsreimbursedreportedseparately,besenttoissuersintheEDGEreports,andthatHHSpublishthenetamount(reimbursedclaims—charges)bystateandissuerintheVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00015Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217468FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations2781FR94080.
annualsummaryriskadjustmentreportwithonerequestinghigh-costriskpoolinformationintheinterimriskadjustmentreport.
Response:Wearefinalizingthehigh-costriskpoolparametersandtheapproachforaccountingforthehigh-costriskpoolpaymentandchargetermsintheriskadjustmentpaymenttransfermethodologyasproposed.
Asdetailedinthe2018PaymentNotice,27weincorporatedahigh-costriskpoolcalculationintotheHHSriskadjustmentmethodologytomitigateanyresidualincentiveforriskselectiontoavoidhigh-costenrollees,andtoensurethat,consistentwiththestatute,transfersbetterreflecttheaverageactuarialriskofriskadjustmentcoveredplans.
Itisnotintendedtobeacontinuationofthetransitionalreinsuranceprogramestablishedundersection1341ofthePPACAthatendedattheconclusionofthe2016benefityear.
Wecontinuetobelievea$1millionthresholdand60percentcoinsurancerateforthe2020benefityearandbeyondareappropriatetoincentivizeissuerstocontrolcostswhileimprovingriskpredictionundertheHHSriskadjustmentmodels.
Furthermore,webelievethe$1millionthresholdand60percentcoinsuranceratewillresultintotalhigh-costriskpoolpaymentsorchargesnationallythatareverysmallasapercentageofpremiumsforissuers,andwillpreventstatesandissuerswithveryhigh-costenrolleesfrombearingadisproportionateamountofunpredictablerisk.
Wealsobelievethatmaintainingthesamethresholdandcoinsuranceratefromyear-to-yearwillhelppromotestabilityandpredictabilityforissuers,andforallofthesereasons,wearefinalizingthe$1millionthresholdand60percentcoinsuranceratefor2020benefityearandbeyondwithoutrequiringnoticeandcommentonthehigh-costriskpoolthresholdseachyear.
Weintendtoreleaseinformationaboutthe2018benefityearhigh-costriskpoolpaymentamounts,andthepercentofpremiumchargedbythehigh-costriskpoolinthe2018benefityearsummaryriskadjustmentreportreleasedunder§153.
310(e),andwouldfollowasimilarapproachforfuturebenefityears.
Weappreciatethecommentssuggestingvariouspotentialchangestothehigh-costriskpoolmethodology.
Oncewehaveresultsandexperiencefromtheinitialyearsofthehigh-costriskpoolintheHHSriskadjustmentprogram,weintendtoanalyzethoseresultsincludingconsideringthegeographicvariationwithinthoseresults.
Ifweweretoseektomakechangestotheseparametersforbenefityearsbeyond2020,wewoulddosothroughnotice-and-commentrulemakingpriortoanychangesbeingimplemented.
Weencouragestatesconsideringastate-basedreinsuranceprogramtoconsidertheinterplaybetweenthehigh-costriskpooladjustmentintheHHS-operatedriskadjustmentprogramandanystate-basedreinsuranceprogram.
Wehaveprovidedtechnicalguidancetostatesconsideringstate-basedreinsuranceprogramstoassistthemindesigningsuchprogramsinamannerthatavoidsdoublecompensatingforcoststhatwouldotherwisebecompensatedundertheriskadjustmentmethodology,includingthehigh-costriskpooladjustment.
iv.
ListofFactorsToBeEmployedintheRiskAdjustmentModels(§153.
320)Thefactorsresultingfromtheequallyweightedblendedfactorsfromthe2015MarketScandataandthe2016and2017enrollee-levelEDGEdataseparatelysolvedmodels,includingthefinalizedconstraintsfortheHepatitisCRXCcoefficient,areshowninTables1,3,and4.
Forthepurposesofthebelowcoefficients,theadult,child,andinfantmodelshavebeentruncatedtoaccountforthehigh-costriskpoolpaymentparametersbyremoving60percentofcostsabovethe$1millionthreshold.
Table1containsfactorsforeachadultmodel,includingtheage-sex,HCCs,RXCs,RXC–HCCinteractions,andenrollmentdurationcoefficients.
Table2containstheHHSHCCsintheseverityillnessindicatorvariable.
Table3containsthefactorsforeachchildmodel.
Table4containsthefactorsforeachinfantmodel.
Tables5and6containtheHCCsincludedintheinfantmodelmaturityandseveritycategories,respectively.
TABLE1—ADULTRISKADJUSTMENTMODELFACTORSFOR2020BENEFITYEARHCCorRXCNo.
FactorPlatinumGoldSilverBronzeCatastrophicDemographicFactorsAge21–24,Male0.
1490.
1170.
0790.
0430.
039Age25–29,Male0.
1430.
1110.
0720.
0350.
030Age30–34,Male0.
1700.
1310.
0850.
0390.
033Age35–39,Male0.
2080.
1610.
1060.
0510.
045Age40–44,Male0.
2510.
1980.
1360.
0740.
067Age45–49,Male0.
2940.
2340.
1650.
0940.
086Age50–54,Male0.
3810.
3110.
2290.
1440.
134Age55–59,Male0.
4270.
3480.
2590.
1660.
154Age60–64,Male0.
4760.
3860.
2860.
1800.
167Age21–24,Female0.
2330.
1850.
1220.
0610.
054Age25–29,Female0.
2630.
2080.
1390.
0700.
061Age30–34,Female0.
3500.
2820.
2030.
1240.
115Age35–39,Female0.
4220.
3460.
2610.
1770.
167Age40–44,Female0.
4670.
3820.
2880.
1940.
183Age45–49,Female0.
4780.
3890.
2890.
1880.
175Age50–54,Female0.
5230.
4300.
3240.
2110.
197Age55–59,Female0.
5010.
4070.
2990.
1850.
171Age60–64,Female0.
5080.
4090.
2950.
1740.
158DiagnosisFactorsHCC001HIV/AIDS2.
9652.
6792.
4772.
3982.
390VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00016Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217469FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsTABLE1—ADULTRISKADJUSTMENTMODELFACTORSFOR2020BENEFITYEAR—ContinuedHCCorRXCNo.
FactorPlatinumGoldSilverBronzeCatastrophicHCC002Septicemia,Sepsis,SystemicInflam-matoryResponseSyndrome/Shock.
7.
4687.
2617.
1447.
1727.
180HCC003CentralNervousSystemInfections,ExceptViralMeningitis.
5.
4775.
3975.
3445.
3615.
363HCC004ViralorUnspecifiedMeningitis4.
4374.
2304.
1064.
0224.
012HCC006OpportunisticInfections5.
9205.
8445.
7965.
7585.
753HCC008MetastaticCancer21.
10420.
61620.
28820.
31620.
320HCC009Lung,Brain,andOtherSevereCan-cers,IncludingPediatricAcuteLymphoidLeukemia.
10.
88610.
53910.
30610.
26810.
263HCC010Non-Hodgkin'sLymphomasandOtherCancersandTumors.
5.
2545.
0184.
8504.
7684.
757HCC011Colorectal,Breast(Age201417:19Apr24,2019Jkt247001PO00000Frm00017Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217470FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsTABLE1—ADULTRISKADJUSTMENTMODELFACTORSFOR2020BENEFITYEAR—ContinuedHCCorRXCNo.
FactorPlatinumGoldSilverBronzeCatastrophicHCC073CombinedandOtherSevereImmunodeficiencies.
4.
6064.
4784.
3944.
3814.
379HCC074DisordersoftheImmuneMechanism4.
6064.
4784.
3944.
3814.
379HCC075CoagulationDefectsandOtherSpecifiedHematologicalDisorders.
2.
7912.
7022.
6342.
5962.
591HCC081DrugPsychosis3.
4383.
2023.
0332.
8922.
872HCC082DrugDependence3.
4383.
2023.
0332.
8922.
872HCC087Schizophrenia2.
8272.
5862.
4222.
3112.
298HCC088MajorDepressiveandBipolarDis-orders.
1.
6021.
4381.
3131.
1841.
167HCC089ReactiveandUnspecifiedPsychosis,DelusionalDisorders.
1.
5891.
4331.
3121.
1831.
165HCC090PersonalityDisorders1.
1150.
9980.
8890.
7590.
742HCC094Anorexia/BulimiaNervosa2.
5352.
3702.
2452.
1642.
152HCC096Prader-Willi,Patau,Edwards,andAutosomalDeletionSyndromes.
5.
2755.
1785.
1085.
0495.
040HCC097DownSyndrome,FragileX,OtherChromosomalAnomalies,andCongenitalMalformationSyn-dromes.
1.
3511.
2551.
1771.
1051.
096HCC102AutisticDisorder1.
1271.
0090.
8990.
7710.
754HCC103PervasiveDevelopmentalDisorders,ExceptAutisticDisorder.
1.
1150.
9980.
8890.
7590.
742HCC106TraumaticCompleteLesionCervicalSpinalCord.
10.
38310.
24810.
15710.
13510.
131HCC107Quadriplegia10.
38310.
24810.
15710.
13510.
131HCC108TraumaticCompleteLesionDorsalSpinalCord.
7.
5127.
3557.
2477.
2097.
203HCC109Paraplegia7.
5127.
3557.
2477.
2097.
203HCC110SpinalCordDisorders/Injuries5.
0704.
8494.
7004.
6534.
647HCC111AmyotrophicLateralSclerosisandOtherAnteriorHornCellDisease.
1.
8041.
6061.
4741.
3721.
360HCC112QuadriplegicCerebralPalsy0.
0730.
0360.
0090.
0000.
000HCC113CerebralPalsy,ExceptQuadriplegic0.
0730.
0360.
0090.
0000.
000HCC114SpinaBifidaandOtherBrain/Spinal/NervousSystemCongenitalAnom-alies.
0.
5440.
4520.
3920.
3410.
335HCC115MyastheniaGravis/MyoneuralDis-ordersandGuillain-BarreSyn-drome/InflammatoryandToxicNeuropathy.
5.
3015.
1725.
0885.
0745.
072HCC117MuscularDystrophy1.
9251.
7831.
6821.
5811.
565HCC118MultipleSclerosis3.
7693.
5573.
4063.
3223.
311HCC119Parkinson's,Huntington's,andSpinocerebellarDisease,andOtherNeurodegenerativeDis-orders.
1.
9251.
7831.
6821.
5811.
565HCC120SeizureDisordersandConvulsions.
.
1.
2751.
1281.
0200.
9170.
904HCC121Hydrocephalus6.
4906.
3836.
3036.
2826.
279HCC122Non-TraumaticComa,andBrainCompression/AnoxicDamage.
8.
0317.
8857.
7807.
7667.
763HCC125RespiratorDependence/Trache-ostomyStatus.
24.
88224.
83124.
79424.
88324.
894HCC126RespiratoryArrest7.
3947.
2247.
1237.
1917.
202HCC127Cardio-RespiratoryFailureandShock,IncludingRespiratoryDis-tressSyndromes.
7.
3947.
2247.
1237.
1917.
202HCC128HeartAssistiveDevice/ArtificialHeart27.
60827.
41127.
28627.
32227.
328HCC129HeartTransplant27.
60827.
41127.
28627.
32227.
328HCC130CongestiveHeartFailure2.
6072.
5052.
4372.
4232.
422HCC131AcuteMyocardialInfarction7.
2146.
9236.
7386.
7976.
807HCC132UnstableAnginaandOtherAcuteIschemicHeartDisease.
4.
8224.
5344.
3684.
3454.
345HCC135HeartInfection/Inflammation,ExceptRheumatic.
5.
5035.
3835.
3025.
2715.
268HCC142SpecifiedHeartArrhythmias2.
4792.
3402.
2372.
1592.
149HCC145IntracranialHemorrhage7.
3327.
0626.
8906.
8486.
844HCC146IschemicorUnspecifiedStroke1.
9071.
7541.
6661.
6241.
620HCC149CerebralAneurysmandArteriovenousMalformation.
2.
7652.
5882.
4682.
3892.
378HCC150Hemiplegia/Hemiparesis4.
3624.
2534.
1884.
2324.
240VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00018Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217471FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsTABLE1—ADULTRISKADJUSTMENTMODELFACTORSFOR2020BENEFITYEAR—ContinuedHCCorRXCNo.
FactorPlatinumGoldSilverBronzeCatastrophicHCC151Monoplegia,OtherParalyticSyn-dromes.
2.
8212.
6932.
6062.
5572.
551HCC153AtherosclerosisoftheExtremitieswithUlcerationorGangrene.
8.
9868.
8908.
8308.
9138.
926HCC154VascularDiseasewithComplications6.
3746.
2186.
1146.
0916.
088HCC156PulmonaryEmbolismandDeepVeinThrombosis.
3.
3333.
1843.
0823.
0133.
004HCC158LungTransplantStatus/Complica-tions.
22.
62822.
50522.
42322.
49522.
505HCC159CysticFibrosis6.
6736.
4146.
2266.
2036.
200HCC160ChronicObstructivePulmonaryDis-ease,IncludingBronchiectasis.
0.
8670.
7590.
6650.
5640.
551HCC161Asthma0.
8670.
7590.
6650.
5640.
551HCC162FibrosisofLungandOtherLungDis-orders.
1.
9181.
8131.
7421.
6881.
680HCC163AspirationandSpecifiedBacterialPneumoniasandOtherSevereLungInfections.
6.
3436.
3116.
2886.
2916.
292HCC183KidneyTransplantStatus6.
3556.
1616.
0355.
9705.
965HCC184EndStageRenalDisease25.
17924.
92224.
75024.
89724.
939HCC187ChronicKidneyDisease,Stage5.
.
.
.
.
1.
0671.
0160.
9850.
9971.
001HCC188ChronicKidneyDisease,Stage4.
.
.
.
.
1.
0671.
0160.
9850.
9971.
001HCC203EctopicandMolarPregnancy,Ex-ceptwithRenalFailure,Shock,orEmbolism.
1.
0030.
8680.
7400.
5420.
512HCC204MiscarriagewithComplications1.
0030.
8680.
7400.
5420.
512HCC205MiscarriagewithNoorMinorCom-plications.
1.
0030.
8680.
7400.
5420.
512HCC207CompletedPregnancyWithMajorComplications.
3.
2962.
8922.
6782.
3442.
301HCC208CompletedPregnancyWithCom-plications.
3.
2962.
8922.
6782.
3442.
301HCC209CompletedPregnancywithNoorMinorComplications.
3.
2962.
8922.
6782.
3442.
301HCC217ChronicUlcerofSkin,ExceptPres-sure.
1.
9081.
8001.
7301.
7021.
700HCC226HipFracturesandPathologicalVertebralorHumerusFractures.
8.
2748.
0447.
8947.
9117.
913HCC227PathologicalFractures,ExceptofVertebrae,Hip,orHumerus.
4.
7964.
6484.
5464.
4944.
488HCC251StemCell,IncludingBoneMarrow,TransplantStatus/Complications.
24.
79324.
78624.
77824.
81024.
814HCC253ArtificialOpeningsforFeedingorElimination.
7.
8127.
7257.
6667.
6967.
700HCC254AmputationStatus,LowerLimb/Am-putationComplications.
3.
0112.
8872.
8112.
8212.
823InteractionFactorsSEVERExHCC006.
SevereillnessxOpportunisticInfec-tions.
7.
0447.
2517.
3877.
5557.
575SEVERExHCC008.
SevereillnessxMetastaticCancer.
.
.
7.
0447.
2517.
3877.
5557.
575SEVERExHCC009.
SevereillnessxLung,Brain,andOtherSevereCancers,IncludingPediatricAcuteLymphoidLeu-kemia.
7.
0447.
2517.
3877.
5557.
575SEVERExHCC010.
SevereillnessxNon-Hodgkin'sLymphomasandOtherCancersandTumors.
7.
0447.
2517.
3877.
5557.
575SEVERExHCC115.
SevereillnessxMyastheniaGravis/MyoneuralDisordersandGuillain-BarreSyndrome/InflammatoryandToxicNeuropathy.
7.
0447.
2517.
3877.
5557.
575SEVERExHCC135.
SevereillnessxHeartInfection/In-flammation,ExceptRheumatic.
7.
0447.
2517.
3877.
5557.
575SEVERExHCC145.
SevereillnessxIntracranialHemor-rhage.
7.
0447.
2517.
3877.
5557.
575SEVERExG06.
.
.
SevereillnessxHCCgroupG06(G06isHCCGroup6whichin-cludesthefollowingHCCsintheblooddiseasecategory:67,68).
7.
0447.
2517.
3877.
5557.
575VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00019Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217472FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsTABLE1—ADULTRISKADJUSTMENTMODELFACTORSFOR2020BENEFITYEAR—ContinuedHCCorRXCNo.
FactorPlatinumGoldSilverBronzeCatastrophicSEVERExG08.
.
.
SevereillnessxHCCgroupG08(G08isHCCGroup8whichin-cludesthefollowingHCCsintheblooddiseasecategory:73,74).
7.
0447.
2517.
3877.
5557.
575SEVERExHCC035.
SevereillnessxEnd-StageLiverDis-ease.
0.
8730.
9350.
9771.
1191.
136SEVERExHCC038.
SevereillnessxAcuteLiverFailure/Disease,IncludingNeonatalHepa-titis.
0.
8730.
9350.
9771.
1191.
136SEVERExHCC153.
SevereillnessxAtherosclerosisoftheExtremitieswithUlcerationorGangrene.
0.
8730.
9350.
9771.
1191.
136SEVERExHCC154.
SevereillnessxVascularDiseasewithComplications.
0.
8730.
9350.
9771.
1191.
136SEVERExHCC163.
SevereillnessxAspirationandSpecifiedBacterialPneumoniasandOtherSevereLungInfections.
0.
8730.
9350.
9771.
1191.
136SEVERExHCC253.
SevereillnessxArtificialOpeningsforFeedingorElimination.
0.
8730.
9350.
9771.
1191.
136SEVERExG03.
.
.
SevereillnessxHCCgroupG03(G03isHCCGroup3whichin-cludesthefollowingHCCsinthemusculoskeletaldiseasecategory:54,55).
0.
8730.
9350.
9771.
1191.
136EnrollmentDurationFactors1monthofenrollment0.
3160.
2760.
2470.
2320.
2302monthsofenrollment0.
3020.
2630.
2340.
2190.
2183monthsofenrollment0.
2780.
2410.
2130.
1990.
1974monthsofenrollment0.
2410.
2080.
1790.
1650.
1645monthsofenrollment0.
2170.
1880.
1620.
1480.
1476monthsofenrollment0.
1850.
1600.
1370.
1230.
1227monthsofenrollment0.
1520.
1310.
1110.
0990.
0988monthsofenrollment0.
1180.
1030.
0880.
0790.
0789monthsofenrollment0.
0740.
0640.
0540.
0480.
04810monthsofenrollment0.
0350.
0320.
0300.
0290.
02911monthsofenrollment0.
0300.
0280.
0270.
0270.
027PrescriptionDrugFactorsRXC01Anti-HIVAgents6.
5285.
9365.
5055.
1645.
120RXC02Anti-HepatitisC(HCV)Agents8.
3697.
7527.
3597.
4137.
430RXC03Antiarrhythmics0.
1160.
1120.
1090.
0960.
090RXC04PhosphateBinders1.
9271.
9241.
9181.
9041.
862RXC05InflammatoryBowelDiseaseAgents1.
7461.
5911.
4701.
2931.
266RXC06Insulin1.
7961.
6301.
4531.
2541.
227RXC07Anti-DiabeticAgents,ExceptInsulinandMetforminOnly.
0.
6440.
5470.
4520.
3150.
296RXC08MultipleSclerosisAgents18.
81917.
87717.
25217.
10117.
067RXC09ImmuneSuppressantsandImmunomodulators.
12.
68812.
08511.
69711.
77011.
783RXC10CysticFibrosisAgents12.
24011.
87611.
65911.
70811.
717RXC01xHCC001.
AdditionaleffectforenrolleeswithRXC01(Anti-HIVAgents)andHCC001(HIV/AIDS).
0.
2730.
5200.
7351.
1871.
247RXC02xHCC037_1,036,035,034.
AdditionaleffectforenrolleeswithRXC02(Anti-HepatitisC(HCV)Agents)and(HCC037_1(ChronicViralHepatitisC)or036(CirrhosisofLiver)or035(End-StageLiverDisease)or034(LiverTransplantStatus/Complications)).
-0.
1560.
0430.
1680.
3000.
311RXC03xHCC142.
AdditionaleffectforenrolleeswithRxC03(Antiarrhythmics)andHCC142(SpecifiedHeartArrhythmias).
0.
0000.
0000.
0000.
0000.
000VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00020Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217473FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsTABLE1—ADULTRISKADJUSTMENTMODELFACTORSFOR2020BENEFITYEAR—ContinuedHCCorRXCNo.
FactorPlatinumGoldSilverBronzeCatastrophicRXC04xHCC184,183,187,188.
AdditionaleffectforenrolleeswithRxC04(PhosphateBinders)and(HCC184(EndStageRenalDis-ease)or183(KidneyTransplantStatus)or187(ChronicKidneyDisease,Stage5)or188(ChronicKidneyDisease,SevereStage4)).
0.
0000.
0000.
0000.
0000.
000RXC05xHCC048,041.
AdditionaleffectforenrolleeswithRxC05(InflammatoryBowelDis-easeAgents)and(HCC048(In-flammatoryBowelDisease)or041(IntestineTransplantStatus/Com-plications)).
-0.
820-0.
761-0.
692-0.
635-0.
626RXC06xHCC018,019,020,021.
AdditionaleffectforenrolleeswithRxC06(Insulin)and(HCC018(PancreasTransplantStatus/Com-plications)or019(DiabeteswithAcuteComplications)or020(Dia-beteswithChronicComplications)or021(DiabeteswithoutCom-plication)).
0.
2890.
2470.
3090.
3550.
360RXC07xHCC018,019,020,021.
AdditionaleffectforenrolleeswithRxC07(Anti-DiabeticAgents,Ex-ceptInsulinandMetforminOnly)and(HCC018(PancreasTrans-plantStatus/Complications)or019(DiabeteswithAcuteComplica-tions)or020(DiabeteswithChron-icComplications)or021(DiabeteswithoutComplication)).
-0.
303-0.
259-0.
209-0.
169-0.
164RXC08xHCC118.
AdditionaleffectforenrolleeswithRxC08(MultipleSclerosisAgents)andHCC118(MultipleSclerosis).
-1.
409-0.
898-0.
556-0.
216-0.
157RXC09xHCC056or057and048or041.
AdditionaleffectforenrolleeswithRxC09(ImmuneSuppressantsandImmunomodulators)and(HCC048(InflammatoryBowelDisease)or041(IntestineTransplantSta-tus/Complications))and(HCC056(RheumatoidArthritisandSpeci-fiedAutoimmuneDisorders)or057(SystemicLupusErythematosusandOtherAutoimmuneDisorders)).
0.
5360.
6520.
7310.
8310.
844RXC09xHCC056.
AdditionaleffectforenrolleeswithRxC09(ImmuneSuppressantsandImmunomodulators)andHCC056(RheumatoidArthritisandSpecifiedAutoimmuneDisorders).
-3.
170-2.
968-2.
818-2.
754-2.
746RXC09xHCC057.
AdditionaleffectforenrolleeswithRxC09(ImmuneSuppressantsandImmunomodulators)andHCC057(SystemicLupusErythematosusandOtherAuto-immuneDisorders).
-0.
803-0.
689-0.
545-0.
428-0.
411RXC09xHCC048,041.
AdditionaleffectforenrolleeswithRxC09(ImmuneSuppressantsandImmunomodulators)and(HCC048(InflammatoryBowelDisease)or041(IntestineTransplantSta-tus/Complications)).
-0.
783-0.
621-0.
528-0.
439-0.
427RXC10xHCC159,158.
AdditionaleffectforenrolleeswithRxC10(CysticFibrosisAgents)and(HCC159(CysticFibrosis)or158(LungTransplantStatus/Com-plications)).
38.
32238.
48538.
55838.
69138.
706VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00021Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217474FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsTABLE2—HHSHCCSINTHESEVERITYILLNESSINDICATORVARIABLEHCC/descriptionSepticemia,Sepsis,SystemicInflammatoryResponseSyndrome/ShockPeritonitis/GastrointestinalPerforation/NecrotizingEntercolitisSeizureDisordersandConvulsionsNon-TraumaticComa,BrainCompression/AnoxicDamageRespiratorDependence/TracheostomyStatusRespiratoryArrestCardio-RespiratoryFailureandShock,IncludingRespiratoryDistressSyndromesPulmonaryEmbolismandDeepVeinThrombosisTABLE3—CHILDRISKADJUSTMENTMODELFACTORSFOR2020BENEFITYEARFactorPlatinumGoldSilverBronzeCatastrophicDemographicFactorsAge2–4,Male0.
2010.
1560.
1050.
0600.
054Age5–9,Male0.
1410.
1050.
0640.
0310.
028Age10–14,Male0.
1780.
1410.
0940.
0580.
055Age15–20,Male0.
2310.
1860.
1320.
0840.
079Age2–4,Female0.
1530.
1150.
0740.
0410.
037Age5–9,Female0.
0970.
0680.
0340.
0090.
008Age10–14,Female0.
1690.
1330.
0900.
0580.
055Age15–20,Female0.
2510.
1970.
1300.
0690.
063DiagnosisFactorsHIV/AIDS4.
4444.
0003.
7043.
5713.
553Septicemia,Sepsis,SystemicInflammatoryResponseSyndrome/Shock12.
68412.
48312.
37012.
35712.
358CentralNervousSystemInfections,ExceptViralMenin-gitis7.
6397.
4747.
3707.
3757.
376ViralorUnspecifiedMeningitis3.
5373.
3063.
1622.
9852.
961OpportunisticInfections14.
89714.
85514.
82114.
80314.
798MetastaticCancer33.
54933.
30733.
12533.
13733.
137Lung,Brain,andOtherSevereCancers,IncludingPedi-atricAcuteLymphoidLeukemia9.
3169.
0638.
8738.
7808.
769Non-Hodgkin'sLymphomasandOtherCancersandTu-mors7.
4307.
1816.
9966.
8836.
868Colorectal,Breast(Age201417:19Apr24,2019Jkt247001PO00000Frm00022Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217475FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsTABLE3—CHILDRISKADJUSTMENTMODELFACTORSFOR2020BENEFITYEAR—ContinuedFactorPlatinumGoldSilverBronzeCatastrophicSystemicLupusErythematosusandOtherAutoimmuneDisorders0.
7070.
5890.
4780.
3670.
355OsteogenesisImperfectaandOtherOsteodystrophies.
.
.
.
.
.
1.
3081.
1971.
1011.
0201.
009Congenital/DevelopmentalSkeletalandConnectiveTissueDisorders1.
3081.
1971.
1011.
0201.
009CleftLip/CleftPalate1.
3091.
1300.
9980.
8690.
853Hemophilia63.
67263.
11962.
72962.
69462.
689MyelodysplasticSyndromesandMyelofibrosis14.
84714.
72614.
64314.
61714.
613AplasticAnemia14.
84714.
72614.
64314.
61714.
613AcquiredHemolyticAnemia,IncludingHemolyticDiseaseofNewborn6.
6906.
4866.
3386.
2556.
246SickleCellAnemia(Hb-SS)6.
6906.
4866.
3386.
2556.
246ThalassemiaMajor6.
6906.
4866.
3386.
2556.
246CombinedandOtherSevereImmunodeficiencies5.
2285.
0824.
9754.
9164.
908DisordersoftheImmuneMechanism5.
2285.
0824.
9754.
9164.
908CoagulationDefectsandOtherSpecifiedHematologicalDisorders4.
5624.
4394.
3414.
2634.
253DrugPsychosis5.
3785.
0974.
9184.
8274.
816DrugDependence5.
3785.
0974.
9184.
8274.
816Schizophrenia4.
7204.
3584.
1113.
9553.
935MajorDepressiveandBipolarDisorders2.
5232.
2942.
1121.
9331.
909ReactiveandUnspecifiedPsychosis,DelusionalDisorders2.
4372.
2192.
0421.
8641.
841PersonalityDisorders0.
5050.
4070.
2990.
1630.
145Anorexia/BulimiaNervosa2.
4732.
2742.
1182.
0232.
009Prader-Willi,Patau,Edwards,andAutosomalDeletionSyndromes1.
5771.
4261.
3241.
2541.
244DownSyndrome,FragileX,OtherChromosomalAnoma-lies,andCongenitalMalformationSyndromes1.
5231.
3761.
2701.
1811.
169AutisticDisorder2.
4192.
2052.
0301.
8591.
836PervasiveDevelopmentalDisorders,ExceptAutisticDis-order0.
5220.
4360.
3370.
2180.
203TraumaticCompleteLesionCervicalSpinalCord9.
9759.
9279.
8989.
9789.
989Quadriplegia9.
9759.
9279.
8989.
9789.
989TraumaticCompleteLesionDorsalSpinalCord7.
1116.
8946.
7526.
7176.
710Paraplegia7.
1116.
8946.
7526.
7176.
710SpinalCordDisorders/Injuries3.
6883.
5013.
3613.
2653.
251AmyotrophicLateralSclerosisandOtherAnteriorHornCellDisease15.
63915.
39715.
21215.
12915.
117QuadriplegicCerebralPalsy2.
1361.
9351.
8291.
8231.
824CerebralPalsy,ExceptQuadriplegic0.
1890.
1410.
1090.
0800.
076SpinaBifidaandOtherBrain/Spinal/NervousSystemCon-genitalAnomalies1.
3171.
1901.
1001.
0291.
020MyastheniaGravis/MyoneuralDisordersandGuillain-BarreSyndrome/InflammatoryandToxicNeuropathy10.
49210.
31510.
19410.
19210.
192MuscularDystrophy3.
1052.
9252.
8002.
6922.
679MultipleSclerosis9.
5859.
2048.
9438.
9088.
904Parkinson's,Huntington's,andSpinocerebellarDisease,andOtherNeurodegenerativeDisorders3.
1052.
9252.
8002.
6922.
679SeizureDisordersandConvulsions1.
9981.
8391.
7011.
5541.
535Hydrocephalus4.
2634.
1464.
0664.
0434.
041Non-TraumaticComa,andBrainCompression/AnoxicDamage5.
4605.
3275.
2265.
1775.
170RespiratorDependence/TracheostomyStatus31.
76431.
64431.
57931.
72731.
745RespiratoryArrest9.
8929.
6399.
4849.
4429.
437Cardio-RespiratoryFailureandShock,IncludingRes-piratoryDistressSyndromes9.
8929.
6399.
4849.
4429.
437HeartAssistiveDevice/ArtificialHeart22.
80822.
52522.
33422.
35522.
358HeartTransplant22.
80822.
52522.
33422.
35522.
358CongestiveHeartFailure5.
7215.
6125.
5285.
4845.
477AcuteMyocardialInfarction5.
6585.
5565.
5125.
4975.
494UnstableAnginaandOtherAcuteIschemicHeartDisease4.
3604.
2554.
1964.
1654.
163HeartInfection/Inflammation,ExceptRheumatic12.
10311.
99611.
92111.
91211.
912HypoplasticLeftHeartSyndromeandOtherSevereCon-genitalHeartDisorders3.
9893.
8413.
6963.
5853.
569MajorCongenitalHeart/CirculatoryDisorders1.
2711.
1721.
0540.
9400.
927AtrialandVentricularSeptalDefects,PatentDuctusArteriosus,andOtherCongenitalHeart/CirculatoryDis-orders0.
8280.
7380.
6380.
5510.
541SpecifiedHeartArrhythmias3.
6783.
5143.
3783.
3013.
291IntracranialHemorrhage12.
33612.
11211.
96811.
95911.
960IschemicorUnspecifiedStroke4.
9164.
8344.
7884.
7874.
788CerebralAneurysmandArteriovenousMalformation3.
1062.
9252.
8032.
7132.
701VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00023Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217476FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsTABLE3—CHILDRISKADJUSTMENTMODELFACTORSFOR2020BENEFITYEAR—ContinuedFactorPlatinumGoldSilverBronzeCatastrophicHemiplegia/Hemiparesis4.
2294.
1004.
0163.
9603.
952Monoplegia,OtherParalyticSyndromes2.
9072.
7532.
6502.
5912.
582AtherosclerosisoftheExtremitieswithUlcerationorGan-grene12.
09411.
84511.
67311.
60711.
596VascularDiseasewithComplications11.
88311.
74711.
65011.
66911.
670PulmonaryEmbolismandDeepVeinThrombosis15.
06714.
95214.
88314.
91514.
920LungTransplantStatus/Complications22.
80822.
52522.
33422.
35522.
358CysticFibrosis22.
80822.
52522.
33422.
35522.
358ChronicObstructivePulmonaryDisease,IncludingBronchiectasis0.
3730.
3070.
2220.
1340.
123Asthma0.
3730.
3070.
2220.
1340.
123FibrosisofLungandOtherLungDisorders2.
3272.
2322.
1402.
0662.
058AspirationandSpecifiedBacterialPneumoniasandOtherSevereLungInfections6.
8636.
7966.
7486.
7706.
772KidneyTransplantStatus10.
61010.
34410.
17610.
12210.
115EndStageRenalDisease32.
08231.
96631.
88531.
98331.
998ChronicKidneyDisease,Stage53.
8133.
6983.
6073.
5113.
502ChronicKidneyDisease,Severe(Stage4)3.
8133.
6983.
6073.
5113.
502EctopicandMolarPregnancy,ExceptwithRenalFailure,Shock,orEmbolism0.
9290.
7820.
6350.
4170.
386MiscarriagewithComplications0.
9290.
7820.
6350.
4170.
386MiscarriagewithNoorMinorComplications0.
9290.
7820.
6350.
4170.
386CompletedPregnancyWithMajorComplications2.
8482.
4722.
2531.
8791.
824CompletedPregnancyWithComplications2.
8482.
4722.
2531.
8791.
824CompletedPregnancywithNoorMinorComplications.
.
.
.
.
.
2.
8482.
4722.
2531.
8791.
824ChronicUlcerofSkin,ExceptPressure2.
7202.
6262.
5392.
4642.
456HipFracturesandPathologicalVertebralorHumerusFractures6.
3856.
0755.
8505.
7365.
724PathologicalFractures,ExceptofVertebrae,Hip,orHu-merus1.
9541.
7971.
6551.
5041.
483StemCell,IncludingBoneMarrow,TransplantStatus/Complications22.
80822.
52522.
33422.
35522.
358ArtificialOpeningsforFeedingorElimination11.
22211.
09011.
02211.
12711.
143AmputationStatus,LowerLimb/AmputationComplications5.
2444.
9934.
8174.
6894.
670TABLE4—INFANTRISKADJUSTMENTMODELFACTORSFOR2020BENEFITYEARGroupPlatinumGoldSilverBronzeCatastrophicExtremelyImmature*SeverityLevel5(Highest)242.
262240.
657239.
483239.
461239.
461ExtremelyImmature*SeverityLevel4148.
994147.
251145.
979145.
799145.
783ExtremelyImmature*SeverityLevel334.
94033.
75332.
85932.
57732.
555ExtremelyImmature*SeverityLevel234.
94033.
75332.
85932.
57732.
555ExtremelyImmature*SeverityLevel1(Lowest)34.
94033.
75332.
85932.
57732.
555Immature*SeverityLevel5(Highest)149.
437147.
839146.
672146.
625146.
621Immature*SeverityLevel471.
06669.
51368.
37068.
25468.
240Immature*SeverityLevel333.
91632.
61831.
66231.
42331.
400Immature*SeverityLevel224.
55923.
30522.
37722.
06422.
026Immature*SeverityLevel1(Lowest)24.
55923.
30522.
37722.
06422.
026Premature/Multiples*SeverityLevel5(Highest)113.
849112.
409111.
366111.
243111.
232Premature/Multiples*SeverityLevel426.
70725.
33724.
35724.
08824.
061Premature/Multiples*SeverityLevel313.
62512.
59211.
83411.
34611.
287Premature/Multiples*SeverityLevel28.
2857.
5206.
8826.
2246.
128Premature/Multiples*SeverityLevel1(Lowest)5.
3814.
8354.
2843.
7043.
632Term*SeverityLevel5(Highest)87.
08485.
83284.
90584.
69084.
663Term*SeverityLevel413.
87912.
97912.
32311.
85911.
806Term*SeverityLevel35.
7285.
1714.
6464.
0423.
959Term*SeverityLevel23.
6143.
1882.
6912.
0511.
970Term*SeverityLevel1(Lowest)1.
5961.
3750.
9730.
5790.
544Age1*SeverityLevel5(Highest)57.
82557.
07456.
51256.
40056.
389Age1*SeverityLevel410.
54610.
0039.
5619.
2559.
219Age1*SeverityLevel33.
0132.
7442.
4912.
2672.
241Age1*SeverityLevel21.
8801.
6731.
4521.
2191.
191Age1*SeverityLevel1(Lowest)0.
5150.
4550.
3740.
3140.
307Age0Male0.
6460.
5950.
5600.
4890.
478Age1Male0.
1200.
1060.
0930.
0730.
070VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00024Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217477FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsTABLE5—HHSHCCSINCLUDEDININFANTMODELMATURITYCATEGORIESMaturitycategoryHCC/descriptionExtremelyImmatureExtremelyImmatureNewborns,Birthweight201417:19Apr24,2019Jkt247001PO00000Frm00025Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217478FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations28See83FR16930at16953.
29See81FR12203at12228.
TABLE6—HHSHCCSINCLUDEDININFANTMODELSEVERITYCATEGORIES—ContinuedSeveritycategoryHCC/descriptionSeverityLevel3CoagulationDefectsandOtherSpecifiedHematologicalDisorders.
SeverityLevel3Prader-Willi,Patau,Edwards,andAutosomalDeletionSyndromes.
SeverityLevel3TraumaticCompleteLesionDorsalSpinalCord.
SeverityLevel3Paraplegia.
SeverityLevel3SpinalCordDisorders/Injuries.
SeverityLevel3CerebralPalsy,ExceptQuadriplegic.
SeverityLevel3MuscularDystrophy.
SeverityLevel3Parkinson's,Huntington's,andSpinocerebellarDisease,andOtherNeurodegenerativeDisorders.
SeverityLevel3Hydrocephalus.
SeverityLevel3UnstableAnginaandOtherAcuteIschemicHeartDisease.
SeverityLevel3AtrialandVentricularSeptalDefects,PatentDuctusArteriosus,andOtherCongenitalHeart/CirculatoryDisorders.
SeverityLevel3SpecifiedHeartArrhythmias.
SeverityLevel3CerebralAneurysmandArteriovenousMalformation.
SeverityLevel3Hemiplegia/Hemiparesis.
SeverityLevel3CysticFibrosis.
SeverityLevel3FibrosisofLungandOtherLungDisorders.
SeverityLevel3PathologicalFractures,ExceptofVertebrae,Hip,orHumerus.
SeverityLevel2ViralorUnspecifiedMeningitis.
SeverityLevel2Thyroid,Melanoma,Neurofibromatosis,andOtherCancersandTumors.
SeverityLevel2DiabeteswithAcuteComplications.
SeverityLevel2DiabeteswithChronicComplications.
SeverityLevel2DiabeteswithoutComplication.
SeverityLevel2Protein-CalorieMalnutrition.
SeverityLevel2CongenitalMetabolicDisorders,NotElsewhereClassified.
SeverityLevel2Amyloidosis,Porphyria,andOtherMetabolicDisorders.
SeverityLevel2CirrhosisofLiver.
SeverityLevel2ChronicPancreatitis.
SeverityLevel2InflammatoryBowelDisease.
SeverityLevel2RheumatoidArthritisandSpecifiedAutoimmuneDisorders.
SeverityLevel2SystemicLupusErythematosusandOtherAutoimmuneDisorders.
SeverityLevel2Congenital/DevelopmentalSkeletalandConnectiveTissueDisorders.
SeverityLevel2AcquiredHemolyticAnemia,IncludingHemolyticDiseaseofNewborn.
SeverityLevel2SickleCellAnemia(Hb-SS).
SeverityLevel2DrugPsychosis.
SeverityLevel2DrugDependence.
SeverityLevel2DownSyndrome,FragileX,OtherChromosomalAnomalies,andCongenitalMalformationSyndromes.
SeverityLevel2SpinaBifidaandOtherBrain/Spinal/NervousSystemCongenitalAnomalies.
SeverityLevel2SeizureDisordersandConvulsions.
SeverityLevel2Monoplegia,OtherParalyticSyndromes.
SeverityLevel2AtherosclerosisoftheExtremitieswithUlcerationorGangrene.
SeverityLevel2ChronicObstructivePulmonaryDisease,IncludingBronchiectasis.
SeverityLevel2ChronicUlcerofSkin,ExceptPressure.
SeverityLevel1(Lowest)ChronicHepatitis.
SeverityLevel1AcutePancreatitis/OtherPancreaticDisordersandIntestinalMalabsorption.
SeverityLevel1ThalassemiaMajor.
SeverityLevel1AutisticDisorder.
SeverityLevel1PervasiveDevelopmentalDisorders,ExceptAutisticDisorder.
SeverityLevel1MultipleSclerosis.
SeverityLevel1Asthma.
SeverityLevel1ChronicKidneyDisease,Severe(Stage4).
SeverityLevel1AmputationStatus,LowerLimb/AmputationComplications.
SeverityLevel1NoSeverityHCCs.
v.
Cost-SharingReductionAdjustmentsWeproposedtocontinueincludinganadjustmentforthereceiptofcost-sharingreductions(CSRs)intheriskadjustmentmodelstoaccountforincreasedplanliabilityduetoincreasedutilizationofhealthcareservicesbyenrolleesreceivingCSRsinall50statesandtheDistrictofColumbia.
Forthe2020benefityear,tomaintainstabilityandcertaintyforissuers,weproposedtomaintaintheCSRfactorsfinalizedinthe2019PaymentNotice.
28SeeTable7.
Consistentwiththeapproachfinalizedinthe2017PaymentNotice,29wealsoproposedtocontinuetouseCSRadjustmentfactorsof1.
12forallMassachusettswrap-aroundplansintheriskadjustmentplanliabilityriskscorecalculation,asallofMassachusetts'cost-sharingplanvariationshaveactuarialvaluesabove94percent.
WearefinalizingtheCSRadjustmentasproposed.
VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00026Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217479FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations30Winkleman,RossandSyedMehmud.
''AComparativeAnalysisofClaims-BasedToolsforHealthRiskAssessment.
''SocietyofActuaries.
April2007.
TABLE7—COST-SHARINGREDUCTIONADJUSTMENTHouseholdincomePlanAVInducedutilizationfactorSilverPlanVariantRecipients100–150%ofFPLPlanVariation94%1.
12150–200%ofFPLPlanVariation87%1.
12200–250%ofFPLPlanVariation73%1.
00>250%ofFPLStandardPlan70%1.
00ZeroCostSharingRecipients300%ofFPLPlatinum(90%1.
00>300%ofFPLGold(80%1.
07>300%ofFPLSilver(70%1.
12>300%ofFPLBronze(60%1.
15Comment:CommenterssupportedtheproposalthattheCSRadjustmentsbeconsistentwiththosefinalizedinthe2019PaymentNotice.
OnecommenterrecommendedthatifHHScontemplateschangingthesefactorsforfuturebenefityears,HHSshouldpublishawhitepaperpriortorulemakingtoprovideissuersanadvanceopportunitytoreviewandcommentontheproposedapproach.
OnecommenterrequestedthatHHSassesstheimpactofthesefactorsandconsiderthepossibilitythatissuerswithalowerdistributionofsilverplanenrolleesmaybenegativelyimpacted.
OnecommentersupportedcontinuingtousetheCSRfactorof1.
12forMassachusetts'wrap-aroundcoverage.
Response:WearefinalizingtheCSRadjustmentasproposed.
Weintendtocontinuetoreviewtheenrollee-levelEDGEdata,includingthedistributionofenrolleesbymetaltier,toassesswhetherchangestothesefactorsareneeded.
IfweweretoconsiderchangestotheCSRadjustmentinthefuture,wewoulddosothroughnotice-and-commentrulemaking.
vi.
ModelPerformanceStatisticsToevaluateriskadjustmentmodelperformance,weexaminedeachmodel'sR-squaredstatisticandpredictiveratios.
TheR-squaredstatistic,whichcalculatesthepercentageofindividualvariationexplainedbyamodel,measuresthepredictiveaccuracyofthemodeloverall.
Thepredictiveratiosalsomeasurethepredictiveaccuracyofamodelfordifferentvalidationgroupsorsubpopulations.
ThepredictiveratioforeachoftheHHSriskadjustmentmodelsistheratiooftheweightedmeanpredictedplanliabilityforthemodelsamplepopulationtotheweightedmeanactualplanliabilityforthemodelsamplepopulation.
Thepredictiveratiorepresentshowwellthemodeldoesonaverageatpredictingplanliabilityforthatsubpopulation.
Asubpopulationthatispredictedperfectlywillhaveapredictiveratioof1.
0.
ForeachoftheHHSriskadjustmentmodels,theR-squaredstatisticandthepredictiveratiosareintherangeofpublishedestimatesforconcurrentriskadjustmentmodels.
30ThefinalR-squaredstatisticforeachmodelthatisshowninTable8reflectstheresultsfromeachdatasetusedintheseparatelysolvedmodelsthatareusedtorecalibratethemodelsforthe2020benefityear,namelythe2015MarketScandata,andthe2016and2017enrollee-levelEDGEdata.
TABLE8—R-SQUAREDSTATISTICFORHHSRISKADJUSTMENTMODELSModels2016EnrolleelevelEDGEdata2017Enrollee-levelEDGEdataR-squared2015MarketScandataR-squaredPlatinumAdult0.
41890.
41310.
4120GoldAdult0.
41310.
40650.
4065SilverAdult0.
40840.
40110.
4023BronzeAdult0.
40520.
39740.
3996CatastrophicAdult0.
40470.
39680.
3991PlatinumChild0.
31090.
32520.
3330GoldChild0.
30620.
32010.
3283SilverChild0.
30220.
31570.
3244BronzeChild0.
29860.
31180.
3207CatastrophicChild0.
29810.
31120.
3201PlatinumInfant0.
32570.
31680.
3331GoldInfant0.
32170.
31270.
3310VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00027Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217480FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations31ThestatepaymenttransferformulareferstothepartoftheHHSriskadjustmentmethodologythatcalculatespaymentsandchargespriortothecalculationofthehigh-costriskpoolpaymentandchargetermsthatapplybeginningwiththe2018benefityear.
32Forexample,seeStandardsRelatedtoReinsurance,RiskCorridors,andRiskAdjustment,ProposedRule,76FR41938(July15,2011);StandardsRelatedtoReinsurance,RiskCorridors,andRiskAdjustment,FinalRule,77FR17232(March23,2012);andthe2014PaymentNotice,FinalRule,78FR15441(March11,2013).
Alsosee,the2018PaymentNotice,FinalRule,81FR94058(December22,2016);andthe2019PaymentNotice,FinalRule,83FR16930(April17,2018).
AlsoseetheAdoptionoftheMethodologyfortheHHS-OperatedPermanentRiskAdjustmentProgramUnderthePatientProtectionandAffordableCareActforthe2017BenefitYear,FinalRule,83FR36456(July30,2018)andthePatientProtectionandAffordableCareAct;AdoptionoftheMethodologyfortheHHS-OperatedPermanentRiskAdjustmentProgramforthe2018BenefitYear,FinalRule,83FR63419(December10,2018).
33Forexample,seeSeptember12,2011,RiskAdjustmentImplementationIssuesWhitePaper,availableathttps://www.
cms.
gov/CCIIO/Resources/Files/Downloads/riskadjustment_whitepaper_web.
pdf.
AlsoseetheAdoptionoftheMethodologyfortheHHS-OperatedPermanentRiskAdjustmentProgramUnderthePatientProtectionandAffordableCareActforthe2017BenefitYear,FinalRule,83FR36456(July30,2018)andthePatientProtectionandAffordableCareAct;AdoptionoftheMethodologyfortheHHS-OperatedPermanentRiskAdjustmentProgramforthe2018BenefitYear,FinalRule,83FR63419(December10,2018).
TABLE8—R-SQUAREDSTATISTICFORHHSRISKADJUSTMENTMODELS—ContinuedModels2016EnrolleelevelEDGEdata2017Enrollee-levelEDGEdataR-squared2015MarketScandataR-squaredSilverInfant0.
31880.
30960.
3297BronzeInfant0.
31720.
30790.
3294CatastrophicInfant0.
31700.
30770.
3294b.
OverviewoftheRiskAdjustmentTransferMethodology(§153.
320)WedefinedthecalculationofplanaverageactuarialriskandthecalculationofpaymentsandchargesinthePremiumStabilizationRule.
Inthe2014PaymentNotice,wecombinedthoseconceptsintoariskadjustmentstatepaymenttransferformula.
31Theriskadjustmenttransfermethodology(statetransferformulapaymentsandchargesandhigh-costriskpoolpaymentsandcharges)isappliedafterissuershavecompletedtheirriskadjustmentEDGEdatasubmissionsfortheapplicablebenefityear.
Thestatepaymenttransferformulaincludesasetofcostadjustmenttermsthatrequiretransferstobecalculatedatthegeographicratingarealevelforeachplan(thatis,wecalculateseparatetransferamountsforeachratingareainwhichariskadjustmentcoveredplanoperates).
Theriskadjustmentstatepaymenttransferformulagenerallycalculatesthedifferencebetweentherevenuesrequiredbyaplan,basedonthehealthriskoftheplan'senrollees,andtherevenuesthattheplancangenerateforthoseenrollees.
Thesedifferencesarethencomparedacrossplansinthestatemarketriskpoolandconvertedtoadollaramountbasedonthestatewideaveragepremium.
HHSchosetousestatewideaveragepremiumandnormalizetheriskadjustmentstatepaymenttransferformulatoreflectstateaveragefactorssothateachplan'senrollmentcharacteristicsarecomparedtothestateaverageandthecalculatedpaymentamountsequalcalculatedchargesineachstatemarketriskpool.
Thus,eachplanintheriskpoolreceivesariskadjustmentpaymentorchargedesignedtocompensateforriskforaplanwithaverageriskinabudget-neutralmanner.
Thisapproachsupportstheoverallgoalsoftheriskadjustmentprogram,whicharetoencourageissuerstoratefortheaverageriskintheapplicablestatemarketriskpool,tostabilizepremiums,andtoavoidthecreationofincentivesforissuerstooperatelessefficiently,sethigherprices,ordevelopbenefitdesignsorcreatemarketingstrategiestoavoidhigh-riskenrollees.
Suchincentivescouldariseifweusedeachissuer'splan'sownpremiumintheriskadjustmentstatepaymenttransferformula,insteadofstatewideaveragepremium.
Intheabsenceofadditionalfunding,weestablishedthroughnotice-and-commentrulemaking32theHHS-operatedriskadjustmentprogramasabudget-neutralprogramtoprovidecertaintytoissuersregardingriskadjustmentpaymentsandcharges,whichallowsissuerstosetratesbasedonthoseexpectations.
Adoptinganapproachthatwouldnotresultinbalancedpaymentsandchargeswouldcreateconsiderableuncertaintyforissuersregardingtheproportionofriskadjustmentpaymentstheycouldexpecttoreceive.
Additionally,inestablishingtheHHS-operatedriskadjustmentprogram,wecouldnothavereliedonthepotentialavailabilityofgeneralappropriationfundswithoutcreatingthesameuncertaintyforissuersintheamountofriskadjustmentpaymentstheycouldexpect,orreducingfundingavailableforotherprograms.
Relyingoneachyear'sbudgetprocessalsowouldhaverequiredustodelaysettingtheparametersforanyriskadjustmentpaymentprorationratesuntilwellaftertheplanswereineffectfortheapplicablebenefityear.
HHSalsocouldnothavereliedonanypotentialstatebudgetappropriationsinstatesthatelectedtooperateastate-basedriskadjustmentprogram,assuchfundswouldnotbeavailableforpurposesofadministeringtheHHS-operatedriskadjustmentprogram.
Withouttheadoptionofabudget-neutralframework,HHSwouldneedtoassessachargeorotherwisecollectadditionalfundstoavoidproratingriskadjustmentpayments.
Theresultinguncertaintywouldhavealsoconflictedwiththeoverallgoalsoftheriskadjustmentprogram—tostabilizepremiumsandreduceincentivesforissuerstoavoidenrollingindividualswithhigher-than-averageactuarialrisk.
Inlightofthebudget-neutralframework,HHSusesstatewideaveragepremiumasthecost-scalingfactorinthestatepaymenttransferformulaundertheHHS-operatedriskadjustmentmethodology,ratherthanadifferentparameter,suchaseachplan'sownpremium,whichwouldnothaveautomaticallyachievedequalitybetweenriskadjustmentpaymentsandchargesineachbenefityear.
Assetforthinpriordiscussions,33useofaplan'sownpremiumorasimilarparameterwouldhaverequiredabalancingadjustmentinlightoftheprogram'sneedforbudgetneutrality—eitherthroughreducingpaymentstoissuersowedapayment,increasingchargesonissuersassessedacharge,orsplittingthedifferenceinsomefashionbetweenissuersowedpaymentsandissuersassessedcharges.
Suchadjustmentswouldhaveimpairedtheriskadjustmentprogram'sgoalsofencouragingissuerstoratefortheaverageriskintheapplicablestatemarketriskpool,stabilizingpremiums,andavoidingthecreationofincentivesVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00028Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217481FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations34Therearemanyreasonswhyanissuercouldhavelower-than-averagepremiums.
Forexample,thelowpremiumcouldbetheresultofefficiency,mispricing,astrategytogainmarketshare,orsomecombinationthereof.
forissuerstooperatelessefficiently,sethigherprices,developbenefitdesignsorcreatemarketingstrategiestoavoidhigher-riskenrollees.
Adoptionofamethodologythatwouldrequireuseofanafter-the-factbalancingadjustmentisalsolesspredictableforissuersthanamethodologythatisestablishedinadvanceofabenefityear.
Stakeholderswhosupportuseofaplan'sownpremiumstatethatuseofstatewideaveragepremiumpenalizesissuerswithefficientcaremanagement.
Whileeffectivecaremanagementmaymakeaplanmorelikelytohavelowercosts,34wedonotbelievethatcaremanagementstrategiesmaketheplanmorelikelytoenrolllower-than-averageriskenrollees;effectivecaremanagementstrategiesmightevenmaketheplanmorelikelytoattracthigher-than-averageriskenrollees,inwhichcasetheplanwillbenefitfromtheuseofstatewideaveragepremiuminthestatepaymenttransferformulaintheHHSriskadjustmentmethodology.
Asnotedbycommenterstothe2014PaymentNoticeproposedrule,transfersmayalsobemorevolatilefromyeartoyearandsensitivetoanomalouspremiumsifscaledtoaplan'sownpremiuminsteadofthestatewideaveragepremium.
Inall,theadvantagesofusingstatewideaveragepremiumoutweighthepricinginstabilityandotherchallengesassociatedwithcalculatingtransfersbasedonaplan'sownpremium.
IntheHHSriskadjustmenttransfermethodology,thestatepaymenttransferformulaisdesignedtoprovideapermemberpermonth(PMPM)transferamount.
ThePMPMtransferamountderivedfromthestatepaymenttransferformulaismultipliedbyeachplan'stotalbillablemembermonthsfortheapplicablebenefityeartodeterminethepaymentduetoorchargeowedbytheissuerforthatplaninaratingarea.
Thepaymentorchargeunderthestatepaymenttransferformulaisthuscalculatedtobalancethestatemarketriskpoolinquestion.
Althoughwedidnotseekcommentonthistopic,wesummarizeandrespondtothecommentsonstatewideaveragepremiumandplan'sownpremiumreceivedinresponsetotheproposedrulebelow.
Giventhevolumeofexhibits,courtfilings,whitepapers(includingallcorrespondingexhibits),andcommentsonotherrulemakingsincorporatedbyreference,wearenotabletoseparatelyaddresseachofthosedocuments.
Instead,wesummarizeandrespondtothesignificantcommentsandissuesraisedbythecommentersthatarewithinthescopeofthisrulemaking.
Comment:SomecommentersexpressedsupportfortheoperationoftheHHSriskadjustmentprograminabudget-neutralmannerandtheutilizationofstatewideaveragepremiumasthecost-scalingfactortoensurethatissuers'collectionamountsequalpaymentamountsfortheapplicablebenefityear.
Thesecommentersnotedthatuseofstatewideaveragepremiumresultsinbalancedpaymenttransfersinastatemarketriskpoolandhelpsadvancethemarketstabilizinggoalsoftheriskadjustmentprogram,andtheysupportedmaintainingthecurrentriskadjustmentstatepaymenttransferformulaandthebudgetneutralframework.
Somecommentersopposedtheuseofstatewideaveragepremiums.
Thesecommentersstatedthatthecurrentriskadjustmentstatepaymenttransferformula'suseofstatewideaveragepremiumspenalizesefficientplans,andisabiasedestimateofenrolleemedicalcostsandactuarialriskthatperverselypenalizeefficient,high-performingissuers.
ThesecommentersrequestedthatHHSadoptalternativestotheexistingriskadjustmentmethodology.
Onecommentersupportedtheuseofeachplan'sownpremiumasthecostscalingfactor.
Thiscommenterstatedthattheriskadjustmentstatepaymenttransferformuladoesnotneedtooperateasbudgetneutral,assection1343ofthePPACAdoesnotrequirethattheprogrambebudgetneutral,andfundsareavailabletoHHSfortheriskadjustmentprogramfromtheCMSProgramManagementaccounttooffsetanypotentialshortfalls.
ThecommenteralsodisagreedwithHHS'rationaleforusingstatewideaveragepremiumtoachievebudgetneutrality,andstatedthatevenifbudgetneutralityisrequired,anyriskadjustmentpaymentshortfallsthatmayresultfromusingaplan'sownpremiuminthestatepaymenttransferformulacouldbeaddressedthroughprorataadjustmentstoriskadjustmenttransfers.
ThiscommenterfurtherstatedthatuseofstatewideaveragepremiumisnotpredictableforissuerstryingtosetratesandcomparedthepredictedriskadjustmentresultsissuerssetoutintheirrespectiveratefilingswithHHS'publishedactualriskadjustmentresultsforastate,concludingthattheriskadjustmentprogramisfailingtoachieveitsgoalbecauseitsanalysisfoundthatissuersarefailingtoaccuratelyforecasttheirriskadjustmentresultsintheirratefilings.
Conversely,othercommentersexpressedconcernsaboutalternativestostatewideaveragepremium.
Onecommenterspecificallyopposedusingaplan'sownpremiumstatingthatitwouldunderminetheriskadjustmentprogram,createincentivesforissuerstoavoidenrollinghigh-costindividuals,andwouldnotautomaticallybalancetransferstozero.
ThiscommenternotedthatthePPACA'sriskadjustmentstatuterequiresstates,orHHSonbehalfofthestates,toassessachargeonplanswithlowerthantheaverageactuarialriskinthestatemarketriskpool,andtomakepaymentstoplanswithhigherthantheaverageactuarialriskinthestatemarketriskpool.
ThiscommenteralsoagreedthatabsentCongressionalactiontoappropriateadditionalfunds,theriskadjustmentprogrammustoperateinabudget-neutralmanner.
Additionally,thecommenterconcurredthatifHHSweretorequirestatesoperatingtheirownriskadjustmentprogramstooperatetheprogramstocoveranyshortfallbetweencollectionsandpaymentsforabenefityear,HHSwouldbeeffectivelyimposinganunfundedmandateonstates.
ThiscommenternotedthatanalysesbytheAmericanAcademyofActuariesandOliverWymanindicatedthattheriskadjustmentprogramisworkingasintendedbycompensatingissuersthatenrollhigher-than-averageriskenrolleesandprotectingagainstadverseselection.
Response:Weagreethattheuseofstatewideaveragepremiumsupportstheunderlyinggoalsoftheriskadjustmentprogrambydiscouragingthecreationofbenefitdesignsandmarketingstrategiestoavoidhigh-riskenrolleesandpromotingmarketstabilityandpredictability.
ThebenefitsofusingstatewideaveragepremiumasthecostscalingfactorintheHHSriskadjustmentstatepaymenttransferformulathereforeextendbeyonditsroleinmaintainingthebudgetneutralityoftheprogram.
Consistentwiththestatute,undertheHHS-operatedriskadjustmentprogram,eachriskadjustmentcoveredplaninthestatemarketriskpoolreceivesariskadjustmentpaymentorowesachargebasedontheplan'sriskcomparedtotheaverageriskinthestatemarketriskpool.
ThestatewideaveragepremiumreflectstheaveragecostandefficiencylevelandwaschosenasthecostscalingfactorinthestatepaymenttransferformulaundertheHHS-operatedriskadjustmentmethodologyforanumberofreasons.
Morespecifically,HHSchosetousestatewideaveragepremiumtoencourageissuerstoratefortheaveragerisk,toautomaticallyachieveequalitybetweenVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00029Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217482FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations3581FR94100and83FR16930.
3683FR36456.
3783FR63419.
3881FRat94100;83FRat36458;and83FRat63425.
riskadjustmentpaymentsandchargesineachbenefityear,andtoavoidthecreationofincentivesforissuerstooperatelessefficiently,sethigherprices,ordevelopbenefitsdesignsorcreatemarketingstrategiestoavoidhigh-riskenrollees.
HHSconsideredandagaindeclinedinthe2018and2019PaymentNotices35andintheAdoptionoftheMethodologyfortheHHS-operatedPermanentRiskAdjustmentProgramforthe2017BenefitYearFinalRule(2017RiskAdjustmentFinalRule)36andAdoptionoftheMethodologyfortheHHS-operatedPermanentRiskAdjustmentProgramforthe2018BenefitYearFinalRule(2018RiskAdjustmentFinalRule)37toadopttheuseofeachplan'sownpremiuminthestatepaymenttransferformula.
Aswedetailedinthe2018PaymentNoticeandthe2017and2018RiskAdjustmentFinalRules,38useofaplan'sownpremiumwouldlikelyleadtosubstantialvolatilityintransferresults,andcouldresultinevenhighertransferchargesforlow-risk,low-premiumplansbecauseoftheprogram'sbudgetneutralframework.
Inaddition,useofplan'sownpremiuminabudgetneutralprogramwouldrequireevengreatertransferpaymentstohigh-risk,high-premiumplans.
Furthermore,useofaplan'sownpremiumintheHHSformulawouldactuallydisadvantagehigh-risk,low-premiumplans,orplansthatsomecommentersreferredtoasthe''efficientplans,''byundercompensatingthembasedontheirloweraveragepremiums,which,inturn,couldincentivizesuchplanstoinflatepremiumpricestoreceivemorefavorableriskadjustmenttransfersalongwithincreasedpremiumrevenue.
IfHHSinsteadappliedabalancingadjustmenttothestatepaymenttransferformulainfavoroftheseplans,low-risk,low-premiumplanswouldberequiredtopayanevenhigherpercentageoftheirplan-specificpremiumsinriskadjustmenttransferchargesduetotheneedtomaintaintheprogram'sbudgetneutrality.
Thistypeofbalancingadjustmentwouldalsoresultinareductiontopaymentstohigh-risk,low-premiumplansthatarepresumablymoreefficientthanhigh-risk,high-premiumplans,furtherincentivizingsuchplanstoinflatepremiumsasdescribedabove.
Inotherwords,theuseofaplan'sownpremiumintheHHSprogramwouldneitherreduceriskadjustmentchargesforlow-costandlow-riskissuers,norwoulditincentivizeissuerstooperateattheaverageefficiency.
Theapplicationofabalancingadjustmentinfavoroflow-risk,low-premiumplanscouldunder-compensatehigh-riskplans,increasingthelikelihoodthatsuchplanswouldraisepremiums.
Inaddition,iftheapplicationofabalancingadjustmentwassplitequallybetweenhigh-riskandlow-riskplans,suchanadjustmentwouldincentivizeissuerstoincreasepremiumsortoemployrisk-avoidancetechniques.
Finally,anysuchbalancingadjustmentswouldhavetobedeterminedafterstatetransfershadbeencalculated,becauseanapproachthatusestheplan'sownpremiumtocalculatetransferswouldnotnecessarilyresultinbudget-neutraltransferswithoutaseparateafter-the-factadjustment.
Asdetailedabove,suchafter-the-factadjustmentswouldimpairthegoalsoftheriskadjustmentprogramandbelesspredictableforissuers.
Forallofthesereasons,wepreviouslydeclinedandcontinuetodeclinetouseeachplan'sownpremiumandaremaintaininguseofstatewideaveragepremiumasthecost-scalingfactorinthestatepaymenttransferformula.
Comments:OnecommenterrequestedthatHHSincludeacaremanagementfactorintheriskadjustmentmethodology,suchasthecaremanagementeffectivenessindex(CMEindex)developedbyAxeneHealthPartners,asthiscommenterbelievedthatacarecoordinationfactorwouldmitigatetheimpactofusingstatewideaveragepremiumsforissuersthatsuccessfullyperformcaremanagementandimprovehealth.
ThiscommenterstatedthatHHSrepresentedinpreviousrulemakingthatitcouldconsiderusingtheCMEindexinfutureyearsandencouragedHHStofollowthroughonthatpromise.
AnothercommenterrequestedthatHHSexplorehowplanswithlowadministrativecostsorhighqualityscoresbasedonobjectivecriteriaandhigh-performingnetworkscouldberewarded.
OnecommenterstatedthatHHS'positionintheproposedrulethatitdid''notbelievethatthecaremanagementstrategiesmaketheplanmorelikelytoenrolllower-than-averageriskenrollees;effectivecaremanagementstrategiesmightevenmaketheplanmorelikelytoattracthigher-than-averageriskenrollees,inwhichcasetheplanwouldbenefitfromtheuseofstatewideaveragepremiuminthestatepaymenttransferformulaintheHHSriskadjustmentmethodology''wasbasedonafaultypremise.
Thiscommenterstatedthat,inadditiontocaremanagementstrategies,thebreadthoftheplan'sprovidernetworkhassignificantimpactonprice,andthat,throughthestatepaymenttransferformula,enrolleeswhochoosenarrownetworkssubsidizeplansfromdominantissuersthatcantendtohavelargernetworksandhigherprices.
Thiscommenterviewedthisasadetrimentaleffectofthestatepaymenttransferformulaonplanswithenrolleesthatchoosenarrownetworks.
SomecommentssuggestedproposedimprovementstotheHHSriskadjustmentprogramgenerally.
Afewcommentersexpressedadesireforbroadriskadjustmentchanges,includinganexemptionfornewandfast-growingplansfromriskadjustmentfor3to5years,applyingacredibility-basedapproachtoparticipationinriskadjustmentbasedonmembershipsizeormarketshare,andplacinganupperboundontheamountofaplan'sriskadjustmenttransferchargeorusingtwo-stageadultmodelsthatHHSproposedinthe2018PaymentNoticeproposedrule.
OnecommentersuggestedHHSlookatstepssomestateshavetakentocorrectmarketdistortionsandconsiderthepossibilityofincorporatingsimilarchangesintotheHHSriskadjustmentmodelsandstatepaymenttransferformula.
OnecommenternotedthatHHSisawareofriskadjustmentbias,hasacknowledgeditsdistortion,andhasignoredthe''fix''toswitchtheriskscoresthatwereusedbyHHSwithriskscoresthatmoreaccuratelyrepresenttheactualHCCcostsoradoptanothermodelthatwouldeliminateestimatedbias.
ThiscommenteralsosuggestedHHSgivestatestheoption,attheirdiscretion,touseagraduatedcaponriskadjustmentchargestoreducevolatilityandincreasepredictabilityofresults,toestablishacapbasedonapercentageofpremiumtoprotectsmallissuersfromtheimpactoflargeriskadjustmentcharges,ortoallowstatestoconsiderstructuresinwhichcapsshiftatsmallermoregraduatedintervalsbasedonissuersize,tolowertheriskthatsmallenrollmentshiftswilltipanissuerbetweenvariouscaps.
Response:WeappreciatethefeedbackonproposedupdatestotheHHSriskadjustmentprogram.
Aswehavenoted,weremaincommittedtoevaluatingtheprogramandengagingstakeholdersintheprogram'spolicydevelopment.
WecontinuetoregularlyassesswhethertheHHS-operatedriskadjustmentprogramshouldbemodifiedbasedonanalysisofmorerecentdataandchanges(ifany)inmarketdynamics,whileweighingthetradeoffsofrefinementswithcontinuingtoprovidestabilityandpredictability.
Throughoutthisrule,wehaveidentifiedseveralspecificriskadjustmenttopicsVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00030Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217483FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations3981FR94099.
40Ifaplanisalow-costplanwithlowclaimscosts,itcouldbeanindicationofmispricing,astheissuershouldbepricingforaveragerisk.
41See81FR94080.
42See81FRat94071and94074.
43See83FRat93425.
4481FR61455at61473.
4581FRat94083.
46Availableathttps://www.
cms.
gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/RA-March-31-White-Paper-032416.
pdf.
47AdvanceNoticeofMethodologicalChangesforCalendarYear(CY)2020fortheMedicareAdvantage(MA)CMS–HCCRiskAdjustmentModel.
December20,2018.
https://www.
cms.
gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2020Part1.
pdf.
wearecurrentlyassessing,anticipateseekingstakeholderfeedbackon,andmaycontemplatechangesforfuturebenefityearsthroughnotice-and-commentrulemaking.
WecontinuouslyevaluatewhetherimprovementsareneededtotheHHSriskadjustmentmethodology,andwillcontinuetodosoasadditionalyears'databecomeavailable.
Forexample,beginningwiththe2018benefityear,weadopteda14percentreductiontothestatewideaveragepremiumtoaccountforadministrativecoststhatareunrelatedtotheclaimsriskoftheenrolleepopulation.
39Whilelowcostplansarenotnecessarilyefficientplans,40webelievethisadjustmentdifferentiatesbetweenpremiumsthatreflectsavingsresultingfromadministrativeefficiencyfrompremiumsthatreflecthealthier-than-averageenrollees.
HHSalsomodifiedtheriskadjustmentmethodologybeginningwiththe2018benefityearbyincorporatingahigh-costriskpooladjustmenttomitigateresidualincentivesforriskselectiontoavoidhigh-costenrollees,tobetteraccountfortheaverageriskassociatedwiththefactorsusedintheHHSriskadjustmentmodels,andtoensurethattheactuarialriskofaplanwithhigh-costenrolleesisbetterreflectedintransferstoissuerswithhighactuarialrisk.
41OtherrecentchangesmadetotheHHSriskadjustmentprogramincludetheincorporationofapartialyearadjustmentfactorandprescriptiondrugutilizationfactors.
42However,atthistime,wedeclinetoamendtheriskadjustmentmethodologytoincludeaCMEindexorasimilarcarecoordinationadjustment.
Aswepreviouslynoted,43achangeofthismagnituderequiressignificantstudyandevaluation.
Althoughthistypeofchangeisnotfeasibleatpresent,wewillcontinuetoexaminethefeasibility,specificity,andsensitivityofmeasuringcaremanagementeffectivenessthroughenrollee-levelEDGEdatafortheindividual,smallgroup,andmergedmarkets,andthebenefitsofincorporatingsuchmeasuresintheHHSriskadjustmenttransfermethodologyinfuturebenefityears,eitherthroughfuturerulemakingorotheropportunitiesinwhichthepubliccansubmitcomments.
Webelievethatarobustriskadjustmentprogramencouragesissuerstoimprovecaremanagementeffectiveness,asdoingsowouldreduceplans'medicalcosts.
Asweexplainabove,useofstatewideaveragepremiumintheHHSriskadjustmentstatepaymenttransferformulaincentivizesplanstoapplyeffectivecaremanagementtechniquestoreducelosses,whereasuseofaplan'sownpremiumcouldbeinflationaryasitbenefitsplanswithhigher-than-averagecostsandpremiums.
Whileeffectivecaremanagementmaymakeaplanmorelikelytohavelowercostsandpremiums,wedonotbelievethatcaremanagementstrategiesnecessarilymaketheplanmorelikelytoenrolllower-than-averageriskenrollees.
Aswenotedintheproposedrule,implementationofeffectivecaremanagementstrategiesmayparticularlyattracthigh-riskenrolleeswithcomplexconditionsthatincurrepeatutilizationofservices.
Inaddition,therearemanyreasonswhyanissuercouldhavelower-than-averagepremiums.
Forexample,thelowpremiumcouldbetheresultofefficiency,mispricing,astrategytogainmarketshare,orsomecombinationthereof.
Assuch,wedisagreewiththecommentthattheriskadjustmentstatepaymenttransferformulaunfairlyresultsinenrolleesthatchoosenarrownetworkssubsidizingenrolleesinbroadernetworks,includingenrolleesinplansissuedbydominantcarriers.
Networksarejustoneofmanyplandesigncharacteristicsthatarecapturedthroughtheuseofthestatewideaveragepremiuminthestatepaymenttransferformula,whichisdesignedtodiscouragethecreationofplandesignsandmarketingstrategiestoavoidhigh-riskenrollees,inkeepingwiththegoalsoftheriskadjustmentprogram.
Thus,totheextentcertainplannetworkdesignsattractsicker-than-averageenrollees,theriskadjustmentprogramassessesthelevelofriskandcompensatesthoseplansfortheincrementalrisk.
Wehavepreviouslyconsideredothermodelchanges,includingtheadoptionofatwo-stageadultmodel.
Specifically,asdiscussedinthe2018PaymentNoticeproposedrule,44weconsideredtheuseofaconstrainedregressionapproachunderwhichwewouldhaveestimatedtheadultriskadjustmentmodelusingonlytheage-sexvariables.
Underthisapproach,wewouldhavethenre-estimatedthemodelusingthefullsetofHCCs,whileconstrainingthevalueoftheage-sexcoefficientstobethesameasthosefromthefirstestimation.
WealsoconsideredcreatingseparatemodelsforenrolleeswithandwithoutHCCstoderivetwoseparatesetsofage-sexcoefficients.
Weevaluatedtheeffectofthesepossiblemodifications,andultimatelydecidedtonotmoveforwardwithsuchchangesduetoconcernsofsignificantlyundercompensatingplanswithhigher-than-averageactuarialrisk.
45WecontinuetoevaluatewaystoimprovetheriskpredictionoftheHHSriskadjustmentmodelsundervariousapproachestomodelestimationthatmightmorepreciselyaccountforthenon-linearitiesinplanliabilityasreferencedinthe2016RiskAdjustmentWhitePaper.
46WearecontinuingtoinvestigateHCCcountmodelswherebythenumberofanenrollee'sHCCswouldbeconsideredincalculatinganenrollee'sriskscore,similartotheproposedMedicareAdvantageriskadjustmentmodelincorporatingHCCcounts.
47Asanotheralternative,weareevaluatingwhetheranon-lineartermmightimprovethepredictionofthemodelsoverthecurrentlinearmodelspecificationmethodfortheadultmodels.
Forexample,thisnon-linearmethodwouldincludeanadditivetermthatisthesumoftheriskscoreexponentiatedtoafactorsolvedbythemodels.
Theaddednon-lineartermwouldbeameasureofoveralldiseaseburdeninwhichhavingcombinationsofHCCscanhavealargereffectthanthesumoftheindividualHCCs.
Wecontinuetoevaluatealternativemodelingapproacheswhileconsideringseveralimportanttrade-offsbetweenmakingimprovementstoriskpredictionandtheyear-to-yearpredictabilityofthemodels.
Wealsoareexamininganyshortcomingsofthepotentialalternativesthatincludeadditionalcomplexity,lackoftransparency,andpotentialupcodingincentives.
Forexample,becauseissuerswouldreceiveanincrementaladditionalfactorforcodinganotherHCC,theremightbeanincentiveforupcoding,particularlywithacountmodel.
Webelievethatthesealternativeapproachesrequirefurtherinvestigationpriortomakinganyofthesetypesofchangestothemodels.
Forthesereasons,weintendtosolicitcommentsinthefutureonpotentialproposedimprovementstothecurrentmodels,aswellasalternativemodelingmethodsinvolvingeithernon-linearorcountmodelsforpotentialuseinfuturebenefityearsofHHS-operatedVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00031Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217484FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations482019PaymentNoticeFinalRule,83FR16930(April17,2018)and§153.
320(d)(3).
49See§154.
215(h)(2).
riskadjustmentmodelrecalibration.
WewouldespeciallybeinterestedincommentsregardingthefactorsHHSshouldconsiderinevaluatingperformanceandtheireffectsonsubgroupsinthepopulation.
Weintendtoalsoseekcommentonthetrade-offsweshouldconsider,alongwithotherriskadjustmenttopics.
Comment:OnecommenterrequestedthatHHSreopenrulemakingproceedings,reconsider,andrevisethePaymentNoticesforthe2017,2018,and2019benefityearsregardingtheriskadjustmentprogramundersection553(e)oftheAdministrativeProcedureAct.
Response:Therequestsrelatedtothe2017,2018,and2019benefityearrulemakingsareoutsidethescopeoftheproposedruleandthisfinalrule,whichislimitedtothe2020benefityear.
i.
StateFlexibilityRequests(§153.
320(d))Inthe2019PaymentNotice,weprovidedstatestheflexibilitytorequestareductiontotheotherwiseapplicableriskadjustmenttransferscalculatedundertheHHS-operatedriskadjustmentmethodology,whichiscalibratedonanationaldataset,forthestate'sindividual,smallgroup,ormergedmarkets,byupto50percenttomorepreciselyaccountfordifferencesinactuarialriskintheapplicablestate'smarket(s).
Wefinalizedthatanyrequestsreceivedwillbepublishedintherespectivebenefityear'sproposednoticeofbenefitandpaymentparameters,andthesupportingevidencefortherequestwillbemadeavailableforpubliccomment.
48Inaccordancewith§153.
320(d)(2),beginningwiththe2020benefityear,statesmustsubmitsuchrequestswiththesupportingevidenceandanalysisoutlinedunder§153.
320(d)(1)byAugust1stofthecalendaryearthatis2calendaryearspriortothebeginningoftheapplicablebenefityear.
IfapprovedbyHHS,statereductionrequestswillbeappliedtotheplanPMPMpaymentorchargetransferamount(Tiinthestatepaymenttransfercalculationbelow).
Weproposedtoamend§153.
320(d)(3)toaddlanguagetoprovidethatifthestaterequeststhatHHSnotmakepubliclyavailablecertainsupportingevidenceandanalysisbecauseitcontainstradesecretsorconfidentialcommercialorfinancialinformationwithinthemeaningoftheHHSFreedomofInformationAct(FOIA)regulationsat45CFR5.
31(d),HHSwilldoso,makingavailableontheCMSwebsiteonlythesupportingevidencesubmittedbythestatethatisnotatradesecretorconfidentialcommercialorfinancialinformation.
Similartotheratereviewprogramestablishedundersection2794ofthePHSAct,HHSwouldreleaseonlyinformationthatisnotatradesecretorconfidentialcommercialorfinancialinformationasdefinedundertheHHSFOIAregulations.
49Inthesecircumstances,similartothefederalratereviewrequirements,weproposedthatanystatesrequestingareductionprovideaversionforpublicreleasethatredactsthetradesecretandconfidentialcommercialorfinancialinformationasdefinedundertheHHSFOIAregulations,whilealsoprovidinganunredactedversiontoHHSforitsreviewofthestate'sreductionrequest.
Wealsoproposedthatstaterequestsforindividualmarketriskadjustmenttransferreductionswouldbeappliedtoboththecatastrophicandnon-catastrophicindividualmarketriskpools,unlessstateregulatorsrequestotherwise.
Wearefinalizingouramendmentto§153.
320(d)(3)toaddlanguagetoprovidethatifthestaterequeststhatHHSnotmakepubliclyavailablecertainsupportingevidenceandanalysisbecauseitcontainstradesecretsorconfidentialcommercialorfinancialinformationwithinthemeaningoftheHHSFOIAregulationsat45CFR5.
31(d),HHSwillmakeavailableontheCMSwebsiteonlythesupportingevidencesubmittedbythestatethatisnotatradesecretorconfidentialcommercialorfinancialinformationbypostingaredactedversionofthestate'ssupportingevidence.
Inlightofcommentsreceived,wearenotfinalizingourproposaltoapplyrequestsforindividualmarketriskadjustmenttransferreductionstoboththecatastrophicandnon-catastrophicindividualmarketriskpoolswithinthestate,unlessthestaterequestedotherwise.
Forthe2020benefityear,HHSreceivedarequesttoreduceriskadjustmenttransfersfortheAlabamasmallgroupmarketby50percent.
Alabama'srequeststatesthatthepresenceofadominantcarrierinthesmallgroupmarketprecludestheHHS-operatedriskadjustmentprogramfromworkingaspreciselyasitwouldwithamorebalanceddistributionofmarketshare.
Thestateregulatorsstatedthattheirreviewoftheriskadjustmentpaymentissuers'financialdatasuggestedthatanypremiumincreaseresultingfromareductiontoriskadjustmentpaymentsof50percentinthesmallgroupmarketforthe2020benefityearwillnotexceed1percent,thedeminimispremiumincreasethreshold.
WesoughtcommentonAlabama'srequesttoreduceriskadjustmenttransfersinthesmallgroupmarketby50percentforthe2020benefityear.
TherequestandadditionaldocumentationsubmittedbyAlabamawaspostedunderthe''StateFlexibilityRequests''headingathttps://www.
cms.
gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/index.
html.
InlightofouranalysisoftheinformationsubmittedwithAlabama'srequestandthecommentsreceived,weareapprovingAlabama'srequesttoreduceriskadjustmenttransfersinthesmallgroupmarketforthe2020benefityearby50percent.
Thefollowingisasummaryofthepubliccommentswereceivedonourproposalsregardingstateflexibilityrequestsunder§153.
320(d),andonAlabama's2020benefityearreductionrequest.
Comment:Commenterssupportedtheabilityofstatestoprovideredactedversionsofpublic-facingdocuments,althoughtworaisedquestionsaboutthescopeoftheredactionsandwhethertheresultingdocumentswouldbesufficienttopermitaneffectivereviewbyinterestedparties.
Response:Wearefinalizingthisamendmentasproposed,aswebelieveitisimportanttoprotectinformationthatcontainstradesecretsorconfidentialcommercialorfinancialinformationwithinthemeaningoftheHHSFOIAregulationsat§5.
31(d).
However,wewillseektoimplementanapproachwithtargetedredactionsfocusedoninformationthatwouldbeconsideredtradesecretsorconfidentialcommercial,orfinancialinformationunder§5.
31(d),tosupporteffectivereviewbyinterestedparties.
Comment:Onecommenteropposedtheapplicationofstateindividualmarketriskadjustmenttransferreductionrequeststoboththeindividualmarketcatastrophicandnon-catastrophicriskpoolswithinthestate.
Thecommenternotedthattheindividualmarketcatastrophicandnon-catastrophicriskpoolshavedifferentcharacteristicsthatimpactthesizeoftransfers.
Response:Afterconsiderationofthecommenters'concerns,wearenotfinalizingtheproposeddefaulttoextendastateindividualmarketreductionrequesttoadjusttransfersinboththeindividualcatastrophicandnon-catastrophicriskpools,unlesstheVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00032Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217485FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations50See83FR16930at16960.
stateregulatorsrequestotherwise.
WhenastatesubmitsareductionrequestrelatedtotheindividualmarkettransfersundertheHHSstatepaymenttransferformula,itwillneedtooutlinetheriskpoolstherequestandanalysisapplytoaspartofitssubmissionunder§153.
320(d)(1).
Weareamendingtheregulatorylanguageat§153.
320(d)tospecificallyreferencestatemarketriskpoolsconsistentwiththisapproachandtomakesometechnicaledits.
Comment:ThemajorityofcommentsaboutAlabama'sstateflexibilityrequestexpressedsupportforthestate'srequest,withmanystatingthatstatesarebestequippedtoevaluatetheneedsoftheirinsurancemarkets.
CommentersopposingthisrequestpointedtothefactthatstatescanelecttooperatethePPACAriskadjustmentprogramandproposetheirownriskadjustmentmethodology,orthatthecurrentHHS-operatedriskadjustmentmethodologyisoperatingasintended.
MultiplecommentersexpressedconcernregardingthemethodologyAlabamausedtoprovideevidencesupportingitsrequest,eachstatingthatamorethoroughactuarialanalysiswasneeded,andsomepointedtotherequested50percentreductionasacrudeandbluntfigurenotbasedondata.
Response:Weagreethatstatesarebestequippedtounderstandtheneedsoftheirinsurancemarketsandinthe2019PaymentNotice,HHSprovidedtheflexibilityforthesereductionrequestswhenastateelectsnottooperatethePPACAriskadjustmentprogram.
Forsomestates,anadjustmenttotransferscalculatedbyHHSunderthestatepaymenttransferformulamaymorepreciselyaccountforcostdifferencesattributabletoadverseselectionintherespectivestatemarketriskpools.
Further,allowingtheseadjustmentscanaccountfortheeffectofstate-specificrulesoruniquemarketdynamicsthatmaynotbecapturedintheHHSmethodology,whichiscalibratedonanationaldataset,withoutthenecessityforstatestoundertaketheburdenandcostofoperatingtheirownPPACAriskadjustmentprogram.
WereviewedAlabama'ssupportingevidenceregardingthestate'suniquesmallgroupmarketdynamicsthatitbelieveswarrantanadjustmenttotheHHScalculatedriskadjustmentsmallgroupmarkettransfersforthe2020benefityear.
AlabamaprovidedinformationdemonstratingthepresenceofadominantcarrierinthesmallgroupmarketprecludestheHHS-operatedriskadjustmenttransfermethodologyfromworkingaspreciselyasitwouldwithamorebalanceddistributionofmarketshare.
AlabamastateregulatorsnotedtheydonotassertthattheHHSformulaisflawed,onlythatitresultsinimpreciseresultsinthestate'ssmallgroupmarketthatcouldfurtherreducecompetitionandincreasecostsforconsumers.
Thestateregulatorsalsoprovidedinformationdemonstratingthattherequestwouldhaveademinimisimpactonnecessarypremiumincreaseforpaymentissuers,consistentwith§153.
320(d)(1)(iii).
WenotethatHHSreviewedtheunredactedstatesupportinganalysisinevaluatingAlabama'srequest,alongwithotherdataavailabletoHHS.
WefoundthesupportinganalysissubmittedbyAlabamatobesufficientinevaluatingthemarket-specificcircumstancesvalidatingAlabama'srequest.
Basedonourreview,weagreethatanynecessarypremiumincreaseforissuerslikelytoreceivepaymentsasaresultofa50percentreductiontoriskadjustmenttransfersintheAlabamasmallgroupmarketforthe2020benefityearwouldnotexceed1percent.
HHShasdeterminedthatthestatehasdemonstratedtheexistenceofrelevantstate-specificfactorsthatwarrantanadjustmenttomorepreciselyaccountforrelativeriskdifferencesandthattheadjustmentwouldhaveademinimiseffect.
Therefore,weareapprovingAlabama'srequestedreductionunder§153.
320(d)(4)(i)(B)basedonthestateregulators'identificationofuniquestate-specificfactorsintheAlabamasmallgroupmarketandthesupportinganalysisofademinimiseffectofthereductionrequested.
The50percentreductionwillbeappliedtothe2020benefityearplanPMPMpaymentorchargetransferamount(Tiinthestatepaymenttransfercalculationbelow)fortheAlabamasmallgroupmarket.
Wealsonotethatstateregulatorsseekingareductiontoriskadjustmenttransfersinthestate'sindividualcatastrophicriskpool,individualnon-catastrophicriskpool,smallgroupmarketoramergedmarketforthe2021benefityearshouldsubmitsupportingmaterialstoHHSasestablishedunder§153.
320(d).
Wewillreviewanyrequestsreceivedonanannualbasis,willmakethesupportingevidencepubliclyavailableforcommentintheproposednoticeofbenefitandpaymentparametersfortherespectivebenefityear,andwillconsidertherelevantcommentsinourreviewofthestaterequestfortheapplicablebenefityear.
ii.
TheRiskAdjustmentTransferMethodologyAlthoughtheproposedHHSriskadjustmenttransfermethodologyforthe2020benefityearisunchangedfromwhatwasfinalizedinthe2019PaymentNotice(83FR16954through16961),webelieveitisusefultorepublishthecalculationinitsentirety.
Additionally,wearerepublishingthedescriptionoftheadministrativecostreductiontothestatewideaveragepremiumandhigh-costriskpoolfactors,althoughthesefactorsandtermsalsoremainunchangedinthisfinalrule.
50Transfers(paymentsandcharges)underthestatepaymenttransferformulawillbecalculatedasthedifferencebetweentheplanpremiumestimatereflectingriskselectionandtheplanpremiumestimatenotreflectingriskselection.
ThestatepaymenttransfercalculationthatispartoftheHHSriskadjustmenttransfermethodologyis:Where:PS=Statewideaveragepremium;PLRSi=plani'splanliabilityriskscore;AVi=plani'smetallevelAV;ARFi=allowableratingfactor;IDFi=plani'sinduceddemandfactor;GCFi=plani'sgeographiccostfactor;si=plani'sshareofstateenrollment.
Thedenominatorwillbesummedacrossallriskadjustmentcoveredplansintheriskpoolinthemarketinthestate.
Thedifferencebetweenthetwopremiumestimatesinthestatepaymenttransferformuladetermineswhetheraplanpaysariskadjustmentchargeorreceivesariskadjustmentpayment.
Thevalueoftheplanaverageriskscorebyitselfdoesnotdeterminewhetheraplanwillbeassessedachargeorreceiveapayment—evenifitsriskscoreisgreaterthan1.
0,itispossiblethattheplanwillbeassessedachargeifthepremiumVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00033Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2ER25AP19.
000khammondonDSKBBV9HB2PRODwithRULES217486FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations51Asdetailedelsewhereinthisfinalrule,catastrophicplansandnon-catastrophicplansandmergedmarketplansareconsideredpartoftheindividualmarketforpurposesofthenationalhigh-costriskpoolpaymentandchargecalculations.
5281FR94100.
53Toestimatetheadministrativecostparameter,weusedinformationintheMLRAnnualReportingFormonhealthcarequalityimprovementexpensesincurred,thefederalandstatetaxesandlicensingonregulatoryfees,andothernon-claimscosts.
Wealsoassumed25percentofgeneraladministrativeexpenses,asreportedontheMLRAnnualReportingFormwouldbeincludedintheadministrativecostparameter.
Informationonthemedicallossratiodataareavailableathttps://www.
cms.
gov/CCIIO/Resources/Data-Resources/mlr.
html.
54Theanalysisused2016CSRpaymentdata.
55See81FR94058at94101.
compensationthattheplanmayreceivethroughitsrating(asmeasuredthroughtheallowableratingfactor)exceedstheplan'spredictedliabilityassociatedwithriskselection.
Riskadjustmenttransfersunderthestatepaymenttransferformulaarecalculatedatthestatemarketriskpoollevel,andcatastrophicplansaretreatedasaseparateriskpoolforpurposesoftheriskadjustmentstatepaymenttransfercalculations.
51ThisresultingPMPMplanpaymentorchargewillbemultipliedbythenumberofbillablemembermonthstodeterminetheplan'spaymentorchargebasedonplanliabilityriskscoresforaplan'sgeographicratingareafortheriskpoolmarketwithinthestate.
Wedefinedthecostscalingfactor,orthestatewideaveragepremiumterm,asthesumoftheaveragepremiumpermembermonthofplani(Pi)multipliedbyplani'sshareofstatewideenrollmentinthemarketriskpool(si).
Thestatewideaveragepremiumwillbeadjustedtoremoveaportionoftheadministrativecoststhatdonotvarywithclaims(14percent)asfollows:PS=(Si(si·Pi))*(10.
14)=(Si(si·Pi))*0.
86Where:si=plani'sshareofstatewideenrollmentinthemarketintheriskpool;Pi=averagepremiumpermembermonthofplani.
Thehigh-costriskpooladjustmentamountwillbeaddedtothestatepaymenttransferformulatoaccountfor:(1)Thepaymentterm,representingtheportionofcostsabovethethresholdreimbursedtotheissuerforhigh-costriskpoolpayments(HRPi),ifapplicable;and(2)thechargeterm,representingapercentageofpremiumadjustment,whichistheproductofthehigh-costriskpooladjustmentfactor(HRPCm)fortherespectivenationalhigh-costriskpoolm(onefortheindividualmarket,includingcatastrophic,non-catastrophicandmergedmarketplans,andanotherforthesmallgroupmarket),andtheplan'stotalpremiums(TPi).
Forthiscalculation,wewilluseapercentofpremiumadjustmentfactorthatisappliedtoeachplan'stotalpremiumamount.
ThetotalplantransfersforagivenbenefityearwillbecalculatedastheproductoftheplanPMPM'stransferamount(Ti)multipliedbytheplan'sbillablemembermonths(Mi),plusthehigh-costriskpooladjustments.
Thetotalplantransfer(paymentorcharge)amountsundertheHHSriskadjustmenttransfermethodologyforabenefityearwillbecalculatedasfollows:Totaltransferi=(Ti·Mi)+(HRPi(HRPCm·TPi)Where:TotalTransferi=Plani'stotalHHSriskadjustmentprogramtransferamount;Ti=Plani'sPMPMtransferamountbasedonthestatetransfercalculation;Mi=Plani'sbillablemembermonths;HRPi=Plani'stotalhigh-costriskpoolpayment;HRPCm=High-costriskpoolpercentofpremiumadjustmentfactorfortherespectivenationalhigh-costriskpoolm;TPi=Plani'stotalpremiumamounts.
Aswenotedabove,weapprovedAlabama'ssmallgroupmarketreductionrequestforthe2020benefityear.
Theapprovedreductionpercentage(50percent)willbeappliedtothe2020benefityearplanPMPMpaymentorchargetransferamount(Ti)underthestatepaymenttransfercalculationfortheAlabamasmallgroupmarketriskpool.
TheAlabamareductiontothePMPMtransferamountsisnotshownintheHHSriskadjustmentstatepaymenttransferformulaabove.
Whilewenotethatweaddressedcommentsregardingthehigh-costriskpooltransfercalculationinthehigh-costriskpoolsectionaboveandcommentsregardingthecost-scalingfactorinthestatepaymenttransferformulaintheoverviewofthetransfermethodologysectionabove,thefollowingisasummaryoftheotherpubliccommentswereceivedonthetotalplantransfercalculationpublishedintheproposedrule.
Comment:OnecommentersupportedHHSreducingthestatewideaveragepremiumtoaccountforcostsassociatedwithadministrativeexpensesthatdonotvarywithclaims.
AnothercommenterrecommendedthatHHSpublishtheanalysisusedtodeterminethe14percentadministrativeexpensefactor,includingthespecificlineitemsfromtheMedicalLossRatio(MLR)AnnualReportingFormthatwereincludedasadministrativeexpensesthatdonotvarywithclaimstodeterminethe14percentreductionofpremium.
Response:Asdetailedinthe2018PaymentNotice,52toderivethisparameter,weanalyzedandcategorizedadministrativeandothernon-claimsexpensesintheMLRAnnualReportingForm,53andestimated,bycategory,theextenttowhichtheexpensesvariedwithclaims.
Wecomparedthoseexpensestothetotalcoststhatissuersfinancethroughpremiums,includingclaims,administrativeexpenses,andtaxes,nettingoutclaimscostsfinancedthroughcost-sharingreductionpayments.
54Wecomparedtheseexpensestototalcosts,ratherthandirectlytopremiums,toensurethattheestimatedadministrativecostpercentagewasnotdistortedbyunder-orover-pricingduringtheyearsforwhichMLRdataareavailable.
Usingthismethodology,wedeterminedthatthemeanadministrativecostpercentageis14percent.
Whileweareassessingwhetherotherdatasourcesmightbeabletosupplementthisanalysisforpotentialupdatesforfutureyears,wecontinuetobelievethatthecurrentpercentagerepresentsareasonablepercentageofadministrativecostsonwhichriskadjustmenttransfersshouldnotbecalculated.
c.
RiskAdjustmentIssuerDataRequirements(§§153.
610,153.
710)Inthe2018PaymentNotice,55wefinalizedthecollectionofmaskedenrollee-leveldatafromissuers'EDGEservers(referredtoas''enrollee-levelEDGEdata'')beginningwiththe2016benefityeartorecalibratetheHHSriskadjustmentmodelsandinformdevelopmentoftheAVCalculatorandmethodology.
Inthe2018PaymentNotice,wealsostatedthatwewouldconsiderusingthisenrollee-levelEDGEdatainthefuturetocalibrateotherHHSprogramsintheindividualandsmallgroupmarkets,andtoproduceapublicusefiletohelpgovernmentalentitiesandindependentresearchersbetterunderstandthesemarkets.
Wenotedthatapublicusefilederivedfromthesedatawouldbede-identifiedinaccordancewiththeHealthInsurancePortabilityandAccountabilityActof1996(HIPAA)requirements,wouldnotincludeproprietaryissuerorplanidentifyingdata,andwouldadheretoHHSrulesandpoliciesregardingprotectedhealthinformation(PHI)andpersonallyidentifiableinformation(PII).
Wealsodescribedinguidancethedataelementsintheenrollee-levelEDGEdatasetandVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00034Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217487FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations56Availableathttps://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Enrollee-level-EDGE-Dataset-for-Research-Requests-05-18-18.
pdf.
57HHSdoesnotcurrentlycollectanyoftheotherdataelementsunder§164.
514(b)(2)thatwouldrequirede-identification.
58Availableathttps://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Enrollee-level-EDGE-Dataset-for-Research-Requests-05-18-18.
pdf.
59Forthe2017benefityear,wehaveincludedauniqueclaimidentifierfield,ahashedclaimidentifier,inthedataextract.
Theclaimidentifierisarandomhashednumberassignedforeachsetofservicelineitemsassociatedwitheachclaim,andcannotbeusedtoidentifytheenrollee,planormedicalrecord.
Includingthisclaimidentifierwillallowdatauserstoassociateallservicelineitemsrenderedunderthesameclaimandalsopermitmorerigorouschecksofdataquality.
thedataelementsproposedtobemadeavailableforresearchrequests.
56UndertheHIPAAsafeharborforde-identificationofdataat45CFR164.
514(b)(2),publicusefilesareconsideredde-identifiediftheyexclude18specificidentifiersthatcouldbeusedaloneorincombinationwithotherinformationtoidentifyanindividualwhoisasubjectoftheinformation.
Tomaketheenrollee-levelEDGEdataavailableasapublicusefilethatcomportswiththerequirementsof§164.
514(b)(2),wewouldhavetoremovedates(otherthantheyear)andagesforenrolleesages90orolder,57anddeterminethattheinformationcouldnotbeusedaloneorincombinationwithotherinformationtoidentifyanindividualwhoisasubjectoftheinformation.
Commentersstatedthatapublicusefilewouldbelimitedinitsusefulnessbecauseitexcludesdatesthatwouldbeusefultoconducthealthservicesresearch.
Alimiteddataset,asdefinedat§164.
514(e)(2),mayincludedates,whichcouldenablerequestorstodoanalysestheywouldnotbeabletodowithapublicusefile.
Inaddition,under§164.
514(e)(4),alimiteddatasetrecipientmustenterintoadatauseagreementthatestablishesthepermittedusesordisclosuresoftheinformationandprohibitstherecipientfromidentifyingtheinformation.
Webelieveentitiesseekingtousetheenrollee-levelEDGEdatawillbeabletobetterunderstandtheindividualandsmallgroupmarketswithalimiteddataset.
Thus,intheproposedrule,weproposedtocreateandmakeavailablebyrequestalimiteddatasetfileratherthanapublicusefile,aswebelievealimiteddatasetfilewillbemoreusefultorequestorsforresearch,publichealth,orhealthcareoperationspurposes.
Wenotedthat,underthisproposal,wewouldmakeenrollee-levelEDGEdata,beginningwiththe2016benefityear,availableasa''limiteddataset''fileunder§164.
514(e).
Thislimiteddatasetfilewouldnotincludethedirectidentifiersoftheindividualorofrelatives,employers,orhouseholdmembersoftheindividual,whicharerequiredtoberemovedunderthelimiteddatasetdefinitionat§164.
514(e)(2)andwhichissuersdonotsubmittotheirEDGEservers.
Wealsoproposedtolimitdisclosuresofthelimiteddatasettorequestorswhoseekthesedataforresearch,publichealth,orhealthcareoperationspurposes,asthosetermsaredefinedunder§164.
501.
Westatedthatwewouldrequirequalifiedrequestorstosignadatauseagreementtoensurethesedatawillbemaintained,used,anddisclosedonlyaspermittedundertheHIPAAPrivacyRule,andtoensurethatanyinappropriateusesordisclosuresarereportedtoHHS.
WenotedthatHHScomponentswouldalsobeabletorequestthelimiteddatasetfileforresearch,publichealth,orhealthcareoperationspurposes,asthosetermsaredefinedunder§164.
501.
Wealsoclarifiedthat,iftheproposalisfinalized,wewouldmakealimiteddatasetfileavailableonanannualbasis,reflectingenrollee-leveldatafromthemostrecentbenefityearavailableonEDGEservers.
Westatedthatifwefinalizetheproposaltomakealimiteddatasetfileavailable,HHSwouldnotofferapublicusefilebasedontheenrollee-levelEDGEdata.
Wesoughtcommentonthisproposal.
Inaddition,weexplainedintheproposedrulethatwereceivedfeedbackinresponsetotheguidancedescribingthedataelementstobemadeavailableaspartofthepublicusefileforresearchrequests58notingthatresearcherswouldbenefitfromadditionaldataelementsonenrollees'geographicidentifiers,enrollees'incomelevel,provideridentifier,provider'sgeographiclocation,hashedclaimidentifier,enrollees'planbenefitdesigndetails,andenrollees'out-of-pocketcostsbycost-sharingtype(deductible,coinsurance,andcopayment).
Wenotedthatwebegancollectingaclaimidentifier59toassociateallservicesrenderedunderthesameclaimbeginningwiththe2017benefityearenrollee-levelEDGEdata.
Therefore,westatedthatifweweretofinalizethelimiteddatasetproposal,wewouldbeabletoincludethisgroupedclaimsidentifierbeginningforthe2017benefityearenrollee-levelEDGElimiteddatasetfile.
However,regardingtheotherdataelementscommentersrequested,weexplainedthateitherissuersdonotsubmitthemtotheirEDGEservers,orwecurrentlydonotextractthemfromissuers'EDGEserversduetoconcernsabouttheabilitytousethedataelement(s)toidentifyissuersorplans.
Forexample,issuersdonotcurrentlysubmitdatatotheirEDGEserversonenrollees'planbenefitdesign,specificcost-sharingelements(deductibles,copayments),provideridentifiers,providers'geographiclocation,enrollees'incomelevel,orenrollees'geographiclocationmorespecificthantheratingarea,andtherefore,weareunabletoextractsuchinformationaspartoftheenrollee-levelEDGEdata.
However,issuersdosubmitenrollees'stateandratingareasaspartoftheEDGEserversubmissions,makingitpossibletoextractthesedataelementsfromtheissuers'EDGEserversaspartoftheenrollee-levelEDGEdata.
Westatedintheproposedrulethat,ifweweretoextractstateandratingareadataelements,wecouldalsomakesuchinformationavailableaspartoftheproposedenrollee-levelEDGElimiteddatasetfile.
Westatedintheproposedrulethatwecontinuetobelievetheenrollee-levelEDGEdatacanincreasecosttransparencyforconsumersandstakeholdersfortheindividualandsmallgroupmarkets,andcanbeausefulresourceforgovernmententitiesandindependentresearcherstobetterunderstandthesemarkets.
Wealsorecognizedaccessanduseofenrollee-levelEDGEdatashouldcontinuetosafeguardenrollees'privacyandsecurityandissuers'proprietaryinformation.
Wereiteratedthatweusetheenrollee-levelEDGEdatatorecalibratetheHHSriskadjustmentmodelsandinformdevelopmentoftheAVCalculatorandmethodologyandstatedthatextractingadditionalstateandratingareainformationcouldenableHHStoassesstheimpactofdifferencesingeographicfactorsintheHHSriskadjustmentmethodology.
Inaddition,westatedthatstakeholdershavenotedthataddinggeographicelementstotheAVCalculatorwouldbetterestimatetheAVofplansbasedonthecostdifferencesacrossregions.
Extractionofthesegeographicdetails(stateandratingarea)fromissuers'EDGEserverscouldalsohelpsupportotherHHSprogramsandpolicypriorities,aswellasprovideadditionaldataelementsforresearchers.
Wenotedthatalthoughthesegeographicdataelementsarenotcurrentlyextractedfromtheenrollee-levelEDGEdataset,extractingthemwouldnotincreaseburdenforissuers,asissuersalreadysubmitthesedataelementsaspartoftheEDGEserverdatasubmissionprocess.
WestatedintheproposedrulethatifweweretoextractstateandratingareaVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00035Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217488FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations60Asnotedpreviously,webeganextractingahashedclaimidentifiertoidentifyalltheservicelineitemsthatbelongtothesameclaimbeginningwiththe2017benefityearenrollee-levelEDGEextract.
61See,forexample,2U.
S.
C.
601(d).
information,wewoulddosoaspartoftheenrollee-levelEDGEdataextractionandwouldusethisinformationtosupporttherecalibrationandpolicydevelopmentrelatedtotheHHS-operatedriskadjustmentprogram,theAVCalculatorandmethodology,aswellasotherHHSprogramsintheindividualandsmallgroup(includingmerged)markets.
Wesoughtcommentonwhethertoextractstateandratingareainformationforenrolleesaspartoftheenrollee-levelEDGEdata.
WealsosoughtcommentonhowstateandratingareainformationcouldbeusedintheHHS-operatedriskadjustmentprogram,AVCalculatorandmethodology,andotherHHSprogramsintheindividualandsmallgroup(includingmerged)markets,aswellasonhowthesedataelementscouldbenefitresearchersandpublichealth.
Wesoughtcommenton,ifweweretoextractthesedataelements,whethertomakestateandratingareainformationavailableaspartoftheproposedlimiteddatasetfilethatwouldbemadeavailabletoqualifiedrequestors.
WesoughtcommentontheadvantagesanddisadvantagesofusingstateandratingareainformationforrecalibrationoftheHHS-operatedriskadjustmentprogram,theAVCalculatorandmethodology,andotherHHSindividualandsmallgroup(includingmerged)marketprograms.
Inaddition,wesoughtspecificcommentonpossibleresearchpurposesforthesedataelements,whetherthebenefitsofextractingtheseadditionaldataelementsoutweighthepotentialrisktoissuers'proprietaryinformation,andwhetherextractionofthesedataelementsisconsistentwiththegoalsofadistributeddataenvironment.
Wealsosoughtspecificcommentontheotherdataelementsoutlinedintheproposedrulethatcommentersrequestedbepartoftheenrollee-levelEDGEdataset,butthatissuersdonotcurrentlysubmittotheirEDGEservers(forexample,enrollees'incomelevel,provideridentifier,provider'sgeographiclocation,hashedclaimidentifier,60enrollees'planbenefitdesigndetails,andenrollees'out-of-pocketcostsbycost-sharingtype,suchasdeductible,coinsurance,andcopayment),andotherenrollmentandclaimsdataelementsnototherwisedescribedintheproposedrule,andwhethercollectionofsuchdataelementscouldbenefitthecalibrationoftheHHSriskadjustmentprogram,theAVcalculatorandmethodology,andotherHHSindividualandsmallgroup(includingmerged)marketprograms.
WealsosoughtspecificcommentwithexamplesonwhetherotherdataelementsthatissuersdonotcurrentlysubmittotheirEDGEserverscouldbenefitfurtherresearch,publichealth,orhealthcareoperationsaspartofalimiteddatasetfilemadeavailabletoqualifiedrequestors.
Finally,weproposedtoextendtheuseofenrollee-levelEDGEdataandreportsextractedfromissuers'EDGEservers(includingdatareportsandadhocqueryingtoolreports)tocalibrateandoperationalizeourindividualandsmallgroup(includingmerged)marketprograms(forexample,theHHS-operatedriskadjustmentprogram,theAVcalculatorandmethodology,andtheout-of-pocketcalculator),aswellastoconductpolicyanalysisfortheindividualandsmallgroup(includingmerged)markets(forexample,toassessthemarketimpactsofpolicyoptionsbeingdeliberated).
Weexplainedthatwebelievetheseadditionalusesoftheenrollee-levelEDGEdatawouldenhanceourabilitytodevelopandsetpolicyfortheindividualandsmallgroup(includingmerged)marketsandavoidburdensomedatacollectionsfromissuers.
Tofurtherourcommitmenttoincreasingtransparencyinhealthcaremarketsandhelpthepublicbetterunderstandthesemarkets,wearefinalizingourproposalwithonemodification.
Underourfinalpolicy,wewillcreateandmakeavailable,onanannualbasis,enrollee-levelEDGEdataasalimiteddatasetfileforqualifiedrequestorswhoseekthesedataforresearchpurposes.
Wewillnotmakethislimiteddatasetavailabletorequestorsforpublichealthorhealthcareoperationsactivities.
WhilethesepurposesarepermittedbytheHIPAAPrivacyRule,inlightofcommentsreceivedandHHS'operationallimitations,HHSwillnotmakethislimiteddatasetfileavailabletorequestorsforpublichealthorhealthcareoperationsactivitiesatthistime.
Wenotethatwemayconsiderexploringtheuseofthepublichealthandheathcareoperationspathwaysformakingthelimiteddatasetfileavailableinthefuture.
Wedidnotproposetoextractstateandratingareainformationfromissuers'EDGEserversorcollectadditionaldataelements,andbasedoncommentsreceived,atthistime,wedonotbelievethebenefitsfromadditionaldataelementextractionsorcollectionswouldoutweighthecostsofpotentialincreasedrisktoissuers'proprietaryinformationandincreasedissuerburden.
Asnotedintheproposedrule,wewillincludethegroupedclaimsidentifierbeginningwiththe2017benefityearenrollee-levelEDGElimiteddatasetfile,asthatisthefirstyearthatdataelementisavailable.
WearefinalizingourproposaltoallowHHStousetheenrollee-levelEDGEdataandreportsextractedfromissuers'EDGEservers(includingdatareportsandadhocqueryingtoolreports)tocalibrateandoperationalizeourindividualandsmallgroup(includingmerged)marketprograms,includingtoconductrecalibrationoftheHHSriskadjustmentprogramandtomakeupdatestotheAVCalculator,andtoconductpolicyanalysisfortheindividualandsmallgroup(includingmerged)markets.
Webelievetheseadditionalusesoftheenrollee-levelEDGEdataandreportswillenhanceourabilitytodevelopandsetpolicyfortheindividualandsmallgroup(includingmerged)marketsandavoidburdensomedatacollectionsfromissuers.
WeclarifythatourpoliciesregardingHHSusesoftheenrollee-levelEDGEdataapplytotheHHScomponentsthatcurrentlyreceiveandusesuchdataforpurposesoftheHHSriskadjustmentprogram.
Aswestatedintheproposedrule,otherHHScomponentswillbeabletorequesttheEDGElimiteddatasetfileforresearchpurposes,asthattermisdefinedunder§164.
501.
Wealsonotethattheenrollee-levelEDGEdatamaybesubjecttodisclosureasotherwiserequiredbylaw.
61Comment:ManycommenterssupportedHHS'proposaltocreateandmakeavailablebyrequestalimiteddatasetfileusingenrollee-levelEDGEdata.
Thesecommentersnotedthatthelimiteddatasetfilewillsupportresearch,publichealth,externalaccountability,andtransparency.
OnecommenterstatedthesedatawillprovideresearcherswithabetterunderstandingofExchangefunctionsandenrollees'healthneeds.
Anothercommenternotedthesedatawillhelpsupportstatedepartmentsofinsuranceintheratereviewprocess.
However,numerousothercommentersdidnotsupporttheproposaltoofferalimiteddatasetfile.
MostofthesecommentersexpressedconcernsaboutthepotentialforunauthorizeddisclosureofPIIandissuerproprietaryinformation.
Onecommenterstateditwasparticularlyconcernedwiththeenrollee-levelEDGEdatabeingusedforthepurposeofhealthcareoperations.
OnecommenterstatedHHShasnotprovidedadequateassurancesthattheinformationwouldnotbeusedforunauthorizedpurposes.
VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00036Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217489FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations62https://www.
cms.
gov/Research-Statistics-Data-and-Systems/Files-for-Order/Data-Disclosures-Data-Agreements/DUA_-_NewLDS.
html.
63https://www.
cms.
gov/Research-Statistics-Data-and-Systems/Files-for-Order/Data-Disclosures-Data-Agreements/DUA_-_NewLDS.
html.
64ForinformationontheCMSlimiteddatasetprocessanddatauseagreements,seehttps://www.
cms.
gov/Research-Statistics-Data-and-Systems/Files-for-Order/Data-Disclosures-Data-Agreements/DUA_-_NewLDS.
html#Policies.
Severalcommentersexpressedconcernsaboutthepotentialofthesedatatoundermineprovidercontractingandratenegotiations.
Somecommentersnotedthatofferingthesedatacoulderodeissuerconfidenceandcouldbeusedbysomeissuerstocompetitivelypriceproductsandgamethefederalriskadjustmentprogram.
Response:Weappreciatethecommentswereceivedonourproposaltocreateandmakeavailablebyrequestalimiteddatasetfileusingtheenrollee-levelEDGEdata.
Wecontinuetobelievetheenrollee-levelEDGEdatacanincreasecosttransparencyforconsumersandstakeholdersfortheindividualandsmallgroup(includingmerged)marketsandcanbeausefulresourceforgovernmententitiesandindependentresearcherstobetterunderstandthesemarkets.
ThesebenefitsalignwithHHS'goaltopromoteincreasedtransparencyinhealthinsurancemarkets.
Wealsorecognizethatanyaccesstoanduseoftheenrollee-levelEDGEdatashouldcontinuetosafeguardenrolleeprivacyandsecurityandissuers'proprietaryinformation.
Whileweacknowledgeandappreciatecommenters'concerns,webelievethebenefitsofmakingthesedataavailableforresearchpurposesoutweighthepotentialrisksassociatedwithunauthorizeddisclosureofthesedata.
Whilesomecommentersstatedthatthelimiteddatasetfilewillbenefitpublichealth,othersexpressedconcern.
Moreover,HHSdoesnotcurrentlymakelimiteddatasetsavailableforhealthcareoperationsorpublichealthpurposes.
Therefore,asdiscussedabove,inlightofcommentsreceivedandHHS'operationallimitations,HHSwillnotmakethislimiteddatasetfileavailabletorequestorsforpublichealthorhealthcareoperationsactivitiesatthistime.
Wenotethatweintendtousetheexistingprocesstomakelimiteddatasetfilesavailableandrequestorswillberequiredtoprovidearesearchpurposeaspartoftheirrequests.
62Webelievethepotentialriskswillbemitigatedthroughtheexistingcontrolsthatlimitaccesstothesedatatoqualifiedrequestorswhoseekthesedataforresearchpurposes,byrequiringrequestorstoenterintoadatauseagreement,andbycontinuingtoapplytheprecautionsalreadyinplacetomaskenrolleeidentifiers.
Under§153.
720,issuersdonotuploadPIItotheirEDGEservers,andmustestablishanduseauniquemaskedidentificationnumberforeachenrolleeandmaynotincludetheenrollee'sPIIinthemaskedenrolleeidentificationnumber.
Furthermore,whenHHSextractsenrollee-levelEDGEdata,wecreateahashedenrolleeidentifier,asystem-generatedrandomnumber,thatcannotbelinkedbacktotheissuers'EDGEserverstoidentifytheissuerorplan.
Aswenotedintheproposedruleandreiteratedabove,thislimiteddatasetfilewillnotincludethedirectidentifiersoftheindividualorofrelatives,employers,orhouseholdmembersoftheindividual,whicharerequiredtoberemovedunderthelimiteddatasetdefinitionat§164.
514(e)(2),asissuersdonotuploadtheseidentifierstotheirEDGEservers.
Thus,webelievewewillcontinuetoprotectenrollees'PIIandissuers'proprietaryinformation.
Furthermore,thelimiteddatasetregulationsunder§164.
514(e)imposespecificlimitationsonuseanddisclosureofthesetypesofdata,andqualifiedrequestorswillberequiredtoabidebytheserequirementsandourpoliciesforlimiteddatasets.
Requestorswillberequiredtoprovidearesearchpurposeaspartoftheirrequest.
Thedatauseagreementwillrequiretherequestorstomaintain,use,anddisclosethelimiteddatasetonlyaspermittedunder§164.
514(e)andreportanyinappropriateusesordisclosuresofthesedata.
63Asdiscussedbelow,wearenotfinalizingapolicytoextractstateandratingareainformationfromissuers'EDGEservers,andtherefore,wewillnotincludethosedatainthelimiteddatasetfiledevelopedusingenrollee-levelEDGEdata.
Becausethelimiteddatasetfileswillnotincludeissuerorplanidentifiableinformation,requestorswithaccesstothelimiteddatasetfileswillnotreceiveorbeabletomisuseanyissuertradesecretinformation.
Additionally,theextractedenrollee-levelEDGEdatadoesnotincludepremiuminformationfromissuers'EDGEserversandthereforerequestorswillnotbeabletodetermineissuer-specificratenegotiationinformation.
Furthermore,issuersdonotuploadprovider(forexample,hospitalorphysician)identifyinginformationtotheirEDGEservers.
Therefore,thesetypesofprovideridentifierscannotbeextractedfortheenrollee-levelEDGEdatacollectioneither,mitigatingcommenters'concernsthatthedatacouldrevealissuer-specificprovidercontractingornegotiatedpriceinformation.
Therefore,wedonotbelievetheenrollee-levelEDGEdatacouldbeusedtoidentifyissuer-specificproprietarypricingdata.
Comment:OnecommentersoughtclarityonthetypesofentitiesthatcanrequestthelimiteddatasetfileandtheprocessHHSwillusetoconsiderrequests.
AnothercommenternotedHHSshoulddevelopstrictstandardsforreleaseofthesedataasalimiteddatasetforwhichitshouldseekpubliccomment.
Response:Asdescribedinthisrule,thelimiteddatasetwillbemadeavailableinaccordancewiththeregulationsat§164.
514(e)andexistingpoliciesandproceduresforlimiteddatasetrequests.
Thelimiteddatasetfile,whenavailable,wouldbeprovidedtoqualifiedrequestorswhoseekthesedataforresearchpurposes,consistentwithotherlimiteddatasetsmadeavailablebyCMS.
64Requestorswillneedtosubmitaresearchpurposestatementandsignadatauseagreementtoensurethesedatawillbeusedforthestatedpurposeonlyandthatthesedatawillbemaintained,used,anddisclosedonlyaspermittedbytheagreementorotherwiserequiredbylaw.
Wewillhavefinaldiscretionoverthedecisionwhethertoapprovearequestforaccesstothelimiteddatasetfile.
Comment:SeveralcommentersexpressedconcernwithanyuseofstateandratingareainformationtosupporttheoperationoftheriskadjustmentprogramandotherHHSprograms.
Somecommentersnotedoutsideentitiescouldidentifyissuersand,possibly,individualenrolleesinalimiteddatasetifitincludedstateandratingareadataelements,whichcouldriskissuers'proprietaryinformationandenrollees'PII.
However,somecommenterswhosupportedreleaseofalimiteddatasetalsosupportedincludingstateandratingareainformationinthelimiteddataset,statingthatthisinformationwouldmakethesedatamoreusefultoresearchers.
MostcommentersdidnotsupporttheuseofstateandratingareainformationtocalibratetheAVCalculator.
Mostcommentersnotedthiswouldaddincreasedcomplexitywithlittlebenefit,causeconsumerandissuerconfusion,andresultinunintendedconsequencesaffectingtheunderlyingAVCalculatorandmethodology.
OnecommenterstatedthattheremaynotbeadequatedatainsomestatesandratingareastobuildmodelsfortheAVCalculatorandmethodology.
Response:WeappreciatethecommentswereceivedregardingVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00037Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217490FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations652014PaymentNotice,78FR15497.
extractionanduseofstateandratingareainformationfromissuers'EDGEservers.
Whilewebelievestateandratingareainformationwouldenhancetheusefulnessoftheenrollee-levelEDGEdata,includingforthelimiteddatasetfile,weagreethattheriskofpotentialunauthorizeddisclosureofissuer-orplan-levelinformationthroughinclusionofgeographicidentifiersoutweighsthesebenefits.
Weunderstandthatincludinggeographicidentifiersinthelimiteddatasetwouldenablequalifiedrequestorswhoreceivethelimiteddatasetfiletoidentifyissuersinstatesorratingareaswithonlyoneissuer.
Weappreciatethecommentsdescribingconcernsregardingtheextractionofstateandratingareadataelements,andaswedidnotproposetoextractandusethosedataelementsfortheenrollee-levelEDGEdata,wearenotmakinganychangesinthatregardatthistime.
WeagreewithcommentersthatusinggeographicinformationfortheAVCalculatorandmethodologyisneitherrequirednorwouldenhancethecurrentmethodology.
ForAVCalculatorandmethodologyupdatesinfutureyears,wewillcontinuetouseenrollee-levelEDGEdatainitscurrentformat(withoutthestateorratingareainformation).
Comment:Manycommentersdidnotsupportthecollectionofadditionaldataelements,suchasenrollees'incomelevel,provideridentifier,planbenefitdesigndetails,andenrollees'out-of-pocketcostsbycost-sharingtype(deductible,coinsurance,andcopayment),thatissuersarenotalreadysubmittingtotheirEDGEservers.
Commentersstatedthesubmissionofadditionaldataelementswouldbeadministrativelycomplex,burdensome,andbeyondtheminimumnecessarydataelementsneededforrecalibrationoftheriskadjustmentprogram.
OnecommenternotedHHSshouldexpandthedataelementsavailableinthelimiteddatasetfile,butdidnotprovidefurtherspecificity,includinghowHHSwoulddothatwithoutfirstcollectingthosedataelementsontheissuers'EDGEservers.
Response:WebelievethatcollectionofadditionaldataelementsthatarenotcurrentlysubmittedbyissuerstotheirEDGEservers,suchasenrollees'planbenefitdesigndetails,andenrollees'out-of-pocketcostsbycost-sharingtype(deductible,coinsurance,andcopayment),wouldenhancetheusefulnessoftheenrollee-levelEDGEdata,includingforthelimiteddataset.
However,weacknowledgethecommenters'concernsthatcollectionofadditionaldataelementsonissuers'EDGEserverscouldbeadministrativelycomplexandburdensomeforissuers,asitwouldincreasetheirdatacollectionrequirement,andforHHS,asthesedataelementswouldhavetobevalidatedandaddedtothefilestructurethatissubmittedthroughthedistributeddataenvironment.
Werecognizetheneedtobalancethebenefitsofenhancedtransparencyandhelpingthepublicbetterunderstandthesemarketsagainstminimizingissuerandgovernmentcostsandburden.
Aswedidnotproposetomakeanychangesinthisregard,wearenotmakinganysuchchangesatthistime,andwillconsiderwhethertoproposecollectionofanyadditionaldataelementsfortheEDGEserversubmissionsforfuturebenefityears.
Comment:SomecommenterssupportedHHSbroadeningitsusesofenrollee-levelEDGEdatatoimproveandadministerprogramswithinHHS'scope,includingtorecalibratetheriskadjustmentprogramandtheAVCalculatorandmethodology.
MostwhocommentedsupportedHHSbroadeningtheuseoftheenrollee-levelEDGEdataasproposed.
OnecommenternotedHHSshouldnotusethesedataforanyotherpurposewithoutexpressissuerpermission.
SomecommentersnotedHHSshouldnotuseEDGEserverdataoutsideoftheriskadjustmentprogram,statingthatsuchusewouldbeinconsistentwiththeintentofusingadistributeddataenvironmentforadministeringtheriskadjustmentprogram.
OnecommenterdidnotsupporttheuseofEDGEdataforpolicyanalysisoutsideoftheriskadjustmentprogram,andrecommendedthat,ifHHSproceedswiththisproposal,itshoulddefinepolicyanalysisandseekpubliccomment.
Response:WearefinalizingourproposaltoallowHHStousetheenrollee-levelEDGEdataandreportsextractedfromissuers'EDGEservers(includingdatareportsandadhocqueryingtoolreports)tocalibrateandoperationalizeourindividualandsmallgroup(includingmerged)marketprograms(forexample,theHHS-operatedriskadjustmentprogram,theAVCalculatorandmethodologyandtheout-of-pocketcalculator),aswellastoconductpolicyanalysisfortheindividualandsmallgroup(includingmerged)markets.
Weagreewithcommentersthatouruseoftheenrollee-levelEDGEdataforthesepurposeswillhelpimproveourunderstandingofthenuancesuniquetotheindividualandsmallgroup(includingmerged)marketssothatwecanberesponsivetomarketfluctuationsandpursueupdatestotheseprograms,asappropriate.
Additionally,weanticipatethatleveragingthesedatainthiswaywillincreaseefficienciesbyreducingourneedtoinitiatenew,potentiallyburdensomedatacollections.
HHSmayusetheenrollee-levelEDGEdatatohelpinformwhichofvariouspoliciesrelatedtotheindividualandsmallgroup(includingmerged)marketswillfurtherHHS'goalstopromotetransparency,supportinnovationintheprivatesector,reduceburdenonstakeholders,andimproveprogramintegrity.
Generally,policiesthatcouldbeinformedbythesedatawouldbedevelopedorrevisedthroughthenotice-and-commentrulemakingprocess.
Wedonotbelieveusingtheenrollee-levelEDGEdataandreportsextractedfromissuers'EDGEserversforthepurposeswehaveoutlinedisinconsistentwiththeintentofusingadistributeddataenvironmentfortheHHSoperatedriskadjustmentprogram.
Inthe2014paymentnotice,wefinalizedthedistributeddatamodelfordatacollectionfortheriskadjustmentandreinsuranceprogramswhenHHSoperatesthoseprogramsonbehalfofaState.
65Inevaluatingdatacollectionoptions,wedeterminedthedistributeddatacollectionmodelprovedthemosteffectiveapproachforobtainingandprocessingthedatanecessaryforbothreinsuranceandriskadjustmentcalculationsbecausesuchamodelwouldminimizeissuerburdenwhileprotectingenrollees'privacy.
WedidnotproposeandarenotmakinganychangestotheriskadjustmentdatatransferprocessbetweenissuersandHHS.
Asdiscussedpreviously,werecognizethesensitivityofenrollee-levelEDGEdataandaretakingprecautionstosafeguardthesedata.
Webelievetheanalysesandusesdescribedinthisrulewouldbenefitissuersandthebroaderindividualandsmallgroupmarket(includingmergedmarket)stakeholders.
WhilewedonotbelieveissuerpermissionisnecessaryforHHStouseenrollee-levelEDGEdataorreportsasHHSwouldnotmakeissuerproprietaryinformationpublicnorwouldHHSrequireissuerstosubmitadditionaldataelements,weappreciatethesensitivitiesrelatedtoenrollee-levelEDGEdataandintendtocontinuefollowingthecurrentprocess,underwhichweengageinnotice-and-commentrulemakingpriortoexpandingusesordisclosuresofthisdata.
d.
RiskAdjustmentDefaultCharge(§153.
740(b))Asdescribedbelow,wearefinalizingachangetothetimelineforpublicationofthe2017benefityearriskadjustmentdatavalidationresultsandtheVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00038Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217491FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations66Asestablishedinthe2015PaymentNoticeat79FR13790,aPMPMdefaultchargeisequaltotheproductofthestatewideaveragepremium(expressedasaPMPMamount)forariskpoolandthe75thpercentileplanrisktransferamountexpressedasapercentageoftherespectivestatewideaveragePMPMpremiumsfortheriskpool.
See79FRat13790.
Whilethispercentilewassubsequentlyadjustedtothe90thpercentileinthe2017PaymentNotice,thePMPMamountisotherwisecalculatedinthesamemanner.
See81FR12237.
67See78FR15409at15416.
6883FR16930at16972.
69Althoughthe2016benefityearwasthefinalbenefityearforthereinsuranceprogram,close-outactivitiescontinuedinthe2018fiscalyear,includingthecollectionofthesecondpartofthe2016benefityearcontributionsforcontributingentitiesthatelectedthebifurcatedschedule,whichwereduebyNovember15,2017,andareexpectedtocontinueinthe2019fiscalyear.
accompanyingcollectionandpaymentofadjustmentsrelatedtotheseresults.
Consistentwiththosechanges,the2018benefityearsummaryriskadjustmenttransferreportissuedbyJune30,2019,willnotreflecttheimpactofthe2017benefityearriskadjustmentdatavalidationadjustmentson2018riskadjustmenttransfers,butwillcontinuetoincludeinformationontheassessmentandallocationoftheapplicablebenefityear'sriskadjustmentdefaultchargesunder§153.
740(b).
HHS'calculationofthe2018benefityearPMPMriskadjustmentdefaultchargewillbeequaltothe90thpercentileofthe2018riskadjustmenttransfersnotadjustedwiththeresultsof2017riskadjustmentdatavalidation.
66e.
RiskAdjustmentUserFeefor2020BenefitYear(§153.
610(f))Asnotedinthisrule,ifastateisnotapprovedtooperate,orchoosestoforgooperatingitsownriskadjustmentprogram,HHSwilloperateariskadjustmentprogramonitsbehalf.
Forthe2020benefityear,HHSwilloperateariskadjustmentprogramineverystateandtheDistrictofColumbia.
Asdescribedinthe2014PaymentNotice,67HHS'operationofriskadjustmentonbehalfofstatesisfundedthroughariskadjustmentuserfee.
Section153.
610(f)(2)providesthatanissuerofariskadjustmentcoveredplanmustremitauserfeetoHHSequaltotheproductofitsmonthlybillablememberenrollmentintheplanandthePMPMriskadjustmentuserfeeratespecifiedintheannualHHSnoticeofbenefitandpaymentparametersfortheapplicablebenefityear.
OMBCircularNo.
A–25Restablishedfederalpolicyregardinguserfees,andspecifiedthatauserchargewillbeassessedagainsteachidentifiablerecipientforspecialbenefitsderivedfromfederalactivitiesbeyondthosereceivedbythegeneralpublic.
Theriskadjustmentprogramwillprovidespecialbenefitsasdefinedinsection6(a)(1)(B)ofCircularNo.
A–25Rtoissuersofriskadjustmentcoveredplansbecauseitmitigatesthefinancialinstabilityassociatedwithpotentialadverseriskselection.
Theriskadjustmentprogramalsocontributestoconsumerconfidenceinthehealthinsuranceindustrybyhelpingtostabilizepremiumsacrosstheindividual,merged,andsmallgroupmarkets.
Inthe2019PaymentNotice,68wecalculatedthefederaladministrativeexpensesofoperatingtheriskadjustmentprogramforthe2019benefityeartoresultinariskadjustmentuserfeerateof$1.
80perbillablememberperyearor$0.
15PMPM,basedonourestimatedcontractcostsforriskadjustmentoperations,estimatesofbillablemembermonthsforindividualsenrolledinriskadjustmentcoveredplans,andeligibleadministrativeandpersonnelcostsrelatedtotheadministrationoftheHHS-operatedriskadjustmentprogram.
Forthe2020benefityear,weproposedtogenerallyusethesamemethodologytoestimateouradministrativeexpensestooperatetheprogram,withthemodificationsdescribedinthisrule.
Thesecostscoverdevelopmentoftheriskadjustmentmodelsandmethodology,collections,payments,accountmanagement,datacollection,datavalidation,programintegrityandauditfunctions,operationalandfraudanalytics,stakeholdertraining,operationalsupport,andadministrativeandpersonnelcostsdedicatedtoriskadjustmentactivitiesrelatedtotheHHS-operatedprogram.
Tocalculatetheuserfee,wedividedHHS'projectedtotalcostsforadministeringtheriskadjustmentprogrambytheexpectednumberofbillablemembermonthsinriskadjustmentcoveredplansinthe50statesandtheDistrictofColumbiawhereHHSwilloperateriskadjustmentforthe2020benefityear.
WeestimatedthetotalcostforHHStooperatetheriskadjustmentprogramforthe2020benefityeartobeapproximately$50million,andtheriskadjustmentuserfeewouldbe$2.
16perbillablememberperyear,or$0.
18PMPM.
TheupdatedcostestimatesattributeallcostsrelatedtotheEDGEserverdatacollectionanddataevaluation(quantityandqualityevaluations)activitiestotheriskadjustmentprogramratherthansharingthemwiththereinsuranceprogram,whichisnolongeroperational.
69Wecollectedamountsunderthereinsuranceprogramforadministrativeexpensesrelatedtothatprogram,whichpartiallyfundedcontractsthatwereusedforboththeriskadjustmentandreinsuranceprograms.
Wenolongerallocateindirectcostsforpersonneloradministrativecoststothereinsuranceprogram,andarereflectingthefullvalueofthosecostsaspartofriskadjustmentoperationsforthe2020benefityear.
Theriskadjustmentuserfeecostsarealsoestimatedtobeslightlyhigherduetoincreasedcontractcostsbasedonadditionalactivitiesfortheriskadjustmentdatavalidationprogramdevelopmentandexecution,includingupdatedcostestimatesassociatedwiththenon-pilotyearsoftheriskadjustmentdatavalidationprogram,includingestimatesforerrorrateadjustments,developmentofthenewriskadjustmentdatavalidationaudittool,andadditionalcontractorsupportforriskadjustmentdatavalidationdiscrepanciesandappeals.
Theestimatedcostsalsoincorporatethefullpersonnelandadministrativecostsassociatedwithriskadjustmentprogramdevelopmentandoperationsintheriskadjustmentuserfeeforthe2020benefityear.
Thepersonnelandadministrativecostsincludedinthecalculationofthe2019benefityearriskadjustmentuserfeeforthe2019PaymentNoticefinalruleincorporatedonlyaportionofthepersonnelcosts,andexcludedindirectcosts.
The2020benefityearriskadjustmentuserfeeincludesthefullamountforeligiblepersonnelcosts,aswellaseligibleindirectcosts.
Finally,weestimatedindividualandsmallgroupmarketbillablemembermonthsforthe2020benefityeartoremainroughlythesame,asobservedinthemostrecentriskadjustmentdataavailableforthe2017benefityear.
Wereceivedonecommentontheproposedriskadjustmentuserfeeforthe2020benefityear,whichsupportedourproposaltoestablishariskadjustmentuserfeeforthe2020benefityearof$2.
16perbillablememberperyear,or$0.
18PMPM.
Wearefinalizingtheriskadjustmentuserfeerateforthe2020benefityearasproposed.
3.
RiskAdjustmentDataValidationRequirementsWhenHHSOperatesRiskAdjustment(§153.
630)Weconductriskadjustmentdatavalidationunder§§153.
630and153.
350inanystatewhereHHSisoperatingriskadjustmentonthestate'sbehalf,whichforthe2020benefityearisall50statesandtheDistrictofColumbia.
ThepurposeofriskadjustmentdatavalidationistoensureissuersareprovidingaccurateandcompleteriskadjustmentdatatoHHS,whichiscrucialtothepurposeandVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00039Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217492FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations70See79FR13743at13756.
71Activitiesrelatedtothe2019benefityearriskadjustmentdatavalidationgenerallybegininthesecondquarterofCY2020.
properfunctioningoftheHHS-operatedriskadjustmentprogram.
Riskadjustmentdatavalidationconsistsofaninitialvalidationauditandasecondvalidationaudit.
Under§153.
630,eachissuerofariskadjustmentcoveredplanmustengageanindependentinitialvalidationauditor.
Theissuerprovidesdemographic,enrollment,andmedicalrecorddocumentationforasampleofenrolleesselectedbyHHStoitsinitialvalidationauditorfordatavalidation.
Eachissuer'sinitialvalidationauditisfollowedbyasecondvalidationaudit,whichisconductedbyanentityHHSretainstoverifytheaccuracyofthefindingsoftheinitialvalidationaudit.
Intheproposedrule,wesetforthanumberofproposedamendmentsandclarificationstotheHHSriskadjustmentdatavalidationprograminlightofexperienceandfeedbackfromissuersduringthefirst2pilotyearsoftheprogram.
ThefollowingisasummaryofthegeneralpubliccommentswereceivedrelatedtoriskadjustmentdatavalidationrequirementswhenHHSoperatesriskadjustment.
Additionalcommentsrelatedtotheerrorestimationmethodologyandnegativeerroroutliersarediscussedlaterinthisrule.
Comment:AfewcommentersurgedHHStoadopttheHEDIS(HealthcareEffectivenessDataandInformationSet)auditmethodology,whichonlyrequiresmedicalrecordreviewforsupplementalcodesthattheplanpullsfrommedicalrecords.
Response:WecontinuetoseekwaystoimprovetheHHSriskadjustmentdatavalidationprogramforbothaccuracyanduserexperience,andwillcontinuetoexamineapproachestakenbyotherorganizationswhenmakingupdatestotheriskadjustmentdatavalidationprocess.
However,becausetheintentofriskadjustmentdatavalidationistoensuretheintegrityoftheriskadjustmentprogrambyvalidatealldiagnosesforwhichanissuerreceivedcreditinriskadjustment,webelievethatriskadjustmentdatavalidationshouldincludealldiagnoses,andnotsimplybelimitedtosupplementaldiagnoses.
Additionally,wenotethattheHEDISauditmethodologyisatwo-partprocessthatiscustomizedbasedonanorganization'sinformationalsystems,andthatwebelievethatthedistributeddataenvironmentprecludestheneedforsuchcustomization.
Assuch,wearemaintainingourcurrentmethodologyforriskadjustmentdatavalidation.
Comment:Afewcommentersrequestedreliefforissuersexperiencingdifficultywithobtainingmedicalrecordsfromprovidersinconnectionwiththeissuers'riskadjustmentdatavalidation.
Onecommenterstatedthatitwashavingdifficultyaccessingmedicalrecordsthatincludedmentalhealthorsubstanceusedisorderdiagnosesbecausestateprivacylawwasmorestringentthantherelevantfederalrequirements,andthatenrolleeconsentmustbeobtainedevenforsummaryinformation.
AnothercommenterrequestedthatHHScreateaprocesstoexemptissuersfromvalidatingHCCsforwhichaproviderrefusedtosupplyamedicalrecordandtheissuerdemonstratedgoodfaithintryingtoobtainsuchrecord.
Response:Inthe2019PaymentNotice,wefinalized§153.
630(b)(6)toproviderelieftoissuersthatareprohibitedfromobtainingmedicalrecordsbystateprivacylawsinresponsetosimilarconcernsexpressedbysomeissuers.
Werecognizethedifficultiesthatfederalandstateprivacylawscanposetoissuersofriskadjustmentcoveredplansforpurposesofriskadjustmentdatavalidation,andourintentionisnottopenalizeissuersthatseektoobtainthenecessaryinformationfromproviders.
Wearecontinuingtoconsiderpossibleapproachesthatpermituserstomeettherequirementsofriskadjustmentdatavalidationconsistentwithallapplicableprivacylaws.
Althoughweappreciatethecomments,theproposedruledidnotproposechangesto§153.
630(b)(6),andwearenotmakinganychangestothatprovisionaspartofthisfinalrule.
a.
VaryingInitialValidationAuditSampleSize(§153.
630(b))Inthe2014PaymentNotice,weestablishedtheriskadjustmentdatavalidationprogramthatHHSuseswhenoperatingriskadjustmentonbehalfofastate.
Consistentwith§153.
350(a),HHSisrequiredtoensurepropervalidationofastatisticallyvalidsampleofriskadjustmentdatafromeachissuerthatoffersatleastoneriskadjustmentcoveredplaninthatstate.
Thecurrentenrolleesamplesizeselectedfortheinitialvalidationauditis200enrolleesstatewide(thatis,combininganissuer'sindividual,smallgroup,andmergedmarketenrollees(asapplicable)inriskadjustmentcoveredplansinthestate)foreachissuer'sHealthInsuranceOversightSystem(HIOS)ID,basedonsamplesizeprecisionanalysesweconductedusingproxydatafromtheMedicareAdvantageprogram.
Thoseanalysescalculatedarangeofsamplesizestotargeta10percentprecisionata95percentconfidencelevel.
Theresultingrangeofsamplesizeswerebetween100and300,andweselected200asamidpoint.
70Inthe2015PaymentNotice,westatedthat,aftertheinitialyearsofriskadjustmentdatavalidation,wewouldevaluateoursamplingassumptionsusingactualenrolleedataandconsiderusinglargersamplesizesforissuersthatarelargerorhavehighervariabilityintheirenrolleeriskscoreerrorrates,andsmallersamplesizesforissuersthataresmallerorhavelowervariabilityintheirenrolleeriskscoreerrorrates.
Wealsostatedthatwewoulduseoursamplingexperienceintheinitialyearsofriskadjustmentdatavalidationtoevaluateusingissuer-specificsamplesizes.
Thecurrentinitialvalidationauditsamplesizeof200wasselectedtoachieveanestimated10percentprecision,assumingadistributionofriskscoreerrorssimilartothatfoundintheMedicareAdvantageriskadjustmentdatavalidationprogram.
However,sincetheHCCgroupfailurerateapproachtoerrorestimation(referredtoastheHCCfailureratemethodology)wasimplementedbeginningwiththe2017benefityearofriskadjustmentdatavalidation,weanticipatethatthecalculatedprecisionwoulddifferfromtheestimateweused,whichwasbasedontheMedicareAdvantageerrorratedata.
Therefore,beginningwiththe2019benefityearofriskadjustmentdatavalidation,71weproposedtovarytheinitialvalidationauditsamplesizeandsetforthindetailandsoughtcommentonseveraldifferentapproachesforvaryingtheinitialvalidationauditsamplesize.
Oneproposedapproachwouldvarytheinitialvalidationauditsamplesizebasedonissuercharacteristics,suchasissuersize,prioryearHCCfailurerates,andsampleprecision.
Wealsosolicitedcommentonanalternativeapproachtoadjustingsamplesizethatwouldincreasesamplesizesbasedonissuersizealone,andwouldcontinuetousetheproxyMedicareAdvantageriskscoreerrorratedatafortheaccompanyingprecisionanalyses.
Additionally,wesolicitedcommentonwhethertheissuers'enrollmentshouldbecalculatedbasedontheyearthatisbeingadjustedorbasedonthebenefityearinwhichtheHCCfailureoccurred.
Inresponsetoacommentwereceivedonthe2019PaymentNoticethatlargersamplesizescouldimprovetheaccuracyofissuers'riskadjustmentdatavalidationsamples,wesolicitedcommentonwhethertopermitissuersofanysizeandHCCfailureratetorequestalargersampleVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00040Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217493FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationssizebeforetheapplicablebenefityear'sinitialvalidationauditcommences.
Finally,wealsoexplainedthatunderthesealternativeapproaches,HHSwouldnotincreasethesampleabove200enrolleeswhenperformingthesecondvalidationauditpairwisemeanstestbecausea200-enrolleesampleissufficienttoachievestatisticalsignificanceinthattest.
Afterconsiderationofthecommentssubmitted,wearenotfinalizinganyincreasetotheinitialvalidationauditsamplesizeatthistime.
Wewillcontinuetoconsiderpotentialchangestoinitialvalidationauditsamplesizesforfuturebenefityearsofriskadjustmentdatavalidation.
Wemayrevisittheseproposals,andmayalsoconsideradditionalalternatives,followingfurtherconsultationwithstakeholdersandfurtheranalysisofactualenrolleedataandnon-pilotyearriskadjustmentdatavalidationresults.
Comment:Anumberofcommentersdidnotsupportvaryingtheinitialvalidationauditsamplesizeatall(regardlessoftheapproachtodoso),andrecommendedthatHHSmaintainthecurrentsamplesizeof200enrollees.
Thesecommentersstatedthatincreasingtheinitialvalidationauditsamplesizewouldcreateundueadministrativeandfinancialburdens,aswellasdisruptiontoplansandtheprovidercommunity,withoutimprovingthequalityofthedatavalidationresults.
Othercommentersgenerallysupportedvaryingtheinitialvalidationauditsamplesize,statingthatlargersamplesizeswouldhelpmeetdesiredprecisiontargets,andlendadditionalcredibilitytoriskadjustmentdatavalidationresults.
Response:Wecontinuetobelievethatlargersamplesizeswouldhelpachievethegoalsofincreasinginitialvalidationauditsampleprecisionandensuringthestatisticalvalidityofthesample.
However,inlightofthecommentsregardingthepotentialuncertaintyrelatedtousing2017benefityearriskadjustmentdatavalidationresultstomakesuchchanges,wearenotfinalizinganychangestotheinitialvalidationauditsamplesizeatthistime.
Wearemaintainingthecurrentinitialvalidationauditsamplesizeof200enrolleesforallissuersofriskadjustmentcoveredplansrequiredtoparticipateintheHHSriskadjustmentdatavalidationprogram.
Wearealsosensitivetotheconcernsaboutthepotentialincreasedburdensforstakeholdersandwillconsiderhowbesttostrikethebalancebetweenmitigatingtheseburdensandincreasingprecisionaswecontinuetoanalyzedifferentapproachesforvaryingsamplesize.
HHSintendstorevisitpotentialchangestoinitialvalidationauditsamplesizesforfuturebenefityearsfollowingfurtherconsultationwithstakeholdersandfurtheranalysisofactualenrolleedataandnon-pilotyearriskadjustmentdatavalidationresults.
Comment:Whileonecommentersupportedtheproposaltouse2017benefityearHCCfailureratestodevelopsamplesizesforthe2019benefityear,anothercommenterdidnotsupportusing2017riskadjustmentdatavalidationresults,becausethecommenterbelievedthatthemethodologywouldnotappropriatelyreflectthe2019benefityearenrolleepopulation.
Thiscommenternotedthatanyenrolleedatausedpriortotheeliminationofthesharedresponsibilitypaymentwouldnotreflectsignificantdifferencesthatcouldaffecttheriskprofileandcompositionofthe2019benefityearpopulation.
Response:Wearenotfinalizinganychangestotheinitialvalidationauditsamplesizeatthistime.
HHSintendstorevisitpotentialchangestoinitialvalidationauditsamplesizesforfuturebenefityearsfollowingfurtherconsultationwithstakeholdersandfurtheranalysisofactualenrolleedataandnon-pilotyearriskadjustmentdatavalidationresults.
Wenotethat2017riskadjustmentdatavalidationprogramyearresultsarethemostrecentresultsthatwouldbeavailableinthe2019benefityear,asaresultoftheoperationaltimingoftheriskadjustmentdatavalidationprogram.
Assuch,wenotethatanyapproachtomodifyriskadjustmentdatavalidationsamplingforanupcomingbenefityearbasedonconsiderationofHCCfailurerates,wouldrelyonpreviousbenefityearfailurerates,asmorerecentdatawouldnotbeavailablepriortowheninitialdatavalidationsamplesaredrawn.
Comment:AfewcommenterssupportedtheproposaltovarytheinitialvalidationauditsamplesizebasedonHCCfailurerates,sampleprecision,andissuersizeastheybelievelargersamplesizeswouldhelpHHSmeetdesiredprecisiontargetsandwouldlendadditionalcredibilitytoriskadjustmentdatavalidationresults.
AnothercommenterencouragedHHStoincreasethesamplesizeasameanstopotentiallyreducedatavalidationerrorrates.
Onecommentersupportedincreasingsamplesizefortheinitialvalidationauditforthoseissuersthatfalloutsideoftheconfidenceinterval.
Severalcommenterssupportedtheproposaltovarytheinitialvalidationauditsamplesizebasedonlyonissuersize,statingthatsamplesizesshouldbestatisticallysignificantandnotcappedat200or400forlargeissuers,andthatlargersamplesizeswouldincreasetheaccuracyoftheriskadjustmentdatavalidationresults.
Commentersalsostatedthatifissuersizeisusedasabasistodeterminetheinitialvalidationauditsamplesize,HHSshouldusetheissuer'senrollmentfortheyearthatisbeingvalidated.
However,manyothercommentersdidnotsupporttheproposaltovarysamplesizebasedonHCCfailurerates,sampleprecision,andissuersize.
OnecommenterstatedHHSshouldonlydosooncethereissufficientcredibleexperiencewiththeHHSriskadjustmentdatavalidationprogram,citingconcernswithmakingsuchchangesbasedon2017benefityeardatavalidationresults,thefirstnon-pilotriskadjustmentdatavalidationyearundertheHHSprogram.
AnothercommenterdidnotsupportthisproposalastheystatediteffectivelydisincentivesissuersfromfocusingonreducingtheirHCCfailureratebecauseanyissuerthatisanoutlierbelowtheconfidenceintervalthresholdwouldbepenalizedbyanincreasedsamplesize.
Thesamecommenteralsonotedthepotentialforannualvariationinsamplesizewouldmakeitdifficultforissuerstoplanforstaffingandresourceneeds.
Othercommentersdidnotsupportvaryingthesamplesizebasedonlyonissuersize,expressingconcernsoverundueadministrativeburdenrelatedtoobtainingmedicalrecordsandsubstantiatingdiagnoses,thefinancialburdenofincreasedadministrativecosts,andtheresultingdisruptiontoplansandtheprovidercommunitywithoutimprovingthequalityofthedatavalidationresults.
Yetanothercommenterstatedthatuntilelectronichealthrecordinteroperabilityandwidespreaddatasharingisimplemented,increasingthesamplesizewouldcreateundueadministrativeburden.
Response:Wesharecommenters'goalsofincreasinginitialvalidationauditsampleprecisionandensuringthestatisticalvalidityofthesample,andwhilewebelievethatincreasedsamplesizescouldhelpachievethesegoals,wearealsosensitivetocommenters'concernsabouttheburdenofanincreasetothesamplesizeandtheuseofresultsfromthefirstnon-pilotyearofriskadjustmentdatavalidationtoestablishlargersamplesizes.
However,whilewerecognizetheseconcerns,wedonotagreewithcommentsthatsuggestedthatincreasedsamplesizeswillactasadisincentiveforissuerstoimprovetheirfailurerates.
WebelievethatincreasingsamplesizewouldVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00041Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217494FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations72Neymanallocationisamethodtoallocatesamplestostratabasedonthestrata'svariancesandsimilarsamplingcostsinthestrata.
ANeymanallocationschemeprovidesthemostprecisionforestimatingapopulationmeangivenafixedtotalsamplesize.
Seehttp://methods.
sagepub.
com/reference/encyclopedia-of-survey-research-methods/n324.
xml.
7383FR16930at16961(April17,2018).
generallyincreasethesampleprecision,andcouldhelpissuersobtainmorefavorableriskadjustmentdatavalidationresultsbycapturingenrolleeswithHCCsthatmayhavebeenmissedinsmallersamples.
Webelievethatthispotentialbenefitwouldgenerallyoutweightheadditionalcostsoflargerinitialvalidationauditsamples.
Asnotedinthisrule,wearenotfinalizinganyincreasetotheinitialvalidationauditsamplesizeatthistime,butintendtorevisittheseproposalsandwillconsiderthecommentsreceivedontheseproposalswhenwerevisitpotentialchangestosamplesizesforfuturebenefityears.
Comment:Onecommentersupportedtheproposaltouse2017benefityearHCCfailureratestodevelopsamplesizesforthe2019benefityear,whileanothercommenteropposedtheuseofprior-yearerrorratesindeterminingsamplesizes.
Onecommenterstatedtheybelievethecurrentriskadjustmentdatavalidationerrorestimationapproachhadseveralflawsthatwouldnotbeadequatelyaddressedbyincreasingtheriskadjustmentdatavalidationsamplesizeforcertainissuers.
Thecommenterstatedthattheseflawsincludedbasingadjustmentstoriskscoressolelyonriskadjustmentdatavalidationoutlierstatus,theuseofnationalbenchmarkswithlargeconfidenceintervals,andadjustmentofcoefficientsbythedifferencebetweenanoutlierissuer'sHCCgroupfailurerateandtheweightedmeanHCCfailurerate.
Thecommenterstatedthatratherthanincreasingthesamplesizeforcertainissuersandbuildingonaflawedprocess,HHSshouldreevaluatetheriskadjustmentdatavalidationmethodologyinitsentirety.
Anothercommenteropposedallowingissuerstorequestalargersamplesize,statingthatallowingsuchrequestscouldprovideopportunitiesforissuerstointentionallyaffectthedatavalidationresultsofotherissuersanddisproportionatelyaffectHCCfailureratesandconfidenceintervals.
Severalcommenterssuggestedalternativeapproachestovarytheinitialvalidationauditsamplesize.
Onecommentersuggestedadoptingsamplesizesbasedonstatisticalsignificancewitha90percentconfidenceintervalandsuppressionofpositiveoutlierresamplingforissuersthathavedemonstratedalowHCCerrorrateovermultipleyears.
AnothercommenterstatedHHSshouldreplacethecurrentrandomsampleof200enrolleeswithadata-driventargetedprocessthatidentifiessituationsthatwarrantinvestigation.
AnothercommenterrecommendedHHSevaluatewaystoensureproviders'timelysubmissionoftheneededinformationanddocumentationtovalidatethediagnosescapturedonthemedicalrecord(s).
AnothercommenterdidnotagreethatHHSshouldcontinuetousetheMedicareAdvantageriskscoreerrorratedatatodetermineprecision,andrecommendedthatHHSusetheavailablecommercialriskadjustmentdatastartingwiththe2020benefityearofriskadjustmentdatavalidation.
Anothercommenterstatedthatiflargersamplesizeswereadopted,issuerswithplansinmultiplestatesshouldbegiventheoptiontousetheexistingsamplesizesfortheinitialvalidationaudit.
Response:Weremaininterestedinexploringwaystoincreasesampleprecisionandthestatisticalvalidityoftheinitialvalidationauditsampleandappreciatethedifferentapproachesoffered.
Wearesensitivetocommenters'concernsabouttheproposalsoutlinedintheproposedruleandbelievethatfurtheranalysisisneededbeforemakingchangestosamplesizes.
Therefore,atthistime,wearenotfinalizinganyincreasetotheinitialvalidationauditsamplesizeandaremaintainingthecurrentsamplesizeof200enrollees.
Wewillrevisittheseproposals,alongwiththecommentssubmitted,andmayconsideralternativesfollowingconsultationwithstakeholdersandfurtheranalysisofavailabledata.
Werespondtocommentsontheriskadjustmentdatavalidationerrorestimationmethodologyinthepreamblebelow.
b.
InitialValidationAuditSampleSize—10thStratumandNeymanAllocation(§153.
630(b))Intheinitialyearsofriskadjustmentdatavalidation,weconstrainedthe''10thstratum''oftheinitialvalidationauditsample—thatis,enrolleeswithoutHCCsselectedfortheinitialvalidationauditsample—tobeone-thirdofthesampledinitialvalidationauditenrollees.
Underthiscurrentapproach,theremaining9age-riskstratawereselectedusingaNeymanallocation72whichoptimizesthenumberofenrolleesperstratumfortheremainingtwo-thirdsofsampledenrollees.
BecauseweexpectedenrolleeswithoutHCCstomakeupthemajorityofissuers'enrollees,intheabsenceofdatafromtheindividualandsmallgroupmarkets,weconstrainedstratum10toensurethathealthyenrolleesweresampledintheinitialyearsofriskadjustmentdatavalidationtoestablishadequatesamplingassumptions.
Intheproposedrule,weproposedtoextendtheNeymanallocationsamplingmethodologytoalsoincludethe10thstratumofenrolleeswithoutHCCs,suchthatsampleswillbeassignedtoall10stratausingaNeymanallocation.
SinceaNeymanallocationapproachisexpectedtoprovideamoreoptimalsamplesizeallocation,weexplainedthatwebelieveusingtheNeymanallocationforallstratawouldoptimizeissuers'initialvalidationsamplesandyieldbetterprecisionthantheone-third/two-thirdsapproachcurrentlyusedintheenrolleeinitialvalidationauditsample.
Further,anapproachthatpermitsforalargerportionofthesampletobeallocatedtotheHCCstrataascomparedtothetwo-thirdsallocationusedinthecurrentapproachwouldresultinamorerobustHCCsampleinsupportofthemeasurementofHCCfailureratesundertheHCCfailureratemethodologyfinalizedinthe2019PaymentNotice.
73Finally,itwouldincreasetheprobabilityofachievingouroriginaltargetof10percentprecisionbasedonourhistoricalobservationsofgreatererrorratevariancesamongtheHCCstrata.
WearefinalizingtheextensionoftheNeymanallocationsamplingmethodologytothe10thstratum,asproposed.
Comment:SomecommenterssupportedextendingtheNeymanallocationsamplingmethodologytothe10thstratum,statingthatdoingsowouldeffectivelycreateanincreaseinthesizeofthesampleactuallyavailabletovalidatetheHCCssubmittedtoissuerEDGEservers.
ThesecommentersnotedthisapproachwouldpermitforalargerportionofthesampletobeallocatedtotheHCCstrataascomparedtothetwo-thirdsallocationusedinthecurrentapproach,therebyresultinginamorerobustHCCsampleinsupportofthemeasurementofHCCfailureratesundertheHCCfailureratemethodologyfinalizedinthe2019PaymentNotice.
However,othercommentersdidnotsupportthisproposal,astheywereconcernedthatincreasingthenumberofsampledmemberswithHCCswouldcreateundueadministrativeandfinancialburdenonplansandtheprovidercommunitywithoutimprovingthequalityofthedatavalidationresultsoraddressingtheirperceivedflawsoftheriskadjustmentdatavalidationsampling.
VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00042Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217495FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations7481FR94106.
75See78FRat72334through72337and79FRat13761through13768.
76See§§153.
630(d)(1)and153.
710(d).
7779FRat13769.
Response:WearefinalizingtheextensionoftheNeymanallocationsamplingmethodologytoalsoincludethe10thstratumofenrolleeswithoutHCCs,suchthatsampleswillbeassignedtoall10stratausingaNeymanallocation.
Asnotedbysomecommenters,thisisexpectedtoprovideamoreoptimalsamplesizeallocationthanthecurrentone-third/two-thirdsapproach.
WebelievethiswillalsoallowustoachievegreaterprecisionintheHCCerrorratemethodologybyexpandingtheportionofthesamplethatmaybeallocatedtotheHCCstrata(thatis,strata1through9)becauseofthepotentialforamorerobustHCCsamplethanthecurrentapproachprovides.
WearefinalizingtheextensionoftheNeymanallocationsamplingmethodologytoalsoincludethe10thstratumofenrolleeswithoutHCCs,suchthatsampleswillbeassignedtoall10stratausingaNeymanallocation.
Asnotedbysomecommenters,thisisexpectedtoprovideamoreoptimalsamplesizeallocationthanthecurrentone-third/two-thirdsapproach.
WebelievethiswillalsoallowustoachievegreaterprecisionintheHCCerrorratemethodologybyexpandingtheportionofthesamplethatmaybeallocatedtotheHCCstrata(thatis,strata1through10)becauseofthepotentialforamorerobustHCCsamplethanthecurrentapproachprovides.
WefurtherbelievethatthebenefitsofmoreaccurateinitialvalidationsamplesgenerallyoutweightheadditionalburdenofincreasedsamplesizesbycapturingenrolleeswithHCCsthatmayhavebeenmissedinsmallersamples.
However,asdiscussedabove,wewillmonitortheimpactofthischangeandcontinuetoconsidermodificationstotheinitialvalidationauditsamplingapproachforfuturebenefityearsinconsultationwithstakeholders.
c.
SecondValidationAuditFindingsandErrorRateDiscrepancyReporting(§153.
630(d)(2))Under§153.
630(d)(2),issuershave30calendardaystoconfirmthefindingsofthesecondvalidationauditorthecalculationoftheriskscoreerrorrate,orfileadiscrepancyreport,inthemannersetforthbyHHS,todisputetheforegoing.
Weproposedtoamendparagraph(d)(2)toshortenthewindowtoconfirmthefindingsofthesecondvalidationaudit(ifapplicable)orthecalculationoftheriskscoreerrorrate,orfileadiscrepancy,towithin15calendardaysofthenotificationbyHHS,beginningwiththe2018benefityearriskadjustmentdatavalidation.
Inlightofcommentsreceived,wewillnotshortenthetimeframeunder§153.
630(d)(2)to15calendardaysatthistime,andwillmaintaintheexisting30-calendardaywindowforissuerstoconfirmthefindingsofthesecondvalidationaudit(ifapplicable)orthecalculationortheriskscoreerrorrate.
Wealsoclarifiedintheproposedrulethattherearetwodiscrepancyreportingwindowsunder§153.
630(d)(2).
First,attheconclusionofthesecondvalidationaudit,wewilldistributetoissuerstheirsecondvalidationauditfindingsintheeventthereisinsufficientagreementbetweentheinitialandsecondvalidationauditresultsduringthepairwisemeansanalysis,andthesecondvalidationauditfindingswillbeusedfortheriskscoreerrorratecalculation.
Thewindowforissuerswhoreceivesecondvalidationauditfindingstoconfirmthefindingsorfileadiscrepancy,inamannersetforthbyHHS,wouldbeginwhenthesecondvalidationauditfindingsreportsareissued.
Second,attheconclusionoftheriskscoreerrorratecalculationprocess,wewilldistributetheriskscoreerrorratecalculationresultstoallissuersforthegivenbenefityear.
Oncetheriskscoreerrorratecalculationresultsaredistributed,thewindowtoconfirmtheresultsorfileadiscrepancy,inthemannersetforthbyHHS,wouldbegin.
Wereiterated,consistentwiththeapproachfinalizedinthe2018PaymentNotice,thatissuersarenotpermittedtoappealtheresolutionofanydiscrepancydisputingtheinitialvalidationauditsample,ortofileadiscrepancyorappealtheresultsoftheinitialvalidationaudit.
74Asdetailedinthe2015PaymentNotice75anddiscussedlaterinthisfinalrule,ifsufficientpairwisemeansagreementisachieved,theinitialvalidationauditfindingswillbeusedforpurposesoftheriskscoreerrorratecalculation,andtherefore,thoseissuerswillonlybepermittedtofileadiscrepancyorappealtheriskscoreerrorratecalculation.
Finally,weproposedtoamend§153.
630(d)(2)toreplacethephrase''auditanderrorrate''forwhichanissuermustconfirmorfileadiscrepancythatappearsattheendoftheprovisionwith''thefindingsofthesecondvalidationaudit(ifapplicable)orthecalculationofariskscoreerrorrateasaresultofriskadjustmentdatavalidation.
''Wearefinalizingtheamendmentsto§153.
630(d)(2)asproposed,exceptfortheproposedshorteningoftheapplicabletimeframefrom15to30calendardays.
Thefollowingisasummaryofthepubliccommentswereceivedonourproposalsregardingthesecondvalidationauditfindingsandriskscoreerrorratediscrepancyreportingwindowsunder§153.
630(d)(2).
Comment:Commentersoverwhelminglyopposedshorteningthediscrepancywindowsforriskadjustmentdatavalidation,withafewsuggestingthatHHSrevisittheideaafteranon-pilotyearofriskadjustmentdatavalidationhasoccurred.
Severalcommenterssuggestedweexamineotherareasoftheriskadjustmentdatavalidationtimelinetopossiblymakeshorter.
Response:Inlightofcommentsreceived,wearenotfinalizingtheproposaltoshortenthediscrepancyreportingwindowunder§153.
630(d)(2)from30to15calendardays.
Although15calendardaysisconsistentwiththeinitialvalidationauditsampleandEDGEdiscrepancysubmissionwindows,76weagreethatsuchachangeshouldnotbemadeuntilaftercompletionofthefirstnon-pilotyearofriskadjustmentdatavalidationandwehavemoreexperiencewiththeprocess.
Additionally,wewillcontinuetoexamineopportunitiestorefinetheriskadjustmentdatavalidationtimelineforfuturebenefityears.
d.
DefaultDataValidationChargeUnder§153.
630(b)(10),ifanissuerofariskadjustmentcoveredplanfailstoengageaninitialvalidationauditororsubmitinitialvalidationauditresults,weimposea''defaultdatavalidationcharge,''whichtheregulationcurrentlyreferstoinparagraph(b)(10)asa''defaultriskadjustmentcharge.
''Asexplainedinthe2015PaymentNotice,thedefaultdatavalidationchargeiscalculatedinthesamemannerasthedefaultriskadjustmentchargeunder§153.
740(b).
77Withthe2017benefityearbeingthefirstnon-pilotyearofriskadjustmentdatavalidation,andthefirstyearforwhichHHSmayimposethedefaultdatavalidationchargefornoncompliancewithapplicabledatavalidationrequirements,weproposedseveralamendmentstofurtherdistinguishthedefaultdatavalidationchargeassessedunder§153.
630(b)(10)fromthedefaultriskadjustmentchargeassessedunder§153.
740(b).
First,weproposedtoamend§153.
630(b)(10)toreplacethephrase''HHSwillimposeadefaultriskadjustmentcharge''with''HHSwillimposeadefaultdatavalidationcharge.
''ThischangeisintendedtomoreclearlydistinguishVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00043Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217496FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations78Exceptasotherwiseprovidedinthisfinalrule,thedefaultdatavalidationchargeiscalculatedinthesamemannerastheriskadjustmentdefaultchargeunder§153.
740(b).
See79FRat13769.
Asestablishedinthe2015PaymentNotice,aPMPMdefaultchargeisequaltotheproductofthestatewideaveragepremium(expressedasaPMPMamount)forariskpoolandthe75thpercentileplanrisktransferamountexpressedasapercentageoftherespectivestatewideaveragePMPMpremiumsfortheriskpool.
See79FRat13790.
Whilethispercentilewassubsequentlyadjustedtothe90thpercentileinthe2017PaymentNotice,thePMPMamountisotherwisecalculatedinthesamemanner.
See81FRat12237.
The2020PaymentNoticeproposedruledidnotpropose,andthisfinalruledoesnotmake,anychangestothisaspectofthecalculationofthedefaultdatavalidationcharge.
Inthe2015PaymentNoticeat79FR13790,weprovidedthatEncouldbecalculatedusinganenrollmentcountprovidedbytheissuer,enrollmentdatafromtheissuer'sMLRandriskcorridorsfilingsfortheapplicablebenefityear,orotherreliabledatasources.
Theproposedruledidnotpropose,andthisfinalruledoesnotmake,anychangestothesourcesthatcouldbeused.
79Ibid.
betweenthetwoseparateriskadjustment-relateddefaultcharges.
Second,weproposedtomodifyhowthedefaultdatavalidationchargeunder§153.
630(b)(10)wouldbecalculated.
Whilewewouldgenerallycontinuetocalculatethedefaultdatavalidationchargeinthesamemannerastheriskadjustmentdefaultchargeunder§153.
740(b),weproposedtocalculatethedefaultdatavalidationchargebasedontheenrollmentforthebenefityearbeingauditedinriskadjustmentdatavalidation,ratherthanthebenefityearduringwhichtransferswouldbeadjustedasaresultofriskadjustmentdatavalidation.
Bywayofexample,ifanissuerissubjecttothedefaultdatavalidationchargeforthe2021benefityearriskadjustmentdatavalidationanditoffersriskadjustmentcoveredplansinthesamestatemarketriskpoolinthe2022benefityear,itsdefaultdatavalidationchargewouldbecalculatedbasedon2021benefityearenrollmentdata(ratherthan2022benefityearenrollmentdata).
Underthisexample,thedefaultdatavalidationchargethisissuerwouldreceiveforfailingtocomplywiththe2021benefityearriskadjustmentdatavalidationrequirementswouldequalapermemberpermonth(PMPM)amountforthe2021benefityearmultipliedbytheplan'senrollmentforthe2021benefityearasfollows:Tn=Cn*EnWhere:Tn=totaldefaultdatavalidationchargeforaplann;Cn=thePMPMamountforplann;78andEn=thetotalenrollment(totalbillablemembermonths)forplann.
79Third,weproposedtoamendtheallocationapproachfordistributionofdefaultdatavalidationchargesamongissuers.
Weproposedtoallocateadefaultdatavalidationchargetotheriskadjustmentdatavalidationissuersthatwerepartofthesamebenefityearriskpool(s)asthenoncompliantissuer.
However,wewouldnotallocatedefaultdatavalidationchargestoanyothernoncompliantissuersinthesamebenefityearriskpool(s).
Thisapproachisconsistentwiththemethodologyforallocatingthedefaultriskadjustmentchargesunder§153.
740(b),andincludesallissuersinthesamebenefityearriskpool(s)thatcouldbesubjecttoariskscoreadjustmentastheresultofotherissuers'riskadjustmentdatavalidationresults.
Issuersinthesamebenefityearriskpool(s)thatareexemptfromtheriskadjustmentdatavalidationrequirementswouldalsobeincludedintheallocationofanydefaultdatavalidationcharges.
Therefore,weproposedtoallocateanydefaultdatavalidationchargescollectedfromnoncompliantissuersamongthecompliantandexemptissuersinthesamebenefityearriskpool(s)inproportiontotheirrespectivemarketsharesandriskadjustmenttransferamountsforthebenefityearbeingauditedforriskadjustmentdatavalidation.
Asanillustrativeexample,assumethereare4issuers(A,B,C,andD)intheindividualnon-catastrophicriskpoolinstateXforthe2017benefityear,andanadditionalissuer,E,inthe2018benefityearindividualnon-catastrophicriskpoolinstateX.
Assume:IssuerAdoesnotcomplywithriskadjustmentdatavalidationrequirementsforthe2017benefityearandisassessedadefaultdatavalidationcharge.
IssuerBwasexemptfromriskadjustmentdatavalidationforthe2017benefityearbecauseitwasasmallissuer(thatis,ithad500orfewerbillablemembermonthsstatewideinstateX).
IssuersCandDcompliedwithapplicable2017benefityearriskadjustmentdatavalidationrequirements.
IssuerEwasnotintheindividualnon-catastrophicriskpoolinstateXfor2017.
IssuerA'sdefaultdatavalidationchargewouldbeallocatedtoissuersB,C,andDinproportiontotheir2017benefityeartransferamountsandmarketshares.
WhileIssuerBwasnotsubjecttoriskadjustmentdatavalidationforthe2017benefityear,itwasstillpartofthesamestatemarketriskpoolandwouldbesubjecttopossibleriskscoreadjustmentsduetotheriskadjustmentdatavalidationresultsofIssuersCandD.
SinceIssuersCandDalsoparticipatedintheindividualnon-catastrophicriskpoolinstateXfor2017andcompliedwithapplicabledatavalidationrequirements,theywouldalsoreceivepartofIssuerA'sdefaultdatavalidationcharge.
However,IssuerEwasnotpartoftheindividualnon-catastrophicriskpoolinstateXuntilthe2018benefityear,andtherefore,wouldnotreceiveanypartofIssuerA's2017benefityeardefaultdatavalidationcharge.
Intheproposedrule,wenotedthatweintendtopublishthedefaultdatavalidationchargeinformationinthebenefityear'sreport(s)releasedunder§153.
310(e)inwhichtransfersareadjustedbasedonriskadjustmentdatavalidationresults.
Wealsoexplainedthat,followingreleaseofthereportunder§153.
310(e),theseamountswouldthenbeincludedaspartofthemonthlypaymentandcollectionprocessesdescribedin§156.
1215alongsidethecollectionofriskadjustmentchargesandpaymentscalculatedundertheHHSriskadjustmentmethodologyfortheapplicablebenefityear.
Fourth,weclarifiedthatadefaultdatavalidationchargeunder§153.
630(b)(10)isseparatefromriskadjustmenttransfersforagivenbenefityear,unlikeadefaultriskadjustmentchargeunder§153.
740(b),whichreplacestheissuer'stransferamountforthatbenefityear.
Forexample,ifanissuerfailstosubmitinitialvalidationauditresultsforthe2017benefityear,itwouldreceiveadefaultdatavalidationchargebasedon2017benefityeardatacalculatedinaccordancewiththeformulaoutlinedinthisfinalrule.
Thisdefaultdatavalidationchargeforthe2017benefityearwouldbeinadditionto,andseparatefrom,theissuer's2018benefityearriskadjustmentpaymentorchargeamountascalculatedundertheHHS-operatedriskadjustmentmethodology.
Thismeansthatanissuermayowebothariskadjustmentchargeandadefaultdatavalidationcharge(forexample,anissuercouldoweariskadjustmentchargeforthe2018benefityearandadefaultdatavalidationchargeforthe2017benefityearriskadjustmentdatavalidation).
Similarly,anissuermayoweadefaultriskadjustmentchargeforagivenbenefityear,alongsideadefaultdatavalidationchargeforthebenefityearbeingaudited(forexample,anissuercouldoweadefaultriskadjustmentchargeforthe2018benefityear,aswellasadefaultdatavalidationchargeforthe2017benefityear).
WeofferedtheseproposalsandclarificationsabouthowHHSwillassessandallocatethedefaultdatavalidationchargeatthistimetoallowissuerstobetterunderstandtheVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00044Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217497FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations8083FR16965.
8178FR15437.
8279FR13761.
implicationsofnoncompliancewithinitialvalidationauditrequirementsasriskadjustmentdatavalidationoperationstransitionawayfromthepilotyearsoftheprogram.
Wearefinalizingtheamendmentsto§153.
630(b)(10),aswellastheproposedchangestothecalculationandallocationofthedefaultdatavalidationcharge,asproposed.
Asoutlinedfurtherbelow,wearemodifyingthetimingforpublication,collectionanddistributionofthedefaultdatavalidationcharges.
Comment:Commenterswereinfavorofbasingthedefaultdatavalidationchargeontheenrollmentoftheyearbeingauditedratherthantheyearbeingadjusted.
Onecommenterrequestedthatweclarifytheallocationmethodologyforissuersthathaveexitedthemarket.
Response:Wearefinalizingtheproposalsrelatedtothedefaultdatavalidationcharge,butaremodifyingthetimingforpublication,collection,anddistributionofthedefaultdatavalidationcharges.
RatherthanreleasingthisinformationaspartoftheannualsummaryriskadjustmenttransferreportreleasedbyJune30,informationondefaultdatavalidationchargesandallocationswillbepublishedaspartoftheseparateannouncementofriskadjustmentdatavalidationresultsandrelatedadjustmentstoriskadjustmenttransfersfortheapplicablebenefityearsothatissuerswillnothavetoconsultmultiplereportsforinformationonpaymentsandchargesrelatedtoriskadjustmentdatavalidation.
Defaultdatavalidationchargeamountswillbeincludedaspartofthemonthlypaymentandcollectionprocessesdescribedin§156.
1215alongsidethecollectionanddistributionoftheriskadjustmentdatavalidation-relatedadjustmentstoriskadjustmenttransfers.
Pleaserefertothepreamblesectionbelowonnegativeerrorrateoutliermarketsforfurtherdetailsontheupdatedtimelineforpublicationofriskadjustmentdatavalidationresults,aswellascollectionanddisbursementofriskadjustmentdatavalidationrelatedadjustmentstoriskadjustmenttransfers.
Weclarifythatifanissuerisinastatemarketriskpoolwithanoncompliantissuerinagivenbenefityear,andthenexitsthestatemarketriskpoolinthesubsequentbenefityear,itwillstillbeeligibletoreceiveitsportionoftheallocationfromthenoncompliantissuer'sdefaultdatavalidationcharge.
Thisapproachisconsistentwiththegeneralpolicyestablishedinthe2019PaymentNotice80toadjustexitingissuers'riskadjustmenttransfersbasedonriskadjustmentdatavalidationresults,anditallowsthosewhoarecompliantwithapplicableriskadjustmentdatavalidationrelatedadjustmentstogainthebenefitofanallocationamount.
e.
SecondValidationAuditPairwiseMeansTestInthe2014PaymentNotice,weprovidedthatasecondvalidationauditwillbeconductedbyanentityretainedbyHHStoverifytheaccuracyofthefindingsoftheinitialvalidationaudit.
81Consistentwith§153.
630(c),HHSmustselectasubsampleoftheriskadjustmentdatavalidatedbytheinitialvalidationauditforthesecondvalidationaudit.
Inthe2015PaymentNotice,weindicatedthattoselectthesubsample,thesecondvalidationauditorwilluseasamplingmethodologythatallowsforpairwisemeanstestingtoestablishastatisticaldifferencebetweentheinitialandsecondvalidationauditresults.
82Thispairwisemeanstestusesa95percentconfidenceinterval(andastandarddeviationof1.
96).
Todopairwisemeanstestingunderthecurrentapproach,thesecondvalidationauditortestsasubsampleofenrolleesfromanissuer'sinitialvalidationauditsampleof200enrollees.
Ifthepairwisemeanstestresultsforasubsampleindicatethatthedifferenceinenrolleeresultsbetweentheinitialandsecondvalidationauditsisnotstatisticallysignificant,theinitialvalidationauditresultsareusedforcalculationofHCCfailureratesandriskscoreerrorrates.
Ifthepairwisemeanstestresultsforthesubsampleyieldastatisticallysignificantdifference,thesecondvalidationauditorperformsanothervalidationauditonalargersubsampleofenrolleesfromtheinitialvalidationaudit.
Theresultsfromthesecondvalidationauditofthelargersubsampleareagaincomparedtotheresultsoftheinitialvalidationauditusingthepairwisemeanstestwithasubsamplesizeofupto100enrollees.
Ifthereisnostatisticallysignificantdifferencebetweentheinitialandsecondvalidationauditsofthelargersubsample,HHSwillapplytheinitialvalidationauditerrorresultstocalculatetheHCCfailureratesandriskscoreerrorrates.
However,ifastatisticallysignificantdifferenceisfoundbasedonthesecondvalidationauditofthelargersubsampleupto100enrollees,HHSwillapplythesecondvalidationauditresultstothelargersubsampletocalculatetheHCCfailureratesandriskscoreerrorrates.
Basedontheresultsofthesecondvalidationauditforthe2016riskadjustmentdatavalidationpilotyear,weproposedtomodifythestatisticalsubsamplingmethodologytofurtherexpandthecomparisonofresultsbetweentheinitialandsecondvalidationaudits.
Specifically,whenthelargersubsample(ofupto100enrollees)resultsindicateastatisticallysignificantdifference,webelievethatfurthersamplingbythesecondvalidationauditorisnecessaryandappropriatetodeterminewhetherthesecondvalidationauditresultsfromthefullsampleshouldbeusedinplaceoftheinitialvalidationauditresults.
Therefore,weproposedthat,ifastatisticallysignificantdifferenceisfoundbasedonthesecondvalidationauditofthelargersubsample(ofupto100enrollees),HHSwouldexpanditssampletothefullinitialvalidationauditsampletoconsiderwhetherthesecondvalidationauditresultsofthefullsampleorthesubsample(ofupto100enrollees)resultsshouldbeusedinplaceofinitialvalidationauditresults.
Allowingthefurthertestingofthesampleprovidesassuranceandconfidenceinthesecondvalidationauditresultsandtheassociatederrorestimationratethatwillultimatelybeusedtoadjustriskscoresandtransfers.
Todeterminewhethertoexpandthesecondvalidationaudittothefullinitialvalidationauditsample,weproposedtouseaprecisionanalysis.
Weproposedtouseprecisionmetrics,includingthestandarderrorandconfidenceintervals,todetermineifthesecondvalidationauditreviewofthelargersubsample(ofupto100enrollees)isofhighorlowprecision.
Iftheresultsofthesecondvalidationauditprecisionanalysisdeterminedthattheprecisionlevelishigh,weproposedthatHHSwouldusethesecondvalidationauditresultsforthelargersubsample(ofupto100enrollees)inplaceoftheinitialvalidationauditresultsfortheerrorestimationandcalculationofadjustmentsforplanaverageriskscore,asapplicable.
However,ifthesecondvalidationauditprecisionanalysisforalargersubsample(ofupto100enrollees)determinedthattheprecisionlevelwaslow,thesecondvalidationauditwouldexpandandusethefullinitialvalidationauditsampleof200enrolleesforerrorestimationandcalculationofadjustmentsforplanaverageriskscore.
Wearefinalizingthisapproachasproposed.
Comment:Onecommenterstatedthatitbelievedtheproposalwouldnotsubstantiallyimprovetheprocess.
VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00045Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217498FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsAnothercommenterdidnotexplicitlyopposetheproposal,butsuggestedbetterpairwiseaccuracycouldbeachievedthroughincreasededucationandoutreach.
Response:HHShasaninterestinprovidingissuerseveryopportunitytousetheresultssubmittedbytheinitialvalidationauditentityandattestedtobytheissuerbeforetakingthestepofreplacingthoseresultswithsecondvalidationauditfindings.
Expandingthesubsamplefurtherandthentestingprecisionwhenthelargersubsample(ofupto100enrollees)resultsindicateastatisticallysignificantdifferenceallowsadditionalopportunitytofindtheinitialvalidationauditfindingsarevalid.
Wedisagreewiththecommenterthattheseproposalswouldnotsubstantiallyimprovetheprocess.
Onthecontrary,webelievethatallowingfurthertestingofthesampleprovidesassuranceandconfidenceintheauditresultsandtheassociatederrorestimationratethatwillultimatelybeusedtoadjustriskscoresandtransfers.
Therefore,wearefinalizingthisapproachasproposed.
Weremaincommittedtoprovidingtrainingandsupportasneededtoimprovetheinitialvalidationauditprocessandsubsequentpairwiseresults.
f.
ErrorEstimationforPrescriptionDrugsIntheproposedrule,weproposedseveraloptionsforincorporatingRXCsintheriskadjustmentdatavalidationprocessesbeginningwiththe2018benefityearriskadjustmentdatavalidation.
BecausetheincorporationofpaymentRXCsintotheriskadjustmentmodelsforadultsbeganwiththe2018benefityear,wediscussedwhethermodificationwasappropriatetotheerrorestimationmethodologytotakeintoaccounttheRXCfailureratesaspartoftheHHSriskadjustmentdatavalidationprocessandweproposedvariouswaystoincorporateRXCsintoriskadjustmentdatavalidationprocesses,includingaddingRXCstotheerrorestimationmethodologybytreatingRXCssimilartoHCCs.
ThefirstproposalthatweoutlinedwouldincorporateRXCsintotheHCCfailureratemethodologybyaddingeachRXCasaseparatefactor,similartoan''HCC'',forclassificationintothelow,medium,andhighHCCgroupsdeterminedbythenationalfailureratesforeachRXC.
Toapplythischangetotheerrorestimationmethodologyfinalizedinthe2019PaymentNotice,weproposedthedefinitionofsuperscripthwouldexpandtoalistofcodesincludingboththe128HCCsand12RXCswherebyHHSwouldfirstcalculatethefailurerateforeachHCCandRXCinissuers'samplesas:Where:h_risthesetofcodesincluding128HHSHCCsand12RXCs.
Freq_EDGEh-risthefrequencyofHCCcodehorRXCcoderoccurringonEDGE,whichisthenumberofsampledenrolleesrecordingHCCcodehorRXCcoderonEDGE.
Freq_IVAh-risthefrequencyofHCCcodehorRXCcoderoccurringininitialvalidationauditresults,whichisthenumberofsampledenrolleeswithHCCcodehorRXCcoderininitialvalidationauditresults.
FRh-risthefailurerateofHCCcodehorRXCcoder.
HHSwouldthencreatethree''HCC/RXC''groupsbasedontheHCCfailureratesandRXCfailureratesderivedintheabovecalculation.
These''HCC/RXC''failurerategroupswouldrankallHCCfailureratesandRXCfailureratestoassigneachuniqueHCCandRXCintheinitialvalidationauditsamplestoahigh,medium,orlowfailurerategroup.
ToassigneachHCCandRXCtoa''HCC/RXC''failurerategroup,weproposedtousethecurrentHCCfailureraterankingmethodologythatrankseachHCC/RXCfailureratedividedintothreegroupingsbasedonweightedtotalobservationsorfrequenciesofthatHCC/RXCacrossallissuers'initialvalidationsample,orassigningHCCsandRXCsfailureratesbytakingintoconsiderationtherankingofrelatedHCCsandRXCsinthegrouping.
Underthisapproach,wewouldmaintainasingleclassificationforHCCandRXChigh,medium,orlowgroups,insteadofcreatingtwoseparateclassificationsofRXCsandsinglecomponentHCCs.
Alternatively,weproposedincorporatingRXCsasaseparate''HCC''groupingintheerrorestimationmethodology.
Underthisapproach,wewouldkeepthe128HCCsinthethreegroups,butcombineallRXCsintoanadditional,fourthseparategroup.
Therefore,separateRXCandHCCsgroupswouldbecreated,andtheirfailurerateswouldbecomputedwithinthosefourgroupings.
ThisapproachtogroupRXCswouldbethesameasforHCCgroupings,whichisbasedonthefailureratesFRrofthe12RXCs:VerDateSep201418:31Apr24,2019Jkt247001PO00000Frm00046Fmt4701Sfmt4725E:\FR\FM\25APR2.
SGM25APR2ER25AP19.
001ER25AP19.
002khammondonDSKBBV9HB2PRODwithRULES217499FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsWhere:risthesetof12RXCs.
Freq_EDGEristhefrequencyofRXCcoderoccurringonEDGE,whichisthenumberofsampledenrolleesrecordingRXCcoderonEDGE.
Freq_IVAristhefrequencyofRXCcoderoccurringininitialvalidationauditresults,whichisthenumberofsampledenrolleeswithRXCcoderininitialvalidationauditresults.
FRristhefailurerateofRXCcoder.
WhileweassumedthatRXCsmaybeeasiertovalidate,thisproposedapproachcouldtakeintoconsiderationthepotentialdifferingfailurerateswithintheRXCgroupingsasopposedtothesinglecomponentHCCgroupings,orisolatetheRXCfailureratestoaseparategroupingfromHCCsbeforeapplyingthosefailureratestotheerrorratecalculation.
Thisalternativeapproachwouldhavealsoresultedinanadditionalgroupingintheerrorestimationmethodology,andhavingmoregroupingsmeansthatthenumberofgroupingswhereitispossibleforanissuertobeanoutlierwouldincrease.
Further,intheeventthatallRXCsdonothavesimilar,lowfailurerates,theconfidenceintervalforanRXC-onlygroupcouldbequitelarge,resultinginasignificantdifferencebetweentheoutliers'failureratestothegroup'sfailureratemean,andbyextension,couldresultinalargerfailurerateadjustmentfactorfortheRXC-onlygroup.
InadditiontoadoptingoneoftheaboveapproachestogroupRXCsaspartoftheerrorestimationmethodology,wewouldalsoneedtoincorporateRXCsintotheerrorratecalculationundertheerrorestimationmethodology.
Todoso,weproposedthreealternativeapproachestoincorporateandadjustforRXCsandRXC–HCCinteractionfactorsintheerrorratecalculation.
OneoptionthatweproposedtoincorporatetheRXCsintheerrorratecalculationwastoaddRXCstothecurrentmethodologyofcalculatingerrorrates,withoutaccountingforanyHCC–RXCinteractionfactors.
ToincorporateRXCsinthecurrenterrorratecalculationunderthisoption,weproposedtomodifytheformulatocalculateanenrollee'sadjustmentAdjustmenti,easfollows:BILLINGCODE4150–28–PVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00047Fmt4701Sfmt4725E:\FR\FM\25APR2.
SGM25APR2ER25AP19.
003khammondonDSKBBV9HB2PRODwithRULES217500FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00048Fmt4701Sfmt4725E:\FR\FM\25APR2.
SGM25APR2ER25AP19.
017khammondonDSKBBV9HB2PRODwithRULES2ThisapproachwouldbethesimplestapproachtoadjustingRXCsintheerrorratecalculation,asRS~~Ggenerallyretainsthesamedefinitionasinthe2019PaymentNotice83forRsr~c,Gandtheresultingcalculationwouldbecompletedasfollows:RS~,G=RS~_hhcfrxc,Gt,et,eWhere:RS~;hhcfrxc,GistheriskscorecomponentofacodecasasingleHCCorRXC,withoutconsideringtheinteractioncoefficientsbetweencodecandothercodesforEnrolleeeofIssueri.
However,thisapproachwouldmeanthattheinteractionoftheriskscorecoefficientsbetweenthesinglecomponentHCCandtheRXCwouldnotbeconsideredintheerrorratecalculation,whichmaybeanoversimplificationofthiscalculation.
Asasecondalternative,wesolicitedcommentsontheadjustmentoftheRXCsintheerrorratecalculationaspartoftheriskscorecoefficientforasinglecomponentHCCbyadjustingtheriskscorecoefficientoftheRXC-HCCinteractionfactor,ifthecoefficientexists.
ThisstepwouldstartwiththecoefficientforasinglecomponentHCCandRXCandthenadjustbothsinglecomponentcoefficientswiththefullinteractiontermforboththeHCCandRXCtocalculatetheerrorrate.
Underthisapproach,ifthereisnocoefficient,thesinglecomponentHCCandRXCwouldnotbeadjustedbyaninteractionterm.
Underthisapproach,RS~~Gwouldbedefinedas:RS~,G=RS~_hccfrxc,G+RS~_x_hXr,Gt,et,et,e8383FR16930at16963.
17501FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations84See83FR16930at16970through16971.
BILLINGCODE4150–28–CThepurposeofthissecondalternativeforincorporatingRXCsintheerrorratecalculationwastocapturethesampledenrollee'scharacteristicsandinteractionbetweenthesinglecomponentHCCandRXCthatmayprovideamoreaccuratecalculationthannotaccountingforanyinteractionbetweenthesinglecomponentHCCandRXC.
However,thisapproachwouldhaveaddedanadditionalsteptotheerrorratecalculation,wherebytheriskscorecoefficientforaconditionwouldbeadjustedbytheinteractioncoefficientsbetweenthesinglecomponentHCCandtheRXCandwouldhavetakenintoaccountthefullinteractioncoefficientseparatelyfortheHCCandRXC,whichmayresultinanover-adjustmentfortheinteractionterms.
AthirdalternativetoincorporatingRXCsaspartoftheerrorratecalculationwouldbetoadjusttheriskscorecoefficientforasinglecomponentHCCandRXCbyamodifiedinteractioncoefficientbetweenthesinglecomponentHCCandRXCindicator,ifthecoefficientexists.
Ifthereisnocoefficient,thesinglecomponentHCCandtheRXCwouldnotbeadjustedbyaninteractioncoefficient.
Thisalternativeapproachwasintendedtocaptureasampledenrollee'sspecificcharacteristicsandinteractionbetweenHCCandRXCandmodifytheinteractionsuchthatthetotaladjustmentsareequaltothetotalinteractiontermvalue.
WealsogenerallysolicitedcommentonhowtoweightriskscorecoefficientsandaccountfortheinteractiontermsbetweenthesinglecomponentHCCandtheRXCsincalculatingtheerrorrateunderthesealternativeproposedapproaches.
Additionally,intheerrorestimationmethodologyfinalizedinthe2019PaymentNotice,wedidnotincludetheseverityillnessindicatorinteractionsforHCCsastheycanbetriggeredbymultiplecombinationsofHCCs,whichwouldbeoverlycomplextoimplement.
AspartofourcurrentevaluationoftheimpactofadjustingfortheRXC–HCCinteractionsintheerrorestimationmethodology,wealsosoughtcommentonwhetherweshouldsimilarlynotadjustfortheRXC–HCCinteractions.
WesolicitedcommentonalloftheseproposedapproachesforincorporatingRXCsintotheerrorestimationmethodologyanderrorratecalculation,includingwhetherweshouldconsideralternativeoptions.
Finally,asanalternativetotheaforementionedproposedpolicies,westatedthatwewerealsoconsideringmethodsforincorporatingRXCs(oralldrugs)intotheriskadjustmentdatavalidationprocessotherthanaspartoftheerrorestimationmethodologyanderrorratecalculation.
WeproposedanoptiontotreatRXCerrorsasadatasubmissionissue.
Specifically,underthisapproach,wewouldincorporateRXCsoralldrugsintoriskadjustmentdatavalidationasamethodofdiscoveringmateriallyincorrectEDGEserverdatasubmissionsinthesameorsimilarmannertohowweaddressdemographicandenrollmenterrorsdiscoveredduringriskadjustmentdatavalidation.
84Underthisapproach,insteadofincorporatingRXCsintotheerrorestimationmethodologyanderrorratecalculation,wewouldtreatRXCorgeneraldrugerrorsdiscoveredduringriskadjustmentdatavalidationinamannersimilartoanEDGEdatadiscrepancy,whichisaddressedinthecurrentbenefityearunder§153.
710(d).
Assuch,theseRXCorgeneraldrugerrorswouldbethebasisforanadjustmenttotheapplicablebenefityearriskscoreandoriginaltransferamount,ratherthanthesubsequentbenefityearriskscore.
Anymaterialerrorsidentifiedthroughthisprocesswouldresultinadecreasetotheissuer'soriginalriskscore,therebyresultinginareducedriskadjustmentpaymentoranincreasedriskadjustmentchargeforthatissuer.
Ifthisalternativeapproachwereadopted,theidentificationofRXCorgeneraldrugerrorscouldalsohavetheeffectofreducingchargesorincreasingpaymentstootherissuersinthestatemarketriskpool,holdingconstanttheotherelementsofthestatepaymenttransferformula,duetothebudgetneutralframeworkfortheHHSoperatedprogram.
Wesolicitedcommentonthisalternativeapproach,especiallyincomparisontotheproposalsforincorporatingRXCsintotheerrorestimationmethodologyorerrorratecalculation,andonwhetherotherspecificrequirementswouldbeneededtoverifymaterialityofriskscoreimpactsifweweretotreatRXCorgeneraldrugerrorsdiscoveredduringriskadjustmentdatavalidationasadatasubmissionissuethroughtheEDGEdatadiscrepancyprocessunder§153.
710(d).
Afterconsiderationofthecommentsreceived,wearefinalizinganapproachunderwhichwewillincorporateRXCsintoriskadjustmentdatavalidationasamethodofdiscoveringmateriallyincorrectEDGEserverdatasubmissionsinamannersimilartohowweaddressdemographicandenrollmenterrorsdiscoveredduringriskadjustmentdatavalidation,andwillpilottheincorporationofthesedrugsintotheriskadjustmentdatavalidationprocessforthe2018benefityear.
Asapilotyear,theidentificationofRXCerrorsduringthe2018benefityearriskadjustmentdatavalidationprocesswillnotbeusedtoadjust2018riskscoresortransfers.
Comment:WhilesomecommentersgenerallysupportedaddingRXCstotheerrorestimationmethodology,manycommentersdiscouragedHHSfromdoingsobecausetheydidnotgenerallybelievethataddingthiscomplexitytotheerrorestimationmethodologywoulddeliverimprovedriskadjustmentdatavalidationresults,andexpressedVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00049Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2ER25AP19.
018khammondonDSKBBV9HB2PRODwithRULES217502FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations8583FR16930at16961–16966.
86SeetheNovember15,2018,EvaluationofEDGEDataSubmissionsforthe2018BenefitYearGuidance,availableathttps://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/EDGE-2018.
pdf.
Alsosee83FRat16970–16971.
concernthatitinsteadwouldincreaseadministrativeandfinancialburdenforissuersandtheprovidercommunity.
Somecommenterswereconcernedaboutmakingchangestotheerrorestimationmethodologywhenissuershavenotyetseenthefirstnon-pilotyearofriskadjustmentdatavalidationresults.
SomecommentersrecommendedretainingthecurrenterrorestimationmethodologythatfocusesonvalidatingHCCsandnotexpandingtheerrorratemethodologytoincludeRXCs,whileonecommenternotedtheproposedruledidnotaddresschangesthatwouldbemadetothemember-levelriskscoreadjustmentcalculation.
SomecommentersrecommendedthatfurtherconsiderationbegiventothevalueofincludingRXCrelatederrorsbeforeincorporatingRXCs(oralldrugs)aspartofthedatavalidationprocess.
However,severalothercommenterssupportedtreatingRXCsinamannersimilartohowweaddressdemographicandenrollmenterrorsdiscoveredduringthedatavalidationprocess(oranEDGEserverdatadiscrepancy)asamoreefficientandlesscomplicatedprocessthantheotheroptions.
Response:Asdiscussedintheproposedrule,werecognizetheremaybedifferencesbetweenHCCsandRXCsthatneedtobeconsideredwhenincorporatingRXCsintoriskadjustmentdatavalidation.
Forexample,itmaybemorestraightforwardforinitialvalidationauditorstovalidateanRXCratherthananHCCbecauseHCCvalidationrequiresrecodingamedicalrecord,withapotentialforgreatervariation.
However,giventheincorporationofRXCsintotheHHSriskadjustmentadultmodelsbeginningwiththe2018benefityearandtheirabilitytoaffectanissuer'sriskscoreandcalculatedtransfersinthestatemarketriskpool,webelieveitisimportantthatRXCsarevalidatedinsomemanneraspartofriskadjustmentdatavalidation.
Therefore,basedoncommentsreceived,wearefinalizinganapproach,startingwith2018benefityearriskadjustmentdatavalidation,underwhichwewillincorporateRXCsintoriskadjustmentdatavalidationinamannersimilartohowweaddressdemographicandenrollmenterrorsdiscoveredduringthedatavalidationprocess.
Thisapproachwillnotaffectorrequirechangestotheerrorestimationmethodology,includingcalculationoftheindividualmembererrorrate,whichwasfinalizedinthe2019PaymentNotice.
85Thatis,RXCfailureswillnotbemeasuredaspartoftheHCCfailureratesusedtoadjustenrollees'riskscores,butwillbetreatedasanEDGEdiscrepancy.
ThisapproachwillensurethatRXCsarebeingvalidatedwhilelimitingburdentoissuersandproviderstovalidatetheseRXCs.
Furthermore,forconsistencywiththeEDGEserverdatadiscrepancyprocessandthepolicyregardingadjustmentstotransfersduetosubmissionofincorrectdata86,wearefinalizingthatRXCerrorswillonlyresultinareducedriskadjustmentpaymentoranincreasedriskadjustmentchargeforthatdiscrepantissuerwiththeerrorsandwillnotresultinincreasedpaymentordecreasedchargesforthatissuer.
Additionally,inresponsetocomments,wearefinalizingapolicytotreattheincorporationofRXCsinto2018benefityearriskadjustmentdatavalidationasapilotyeartoallowHHSandissuerstogainexperienceinvalidatingRXCsbeforeRXCsareusedtoadjustissuers'riskscores.
ThisapproachwillalsoallowforHHSandissuerstoprimarilyfocuseffortsandresourcesonvalidatingHCCsinthe2018benefityearriskadjustmentdatavalidationandunderstandingthefirstyearofriskadjustmentdatavalidationresults,whichissuerswillreceivelaterthisyear(reflecting2017benefityeardatavalidationresults).
Comment:SeveralcommenterssuggestedpilotingtheincorporationofRXCsintotheriskadjustmentdatavalidationprocesstogainexperienceinhowbesttoevaluateRXCerrorsandunderstandpotentialimplicationsintheriskadjustmentdatavalidationprocess.
Someofthesecommentersrecommendedapilotfor2yearstoallowHHS,issuersandotherstakeholderstogainexperiencewiththeincorporationofRXCsintotheriskadjustmentdatavalidationprocess.
OthercommentersrequestedthatHHSpostponetheimplementationofRXCsinriskadjustmentdatavalidationorfocuscurrentdatavalidationeffortsonHCCs.
OneofthesecommentersnotedthatHHSwouldhavethemeanstoaddressanyobviousfraudulentactivityregardingRXCsdiscoveredaspartofapilotprocess.
Response:WearefinalizingtheincorporationofRXCsinriskadjustmentdatavalidationbeginningwiththe2018benefityear.
However,inresponsetocomments,wewilltreatthe2018benefityearasapilotyearforpurposesofincorporatingRXCs,similartothepilotyearsthatweallowedforotheraspectsofriskadjustmentdatavalidationforthe2015and2016benefityears.
Underthisapproach,theriskadjustmentdatavalidationprocesseswillproceedforthe2018benefityearinasimilarmannerasthe2017benefityear,withtheadditionofRXCsbeingincludedandtreatedinamannersimilartohowwetreatdemographicandenrollmenterrorsduringdatavalidation.
However,theidentificationofRXCerrorsaspartof2018riskadjustmentdatavalidationwillnotbeusedtoadjustriskscores.
WhilewedonotagreewithcommentersthatpilotingRXCsinriskadjustmentdatavalidationfor2yearsisnecessaryatthistime,weagreewithcommenterswhosuggestedthatpilotingtheincorporationofRXCsinriskadjustmentdatavalidationforthe2018benefityearwillprovideHHS,issuers,andstakeholderswithexperienceinvalidatingRXCsandunderstandingpotentialimplicationsbeforeusingidentifiedRXCerrorstoadjustriskscores.
OurintentionatthistimeistofullyimplementtheincorporationofRXCsintoriskadjustmentdatavalidation,asoutlinedinthisfinalrule,beginningwiththe2019benefityearofriskadjustmentdatavalidation.
Comment:CommenterswantedadditionalinformationonhowHHSplanstovalidateRXCs,withonecommenterrecommendingaverificationapproachwheretheauditwouldconfirmthattheprescriptionisavalidpaidclaimbyreviewingthisinformationonissuers'sourcesystems(similartohowdemographicandenrollmentdataisvalidatedinriskadjustmentdatavalidation),andnotobtaintheactualprescription,whichacommenterthoughtwouldbeburdensomeandwouldleadtofalseresults.
SomecommenterssoughtclarificationastowhatconstitutesavalidprescriptionthatwouldneedtobeobtainedtovalidatetheRXCandwhatwouldbeconsideredacceptabledocumentationwithinthemedicalrecordsystemforthepurposesofvalidatingtheRXC.
Onecommenter,whowantedclarificationonhowHHSdeterminesthematerialityoferrorsandthesizeoftheadjustmentfordatadiscrepancies,notedthatissuersmaynothavetheabilitytoprovideothertypesofdocumentationtovalidatethataprescriptionwaswrittenbyaprovider,andanothercommenterstatedthataslongastheissuerpaidforthedrug,itwouldbedifficulttoseehowtheissueractedinbadfaithandthatapplyingadatavalidationprocessthatmakessuretheissuer'sclaimsandpaymentsmatchwhatisreportedtoVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00050Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217503FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations8781FR94077.
88FurtherdetailsontheprocessforhowRXCswillbevalidatedduringthepilotyearwillbeprovidedinthe2018RiskAdjustmentDataValidationProtocolsthatweanticipatewillbereleasedinMay2019.
89See83FRat16970–16971.
90See,https://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/EDGE-2018.
pdf;https://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/RA-Adjustment-Guidance-9–2-15.
pdfandhttps://www.
regtap.
info/uploads/library/DDC_AttestDisc_Slides_050818_v2_5CR_050818(1).
pdf.
9183FRat16970.
9283FR16965.
EDGEistheonlyvalidationthatmightidentifypotentialinappropriateorfraudulentactions.
OthercommenterssuggestedvaryingtypesofcollaborationwithstakeholdersonmethodologyanddocumentationstandardsrelatedtoincorporationofRXCsintoriskadjustmentdatavalidation.
Response:Asdiscussedinthe2018PaymentNotice,87HHSdoesnotperformriskadjustmentdatavalidationauditswiththeintentofdeterminingwhetheracliniciancorrectlydiagnosedapatient.
Rather,HHSfocusesonensuringthatenrollees'diagnosesonpaidclaimsreflecttheappropriatelyassignedHCCsandwerediagnosedbyalicensedclinician.
Likewise,invalidatingpharmacyclaims,weintendtovalidatefactorssuchaswhethertheprescriptionwaspaidbytheissuer,andwhethertheRXCeligibleservicecodeonamedicalclaimwaspaidbytheissuer.
WebelievethatthistypeofapproachtoRXCswillbeaneffectiveapproachforvalidatingthatissuersareprovidingaccurateRXCclaimsinformationwhilelimitingtheburdenonissuersandotherstakeholdersinvolvedintheriskadjustmentdatavalidationprocess.
Specifically,tovalidateRXCsinriskadjustmentdatavalidation,wewillconductaclaims-basedvalidationtoevaluatetheaccuracyofRXCdatasubmissions.
Underthisapproach,similartohowweconfirmdemographicandenrollmentdataduringtheriskadjustmentdatavalidationprocess,wewillnotrequiretheissuertoobtainavalidprescriptionfortheRXCandwillonlysubjectissuers'sourcesystemdocumentationofpharmacyclaimsormedicalclaimstotheinitialvalidationauditorandsecondvalidationauditorreview,therebylimitingtheburdenonissuerstovalidatetheRXCs.
88Consistentwiththetreatmentofdemographicandenrollmenterrorsdiscoveredduringdatavalidation,89weintendtocommunicatewithissuerswheresignificantRXCerrorsarefound.
Furthermore,inanon-pilotyear,wewouldonlyadjustissuerriskscoresforRXCerrorsincaseswhereanissuerhasmateriallyincorrectEDGEserverRXCdatasubmissions,andthesediscoveredRXCerrorswouldbethebasisforanadjustmenttotheapplicablebenefityeartransferamountforthestatemarketriskpoolsinquestion.
WewillworkwiththeseissuerstoresolvepotentialdiscrepanciesinamannersimilartotheEDGEdatasubmissiondiscrepancyprocess.
90WealsointendtobeincommunicationwithallissuersinaffectedstatemarketriskpoolsthroughoutthesecondvalidationauditprocesswhenRXCerrorsorotheridentifieddatavalidationerrorscouldresultinadjustmentstoriskadjustmenttransfers.
ThisapproachwilltargetmateriallyincorrectRXCdataandwillnottargetanisolatedRXCdataerror,whichissimilartothegoaloftheerrorestimationmethodologyforHCCsfinalizedinthe2019PaymentNotice—toavoidadjustingallissuers'riskadjustmenttransfersforexpectedvariation.
Theapproachisalsosimilartohowdemographicandenrollmentvalidationisoccurringwherethereviewinvolvestheidentificationoferrorsthatcouldresultintheinitiationofadiscrepancyprocessforadjustments.
91Additionally,weintendtolearnfromtheexperienceofvalidatingRXCsduringthepilotyeartoinformandpotentiallyrefinetheapproachforincorporatingreviewofRXCsindatavalidationinfuturebenefityears.
However,asnotedabove,ourintentionatthistimeistofullyimplementtheincorporationofRXCsintoriskadjustmentdatavalidation,asoutlinedinthisfinalrule,beginningwiththe2019benefityearofriskadjustmentdatavalidation.
g.
RiskAdjustmentDataValidationAdjustmentsinExitingandSingleIssuerMarketsandNegativeErrorRateOutlierMarketsi.
RiskAdjustmentDataValidationAdjustmentsinExitingIssuerMarketsUndertheriskadjustmentdatavalidationprogram,adjustmentstotransfersaregenerallymadeinthebenefityearfollowingthebenefityearthatwasaudited.
Forissuersthatexitthemarketfollowingthebenefityearbeingaudited,andthereforedonothavetransferstoadjustduringthefollowingbenefityear,wepreviouslyfinalizedanexceptiontothisgeneralrulesuchthatwewilladjusttheexitingissuer'sprioryearriskscoresandassociatedtransferswhereithasbeenidentifiedasanoutlierthroughtheHCCfailureratemethodologyduringriskadjustmentdatavalidation.
92Intheproposedrule,weproposedtoamendourpolicytoprovidethat,ifanexitingissuerisfoundtobeanegativeerrorrateoutlier,HHSwouldnotmakeadjustmentstothatissuer'sriskscoreanditsassociatedriskadjustmenttransfersasaresultofthisnegativeerrorrateoutlierfinding.
Anegativeerrorratewillhavetheeffectofincreasinganissuer'sriskscoreandtherebyincreasingitscalculatedriskadjustmentpaymentorreducingitscalculatedriskadjustmentcharge.
Toavoidretroactivelyre-openingariskpooltomakeadjustmentstootherissuers'transfersbasedonanexitingissuer'snegativeerrorrate,weproposedtore-opentheissuer'sriskscoreanditsassociatedriskadjustmenttransfersinapriorbenefityearonlyiftheexitingissuerwasfoundtohavehadapositiveerrorrate,andwasthereforeoverpaidorunderchargedbasedonitsriskadjustmentdatavalidationresults.
Whentheexitingissuerisapositiveerrorrateoutlier,HHSwouldcollectfunds(eitherincreasingthechargeamountorreducingthepaymentamount)fromtheexitingissuerandredistributetheamountstootherissuerswhoparticipatedinthesamestatemarketriskpoolinthepriorbenefityear.
Thisapproachwasintendedtohelpensurethatissuersaremadewholeevenifanissuerwithapositiveerrorrateexitsthestate,withouttheadditionalburdensassociatedwithhavingtransfersadjusted(includingthepotentialforadditionalchargesbeingassessed)forapriorbenefityearforanegativeerrorrateoutlierwhenanissuerdecidestoexitastate.
Further,weproposedthattobeconsideredanexitingissuerunderthispolicy,theissuerwouldhavetoexitallofthemarketsandriskpoolsinthestate(thatis,notsellingorofferinganynewplansinthestate).
Ifanissueronlyexitssomemarketsorriskpoolsinthestate,butcontinuestoselloroffernewplansinothers,itwouldnotbeconsideredanexitingissuerunderthispolicy.
Finally,weclarifiedthatunderthisproposedpolicy,asmallgroupmarketissuerwithoff-calendaryearcoveragewhoexitsthemarketbuthasonlycarry-overcoveragethatendsinthenextbenefityear(thatis,carry-overofrunoutclaimsforindividualsenrolledinthepreviousbenefityear,withnonewcoveragebeingofferedorsold)wouldbeconsideredanexitingissuerandwouldalsobeexemptfromriskadjustmentdatavalidationforthebenefityearwiththecarry-overcoverage.
IndividualmarketissuersofferingorsellinganynewindividualmarketcoverageinthesubsequentbenefityearwouldbesubjecttoriskadjustmentdataVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00051Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217504FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations93See83FRat16967.
94Id.
9579FR13768through13769.
9679FR13743at13768through13769.
validation,unlessanotherexemptionapplied.
Comment:Severalcommenterssupportedtheproposalsregardingexitingissuers,indicatingthatitwouldnotbehelpfultomarketstabilityandwouldcauseharmtoissuersthatremaininamarketifanexitingissuerthatwasanegativeerrorrateoutlierresultedinadjustmentstotheriskscoresandtransfersinthestatemarketriskpool.
Afewcommenterssupportedtheproposal,andsomestatedthatitshouldbeextendedsothatnoissuer'sriskscoreortransferwouldbeincreasedforanegativeerrorrate,statingthatdoingsowouldcreatesignificantuncertaintyinfinancialprojectionsandpricingforissuers.
Response:Afterconsiderationofthecommentsreceived,wearefinalizingtheriskadjustmentdatavalidationpoliciesregardingexitingissuers,andwillapplythispolicytothe2018benefityearriskadjustmentdatavalidationandbeyond.
Webelievethatthepoliciesonexitingissuersmitigatetheimpactonremainingissuers,andwillaidinthemarket'sstabilityandproperfunctioningyeartoyearbylimitingtheapplicationofanexitingissuer'sriskadjustmentdatavalidationresultstosituationswheretheissuerwasoverpaidorunderchargedforthebenefityearbeingvalidated.
Commentsonnegativeerrorratesgenerally(thatis,forissuerswhoarenotexitingissuers)areaddressedinaseparatesectionofthispreamblebelow.
ii.
RiskAdjustmentDataValidationAdjustmentsinSingleIssuerMarketsForanissuerthatisthesoleissuerinastatemarketriskpoolinabenefityear,therearenoriskadjustmenttransfersunderthestatepaymenttransferformulaandthus,nopaymentorfinancialaccountabilitytootherissuersforthatriskpool.
93Wedonotcalculateriskadjustmenttransfersforabenefityearinastatemarketriskpoolinwhichthereisonlyoneissuer,andthatissuerisnotrequiredtoconductriskadjustmentdatavalidationforthatstatemarketriskpool.
94However,ifthesoleissuerwasparticipatinginmultipleriskpoolsinthestateduringtheyearthatisbeingaudited,thatissuerwillbesubjecttoriskadjustmentdatavalidationforthoseriskpoolswithotherissuersthathadriskadjustmenttransferscalculated.
Inaddition,thesoleissuermayhavebeenidentifiedasanoutlierforriskadjustmentdatavalidation,anditserrorratewouldbeappliedtoallofitsriskadjustmentcoveredplansinthestatemarketriskpoolswhereitwasnotthesoleissuer.
Itserrorratewouldalsobeappliedtoadjustthesubsequentbenefityear'stransfersforotherissuersinthesamestatemarketriskpool(s).
Ifthesoleissuerthatparticipatedinriskadjustmentdatavalidationforabenefityearwasidentifiedasoutlier,andinthefollowingbenefityear,anewissuerenteredwhatwasformerlythesoleissuerriskpool,weproposedthattheformersoleissuer'serrorratewouldalsoapplytotheriskscoresforitsriskadjustmentcoveredplansinthesubsequentbenefityearintheriskpool(s)inwhichhadbeenthesoleissuer—thatis,theformerlysoleissuer'sriskscoresandtransferamountscalculatedforthebenefityearinwhichanewissuerenteredthestatemarketriskpoolwhichdidnothaveriskadjustmenttransferscalculatedintheprioryearwouldbesubjecttoadjustmentbasedontheformerlysoleissuer'serrorrate.
Inaddition,thenewissuerwouldhaveitsriskadjustmenttransferadjustedinthecurrentbenefityeariftheformersoleissuerwasanoutlierwithriskscoreerrorratesinthepriorbenefityear'sriskadjustmentdatavalidation.
Comment:Afewcommentersdisagreedwiththeproposalsfornewentrantsintoariskpoolthatformerlywasasingleissuerriskpool.
Thesecommentersstatedthatallissuersshouldbetreatedthesameunderriskadjustmentdatavalidation,andthatanewentrantwhowasnotsubjecttoriskadjustmentdatavalidationintheyearbeforetheyearinwhichitenteredthestatemarketriskpoolshouldnotbesubjecttoadjustmentsuntilbothissuershaveundergoneriskadjustmentdatavalidation.
Oneofthesecommentersalsoexpressedconcernsthattheproposedpolicywouldcreate''perverseincentives''anddecreasemarketstability,andthatissuerswouldfaceuncertaintyaboutfutureliabilitiesassociatedwithriskadjustmentdatavalidationdependingonwhetheranotherissuerentersthemarketinquestion.
Response:Afterconsiderationofthecommentsreceived,wearefinalizingthepoliciesrelatedtotheapplicationofriskadjustmentdatavalidationresultswhentherearenewentrantsintoariskpoolthatformerlywasasingleissuerriskpoolforthe2018benefityearriskadjustmentdatavalidationandbeyond.
Wedonotbelievethatthispolicywouldcreateperverseincentives,decreasemarketstability,orcauseuncertaintyaboutfutureliabilitiesassociatedwithriskadjustmentdatavalidation,asthispolicyresultsinconsistenttreatmentforallissuers.
Thus,transferswillbeadjustedforoutlierswhenanotherissuerjoinsasoleissuerstatemarketriskpool,asriskadjustmentdatavalidationisbasedonallstatemarketsandoutlierstatusinonemarketisreflectiveofoutlierstatusinothers.
95Infact,webelievepostponingtheapplicationofadjustmentsduetoriskadjustmentdatavalidationoutlierstatusforsoleissuerstatemarketriskpoolsuntilbothissuershaveundergoneriskadjustmentdatavalidationpossiblycouldcreateperverseincentivesandresultinmarketdistortions,asissuerswouldnotberequiredtosubstantiatetheirEDGEdatasubmissionsnorwouldtheissueridentifiedasanoutlierinothermarketriskpoolsinthestatebesubjecttotheadjustmentsdeemedappropriatethroughtheprioryear'sriskadjustmentdatavalidation.
Additionally,wedonotagreethatissuerswouldfaceuncertaintyaboutfutureliabilitiesassociatedwithriskadjustmentdatavalidationdependingonwhetheranotherissuerentersthestatemarketriskpoolinquestion.
Thissoleissuerpolicyfinalizedinthisruleisconsistentwiththepolicyestablishedinthe2015PaymentNoticespecifyingthateachissuer'sriskscoreadjustment(fromriskadjustmentdatavalidationresults)willbeappliedtoadjusttheplan'saverageriskscoreforeachoftheissuer'sriskadjustmentcoveredplans.
96Thispolicyalsoalignswithhowerrorratesareappliedifanewissuerenteredastatemarketriskpoolwithmorethanoneissuer.
iii.
RiskAdjustmentDataValidationandNegativeErrorRateOutlierMarketsAsdiscussedintheproposedruleifanissuerisanegativeerrorrateoutlier,itsriskscorewillbeadjustedupwards.
Assumingnochangestoriskscoresfortheotherissuersinthestatemarketriskpool,thisupwardadjustmentwouldreducetheissuer'sriskadjustmentchargeorincreaseitsriskadjustmentpaymentfortheapplicablebenefityear,leadingtoanincreaseinriskadjustmentchargesoradecreaseinriskadjustmentpaymentsfortheotherissuersinthestatemarketriskpool.
Ifanissuerisapositiveerrorrateoutlier,itsriskscorewillbeadjusteddownwards.
Assumingnochangestoriskscoresfortheotherissuersinthestatemarketriskpool,thisdownwardadjustmentwouldincreasetheissuer'schargeordecreaseitspaymentfortheapplicablebenefityear,leadingtoadecreaseinchargesoranincreaseinpaymentsfortheotherissuersinthestatemarketriskpool.
TheVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00052Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217505FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations97Forexample,westatedinthe2015PaymentNoticethat''theeffectofanissuer'sriskscoreerroradjustmentwilldependuponitsmagnitudeanddirectioncomparedtotheaverageriskscoreerroradjustmentanddirectionfortheentiremarket''.
See79FR13743at13769.
98Forexample,inthe2019PaymentNotice,westatedthat''wewillusea1.
96standarddeviationcutoff,fora95percentconfidenceinterval,toidentifyoutliers''andthat''whenanissuer'sHCCgroupfailurerateisanoutlier,wewillreduce(orincrease)eachoftheapplicableinitialvalidationauditsampleenrollees'HCCcoefficientsbythedifferencebetweentheoutlierissuer'sfailureratefortheHCCgroupandtheweightedmeanfailureratefortheHCCgroup.
''Wealsostatedthat''specifically,thiswillresultinthesampleenrollees'applicableHCCriskscorecomponentsbeingreduced(orincreased)byapartialvalue,orpercentage,calculatedasthedifferencebetweentheoutlierfailureratefortheHCCgroupandtheweightedmeanfailureratefortheapplicableHCCgroup.
''83FR16930at16962.
Theshorthand''positiveerrorrateoutlier''capturesthoseissuerswhoseHCCcoefficientsarereducedasaresultofbeingidentifiedasanoutlier;whiletheshorthand''negativeerrorrateoutlier''capturesthoseissuerswhoseHCCcoefficientsareincreasedasaresultofbeingidentifiedasanoutlier.
99Anexceptiontothisapproachisthepolicyfinalized,beginningforthe2018benefityearofriskadjustmentdatavalidation,anddiscussedaboveinthisruleforexitingissuerswhoarenegativeerrorrateoutliers.
100OnJuly13,2018,HHSreleasedamemoviaRiskAdjustmentDataValidationAuditToolforissuerstitled,''2016BenefitYearHHS-operatedRiskAdjustmentDataValidation(HHS–RADV)FinalResults''thatincludedtheprogrambenchmarkmetricsandthe2016benefityearHHS–RADVResultsJobAidreportthatincludedtheHCCgroupdefinitionsandanillustrativeexampleofthestepsforerrorratecalculation.
Thus,issuerswereprovidedwithillustrativeinformationonthe2016benefityearriskadjustmentdatavalidationresultsunderthemethodologyfinalizedinApril2018,butthatinformationwasprovidedforinformationalpurposesonlyandshouldnothavebeenusedforpurposesofratesetting.
Inaddition,asasecondpilotyear,the2016benefityearriskadjustmentdatavalidationresultswerenotappliedtoadjustriskadjustmenttransfers.
intentofthistwo-sidedoutlieridentification,andtheresultingadjustmentsforoutlierissuersthathavesignificantlybetterthanaverage(negativeerrorrate)andpoorerthanaverage(positiveerrorrate)datavalidationresultsistoensurethatriskadjustmentdatavalidationadjustsriskadjustmenttransfersforidentified,materialriskdifferencesbetweenwhatissuerssubmittedtotheirEDGEserversandwhatwasvalidatedinmedicalrecords.
Theincreasetoriskscore(s)fornegativeerrorrateoutliersisconsistentwiththeupwardanddownwardriskscoreadjustmentsthatwerefinalizedaspartoftheoriginalriskadjustmentdatavalidationmethodologyinthe2015PaymentNotice97andtheHCCfailurerateapproachtoerrorestimationfinalizedinthe2019PaymentNotice.
98Thatis,thelong-standingintentofHHS-operatedriskadjustmentdatavalidationhasbeentoaccountforidentifiedriskdifferences,regardlessofthedirectionofthosedifferences.
99However,wesoughtcommentontheimpactofthecurrentapproachundertheerrorestimationmethodologyandtheoutlieradjustmentpolicyfornegativeerrorrateoutlierissuers,orissuerswithsignificantlylower-than-averageHCCfailurerates,onotherissuersinastatemarketriskpool,theincentivesthatnegativeerrorrateadjustmentsmaycreate,andpotentialmodificationstotheerrorrateestimationmethodologyortheoutlieradjustmentpolicy,suchastoutilizethestatemeanfailurerateinsteadofthenationalmeanfailurerate,tomodifytheerrorratecalculationtotheconfidenceintervalinsteadofthemean,toexcludenegativeerrorrateoutliersortouseothermethodsoflesseningtheimpactofnegativeerrorrateissuersonaffectedriskpools,beginningwiththe2018benefityearofriskadjustmentdatavalidationorlater.
Comment:SomecommentersrecommendedthatHHSfollowitscurrentriskadjustmentdatavalidationmethodologyandoutlieradjustmentpolicy,beginningwiththeapplicationof2017benefityearriskadjustmentdatavalidationto2018benefityearriskadjustmenttransfers,withoutfurtherdelayormaterialchange.
Thesecommentersstatedthatfurtherdelayofriskadjustmentdatavalidationwouldbeunreasonable,createmarketinstability,andwouldfundamentallyjeopardizetheprogram'sintegrity.
ThesecommentersalsoexpressedsupportforevaluatingprospectiveimprovementstotheHHSriskadjustmentdatavalidationmethodologyandoutlieradjustmentpolicyforfuturebenefityears.
However,othercommentersstatedthatissuersgenerallydidnotexpectthesignificantfinancialimpactofriskadjustmentdatavalidationtobeaslargeasindicatedbythe2016pilotresultsthatwerereleasedbyHHSinJuly2018,100notingthatthecurrentriskadjustmentdatavalidationerrorratemethodologywasnotfinalizeduntilApril2018.
Thesecommentersalsotendedtoexpressconcernthattheerrorratesarecalculatedbasedonadjustingtothemean,insteadoftheconfidenceintervals.
Someofthesecommenterswerealsoconcernedthatissuersmaybeginbookinganticipatedimpactofriskadjustmentdatavalidationon2018riskadjustmenttransfersintheir2019financials,raisingpremiumsduetotheuncertaintyassociatedwithestimatingthoseimpacts.
Thesecommentersbelievethatthecurrentriskadjustmentdatavalidationmethodologywouldleadtohigherpremiumsbycompellingissuerstoraisepremiumstobufferagainstthepotentialofunpredictableriskadjustmentdatavalidationadjustments,whichcouldcreateinstabilityandunpredictabilityinratesetting,andaffectmarketparticipation.
Severalcommentersexpressedconcernabouttheimpactofthenegativeerrorrateoutliersincaseswheretheissuerhadazeroerrorrate,particularlygiventhepotentialdistributiveeffectoftheadjustmentstotransfersbasedonmarketshare.
Anothercommenterstatedthattheexitingissuerproposalonnegativeerrorratesshouldbeextendedtoallissuerssuchthatnoissuer'sriskscorewouldbeincreasedbecauseofanegativeerrorrate.
Thecommenterbelievesthatthiswouldavoidthecreationofsignificantuncertaintyinfinancialprojectionsandpricingforissuersinthesamestatemarketriskpoolwhosetransferscouldbenegativelyaffectedbyanotherissuer'sincreasedriskscore.
OnecommenterquestionedHHS'authoritytoapplythecurrentriskadjustmentdatavalidationerrorestimationmethodologyto2018riskscores.
AnothercommenterstateditsbeliefthatHHShastheauthoritytomakeadjustmentstotheriskadjustmentdatavalidationmethodologyfinalizedinthe2019PaymentNotice.
SomecommenterssuggestedthatHHStreatthe2017benefityearasanotherpilotyearorpostponetheimplementationoftheriskadjustmentdatavalidationadjustmentstoriskscoresandtransfersuntillaterbenefityears(forexample,2020andbeyond).
ManycommentersrecommendedHHSconveneajointindustrystakeholderworkgrouptodevelopeffectivesolutionstoensuretheriskadjustmentprogramachievesitsgoalsandfulfillsitsintendedpurpose.
Othercommentersrecommendedbroaderchangestotheriskadjustmentdatavalidationprocess,suchasusingatargeteddata-drivenapproachtoriskadjustmentdatavalidation,dividingtheauditsintoindividualandsmallgrouptoseparatetheimpactontransfers,orcreatingaprocesstoexemptissuersfromvalidatingHCCsforwhichaproviderrefusestosupplyamedicalrecord(whentheissuerhasdemonstratedgoodfaithintryingtoobtainthatrecord).
Response:Wedidnotproposeandarenotmakinganychangeswithrespecttotheapplicationof2017benefityearriskadjustmentdatavalidationresultsto2018benefityearriskadjustmentriskscoresandtransfersusingthecurrentHHSriskadjustmentdatavalidationmethodologyandoutlieradjustmentpolicy.
HHSconducted2pilotyearsforVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00053Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217506FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations10177FR17234.
10278FRat15438.
103Forexample,westatedinthe2015PaymentNoticethat''theeffectofanissuer'sriskscoreerroradjustmentwilldependuponitsmagnitudeanddirectioncomparedtotheaverageriskscoreerroradjustmentanddirectionfortheentiremarket''.
See79FR13769.
104See,StandardsRelatedtoReinsurance,RiskCorridorsandRiskAdjustment,77FR17234,2014PaymentNotice,78FRat15438,and2015PaymentNotice,79FR13769.
105Availableatwww.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Proposed-Changes-RA-Holdback-2018BY.
pdf.
riskadjustmentdatavalidation,andweagreewithcommentersthatanotherpilotyearwouldnotbeappropriateatthistime(absenttheexceptionforMassachusettsissuersdetailedbelow)becausefurtherdelaycouldjeopardizetheprogram'sintegrity.
Thus,wearenotmakingthe2017benefityearriskadjustmentdatavalidationapilotyear,norarewemakinganychangestotheriskadjustmentdatavalidationerrorestimationmethodologyforthe2017or2018benefityears.
WhilethecurrenterrorestimationmethodologywasnotfinalizeduntilApril2018,itwasappliedprospectivelytoriskadjustmentdatavalidationforthe2017benefityear.
Wehavealsobeentransparentaboutthepotentialforadjustmentsbasedonriskadjustmentdatavalidationresults,includingthetwo-sidednatureofsuchadjustments,sincetheinceptionoftheprogram.
Consistentwith§153.
350(c),asfinalizedinthefinalruleStandardsRelatedtoReinsurance,RiskCorridorsandRiskAdjustment,101HHSmayadjustriskadjustmentpaymentsandchargestoallissuersofriskadjustmentcoveredplansbasedonadjustmentstotheaverageactuarialriskofariskadjustmentcoveredplanduetoerrorsdiscoveredduringdatavalidation.
Thisapproachwasalsoreflectedinthe2014PaymentNotice,whichnotedourintenttomakeadjustmentswhereanissuerunder-reporteditsriskscores.
102Further,undertheoriginalriskadjustmentdatavalidationmethodologyfinalizedinthe2015PaymentNotice103,everyfailuretovalidateanHCCwouldhaveresultedinanadjustmenttotheissuer'sriskscoreandwouldhavealsoaffectedtransfersforallissuersinthestatemarketriskpool(includingbothissuerswithHCCvalidationfailuresandthosewithout)duetothebudgetneutralnatureoftheHHS-operatedriskadjustmentprogram.
However,asdetailedinthe2019PaymentNotice,werecognizedthatmanyissuerswouldexperiencesomevariationanderrorbecauseproviders'documentationofenrolleehealthstatusvariesacrossprovidertypesandgroups.
OurexperienceswiththeMedicareAdvantageriskadjustmentdatavalidationprogramandtheHHS-operatedriskadjustmentdatavalidationpilotyearsreinforcedthisbelief.
Asaresult,toavoidadjustingtransfersforanyandallfailures,weadoptedtheHCCfailureratemethodology,whichresultsinadjustmentstoanissuer'sriskscoreonlywhentheissuer'sfailurerateisstatisticallydifferentfromtheweightedmeanfailurerate,ortotalfailurerate,forallissuersthatsubmittedinitialvalidationaudits(thatis,theissuerisidentifiedasanoutlier).
Similartotheoriginalmethodologyfinalizedinthe2015PaymentNotice,whenthereisanoutlierissuer,thetransfersforotherissuersinthestatemarketriskpoolwillalsobeadjustedduetothebudgetneutralnatureoftheHHS-operatedriskadjustmentprogram.
Wefurthernotethat,basedonouranalysisofthe2016benefityearriskadjustmentdatavalidationresultsandouranalysisoftheinitialestimated2017benefityearriskadjustmentdatavalidationresults,wehavefoundthattheHCCfailurerateapproachtoerrorestimationsignificantlyreducestheoveralltransferimpactofadjustmentswhencomparedwithresultsundertheoriginalmethodology.
Additionally,asdetailedabove,theidentificationofpositiveandnegativeerrorrateoutliersandtheresultingadjustmentsundertheHCCfailureratemethodologyisconsistentwiththetwo-sidedadjustmentapproachadoptedundertheoriginalriskadjustmentmethodologyfinalizedinthe2015PaymentNotice.
Exceptasprovidedelsewhereinthisfinalrulefornegativeerrorrateoutliersresultingfromexitingissuers,wecontinuetobelievethatadjustingforbothnegativeandpositiveerrorrateoutliersensuresthatissuers'actualactuarialriskisreflectedandthattheHHS-operatedriskadjustmentprogramassesseschargestoissuerswithplanswithlower-than-averageactuarialriskwhilemakingpaymentstoissuerswithplanswithhigher-than-averageactuarialrisk.
ItalsoincentivizesissuerstoachievethemostaccurateEDGEdatasubmissionsforinitialriskadjustmenttransfercalculations.
Forallthesereasons,wedonotbelievethatfurtherchangesareneededtotheerrorestimationmethodologyortheoutlieradjustmentpolicyatthistime.
Wewillapplythecurrentmethodologyandoutlieradjustmentpolicytoboththe2017benefityearand2018benefityearofriskadjustmentdatavalidation.
Weintendtosolicitfurthercommentsandworkwithstakeholdersregardingpotentialchangesforfuturebenefityears.
However,asexplainedabove,whileissuershavebeenonnoticesince2012thatadjustmentsbasedonriskadjustmentdatavalidationresultscouldoccur,104werecognizethattheinitialexperienceduringthepilotyearsofriskadjustmentdatavalidationhascausedconcernoverthepotentialdirectionandmagnitudeoftheadjustments.
Afterconsiderationofthecommentsreceived,andfurtheranalysisoftimingconsiderations(suchastheimpactonadjustmentsofanysuccessfulriskadjustmentdatavalidationappeals,aswellastheproposedchangetotheriskadjustmentappealsholdbackforthe2018benefityearandbeyond(''ProposedHoldbackGuidance''105)),weareupdatingthetimelineforpublication,collection,anddistributionofriskadjustmentdatavalidationadjustmentstotransfers.
Westillintendtopublish2017benefityearerrorratesinMay2019,butunderourupdatedtimeline,weintendtopublishthe2017benefityearriskadjustmentdatavalidationadjustmentsonAugust1,2019afterthereleaseoftheSummaryReportonPermanentRiskAdjustmentTransfersforthe2018BenefitYear(intendedtobereleasedonJune28,2019).
TheinformationreleasedintheAugust1,2019reportonriskadjustmentdatavalidationadjustmentstotransferswillbebasedonthepreliminary2017benefityearriskadjustmentdatavalidationresults,priortotheresolutionofappeals.
TheAugust1,2019reportwillalsoincludeinformationon2017benefityeardefaultdatavalidationchargesunder§153.
630(b)(10)andallocationofthoseamounts.
Wewillalsodelaythecollectionanddistributionof2017benefityearriskadjustmentdatavalidationadjustmentsto2018benefityearriskadjustmenttransfersand2017benefityeardefaultdatavalidationchargesandallocationsuntil2021toprovideissuerswithmoreoptionsonhowandwhentobookfinancialimpactsfromriskadjustmentdatavalidation,inkeepingwithguidancefromstatedepartmentsofinsurance,whereapplicable.
Specifically,weintendtoupdatetheMedicalLossRatioFormInstructionstoprovideguidancetoissuers,consistentwith§153.
710(g)(2)and(3),regardingthereportingofriskadjustmentdatavalidationadjustmentsformedicallossratioreportingpurposes.
TheguidancewouldinstructissuerstoreportriskadjustmentdatavalidationadjustmentsanddefaultdatavalidationchargesandallocationsinthesamemedicallossVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00054Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217507FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsratioreportingyearastheyearwhentheseamountsarecollectedanddisbursed(forexample,the2017benefityearriskadjustmentdatavalidationadjustmentsanddefaultdatavalidationchargesandallocationswouldbereportedinthe2021MLRreportingyear).
WealsointendtoupdatetheUnifiedRateReviewTemplate(URRT)instructionstopermitissuersandstatestoconsiderriskadjustmentdatavalidationadjustmentimpactsinratesfortheyearwhentheseamountswillbecollectedanddisbursed(forexample,issuersandstateswouldhavetheoptiontoconsider2017benefityearriskadjustmentdatavalidationadjustmentsinratesettingforthe2021benefityear,insteadof2020benefityearratesetting).
Changingthetimelinefortheyearinwhichissuersmaypay,receive,andaccountfortheirresultsfromriskadjustmentdatavalidationintheMLRandURRTsubmissionswillonlychangethetiming.
Thisapproachwillnotchangetheassociatedprocessesandthereforewillnotincreaseburdenonissuersorstates.
Delayingthecollectionanddistributionof2017benefityearriskadjustmentdatavalidationadjustmentsto2018benefityearriskadjustmenttransfersuntil2021willalsoallowmoretimeforHHStoworkwithissuerstoresolveanyriskadjustmentdatavalidationappeals.
Itwillalsohelpmitigatethepotentialforadditionaluncertaintyandinstabilitythatcouldbecreatedbymakingadjustmentsbeforeappealsareresolved,asasuccessfulriskadjustmentdatavalidationappealcouldaffectthecalculatedriskscoreerrorrateandaccompanyingadjustmentstotransfers.
Weanticipateadheringtoasimilartimelineinfutureyearsforthecollectionandpaymentofriskadjustmentdatavalidationadjustmentstoriskadjustmenttransfers(alongwithdefaultdatavalidationchargesandallocations),suchthatriskadjustmenttransferswithoutriskadjustmentdatavalidationadjustmentswouldbereportedbyJune30thoftheyearaftertheapplicablebenefityear,andissuerswouldreportthoseamountsinthemedicallossratioreportssubmittedbyJuly31stoftheyearaftertheapplicablebenefityear.
Thepreliminaryriskadjustmentdatavalidationadjustmentsthatcouldimpactthatbenefityear'stransfers,alongwithinformationondefaultdatavalidationchargesandallocationsfortheapplicablebenefityear,wouldbereportedaftertheJune30reportispublished,andwewouldcollectanddisburseriskadjustmentdatavalidationadjustmentsanddefaultdatavalidationchargesandallocationstwoyearsaftertheannouncement.
Issuerswouldbeinstructedtoreflectthosefinaladjustmentamountsanddefaultdatavalidationchargesandallocationsinthemedicallossratioreportingyearinwhichcollectionsandpaymentsofthoseamountsoccur,andwouldbepermittedtoreflectthoseamountsinratesettingforthatsamebenefityear.
Forexample,2018benefityearriskadjustmentdatavalidationadjustmentsanddefaultdatavalidationchargesandallocationswouldbecollectedandpaidin2022;issuerscouldaccountfortheimpactsofthoseamountsinratesettingforthe2022benefityear,andissuerswouldreporttheadjustmentsanddefaultdatavalidationchargesandallocationsinthe2022benefityearmedicallossratioreportingyear.
Furthermore,giventhesetimelinechangesforcollectingandpayingriskadjustmentdatavalidationadjustmentsbeingfinalizedinthisfinalruleandinresponsetocommentsthatwereceivedindicatingthatsomeissuershaddifficultyobtainingmedicalrecords,wearealsoconsideringoptionstoextendthetimelineforconductingandcompletingtheriskadjustmentdatavalidationprocessesforissuersandHHS.
Webelievethatthisadditionaltimemayhelpissuersincompletingtheoperationalprocessesinfuturebenefityears.
Therefore,weintendtoseekinputonanupdatedriskadjustmentdatavalidationtimelinebeginningwiththe2018benefityeartoprovidemoretimeformedicalrecordcollectionduringtheinitialvalidationauditsandmoretimeforthecompletionofthesecondvalidationaudit.
Comment:Somecommenterssupportedthecurrentpolicythatinvolvesadjustingforbothpositiveandnegativeoutlierswithoneofthesecommentersnotingthatadjustmentsfornegativeoutliersencouragecompleteandaccuratecoding,andmorecomprehensivedocumentation.
Manycommenters,ontheotherhand,supportedtheeliminationofriskscoreadjustmentsforissuersthatarenegativeerrorrateoutliers,notingthatanegativeerrorrateissuershouldnotberewardedforsubmittingincorrectorincompletedatatotheEDGEserverandthatnegativeerrorrateoutlierscreateuncertaintyinthemarket,particularlyforissuerswithintheconfidencebounds(thatis,thoseissuerswhoarenotoutliers).
Onecommentersupportedadjustinganissuer'sriskscorewhentheissuer'serrorratemateriallydeviatesfromastatisticallymeaningfulvalueorwhenitserrorratemateriallydeviatesfromastatisticallymeaningfulvaluebyamultiplierfigurethatvaluesbacktotheoutliercutoffpoint.
AnothercommenterrecommendedthatHHSapplytheerrorratestothetransfersofthebenefityearthatisbeingaudited,ratherthantotransfersinthefollowingbenefityear.
Severalcommentersrecommendedthatoutlierissuers'errorratesbecalculatedbasedontheendsoftheconfidenceintervalinsteadofthemeantoeliminatethe''paymentcliff''underthecurrentmethodology.
Someofthesecommenterspreferredadjustingoutlierstothenearestendsoftheconfidenceintervalsasashorttermsolutiontoreducethenegativefinancialimpactonotherissuersinthestatemarketriskpoolbecause,forexample,theybelievethenationwideweightedaverageprovidesanadjustmentthatistoolargeinstateswherethestatewidegroupfailurerateislowerthanthenationwideaverage.
SomeofthesecommentersalsonotedthatadjustingtotheconfidenceintervalswouldminimizeunexpectedimpactsontransfersandremovetheextremeimpactofsmalladjustmentsinHCCaccuracyforissuerswhosefailureratesareneartheedgesoftheconfidenceinterval.
Response:Wedidnotproposeandarenotmakinganychangestotheerrorestimationmethodologyapplicableto2017and2018benefityearsriskadjustmentdatavalidation.
Wehaveconcernsaboutadjustingoutlierissuerstotheedgesoftheconfidenceintervalsinsteadofthemean,whichiswhythatapproachwasnotadoptedinthecurrenterrorestimationmethodology.
Specifically,weareconcernedthatadjustingtotheedgesofconfidenceintervalsmayeffectivelyreducetheimpactofriskadjustmentdatavalidationresultstothepointthatthepositiveerrorrateoutlieradjustmentsmaynotprovideenoughdisincentivetopreventinappropriatecodingandthebenefitofupcodingmayoutweighthepotentialcostsoftheriskadjustmentdatavalidationriskscoreadjustments.
However,infutureyears,afterwehaveanalyzedmoredataontheriskadjustmentdatavalidationresults,weintendtoconsiderrefinementstotheriskadjustmentdatavalidationprocessandmethodology,andmayconsideralternativeoptionsforerrorrateadjustments,suchasusingmultipleorsmoothedconfidenceintervalsforoutlieridentificationandriskscoreadjustment.
Whileweareinterestedinapplyingtheriskadjustmentdatavalidationresultstothebenefityearbeingaudited,wehaveconcernsthatinordertoswitchtothatpolicystartingwiththe2018benefityear,wewouldbeadjusting2018benefityearriskadjustmenttwice(onceforthe2017VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00055Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217508FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations106ParticipationinriskadjustmentdatavalidationisbasedonHIOSIDsandnotparentcompanies.
Therefore,whilesomeissuers'parentcompaniesinMassachusettsmayhavepreviouslyparticipatedintheHHS-operatedriskadjustmentprograminotherstatesunderotherissuerHIOSIDs,noissuerHIOSIDsinMassachusettspreviouslyparticipatedintheHHS-operatedriskadjustmentprogram,includingthepilotyearsofriskadjustmentdatavalidation.
107See81FR94058at94104and83FR16930at16966.
108ExemptionfromHHS-OperatedRiskAdjustmentDataValidation(HHS–RADV)forIssuersinLiquidationorEnteringLiquidation(April9,2018).
https://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/RADV-Exemption-for-Liquidation-Guidance.
pdf.
10983FR16930at16966.
11081FR94058at94104–94105.
benefityearriskadjustmentdatavalidationresultsandasecondtimeforthe2018benefityearriskadjustmentdatavalidationresults).
However,wewillcontinuetoconsidermodificationstoriskadjustmentdatavalidationprocessesandmethodologies,includingwhichbenefityeartransfers'thedatavalidationadjustmentsareappliedto,forfuturebenefityears.
Asmentionedelsewhereinthisfinalrule,weintendtoconsiderthecommentsreceivedforpotentialupdatestothecurrentmethodologyandoutlieradjustmentpolicyforfuturebenefityears.
Wewillconsultwithstakeholdersbeforeimplementinganysuchchanges.
Comment:OnecommenterrequestedthatHHStreatthe2017benefityearasapilotyearforMassachusettsforriskadjustmentdatavalidationpurposessincethe2017benefityearwasthefirstyearthatMassachusettsissuersparticipatedintheHHS-operatedriskadjustmentprogram.
ThiscommenternotedthattherewillbesomedistortionintheresultsofauditsforissuersinMassachusetts,andwasespeciallyconcernedthatthisdistortionmaybemagnifiedforsmallerissuers.
Response:WeunderstandthatMassachusettsissuersareinauniquesituationwithregardtoriskadjustmentdatavalidationforthe2017benefityear,sincethe2017benefityearwasthefirstyearinwhichMassachusettsparticipatedintheHHS-operatedriskadjustmentprogramandsubmitteddatatoEDGEservers,andnoMassachusettsissuers106hadanopportunitytoparticipateinthepilotyearsofHHSriskadjustmentdatavalidation.
Therefore,inresponsetocommentsandafterconsiderationofthespecificfactsandcircumstancesinvolved,webelievethatexercisingourenforcementdiscretiontoprovideMassachusettsissuerswithanon-adjustmentyearforriskadjustmentdatavalidationisappropriate.
ItisconsistentwithourgeneralapproachtoimplementingriskadjustmentdatavalidationinotherstateswhereHHSisresponsibleforoperatingtheprogramandwewillthereforeexerciseourdiscretiontooperateriskadjustmentdatavalidationforthe2017benefityearasapilotyearforMassachusetts.
Massachusettsissuerswillreceive2017benefityearriskadjustmentdatavalidationerrorrateresults,buttheseissuerswillnothavetheir2018benefityearriskadjustmentriskscoresortransfersforMassachusettsstatemarketriskpoolsadjustedbasedon2017riskadjustmentdatavalidationresults.
Furthermore,Massachusettsissuers'failurerateswillnotbeincludedinthecalculationofthenationalmetricsforthe2017benefityearriskadjustmentdatavalidationtoavoidthepotentialdistortioninthenationalmetricsthatwillbeappliedtoissuersinotherstatemarketriskpools.
AllotherissuersinallotherstatesandtheDistrictofColumbiawillhavetheir2018benefityearriskadjustmentriskscoresandtransfersadjustedbasedon2017benefityearriskadjustmentdatavalidationresultsinaccordancethecurrenterrorestimationmethodologyfinalizedinthe2019PaymentNotice.
Inaddition,totheextentthataMassachusettsissueralsoofferedriskadjustmentcoveredplansinotherstatemarketriskpools,its2018benefityearriskadjustmentriskscoresandtransfersforthoseotherstatemarketriskpoolswillbeadjustedbasedon2017benefityearriskadjustmentdatavalidationresults.
h.
ExemptionsFromRiskAdjustmentDataValidationInpreviousrules,107weestablishedexemptionsfromtheHHS-operatedriskadjustmentdatavalidationrequirementsforissuerswith500orfewerbillablemembermonthsstatewideandissuersatorbelowamaterialitythresholdforthebenefityearbeingaudited.
Additionally,onApril9,2018,wereleasedguidanceindicatingthatweintendedtoproposeasimilarexemptionfromriskadjustmentdatavalidationrequirementsforcertainissuersinorenteringliquidation.
108Thepurposeofthesepoliciesistoaddressnumerousconcerns,particularlyfromsmallerissuersandstateregulators,regardingtheregulatoryburdenandcostsassociatedwithcomplyingwiththeHHS-operatedriskadjustmentdatavalidationprogram.
HHSpreviouslyconsideredtheseconcernsandprovidedreliefwherepossible,andunderthisfinalrule,wearecodifyingtheseexemptionsinregulationat§153.
630(g),asdescribedfurtherbelow.
Inthe2019PaymentNotice,wefinalizedthatbeginningwith2017benefityearHHS-operatedriskadjustmentdatavalidation,issuerswith500billablemembermonthsorfewerstatewideinthebenefityearbeingauditedthatelecttoestablishandsubmitdatatoanEDGEserverwillnotbesubjecttotherequirementtohireaninitialvalidationauditororsubmitinitialvalidationauditresults.
109Weexplainedthatexemptingtheseissuersfromtherequirementtohireaninitialvalidationauditorisappropriatebecausetheywillhaveadisproportionatelyhighoperationalburdenforcompliancewithriskadjustmentdatavalidation.
Wenotedthat,beginningwith2018benefityearriskadjustmentdatavalidation,theseissuerswillnotbesubjecttorandom(ortargeted)samplingunderthematerialitythreshold,andtheywillcontinuetonotbesubjecttotherequirementtohireaninitialvalidationauditororsubmitinitialvalidationauditresults.
Issuerswhoqualifyforthisexemptionwillnotbesubjecttoenforcementactionfornon-compliancewithriskadjustmentdatavalidationrequirements,orbeassessedthedefaultdatavalidationchargeunder§153.
630(b)(10).
Westatedthatthedeterminationofwhetheranissuerhas500orfewerbillablemembermonthswillbemadeonastatewidebasis(thatis,bycombininganissuer'senrollmentinastate'sindividual,smallgroup,andmergedmarkets,asapplicable,inabenefityear).
Intheproposedrule,weproposedtocodifythisexemptionat§153.
630(g)(1).
Wereceivednocommentsoncodifyingthisexemption;therefore,inthisfinalrule,wearecodifyingthisexemptionasproposed.
Consistentwiththefinalizedpolicyadoptedinthe2019PaymentNotice,thisexemptionisavailablebeginningwiththe2017benefityearofriskadjustmentdatavalidation.
Second,inthe2018PaymentNotice,HHSfinalizedamaterialitythresholdforriskadjustmentdatavalidationtoeasetheburdenofannualauditrequirementsforsmallerissuersofriskadjustmentcoveredplans.
110Weevaluatedtheburdenassociatedwithriskadjustmentdatavalidation,particularly,thefixedcostsassociatedwithhiringaninitialvalidationauditorandsubmittingresultstoHHSonanannualbasis.
Weestablishedamaterialitythresholdforriskadjustmentdatavalidationthatconsideredtheburdenofsuchaprocessonsmallerplans.
Specifically,westatedthatissuerswithtotalannualpremiumsatorbelow$15millionforriskadjustmentcoveredplans(calculatedstatewidebasedonthepremiumsofthebenefityearbeingvalidated)willnotbesubjectVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00056Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217509FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations111Whenselectingissuersatorbelowthematerialitythresholdformorefrequentinitialvalidationaudits,wewillconsidertheissuer'spriorriskadjustmentdatavalidationresultsandanymaterialchangesinriskadjustmentdatasubmissions,asmeasuredbyourqualitymetrics.
See81FR94105.
112See83FR16966.
113NationalAssociationofInsuranceCommissionersModelAct,IssuerReceivershipAct.
2007.
http://www.
naic.
org/store/free/MDL-555.
pdf.
totheannualinitialvalidationauditrequirements,butwillstillbesubjecttoaninitialvalidationauditapproximatelyevery3years(barringanyrisk-basedtriggersduetoexperiencethatwarrantmorefrequentaudits).
Undertheestablishedprocess,wewillconductrandomandtargetedsamplingforissuersatorbelowthematerialitythreshold,beginningwiththe2018benefityearofriskadjustmentdatavalidation.
Evenifanissuerisexemptfrominitialvalidationauditrequirementsunderthematerialitythreshold,HHSmayrequiretheseissuerstomakerecordsavailableforreviewortocomplywithanauditbythefederalgovernmentunder§153.
620.
Weproposedtocodifythematerialitythresholdexemptionat§153.
630(g)(2),providingthatanissuerofariskadjustmentcoveredplanwouldbeexemptfromthedatavalidationrequirementsin§153.
630(b)iftheissuerisatorbelowthematerialitythresholddefinedbyHHSandisnotselectedbyHHStoparticipateinthedatavalidationrequirementsinanapplicablebenefityearunderarandomandtargetedsamplingconductedapproximatelyevery3years(barringanyrisk-basedtriggersduetoexperiencethatwarrantmorefrequentparticipationinriskadjustmentdatavalidation).
111Consistentwiththematerialitythresholdfinalizedinthe2019PaymentNotice,112weproposedtodefinethematerialitythresholdastotalannualpremiumsatorbelow$15million,basedonthepremiumsofthebenefityearbeingvalidatedforalloftheissuer'sriskadjustmentcoveredplansintheindividual,smallgroup,andmergedmarkets(asapplicable)inthestate.
Wedidnotproposeanytrendingadjustmenttothematerialitythreshold,butstatedthatifweweretomodifythedefinitionofmaterialitytotrendthe$15millionthresholdinfuturebenefityears,wewouldproposethatchangethroughnotice-and-commentrulemaking.
Wenotedthatifanissuerofariskadjustmentcoveredplanwithinthematerialitythresholdisnotexemptfromthedatavalidationrequirementsforagivenbenefityear(thatis,theissuerisselectedbyrandomandtargetedsampling),andfailstoengageaninitialvalidationauditorortosubmittheresultsofaninitialvalidationaudittoHHS,theissuerwouldbesubjecttoadefaultdatavalidationchargeinaccordancewith§153.
630(b)(10),andmaybesubjecttootherenforcementaction.
Wearecodifyingthisexemptionat§153.
630(g)(2),includingtheestablishmentofa$15millionthresholdthatwillcontinuetoapplyuntilsuchtimeasitmaybechangedthroughnotice-and-commentrulemakingasproposed.
Consistentwiththeoriginalpolicyfinalizedinthe2018PaymentNotice,thisexemptionisavailablebeginningwith2018benefityearriskadjustmentdatavalidation.
Lastly,asnotedinthisrule,HHSreleasedguidanceonApril9,2018indicatingourintentiontoproposeinfuturerulemakinganexemptionfromriskadjustmentdatavalidationrequirementsforcertainissuersinliquidationorthatwillenterliquidation.
Thepurposeofexemptingtheseissuersissimilartothereasonsoutlinedinthisruleforsmallerissuersandthosebelowthematerialitythreshold—torecognizetheburdensandcostsassociatedwiththeriskadjustmentdatavalidationrequirementsontheseissuers,giventheirreducedfinancialandstaffresources.
Underthisproposal,certainissuersinliquidationorthatwillenterliquidationwouldbeexemptfromtherequirementtohireaninitialvalidationauditorandsubmitinitialvalidationauditresults,aswellasthesecondvalidationauditrequirements,andwouldnotbesubjecttoenforcementactionfornon-compliancewithriskadjustmentdatavalidationrequirementsorbeassessedthedefaultdatavalidationchargeunder§153.
630(b)(10).
Weproposedcodifyingat§153.
630(g)(3)thatanissuerwouldbeexemptfromtheapplicablebenefityearofriskadjustmentdatavalidationiftheissuerisinliquidationasofApril30thoftheyearwhentransferadjustmentsbasedondatavalidationresultsaremade(thatis,2benefityearsafterthebenefityearbeingaudited).
Forthe2018benefityearandbeyond,weproposedthattoqualifyfortheexemption,theissuermustalsonotbeapositiveerrorrateoutlierinthepriorbenefityearofriskadjustmentdatavalidation(thatis,theissuerisnotapositiveerrorrateoutlierundertheerrorestimationmethodologyintheprioryear'sriskadjustmentdatavalidation)asoutlinedinproposedparagraph(g)(3)(ii).
Ifanissuerinliquidationorthatwillenterliquidationbytheapplicabledatewasapositiveerrorrateoutlierinthepreviousyear'sriskadjustmentdatavalidation,weproposednottoexempttheissuerfromthesubsequentbenefityear'sriskadjustmentdatavalidation,andtheissuerwouldberequiredtoparticipateinriskadjustmentdatavalidationorreceivethedefaultdatavalidationchargeinaccordancewith§153.
630(b)(10)unlessanotherexemptionapplies.
Toqualifyforthisexemptioninanyyear,weproposedunderparagraph(g)(3)(i)thattheissuermustprovidetoHHS,inamannerandtimeframetobespecifiedbyHHS,anattestationthattheissuerisinorwillenterliquidationnolaterthanApril30th2yearsafterthebenefityearbeingauditedthatissignedbyanindividualwiththeauthoritytolegallyandfinanciallybindtheissuer.
Inproposedparagraph(g)(3)(iii),weproposedtodefineliquidationasmeaningthatastatecourthasissuedanorderofliquidationfortheissuerthatfixestherightsandliabilitiesoftheissueranditscreditors,policyholders,shareholders,members,andallotherpersonsofinterest.
OurintentionwiththispolicywastoalignthedefinitionofliquidationwithstatelawonliquidationofhealthinsuranceissuersandtheNationalAssociationofInsuranceCommissioners'ModelActonreceivershipwherepossible.
113Whileweunderstoodtheexactdateofaliquidationordermaybeuncertaininspecificcircumstances,weproposedthattheindividualsigningtheattestationmustbereasonablycertainthattheissuerwillenterliquidationbyApril30th2benefityearsafterthebenefityearbeingaudited.
Underourproposal,wewouldacceptanattestationfromarepresentativeofthestate'sdepartmentofinsurance,anappointedliquidator,orotherappropriateindividualwhocanlegallyandfinanciallybindtheissuer.
HHSwouldverifytheissuers'liquidationstatuswiththeapplicablestateregulatorsforissuerswhosubmittedanattestationunder§153.
630(g)(3).
Wealsoproposedthat,becausetheApril30th2benefityearsafterthebenefityearbeingauditedisafterthedeadlineforcompletingtheinitialvalidationauditforagivenbenefityear,anissuerwhosubmitsanattestationforthisexemptionbutisdeterminedbyHHStonotmeetthecriteriafortheexemptionwouldreceiveadefaultdatavalidationchargeinaccordancewith§153.
630(b)(10)iftheissuerfailstocompleteorcomplywiththeriskadjustmentdatavalidationprocesswithintheestablishedtimeframesforVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00057Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217510FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations114Availableathttps://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/RADV-Exemption-for-Liquidation-Guidance.
pdf.
115See81FR94104through94105and83FR16966through16967.
116See§153.
740(a)and(b).
thegivenbenefityear,unlessanotherexemptionapplies.
Additionally,wenotedthatanyissuerthatqualifiesforanyofthethreeexemptionsinproposed§153.
630(g)wouldnothaveitsriskscoreanditsassociatedriskadjustmenttransfersadjustedduetoitsownriskscoreerrorrate,butthatissuer'sriskscoreanditsassociatedriskadjustmenttransferscouldbeadjustedifotherissuersinthatstatemarketriskpoolwereoutliersandreceivedriskscoreerrorratesforthatbenefityear'sriskadjustmentdatavalidation.
Wearealsofinalizingthecodificationoftheliquidationexemptionat§153.
730(g)(3)asproposedforthe2018benefityear.
For2017benefityearriskadjustmentdatavalidation,weintendtoworkwithissuersinliquidationandwillexerciseourenforcementdiscretion,whereappropriate,toprovidereliefconsistentwiththecriteriaoutlinedintheApril9,2018guidance114andtheproposedrule.
Comment:Commentersgenerallysupportedthecodificationofamaterialityexemption,butsomesuggestedadifferentthreshold,notingaflatmaterialitythresholdwouldnotaccountforvariationsacrossmarkets.
Someofthesecommenterssuggestedathresholdbasedonapercentageofpremiums(forexample,issuerswhosepremiumsaccountforlessthan5percentofthestatewidepremium).
Alternatively,somecommentersstatedthatifaflatmaterialitythresholdisused,itshouldbeupdatedinfuturebenefityearstoaccountforchangesinmarketconditions.
Onecommenterdidnotsupporttheestablishmentofamaterialitythresholdthatwouldexemptissuersfromconductingriskadjustmentdatavalidationeachyear.
Thiscommenterstatedthatallissuersshouldbesubjecttothesamerequirementsandoperateonalevelplayingfield,andifallissuersparticipateinriskadjustmentdatavalidation,allissuerswillhaveauditedresults,whichwillpromoteoverallconfidenceintheriskadjustmentprogram.
Response:Althoughweappreciatethecomments,asnotedintheproposedrule,weproposedtocodifythematerialityexemptionthatwasfinalizedinthe2018and2019PaymentNotices.
Asdetailedinthesepriorrulemakings115,webelievethisexemptionisappropriatebecausethefixedcostsassociatedwithhiringaninitialvalidationauditorandsubmittingresultstoHHSmaybedisproportionatelyhighforsmallerissuers,andmayevenconstitutealargeportionoftheiradministrativecosts.
Also,weestimatedthatissuersthatcoverunder2percentofmembershipnationallywouldqualifyforthisexemption,sotheeffectoftheexemptiononriskadjustmentdatavalidationisnotmaterial.
HHSwillcontinuetoreviewandanalyzewhetherthethresholdshouldbeupdatedforfuturebenefityears,butwearemaintainingthecurrent$15millionthresholdbecausewebelievethat,undercurrentmarketconditions,itstilldelineatesproperlythelimitedgroupofsmallerissuersofriskadjustmentcoveredplansthatisappropriatefortheexemption'srelief.
Asdetailedinpriorrulemakingsthatestablishedthisexemption,issuerswhomeetthematerialitythresholdwouldnotbeexemptfromconductingriskadjustmentdatavalidationeachyear.
Issuersmeetingthisexemptionwillbesubjecttorandomandtargetedsamplingtoparticipateinriskadjustmentdatavalidationapproximatelyevery3years(barringanyrisk-basedtriggersduetoexperiencethatwarrantmorefrequentparticipationinriskadjustmentdatavalidation),beginningwiththe2018benefityearofriskadjustmentdatavalidation.
Weagreewiththecommenterthatissuersshouldgenerallybesubjecttothesamerequirementsforriskadjustmentdatavalidation,butalsobelievetherearelimitedexemptionsthatmaybeappropriatetoaddressspecificconcerns.
Webelievethat,forthereasonsarticulatedabove,thereisadequatejustificationforthematerialitythresholdascurrentlystructured.
Wearethereforefinalizingthecodificationofthematerialitythresholdexemptionat§153.
630(g)(2).
Comment:Commentersdisagreedwiththeproposaltoexemptcertainliquidatingissuersfromtherequirementstohireaninitialvalidationauditor,submitinitialvalidationauditresults,andundergothesecondvalidationaudit,andfromenforcementactionsfornon-compliancewithriskadjustmentdatavalidationrequirements,includingthedefaultdatavalidationcharge.
Onecommenterstatedthatissuersfacingliquidationmighthaveincentivestosubmitinaccurateriskadjustmentdatagiventheirfinancialpressures,andthatrequiringtheseissuerstoparticipateinriskadjustmentdatavalidationwillpromoteconfidenceintheprogramandthequalityofthedatasubmittedbytheseissuers.
Twocommentershadsignificantconcernsthatsomeplansmightfindwaystotakeadvantageoftheexemptionwithoutenteringliquidation.
Also,inordertocreatealevelplayingfieldforallissuersofriskadjustmentcoveredplans,onecommenterstressedtheimportanceofrequiringallissuerstoconductriskadjustmentdatavalidationeachyear,sincethiswillpromoteconfidenceinthetransfersbyensuringthequalityandintegrityoftheissuerdata.
Response:Whilewerecognizethecommenters'concernthatanissuerthatanticipatesenteringliquidationmayhaveanincentivetoprovidepoorqualityriskadjustmentdata,werequireallissuerstoattesttotheaccuracy,quantityandqualityoftheirriskadjustmentdataaftertheapplicablebenefityear'sdatasubmissiondeadlineduringtheEDGEAttestationandDiscrepancyReportingProcess,andpartofthisattestationnotesthatissuerswhosubmitfalsedatauponwhichriskadjustmenttransfersarecalculatedcouldbesubjecttoprosecutionundertheFalseClaimsAct.
HHSalsohasadditionalsafeguardsthathelpmitigatethepossibilitythatissuerswillprovidepoorqualitydatainconnectionwiththeriskadjustmentprogram,includingauthoritytoimposeacivilmonetarypenaltyforfailuretocomplywithriskadjustmentdatarequirements,aswellastoimposeariskadjustmentdefaultchargewhereanissuerfailedtheEDGEquality/quantityevaluationbysubmittinginadequatedata.
116Further,therequirementsthattheattestingindividualbereasonablycertainthattheissuerwillenterliquidationandthat,beginningwiththe2018benefityear,anissuercannotbeapositiveerrorrateoutlierinriskadjustmentdatavalidationforthepriorbenefityeararefurthersafeguardsintendedtohelpprotectagainstinappropriateuseoftheliquidationexemption.
WealsonotethatifanissuerdoesnotenterliquidationbytheapplicableApril30thduedate,thisexemptionwouldnotbeavailableandtheissuerwouldbesubjecttoadefaultdatavalidationchargeunder§153.
630(b)(10).
Therefore,wedonotanticipatethatissuerswillinappropriatelyattempttoclaimtheexemptionwithoutenteringliquidation,andhaveputsafeguardsinplacetoprotectagainstsituationswhereanissuerattemptstodoso.
Sincetheliquidationexemptionisconsistentwithourbroaderpolicyofprovidingreliefwhereappropriatetoissuerswithlimitedresources,andtheconcernsnotedbythecommentersshouldbeamelioratedbythesafeguardsandVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00058Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217511FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations117Availableathttps://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/RADV-Exemption-for-Liquidation-Guidance.
pdf.
11881FRat12246.
11983FRat16997.
enforcementauthoritiesdescribedabove,wearefinalizingtheliquidationexemptionforthe2018benefityearasproposed.
WeintendtoworkwithissuerswhomeetthecriteriaoutlinedintheApril9,2018guidance117andtheproposedruleandwilluseenforcementdiscretion,whereappropriate,toexempttheseissuersfor2017benefityearriskadjustmentdatavalidation.
E.
Part155—ExchangeEstablishmentStandardsandOtherRelatedStandardsUndertheAffordableCareAct1.
Definitions(§155.
20)Weproposedtoamend§155.
20toadddefinitionsof''directenrollmenttechnologyprovider,''''directenrollmententity,''''directenrollmententityapplicationassister,''and''web-broker.
''Afterconsiderationofthecommentsreceived,wearefinalizingtheadoptionofthesenewdefinitionsasproposed.
Forfurtherdiscussion,pleaseseethepreambleto§§155.
220,155.
221,and155.
415.
Comment:Severalcommenterssupportedtheproposeddefinitions,inparticularthedistinctioncreatedbetween''directenrollmenttechnologyprovider''and''web-broker.
''Onecommenterrecommendedtheterm''directenrollmenttechnologyprovider''notbeincludedinthedefinitionof''web-broker''toavoidpotentialconfusionthatdirectenrollmenttechnologyprovidersarelicensedasbrokers.
However,thesamecommenteragreedthatdirectenrollmenttechnologyprovidersandweb-brokersshouldbesubjecttothesamerequirementsandacknowledgedtheincreasedcomplexityofcompletelydistinguishingthem.
Response:''Directenrollmenttechnologyprovider''isdefinedasatypeofweb-brokerbusinessentitythatisnotalicensedagent,broker,orproducerunderstatelawandhasbeenengagedorcreatedby,orisownedbyanagentorbroker,toprovidetechnologyservicestofacilitateparticipationindirectenrollmentunder§§155.
220(c)(3)and155.
221.
Thisdefinitionreferstotheseentitiesasatypeofweb-brokerbusinessentity,andtheaccompanyingdefinitionof''web-broker''similarlyincludesareferencetodirectenrollmenttechnologyproviders,forthepurposeofgenerallyextendingthesamerequirementstodirectenrollmenttechnologyprovidersasweb-brokers,unlessotherwisespecified.
Thecreationoftheterm''directenrollmenttechnologyprovider''anditsaccompanyingdefinitionwasnecessarytodistinguishtheseentitiesfromothertypesofweb-brokers,whereappropriate.
Seethebelowpreamblediscussionin§§155.
220and155.
221forfurtherdetails.
2.
GeneralFunctionsofanExchangea.
ConsumerAssistanceToolsandProgramsofanExchange(§155.
205)Section1311(d)(4)(B)ofthePPACArequiresanExchangetoprovidefortheoperationofatoll-freetelephonehotlinetorespondtorequestsforassistance.
Inthe2017PaymentNotice,weexplainedthedistinctionbetweenatoll-freecallcenterandatoll-freehotline,forpurposesofspecifyingthedifferentrequirementsforSBE–FPsandotherExchanges.
118Inthe2019PaymentNotice,wefinalizedregulationsprovidingforaleanerFF–SHOPimplementation,andhaveadoptedthatapproach.
Inthatrulemaking,weexplainedthattheFF–SHOPswillcontinuetoprovideacallcentertoanswerquestionsrelatedtotheSHOP.
119Currently,employerspurchaseandenrolltheiremployeesinnewFF–SHOPcoveragethroughissuersandthroughagentsandbrokersregisteredwiththeFFE,andnolongerenrollinSHOPcoverageusinganonlineFF–SHOPplatform.
Underthisapproach,FF–SHOPcallcentervolumehasbeenextremelylow.
Giventhisexperience,weproposedtoamend§155.
205(a)toallowSHOPsoperatingintheleanerfashiondescribedinthe2019PaymentNoticetooperateatoll-freetelephonehotline,asrequiredbysection1311(d)(4)(B)ofthePPACA,andtoeliminatetherequirementtooperateamorerobustcallcenter.
Weproposedtoamendtheinterpretationprovidedinthe2017PaymentNoticeofwhatisrequiredtoestablishatoll-freehotline,asrequiredbysection1311(d)(4)(B)ofthePPACA.
There,westatedthatatoll-freehotlineincludesthecapabilitytoprovideinformationtoconsumersandappropriatelydirectconsumerstothefederallyoperatedcallcenterorHealthCare.
govtoapplyfor,andenrollin,coveragethroughtheExchange.
GiventhatSHOPsthatoperateintheleanerfashionnolongerofferonlineenrollmentandtoreflecttheoptionforsuchSHOPstoprovideatoll-freehotline,ratherthanamorerobustcallcenter,weproposedthatatoll-freehotlineincludethecapabilitytoprovideinformationtoconsumersabouteligibilityandenrollmentprocesses,andtoappropriatelydirectconsumerstotheapplicableExchangewebsiteandotherapplicableresources.
Thetoll-freehotlineprovidedbysuchSHOPswouldconsistofatoll-freenumberlinkedtointeractivevoiceresponsecapability,withpromptstopre-recordedresponsestofrequentlyaskedquestions,informationaboutlocatinganagentandbrokerinthecaller'sarea,andtheabilityforthecallertoleaveamessageregardinganyadditionalinformationneeded.
WestatedourbeliefthatthishotlinewouldadequatelyaddresstheneedsofpotentialFF–SHOPconsumersrequestingassistance,andappropriatelydirectconsumerstoservicestoapplyfor,andenrollin,FF–SHOPcoverage.
Comment:Afewcommenterswereinsupportofoperatingthecallcenterinaleanerfashion.
Onecommenterwasnotinsupportoftheproposal,concernedthatconsumerswouldnotbeabletoobtaintimelyassistance.
Response:TheSHOPtoll-freecallcenterwillcontinuetoprovidetimelyaccesstoassistance.
Consumerscanimmediatelyaccesspre-recordedresponsestofrequentlyaskedquestionsalongwithinformationaboutlocatinganagentandbrokerintheconsumer'sarea.
Further,theconsumercanleaveamessageorsendanemailrequestinganyfurtherinformationneeded,whichwillbemonitoreddailyforpromptresponse.
Therefore,wearefinalizingthesechangesasproposed.
b.
NavigatorProgramStandards(§155.
210)Section1311(d)(4)(K)and1311(i)ofthePPACArequireeachExchangetoestablishaNavigatorprogramunderwhichitawardsgrantstoentitiestoconductpubliceducationactivitiestoraiseawarenessoftheavailabilityofQHPs,distributefairandimpartialinformationconcerningenrollmentinQHPs,andtheavailabilityofpremiumtaxcredits,andcost-sharingreductions;facilitateenrollmentinQHPs;providereferralstoanyapplicableofficeofhealthinsuranceconsumerassistanceorhealthinsuranceombudsmanestablishedundersection2793ofthePHSAct,oranyotherappropriatestateagencyoragenciesforanyenrolleewithagrievance,complaint,orquestionregardingtheirhealthplan,coverage,oradeterminationundersuchplanorcoverage;andprovideinformationinamannerthatisculturallyandlinguisticallyappropriatetotheneedsofthepopulationbeingservedbytheExchange.
ThestatutealsorequirestheSecretarytodevelopstandardstoensurethatinformationmadeavailablebyNavigatorsisfair,accurate,andimpartial.
WehaveimplementedtheVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00059Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217512FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations120Thesetopicsare:UnderstandingtheprocessoffilingExchangeeligibilityappeals;understandingandapplyingforexemptionsfromtheindividualsharedresponsibilitypaymentthataregrantedthroughtheExchange;theExchange-relatedcomponentsofthepremiumtaxcreditreconciliationprocess;understandingbasicconceptsandrightsrelatedtohealthcoverageandhowtouseit;and,referralstolicensedtaxadvisers,taxpreparers,orotherresourcesforassistancewithtaxpreparationandtaxadviceoncertainExchange-relatedtopics.
121Theseareasinclude:theneedsofunderservedandvulnerablepopulations;eligibilityandenrollmentrulesandprocedures;therangeofQHPoptionsandinsuranceaffordabilityprograms;and,theprivacyandsecuritystandardsapplicableunder§155.
260.
122Theseareasinclude:informationonQHPs,includingbenefitscovered,differencesamongplans,paymentprocess,rightsandprocessesforappealsandgrievances,andcontactingindividualplans;thetaximplicationsofenrollmentdecisions;informationonaffordabilityprograms;Exchangeeligibilityandenrollmentrulesandprocedures;privacyandsecuritystandards,customerservicestandards;outreachandeducationmethodsandstrategies;appropriatecontactinformationforotheragenciesforconsumersseekinginformationaboutcoverageoptionsnotofferedthroughtheExchange;basicconceptsabouthealthinsuranceandtheExchange;workingeffectivelywithindividualswithlimitedEnglishproficiency,anddisabled,rural,underservedorvulnerableindividuals;providinglinguisticallyandculturallyappropriateservices;ensuringphysicalandotheraccessibilityforpeoplewithafullrangeofdisabilities;andapplicableadministrativerules,processesandsystemsrelatedtoExchangesandQHPs.
123Wenotethat§155.
215alsoappliestonon-Navigatorassistancepersonnel,alsoreferredtoasstatutorilyrequiredNavigatordutiesthroughregulationsat§155.
210(forallExchanges)and§155.
215(forNavigatorsinFFEs).
Further,section1311(i)(4)ofthePPACArequirestheSecretarytoestablishstandardsforNavigatorstoensurethatNavigatorsarequalified,andlicensed,ifappropriate,toengageintheNavigatoractivitiesdescribedinthestatute.
Thisprovisionhasbeenimplementedat§155.
210(b)(forallExchanges)andat§155.
215(b)(forNavigatorsinFFEs).
Section155.
210(e)(9)specifiesthatanExchangemayrequireorauthorizeNavigatorstoprovideassistancewithanumberoftopicsnotspecificallymentionedinthestatute,includingcertainpost-enrollmentactivities.
ThissectionspecifiesthatNavigatorsoperatinginFFEsareauthorizedtoprovideassistanceonthesetopicsandarerequiredtodosounderNavigatorgrantsawardedin2018orlater.
120ToprovidemoreflexibilityrelatedtotherequireddutiesforNavigatorsoperatinginFFEs,weproposedtoamend§155.
210(e)(9)tomakeassistancewiththesetopicspermissibleforFFENavigators,notrequired,effectiveupontheawardingoftheFEEnavigatorgrantsin2019.
WestatedourbeliefthatmakingassistancewiththesetopicsoptionalforFFENavigatorswouldreduceregulatoryburdenonFFENavigatorentitiesandbettermeetconsumers'needsbyallowingFFENavigatorstoprioritizeworkaccordingtoconsumerdemand,communityneeds,andorganizationalresources.
WeacknowledgethatHHSaddedtheseduties2yearsagotoensuretheavailabilityofmorerobustconsumerassistance;however,sincethattime,therehavebeenprogrammaticandhealthcarecoveragepolicychangesthathavecausedustoreflectfurther.
WestatedourbeliefthatconsumerswouldbebetterservedbyallowingmoreflexibilityforNavigatorstotailortheirservicestomakethemostoftheirresourcesandtofittheneedsoftheircommunities.
Intheproposedrule,weemphasizedthatFFENavigatorswouldbeauthorizedtocontinuetoprovideassistancewithanyofthetopicslistedunder§155.
210(e)(9).
Undertheproposedapproach,ifFFENavigatorgranteeschoosetoprovideanyoftheassistancespecifiedin§155.
210(e)(9),wewillcontinuetoexpectthemtoassesstheircommunities'needsandbuildcompetencyintheassistanceactivitiesinwhichtheyareengaging.
ItisimportanttonotethatthecurrentFFENavigatortrainingforannualcertificationorrecertificationmightcontinuetoincludetrainingonsomeofthe§155.
210(e)(9)topics.
TosupplementtherequiredFFENavigatortraining,wealsoplantocontinueprovidingFFENavigatorswithadditionalinformationrelatedtotheseassistanceactivitiesthroughinformalwebinars,newsletters,andtechnicalassistanceresourcessuchasfactsheetsandslidepresentations.
FFENavigatorgranteesthatopttocarryoutanyoftheassistanceactivitiesin§155.
210(e)(9)willbeexpectedtodrawuponthesematerialstoensuretheirstaffandvolunteersareadequatelypreparedtoprovidethatassistance.
OurproposalalsoretainedSBEautonomytodeterminewhetherrequiringorauthorizingtheSBE'sNavigatorstoperformtheactivitieslistedin§155.
210(e)(9)bestmeetsthestate'sneedsandresources.
WerecognizethatthetimeFFENavigatorscurrentlyspendprovidingassistancewiththe§155.
210(e)(9)topicsvaries.
Tobetterunderstandthefutureimpactofremovingthisrequirement,werequestedcommentonhowmanyhourspermonthFFENavigatorgranteesandindividualNavigatorscurrentlyspendprovidingtheassistanceactivitiesdescribedat§155.
210(e)(9),whatpercentageoftheircurrentworkinvolvesprovidingthesetypesofassistance,andhowthatamountofworkwouldbeimpactedifprovidingthesetypesofassistancewouldnolongerberequired.
WealsorequestedcommentonhowFFENavigatorgranteesandindividualNavigatorsmightreprioritizeworkandspendtimefulfillingtheirotherduties,ifnotrequiredtoprovidethetypesofassistancedescribedunder§155.
210(e)(9).
InadditiontoproposingtoincreaseFFENavigatorflexibilitywithregardtothetypesofassistancetheyprovide,wealsoproposedtoprovidemoreflexibilityrelatedtothetrainingrequirementsthatExchangesestablishforNavigators.
Sections155.
210(b)(2)and155.
215(b)(2)establishNavigatortrainingstandardsconsistentwithsection1311(i)(4)ofthePPACA.
Section155.
210(b)(2)specifiesthatExchangesmustdevelopandpubliclydisseminateasetoftrainingstandardstobemetbyallentitiesandindividualscarryingoutNavigatorfunctionsunderthetermsofaNavigatorgrant,toensureexpertiseinseveralspecifictopicareas.
121Currently,under§155.
210(b)(2),Exchanges(includingSBEs)thatopttorequiretheirNavigatorstoperformtheassistancedescribedin§155.
210(e)(9)mustalsodevelopanddisseminatetrainingstandardsrelatedtothespecificassistanceareastheyrequireunder§155.
210(e)(9).
Also,NavigatorsinFFEscurrentlymustbetrainedinfifteenadditionaltopicareasidentifiedat§155.
215(b)(2).
122ToprovidemoreflexibilityrelatedtothetrainingrequirementsforNavigators,weproposedtostreamlineboththerequirementin§155.
210(b)(2)forallExchangestodevelopanddisseminateNavigatortrainingstandardsonspecifictopics,andthelistofrequiredtrainingtopicsforFFENavigatorsin§155.
215(b)(2).
Weproposedtoamendtherequirementat§155.
210(b)(2)torequireExchangestodevelopandpubliclydisseminatetrainingstandardstoensurethattheentitiesandindividualsarequalifiedtoengageinNavigatoractivities,includinginthefourmajorareascurrentlyspecifiedat§155.
210(b)(2)(i)through(iv).
Thiswouldeliminatethetrainingrequirementsatcurrent§155.
210(b)(2)(v)–(ix)thatcorrespondtotheactivitiesoutlinedin§155.
210(e)(9),sincethoseactivitieswouldnolongerberequired.
WealsoproposedtoreplacethecurrentlistoffifteenadditionalFFENavigatortrainingtopicsat§155.
215(b)(2)withacross-referencetotheamended§155.
210(b)(2)topics.
123Intheproposedrule,weVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00060Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217513FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsenrollmentassistancepersonnel.
However,atthistime,thisprogramisnolongerinoperationintheFFEs.
statedthatwebelievetherevisedregulationswouldbebroadenoughtoensurethateachNavigatorprogramfulfillstherequirementsdescribedinsection1311(i)ofthePPACA.
ThisapproachwouldprovideExchangesgreaterflexibilityindesigningtheirNavigatortrainingprogramstoensurecoverageofthemostinstructiveandtimelytopicsandtoalignthetrainingwithfuturechangesintheNavigatorprogramortheoperationoftheExchanges,whilestillensuringthatNavigatorsarequalifiedtocarryouttheirrequiredduties.
ThisadditionalflexibilitywouldalsoallowExchangestofocusontrainingareastheydeterminetobemostrelevanttothepopulationstheyserveandonthepolicyandoperationsoftheExchangeinwhichtheyoperate.
Furthermore,Exchangescouldopttoprovidemoretrainingthanwouldberequiredundertheseproposedamendments.
Forexample,inadditiontotheFFEannualNavigatortraining,requiredforNavigatorcertificationunder§155.
215(b),NavigatorsinFFEsareprovidedwithtrainingthroughouttheyearthatservesasasupplementtotheannualFFENavigatortrainingbycoveringtimelyandappropriatetrainingtopicsthatmightnotbeincludedintheannualFFENavigatortraining.
ThisadditionaltrainingprovidedbyFFEs,isconsistentwiththerequirementthatFFENavigatorsobtaincontinuingeducation,asspecifiedat§155.
215(b)(1)(iv),andweintendtocontinuethispractice.
Currently,HHSprovidesSBEs,includingSBE–FPs,theflexibilitytodecidewhethertheywillrequireorauthorizetheirNavigatorstoprovideassistanceonanyoralloftheareasdescribedat§155.
210(e)(9).
Thechangesthatwearefinalizinginthisfinalruledonotchangethatflexibility.
IfSBEschoosetoauthorizeorrequiretheirNavigatorstoprovideassistanceinanyoftheareaslistedat§155.
210(e)(9),theywillstillberequiredtoensurethattheirNavigatorsarequalifiedtoprovidethisassistance.
Underouramendments,anySBEsoptingtoauthorizeorrequiretheirNavigatorstoprovideanyorallofthetypesofassistancelistedat§155.
210(e)(9)willhavetheflexibilitytodetermineeffectiveapproachestotrainingtheirNavigatorsonperformingthesetypesofassistancebasedonlocalexperience.
WebelieveeachExchangeisbestpositionedtodeterminethetrainingthatismostappropriatefortheactivitiesoftheirNavigators.
TheseproposalsareintendedtoincreaseprogramflexibilitywithinExchangesanddecreaseregulatoryburdenrelatedtoNavigatortrainingwhilemaintainingstandardsthatwillensurethatNavigatorsaresufficientlypreparedtocarryoutallrequiredorauthorizedactivities.
Wesolicitedcommentsontheseproposalsandreceivedarangeofcommentsinfavorandnotinfavoroffinalizingthispolicy.
StreamliningtheNavigatortrainingrequirementswillallowExchangesandNavigatorstoprioritizetheirtrainingresourcesonthosetasksthatwillbestservetheirstatemarketsandExchanges.
HHSwillcontinuetoprovidetrainingonallcurrentNavigatortrainingtopics.
Theformatoftheprovidedtrainingmayincludeothermethodsoftechnicalassistance,butHHSisstillcommittedtoprovidingtrainingonallofthestreamlinedNavigatortrainingtopics.
Wearefinalizingthesechangesasproposed.
Finally,weproposedallowing,butnotrequiring,NavigatorstoassistconsumerswithapplyingforeligibilityforinsuranceaffordabilityprogramsandQHPenrollmentthroughweb-brokerwebsitesundercertaincircumstances.
Wearenotfinalizingthisproposal.
Forfurtherdiscussionofthatproposal,pleaseseethepreambleto§155.
220.
Comment:WereceivedsomecommentsinsupportofthestateflexibilitytherulegrantstoSBEstodesigntheirowntrainingrequirements.
However,manycommentersexpressedconcernaboutthisproposal,citingthecomplexityoftheenrollmentprocess;theneedtoeducateassistersonhowtobestserveunderservedandvulnerablepopulations;theneedtotrainNavigatorsonhowtoprovideculturallyandlinguisticallyappropriateservices;andtheuniqueroleNavigatorsplayinhelpingunderservedandvulnerablepopulationstobothenrollinandusetheircoverage.
CommentersalsostatedthatreducingthenumberofmandatorytrainingrequirementsmayresultinNavigatorsnotbeingfullyequippedtoserveunderservedandvulnerableconsumers.
Response:WeagreewiththecommentersthatsupportedtheenhancedflexibilitythattherulegrantstoSBEstodesignthetrainingrequirementsthatarethebestfitfortheirstates.
NothinginthisfinalruleprohibitsSBEsfromchoosingnottostreamlinetheirstatetrainingorcertificationrequirementstoalignwiththerequiredtrainingintheFFEs.
WebelieveitisimportanttoprovideSBEswithenhancedflexibilityandtheautonomytodesign,provide,andimplementthetrainingthatisthebestfitfortheircommunities.
Thestreamlinedtrainingrequirementswillstillcoverhowtoservevulnerableandunderservedconsumersasarequiredtopic,andstillrequirethatExchangesdevelopandpubliclydisseminateasetoftrainingstandardsforNavigatorstoensureNavigatorsarequalifiedtoengageinNavigatoractivities.
Additionally,therequiredNavigatorcertificationandrecertificationtrainingswillnotbetheonlysourceoftrainingthatHHSwillprovidetobesteducateNavigatorsintheFFEsonthecomplexitiesoftheenrollmentprocess,howtobestservevulnerableandunderservedconsumers,andhowtoserveconsumersinwayswhichareculturallyandlinguisticallyappropriate.
Inadditiontotherequiredtraining,HHSwillcontinuetoprovidetrainingthroughotherchannels.
Thesechannelsincludewebinars,policybriefs,jobaids,newsletters,andfactsheets.
HHSiscommittedtoprovidingNavigatorswithsufficienttraining,andwillcontinuetoidentifyandprovidetrainingsinareasinwhichitmaybeneeded.
Comment:ManycommentersexpressedconcernthatbecauseallNavigatorentities,asrecipientsoffederalfunds,mustcomplywithsection1557ofthePPACA,TitleVIoftheCivilRightsActof1964,section504oftheRehabilitationAct,andtheAmericanswithDisabilitiesAct,itisessentialforHHStocontinuetoprovidetrainingonthesetopics.
Thesecommentersalsoexpressedconcernthatiftrainingonthesetopicswerenolongerrequired,Navigatorswouldbeunabletolearnhowtocomplywiththeselaws.
ThesecommentersalsoexpressedtheirbeliefthatNavigatorsoftenserveconsumerswhohavedisabilities,chronicillness,orLimitedEnglishProficiency(LEP),andstatedthatifhowtoservethesepopulationswerenolongerarequiredtrainingtopic,Navigatorswouldbeunabletoservetheseconsumerseffectively.
Response:WeunderstandthatNavigatorsmustcomplywithanti-discriminationlawsandintendtocontinuetoprovideinformationaboutthistopicaspartofthebroaderrequiredtrainingcategoryforservingvulnerableandunderservedconsumersrequiredtrainingcategory.
WeinterprettherequirementfortrainingstandardstoensuretheentitiesandindividualsarequalifiedtoengageinNavigatoractivitiesrelatedtotheneedsofunderservedandvulnerablepopulationstoincludetopicssuchas:VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00061Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217514FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsAnoverviewofanti-discriminationlawssuchassection1557ofthePPACA,TitleVIoftheCivilRightsActof1964,section504oftheRehabilitationActandtheAmericanswithDisabilitiesAct;Navigators'legalresponsibilitytocomplywiththeabovelaws;Bestpracticesforhowtodoso;andHowtoserveunderservedandvulnerableconsumers,includingthosewhoserveconsumerswhomayhavedisabilities,chronicillness,oraLimitedEnglishProficiency(LEP).
WewillmonitorimplementationoftherevisedNavigatortrainingsandtheirimpacttoensurethattheseunderservedandvulnerablepopulationscontinuetobeproperlyservedbytheNavigatorprogram.
IfHHSseessignificantevidencethatthecapacityofNavigatorstoservethesepopulationsandcomplywithanti-discriminationlawshaserodedafterthesechangesareimplemented,weareopentoreconsideringourapproach.
Comment:WereceivedcommentsinsupportoftheflexibilitytherulegrantstoSBEstochoosewhethertheirNavigatorsshouldcontinuetoberequiredtoprovidecertaintypesofassistance,includingpost-enrollmentassistance,orwhetherthatshouldbeoptional.
Response:Weagreewiththecommenterswhosupportedtheenhancedflexibilitythattheruleprovides.
WealsoagreethatSBEsshouldhavetheflexibilitytoeitheractinaccordancewiththisrulebymakingcertaintypesofassistance,includingpost-enrollmentassistance,optional,ortocontinuetorequireit.
WebelievethatSBEs,ratherthanthefederalgovernment,arebestsuitedtodeterminetheneedsofthepopulationstheyserve,andhowtobestprioritizetheworkNavigatorsprovidetomeetthoseneeds.
ThisfinalruleprovidesSBEswithflexibilityandautonomytoallocatetheirresourcesinwaysthatbestservethecitizensoftheirstates.
Comment:Manycommentersalsoexpressedconcernabouttheproposalthatmakesprovidingcertaintypesofassistance,includingpost-enrollmentassistance,optionalintheFFE.
CommentersstatedthatthevulnerablepopulationsthatNavigatorsserverequireongoingassistanceafterenrollmentandthatNavigatorsplayanimportantroleineducatingconsumersonhowtouseinsuranceoncetheyareenrolled,includingtheirroleinassistingconsumersonhowtofileanappeal;howtoreportfluctuatingincometotheExchange;howtoreconciletheirAPTC;howtoprovidereferralstostateagencies;howtoanswerconsumers'questionsabouttheirhealthplans;howtoprovideeducationtoimproveconsumers'healthliteracy;howtohelpconsumerslocateproviders;andhowtoanswerbillingandpaymentquestions.
CommentersalsostatedthatbecauseofthetrustedrelationshipsNavigatorsbuildwithconsumersduringtheenrollmentprocess,Navigatorsarebestsuitedtoprovidethepost-enrollmentassistancethatthoseconsumersneed.
Wealsoreceivedcommentsthatifprovidingcertaintypesofassistance,includingpost-enrollmentassistance,becameoptionalratherthanrequired,consumerhealthliteracyandhealthequitymaybeimpacted.
Response:NothinginthisfinalruleprohibitsNavigatorsintheFFEfromprovidingthesetypesofassistance.
IfNavigatorgranteesoperateinareaswheresignificantassistanceintheseareasisneeded,thoseNavigatorgranteesretaintheoptiontocontinueprovidingthatassistance,andwewouldencouragethemtocontinuetodoso.
Webelievethat,justlikeintheSBEs,Navigatorgranteesthemselves,ratherthanthefederalgovernment,areinthebestpositiontodeterminetheparticularneedsofthecommunitiestheyserve,andthetypeofassistancethatisrequiredtomeetthoseneeds.
Wealsoarecommittedtoimprovinghealthequity,andencourageNavigatorstocontinuetheirimportanteffortstoreducehealthdisparitiesinthecommunitieswhichtheyserve.
ThisfinalruleprovidesNavigatorgranteeswithflexibilitytoservetheirconsumersaccordingtoconsumerdemand,communityneeds,andorganizationalresources;andallowsNavigatorstoprioritizetheirworkaccordingly.
IfNavigatorgranteesdecidetocontinuetoprovidethetypesofassistancethatwillnolongerberequired,theyandtheExchangearerequiredtoensurethattheyareappropriatelytrainedtoprovidethatassistance.
TheFFEswillcontinuetoprovidetrainingonpost-enrollmentassistanceviawebinars,policybriefs,jobaids,newsletters,factsheets,andotherresources,asneeded,andurgethoseNavigatorstoreviewthoseresourcesandattendthosetrainings.
Comment:WesoughtcommentontheamountoftimeNavigatorsspendprovidingthetypesofassistancethatwillnolongerberequired,includingpost-enrollmentassistance.
ManycommentersnotedthatthetimeNavigatorsspentprovidingsuchassistancewasmanageable,andthatNavigatorsdidnotwantorneedtheflexibilitytheruleprovides.
Thesecommentersstatedthatenrollmentassistanceneedslessenaftertheconclusionoftheopenenrollmentperiod,andtherefore,thatNavigatorshadtheneededtimetoprovidepost-enrollmentassistance.
Response:Weappreciatethosewhosubmittedcommentsontheamountoftimespentprovidingthetypesofassistancethatwillnolongerberequired,includingpost-enrollmentassistance.
WebelievetheneedsofthepopulationsservedbyNavigatorsarenotstatic,andnotallcommunitieshavethesameneeds.
TheresourceseachNavigatormayhavetodevotetoprovidingthisassistancemayvarybygrantee.
WebelievethatitisessentialtoprovideNavigatorswithasmuchflexibilityandautonomyaspossibletoprioritizetheirworkaccordingtoconsumerdemand,communityneeds,andorganizationalresources.
Comment:Manycommenterssuggestedthatratherthanmakingcertaintypesofassistance,includingpost-enrollmentassistance,optional,andstreamliningtherequiredNavigatortrainingstandards,HHSshouldinsteadallocatemorefundingtotheNavigatorprogram.
Response:WhenExchangeswereintheirinfancyandpublicawarenessandunderstandingofcoverageoptionswaslow,HHSencouragedNavigatorstoprovideintensiveface-to-faceassistancetoconsumers.
Thisassistanceincludedprovidingcertaintypesofassistance,includingpost-enrollmentassistance,asarequiredduty.
Italsoguidedthedevelopmentofourtrainingstandardsinpastyears.
Sincethattime,publicawarenessandeducationonoptionsforcoverageavailablethroughtheExchangeshasincreased.
Certifiedapplicationcounselors,directenrollmentpartners,andExchange-registeredagentsandbrokersserveasadditionalresourcesforeducationoncoverageoptionsandoutreachtoconsumers.
WebelieveitisappropriatetoscaledowntheNavigatorprogramandotheroutreachactivitiestoreflecttheenhancedpublicawarenessofhealthcoverageoptionsthroughtheExchanges.
c.
StandardsApplicabletoNavigatorsandNon-NavigatorAssistancePersonnelCarryingOutConsumerAssistanceFunctionsUnder§§155.
205(d)and(e)and155.
210inaFederally-FacilitatedExchangeandtoNon-NavigatorAssistancePersonnelFundedThroughanExchangeEstablishmentGrant(§155.
215)ForadiscussionoftheprovisionsofthisfinalrulerelatedtostandardsapplicabletoNavigatorssubjecttoVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00062Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217515FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations124HHSpreviouslydefinedtheterm''web-broker''asincludinganindividualagentorbroker,agroupofagentsandbrokers,oracompanythatisinterestedinprovidinganon-Federally-facilitatedExchangewebsitetoassistconsumersintheQHPselectionandenrollmentprocessasdescribedin§155.
220(c)(3).
125Wealsoproposedminortechnicaleditstothelastsentenceofparagraph(g)(5)(iii)tomorecloselyalignthisprovisionwiththelanguageatparagraph(g)(4),whichestablishessimilarparametersfollowingtheterminationofanagent's,broker's,orweb-broker'sagreementsandregistrationwiththeFFEs.
§155.
215,pleaseseethepreambleto§155.
210.
d.
AbilityofStatesToPermitAgentsandBrokersToAssistQualifiedIndividuals,QualifiedEmployers,orQualifiedEmployeesEnrollinginQHPs(§155.
220)Throughoutthepreamblefor§§155.
220and155.
221,weproposedtousetheterm''web-broker''torefertoanindividualagentorbroker,agroupofagentsorbrokers,oranagentorbrokerbusinessentity,registeredwithanExchangeunder§155.
220(d)(1)thatdevelopsandhostsanon-ExchangewebsitethatinterfaceswithanExchangetoassistconsumerswiththeselectionofandenrollmentinQHPsofferedthroughtheExchange,aprocessreferredtoasdirectenrollment.
Wehaveusedtheterm''web-broker''inthepreambleofpriorrules,aswellasinguidance,andproposedtogenerallyreplacethepreviouslyusedinformaldefinitionwiththeoneproposedinthisrulemaking.
124Weproposedtodefine''web-broker''in§155.
20andusethattermin§§155.
220and155.
221,whereapplicable,toavoidconfusion.
Weclarifiedthatgeneralreferencestoagentsorbrokerswouldalsobeapplicabletoweb-brokerswhenaweb-brokerisalicensedagentorbroker.
Wealsoproposedtodefine''directenrollmenttechnologyproviders''asatypeofweb-brokerthatisnotalicensedagent,broker,orproducerunderstatelawandhasbeenengagedorcreatedby,orisownedby,anagentorbrokertoprovidetechnologyservicestofacilitateparticipationindirectenrollmentasaweb-brokerunder§§155.
220(c)(3)and155.
221.
Theproposeddefinitionofweb-brokerreflectedtheinclusionofdirectenrollmenttechnologyproviders.
Therefore,referencesto''web-brokers''wereintendedtoincludedirectenrollmenttechnologyproviders,aswellaslicensedagentsorbrokersthatdevelopandhostnon-ExchangewebsitestofacilitateQHPselectionandenrollment,unlessindicatedotherwise.
Pleaseseethepreamblediscussionrelatedto§155.
221forfurtherdetails.
Asnotedabove,wearefinalizingthesedefinitionsasproposed.
Asdescribedinthepreambleto§155.
221,weproposedsignificantchangesto§155.
221tostreamlineandconsolidatetherequirementsapplicabletoalldirectenrollmententities—bothissuersandweb-brokers—inoneregulation.
Toreflectthesechanges,wealsoproposedseveralamendmentsto§155.
220.
First,weproposedtomovecertainrequirementsthatapplytoalldirectenrollmententitiesfrom§155.
220to§155.
221.
Specifically,weproposedtomovetherequirementscurrentlycapturedin§155.
220(c)(3)(i)(K)and(L),andtoamendtherequirementcurrentlyin(L),whichasdescribedfurtherbelow,arenowat§155.
221(b)(4)and(d),respectively.
Wearefinalizingthesechangesasproposed.
Weproposedconformingeditsthroughout§155.
220toincorporatetheuseoftheterm''web-broker,''asproposedtobedefined,inapplicableparagraphstomoreclearlyidentifywhichFFErequirementsextendtoweb-brokers.
Intheintroductorytexttoparagraphs(a),(c),and(d),andinparagraphs(c)(1),(c)(5),(e),(f)(1),(f)(2),(f)(3),(f)(3)(i),(f)(4),(g)(1),(g)(2),(g)(2)(iii),(g)(2)(iv),(g)(4),(g)(5)(i)(A),(g)(5)(i)(B),(g)(5)(ii),(g)(5)(iii),125(h)(1),(h)(2),(h)(3),(i),(j)(1),(j)(3),(k)(1),(k)(2),and(l),weproposedtoaddareferencetoweb-brokereachtimeagentsorbrokersarereferenced,toclarifythattheseparagraphsalsoapplytoallweb-brokers,includingdirectenrollmenttechnologyproviders.
Inparagraphs(c)(3)(i),(c)(3)(i)(A),(c)(3)(ii),(c)(4),(c)(4)(i),(c)(4)(i)(E),(c)(4)(i)(F),and(c)(4)(ii),weproposedtoreplacesomereferencesto''agentorbroker''withreferencesto''web-broker''toclarifywhentheseparagraphsapplytoonlyweb-brokers,andnottoothertypesofagentsorbrokerswhodonothostordevelopanon-ExchangewebsitetoassistconsumerswithdirectenrollmentinQHPsofferedthroughtheFFEsorSBE–FPs.
Wealsoproposedtorevisethesectionheadingfor§155.
220to''AbilityofStatestopermitagents,brokers,andweb-brokerstoassistqualifiedindividuals,qualifiedemployers,orqualifiedemployeesenrollinginQHPs'',aswellasthesectionheadingforparagraph(i)tosimilarlyaddareferencetoweb-broker.
Wearefinalizingthesechangesasproposed.
Pleaseseethepreamblediscussionrelatedto§155.
221forfurtherdetailsonotherproposedandfinalizedchangesrelatedtostreamliningtheseregulationsandclarifyingtherequirementsapplicabletoweb-brokersandotherdirectenrollmententities.
Wealsoproposedtoamend§155.
220(c)(3)(i)toaddanewparagraph(c)(3)(i)(K)thatrequiresweb-brokerwebsitestocomplywiththeapplicablerequirementsin§155.
221whenaninternetwebsiteofaweb-brokerisusedtocompletetheQHPselection.
Wenotedthisnewproposedrequirementwouldalsoapplywhenaninternetwebsiteofaweb-brokerisusedtocompletetheExchangeeligibilityapplication,throughtheexistingcrossreferencetoparagraph(c)(3)(i)inparagraph(c)(3)(ii)(A),buttheapplicablerequirementsunder§155.
221maydifferdependingonwhetherthenon-ExchangewebsiteisusedtocompletetheExchangeeligibilityapplicationorisusedtocompletetheQHPselection.
Wearefinalizingthisamendmentasproposed.
Pleaseseethepreamblediscussionrelatedto§155.
221forfurtherdetails.
Wealsoproposedtoamend§155.
220(c)(3)(i)toaddanewrequirementatnewparagraph(c)(3)(i)(L)thatprohibitsweb-brokerwebsitesfromdisplayingrecommendationsforQHPsbasedoncompensationtheweb-broker,agent,orbrokerreceivesfromQHPissuers.
Intheproposedrule,theterm''compensation''wouldincludecommissions,fees,orotherincentivesasestablishedintherelevantcontractbetweenanissuerandtheweb-broker.
Intheproposedrule,werecognizedthatweb-brokerwebsitesoftenaskforcertaininformationfromconsumerstoassistwiththedisplayandsortingofQHPoptionsontheirnon-Exchangewebsites.
Thismayincludeestimatedannualincome,preferencesregardinghealthcareproviders,prescriptiondrugstheconsumertakes,expectedfrequencyofdoctors'visits,orotherinformation.
Wealsoacknowledgedthatweb-brokerssometimesdisplayQHPrecommendationsorassignscorestoQHPsusingtheinformationtheycollect.
Weexpressedsupportforthedevelopmentanduseofinnovativeconsumer-assistancetoolstohelpconsumersshopforandselectQHPsthatbestfittheirneeds,consistentwithapplicablerequirements.
However,wenotedthatwebelievesuchrecommendationsshouldnotbebasedoncompensationweb-brokers,agents,orbrokersmayreceivefromQHPissuerswhenconsumersenrollinQHPsofferedthroughExchangesusingweb-brokernon-Exchangewebsites.
Wearefinalizingthisamendmentasproposedwiththefollowingclarificationinresponsetocomments.
Thedefinitionoftheterm''compensation''forthisVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00063Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217516FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations126See§155.
220(c)(4)(i)(A).
purposeincludescommissions,fees,orotherincentivesgrantedbyanissuertoaweb-broker,agent,orbroker.
Theinclusionofareferencetoagentsandbrokersinthisdefinitionmorecloselyalignswiththeintent,whichwastoprohibitthedisplayofQHPrecommendationsbasedoncompensationreceivedbyanyofthesethreeentitiesfromQHPissuers.
Theremainingrevisionstothemeaningof''compensation''areintendedtocaptureanyremunerationorincentivesgrantedbyanissuer,whethertheybegrantedpursuanttothetermsofawrittencontractorotherwise.
Wealsoproposedtoamend§155.
220(c)(4)(i)(A)torequireaweb-brokertoprovideHHSwithalistoftheagentsorbrokerswho,throughacontractorotherarrangement,usetheweb-broker'snon-ExchangewebsitetoassistconsumerswithcompletionofQHPselectionorfortheExchangeeligibilityapplication,inaformormannertobespecifiedbyHHS.
WeexplainedthatauthoritycurrentlyexistsforHHStorequestthisinformationforagentsorbrokerswho,throughacontractorotherarrangement,usethenon-ExchangewebsitetocompletetheQHPselectionprocess.
126However,duetothetrendofincreaseduseandexpansionofdirectenrollmentpathwaysforQHPenrollment,weexplainedthatwebelieveitwasappropriatetocollectthisinformationproactivelyandtoalsoextenditscollectiontoincludetheuseofweb-brokernon-ExchangewebsitesforcompletionoftheExchangeeligibilityapplication,sothatwemayinvestigateandrespondmoreefficientlyandeffectivelytoanypotentialinstancesofnoncompliancethatmayinvolveagentsorbrokersusingaweb-broker'sdirectenrollmentpathway.
Havingthisinformationwould,forexample,enableustoidentifymorequicklywhethernoncomplianceisattributabletoaspecificindividualorindividuals,insteadoftheweb-brokerentity.
Weexplainedthatweanticipateissuingfurtherguidanceontheformandmannerforthesesubmissionsandwereconsideringrequiringthelistmustinclude,atminimum,eachagent'sorbroker'sname,state(s)oflicensure,andNationalProducerNumber.
Wefurthernotedthatwewereconsideringadoptingquarterlyormonthlysubmissionrequirements,exceptforthemonthbeforetheindividualmarketopenenrollmentperiodandduringtheindividualmarketopenenrollmentperiod,duringwhichwewereconsideringadoptingweeklyordailysubmissionrequirements.
Wenotedwewerealsoconsideringrequiringthesubmissionofthisdataviaemailusinganencryptedfileformat,suchasapassword-protectedExcelspreadsheet,oralternativelyrequiringsubmissionthroughasecureportal.
Weinvitedcommentsonthefrequencyandmannerforthesesubmissions,aswellasotherdataelementsthatweshouldconsiderforinclusionaspartofthisrequiredreporting.
Wealsoproposedtoremovethefinalclausein§155.
220(c)(4)thatlimitsthescopeofthatsectiontoagentsorbrokersusingweb-brokerwebsiteswhoarelistedastheagentofrecordontheenrollments.
Severalyearsofexperienceobservingweb-brokeroperationshasinformedusthatweb-brokersoftensubmitanentity-levelNationalProducerNumberforallQHPenrollmentscompletedthroughtheirwebsites.
Thereforetheweb-brokerbusinessentityistheagentofrecord.
However,therequirementsstatedin§155.
220(c)(4)areintendedtoapplybroadlytoagentsorbrokersusingweb-brokernon-ExchangewebsitestoassistwithQHPselectionsandenrollments.
Weexplainedthatwebelievetheexistingrequirementsforweb-brokersthatprovideaccesstotheirnon-Exchangewebsitestootheragentsandbrokers,suchasverifyingagentsorbrokersarelicensedinthestatesinwhichtheyareassistingconsumersandhavecompletedtheFFEregistrationprocess(see§155.
220(c)(4)(i)(B)),aswellasreportingtoHHSandapplicablestatedepartmentsofinsuranceanypotentialmaterialbreachesofapplicable§155.
220standards(see§155.
220(c)(4)(i)(E)),shouldapplybroadlytoagentsandbrokersusingweb-brokernon-Exchangewebsites,andnotonlytothoselistedastheagentsofrecord.
Wearefinalizingthechangesto§155.
220(c)(4)(i)(A)asproposed.
Weintendtoissueguidanceregardingtheformandmannerforsubmissionofinformationbyweb-brokerstoHHSregardingtheagentsorbrokerswhousetheweb-broker'snon-ExchangewebsitetoassistwiththecompletionofQHPselectionortheExchangeeligibilityapplication.
Currently,§155.
20definesan''agentorbroker''asapersonorentitylicensedbythestateasanagent,broker,orinsuranceproducer.
Under§155.
220(d),anagentorbrokerthatenrollsindividualsinQHPsinamannerthatconstitutesenrollmentthroughtheExchangeorassistsindividualswithapplyingforAPTCorcost-sharingreductionsmustexecuteanagreementwiththeExchange,registerwiththeExchange,receivetraining,andcomplywiththeExchange'sprivacyandsecuritystandards.
Whentheseregulatoryprovisionswereoriginallydrafted,itwasanticipatedthatagentsandbrokerswerepredominantlyindividuals.
However,withtheexpansionofdirectenrollment,therearemoreFFEagentsandbrokers,includingweb-brokers,thathaveobtainedFFEregistrationintheircapacitiesaslicensedbusinessentities,andnotintheirindividualcapacitiesaslicensedagentsorbrokers(non-individualentities).
Asnotedintheproposedrule,certainregulatoryrequirements,suchasthoseregardingtrainingarelesssuitedforthesenon-individualtypesoflicensedagentsorbrokers.
Forexample,tocomplywiththerequirementtocompletetrainingat§155.
220(d)(2),wecurrentlyrequireagentsorbrokersthatareregisteredwiththeFFEsasnon-individualentitiestodesignateanindividualtotaketrainingontheentity'sbehalf,eventhoughallindividualagentsorbrokersassistingFFEconsumersthroughtheentityhavetocompletethetrainingasindividualagentsandbrokers.
Becausethetrainingisnotdesignedforrepresentativesofanon-individualentitywhoarenotprovidingdirectassistancetoFFEconsumers,weexplainedthatwebelieveditisappropriatetoremovethisrequirementforlicensedagentorbrokernon-individualentities.
Therefore,weproposedtoamend§155.
220(d)(2)toexemptfromthetrainingrequirementalicensedagentorbrokerentitythatregisterswiththeFFEinitscapacityasabusinessorganizedunderthelawsofastate,andnotasanindividualperson.
Wealsoexplainedthatwedidnotintendforthischangetoaltertherequirementthatindividualagentsorbrokersmustcompletetraining,asapplicable,aspartoftheannualFFEregistrationprocess.
Therefore,allindividualagentsandbrokersinteractingwithindividualmarketFFEorSBE–FPconsumers,whetherworkingindependentlyorwithanon-individualagentorbrokerentity,includingweb-brokers,wouldcontinuetoberequiredtocompleteannualtraining.
IndividualagentsorbrokersinteractingwithFFE–SHOPorSBE–FP–SHOPconsumerswouldcontinuetobeencouragedtotakeFFEtrainingonanannualbasis.
Wealsoproposedtoincludelanguagein§155.
220(d)(2)toclarifythatdirectenrollmenttechnologyproviderswillnotberequiredtocompleteFFEannualtrainingbecausethesenon-individualentitieswillnotbeinteractingwithindividualmarketFFEorSBE–FPconsumerswithouttheassistanceofanindividualagentorbroker;theyareVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00064Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217517FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations127ThisprovisionalsocurrentlyapplieswhenaninternetwebsiteofanagentorbrokerisusedtocompletetheExchangeeligibilityapplicationthroughtheexistingcrossreferencetoparagraph(c)(3)(i)in§155.
220(c)(3)(ii)(A).
128Asdescribedelsewhereinthisrule,wearefinalizingtheproposeddeletionof§§155.
220(c)(3)(i)(L)and156.
1230(b)(1)andreplacementwithsimilarauthorityin§155.
221(d)thatwillbeapplicabletoalldirectenrollmententities.
129FormoreinformationontheMarketplacepathway,pleaseseetheHealthInsuranceMarketplaceGuidance:RoleofAgents,Brokers,andWeb-brokersinHealthInsuranceMarketplace(November8,2016)Availableathttps://www.
cms.
gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Marketplaces/Downloads/Role-of-ABs-in-Marketplace_Nov-2016_Final.
pdf.
anotherexampleofanon-individualentityforwhichthistrainingrequirementislesssuited.
Wearefinalizingtheseamendmentsasproposed.
Toimproveprogramintegrity,weproposedtodeletetheexisting§155.
220(g)(3)andaddnewparagraphs(g)(3)(i)and(ii)toallowHHStoimmediatelyterminateanagent'sorbroker'sagreementwiththeFFEsforcausewithnoticetotheagentorbrokerifanagentorbrokerfailstocomplywiththerequirementtomaintaintheappropriatelicenseunderstatelawineverystateinwhichtheagentorbrokeractivelyassistsconsumerswithselectingorenrollinginQHPsofferedthroughtheFFEsorSBE–FPs.
WenotedthattheFFEagreementsrequiredunder§§155.
220(d)and155.
260(b)thatagentsandbrokersexecutewiththeFFEsaspartoftheannualFFEregistrationprocessincludetherequirementtomaintainvalidlicensureineverystatethattheagentorbrokerassistsExchangeconsumers.
Statelicensureasanagent,broker,orinsuranceproducerisacriticalconsumerprotectiontoensurethatwhenassistingExchangeconsumerstheseindividualsandentitiesarefamiliarwithrulesandregulationsapplicableinallstatesinwhichtheyprovideassistancetoFFEorSBE–FPconsumers.
LicensureineverystatewheretheagentorbrokerisactivelyassistingFFEorSBE–FPconsumersisapredicaterequirementtoregisteringwiththeFFEstoprovidesuchassistance.
Weexplainedthatallowingforimmediateterminationofanagent'sorbroker'sagreementswiththeFFEsforfailuretoadheretotheapplicablestatelicensurerequirementsensuresthatanunlicensedindividualmaynotcontinuetopossesstheagent/brokerrolethatenablesaccesstotheFFEsorSBE–FPstoprovideassistancetoExchangeconsumersasanagentorbrokerduringtheadvance30-daynoticeperiodthatwouldotherwiseapplyunderthecurrent§155.
220(g)(3).
Weexplainedthatwebelievedallowingforimmediateterminationinthesecircumstancesisappropriatetoprotectconsumers,aswellasExchangeoperationsandsystems.
Underthisproposal,wewouldconfirminformationaboutlicensure(orthelackthereof)withtheapplicablestateregulatorspriortotakingactionunderthenewparagraph(g)(3)(ii).
Inaddition,weproposedthatanagentorbrokerwhoseagreementswiththeFFEsareimmediatelyterminatedforcauseunderthenewproposedparagraph(g)(3)(ii)wouldbeabletorequestreconsiderationunder§155.
220(h).
Wefurtherproposedamendmentstoparagraph(g)(4),suchthat,consistentwithotherterminationsforcauseunderparagraph(g)(3),immediateterminationsunderthenewproposedparagraph(g)(3)(ii)wouldresultintheagentorbrokernotbeingregisteredwiththeFFEsorpermittedtoassistwithorfacilitateenrollmentofqualifiedindividuals,qualifiedemployersorqualifiedemployeesinQHPsthroughtheFFEsorSBE–FPsorassistindividualsinapplyingforAPTCandcost-sharingreductions(CSRs)forQHPsaftertheapplicableperiodhaselapsed.
However,inthesecircumstances,theagentorbrokerwouldberequiredtocontinuetoprotectanypersonallyidentifiableinformationaccessedduringthetermofhisorheroritsagreementswiththeFFEs.
Wealsoproposedtocreateanewparagraph(g)(3)(i)toretaintheexistinglanguagedescribingthecurrentnotificationprocessandtimelinesforterminationforcauseunderparagraph(g)withadvance30-days'notice,exceptthatweproposedaclarifyingedittoreflectthatthenewparagraph(g)(3)(ii)wouldconstituteanexceptiontothecurrentprocessdescribedinexistingparagraph(g)(3).
Asdetailedearlierinthispreamble,wealsoproposedtoaddareferencetoweb-brokertotheexistingparagraph(g)(3)(proposedasnewparagraph(g)(3)(i))toclarifythisparagraphalsoappliestoweb-brokers.
Wearefinalizingtheseamendmentsasproposed.
TopromoteinformationtechnologysystemsecurityintheFFEsandSBE–FPs,includingtheprotectionofconsumerdata,weproposedtoamend§155.
220(k)byaddinganewparagraph(k)(3)thatwouldcontinuetoallowHHStoimmediatelysuspendanagent'sorbroker'sabilitytotransactinformationwiththeExchangeifHHSdiscoverscircumstancesthatposeunacceptablerisktoExchangeoperationsorExchangeinformationtechnologysystemsuntiltheincidentorbreachisremediedorsufficientlymitigatedtoHHS'satisfaction.
WenotedthatthisproposedlanguagewasidenticaltoanexistingprovisionthatapplieswhenaninternetwebsiteofanagentorbrokerisusedtocompleteQHPselectionatcurrent§155.
220(c)(3)(i)(L)127andasimilarprovisionapplicabletoQHPissuersparticipatingindirectenrollmentatcurrent§156.
1230(b)(1).
128Inproposed§155.
220(k)(3),wenotedourintentforthisprovisiontoapplytoagentsandbrokerswho,onceregisteredunder§155.
220(d)(1),obtaincredentialsthatprovideaccesstoFFEsystemsthatmaybemisusedinamannerthatthreatensthesecurityoftheExchange'soperationsorinformationtechnologysystems.
WeexplainedthatwebelievethisproposedchangewasnecessarytoensurethatHHScancontinuetotakeimmediateactiontostopunacceptableriskstoExchangeoperationsorsystemsposedbyagentsandbrokers.
BecausethepotentialrisksposedbyagentsandbrokerswithaccesstoFFEsystemsaresimilartothoseposedbyweb-brokersorQHPissuersparticipatingindirectenrollment,weexplainedthatwebelievethischangewasnecessaryandappropriatetoprovideauniformprocessandabilitytoprotectExchangesystemsandoperationsfromunacceptablerisks,aswellastoprotectsensitiveconsumerdata.
WenotedthatagentsandbrokerswhoseabilitytotransactinformationwiththeExchangeissuspendedunderthisproposedauthoritywouldremainregisteredwiththeFFEsandauthorizedtoassistconsumersusingtheMarketplace(orside-by-side)pathway,129unlessanduntiltheiragreementsaresuspendedorterminatedunder§155.
220(f)or(g).
Wearefinalizingthischangeasproposed.
Tofurtherimproveprogramintegrity,weproposedinanew§155.
220(m)severaladditionalareasinwhichweproposedtoregulateweb-brokersdifferentlyfromagentsorbrokers.
Weexplainedthatwebelievetheseadditionalproposedchangesinnewparagraph(m)areimportanttofurtherprotectagainstpotentialfraudulentenrollmentactivities,includingtheimproperpaymentofAPTCandCSRs,tosafeguardconsumerdataandExchangeoperationsandsystems,andtoensuredirectenrollmentremainsasafeandconsumer-friendlyenrollmentpathway.
At§155.
220(m)(1),weproposedtoallowaweb-broker'sagreement(s)tobesuspendedorterminatedforcauseunder§155.
220(g),oraweb-brokertobedeniedtherighttoenterintoagreementswiththeFFEsunder§155.
220(k)(1)(i),basedontheactionsVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00065Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217518FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsofitsofficers,employees,contractors,oragents.
Forexample,iftheactionsofsuchindividualsorentitiesareinviolationofanystandardspecifiedin§155.
220,anytermsorconditionsoftheweb-broker'sagreementswiththeFFEs,oranyapplicablefederalorstatestatutoryorregulatoryrequirements,whetherornottheofficer,employee,contractor,oragentisregisteredwiththeFFEsasanagentorbroker,theweb-broker'sagreement(s)maybeterminatedunderparagraph(g)(3)ifHHSdeterminesthespecificfindingofnoncomplianceorpatternofnoncomplianceissufficientlysevere.
Similarly,ifHHSreasonablysuspectsthatanofficer,employee,contractor,oragentofaweb-brokermayhaveengagedinfraud,whetherornotsuchindividualorentityisregisteredwiththeFFEsasanagentorbroker,HHSmaytemporarilysuspendtheweb-broker'sagreement(s)forupto90daysconsistentwith§155.
220(g)(5)(i)(A).
At§155.
220(m)(2),weproposedtoallowaweb-broker'sagreementtobesuspendedorterminatedunder§155.
220(g)ortodenyittherighttoenterintoagreementswiththeFFEsunder§155.
220(k)(1)(i),ifitisunderthecommonownershiporcontrol,orisanaffiliatedbusiness,ofanotherweb-brokerthathaditsagreementsuspendedorterminatedunder§155.
220(g).
Ingeneral,forpurposesofthisprovision,weproposedtodefine''commonownershiporcontrol''basedonwhetherthereissignificantoverlapintheleadershiporgovernanceoftheentities.
Wealsoproposedtocollectdataduringtheweb-brokeronboardingprocesstoassistwiththeanalysisofwhethertheweb-brokerisunderthecommonownershiporcontrol,orisanaffiliatedbusiness,ofanotherweb-brokerthathaditsagreementsuspendedorterminatedunder§155.
220(g).
At§155.
220(m)(3),weproposedallowingtheExchangetocollectinformationfromaweb-brokerduringitsregistrationwiththeExchange,oratanothertimeonanannualbasis,inaformandmannertobespecifiedbyHHS,sufficienttoestablishtheidentitiesoftheindividualswhocompriseitscorporateleadershipandtoascertainanycorporateorbusinessrelationshipsithaswithotherentitiesthatmayseektoregisterwiththeFFEasweb-brokers.
Weexplainedtheseprovisionswereimportanttomaintainprogramintegrity,becausetheywillprovideauthoritytocollectinformationthatwillbeusedtominimizetheriskthatanindividualorentitycancircumventanExchangesuspensionorterminationorotherenforcementactionrelatedtonon-compliance.
Wearefinalizingtheamendmentstocreatenewparagraphs(m)(1),(m)(2),and(m)(3)asproposed.
Asnotedintheproposedrule,theuseofdirectenrollmentthroughwebsitesotherthanHealthCare.
govhasexpanded,ashavetherequirementsonweb-brokersseekingtoparticipateinFFEsandSBE–FPs.
Forthosereasons,weproposedtomodifypriorpolicythatprohibitedNavigatorsandcertifiedapplicationcounselors(togetherreferredtohereas''assisters'')fromusingweb-brokerwebsitestoassistwithQHPselectionandenrollment.
Ourproposalwouldhavepermitted,butnotrequired,assistersinFFEsandSBE–FPs,totheextentpermittedbystatelaw,touseweb-brokerwebsitestoassistconsumerswithQHPselectionandenrollment,ifthewebsitemetcertainconditionsdesignedtoensurethatassisterswereabletouseitwhilestillmeetingtheirstatutoryandregulatoryobligationstoprovidefair,accurate,andimpartialinformationandassistancetoconsumers.
Topromotestateflexibilityandautonomyunderthisproposal,SBEsotherthanSBE–FPswouldhavehaddiscretiontopermittheirassisterstouseweb-brokerwebsites,solongastheweb-brokerwebsitesthatassisterswerepermittedtouseinSBEs,ataminimum,adheredtothestandardsoutlinedintheproposal.
Also,SBEscouldinsteadhavechosentopreservetheprohibitiononassisteruseofweb-brokerwebsites.
Theexpansionofdirectenrollmentandtheimplementationofenhanceddirectenrollmentincreasedinterestinallowingassisterstouseweb-brokerwebsitestoassistconsumerswithselectionandenrollmentinQHPsofferedthroughExchanges.
Asdetailedintheproposedrule,someweb-brokerssupportedthisidea,becauseoftheuniqueroleassistersserveinmanycommunities.
Someassistersalsoexpressedadesiretouseweb-brokerwebsitestoprovideanimprovedconsumerexperiencebyleveraginguniqueconsumerassistancetoolsmanyweb-brokersdeveloped,suchasthosethatprovideaccesstoreal-timeinformationonthestatusofsubmittedapplicationsandenrollments.
Intheproposedrule,weexplainedthattheimplementationofenhanceddirectenrollmentbysomeweb-brokersalsopresentsconsumerswithanadditionalmethodofapplyingforinsuranceaffordabilityprograms,selectingandenrollinginQHPsofferedthroughExchanges,andreceivingpost-enrollmentsupportservices.
WeexplainedthatwebelievethisnewoptionshouldbeavailabletoallFFEandSBE–FPassisterswhoprovideapplicationandenrollmentassistance,providedthattheinformationandassistancetheassisterprovideswillremainfair,accurate,andimpartial.
WealsoexpressedhopethatallowingFFEandSBE–FPassisterstouseweb-brokerwebsitestoenrollconsumerswouldencouragecollaborationbetweenassistersandweb-brokerstothebenefitofconsumersbyprovidingconsumersthemostappropriatesupportateachstageoftheExchangeapplicationandQHPselectionandenrollmentprocesses.
Tofurthersupporttheuseofweb-brokerwebsitesbyassisters,wealsoproposedtoamendandreplace§155.
220(c)(3)(i)(D)withnewrequirementsforweb-brokerwebsitestodisplayallQHPdataprovidedbytheExchange,consistentwiththerequirementsof§155.
205(b)(1)and(c),forsuchwebsitestobeeligibleforusebyassisterswhenotherwisepermittedunderstatelaw.
ForFFEsandSBE–FPs,weproposedanoptionalannualcertificationprocessforweb-brokersthatwouldhavebeenintegratedintotheexistingannualweb-brokerregistrationprocess,orcouldhaveoccurredduringanothertimeofyear,duringwhichaweb-brokercouldhavebeencertifiedbytheExchangebyattestingtoitscompliancewiththeQHPdatadisplayrequirements.
Wealsoproposedthatifaweb-brokerwebsitedidnotfacilitateenrollmentinallQHPs,itwouldberequiredtoidentifytoconsumerstheQHPs,ifany,forwhichtheweb-brokerwebsitedidnotfacilitateenrollmentbyprominentlydisplayingastandardizeddisclaimerprovidedbytheExchange,inaformandmannerspecifiedbytheExchange,statingthattheconsumercouldenrollinsuchQHPsthroughtheExchangewebsite,anddisplayalinktotheExchangewebsite.
However,afterconsiderationofcomments,wearenotfinalizingtheproposedmodificationtothepriorpolicythatprohibitedassistersfromusingweb-brokerwebsitesortheaccompanyingproposalstoamendandreplace§155.
220(c)(3)(i)(D).
Thecurrentpolicy,whichprohibitstheuseofweb-brokerwebsitesbyassisters,remainsineffect.
Wearealsoretainingtheexistingrequirementat§155.
220(c)(3)(i)(D),whichrequiresthedisplayofallQHPdataprovidedbytheExchangeonnon-ExchangewebsitesusedtocompleteQHPselectionand/ortheExchangeeligibilityapplication.
Thefollowingisasummaryofthecommentsreceivedontheproposedamendments,policiesandclarificationsrelatedto§155.
220.
Commentsrelatedtotheaccompanyingproposalsunder§155.
221arediscussedlaterinthisrule.
VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00066Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217519FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations130Withsomelimitedexceptions,stand-alonedentalplans(SADPs)areconsideredatypeofQHP.
SeePatientProtectionandAffordableCareAct;EstablishmentofExchangesandQualifiedHealthPlans;ExchangeStandardsforEmployers;FinalRuleandInterimFinalRule(77FR18310,18315)(March27,2012).
ThesamedisplayrequirementsextendtoSADPs,includingdisplayofallapplicableSADPsofferedthroughtheExchangeandallavailableinformationspecifictoeachSADPontheirwebsites,aswellasincludingthePlanDetailDisclaimertotheextentthatallrequiredSADPcomparativeinformationisnotdisplayedontheweb-broker'swebsite.
131https://www.
cms.
gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Marketplaces/Downloads/Guidance-Web-brokers-Displaying-Disclaimers.
pdf.
Comment:Commentersthatreferredtotheproposalat§155.
220(c)(3)(i)(L)toprohibitweb-brokerwebsitesfromdisplayingQHPrecommendationsbasedoncompensationanagent,broker,orweb-brokerreceivesfromQHPissuersunanimouslysupportedit.
Somecommentersalsosupportedprohibitingimplicitrecommendationsbasedoncompensationreceivedfromissuersbyrequiringweb-brokerwebsitestodisplayallQHPinformationprovidedbytheExchangeforallQHPsofferedthroughtheExchangeinsteadofdisplayinglimiteddetailsandastandardizeddisclaimeraspermittedunder§155.
220(c)(3)(i)(A).
Onecommenterrecommendedrequiringweb-brokerwebsitestodisplaytherationaleforanyQHPrecommendationstheymake.
Response:Wearefinalizingtheamendmentasproposedat§155.
220(c)(3)(i)(L).
Asstatedabove,weareamendingthedefinitionoftheterm''compensation''forthispurposetoincludecommissions,fees,orotherincentivesprovidedbyaQHPissuertotheagent,broker,orweb-broker.
Thisbetteralignswithourintent,aswellascommentsreceivedinsupportoftheproposal,toprohibitthedisplayofQHPrecommendationsonweb-brokerwebsitesbasedoncompensationanagent,broker,orweb-brokerreceivesfromQHPissuers.
Whileweacknowledgethatweb-brokerwebsitesmayimplicitlyrecommendQHPsbasedoncompensationtheyreceivefromQHPissuers,wedidnotproposeandarenotestablishingstandardsinthisfinalruleinthisregard.
However,weintendtomonitorimplementationandeffectivenessofthenewstandardfinalizedat§155.
220(c)(3)(i)(L),whichprohibitsthedisplayofQHPrecommendationsonweb-brokerwebsitesbasedoncompensationreceivedfromQHPissuers,andmayconsiderproposingadditionalstandardsrelatedtothedisplayofQHPrecommendationsonweb-brokerwebsites,includingrequiringthedisplayofarationaleforanyQHPrecommendations,infuturerulemaking.
Wealsoclarifythatunder§155.
220(c)(3)(i)(A),aweb-brokerwebsiteusedtocompleteQHPselectionortheExchangeeligibilityapplicationmustdiscloseanddisplayallQHP130informationprovidedbytheExchange,consistentwiththerequirementsof§155.
205(b)(1)and(c).
IfnotdirectlyprovidedbytheExchange,aweb-brokermayobtainadditionalinformationonQHPsdisplayedonitswebsitedirectlyfromthoseQHPissuerswithwhomithasacontractualrelationship.
Inaccordancewith§155.
220(c)(3)(i)(A),ifaweb-brokerdoesnothaveaccesstoallofthecomparativeinformationrequiredunder§155.
205(b)(1)and(c)foraQHPofferedthroughtheExchange,suchaspremiumorbenefitinformation,itmustdisplaytherequiredstandardizedPlanDetailDisclaimerforthespecificQHP.
131Comment:Severalcommenterssupportedtheproposalat§155.
220(c)(4)(i)(A)torequireweb-brokerstoprovideHHSwithalistofagentsandbrokerswhoenterintoacontractorotherarrangementtousetheweb-broker'swebsitetoassistconsumerswithExchangeapplicationsandQHPselections.
Onecommenterrecommendedthelistberequiredannuallyandlimitedtoincludeagentsandbrokerswhohaveasignedagreementandactuallyusedaweb-broker'swebsitetoassistwithQHPenrollmentinthepastyear,andnotanyagentsorbrokersthatcouldpotentiallyhaveusedtheweb-broker'swebsiteforthatpurposebutdidnot,intheinterestofreducingburden.
Anothercommenterexpressedconcernaboutthescopeofthisproposalandwhetheritextendsbeyondagentsandbrokersusingaweb-broker'swebsitetobusinessdevelopmentpartnersthroughwhichitreceivesreferrals.
Response:Wearefinalizingtheamendmentasproposedat§155.
220(c)(4)(i)(A).
Asindicatedabove,weintendtoissueguidanceontheformandmannerforthesesubmissionsandappreciatethedesiretominimizetheburdenofthisrequirement.
Thatisoneofthereasonsweareconsideringadoptingameasured,targetedapproachtoreportingthatwouldreducethefrequencyofthesubmissionsformostoftheyearbyadoptingquarterlyormonthlysubmissionrequirements.
Wecontinuetobelievethatmorefrequentreporting,suchasdailyorweeklysubmissions,aremoreappropriateforthetimeperiodspanningfromthemonthbeforethroughtheentireindividualmarketopenenrollmentperiodbecauseoftheincreasedvolumeofenrollmentsandtheaccompanyingincreasedaccesstoFFEsystemsandconsumerinformationduringthistime.
Forthisrequirementtoenableustomoreefficientlyandeffectivelyinvestigateandrespondtoinstancesofnoncompliance,includingthosesituationsthatmayposeriskstoExchangedataandsystems,wemusthavetheinformationmorefrequentlythanannually.
Forexample,agents,broker,andweb-brokersmayenterintonewrelationshipsand/orendexistingagreementsatanytimeduringtheyear.
Theadoptionofanannualreportingschedulewouldnotcapturethesechangesuntilthefollowingyear.
Assuch,thereisariskthatthedatawouldbecomeobsoletequickly,hinderingouroversightandenforcementefforts.
Forthesereasons,wedeclinetoadoptanannualreportingschedule.
Wealsobelievethedatacollectedmustincludeinformationaboutallagentsandbrokersthatareabletouseaweb-broker'swebsitefordirectenrollment,whetherornottheyhavedonesorecently,sinceagentsandbrokerswiththisaccessareequallyabletoaccessthesystemsandengageinmisconductthatwemayneedtoinvestigate.
Intermsofthescopeofinformationthatwillhavetobereported,weclarifyitextendsonlytothoseagentsandbrokersthathaveacurrentcontractualorotherarrangementwithaweb-brokertouseitswebsitetoassistconsumerswiththecompletionofanExchangeeligibilityapplicationorQHPselectionintheFFEorSBE–FP.
Personsorentitiesonlyreferringconsumerstotheweb-broker'swebsitewouldnotbesubjecttothisrequirement.
Comment:Severalcommenterssupportedtheproposalat§155.
220(g)(3)(ii)toallowfortheimmediateterminationofagreementswithagentsorbrokersforcauseifanagentorbrokerfailstomaintaintheappropriatestatelicenseineverystateinwhichtheagentorbrokerisactivelyassistingconsumerswithExchangeapplicationsandQHPenrollment.
Onecommenterpointedoutthatsomenationallicensuredatabasescontaininaccuraciesanditisimportanttoensureaccurateinformationisusedasthebasisfortermination.
AnothercommenteremphasizedtheimportanceoftimelyandaccuratecommunicationbetweenHHSandstateregulatorsasitrelatestothisproposal.
Response:Wearefinalizingtheamendmentsto§155.
220(g)(3)asproposed.
WeappreciatethecommentsVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00067Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217520FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsexpressingconcernsaboutthepotentialforinaccuratedataandtheneedfortimelycommunicationswithstateregulators.
Wewilldevelopprocedurestoverifystatelicensurewithapplicablestateregulators,whichmayincludeconfirmingnationaldatabaseinformationwithinformationmadepubliclyavailablebyindividualstates,aswellasoutreachtostateregulators.
Wealsowillcontinueourgeneraleffortstocoordinateoversightactivitiesrelatedtoagentsandbrokerswithstates.
Inaddition,asdetailedabove,agentsorbrokerswhoseagreementswiththeFFEsareimmediatelyterminatedunderthenewparagraph(g)(3)(ii)willbeabletorequestreconsiderationunder§155.
220(h).
Comment:Wereceivedseveralcommentsontheproposalsat§155.
220(m)relatedtotheenforcementactionsthatmaybetakenagainstweb-brokers.
Onecommentersupportedtheproposals.
Onecommenterrequestedweclarifytheuseof''agent''inproposed§155.
220(m)(1),relatingtothesuspensionorterminationofaweb-broker'sagreementwiththeExchangeunderparagraph(g),andthedenialoftherightfortheweb-brokertoenterintoagreementswiththeFFEunderparagraph(k)(1)(i)basedontheactionsofitsofficers,employees,contractorsoragents(regardlessofwhethertheseindividualsareregisteredwiththeExchangeasanagentorbroker).
Anothercommenterexpressedconcernthattheseproposalsappearedtoprovideauthoritytosuspendorterminateaweb-broker'sagreementbasedontheactionsofasfewasoneagentusingtheweb-broker'swebsite.
Afourthcommenterstatedthattheproposalsshouldapplytonon-web-brokeragentorbrokerbusinessentitiesandnotonlyweb-brokerbusinessentities,andthatHHSshouldprovideexamplesoftheactionsthatcouldbegroundsforterminationorsuspensionofaweb-broker'sagreements,includingwhethersuchactionswouldneedtoberelatedtotheoperationoftheweb-broker'swebsite.
Response:Wearefinalizingtheseamendmentsasproposed.
Asexplainedintheproposedrule,theintentofthesechangesistoprovideadditionaltoolsforHHStoguardagainstfraudulentactivities,protectconsumerdataandExchangeoperationsandsystems,andaddressseriouscasesofmisconduct.
Web-brokerbusinessentitiesparticipatingorseekingtoparticipateindirectenrollmentareproliferating.
Inaddition,thecomplexityofweb-brokers'technicalintegrationswithExchangesystemsareincreasing,providinggreateraccesstosensitiveconsumerdataandgrowingdependenciesbetweenExchangeandweb-brokersystems.
Afterseveralyearsofexperienceobservingweb-brokeroperationsandparticipationintheFFEsandSBE–FPs,wefounditwasnecessarytoupdateouroversightandenforcementauthoritytoaddtoolstocombatfraudtoalignwiththesechanges.
Wedonotexpectthisauthoritywillbeusedagainstthevastmajorityofweb-brokersthatmakeagood-faithefforttocomplywithapplicablerequirements.
Further,weanticipatetheseprovisionswillhavelimitedimpactastheyaredesignedtoprovideHHSgreaterflexibilitytoaddressthelimitedinstanceswherethereisevidenceofsignificantmisconductornon-compliancebyaweb-broker,itsofficers,employees,contractors,oragents.
Weclarifythat''agent''asreferredtoin§155.
220(m)(1)isintendedtorefertoanindividualorentitywithabusinessrelationshipwithaweb-brokersuchthattheentityorindividualisauthorizedtoactonbehalfoftheweb-broker.
''Agent''inthiscontextmayormaynotrefertoalicensedagentorbrokerregisteredwiththeFFEstoassistExchangeconsumers,unlessthelicensedagentorbrokerisalsoauthorizedtoactonbehalfoftheweb-broker.
Webelievethisnewauthoritywillclosesomecurrentgapsinoversightofweb-brokers,suchasthosethatexistwhenanindividualorentityregisteredwiththeFFEsisdeniedtherighttoenterintoFFEagreementsforfuturebenefityearsunder§155.
220(k)(1)(i)duetomisconductandtheindividualorentitytriestoavoidtheimplicationsoftheenforcementactionbycreatinganewweb-brokerbusinessentitythatseekstoregisterwiththeFFEsbeforetheexpirationofthepenaltyunder§155.
220(k)(1)(i).
Examplesofthetypesofactivitiesthatcouldgiverisetoenforcementactionunderthesenewauthoritiesareaweb-broker'sofficerinstructinghisagent/brokeremployeestofalsifydatasubmittedonconsumers'Exchangeapplications,adocumentedpatternbyaweb-brokerentityofmisusingExchangeconsumerdata,orthefailuretoadoptprocedurestoproperlysecuredataandcomplywithapplicableprivacyandsecurityrequirements.
Astheseexamplesillustrate,theactivitiesforwhichanenforcementactionmaybetakenunderthisauthorityarenotlimitedtoactivitiesrelatedonlytotheoperationofaweb-broker'swebsite.
Whileeachenforcementactionisfact-specific,wegenerallyclarifythatifaregisteredagentorbrokerisbelievedtohaveengagedinnoncompliancethatwediscoverthroughouroversightofweb-brokerwebsites,andthereisnoevidencethattheweb-brokerwaspartofthenoncomplianceactivities,wewouldtaketheenforcementactionagainsttheagentorbroker(andnottheweb-broker).
However,iftheinvestigationrevealsfactsthatindicatetheweb-brokerwasinvolvedinthenon-compliance,thenwemayalsotakeactionunderthisnewauthorityagainsttheweb-broker(inadditiontotakingappropriateactionfortheagentorbrokerinvolved).
Wemayconsiderexpandingthisauthoritytonon-web-brokeragentorbrokerbusinessentitiesinthefuture.
However,thespecificconcernsandpotentialriskstheproposalswereintendedtomitigateareposedmostacutelybyweb-brokersbyvirtueofthemoredirectandexpansiveaccesstheyhavetoExchangesystemsandconsumerdata.
Therefore,weproposedandarefinalizingthisauthorityaslimitedtoweb-brokersatthistime.
Comment:Numerouscommentersopposedtheproposaltoallowassisterstouseweb-brokerwebsitesandtheproposednewregulationsthatwouldhavereplacedtheexisting§155.
220(c)(3)(i)(D).
Commenterswereconcernedaboutwhetherassisterscouldremainfairandimpartialiftheywereassistingconsumersusingweb-brokerwebsitesthatdidnotofferenrollmentintoallQHPsofferedthroughtheExchange,orthatincludedQHPrecommendations.
Somecommentershighlightedtheconfusionassistersandconsumersmayencounterwhenusingweb-brokerwebsitesthatincludemarketingfornon-QHPproducts.
Onecommenteropposedanyproposedexpansiontotheroleofassisters.
Somecommenterssupportedprohibitingweb-brokerwebsitesfromrecommendingQHPsifthisproposalwasfinalized.
Onecommentersuggestedthatassistersshouldonlybepermittedtouseweb-brokerwebsitesthatexclusivelymarketQHPs,andweb-brokersshouldnotreceivecommissionsforconsumersenrolledinQHPsthroughaweb-brokerwebsiteiftheconsumersreceivedsupportfromassisters.
Anothercommenteradvocatedformandatorycertificationofweb-brokerwebsitesbeforeassistersmayusethem.
Onecommentersupportedrequiringweb-brokerwebsitestodevelopaseparatepathwayexclusivelyforassisterstouse.
Onecommenterrecommendedallowingweb-brokerstocompensateassisterstosupplementfederalfundingforassisters,andnotedthatthecompensationshouldbeunrelatedtowhethertheweb-brokerreceivedacommissionassociatedwiththeassistanceprovidedtotheconsumerbytheassister,andshouldincludeVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00068Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217521FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations132Proxydirectenrollmentwasimplementedonatemporarybasisforplanyear2018.
Moreinformationisavailableathttps://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Guidance-for-the-Proxy-Direct-Enrollment-Pathway-for-2018-Individual-Market-Open-Enrollment-Period.
pdf.
13381FRat94118.
compensationforassistanceprovidedtoconsumerswhoaredeterminedeligibleforMedicaid.
Somecommenterssupportedspecificelementsoftheproposal.
SeveralcommenterssupportedtheflexibilityproposedtobeprovidedtoSBEs,otherthanSBE–FPs,toeitherpermittheirassisterstouseweb-brokerwebsitesortoinsteadpreservetheprohibitiononassisteruseofthesenon-Exchangewebsites.
Onecommentersupportedtheproposedrequirementthatweb-brokerwebsitesdisplayallQHPdataprovidedbytheExchangebeforeassisterscouldusethewebsites.
Onecommenterthatgenerallysupportedtheproposaldescribedapotentialoutcomeoftheproposalwouldbethedevelopmentofnewconsumer-assistancetoolsthatassisterswouldbeabletoleveragewhenusingaweb-brokerwebsitetoassistconsumers.
Response:Weagreewithcommentersthatthereareconcernsrelatedtoassisteruseofweb-brokerwebsitesthatwarrantfurtherconsideration,andtherefore,wearenotfinalizingtheproposedmodificationtothepriorpolicythatprohibitsassistersfromusingweb-brokerwebsitesortheaccompanyingproposalstoamendandreplace§155.
220(c)(3)(i)(D)atthistime.
Adoptionofapprovedenhanceddirectenrollmentfunctionalitybyweb-brokersremainslimitedandwehavedecidedtofocusontheimplementationandoversightoftheenhanceddirectenrollmentpathwaybeforeallowingtheuseofweb-brokerwebsitesbyassisters.
Thisapproachalsoallowsweb-brokersinterestedinparticipatinginenhanceddirectenrollmenttofocusonimplementingandcomplyingwiththosenewrequirementsatthistime.
Inaddition,newinsightsmaybegainedabouthowbesttoapproachandimplementthispolicychangeasmoreweb-brokersareapprovedtoparticipateinenhanceddirectenrollmentandwegainmoreexperiencewithenhanceddirectenrollmentpathwaysgenerally.
Weintendtomonitorthesechangesandmayrevisitthecurrentpolicyregardingassisteruseofthesewebsitesincludingcommentsreceivedonthepoliciesintheproposedrule,atalaterdate.
WebelieveassistersremainacriticalcomponentoftheoptionsavailableforconsumerstoreceivesupportcompletingtheExchangeeligibilityapplicationandselectingandenrollinginQHPs,especiallyforcertainvulnerablepopulationsthathavehistoricallyunmetneeds.
Thecurrentpolicy,whichprohibitstheuseofweb-brokerwebsitesbyassisters,remainsineffectandwearealsoretainingtheexistingrequirementat§155.
220(c)(3)(i)(D).
e.
StandardsforThird-PartyEntitiesToPerformAuditsofAgents,Brokers,andIssuersParticipatinginDirectEnrollment(§155.
221)DirectenrollmentisamechanismforthirdpartiestodirectlyenrollconsumersseekingQHPsthroughanon-ExchangewebsiteinamannerconsideredtobethroughtheExchange.
DirectenrollmentwascreatedtoprovideconsumersdifferentoptionstoshopforandenrollinQHPsofferedthroughtheExchange.
TheentitiesthathavebeenauthorizedtoofferdirectenrollmentpathwaystodateareQHPissuers,aswellasagentsandbrokersthatdevelopandhostnon-ExchangewebsitestofacilitateconsumerselectionofandenrollmentinQHPs,referredtoasweb-brokers.
Asdescribedabove,inthisrulewefinalizedanewdefinitionfortheterm''web-broker.
''Consistentwiththisnewdefinition,weusethetermweb-brokerthroughoutthisfinalrulewhenwearereferringtoagentsandbrokersthatdevelopandhostnon-ExchangewebsitestofacilitateconsumerselectionofandenrollmentinQHPsofferedthroughanExchange,otherwiseknownasdirectenrollment,aswellasdirectenrollmenttechnologyproviders.
Theoriginalversionofdirectenrollment,orclassicdirectenrollment,isstillinoperation.
Itutilizesadoubleredirectfromadirectenrollmententity'swebsitewhereQHPshoppingoccurs,toHealthCare.
govwheretheeligibilityapplicationiscompleted,andbacktotheentity'swebsitetofinalizetheselectionoftheQHP.
ClassicdirectenrollmentallowsQHPissuersandweb-brokerswhomeetapplicablerequirementstodesignandhostaplanshoppingexperience,andassistconsumerswiththeQHPselectionprocessusingrelativelysimpleandlimitedapplicationprogramminginterfaces(APIs).
TheFFEdirectenrollmentprogramhasexpandedbeyondtheclassic(thatis,double-redirect)directenrollmentpathwayastheFFEs'technicalcapabilitieshavesignificantlyincreased,beginningwithproxydirectenrollmentforplanyear2018132andcontinuingwiththeimplementationofenhanceddirectenrollmentforplanyear2019andbeyond.
133TherequirementsandtechnicalexpertiseneededtoparticipateineachnewiterationofdirectenrollmenthavesimilarlyincreasedasparticipantshavegreateraccesstoandresponsibilityforsensitiveconsumerdataandExchangesystems.
Withenhanceddirectenrollment,HHSallowsparticipantstocreateandhostadynamiceligibilityapplicationandintegrateseveralnewAPIsthatfacilitateeligibilitydeterminations,aswellastheconsumer'senrollmentinaQHP,anddatasharingwiththeapplicableExchange.
Enhanceddirectenrollmentprovidesnewoptionsforconsumerstoreceivemorecomprehensiveservicesthroughanon-Exchangewebsite,withouttheneedtoredirecttoHealthCare.
gov,forapplicationandenrollmentandongoingsupportthroughouttheplanyear.
Weexplainedintheproposedrulethatwebelievethiswillpromoteinnovationandcompetition,andultimatelyleadtobetterexperiencesformoreconsumers.
Wealsonotedthatstreamliningandconsolidatingregulatoryrequirements,whenpossible,willsimplifytheotherwisecomplexrequirementstoparticipateindirectenrollmentandmakeiteasierfordirectenrollmententitiesandorganizationsinterestedinparticipatingindirectenrollmenttounderstandandcomplywithapplicablerequirements.
Wealsoexplainedthatthecomplexandevolvingnatureofdirectenrollmentrequiresupdatestoaccommodateinnovation,ensureprogramintegrity,andprotectsensitiveconsumerdata.
Asdetailedintheproposedrule,theentitiesthathavebeenpermittedtoofferdirectenrollmentpathwaystodatehavebeenQHPissuersandweb-brokersthatdevelopandhostnon-ExchangewebsitestofacilitateselectionofandenrollmentinQHPsofferedthroughanFFEorSBE–FP.
DirectenrollmentregulatoryprovisionshavelikewisebeendividedintosectionsseparatelyapplicabletoQHPissuersparticipatingindirectenrollmentandweb-brokers.
Asdirectenrollmenthasevolvedwiththeimplementationofenhanceddirectenrollment,manyoftherequirementsapplicabletoQHPissuersperformingdirectenrollmentandweb-brokershavebecomeincreasinglysimilar.
Therefore,weproposedtorevise§155.
221toapplytoalltypesofdirectenrollmententitiesandtoexpandtherequirementscapturedinthisregulationbeyondauditsofdirectenrollmententities.
Toreflectthischangewealsoproposedtorevisethesectionheadingof§155.
221to''Standardsfordirectenrollmententitiesandforthird-partiestoperformauditsofdirectenrollmententities.
''VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00069Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217522FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations134Forexample,amendmentsto§155.
220(d)(2)exemptdirectenrollmenttechnologyprovidersfromthetrainingrequirementthatispartoftheannualFFEregistrationprocessforagentsandbrokers.
135Directenrollmentoperationalreadinessreviewrequirementsarecurrentlycapturedat§155.
220(c)(3)(i)(K)forweb-brokersand§156.
1230(b)(2)forQHPissuers.
136See§156.
1230(b)(2)forissuersparticipatingindirectenrollmentand§155.
220(c)(3)(i)(K)forweb-brokers.
137See§155.
221(b)(5).
Alsosee§156.
1230(b)(2).
Asdetailedabove,wealsoproposedtoamend§155.
20toincludedefinitionsofseveraltermsweproposedtousein§155.
221including:''directenrollmententity''and''web-broker.
''Specifically,weproposedtodefine''directenrollmententity''asanentitythatanExchangepermitstoassistconsumerswithdirectenrollmentinQHPsofferedthroughtheExchangeinamannerconsideredtobethroughtheExchangeasauthorizedby§§155.
220(c)(3),155.
221,or156.
1230.
Weproposedtodefine''web-broker''asanindividualagentorbroker,groupofagentsorbrokers,orbusinessentityregisteredwithanExchangeunder§155.
220(d)(1)thatdevelopsandhostsanon-ExchangewebsitethatinterfaceswithanExchangetoassistconsumerswithdirectenrollmentinQHPsofferedthroughtheExchangeasdescribedin§§155.
220(c)(3)and155.
221.
Asexplainedelsewhereinthispreamble,wealsoproposedtodefinetheterm''web-broker''toincludedirectenrollmenttechnologyproviders.
Weexplainedthatitisimportanttodistinguish''web-brokers''fromotheragentsandbrokersutilizinganon-ExchangewebsitetoassistconsumerswithdirectenrollmentinQHPsofferedthroughtheExchangeswhentheydidnotdevelopanddonothostthenon-Exchangewebsite.
Stateddifferently,agentsandbrokersusinganon-Exchangewebsitedevelopedandhostedbyaweb-brokerarenotthemselvesnecessarilyweb-brokers.
Forthereasonsoutlinedinthepreambleto§155.
220,weareoftheviewthatitisappropriatetoimposedifferentrequirementsonweb-brokersandagentsandbrokerswhoarenotweb-brokers.
Theproposeddefinitionandtheproposedchangesto§§155.
220and155.
221reflectthisapproachandwouldenableweb-brokers,agents,andbrokerstomoreclearlyidentifywhenrequirementsareapplicabletoonlyweb-brokers.
Wealsoproposedtoamend§155.
20todefine''directenrollmenttechnologyprovider''asatypeofweb-brokerbusinessentitythatisnotalicensedagent,broker,orproducerunderstatelawandhasbeenengagedorcreatedby,orisownedby,anagentorbrokertoprovidetechnologyservicestofacilitateparticipationindirectenrollmentasaweb-brokerinaccordancewith§§155.
220(c)(3)and155.
221.
Thisdefinitioncapturesinstanceswhenanindividualagentorbroker,agroupofagentsorbrokers,oranagentorbrokerbusinessentity,engagestheservicesoforcreatesatechnologycompanythatisnotlicensedasanagent,broker,orproducertoassistwiththedevelopmentandmaintenanceofanon-ExchangewebsitethatinterfaceswithanExchangetoassistconsumerswithdirectenrollmentinQHPsofferedthroughtheExchangesasdescribedin§§155.
220(c)(3)and155.
221.
Whenthetechnologycompanyisnotitselflicensedasaninsuranceagencyorbrokerage,butotherwiseisfunctioningasaweb-broker,weproposedthatthesetechnologycompanieswouldbeconsideredatypeofweb-brokerthatmustcomplywithapplicableweb-brokerrequirementsunder§§155.
220and155.
221,unlessindicatedotherwise.
134Theproposeddefinitionof''web-broker''reflectstheinclusionofdirectenrollmenttechnologyproviders.
Asdetailedabove,wearefinalizingthesedefinitionsasproposed.
Pleaserefertothepreamblefor§155.
20forasummaryofcommentsontheproposeddefinitions.
Weproposedtogenerallymaintainthecurrentrequirementsin§155.
221thatdescribethestandardsforthird-partiestoperformauditsofdirectenrollmententities.
However,toaccommodatenewcontentweproposedtoaddtothisregulation,weproposedtoredesignatetheexistingparagraphs(a)through(c)asparagraphs(e)through(g),respectively.
Wealsoproposedsomeamendmentstoexistingrequirementscurrentlycapturedinparagraphs(a)through(c),asdescribedmorefullybelow.
Inaddition,throughouttheredesignatedparagraphs(e),(f),(f)(2),(f)(3),(f)(4),(f)(6),(f)(7),and(g),weproposedconformingeditstochangereferencestoagents,brokers,andissuerstodirectenrollmententities.
Wealsoproposedtoupdatetheregulatorycross-referencesintheredesignatedparagraph(f)(6)and(f)(7)from§155.
221(a)to§155.
221(e)toalignwithotherproposedstreamliningchangestothisregulation.
Wealsoproposedtoaddparagraphheadingsthroughoutthisrevisedregulationforfurtherclarity.
Inparagraph(e),wealsoproposedtoaddlanguagetorequirethatthethird-partyentitiesthatconductannualreviewsofdirectenrollmententitiestodemonstrateoperationalreadinessconsistentwithnew§155.
221(b)(4)135beindependentoftheentitiestheyareauditing.
Weproposedthischangebecausewebelieveanindependentauditislesslikelytobeinfluencedbyadirectenrollmententity'sbusinessconsiderationsandthereforeismorereliable.
Wenotethatcurrent§155.
221(b)(4)requiresthird-partyauditorstodisclosetoHHSanyfinancialrelationshipstheyhavewiththeentitiestheyareauditing.
Weexplainedintheproposedrulethatwebelievethisdisclosurerequirementremainsrelevantevenwiththeproposedadditiontoproposedparagraph(e)thatwillrequireauditorstobeindependent,becauseanauditormaybeindependentwhilealsocontractingwiththeentityitisauditing(andthereforehavingafinancialrelationshipwiththeentity)toperformauditsorotheractivitiesunrelatedtothosedescribedin§155.
221.
Wethereforeproposedtoretainthisdisclosurerequirementatnew§155.
221(f)(4).
Wealsoproposedtoclarifyinparagraph(e)thataninitialauditisrequired,inadditiontosubsequentannualaudits,andthattheseauditsmustincludereviewoftheentity'scompliancewithapplicabledirectenrollmentrequirements.
Theseclarificationsdonotrepresentachangefromthecurrentapproach,asdirectenrollmententitiesarecurrentlyrequiredtodemonstrateoperationalreadinessbeforetheirwebsitesmaybeusedtocompleteQHPselections,136andtheseauditsmustconfirmcompliancewithapplicablerequirements.
137Inparagraph(e),weproposedtoaddlanguagetoclarifythatoperationalreadinessmustbedemonstratedpriortothedirectenrollmententity'swebsitebeingusedtocompleteanExchangeeligibilityapplicationormakeaQHPselection.
Thislanguageisconsistentwiththeoperationalreadinessreviewrequirementscurrentlycapturedat§155.
220(c)(3)(i)(K)forweb-brokersand§156.
1230(b)(2)forQHPissuers,whichweproposedbemovedto§155.
221(b)(4),andaccountsforthefactthatdirectenrollmententitiesparticipatinginenhanceddirectenrollmentwillhosttheeligibilityapplicationinadditiontoQHPselection.
Weproposedtomaintainthelastsentencethatcurrentlyappearsin§155.
221(a)asthelastsentenceofthenewparagraph(e)thatstatesthethird-partyentitywillbethedownstreamordelegatedentityoftheagent,broker,orissuerthatparticipatesorwishestoparticipateindirectenrollment,replacingthereferencestoagent,broker,VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00070Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217523FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations138See,forexample,section4.
3oftheFederally-facilitatedMarketplaceandFederally-facilitatedSmallBusinessHealthOptionsProgramEnrollmentManual,availableathttps://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Enrollment-Manual-062618.
pdf.
Alsosee,sectionII.
BoftheGuidanceforWeb-brokersRegisteredwiththeFederally-FacilitatedMarketplaces(October17,2016),availableathttps://www.
cms.
gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Marketplaces/Downloads/Guidance-Web-brokers-FFMs.
pdf.
139Asproposed,thisnewstandardizeddisclaimerwouldbeinadditiontotheexistingrequirementsat§155.
220(c)(3)(i)(A)and(G)forweb-brokersandat§156.
1230(a)(1)(iv)forQHPissuersparticipatingindirectenrollment.
andissuerwithdirectenrollmententity.
Inparagraph(f),weproposedtogenerallymaintainthecurrentrequirementcapturedin§155.
221(b)thatadirectenrollmententitymustsatisfytherequirementtodemonstrateoperationalreadinessbyengagingathird-partyentitythatcomplieswiththespecifiedrequirements.
Wealsoproposedtorequireundernewparagraph(f)thatawrittenagreementmustbeexecutedbetweenthedirectenrollmententityanditsauditorstatingthattheauditorwillcomplywiththestandardsoutlinedinparagraph(f).
Weproposedthisnewrequirementbecausewebelievethemosteffectivewaytoensureadirectenrollmententityhasthenecessarycontrolandoversightoveritsauditortoensurecompliancewiththeapplicablestandardsin§155.
221isforthosestandardstobememorializedinawrittenagreementbetweentheparties.
Weproposedtodeletetheprovisionincurrentparagraph(c)thatreferstoeachthird-partyentityhavingtosatisfythestandardsoutlinedincurrentparagraph(b),toavoidduplicationwithanearlyidenticalprovisioninproposedparagraph(f).
Weproposedtomaintain,intheredesignatednewparagraph(g),theprovisionthatclarifiesthatdirectenrollmententitiesmayengagemultiplethird-partyentitiestoconducttheoperationalreadinessauditsunderproposed§155.
221(e).
Weproposedanewparagraph(a)in§155.
221thatwillestablishthetypesofentitiestheFFEswillpermittoassistconsumerswithdirectenrollmentinQHPsofferedthroughanExchangeinamannerthatisconsideredtobethroughtheExchange,totheextentpermittedbystatelaw.
Weproposedtocapturein§155.
221(a)thetwotypesofentitiesthatarealreadypermittedbytheFFEstouseandofferanon-Exchangewebsitetofacilitatedirectenrollment:QHPissuersthatmeettherequirementsin§156.
1230andweb-brokersthatmeettherequirementsin§155.
220.
Newproposedparagraph(a)alsoreflectedthattheseentitieswouldberequiredtocomplywiththeapplicablerequirementsoutlinedinthenewproposed§155.
221,whichweproposedtocapturethedirectenrollmentrequirementsthatwouldapplytobothweb-brokersandQHPissuersparticipatingindirectenrollment.
Fortheremainingrequirementsthatonlyapplytoweb-brokersoronlyapplytoQHPissuersparticipatingindirectenrollment,weproposedtoretainthoserequirementsin§§155.
220and156.
1230,respectively.
Intheproposedrule,wedescribedguidancethatdetailsseveralexistingdisplaystandardsapplicabletoissuersorweb-brokersparticipatingindirectenrollment.
138Weexplainedthatwereceivedfeedbackfromissuersandweb-brokerssuggestingtherewassomeconfusionaboutthecurrentstandardsandguidancerelatedtothedisplayofQHPsandnon-QHPsonnon-Exchangewebsitesusedtofacilitatedirectenrollment.
Inanefforttoclarifyexpectations,achievegreateruniformityinstandardsforalldirectenrollmententities,andprovideflexibilityforinnovation,weproposedtoestablishrequirementsunder§155.
221(b)fortheFFEs,whichwouldapplytoallFFEdirectenrollmententities.
Asnotedelsewhereinpreamble,someoftheproposedrequirementsin§155.
221(b)wereintendedtostreamlineexistingweb-brokerandQHPissuerdirectenrollmentrequirementsthatarecurrentlyseparatelyimposedunder§§155.
220and156.
1230bycapturingthesesimilarrequirementsinoneregulation.
Otherproposedstandardsin§155.
221(b)arenewregulatoryrequirementsandareproposedtoclarifyorotherwiseaddresscompliancequestionsthathavearisenundertheexistingregulationsandguidance.
Atnew§155.
221(b)(1),weproposedtorequiredirectenrollmententitiestodisplayandmarketQHPsandnon-QHPsonseparatewebsitepagesontheirrespectivenon-Exchangewebsites.
Weexplainedthatthisproposalwasintendedtobalancethegoalsofminimizingconsumerconfusionaboutdistinctproductswithsubstantiallydifferentcharacteristics,andallowingmarketingflexibilityandopportunitiesforinnovation.
At§155.
221(b)(2),weproposedtorequiredirectenrollmententitiestoprominentlydisplayastandardizeddisclaimerintheformandmannerprovidedbyHHS.
139ConsistentwithcurrentpracticefortheotherstandardizeddisclaimersprovidedbyHHSunder§§155.
220and156.
1230,weexplainedwewouldprovidefurtherdetailsonthetextandotherdisplaydetailsforthestandardizeddisclaimeringuidance,butnoteditspurposewouldbetoassistconsumersindistinguishingbetweendirectenrollmententitywebsitepagesthatdisplayQHPsandthosethatdisplaynon-QHPs,andforwhichproductsAPTCandCSRsareavailable,duringasingleshoppingexperience.
Innew§155.
221(b)(3),HHSproposedthatdirectenrollmententitiesmustlimitthemarketingofnon-QHPsduringtheExchangeeligibilityapplicationandQHPplanselectionprocessinamannerthatwillminimizethelikelihoodthatconsumerswillbeconfusedastowhatproductsareavailablethroughtheExchangeandwhatproductsarenot.
Forexample,undertheproposeddisplaystandardscapturedat§155.
221(b)(1)through(b)(3),directenrollmententitieswouldberequiredtoofferanExchangeeligibilityapplicationandQHPselectionprocessthatisfreefromadvertisementsorinformationfornon-QHPsandsponsoredlinkspromotinghealthinsurance-relatedproducts.
However,itwouldbepermissibleforadirectenrollmententitytomarketordisplaynon-QHPhealthplansandotheroff-Exchangeproductsinasectionoftheentity'swebsitethatisseparatefromtheQHPwebpagesiftheentityotherwisecompliedwiththeproposedstandardizeddisclaimerrequirements.
Theproposedrequirementscapturedat§155.
221(b)(1)–(3)areintendedtoprovideflexibilityfordirectenrollmententitiestomarketvaluableadditionalcoveragethatcomplementsQHPcoverage,whilealsoallowingHHStoestablishimportantparametersaroundthemannerandtypeofnon-QHPsthatdirectenrollmententitiesmaymarketaspartofasingleshoppingexperiencewithQHPs.
WeexplainedthatwebelievemarketingsomeproductsinconjunctionwithQHPsmaycauseconsumerconfusion,especiallyasitrelatestotheavailabilityoffinancialassistanceforQHPspurchasedthroughtheExchanges.
ButwealsoappreciatethathavingflexibilitytoupdatethesestandardswouldallowustoadaptthedisplayguidanceasnewproductscometomarketandastechnologiesevolvethatcanassistwithdifferentiatingbetweenQHPsofferedthroughtheExchangeandotherproductsconsumersmaybeinterestedin.
Wealsonotedourbeliefthattheconvenienceofbeingabletopurchaseadditionalproductsaspartofasingleshoppingexperienceoutweighspotentialconsumerconfusion,ifpropersafeguardscanbeputinplace.
In§155.
221(b)(4),weVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00071Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217524FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsproposedtomoveandconsolidatetheparallelrequirementscurrentlycapturedin§§155.
220(c)(3)(i)(K)and156.
1230(b)(2)thatweb-brokersandQHPissuers,respectively,demonstrateoperationalreadinessandcompliancewithapplicablerequirementspriortotheirinternetwebsitesbeingusedtocompleteaQHPselection.
Wealsoincludedlanguageinproposed§155.
221(b)(4)toclarifythatoperationalreadinessandcompliancewithapplicablerequirementsmustalsobedemonstratedpriortotheirinternetwebsitesbeingusedtocompleteanExchangeeligibilityapplication.
WeexplainedthatthisclarificationwasimportantasenhanceddirectenrollmentisimplementedandapproveddirectenrollmententitiesarehostingtheExchangeeligibilityapplicationontheirnon-Exchangewebsites.
Weproposedaccompanyingamendmentstoremovetheoperationalreadinessrequirementsfrom§§155.
220and156.
1230aspartofoureffortstostreamlinetheregulatoryrequirementsapplicabletodirectenrollmententities.
Lastly,in§155.
221(b)(5),weproposedtocapturetherequirementfordirectenrollmententitiestocomplywithallapplicablefederalandstaterequirements.
ThiswouldincludetheadditionalExchangerequirementsin§§155.
220and156.
1230thatapplytoweb-brokersandQHPissuersthatparticipateindirectenrollment,respectively.
In§155.
221(c),weproposedFFErequirementsrelatedtodirectenrollmententityapplicationassisters.
Pleaseseethepreambleto§155.
415forfurtherdetails.
In§155.
221(d),weproposedtoconsolidateandamendtheexistingparallelprovisionsin§§155.
220(c)(3)(i)(L)and156.
1230(b)(1)toauthorizeHHStoimmediatelysuspendthedirectenrollmententity'sabilitytotransactinformationwiththeExchangeifHHSdiscoverscircumstancesthatposeunacceptablerisktotheaccuracyoftheExchange'seligibilitydeterminations,ExchangeoperationsorExchangeinformationtechnologysystemsuntilsuchcircumstancesareresolved,remediedorsufficientlymitigatedtoHHS'satisfaction.
Weproposedtoremovetheprovisionsfrom§§155.
220(c)(3)(i)(L)and156.
1230(b)(1)aspartofoureffortstostreamlineandconsolidatetherequirementsapplicabletodirectenrollmententitiesinoneregulation.
Theproposalcapturedin§155.
221(d)includeslanguagethatwillextendtheauthoritytosuspendtheabilitytotransactinformationwiththeExchangetoalsoincludediscoveryofcircumstancesbyHHSthatposeunacceptablerisktotheaccuracyoftheExchange'seligibilitydeterminations.
ThisadditionwasnecessaryandappropriateasenhanceddirectenrollmentallowsdirectenrollmententitiestocollectandtransmittheapplicationdatathattheExchangesusetocompleteeligibilitydeterminations.
Lastly,toaccountfordirectenrollmententitiesthatmaybeassistingconsumersinSBE–FPstates,weproposedanew§155.
221(h)toclarifythatsuchentitiesarealsorequiredtocomplywithapplicablestandardsin§155.
221.
Wesoughtcommentonalloftheseproposals.
Afterconsiderationofthecommentsreceived,wearefinalizingalloftheamendmentsto§155.
221,asproposed.
Comment:Wereceivednumerouscommentsontheproposalsat§§155.
221(b)(1)and(3)torespectivelyrequirethatQHPsandnon-QHPsbedisplayedandmarketedonseparatewebsitepagesofnon-Exchangewebsitesandtolimitmarketingofnon-QHPsduringtheExchangeapplicationandQHPselectionprocess.
ManycommenterssupportedtheproposaltorequireQHPsandnon-QHPsbedisplayedandmarketedonseparatewebsitepagesonnon-Exchangewebsites.
Somecommenterswereopposedtoanymarketingofnon-QHPs,evenaftertheExchangeapplicationandQHPselectionprocess,onnon-Exchangewebsites.
OnecommenterstatedthatallowingthistypeofmarketingcreatesincentivesforbrokerstoadviseconsumerstospendmoremoneyonsupplementalplansandlessonQHPs,whichthecommenterwasconcernedwouldnotbeintheconsumer'sinterest.
Somecommentersspecificallycitedconcernsaboutthemarketingofshort-term,limited-durationinsuranceplans.
SomecommentersrecommendedweadoptrequirementsthathelpconsumersunderstandthedifferencesbetweenQHPsandnon-QHPs,andtheavailabilityoffinancialassistanceonlyapplyingtoQHPs.
Onecommenteragreedwiththegoaloftheproposaltominimizeconsumerconfusion,butwasopposedtolimitingthemarketingofnon-QHPproductsuntilaftertheExchangeapplicationandQHPselectionprocessesarecomplete,andclaimedthislimitationwouldsuppressweb-brokerparticipation.
Onecommenterwasopposedtomostlimitsonmarketingnon-QHPs,andwantedweb-brokerstobeabletodisplayandmarketnon-QHPalternativestoQHPs,ratherthanjustcomplementarynon-QHPproductsduringtheconsumer'sshoppingexperience.
Response:Wearefinalizingtheamendmentstocreatenew§155.
221(b)(1)and(3)asproposed.
Asexplainedintheproposedrule,wehaveconsistentlyreceivedfeedbackfromQHPissuersandweb-brokersaboutconfusionwithrespecttothecurrentguidanceandstandardsrelatedtothedisplayandmarketingofQHPsandnon-QHPsontheirrespectivenon-Exchangewebsites.
Webelievethisapproachprovidesadditionalclarityandrepresentsabalancethatminimizesthechancethatconsumerswillbeconfusedabouttheproductsbeingofferedtothem,includingwhichproductsAPTCandCSRsareavailablefor,whilealsoallowingsomemarketingofcomplementarynon-QHPproductsaftertheExchangeapplicationandQHPselectioniscompletebutduringasingleshoppingexperienceonnon-Exchangewebsites.
Thisprovisionwillnotlimitweb-brokersorissuersfrommarketingnon-QHPproductstoconsumersoutsidetheExchangeapplicationandQHPselectionprocesses,butifaconsumerhasdecidedtocompletetheExchangeeligibilityapplicationortoshopforQHPsonanon-Exchangewebsite,webelievethemarketingofnon-QHPproductstothemduringthattimewouldcauseconfusionaboutwhichproductsareofferedthroughtheExchange(andthereforesubjecttoapplicablerequirementsandeligibleforAPTCandCSRs)andwhicharenot.
Thedisclaimerrequirementestablishedat§155.
221(b)(2)isintendedtohelpconsumersunderstandthedifferencebetweenQHPsandnon-QHPs,andthatfinancialassistanceisonlyavailableforQHPs.
Wedonotbelievethispolicycreatesnewincentivesforbrokerstomarketnon-QHPproductsinsteadofQHPs.
Totheextentthoseincentivesexist,theyexistwithorwithoutthispolicy.
Similarly,wedonotbelievethispolicyhasanyimplicationsspecifictothemarketingofshort-term,limited-durationinsuranceplansgenerally.
Under§155.
221(b)(1)itisnotpermissibletodisplayormarketanynon-QHPplans,includingshort-term,limited-durationinsuranceplans,onthesamewebsitepagesasQHPs.
Asdescribedintheproposedruleandabove,therequirementsat§155.
221(b)(1)through(3)areintendedtoprovideflexibilityfordirectenrollmententitiestomarketvaluableadditionalcoveragethatcomplementsQHPcoverage,whilealsoallowingHHStoestablishimportantparametersaroundthemannerandtypeofnon-QHPsthatdirectenrollmententitiesmaymarketaspartofasingleshoppingVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00072Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217525FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations140PatientProtectionandAffordableCareAct;ProgramIntegrity:Exchange,SHOP,andEligibilityAppeals;FinalRule,78FR54070(August30,2013).
experiencewithQHPsofferedthroughtheExchange.
Wemayreleaseadditionalguidance,asmaybenecessaryorappropriate,tofurtherclarifythenewstandardswearefinalizingat§155.
221(b)(1)through(3)fordirectenrollmententitiesthatwishtodisplayandmarketnon-QHPsonseparatewebpagesbutaspartofasingleshoppingexperiencewithQHPsofferedthroughtheExchange.
f.
CertifiedApplicationCounselors(§155.
225)Weproposedallowing,butnotrequiring,certifiedapplicationcounselorstoassistconsumerswithapplyingforeligibilityforinsuranceaffordabilityprogramsandQHPenrollmentthroughweb-brokerwebsitesundercertaincircumstances.
Wearenotfinalizingthisproposal.
Foradiscussionoftheprovisionsofthisfinalrulerelatedtothatproposal,pleaseseethepreambleto§155.
220.
3.
ExchangeFunctionsintheIndividualMarket:EnrollmentinQualifiedHealthPlansa.
AllowingIssuerApplicationAssistersToAssistWithEligibilityApplications(§155.
415)InthefirstProgramIntegrityRule,140wefinalized§155.
415,whichallowsanExchange,totheextentpermittedbystatelaw,topermitissuerapplicationassisterstoassistconsumersintheindividualmarketwithanExchangeeligibilityapplicationiftheymetcertainrequirements.
At§155.
20,wedefineissuerapplicationassisterasanemployee,contractor,oragentofaQHPissuerwhoisnotlicensedasanagent,broker,orproducerunderstatelawandwhoassistsindividualsintheindividualmarketwithapplyingforadeterminationorredeterminationofeligibilityforcoveragethroughtheExchangeorforinsuranceaffordabilityprograms.
Atcurrent§156.
1230(a)(2),whenpermittedbyanExchangeunder§155.
415,andtotheextentpermittedbystatelaw,QHPissuersthatelecttouseapplicationassistersarerequiredtoensurethateachoftheirapplicationassistersatleast:(1)ReceivestrainingonQHPoptionsandinsuranceaffordabilityprograms,eligibility,andbenefitsrules;(2)complieswiththeExchangeprivacyandsecuritystandardsconsistentwith§155.
260;and(3)complieswithapplicablestatelawrelatedtothesale,solicitation,andnegotiationofhealthinsuranceproducts,includinglawsrelatedtoagent,broker,andproducerlicensure,confidentiality,andconflictsofinterest.
Inadoptingthisapproach,werecognizedthat,insomestates,alicensemayberequiredtoassistanapplicantapplyingforaneligibilitydeterminationorredetermination.
Wedeferredtoexistingstatelawsrelatedtoenrollmentassistancewhendecidingwhichindividualsmayassistapplicantsandenrolleesasauthorizedunder§156.
1230(a)(2),andwhetherlicensurewouldberequiredtoprovidesuchassistance.
Westatedthatifstatelawrequiresalicensetoenrollapplicantsincoverage,thenissuersandtheirapplicationassisterswouldneedtofollowstatelawforlicensurerequirements.
WealsorecognizedthattherewerecertainfunctionsthatissuersgenerallyhadtheirstaffperformpriortotheissuanceofthefirstProgramIntegrityRule,suchasansweringgeneralinformationaboutplans,andwewantedtoallowthoseindividualstocontinuetoperformthosefunctions,withoutmeetingadditionalstandards,ifpermittedbystatelaw.
Weindicatedthat,ifanissuerwantsthoseindividualstoperformadditionalfunctions,suchashelpingconsumersastheyapplyforaneligibilitydeterminationorredeterminationforcoveragethroughtheExchange,orastheyapplyforinsuranceaffordabilityprograms,orastheyreportchangestoanExchange,thoseindividualscouldassistconsumerswithapplicationssubjecttothestandardsin§156.
1230(a)(2),solongasprovidingsuchassistancedidnototherwiseconflictwithstatelaw.
Additionally,westatedthatfacilitatingselectionofaQHPmaybeatypicalfunctionofissuerstaffandissuerstaffwillbeabletoperformpost-eligibilityfunctionssuchasplancompareandselection,ifpermittedbystatelaw,withoutbeingsubjecttothestandardsof§156.
1230(a)(2).
Ascurrentlycodified,theapplicationassisterdefinitionandaccompanyingrequirementsonlyapplytoissuerapplicationassisters.
Asdescribedintheproposedrule,webelieveprovidingparityfordirectenrollmententities,whenpossible,promotesfaircompetitionandmaximizesconsumerchoice.
Inaddition,therewasnoapparentreasonwhyissuerstaffaremorequalifiedtoassistconsumerswiththeExchangeeligibilityapplicationthanthestaffofotherdirectenrollmententities,assumingallreceiveappropriatetrainingandwhenotherwisepermittedunderapplicablestatelaw.
Therefore,weproposedtoexpandtheflexibilitytoemployorcontractwithapplicationassisterstoalldirectenrollmententities,tocreateparitybetweenissuersandothertypesofdirectenrollmententities.
Accordingly,weproposedchangestoseveralregulatorysections.
Specifically,weproposedtoamend§155.
20byaddingtheterm''directenrollmententityapplicationassister,''whichweproposedtodefineasanemployee,contractor,oragentofadirectenrollmententitywhoisnotlicensedasanagent,broker,orproducerunderstatelawandwhoassistsindividualsintheindividualmarketwithapplyingforadeterminationorredeterminationofeligibilityforcoveragethroughtheExchangeorforinsuranceaffordabilityprograms.
Weproposedtoadoptthesameapproachfordirectenrollmententityapplicationassistersastheexistingoneforissuerapplicationassisters.
Inotherwords,underourproposal,theseapplicationassisterswouldneedtocomplywithapplicablestatelaw,includinganylicensurerequirements,andwewouldcontinuetodefertoexistingstatelawsrelatedtoenrollmentassistancewhendecidingwhichindividualsmayassistapplicantsandenrolleesandwhetherlicensureisrequiredtoprovidesuchassistance.
Wealsoproposedtorevise§155.
415(a)toauthorizeanExchange,totheextentpermittedbystatelaw,topermitissueranddirectenrollmententityapplicationassisters,asdefinedat§155.
20,toassistindividualsintheindividualmarketwithapplyingforadeterminationorredeterminationofeligibilityforcoveragethroughtheExchangeandinsuranceaffordabilityprograms.
Additionally,weproposedtomaintainlanguagein§155.
415(a)tomandatethatalldirectenrollmententitieswhoseektouseapplicationassisters,andnotjustQHPissuers,mustensurethattheirapplicationassistersmeetthestandardscurrentlycapturedin§156.
1230(a)(2),whichweproposedtomovetonewparagraphs(b)(1)through(3)of§155.
415,withtwoproposedamendments.
Currently,§156.
1230(a)(2)(i)requiresallQHPissuerapplicationassisterstoreceivetrainingonQHPoptionsandinsuranceaffordabilityprograms,eligibility,andbenefitsrulesandregulations.
Intheproposedrule,wenotedthatlicensedagentsandbrokerscurrentlyassistingconsumerswithQHPenrollmentthroughtheFFEsandSBE–FPsmusthavecredentialstoaccessFFEsystemstoofferthatassistance.
ThosecredentialsareobtainedduringtheFFEregistrationandtrainingprocessesforagentsandbrokers.
ForapplicationassisterstohavesimilaraccesstoFFEsystems,sothattheyarealsoabletoassistconsumersasdescribedinthisVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00073Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217526FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsrule,theywillneedcredentialssimilartothoseobtainedbyagentsandbrokersduringtheFFEregistrationandtrainingprocesses.
Therefore,weproposedtorequirethatapplicationassistersprovidingassistanceintheFFEsandSBE–FPscompleteasimilarannualregistrationandtrainingprocessastowhatisrequiredforagentsandbrokersunder§155.
220(d)(1)and(2),inaformandmannertobespecifiedbyHHS,sothattheywillhavethenecessarytrainingbeforebeingprovidedcredentialstoassistconsumersandaccessFFEsystems.
Thisproposednewtrainingandregistrationrequirementforapplicationassistersiscapturedinthenewproposed§155.
415(b)(1).
Currently,§156.
1230(a)(2)(iii)requiresallQHPissuerapplicationassisterstocomplywithapplicableagent,broker,andproducerlicensurelaws,whichmaynotbeapplicableinagivencircumstance.
Forexample,anotherstatelicensurelawmayexistforprofessionalswhosefunctionsaremoresimilartoapplicationassistersthanlicensedagents,brokers,andproducers.
We,therefore,proposedtoamendthisstandard(proposedtoberedesignatedat§155.
415(b)(3))torequireallapplicationassisterstocomplywithapplicablestatelawrelatedtothesale,solicitationandnegotiationofhealthinsuranceproducts,includinganystatelicensurelawsapplicabletothefunctionstobeperformedbytheapplicationassister;confidentiality;andconflictsofinterest.
WedidnotproposeanychangestotheotherstandardforapplicationassistersthatrequirescompliancewiththeExchange'sprivacyandsecuritystandardsadoptedconsistentwith§155.
260(proposedtoberedesignatedfrom§156.
1230(a)(2)(ii)tonew§155.
415(b)(2)).
Wealsoproposedtodeleteandreserve§156.
1230(a)(2)toreduceredundancies,asQHPissuerssubjecttothecurrentstandardscapturedat§156.
1230(a)(2)wouldbesubjecttotherequirementsin§155.
415(b)iftheyelecttouseapplicationassisters.
WenotethatanyQHPissuersthatarenotdirectenrollmententities,butuseapplicationassisters,willalsobesubjecttotheserequirementsandabletouseapplicationassisters,totheextentpermittedbytheapplicableExchangeandstatelaw.
Finally,consistentwiththenewparagraphsat§155.
221(c)and(h),weclarifiedthatdirectenrollmententitiesparticipatinginFFEsorSBE–FPswillbepermittedtouseapplicationassisters,totheextentpermittedbystatelaw.
Wesoughtcommentontheseproposedchanges.
Wearefinalizingtheseamendmentsasproposed,withtechnicaleditsto§155.
415(b)(3)toclarifythatthereferenceattheendofthesubparagraphto''confidentialityandconflictsofinterest''isreferringtosuchstandardsasareimposedunderStatelaw.
WefurthernotethatHHSwillpermitapplicationassisterstoperformtheassistancefunctionsoutlinedin§155.
415toassistconsumersusingtheFFEsandSBE–FPs,totheextentallowedunderstatelaw,beginningwiththe2021openenrollmentperiod.
HHSneedsadditionaltimetoimplementtheregistrationandtrainingprocessesnecessarytooperationalizethisproposalwhilemaintainingsafeguardstoprotectconsumerdataandExchangesystems.
SBEsthatdonotrelyonthefederalplatformcanimplementtheseprovisionssooner,totheextentotherwisepermittedunderstatelaw.
Weintendtoreleasefutureguidanceabouttheformandmanneroftheregistrationandtrainingprocessesunder§155.
415(b)(1)forapplicationassistersparticipatingintheFFEsorSBE–FPs.
Comment:Twocommenterssupportedthisproposal.
Twoothercommentersquestionedwhetherdirectenrollmententityapplicationassisterswouldbesubjecttostatelawsapplicabletolicensedagentsorbrokers,suchasthosepertainingtoprotectingconsumerinformation,conflictsofinterest,andprofessionalliabilityinsurance.
Twocommentersalsosuggesteddirectenrollmententityapplicationassistersshouldbesubjecttorequirementssimilartothoseforagentsorbrokersunder§155.
220.
Response:Wearefinalizingthisproposalasproposed,withaclarifyingeditto§155.
415(b)(3)toclarifythatthereferenceattheendofthesubparagraphto''confidentialityandconflictsofinterest''isreferringtosuchstandardsasareimposedunderstatelaw.
Weunderstandthatinsomestatesalicensemayberequiredforapplicationassisterstoassistconsumersapplyingforaneligibilitydeterminationorredetermination.
Wedefertoexistingstatelawsrelatedtoenrollmentassistancewhendecidingwhichindividualsmayassistapplicantsandenrolleesasdescribedinthisrule,andwhetherstatelicensureisrequiredtoprovidesuchassistance.
Ifstatelawrequiresalicensetoengageintheseactivities,thenapplicationassisterswillneedtofollowstatelawforlicensurerequirements.
Sinceapplicationassistersunderthefederaldefinitionarenotlicensedagentsorbrokers,wedonotbelieveitisappropriatetosubjectthemtothesamerequirementsimposedonlicensedagentsandbrokersunder§155.
220.
Notably,applicationassistersarenotauthorizedtofunctioninthesamewaysaslicensedagentsorbrokers.
However,therearesomerequirementsfinalizedinthisruleapplicabletoapplicationassistersthataresimilartothoseapplicabletoagentsorbrokersassistingconsumersintheFFEsandSBE–FPs,includingrequirementstocomplywithExchangeprivacyandsecuritystandards.
Inaddition,asdescribedabove,applicationassistersintheFFEsandSBE–FPswillberequiredtocompleteregistrationandtrainingsimilartoagentsorbrokerswhoparticipateinExchanges.
WewillreleasefutureguidanceabouttheformandmannerfortheregistrationandtrainingprocessesforapplicationassisterswhowishtoparticipateinFFEsandSBE–FPs.
Also,asfinalizedinthisruleat§155.
415(b)(3),allapplicationassistersmustcomplywithapplicablestatelawrelatedtothesale,solicitationandnegotiationofhealthinsuranceproducts,includinganystatelicensurelawsapplicabletothefunctionstobeperformedbytheapplicationassister,aswellasapplicablestatelawrelatedtoconfidentialityandconflictsofinterest.
b.
SpecialEnrollmentPeriods(§155.
420)Underourcurrentrules,individualswhoareenrolledinemployer-sponsoredcoverageorcoveragepurchasedthroughanExchangeareeligibleforaspecialenrollmentperiodiftheybecomenewlyeligibleforAPTC.
However,nocomparablespecialenrollmentperiodexistsforindividualswhoareenrolledinoff-Exchangeindividualmarketcoverage.
Webelievethismaypresentasignificantbarrierforsomeindividualstoremainincontinuouscoverageforthefullplanyear.
Therefore,weproposedtoamend§155.
420(d)toaddnewparagraph(d)(6)(v)toauthorizeExchanges,attheiroption,toprovideaspecialenrollmentperiodtoenrollinExchangecoverageforoff-ExchangeindividualmarketenrolleeswhoexperienceadecreaseinhouseholdincomeandreceiveanewdeterminationofeligibilityforAPTCbyanExchange.
Weproposedtomakethisspecialenrollmentperiodavailabletoqualifiedindividualsandtheirdependentswhoexperiencecircumstancesthatresultinadecreaseinhouseholdincomeifthequalifiedindividualorhisorherdependentareboth(1)newlydeterminedeligibleforAPTCbyanExchange,and(2)hadMECinwhichtheywereenrolledinandentitledtoreceivebenefitsasdescribedin26CFR1.
5000A–1(b)foroneormoredaysduringthe60daysprecedingthechangeincircumstances.
Wecite26VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00074Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217527FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations141Instructionsforconsumerstoverifytheireligibilityforaspecialenrollmentperiodareavailableathttps://www.
healthcare.
gov/coverage-outside-open-enrollment/confirm-special-enrollment-period/.
142Availableathttps://www.
healthcare.
gov/help/prove-coverage-loss/andhttps://www.
healthcare.
gov/verify-information/documents-and-deadlines/.
CFR1.
5000A–1(b)becauseitsetsforthcriteriaforwhatitmeansto''haveMEC,''includinggeneralrequirementstobeenrolledinandentitledtoreceivebenefitsunderaprogramorplanidentifiedasMECunder26CFR1.
5000A–2andcertainsituationsunderwhichanindividualisnotenrolledinMECbutistreatedas''havingMEC.
''Underthisspecialenrollmentperiod,qualifiedindividualsanddependentswillbeeligibleforExchangecoveragefollowingtheregularprospectivecoverageeffectivedaterulesdescribedinparagraph(b)(1)ofthissection,andmustenrollwithin60daysfromthedateofthefinancialchange,inaccordancewithparagraph(c)(1)ofthissection.
Wesoughttoprovideindividualswithmorehealthcoverageoptionsandtoempowerthemtoenrollinthehealthcoveragethatbestmeetstheirneedsandtheneedsoftheirfamilies.
Forindividualsandfamilieswithhouseholdincomesgreaterthan400percentofthefederalpovertylevel(FPL)whoarenoteligibleforAPTC,thismaymeanthattheychoosetopurchasehealthinsurancecoverageoutsideoftheExchangeduringtheannualopenenrollmentperiodoranothereligibleenrollmentperiod,especiallyifthemarketoutsideoftheExchangeoffersadditionalplanoptionsatmoreaffordableprices.
However,theseindividualsorfamiliesmayexperienceachangeinhouseholdincomeduringthebenefityearthatmakestheircurrenthealthcoveragenolongeraffordable.
Whileparagraphs(d)(6)(iii)and(d)(6)(iv)currentlyprovidespecialenrollmentperiodsforindividualswhoseemployer-sponsoredcoveragebecomesunaffordableordoesnotprovideminimumvalue,resultingintheemployeebecomingnewlyeligibleforAPTC,andforindividualspreviouslyinthecoveragegapwhobecomenewlyeligibleforAPTCasaresultofachangeinhouseholdincomeormove,respectively,thereisnocurrentpathwaytoExchangecoverageforenrolleesinoff-ExchangeindividualmarketplanswhoarenewlyeligibleforAPTC.
SincenopathwaytoExchangecoveragecurrentlyexists,webelievethatunsubsidizedindividualmarketenrolleeswhosehouseholdincomehasdecreasedmaynolongerbeabletoaffordtheirunsubsidizedhealthplansandmaydecidetoterminatecoveragemid-year.
Therefore,thespecialenrollmentperiodinparagraph(d)(6)(v)willaddressthisissuebyestablishingapathwaytoExchangecoverageforqualifiedindividualsenrolledinoff-ExchangecoveragewhoexperienceadecreaseinhouseholdincomeandarenewlydeterminedeligibleforAPTC.
Webelievethatthispolicywillhelppromotecontinuousenrollmentinhealthcoverageandbringadditionalstabilitytotheindividualmarketriskpool,whichwilllikelyhaveapositiveimpactonhealthinsurancepremiums.
IndividualsseekingtoaccessthespecialenrollmentperiodwillnotbecurrentExchangeenrolleesandwillreceiveanewdeterminationofeligibilityforAPTCthroughtheExchange'sconsumerapplication.
FortheFFEs,anindividual'scurrenthouseholdincomeandeligibilityforAPTCwillbeverifiedthroughtheFFE'seligibilitysystemanddatamatchingissueresolutionprocess,inaccordancewiththerequirementsin§155.
320(c).
Toensurethatthespecialenrollmentperiodisavailabletotheintendedpopulationwhilemitigatingrisksofadverseselectionandinappropriateuse,weproposedtorequiretheindividualseekingaccesstothespecialenrollmentperiodtoprovideevidenceofbothachangeinhouseholdincomeandofpriorhealthcoverage.
Verifyingthatadecreaseinhouseholdincomeoccurredwillpreventindividualswhoenrolledinhealthcoverageoff-Exchange,buthavenotexperiencedafinancialchange,fromattemptingtousethisspecialenrollmentperiodforthesolepurposeofpurchasingamoreorlesscomprehensivelevelofcoveragemid-year.
Toprotecttheindividualmarketriskpoolfromadverseselection,asmentionedinthisrule,weproposedtoincludeapriorcoveragerequirement,whichwillprotectagainstindividualswhooptednottoenrollinhealthcoverageduringtheannualopenenrollmentperiodfromusingthisspecialenrollmentperiodtoenrollinExchangecoveragemid-year.
Additionally,thispriorcoveragerequirementwillpromotecontinuouscoverage.
Theprior-coveragerequirementalignswithexistingprior-coveragerequirementsforspecialenrollmentperiodsat§155.
420(d)(2)(i)and(d)(7).
Weenvisionleveragingexistingpre-enrollmentverificationprocedures141toconfirmeligibilityforthespecialenrollmentperiod,eitherthroughreviewofanindividual'ssubmitteddocumentationorthroughuseofelectronicdatasources,whenavailable,priortosendingtheindividual'splanselectiontotheissuerforenrollment.
Consistentwithcurrentpractices,incaseswhereeligibilityisnotverifiedelectronically,individualswillberequiredtosubmitdocumentationwithin30daysofplanselectiontoverifytheirpriorcoverageandtheirdecreaseinincome.
Consumer-submitteddocumentscurrentlyacceptedbytheFFEforpurposesofdemonstratingpriorcoverageandverifyingattestedincomearecurrentlyidentifiedonHealthCare.
gov,142andweanticipatedevelopingadditionalconsumerinstructionsrelatingtosubmittingdocumentstoverifyadecreaseinincome.
WerecognizethatStateExchangesmaintainflexibilitytodeterminewhetherandhowtoimplementpre-enrollmentverificationofeligibilityforspecialenrollmentperiodsandmaynothavetheoperationalcapacitytoimmediatelyimplementandverifyeligibilityforthisspecialenrollmentperiod.
SomeStateExchangesmayalsodeterminethereisinsufficientneedamongoff-Exchangeconsumersforthisspecialenrollmentperiodbecauseoftheratingandpricingpracticesspecifictotheirstatemarkets.
Therefore,weproposedtomakethisspecialenrollmentperiodavailableattheoptionoftheExchange.
ThisspecialenrollmentperiodisintendedonlyforindividualsnotcurrentlyenrolledinExchangecoverage,sincecurrentExchangeenrolleeswhoexperienceadecreaseinhouseholdincomemid-yearmayalreadyqualifyforaspecialenrollmentperiodunderparagraphs(d)(6)(i)and(ii),ormayenrollinoff-ExchangeplansiftheybecomenewlyineligibleforAPTCunder§147.
104(b)(2)(i)(B).
Paragraph(a)(4)(iii)of§155.
420generallylimitstheplansintowhichanenrolleewhoqualifiesforaspecialenrollmentperiodorisaddingadependentthroughaspecialenrollmentperiodmayenroll.
Severalspecialenrollmentperiodsareexcludedfromthislimitation.
However,weproposedthatthenewspecialenrollmentperiodwillbesubjecttotheruleinparagraph(a)(4)(iii).
Therefore,shouldaqualifiedindividualwhoqualifiesforthespecialenrollmentperiodinparagraph(d)(6)(v)alreadyhavemembersofhisorherhouseholdenrolledinExchangecoverageandthoseenrolleesdonotqualifyforanotherspecialenrollmentperiodatthesametimethatprovidesthemwithadditionalplanenrollmentflexibilities,theExchangemustallowVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00075Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217528FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsthequalifiedindividualtobeaddedtothesameQHPastheExchangeenrolleesinhisorherhousehold,iftheplanbusinessrulesallow.
Iftheplan'sbusinessrulesdonotallowthequalifiedindividualtoenroll,theExchangemustallowthecurrentenrolleestochangetoanotherQHPwithinthesamelevelofcoverage(oronemetallevelhigherorlowerifnosuchQHPisavailable),andtoaddthequalifiedindividualtothesameplanasoutlinedunder§156.
140(b).
Asalways,andattheoptionofthequalifiedindividual,heorshemayenrollinaseparateQHPatanymetallevel,inaccordancewith§155.
420(a)(4)(iii)(B).
Weanticipatethatthissituationwillariserelativelyinfrequentlyduetotheavailabilityofthespecialenrollmentperiodsat(d)(6)(i)and(d)(6)(ii)of§155.
420forenrolleeswhobecomenewlyeligibleforAPTCorexperienceachangeineligibilityforcost-sharingreductions.
Wealsoproposedtomodifythetypesofcoveragethatmaysatisfythepriorcoveragerequirementbyamending§155.
420(a)(5)toincludethecoveragetypesdescribedinparagraphs(d)(1)(iii)and(iv)ofthissection,suchaspregnancyMedicaid,CHIPunbornchild,andMedicallyNeedyMedicaid,inadditiontoMECdescribedin26CFR1.
5000A–1(b).
Webelievethatthisclarificationisnecessarytoensureconsistencyacrossourspecialenrollmentperiodregulationsforthetypesofcoveragethatqualifyanindividualforaspecialenrollmentperiod.
Wealreadytreatcertaintypesofcoverage,includingpregnancyMedicaid,CHIPunbornchild,andMedicallyNeedyMedicaid,althoughnotindependentlydesignatedasMECunder26CFR1.
5000A–1(b),asMECforpurposesofqualifyingforthelossofMECspecialenrollmentperioddescribedin§155.
420(d)(1).
However,individualscurrentlyenrolledinthesetypesofcoveragewillnotqualifyforspecialenrollmentperiodsthatrequirepriorcoverage.
Toavoidtreatingthesametypesofcoveragedifferentlyforpurposesofeligibilityfordifferentspecialenrollmentperiods,weproposedanaligningedittoparagraph(a)(5).
Lastly,weproposedtoclarifycertaintermsin§155.
420(b)(2)(iv),whichaddressesthecoverageeffectivedatesthatapplytothespecialenrollmentperiodsin§155.
420(d)(1),(d)(3),(d)(6)(iii),(d)(6)(iv),and(d)(7).
Specifically,weproposedtoreplacetheword''consumer''withthephrase''qualifiedindividual,enrollee,ordependent,asapplicable,''toalignwiththeterminologyusedat§155.
420(d)todescribespecialenrollmentperiodtriggeringevents.
WedonotanticipatethatthiswordingchangewillcreateadditionalcostorburdenforExchangesorforanyotherstakeholders.
Comment:Wereceivedbroadsupportfromcommentersfortheproposalsat§155.
420.
Commentersnotedtheproposedspecialenrollmentperiodcreatesconsistencywithexistingspecialenrollmentperiodsavailabletoindividualswhoareenrolledinemployer-sponsoredcoverageorcoveragepurchasedthroughanExchangewhobecomenewlyeligibleforAPTC.
Commentersnotedtheproposedspecialenrollmentperiodwouldpromotecontinuouscoverageamongconsumersandincreaseaccesstocare.
Wealsoreceivedcommentsinsupportofthemodificationtopriorcoveragerequirementsat§155.
420(a)(5)toincludecoveragetypessuchaspregnancyMedicaid,CHIPunbornchild,andMedicallyNeedyMedicaid,inadditiontoMECdescribedin26CFR1.
5000A–1(b).
Response:Wearefinalizingallpoliciesunder§155.
420asproposed.
Wenotethattheproposednewspecialenrollmentperiodunder§155.
420(d)(6)(v)isavailableattheoptionoftheExchange.
HHSisdeterminingthedateonwhichthisspecialenrollmentperiodwillbeimplementedforFederally-facilitatedExchangesandStateExchangesusingthefederaleligibilityandenrollmentplatform,andanticipatesitwillnotbeavailableuntilafterJanuary1,2020.
Comment:Onecommenterexpressedsupportfortheproposednewspecialenrollmentperiodunder§155.
420(d)(6)(v),buturgedHHStoreducetheoverallnumberofspecialenrollmentperiodstoalignwiththeprivatemarketandMedicareAdvantageprogram.
Response:HHSiscommittedtomakingsurespecialenrollmentperiodsareavailabletothosewhoareeligibleforthem,andequallycommittedtoavoidinganymisuseorabuseofspecialenrollmentperiods.
Recentlyimplementedspecialenrollmentperiodpolicies,suchaspre-enrollmentverificationandplancategorylimitations,areintendedtopromotecontinuousenrollmentincoverageandprotecttheriskpoolfromadverseselectionthatmayhaveadestabilizingimpactonthemarketforexistingenrollees.
Giventhesemitigationstrategies,wedonotbelieveitisnecessarytoreducethenumberofavailablespecialenrollmentperiodsunder§155.
420atthistime.
Comment:Severalcommenterswroteinsupportoftheproposedrequirementthatthespecialenrollmentperiodunderproposed§155.
420(d)(6)(v)beavailabletoconsumerswhowerepreviouslyenrolledinMECasdefinedat26CFR1.
5000A–1(b).
Thesecommenterswrotethatcontinuousenrollmentincomprehensivecoverageisimportanttomaintainingastableriskpool,andexpressedconcernaboutadverseselectionshouldthespecialenrollmentperiodbemadeavailabletoconsumersenrolledinalternatetypesofcoveragesuchasshort-term,limited-durationinsuranceorhealthcaresharingministryplans.
Response:Weagreethattheproposedpriorcoveragerequirementisimportanttopromotecontinuouscoverageandprotectagainstadverseselection,andnotethatMECdescribedin26CFR1.
5000A–1(b)excludesthecoveragetypesofprimaryconcerntocommenters.
Comment:Othercommentersstatedshort-term,limited-durationinsuranceandothercoveragetypesnotcurrentlydesignatedasMECshouldbeconsideredtomeetthepriorcoveragerequirementsfortheproposedspecialenrollmentperiod.
SomecommentersreferencedHHSsupportforthesecoverageoptionsinotherrulemakingandguidance,andothercommentersexpressedconcernthatconsumersmaybemisledintounintentionalenrollmentintoshort-term,limited-durationplans.
Response:TheAdministrationseekstomakemorecoverageoptionsavailabletoconsumers,includingshort-term,limited-durationcoverageandotherformsofcoveragethatmaynotconstituteMEC.
However,thepriorcoveragerequirements,asimplementedinourotherspecialenrollmentperiods,areintendedtopromotecontinuouscoverageinMECandprotecttheriskpoolfromadverseselection.
Comment:Onecommentersuggestedweamendtheproposedregulatorytexttoreferencepriorcoveragerequirementsat§155.
420(a)(5)asopposedto26CFR1.
5000A–1(b)toenhanceclarityofthepriorcoveragerequirement.
Response:Webelievethischange,ifimplemented,wouldrequireadditionalaligningeditsforallspecialenrollmentperiodscontainingapriorcoveragerequirement.
Wewillconsiderthiswhenmakingfuturetechnicalamendmentstoregulationsat§155.
420,butwillnotmakesuchchangesatthistime.
Comment:Othercommentersstatedeligibilityfortheproposedspecialenrollmentperiodunder§155.
420(d)(6)(v)shouldbeexpandedtoincludeconsumerswhowereautomaticallyre-enrolledineithersubsidizedorunsubsidizedhealthplanswhichbecomeunaffordable.
VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00076Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217529FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations143ConsumersubmitteddocumentscurrentlyacceptedbytheFFEforpurposesofdemonstratingpriorcoverageandverifyingattestedincomeareavailableathttps://www.
healthcare.
gov/help/prove-coverage-loss/andhttps://www.
healthcare.
gov/verify-information/documents-and-deadlines/,respectively.
Response:Consumersinthisscenariomaybeeligibleforthespecialenrollmentperiodasproposed,providedthattheyexperienceadecreaseinincomeandthattheplaninwhichtheywereautomaticallyre-enrolledmeetsthecurrentdefinitionofMEC.
Consumersautomaticallyre-enrolledintoExchangecoverageandwhoexperienceachangeineligibilityforfinancialassistanceoutsidetheannualopenenrollmentperiodmayalsoaccessthecurrentspecialenrollmentperiodat§155.
420(d)(6)(i)and(d)(6)(ii).
Comment:Anothercommenterquestionedwhethertheproposednewspecialenrollmentperiodunder§155.
420(d)(6)(v)shouldbemadeavailabletoconsumerswhoexperienceachangeintaxhouseholdcompositionoraresolutionofaprioryeartaxreturnthatcausesanindividualtobecomenewlyeligibleforAPTCinanExchangeplan.
Response:Webelievethatmanyconsumerswhoexperienceinchangeintaxhouseholdcompositionmayqualifyforaspecialenrollmentperiodunderexistingregulations,suchasincasesofmarriageandgainingorbecomingadependent.
HHSofferedaone-timespecialenrollmentperiodtoconsumerswhodidnotenrollinExchangecoveragebecausetheyfailedtoreconciletheirAPTContheirtaxreturnduringthefirstyearofimplementationofthisrequirement.
However,wedonotbelieveapermanentextensionofthisspecialenrollmentperiodthroughthisproposalisappropriate,asconsumersnowhavemultipleyearsofexperiencewiththerequirementthattheymustfileataxreturnandreconcileAPTCtoremaineligibleforfutureAPTC.
Forthesereasons,wearefinalizingtheeligibilityrequirementsforthespecialenrollmentperiodasproposedandwillnotexpandeligibilityassuggestedbythecommenter.
Comment:Anothercommentersuggestedthatconsumersshouldhave90days,insteadof60days,toreporttheirfinancialchangetotheExchange.
Response:Webelievethecurrentwindowof60daysprovidesampletimeforconsumerstoreporttriggeringeventstotheExchangeandmakeauthorizedplanchangesand,inmanyinstances,encouragesconsumerstoavoidextendedlapsesinhealthcoverage.
Asaresult,wewillnotincreasethetimewithinwhichconsumersmustreporttriggeringeventstoqualifyforaspecialenrollmentperiod.
Comment:Severalcommentersexpressedsupportforourproposaltorequireconsumerstosubmitevidencetodemonstratetheyhaveexperiencedadecreaseinhouseholdincomeandmetthepriorcoveragerequirement.
Onecommenterrequestedadditionalinformationonhowthesemeasureswouldprotectagainstfraud.
Response:Weagreethatrequiringevidenceofpriorcoverageandadecreaseinhouseholdincomeareimportantprogramintegritymeasuresthatprotectagainstfraud.
Webelievetheserequirementsprovidesufficientmitigationagainstinappropriateuseoftheproposedspecialenrollmentperiod.
Comment:Othercommentersexpressedconcernregardingtheconsumerburdenassociatedwithverificationrequirementsandrequestedmoreinformationonwhattypesofconsumerdocumentswouldbeaccepted.
Anothercommenterstatedthatverifyingaconsumer'sdecreaseinhouseholdincomecreatesanundueburden,andthatthereisnoevidencetosupportthenotionthatconsumerswillseektoswitchplancategorylevelsmid-yearduetohealthstatus.
Response:Weappreciatethattheproposedverificationrequirementsdorequireconsumerstosubmitdocumentsinmostcases.
However,ourexperiencewithpre-enrollmentverificationforspecialenrollmentperiodsdemonstratesthatconsumersarenotsignificantlyburdenedbytheserequirements,asthevastmajorityofspecialenrollmentperiodapplicantswhoarerequiredtosubmitdocumentstocompleteenrollmentareabletosuccessfullyverifytheireligibility.
Wemaintainthattheverificationofaconsumer'sdecreaseinhouseholdincomeisanimportantprogramintegritymeasuretoensureindividualconsumersarenotabletoaccessthisspecialenrollmentperiodsolelyduetoachangeinhealthstatus,andarefinalizingthisverificationrequirementasproposed.
Tomitigateconsumerburden,weintendtoutilizeelectronicdatasourceswherepossibleandwillleverageexistingprocessestoacceptdocumenttypesthatarecurrentlyinusebyHHStoverifypriorcoverageandincomeinformation.
143Comment:Manycommenterssupportedmakingtheproposedspecialenrollmentperiodat§155.
420(d)(6)(v)attheoptionoftheExchange.
OthercommentersurgedHHStorequirethespecialenrollmentperiodforallExchangesandquestionedwhetherHHSwouldpromotethenewspecialenrollmentperiodinitsmarketingandoutreachmaterials.
Response:WebelieveStateExchangesarewellpositionedtoassessboththeconsumerneedandtheExchange'soperationalcapacitytoimplementtheproposedspecialenrollmentperiodanditsverificationrequirementsandwearefinalizingtheproposedspecialenrollmentperiodattheoptionoftheExchange.
Giventheimportanceofpre-enrollmentverificationtoprotectingagainstadverseselectionandmisuseoftheproposedspecialenrollmentperiod,webelieverequiringthespecialenrollmentperiodtobeimplementedbyStateExchangeswhichhavenotfullyimplementedpre-enrollmentverificationmayinjectadverseriskintotheExchange'smarketplace.
HHSintendstoupdatecurrenttechnicalassistanceandtrainingmaterialstoincludeinformationregardingthenewspecialenrollmentperiodandwillprovideinformationtorelevantstakeholdergroupssuchasissuers,agentsandbrokers,andconsumerassisters.
Comment:AnothercommenterrequestedthatStateExchangeswhorelyonthefederaleligibilityandenrollmentplatformbegrantedflexibilitytochoosetoimplementthespecialenrollmentperiod.
Response:HHSintendstoimplementthisspecialenrollmentperiodforallExchangescurrentlyusingthefederaleligibilityandenrollmentplatform,andcurrentlylackstheoperationalcapacitytoofferthisflexibility.
4.
EligibilityStandardsforExemptions(§155.
605)a.
EligibilityforanExemptionThroughtheIRS(§155.
605(e))Individualscanclaimhardshipexemptionsthroughthetaxfilingprocessforhardshipsdescribedin§155.
605(e)(1)through(4),whichincludemosthardshipexemptions,butnotthegeneralhardshiptypesdescribedinparagraph(d)(1)ofthissection.
AllowingthegeneralhardshipexemptiontypestobeclaimedthroughtheIRSwillincreaseflexibilityanddecreaseburdensforindividualsseekinghardshipexemptions.
Therefore,weproposedtoamend§155.
605(e),whichdescribestheexemptionsthatcanbeclaimedthroughtheIRStaxfilingprocesswithoutanindividualhavingtoobtainanexemptioncertificatenumberfromanExchange,toaddanewparagraph(e)(5)thatwillallowindividualstoclaimthroughthetaxfilingprocesshardshipexemptionswithinallofthecategoriesdescribedinparagraph(d)(1)ofthissectiononafederalincometaxreturnVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00077Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217530FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations144https://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Authority-to-Grant-HS-Exemptions-2018-Final-91218.
pdf.
145https://www.
irs.
gov/pub/irs-drop/n-19-05.
pdf.
146https://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Authority-to-Grant-HS-Exemptions-2018-Final-91218.
pdf.
147https://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2018-Hardship-Exemption-Guidance.
pdf.
148Note:Asexplainedinthesubsequentfootnote,thisamountdiffersfromtheproposedpremiumadjustmentpercentageduetothefactthatweutilizethemostrecentNHEAdata,whichupdatedinFebruary2019.
149The2013and2019percapitapersonalincomefiguresusedforthiscalculationreflectthelatestNHEAdata,whichwasupdatedbetweenthepublicationoftheproposedruleandthisfinalrule,onFebruary20,2019.
TheseriesusedinthedeterminationsoftheadjustmentpercentagescanbefoundinTables1and17ontheCMSwebsite,whichcanbeaccessedbyclickingthe''NHEProjections2018–2027—Tables''linklocatedintheDownloadssectionatthefollowingaddress:http://www.
cms.
gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.
html.
AdetaileddescriptionoftheNHEprojectionmethodologyisavailableathttps://www.
cms.
gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/ProjectionsMethodology.
pdf.
fortaxyear2018only.
Wearefinalizingthischangeasproposed.
ThisrulealignswithHHSguidancepublishedonSeptember12,2018,entitled,''GuidanceonClaimingaHardshipExemptionthroughtheInternalRevenueService(IRS)''144andwithIRSNotice2019–05.
145Weanticipatethattheguidanceandthisrulewillprovideindividualswithadditionalflexibilityforclaimingahardshipexemptionbyprovidingindividualstheadditionaloptionofclaimingthisexemptionontheirfederalincometaxreturnfor2018only.
Comment:CommentersgenerallysupportedtheproposalforindividualstoclaimhardshipexemptionsontheirtaxreturnswithoutobtaininganexemptioncertificationnumberfromtheMarketplace,becauseitwillreduceburdenonindividuals.
Response:Wearefinalizingthischangeasproposed.
Weagreethatthischangewilllessentheburdenonindividualsbyallowingthemtoclaimthegeneralhardshipexemptionsthroughthetaxfilingprocessfortaxyear2018.
ItwillfurtherreduceburdensinceindividualswillnotberequiredtoobtainanexemptioncertificationnumberfromtheMarketplacepriortofilingtheirtaxreturns.
Comment:Onecommenterstatedtheproposalwasunnecessarygiventhattaxfilingseasonfor2018returnsisunderway(thischangeonlyappliestothe2018taxyear)andthatHHShasnotbeentransparentinthepastaboutthespecificationsforclaimingeachtypeofhardshipexemption.
Response:ThePPACAgrantsauthoritytotheExchangestograntallexemptions.
Asaresult,HHShasconsistentlycodifiedinregulationsanygrantofauthorityithasprovidedtotheIRSinsubregulatoryguidanceforspecifichardshipexemptions.
Andalthoughtaxfilingseasonforthe2018taxyearhasalreadybegun,HHSplanstomaintainourpriorpracticeofprovidingregulatoryrevisionswhengrantingauthoritytotheIRSforindividualstoclaimspecificexemptionsthroughthetaxfilingprocess.
In2018,HHSpublishedguidanceallowingindividualstoclaimthegeneralhardshipexemptionsthroughtheIRSontheir2018taxreturns.
146Alsoin2018,wepublishedguidancethatprovidedexamplesofgeneralhardshipsthatanindividualmayclaim,suchassingle-issuercountyhardships.
147Thisguidancedidnotaltertheexistingregulationsanddidnotcreateanynewsubstantiverequirementsforpeopleseekingahardshipexemption.
Comment:OnecommenterclaimedtheproposalunderminestheoriginalintentofCongressinenactingtheindividualmandatebymakingittooeasyforindividualstoclaimageneralhardshipexemption.
Response:WhileweagreethatthePPACA'sprovisionsincentivizeconsumerstoobtainhealthinsuranceinmanyrespects,thePPACAprovidesstatutoryauthorityforhardshipexemptions.
Consistentwithitsauthority,HHSseekstoprovideindividualswiththeseexemptionsinamannerthatminimizesburden.
b.
RequiredContributionPercentage(§155.
605(d)(2))Undersection5000AoftheCode,anindividualmusthaveMECforeachmonth,qualifyforanexemption,ormakeanindividualsharedresponsibilitypayment.
Under§155.
605(d)(2),anindividualisexemptfromtherequirementtohaveMECiftheamountthatheorshewillberequiredtopayforMEC(therequiredcontribution)exceedsaparticularpercentage(therequiredcontributionpercentage)ofhisorherprojectedhouseholdincomeforayear.
AlthoughtheTaxCutsandJobsActreducestheindividualsharedresponsibilitypaymentto$0formonthsbeginningafterDecember31,2018,therequiredcontributionpercentageisstillusedtodeterminewhetherindividualsabovetheageof30qualifyforanaffordabilityexemptionthatwillenablethemtoenrollincatastrophiccoverageunder§155.
305(h).
Theinitial2014requiredcontributionpercentageundersection5000AoftheCodewas8percent.
Forplanyearsafter2014,section5000A(e)(1)(D)oftheCodeandTreasuryregulationsat26CFR1.
5000A–3(e)(2)(ii)providethattherequiredcontributionpercentageisthepercentagedeterminedbytheSecretaryofHHSthatreflectstheexcessoftherateofpremiumgrowthbetweentheprecedingcalendaryearand2013,overtherateofincomegrowthforthatperiod.
Theexcessoftherateofpremiumgrowthovertherateofincomegrowthisalsousedfordeterminingtheapplicablepercentageinsection36B(b)(3)(A)oftheCodeandtherequiredcontributionpercentageinsection36B(c)(2)(C)oftheCode.
Asdiscussedelsewhereinthispreamble,weproposedasthemeasureforpremiumgrowtha2020premiumadjustmentpercentageof1.
2969721275(oranincreaseofabout29.
7percentovertheperiodfrom2013to2019).
Wearefinalizingthenewpremiumgrowthmeasurethatwouldbecomposedofindividualmarketpremiumgrowthandemployer-sponsoredinsurancepremiumgrowth.
Therefore,asnotedlaterinthispreamble,wearefinalizingapremiumadjustmentpercentageof1.
2895211380forthe2020benefityear.
148Thisamountreflectsanincreaseofabout3.
02percentoverthe2019premiumadjustmentpercentage(1.
2895211380/1.
2516634051).
Asthemeasureofincomegrowthforacalendaryear,weestablishedinthe2017PaymentNoticethatwewillusepercapitapersonalincome(PI).
Undertheapproachfinalizedinthe2017PaymentNotice,usingtheNationalHealthExpenditureAccount(NHEA)data,therateofincomegrowthfor2020isthepercentage(ifany)bywhichthemostrecentprojectionofpercapitaPIfortheprecedingcalendaryear($56,261for2019)exceedspercapitaPIfor2013($44,922),carriedouttotensignificantdigits.
TheratioofpercapitaPIfor2019overthepercapitaPIfor2013isestimatedtobe1.
2524152976(thatis,percapitaincomegrowthofabout25percent).
149Thisreflectsanincreaseofapproximately3.
9percentrelativetotheincreasefor2013to2018(1.
2524152976/1.
2059028167)usedinthe2019PaymentNotice.
PercapitaPIincludesgovernmenttransfers,whichreferstobenefitsindividualsreceivefromfederal,state,andlocalgovernments(forexample,SocialSecurity,Medicare,unemploymentVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00078Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217531FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations150U.
SDepartmentofCommerceBureauofEconomicAnalysis(BEA)Table3.
12GovernmentSocialBenefits.
Availableathttps://apps.
bea.
gov/iTable/iTable.
cfmreqid=19&step=3&isuri=1&categories=survey&nipa_table_list=110.
insurance,workers'compensation,etc.
).
150Usingthe2020premiumadjustmentpercentagefinalizedinthisfinalrule,theexcessoftherateofpremiumgrowthovertherateofincomegrowthfor2013to2019is1.
2895211380/1.
2524152976,or1.
0296274251.
Thisresultsinarequiredcontributionpercentageof8.
00*1.
0296274251or8.
24percentforthe2020benefityear,whichwhenroundedtothenearestone-hundredthofonepercent,representsadecreaseof0.
07ofapercentagepointfrom2019(8.
23702–8.
30358).
Wealsorequestedcommentonwhetherweshouldexcludeanygovernmenttransfers(thatis,SocialSecurity,Medicare,unemploymentinsurance,workers'compensation,etc.
)frompercapitaPI,butwedidnotreceiveanycommentsinresponsetothisrequest.
Comment:Twocommentersindicatedthattheyopposepoliciesthatreduceaccesstohealthcoverage,includingtheproposedrequiredcontributionpercentageincreasesresultingfromtheproposedchangeinpremiumadjustmentpercentage.
Anothercommenternotedthattheproposalwouldincreasethenumberofindividualswhoareeligibleforcatastrophiccoverage,whichshouldbeadequatetoaddressapatient'sneedsandtherebynotcontributetoanexpansionofshort-termlimiteddurationinsuranceplans.
Response:HHSisrequiredtoupdatetherequiredcontributionpercentageannuallyforpurposesofdeterminingwhetherindividualsabovetheageof30qualifyforanaffordabilityexemptionthatwillenablethemtoenrollincatastrophiccoverageunder§155.
305(h).
Wenotethatasaresultoftheupdatedpremiumadjustmentpercentagefinalizedelsewhereinthisrule,therequiredcontributionpercentagehasdecreased.
Forfurtherdiscussionoftheupdatedpremiumadjustmentpercentagefor2020,refertosectionF(3)(e)ofthispreamble.
F.
Part156—HealthInsuranceIssuerStandardsUndertheAffordableCareAct,IncludingStandardsRelatedtoExchanges1.
Definitions(§156.
20)Wearedefiningtheterm''generic''inpart156inresponsetocommentsrequestingadefinitionrelatedtotheproposalthatamountspaidtowardcostsharingusinganyformofdirectsupportofferedbydrugmanufacturerstoinsuredpatientstoreduceoreliminateimmediateout-of-pocketcostsforspecificprescriptionbranddrugsthathaveagenericequivalentnotberequiredtobecountedtowardtheannuallimitationoncostsharing.
Foradiscussionofthatproposalandtherelateddefinitionwearefinalizingat§156.
20,pleaseseethepreambleto§156.
130.
2.
FFEandSBE–FPUserFeeRatesforthe2020BenefitYear(§156.
50)Section1311(d)(5)(A)ofthePPACApermitsanExchangetochargeassessmentsoruserfeesonparticipatinghealthinsuranceissuersasameansofgeneratingfundingtosupportitsoperations.
IfastatedoesnotelecttooperateanExchangeordoesnothaveanapprovedExchange,section1321(c)(1)ofthePPACAdirectsHHStooperateanExchangewithinthestate.
Accordingly,in§156.
50(c),wespecifiedthataparticipatingissuerofferingaplanthroughanFFEorSBE–FPmustremitauserfeetoHHSeachmonththatisequaltotheproductoftheannualuserfeeratespecifiedintheannualHHSnoticeofbenefitandpaymentparametersforFFEsandSBE–FPsfortheapplicablebenefityearandthemonthlypremiumchargedbytheissuerforeachpolicywhereenrollmentisthroughanFFEorSBE–FP.
OMBCircularNo.
A–25Restablishedfederalpolicyregardinguserfees;itspecifiesthatauserfeechargewillbeassessedagainsteachidentifiablerecipientofspecialbenefitsderivedfromfederalactivitiesbeyondthosereceivedbythegeneralpublic.
ActivitiesperformedbythefederalgovernmentthatdonotprovideissuersparticipatinginanFFEwithaspecialbenefitarenotcoveredbythisuserfee.
Asinbenefityears2014through2019,issuersseekingtoparticipateinanFFEinthe2020benefityearwillreceivetwospecialbenefitsnotavailabletothegeneralpublic:(1)ThecertificationoftheirplansasQHPs;and(2)theabilitytosellhealthinsurancecoveragethroughanFFEtoindividualsdeterminedeligibleforenrollmentinaQHP.
Forthe2020benefityear,issuersparticipatinginanFFEwillreceivespecialbenefitsfromthefollowingfederalactivities:Provisionofconsumerassistancetools;Consumeroutreachandeducation;ManagementofaNavigatorprogram;Regulationofagentsandbrokers;Eligibilitydeterminations;Enrollmentprocesses;andCertificationprocessesforQHPs(includingongoingcomplianceverification,recertification,anddecertification).
Basedonestimatedcosts,enrollment,andpremiumsforthe2020benefityear,weproposeda2020benefityearuserfeerateforallparticipatingFFEissuersof3.
0percentoftotalmonthlypremiums.
Thisrateislowerthanthe3.
5percentFFEuserfeeratethatwehadestablishedforbenefityears2014through2019.
Theloweruserfeerateforthe2020benefityearreflectsourestimatesofpremiumincreasesandenrollmentdecreasesforthe2020benefityear.
Wesoughtcommentonthisproposal.
Asdiscussed,OMBCircularNo.
A–25Restablishedfederalpolicyregardinguserfees,andspecifiedthatauserchargewillbeassessedagainsteachidentifiablerecipientforspecialbenefitsderivedfromfederalactivitiesbeyondthosereceivedbythegeneralpublic.
SBE–FPsenterintoaFederalplatformagreementwithHHStoleveragethesystemsestablishedfortheFFEstoperformcertainExchangefunctions,andtoenhanceefficiencyandcoordinationbetweenstateandfederalprograms.
Accordingly,in§156.
50(c)(2),wespecifiedthatanissuerofferingaplanthroughanSBE–FPmustremitauserfeetoHHS,inthetimeframeandmannerestablishedbyHHS,equaltotheproductofthemonthlyuserfeeratespecifiedintheannualHHSnoticeofbenefitandpaymentparametersfortheapplicablebenefityearandthemonthlypremiumchargedbytheissuerforeachpolicywhereenrollmentisthroughanSBE–FP,unlesstheSBE–FPandHHSagreeonanalternativemechanismtocollectthefundsfromtheSBE–FPorstateinsteadofdirectcollectionfromSBE–FPissuers.
ThebenefitsprovidedtoissuersinSBE–FPsbythefederalgovernmentincludeuseofthefederalExchangeinformationtechnologyandcallcenterinfrastructureusedinconnectionwitheligibilitydeterminationsforenrollmentinQHPsandotherapplicablestatehealthsubsidyprograms,asdefinedatsection1413(e)ofthePPACA,andQHPenrollmentfunctionsunder§155.
400.
TheuserfeerateforSBE–FPsiscalculatedbasedontheproportionofuserfeeeligibleFFEcoststhatareassociatedwiththeFFEinformationtechnologyinfrastructure,theconsumercallcenterinfrastructure,andeligibilityandenrollmentservices,andallocatingashareofthosecoststoissuersintherelevantSBE–FPs.
Basedonthismethodology,weproposedtochargeissuersofferingQHPsthroughanSBE–FPauserfeerateof2.
5percentoftheVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00079Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217532FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations151SeethefollowingFY2019budgetdocumentsforareferencetoestimatesprovidedforthePresident'sbudget.
HHSFY2019BudgetinBrief.
Availableathttps://www.
hhs.
gov/sites/default/files/fy-2019-budget-in-brief.
pdf;CMSFY2019JustificationofEstimatesforAppropriationsCommittees.
Availableathttps://www.
cms.
gov/About-CMS/Agency-Information/PerformanceBudget/Downloads/FY2019-CJ-Final.
pdf.
monthlypremiumchargedbytheissuerforeachpolicyunderplansofferedthroughanSBE–FP.
Thisrateislowerthanthe3.
0percentuserfeeratethatwehadestablishedforbenefityear2019.
TheloweruserfeerateforSBE–FPissuersforthe2020benefityearreflectsourestimatesofpremiumincreasesandenrollmentdecreasesforthe2020benefityear.
Wesoughtcommentonthisproposal.
WearefinalizingtheFFEandSBE–FPuserfeeratesforthe2020benefityearat3.
0and2.
5percentofmonthlypremiums,respectively,asproposed.
Comment:ThemajorityofcommenterssupportedHHS'effortstoreducethecostsofoperatingtheFFEandreducingFFEandSBE–FPuserfeerates.
SomecommentersnotedHHSshouldlowertheuserfeeratesfurtheroreveneliminatetheuserfeecollectiontopromoteincreasedcompetition,improveaccesstocoverage,andreduceissuerduplicationofeffortintheoff-Exchangemarket.
However,othercommentersdidnotsupportthereductionofFFEandSBE–FPuserfeerates,askingthatHHSmaintaincurrentuserfeerates.
SeveralofthesecommentersencouragedHHStoeitherre-investexcessfundsintoconsumeroutreachandeducationactivitiesorotherwiserestorefundingofthoseactivitiesto2017levels.
OnecommentersuggestedHHSshoulduseexcessfundstosupportoutreachtotheuninsured,especiallyinruralareas.
AnothercommenternotedthatincreasedinvestmentstomarketingandoutreachwillresultinlowerExchangepremiumsduetoanimprovedriskmix,whichwouldoutweighthecostsofpremiumincreasesfromahigheruserfeerate.
OthercommentersnotedthatHHSneedstoensurethatitisinvestingsufficientfundsinimprovementstoFFEinformationtechnology.
Response:WearefinalizingtheFFEandSBE–FPuserfeeratesforthe2020benefityearat3.
0and2.
5percentofmonthlypremiums,respectively,asproposed.
WewillcontinuetoexaminecostestimatesforthespecialbenefitsprovidedtoissuersofferingQHPsontheFFEsandSBE–FPsforfuturebenefityears,andwewillestablishtheuserfeeratethatisreasonableandnecessarytofullyfunduserfeeeligibleExchangeoperationcosts.
AswediscussedinourproposaltoreducetheFEEandSBE–FPuserfeeratesforthe2020benefityear,wedevelopedtheuserfeeratesbaseduponestimatedcosts,enrollment,andpremiums.
Wespecificallynotedthatthereduceduserfeerates,whichwearefinalizingasproposed,incorporateourestimatesofpremiumincreasesandenrollmentdecreasesforthe2020benefityear,andarenotsolelyareflectionofthetotalexpensesestimatedtooperateandmaintaintheFederalplatformandFFEoperations.
Wealsoreiteratethatanycollectionsinexcessofuserfeeeligiblecostsforagivenyeararerolledoverforspendingtothesubsequentyear'suserfeeeligibleexpenses.
Finally,wenotethatoutreachandeducationeffortswillcontinuetobeevaluatedannuallyandfundedattheappropriatelevel.
HHSremainscommittedtoprovidingaseamlessenrollmentexperienceforFederalplatformconsumers.
Wearecommittedtoapplyingresourcestocost-effective,high-impactoutreachandmarketingactivitiesthatofferthehighestreturnoninvestment.
Comment:OnecommenternotedHHSshouldfurtherreduceuserfeesforissuerswhotakeonadditionalactivitiesadministeredbytheFFE,suchasdirectenrollmentandincreasedmarketingandoutreach.
Response:AllissuersofferingQHPsontheFFEsandSBE–FPsreceivethesamerespectivespecialbenefitsHHSprovidesthroughtheactivitiesassociatedwithoperatingtheFederalplatform.
TheamountofspecialbenefitsHHSoffersissuersdoesnotchangeevenifanissuerchoosestotakeonadditionalactivities,whichmayoverlapwiththeFederalplatformfunctions.
Further,issuerswhochoosetoparticipateasanEnhancedDirectEnrollmentpartnerstillderivespecialbenefitsfromcostsHHSincurstooperatetheFederalplatform.
Assuch,ouranalysisofuserfeeeligiblecostsdoesnotjustifyanadditionalreductiontotheuserfeeratebeyondwhatisbeingfinalizedinthisruleforthe2020benefityear.
WecontinuetoannuallyreviewchangesinestimateduserfeeeligiblecostsduetoeconomiesandstructuralimprovementsbeingmadetothefederalactivitiesthatworkinconcerttoimprovetheenrollmentandeligibilitydeterminationfunctionsforissuersofferingQHPsthroughFFEsandSBE–FPs,aswellastheplancertificationactivitiesforFFEs.
Comment:SeveralcommentersrequestedmoretransparencyfromHHSonhowwesettheFFEandSBE–FPuserfeeratesandurgedHHStomakeavailableabreakdownofExchangeexpensesbyfunctionalarea.
CommentersnotedmoretransparencywouldreduceuncertaintyamongSBE–FPstates,allowstatestobetterascertainthecosteffectivenessoftransitioningtoadifferentexchangemodel,andhelpidentifyareasforadditionalcostsavings.
OnecommenternotedHHSshouldissueareportoutliningtheuseofExchangeuserfeesforpastplanyearsandannuallymovingforward.
AnothercommenternotedHHSshouldprovideitsspecificassumptionsformarketingandoutreachbudgetlevelsthroughtheannualpaymentnoticeprocess.
OnecommenterrequestedHHSensurenouserfeesaredivertedtonon-ExchangefunctionsandurgedHHStoproviderefundsorcreditstoissuersforfundscollectedinexcessofExchangecosts.
Response:TheFFEandSBE–FPuserfeeratesforthe2020benefityeararebasedonexpectedtotalcoststoofferthespecialbenefitstoissuersofferingplansonFFEsorSBE–FPsandevaluationofexpectedenrollmentandpremiumsforthe2020benefityear.
TheseestimatesyieldedanFFEuserfeerateof3.
0percentofpremiums,andanSBE–FPuserfeerateof2.
5percentofpremiums,basedontheproportionofFFEfunctionsthatapplytoSBE–FPs.
Weexpecttheseuserfeeratestoresultinadequatecollectionsbasedonourcurrentestimatesofenrollment,premiums,anduserfeeeligiblecosts.
Userfeeeligiblecostsareestimatedinadvanceofthebenefityearandarebaseduponcontractcoststhatarenotyetfinalized.
WewillcontinuetooutlineuserfeeeligiblefunctionalareasinthePaymentNotice,andwillevaluatecontractactivitiesrelatedtooperationofthefederalExchangeuserfeeeligiblefunctions.
151ThecategoriesthatareconsidereduserfeeeligibleincludeactivitiesthatprovidespecialbenefitstoissuersofferingQHPsthroughtheFederalplatform,anddonotincludeactivitiesthatareprovidedtoallissuers.
Forexample,functionsrelatedtoriskadjustmentprogramoperations,whichareprovidedtoallissuersinstateswhereHHSoperatestheriskadjustmentprogram(all50statesandtheDistrictofColumbiaforthe2020benefityear),arenotincludedintheFFEorSBE–FPuserfeeeligiblecosts.
However,costsrelatedtoExchange-relatedinformationtechnology,healthplanreview,managementandoversight,eligibilityandenrollmentdeterminationfunctionsincludingthecallcenter,andconsumerinformationandoutreachareincorporatedintheFFEuserfeeeligiblecosts.
SBE–FPsconducttheirownhealthplanreviewsandconsumerinformationandoutreach,andtherefore,theSBE–FPuserfeerateisdeterminedVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00080Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217533FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations152CBOestimatesthat,undercurrentlaw,outlaysforhealthinsurancesubsidiesandrelatedspendingwillrisebyabout60percentovertheprojectionperiod,increasingfrom$58billionin2018to$91billionby2028.
SeeCBOreportTheBudgetandEconomicOutlook:2018to2028,April2018,page51.
Availableathttps://www.
cbo.
gov/system/files/115th-congress-2017-2018/reports/53651-outlook.
pdf.
153ThePresident'sFiscalYear2020BudgetincludesalegislativeproposaltoprovideforamandatoryappropriationtomakeCSRpaymentsforcalendaryear2020.
TheproposalalsoallowsforCSRpaymentstoissuerswhodidnot''silver-load''or''broad-load''fromthe4thquarterof2017throughtheendof2019.
basedontheportionofFFEcoststhatarealsoapplicabletoissuersofferingQHPsthroughSBE–FPs.
Comment:OnecommenternotedHHSshouldlowertheSBE–FPuserfeerateto1.
5percentofpremiumstobetterreflectthecurrentstabilityoftheExchangeinformationtechnologyandoutreachandmarketingexpensesbornebytheSBE–FPstates,andbecauseHHSlikelyreceivedexcessfundsinthe2018and2019benefityearsduetotheincreasesinExchangepremiumsattributabletotheeliminationofCSRpaymentsandintroductionofsilverloading.
Response:ThefinalSBE–FPuserfeerateforthe2020benefityearof2.
5percentofpremiumsisbasedonHHS'calculationofthepercentofcontractcostsofthetotalFFEfunctionsutilizedbySBE–FPs—thecostsassociatedwiththeinformationtechnology,callcenterinfrastructure,andeligibilitydeterminationsforenrollmentinQHPsandotherapplicableStatehealthsubsidyprograms.
WehavecalculatedthetotalcostsallocatedtoSBE–FPfunctionsandenrollmentandpremiumestimatestoyieldauserfeerateof2.
5percentforSBE–FPissuersbenefitingfromfunctionsprovidedbytheFederalplatform.
WebelieveissuersofferingQHPsthroughtheFederalplatform,eithertheFFEsorSBE–FPs,shouldbechargedproportionallyforthespecialbenefitsprovidedbytheFederalplatform.
Asdescribedinthisrule,userfeeeligiblecostestimatesarereviewedonanannualbasisanddevelopedinadvanceofthebenefityear.
Ifnecessary,wewillapplyanovercollectionofuserfeefundstouserfeeeligibleexpensesinsubsequentbenefityears,aspermissible.
Asnotedinthisrule,anticipatedExchangepremiumsareonefactorHHSconsiderswhendevelopingtheFFEandSBE–FPuserfeerates.
HHSagreesthatincreasesinpremiums,allotherfactorsbeingequal,shouldplacedownwardpressureontheFFEandSBE–FPuserrates.
Indeed,wearefinalizingourproposaltoreduceboththeFFEandSBE–FPuserfeeratesby0.
5percentagepointsbaseduponestimatesofincreasedpremiumsanddecreasedenrollmentsforthe2020benefityear.
AlthoughthecommenteriscorrectthatHHSreduceditsoutreachandeducationcostsin2018and2019,wedonotchargeSBE–FPsforthesecostsasoutreachandeducationactivitiesareSBE–FPs'responsibility.
ThereforeanyfurtherreductionofoutreachandeducationactivitieswouldnotbereflectedintheSBE–FPuserfeerate.
Comment:OnecommenterrequestedtheuserfeeratebechargedasafixeddollaramountinsteadofapercentofpremiumbecauseHHS'Exchangecostsarefixed.
Response:Aswehavestatedinpriorpaymentnotices,theFFEandSBE–FPuserfeerateswillcontinuetobeassessedasapercentofthemonthlypremiumchargedbyparticipatingissuers.
Settingtheuserfeeasapercentofpremiumensuresthattheuserfeegenerallyalignswiththeissuer'suseoftheenrollmentandeligibilityfunctionsperformedbytheFFE,andensuresthatuserfeechargesreflectExchangeenrollment.
3.
SilverLoadingSection1402ofthePPACArequiresissuerstoprovideCSRstohelpmakecoverageaffordableforcertainlow-andmoderate-incomeconsumerswhoenrollinsilverlevelQHPs,aswellasIndianswhoenrollinQHPsatanymetallevel.
Section1402ofthePPACAfurtherstatesthatHHSwillreimburseissuersforthecostofprovidingCSRs.
UntilOctober2017,thefederalgovernmentreliedonthepermanentappropriationat31U.
S.
C.
1324asthesourceoffundsforfederalCSRpaymentstoissuers.
However,onOctober11,2017,theAttorneyGeneraloftheUnitedStatesprovidedHHSandtheDepartmentoftheTreasurywithalegalopinionindicatingthatthepermanentappropriationat31U.
S.
C.
1324cannotbeusedtofundCSRpaymentstoinsurers.
Inlightofthisopinion—andintheabsenceofanyotherappropriationthatcouldbeusedtofundCSRpayments—HHSdirectedCMStodiscontinueCSRpaymentstoissuersuntilCongressprovidesanappropriation.
InresponsetotheterminationofCSRpaymentstoissuers,manyissuersincreasedpremiumsin2018and2019onlyonsilverlevelQHPstocompensateforthecostofCSRs—apracticesometimesreferredtoas''silverloading''or''actuarialloading.
''Becausepremiumtaxcreditsaregenerallycalculatedbasedonthesecond-lowestcostsilverplanofferedthroughtheExchange,thispracticehasledtoconsumersreceivinghigherpremiumtaxcredits.
Thecostofthesehigherpremiumtaxcreditsarebeingbornebytaxpayers.
SilverloadingistheresultofCongressnotappropriatingfundstopayCSRs,withtheresultbeinganincreasetothepremiumsofbenchmarkplansusedtocalculatepremiumtaxcredits,andthefederaldeficit.
152TheAdministrationsupportsalegislativesolutionthatwouldappropriateCSRpaymentsandendsilverloading.
153IntheabsenceofCongressionalaction,wesoughtcommentonwaysinwhichHHSmightaddresssilverloading,forpotentialactioninfuturerulemakingapplicablenotsoonerthanplanyear2021.
Consistentwithourdiscussionintheproposedrule,wearenotfinalizinganychangeinpolicyforsilverloadinginthisfinalrule.
Comment:Allcommenterssupportedsilverloadingasanoptiontomaintainconsumeraffordabilityandparticipation.
ThemajorityofcommentersurgedHHStocontinuetoallowstatestodeterminehowtoimplementCSRloading.
Somecommentersexpressedoppositiontothepracticeof''broadloading,''inwhichissuersincreasepremiumsonallmetallevelplans(on-andoff-Exchange)tomitigatethelackofCSRreimbursement.
ThosecommentersstatedthatincreasingpremiumsforallplanswouldforceunsubsidizedconsumerstopayhigherpremiumsandwoulddecreaseAPTCamounts.
Commentersnotedthereductioninfinancialassistance,andlargepremiumswingsfromyeartoyearwillcauseconsumerconfusionandinstabilityintheExchanges,andsuchmarketdisruptionmayleadtoissuersleavingtheExchanges.
SomecommenterssuggestedthatHHSshouldphaseinalimitationonsilverloadingafterpermanentandstablefundingisprovided,tomitigatesignificantout-of-pocketcostsforeligibleenrolleeswhowouldseetheamountoftheirpremiumtaxcreditreduced.
Response:Weappreciatethecommentsreceivedandwilltakethemintoconsiderationindeterminingwhetherfutureactionisappropriate.
4.
EssentialHealthBenefitsPackagea.
StateSelectionofEHB-BenchmarkPlanforPlanYearsBeginningonorAfterJanuary1,2020(§156.
111)Inthe2019PaymentNotice,wefinalizedoptionsforstatestoselectnewEHB-benchmarkplansstartingwiththe2020benefityear.
Under§156.
111,astatemaymodifyitsEHB-benchmarkplanby:VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00081Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217534FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations154ILDOIPressRelease,''IllinoisbecomesfirstandonlystatetochangeEssentialHealthBenefit-benchmarkplan,''Aug.
27,2018.
Availableathttps://www2.
illinois.
gov/IISNews/18098-DOI_Essential_Health_Benefit-benchmark_plan_Release.
pdf.
(1)SelectingtheEHB-benchmarkplanthatanotherstateusedforthe2017planyear;(2)ReplacingoneormoreEHBcategoriesofbenefitsinitsEHB-benchmarkplanusedforthe2017planyearwiththesamecategoriesofbenefitsfromanotherstate'sEHB-benchmarkplanusedforthe2017planyear;or(3)Otherwiseselectingasetofbenefitsthatwouldbecomethestate'sEHB-benchmarkplan.
Underanyofthesethreeoptions,theEHB-benchmarkplanwillalsohavetomeetadditionalstandards,includingscopeofbenefitsrequirements.
TheseoptionswereintendedtoprovidestateswithmoreflexibilityintheselectionoftheirEHB-benchmarkplanthanhadpreviouslyexisted.
Inthe2019PaymentNotice,weencouragedstatestoconsiderthepotentialimpactonvulnerablepopulationsastheyselecttheirnewEHB-benchmarkplans,andtheneedtoeducateconsumersonbenefitdesignchanges.
WealsoremindstatestoinformissuersofsuchchangesshouldtheyselectanewEHB-benchmarkplan.
Intheproposedrule,westatedthatwebelievethatthethreenewoptions—thethirdinparticular—mayprovidestateswithadditionalflexibilitytoaddresstheopioidepidemic.
Forexample,IllinoismadechangestoitsEHB-benchmarkplanforplanyear2020thataimtoreduceopioidaddictionandoverdosebyincludinginitsEHB-benchmarkplanalternativetherapiesforchronicpain,restrictingaccesstoprescriptionopioids,andexpandedcoverageofmentalhealthandsubstanceusedisordertreatmentandservices.
154WecontinuetoencourageotherstatestoexplorewhethermodificationstotheirEHB-benchmarkplanwouldbehelpfulinfightingtheopioidepidemic.
Additionally,the2019PaymentNoticestatedthatwewouldproposesubsequentEHB-benchmarkplansubmissiondeadlinesintheHHSannualNoticeofBenefitandPaymentParameters.
Accordingly,weproposedMay6,2019asthedeadlineforstatestosubmittherequireddocumentsforthestate'sEHB-benchmarkplanselectionforthe2021planyear.
Wenotedthatthisdeadlinewouldbedelayed,ifnecessary,tobeonoraftertheeffectivedateofthisfinalrule.
Togiveadvancenoticetostatesandissuers,wesimultaneouslyproposedMay8,2020asthedeadlineforstatestosubmittherequireddocumentsforthestate'sEHB-benchmarkplanselectionforthe2022planyear.
Althoughnotarequirement,werecommendstatessubmitapplicationsatleast30dayspriortothesubmissiondeadlinestoensurecompletionoftheirdocumentsbytheproposeddeadlines.
WerecognizethatthesedeadlinesareearlierintheyearthantheJuly2,2018deadlineforthestate'sEHB-benchmarkplanselectionforthe2020planyear.
Thesedeadlineswouldallowforanearlierfinalizationofastate'sEHB-benchmarkplanandalongertimeperiodforissuerstodevelopplansthatadheretotheirstate'snewEHB-benchmarkplan.
Stateswouldhavetohavecompletedtherequiredpubliccommentperiodandsubmitacompleteapplicationbythedeadlines.
Comment:WereceivedanumberofcommentssupportingourencouragementofstatestoexplorewhethermodificationstotheirEHB-benchmarkplanwouldbehelpfulinfightingtheopioidepidemic.
Somecommenterssupportedsuchmodifications,butonlytotheextenttheydonotimposestrictlimitsonthedosesofopioidsfortreatingpain,whichcommentersstatedcouldcomeattheexpenseofindividualswhoneedaccesstothesemedicationstotreattheirconditions.
Response:Weappreciatethesecomments,andcontinuetourgestatestoconsidertakingallappropriateactiontoaddresstheopioidepidemic,includingbymakingmodificationstotheirEHB-benchmarkplans.
Comment:SeveralcommenterssupportedtheEHB-benchmarkselectionsubmissiondeadlineasproposed.
AfewcommentersexpressedtheirdesireforHHStoextendthesubmissiondeadlinetoallowstatesmoretimetoevaluatetheirEHB-benchmarkplans,andconsidersubmittingchangestoHHS.
Response:WearefinalizingMay6,2019asthe2021planyearEHB-benchmarkplanselectionsubmissiondeadlineandMay8,2020asthe2022planyearEHB-benchmarkplansubmissiondeadline,asproposed.
Werecognizetheproposedsubmissiondeadlineforplanyear2021isearlierintheyearthanthedeadlineforthepreviousplanyearandalsobeforetherule'seffectivedate.
However,unlikethe2020submissiondeadline,whichwefinalizedinthe2019PaymentNoticeconcurrentlywiththepolicyat§156.
111(a),wearenotfinalizinganynewpolicyat§156.
111(a)for2021.
BecausestateshavenowhadoverayeartodeterminewhethertomakeEHB-benchmarkplanchangesfor2021,webelievethatthedeadlinegivesthemampletimetosubmittherequireddocumentstoHHSandthattheyhavebeenpreparingforthisdeadlinesinceproposedintheproposedrule.
Inhavinganearliersubmissiondatethanforthe2020planyear,issuersandotherstakeholderswouldhavemoretimetounderstandbenchmarkplanchangesmadebythestateandforissuerstodesignplansthatwillcomplywithchangestothebenchmark.
Wedonotbelievethatfinalizingalaterdate,includingadateonoraftertherule'seffectivedate,wouldgiveissuerssufficienttimetodesignplans.
b.
ProvisionofEHB(§156.
115)Inthe2019PaymentNotice,wealsofinalizedapolicythroughwhichstatesmayopttopermitissuerstosubstitutebenefitsbetweenEHBcategories.
Inthepreambletothatrule,westatedthatthedeadlinesapplicabletostateselectionofanewbenchmarkplanwouldalsoapplytothisstateopt-inprocess.
WethereforeproposedMay6,2019asthedeadlineforstatestonotifyusthattheywishtopermitbetween-categorysubstitutionforthe2021planyearandMay8,2020asthedeadlineforstatestonotifyusthattheywishtopermitbetween-categorysubstitutionforthe2022planyear.
Wenotedthatthe2021planyeardeadlinewouldbedelayed,ifnecessary,tobeonoraftertheeffectivedateofthisfinalrule.
StateswishingtomakesuchanelectionmustdosoviatheEHBPlanManagementCommunity.
Comment:Afewcommenterssupportedtheproposedsubmissiondeadline.
Response:Wearefinalizingthesubmissiondeadlinesasproposed.
Thedeadlineforthe2021planyearisMay6,2019,andthedeadlineforthe2022planyearisMay8,2020.
Althoughthe2021planyeardeadlineisbeforetherule'seffectivedate,webelievethatthisisnecessaryinorderforissuerstohavesufficienttimetodesignplansthattakeintoaccountanybenefitsubstitutionchanges.
c.
PrescriptionDrugBenefits(§156.
122)i.
Mid-YearFormularyChangeReportingRequirementAtnew§156.
122(d)(3),weproposedthatforplanyearsbeginningonorafterJanuary1,2020,QHPissuersintheFFEswouldberequiredtonotifyHHSannuallyinanHHS-specifiedformatofanymid-yearformularychangesmadeinthepriorplanyearconsistentwiththeproposedchangesto§147.
106(e).
QHPissuersintheFFEswouldberequiredtoreportthenameofthedrugbeingremovedfromtheformulary,dosage,nameofthegenericequivalent,theRxNormConceptUniqueIdentifierVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00082Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217535FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations155Pengxiang,L.
,SanfordShwartz,J.
,&Doshi,J.
A.
(2016).
ImpactofCostSharingonTherapeuticSubstitution:TheStoryofStatinsin2006.
JournaloftheAmericanHeartAssociation.
156Robinson,J.
C,Whaley,C.
M.
,&Brown,T.
T.
(2017).
AssociationofReferencePricingwithDrugSelectionandSpending.
NewEnglandJournalofMedicine,377:658665.
Doi:10.
1065/NEJMsa1700087.
(RxCUI)associatedwiththebrandandgenericdrug,ifthebranddrugwasmovedtoahighercostsharingtierorremovedfromtheformulary,inamannerspecifiedintheforthcomingPRAassociatedwiththisfinalrule.
WeproposedtousethisinformationtounderstandhowtheproposedchangewouldaffectQHPenrollees.
Wesoughtcommentonthisproposal.
Comment:Severalcommenterssupportedthecollectionasproposed.
Othercommenterssuggestedexpandingthesubmissiontorequireissuerstoreporttomid-yearlyformularychangestothestateinadditiontoHHS.
OtherissuerssuggestedHHSuseexistingdatasourcestocollecttheinformation.
Response:Wearenotfinalizingthiscollectionbecausewearenotfinalizingtheproposalinthisruleat§147.
106(e).
Formoreinformationaboutthatproposal,seethepreambleto§147.
106.
ii.
TherapeuticSubstitutionWesolicitedcommentsontwoadditionaldrugpoliciesintendedtoconsiderthepotentialoftherapeuticsubstitution.
First,theprescriptiondrugmarketbecamemoreefficientafterseveralstatespassedlawsthatallowedforgenericsubstitution.
Similarly,therapeuticsubstitution,whichconsistsofsubstitutingchemicallydifferentcompoundswithinthesameclassforoneanother,155couldbeemployedtoimprovetheefficiencyofthepharmaceuticalmarket.
Weacknowledgedthatmanystakeholdersareopposedtotherapeuticsubstitutionandthatthereareconcernsregardingefficacy,adverseeffects,druginteractions,anddifferentindicationsfordrugswithinaclass.
Iftherapeuticsubstitutionweretobecomecommonplace,efficientsystemsthatallowforseamlesscommunicationamongprescribers,pharmacies,andinsurancecompanieswouldneedtobeinplace.
Therapeuticsubstitutionmayhelpdecreasedrugcostsifitcanbeimplementedinawaythatdoesnotnegativelyaffectqualityandaccesstocare.
Wesolicitedcommentonwhethertherapeuticsubstitutionandgenericsubstitutionpoliciesshouldbothbepursuedsinceeachofthetwooptionsmightoffsetanypotentialpremiumimpactoftheother,aswellaswhethercertaindrugcategoriesandclassesarebettersuitedtotherapeuticsubstitutionthanothers.
Wealsosoughtcommentonanyexistingstandardsofpracticefortherapeuticsubstitutionandwhetherthosestandardsarenationallyrecognizedandreadilyavailableforproviderstouse.
Second,themajorityofissuers,employers,andpharmacybenefitmanagersnegotiatepricediscountsandrebatesfrompharmaceuticalmanufacturersbyimplementingtieredformularies,whichlinkpatients'cost-sharingobligationstothelistpriceofeachdrug.
Tieredformularieshavebeensuccessfulinattenuatingthegrowthinpharmaceuticalspendingandoveralldrugspending.
However,inrecentyears,drugspendinghasagainincreased.
Reference-basedpricingisonestrategyforattenuatingincreasesinpharmaceuticalspending.
Reference-baseddrugpricingoccurswhenanissuerinacommercialmarketcoversagroupofsimilardrugs,suchaswithinthesametherapeuticclass,uptoasetprice,withtheenrolleepayingthedifferenceincostiftheenrolleedesiresadrugthatexceedstheset(reference)price.
156Implementationofreference-basedpricingfordrugscouldbringdownoverallhealthplancosts,andperhapspremiumincreases,whileincreasingconsumerout-of-pocketcostsinsomeinstances.
Durablemedicalequipmentbenefitslikeeyeglassesandcontactsaresometimescoveredinasimilarmanner.
Althoughreference-basedpricingisoftendiscussedinthecontextofnetworkadequacyandusingcertainproviderswithinaparticularnetworkwhoarewillingtoacceptareferenceprice,wedonotintendforthisdrugpolicytohavenetworkimplications,andissuersarecurrentlyfreetoimposelowercostsharingfordrugsobtainedviamailorder.
Wesoughtcommentontheopportunitiesandrisksofimplementingorincentivizingreference-basedpricingforprescriptiondrugs.
Comment:Somecommentersdidnotsupporttheimplementationofapolicyrelatedtotherapeuticsubstitutionduetoconcernsregardingefficacy,adverseeffects,druginteractions,differentindicationsfordrugswithinaclassandthepotentialofsuchapolicytojeopardizeconsumers'accesstoclinicallyindicateddrugs.
Commentersnotedthatautomatictherapeuticsubstitutionoverridesatreatmentdecisionmadebetweenthepatientandprovider,whichcouldputpatients'healthatrisk.
Additionally,commentersnotedthattheydidnotbelievethatthecurrenthealthcaresystempossessestheoperationalcapacitytoimplementtherapeuticsubstitutionwithoutjeopardizingthequalityofandaccesstocare.
CommenterswhoweresupportiveoftherapeuticsubstitutionstatedtheyappreciatedHHS'effortstoallowadditionaltoolsandflexibilitytomanagedrugcostsandrecommendedthatbiosimilarsandinterchangeablebiologicsbetherapeuticallysubstitutableaswell.
Onecommentersupportedtheconceptofreference-basedpricing,butnotedthatimplementationmustbecarefullyconsidered.
Commenterswhoopposedreference-basedpricingstatedtheywerenotconfidentthatthereweretransparencymeasuresinplacetoenablereference-basedpricingtobesuccessful.
TwocommentersrequestedthatHHSpostponeitsconsiderationofimplementingreference-basedpricinguntilgreatertransparencyisachievedthroughouttheentirepharmaceuticalsupplychain.
OnecommenternotedthatifHHSweretoimplementreference-basedpricing,itshouldallowpatientstorequestanexceptionfromthebalancebillingrequirementifamedicationismedicallynecessarybutexceedsthereferenceprice.
Twocommenterswerereceptivetoapolicyrelatedtoreference-basedpricing,notingthatimplementationcouldhaveapositiveimpactonpharmacyspending,butcautionedthatbecausethistypeofpricingmodelmaybesomewhatnewinthepharmacyspace,itcouldinitiallycausememberconfusion.
Somecommenterscautionedthatimplementationofthisinitiativewouldrequireextensivemembercommunication.
Additionally,onecommenternotedthatHHSshouldstudythevariouswaysgroupbenefitplansarealreadyemployingreference-basedpricingbeforeactingonregulatoryrequirementsorincentivesandcautionedagainstdefiningreference-basedpricingexplicitlybeforeactuallyengaginginanyformalregulatoryactivityconcerningthispractice,asprematuredefinitionscanbelimiting.
Response:Weappreciatethesecommentsandwilltakethemunderconsiderationforanyfuturerulemaking.
d.
ProhibitiononDiscrimination(§156.
125)Opioidmisuseandaddictionisaseriousnationalcrisisthataffectspublichealth,aswellassocialandeconomicwelfare.
Morethan115peopleintheUnitedStatesdieeachdayfromopioidVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00083Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217536FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations157CDC/NCHS,NationalVitalStatisticsSystem,Mortality.
CDCWonder,Atlanta,GA:USDepartmentofHealthandHumanServices,CDC;2017.
https://wonder.
cdc.
gov.
158FlorenceC.
S.
,ZhouC.
,LuoF.
,XuL.
TheEconomicBurdenofPrescriptionOpioidOverdose,Abuse,andDependenceintheUnitedStates,2013.
MedCare.
2016;54(10):901–906.
doi:10.
1097/MLR.
0000000000000625.
Availableathttps://www.
ncbi.
nlm.
nih.
gov/pubmed/27623005.
159AsdeterminedbyActingSecretaryEricD.
Hargan.
''DeterminationthataPublicHealthEmergencyExists''.
October26,2017.
Availableathttps://www.
phe.
gov/emergency/news/healthactions/phe/Pages/opioids.
aspx.
RenewedbyActingSecretaryHargan.
''RenewalofDeterminationthataPublicHealthEmergencyExists''.
January19,2018.
Availableathttps://www.
phe.
gov/emergency/news/healthactions/phe/Pages/opioid-24Jan2018.
aspx.
RenewedbySecretaryAlexM.
AzarII.
''RenewalofDeterminationthataPublicHealthEmergencyExists''.
April20,2018.
Availableathttps://www.
phe.
gov/emergency/news/healthactions/phe/Pages/opioid-20Apr2018.
aspx.
RenewedbySecretaryAzar.
''RenewalofDeterminationthataPublicHealthEmergencyExists''.
July19,2018.
Availableathttps://www.
phe.
gov/emergency/news/healthactions/phe/Pages/opioid-19July2018.
aspx.
RenewedbySecretaryAzar.
''RenewalofDeterminationthataPublicHealthEmergencyExists''.
October18,2018.
Availableathttps://www.
phe.
gov/emergency/news/healthactions/phe/Pages/opioid-18Oct2018-aspx.
aspx.
RenewedbySecretaryAzar.
''RenewalofDeterminationthataPublicHealthEmergencyExists''.
January17,2019.
Availableathttps://www.
phe.
gov/emergency/news/healthactions/phe/Pages/opioid-17jan2019.
aspx.
160''ThePresident'sCommissiononCombatingDrugAddictionandtheOpioidCrisis''.
Pages19–23.
November1,2017.
Availableathttps://www.
whitehouse.
gov/sites/whitehouse.
gov/files/images/Final_Report_Draft_11-1-2017.
pdf.
161TherearefourdrugscurrentlyusedinMAT:Buprenorphine;naltrexone;buprenorphineincombinationwithnaloxone;andmethadone.
162''MedicationandCounselingTreatment''.
September28,2015.
Availableathttps://www.
samhsa.
gov/medication-assisted-treatment/treatment.
163''Formanypeoplestrugglingwithaddiction,failingtoofferMATisliketryingtotreataninfectionwithoutantibiotics.
.
.
WeknowthatthereissometimesstigmaassociatedwithMAT—especiallywithlongtermtherapy.
ButsomeoneonMAT,evenonewhorequireslong-termtreatment,isnotanaddict.
Theyneedmedicinetoreturntowork;re-engagewiththeirfamilies;andregainthedignitythatcomeswithbeingincontroloftheirlives.
Theseoutcomesareliterallytheoppositeofhowwedefineaddiction.
Ourfellowcitizenswhocommittotreatmentshouldnotbetreatedaspariahs—theyarerolemodels.
''Azar,Alex.
PlenaryAddresstoNationalGovernorsAssociation,February24,2018.
Availableathttps://www.
hhs.
gov/about/leadership/secretary/speeches/2018-speeches/plenary-addres-to-national-governors-association.
html.
164MHPAEAoriginallyappliedtolargegrouphealthplansandlargegrouphealthinsurancecoverage,andPPACAextendedittoapplytoindividualhealthinsurancecoverage.
165§156.
115(a)(3).
166Forexamplesofnonquantitativetreatmentlimitations,see§146.
136(c)(4)(ii).
167ClassificationsunderMHPAEAareasfollows:Inpatient,in-network;inpatient,out-of-network;outpatient,in-network;outpatient,out-of-network;emergencycare;andprescriptiondrugs.
§146.
136(c)(2)(ii).
overdoses.
157TheCentersforDiseaseControlandPreventionestimatesthatthetotalcostsofprescriptionopioidmisusealoneintheUnitedStatesis$78.
5billionperyear,includingthecostsofhealthcare,lostproductivity,addictiontreatment,andcriminaljusticeinvolvement.
158IthasbeenanactivePublicHealthEmergency,asdeterminedbytheSecretaryunder42U.
S.
C.
247d,sinceOctober26,2017.
159Severalfactorshaveinfluencedtheopioidcrisis,including:theopioidpharmaceuticalmanufacturingandsupplychainindustry;deficientpatientandproviderpainmanagementeducation;roguepharmaciesandunethicalphysicianprescribing;andtheinsufficientavailabilityoftreatmentservices,includingMedication-AssistedTreatment(MAT).
160MATistheuseofmedicationapprovedbytheFDAforaddictiondetoxification,relapseprevention,ormaintenancetreatment,incombinationwithcounselingandbehavioraltherapiestotreatsubstanceusedisordersandpreventoverdosethroughdetoxification,relapseprevention,andmaintenancetreatment.
161MAThasproventobeclinicallyeffectiveintreatingopioidusedisorderandtosignificantlyreducetheneedforinpatientdetoxificationservicesforindividualswithopioidusedisorder.
162Despitethisevidence,anddespitetheattentionpaidtothenationwideopioidPublicHealthEmergency,thereisnotcomprehensive,nationwidecoverageofthedrugsusedinMAT,atleastamongQHPissuers.
AreviewofQHPissuerformulariesinthe39FFEandSBE–FPstatesforwhichwehavedatarevealsthat,whilemanyQHPscoverallfourMATdrugs,notalldo.
Specifically,forplanyear2018,2,553QHPs(95percent)inthese39FFEandSBE–FPstatescoverallfourofthesedrugs;105QHPs(4percent)coverthree;and25QHPs(201417:19Apr24,2019Jkt247001PO00000Frm00084Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217537FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations168See§146.
136(c)(4)(iii),Ex.
10.
169IRSRev.
Proc.
2014–37.
benefitsintheclassificationarecomparableto,andareappliednomorestringentlythantheprocesses,strategies,evidentiarystandardsandotherfactorsusedinapplyingthelimitationtomedical/surgicalbenefitsinthesameclassification.
Inotherwords,theissuermustdemonstratethat,aswrittenandinoperation,theprocesses,strategies,evidentiarystandards,andotherfactorsitappliedindecidingthatthedrugiscoveredformedical/surgicalpurposes,arecomparabletothoseitusedindecidingthatthedrugisnotcoveredforMATpurposes,andthattherearenoseparatelimitationsthatapplyonlyformentalhealthorsubstanceusedisorderbenefits.
168Wealsonotedthatfederalcivilrightslaws,suchastitleIIoftheAmericanswithDisabilitiesActandsection504oftheRehabilitationAct,prohibitdiscriminationagainstindividualswhoparticipateinorhavecompletedsubstanceusedisordertreatment,includingMAT.
Comment:Manycommenterssupportedourcontinuedinterpretationoftheprohibitionondiscriminationasitappliestothecoverageoftreatmentsforopioidusedisorder.
ManycommenterssupportedourrecommendationthatissuersprovidecomprehensivecoverageofMAT,therebyincreasingaccesstoMATanddestigmatizingitsuse.
SeveralcommenterssuggestedthatHHSrequirecoverageofallfourdrugsusedinMAT,andafewcommenterscautionedagainstsucharequirement.
AnumberofcommentsoutsidethescopeofthisruleencouragedHHSandstatestotakeaggressiveenforcementactionsagainstalldiscriminatorybenefitdesigns,includingplandesignsthatmayviolateMHPAEA.
Anumberofcommenterssuggestedthatdiscriminatorybenefitdesignsexistwithregardstowomen'shealthbenefitsandbenefitsforthetreatmentofsexuallytransmitteddiseases.
Response:Weappreciatethesecommentsandwilltakethemunderconsiderationaswecontinuetomonitorandimplementstrategiestoaddressdiscriminatorybenefitdesignsandtheopioidepidemic.
e.
PremiumAdjustmentPercentage(§156.
130)Section1302(c)(4)ofthePPACAdirectstheSecretarytodetermineanannualpremiumadjustmentpercentage,ameasureofpremiumgrowththatisusedtosettherateofincreaseforthreeparametersdetailedinthePPACA:(1)Themaximumannuallimitationoncostsharing(definedat§156.
130(a));(2)therequiredcontributionpercentageusedtodetermineeligibilityforcertainexemptionsundersection5000AoftheCode(definedat§155.
605(d)(2));and(3)theemployersharedresponsibilitypaymentamountsundersection4980H(a)and(b)oftheCode(seesection4980H(c)(5)oftheCode).
Section1302(c)(4)ofthePPACAand§156.
130(e)providethatthepremiumadjustmentpercentageisthepercentage(ifany)bywhichtheaveragepercapitapremiumforhealthinsurancecoveragefortheprecedingcalendaryearexceedssuchaveragepercapitapremiumforhealthinsurancefor2013,andtheregulationsprovidethatthispercentagewillbepublishedintheannualHHSnoticeofbenefitandpaymentparameters.
Tocalculatethepremiumadjustmentpercentageforthe2020benefityear,wecalculatethepercentagebywhichtheaveragepercapitapremiumforhealthinsurancecoveragefor2019exceedstheaveragepercapitapremiumforhealthinsurancefor2013,androundtheresultingpercentageto10significantdigits.
Theresultingpremiumindexreflectscumulative,historicgrowthinpremiumsfrom2013onwards.
The2015PaymentNotice(79FR13743)and2015MarketStandardsRule(79FR30240)establishedamethodologyforestimatingtheaveragepercapitapremiumforpurposesofcalculatingthepremiumadjustmentpercentageforthe2015benefityearandbeyond.
Beginningwiththe2015benefityear,thepremiumadjustmentpercentagewascalculatedbasedontheestimatesandprojectionsofaverageperenrolleeemployer-sponsoredinsurancepremiumsfromtheNHEA,whicharecalculatedbytheCMSOfficeoftheActuary.
Intheproposed2015PaymentNotice,weproposedthatthepremiumadjustmentpercentagebecalculatedbasedontheprojectionsofaverageperenrolleeprivatehealthinsurancepremiums.
Basedoncommentsreceived,wefinalizedthe2015PaymentNoticetoinsteaduseperenrolleeemployer-sponsoredinsurancepremiumsinthemethodologyforcalculatingthepremiumadjustmentpercentage.
Wechoseemployer-sponsoredinsurancepremiumsbecausetheyreflectedtrendsinhealthcarecostswithoutbeingskewedbyindividualmarketpremiumfluctuationsresultingfromtheearlyyearsofimplementationofthePPACAmarketreforms.
WeadoptedthismethodologyinsubsequentPaymentNoticesfor2016through2019,butnotedinthe2015PaymentNoticethatwemayproposetochangeourmethodologyaftertheinitialyearsofimplementationofthemarketreforms,oncethepremiumtrendismorestable.
Asdiscussedinthe2015PaymentNotice,weconsideredfourcriteriawhenfinalizingthepremiumadjustmentpercentagemethodologyforthe2015benefityear:(1)Comprehensiveness—thepremiumadjustmentpercentageshouldbecalculatedbasedontheaveragepercapitapremiumforhealthinsurancecoveragefortheentiremarket,includingtheindividualandgroupmarkets,andbothfullyinsuredandself-insuredgrouphealthplans;(2)Availability—thedataunderlyingthecalculationshouldbeavailablebythesummeroftheyearthatispriortothecalendaryearsothatthepremiumadjustmentpercentagecanbepublishedintheannualHHSnoticeofbenefitandpaymentparametersintimeforissuerstodeveloptheirplandesigns;(3)Transparency—themethodologyforestimatingtheaveragepremiumshouldbeeasilyunderstandableandpredictable;and(4)Accuracy—themethodologyshouldhavearecordofaccuratelyestimatingaveragepremiums.
Wecontinuetoconsiderthesecriteriaasweevaluateothersourcesofpremiumdatathatcouldbeusedincalculatingthepremiumadjustmentpercentage.
Todate,theNHEAprojectionsofperenrolleeemployer-sponsoredinsurancepremiumshavealsobeenusedbytheDepartmentoftheTreasuryandtheIRSfordeterminingtheapplicablepercentageinsection36B(b)(3)(A)oftheCodeandtherequiredcontributionpercentageinsection36B(c)(2)(C)oftheCode.
169Theapplicablepercentageinsection36B(b)(3)(A)oftheCodeisusedtodeterminetheamountanindividualmustcontributetothecostofanExchangeQHPandthus,relatestotheamountoftheindividual'spremiumtaxcredit.
Thisisbecause,ingeneral,anindividual'spremiumtaxcreditisthelesserof(1)thepremiumspaidfortheExchangeQHP,and(2)theexcessofthepremiumforthebenchmarkplanoverthecontributionamount.
Thecontributionamountistheproductoftheindividual'shouseholdincomeandtheapplicablepercentage.
Therequiredcontributionpercentageinsection36B(c)(2)(C)oftheCodeisusedtodeterminewhetheranofferofemployer-sponsoredinsuranceisconsideredaffordableforanindividual,whichrelatestoeligibilityforthepremiumtaxcreditbecauseanindividualwithanofferofaffordableemployer-sponsoredinsurancethatVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00085Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217538FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations170SeealsoIRSNotice2015–87,Q&A12fordiscussionoftheadjustmentoftherequiredcontributionpercentageasappliedforcertainpurposesundersections4980Hand6056oftheCode.
171SeeIRSRev.
Proc.
2014–37(https://www.
irs.
gov/pub/irs-drop/rp-14-37.
pdf).
172The2013and2019perenrolleepremiumsforprivatehealthinsurance(excludingMedigapandpropertyandcasualtyinsurance)figuresusedforthiscalculationreflectthelatestNHEAdata,whichwasupdatedbetweenthepublicationoftheproposedruleandthisfinalrule,onFebruary20,2019.
TheseriesusedinthedeterminationsoftheadjustmentpercentagescanbefoundinTable17ontheCMSwebsite,whichcanbeaccessedbyclickingthe''NHEProjections2018–2027—Tables''linklocatedintheDownloadssectionathttp://www.
cms.
gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.
html.
AdetaileddescriptionoftheNHEprojectionmethodologyisavailableathttps://www.
cms.
gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/ProjectionsMethodology.
pdf.
173SeePPACAsection9010(e)(2).
However,undersection4003ofPublicLaw115–120,DivisionD—SuspensionofCertainHealth-RelatedTaxes,enactedonJanuary22,2018,thecollectionoftheHealthInsuranceProvidersFeeissuspendedforthe2019calendaryear.
providesminimumvalueisineligibleforthepremiumtaxcredit.
Specifically,anofferofemployer-sponsoredinsuranceisconsideredaffordableforanindividualiftheemployee'srequiredcontributionforemployer-sponsoredinsuranceislessthanorequaltotherequiredcontributionpercentage(setat9.
5percentin2014)oftheindividual'shouseholdincome.
170Section36B(b)(3)(A)(ii)oftheCodegenerallyprovidesthattheapplicablepercentagesaretobeadjustedafter2014toreflecttheexcessoftherateofpremiumgrowthovertherateofincomegrowthfortheprecedingyear.
Section36B(c)(2)(C)oftheCodeprovidesthattherequiredcontributionpercentageistobeadjustedafter2014inthesamemannerastheapplicablepercentagesareadjustedinsection36B(b)(3)(A)(ii)oftheCode.
Asnotedinthisrule,theDepartmentoftheTreasuryandtheIRShaveissuedguidanceprovidingthattherateofpremiumgrowthforpurposesofthesesection36Bprovisionsisbasedonperenrolleespendingforemployer-sponsoredinsuranceaspublishedintheNHEA.
171Intheproposedrule,weproposedtomodifythepremiumgrowthmeasurethatweusedtocalculatethepremiumadjustmentpercentageforthe2020benefityearandbeyond.
Weproposedtouseamorecomprehensivepremiummeasurethatcapturesincreasesacrossthemarket,includingindividualmarketpremiumsandemployer-sponsoredinsurancepremiums,forpurposesofcalculatingthepremiumadjustmentpercentage.
Specifically,weproposedtocalculatethepremiumgrowthmeasuresfor2013and2019asprivatehealthinsurancepremiumsminuspremiumspaidforMedigapinsuranceandpropertyandcasualtyinsurance,dividedbytheunroundednumberofuniqueprivatehealthinsuranceenrollees,excludingallMedigapenrollees.
Thispremiummeasureisanadjustedprivateindividualandgroupmarkethealthinsurancepremiummeasure,whichissimilartoNHEA'sprivatehealthinsurancepremiummeasure.
NHEA'sprivatehealthinsurancepremiummeasureincludespremiumsforemployer-sponsoredinsurance,''directpurchaseinsurance,''whichincludesindividualmarkethealthinsurancepurchaseddirectlybyconsumersfromhealthinsuranceissuers,bothonandofftheExchanges,andMedigapinsurance,andthemedicalportionofaccidentinsurance(''propertyandcasualty''insurance).
ThemeasureweproposedtouseispublishedbyNHEAandincludesNHEAestimatesandprojectionsofemployer-sponsoredinsuranceanddirectpurchaseinsurancepremiums,butweproposedtoexcludeMedigapandpropertyandcasualtyinsurancefromthepremiummeasuresincethesetypesofcoveragearenotconsideredprimarymedicalcoverageforindividualswhoelecttoenroll.
Weproposedtouseperenrolleepremiumsforprivatehealthinsurance(excludingMedigapandpropertyandcasualtyinsurance)sothatthepremiumgrowthmeasuremorecloselyreflectspremiumtrendsforallindividualsprimarilycoveredintheprivatehealthinsurancemarketsince2013,andweanticipatedthattheproposedchangetouseperenrolleepremiumsforprivatehealthinsurance(excludingMedigapandpropertyandcasualtyinsurance)wouldadditionallyreducefederalpremiumtaxcreditexpenditures,iftheDepartmentoftheTreasuryandtheIRSweretoadopttheproposedchange.
Usingtheprivatehealthinsurancepremiummeasure(excludingMedigapandpropertyandcasualtyinsurance),weproposedthatthepremiumadjustmentpercentagefor2020bethepercentage(ifany)bywhichthemostrecentNHEAprojectionofperenrolleepremiumsforprivatehealthinsurance(excludingMedigapandpropertyandcasualtyinsurance)for2019(whenproposed,$6,468)exceedsthemostrecentNHEAestimateofperenrolleepremiumsforprivatehealthinsurance(excludingMedigapandpropertyandcasualtyinsurance)for2013(whenproposed,$4,987).
172Usingthisformula,theproposedpremiumadjustmentpercentageforthe2020benefityearwas1.
2969721275($6,468/$4,987),whichrepresentedanincreaseinprivatehealthinsurance(excludingMedigapandpropertyandcasualtyinsurance)premiumsofapproximately29.
7percentovertheperiodfrom2013to2019.
Wearefinalizingtheproposaltouseperenrolleeprivatehealthinsurancepremiums(excludingMedigapandpropertyandcasualtyinsurance)inthepremiumadjustmentpercentagecalculation.
Aswediscussedintheproposedrule,immediateapplicationofthischangewillresultinafasterpremiumgrowthratefortheforeseeablefuturethanifwecontinuedtouseonlyemployer-sponsoredinsurancepremiumsasinpriorbenefityears.
Weanticipatethatthischangewillhaveseveralimpactsonthehealthinsurancemarket.
Asexplainedinthisrule,thepremiumadjustmentpercentageisusedtosettherateofincreaseforthemaximumannuallimitationoncostsharing,therequiredcontributionpercentageusedtodetermineeligibilityforcertainexemptionsundersection5000AoftheCode,andtheemployersharedresponsibilitypaymentamountsundersection4980H(a)and(b)oftheCode.
Accordingly,apremiumadjustmentpercentagethatreflectsafasterpremiumgrowthratewouldresultinahighermaximumannuallimitationoncostsharing,ahigherrequiredcontributionpercentage,andhigheremployersharedresponsibilitypaymentamountsthanifthecurrentpremiumadjustmentpercentagepremiummeasure(employer-sponsoredinsuranceonly)wereadoptedforthe2020benefityear.
Intheproposedrule,westatedthat,ifwefinalizeachangetothepremiummeasureusedinthepremiumadjustmentpercentageforthe2020benefityear,weexpecttheDepartmentoftheTreasuryandtheIRStoissueadditionalguidancetoadoptthesamepremiummeasureforpurposesoffutureindexingoftheapplicablepercentageandrequiredcontributionpercentageundersection36BoftheCode.
Additionally,theHealthInsuranceProvidersFeeestablishedundersection9010ofthePPACAalsotakesthemeasureofpremiumgrowthusedfortheapplicablepercentageinsection36B(b)(3)(A)(ii)oftheCodeintoconsiderationforpurposesofcalculatingthefeefor2019andbeyond.
173WeexpecttheDepartmentoftheTreasuryandtheIRStoadoptthepremiummeasurethatresultsinafasterpremiumgrowthratethatweareVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00086Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217539FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations174The2013and2019perenrolleepremiumsforprivatehealthinsurance(excludingMedigapandpropertyandcasualtyinsurance)usedforthiscalculationreflectthelatestNHEAdata,whichwasupdatedbetweenthepublicationoftheproposedruleandthisfinalrule,onFebruary20,2019.
TheseriesusedinthedeterminationsoftheadjustmentpercentagescanbefoundinTable17ontheCMSwebsite,whichcanbeaccessedbyclickingthe''NHEProjections2018–2027—Tables''linklocatedintheDownloadssectionathttp://www.
cms.
gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.
html.
AdetaileddescriptionoftheNHEprojectionmethodologyisavailableathttps://www.
cms.
gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/ProjectionsMethodology.
pdf.
finalizing,whichwillresultinslightlyhigherHealthInsuranceProvidersFeesimposedonhealthinsuranceissuersthatarerequiredtopaythefee,overthelongterm.
WeanticipatethathealthinsuranceissuerssubjecttotheHealthInsuranceProvidersFeegenerallywouldpassthefeeontoconsumers,andthathigherfeeswouldincreasepremiumsintheindividual,small,andlargegroupmarkets,althoughweanticipatethatanypremiumincreaseswouldbeverysmall.
Additionally,asstatedintheproposedrule,afasterpremiumgrowthmeasureandcorrespondingincreaseintheapplicablepercentagewillincreasetheamountthatindividualsreceivingthepremiumtaxcreditcontributetowardspremiums,therebyreducingfederaloutlaysforthepremiumtaxcreditthathadincreasedsignificantlyinthe2018benefityearasmanyissuersincreasedsilverplanpremiumstooffsetthecostofprovidingcost-sharingreductionstoeligibleenrolleeswithoutreceivingcost-sharingreductionpaymentsfromthefederalgovernment.
WehaveupdatedtheimpactestimatesintheRegulatoryImpactAnalysisofthisfinalruletoreflectimpactestimatesprovidedbytheDepartmentoftheTreasury,pendingtheiranticipatedadoptionofthepremiummeasurefinalizedinthisrule.
Althoughcommentersexpressedconcernabouttheimpactsresultingfromthischange,asdiscussedlaterinthepreambleofthisfinalrule,wearefinalizingthechangeasproposed—touseperenrolleeprivatehealthinsurancepremiums(excludingMedigapandpropertyandcasualtyinsurance)asthepremiumgrowthmeasureforpurposesofcalculatingthepremiumadjustmentpercentage.
Thisapproachallowsustoachievethestatutoryandregulatorygoalsofamorecomprehensiveandaccuratemeasureofpremiumcostsacrosstheprivatemarket.
Usingtheproposedpremiummeasure,thepremiumadjustmentpercentageiscalculatedasthedifferencebetweenthepercentage(ifany)bywhichthemostrecentNHEAprojectionofperenrolleepremiumsforprivatehealthinsurance(excludingMedigapandpropertyandcasualtyinsurance)for2019($6,436)exceedsthemostrecentNHEAestimateofperenrolleepremiumsforprivatehealthinsurance(excludingMedigapandpropertyandcasualtyinsurance)for2013($4,991),carriedoutto10significantdigits.
174Usingthisformula,thefinalpremiumadjustmentpercentagefor2020,roundedto10significantdigits,usingperenrolleepremiumsforprivatehealthinsurance(excludingMedigapandpropertyandcasualtyinsurance)is1.
2895211380($6,436/$4,991),whichisanincreaseofapproximately29percentovertheperiodfrom2013to2019.
Comment:Allcommentersonthistopicexpressedoppositiontoorconcernsabouttheproposedchange,manyofwhomindicatedHHSshouldcontinuetousethecurrentmeasure,employer-sponsoredinsurancepremiums,tomeasurepremiumgrowth.
Almostallcommenterswereconcernedabouttheimpactoftheproposalonthehealthinsurancemarketandindividualsandfamilies,citingHHS'estimatesoftheimpactsintheRegulatoryImpactAnalysis,includingadecreaseinenrollmentandincreaseinpremiumsandout-of-pocketcostsforconsumers.
Severalcommentersnotedthatindividualmarketpremiumsshouldnotbeusedtomeasurepremiumgrowthsince2013becausepremiumshaveincreasedduetoPPACAmarketreformsandfederalpolicyandlegislativechanges,includingchangesinthecompositionoftheindividualmarketriskpoolthatoccurredwiththeeliminationofpre-existingconditionexclusions,theinclusionofaricherbenefitpackageandlowercost-sharingthantypicallyprovidedintheindividualmarketin2013,thecessationofCSRpayments,thereductionoftheindividualsharedresponsibilitypenaltyto$0,andtheendingofthereinsuranceprogram.
Commentersstatedthesepremiumincreasesshouldnotbeincludedinthemeasureofpremiumgrowthbecausetheyarenotbasedonutilizationorcostofmedicalservices.
Severalcommentersnotedourmethodologyisflawedbecausetheproposalstartswith2013asthebaseyear,buttheindexingprovisionsofsection1401ofthePPACAstartwith''thecalendaryearafter2014''(2015)andthenusetheprecedingyear,or2014asthebaseyear.
TheystatethatsinceEHBdidnotgointoeffectuntil2014,utilizingabaseyearearlierthan2014doesnotcomparethepricesoflikeindividualinsuranceproducts.
SeveralcommentersrecommendedHHSuseabaseyearnoearlierthan2018(ratherthan2013)toavoidinclusionofpremiumincreasesresultingfromPPACAmarketreformsandotherfederalpolicyandlegislativedecisions.
SomecommentersnotedthatHHSconsideredandrejectedadoptingusingindividualmarketpremiumsinthepremiummeasureforthepremiumadjustmentpercentageforthe2015benefityearbecausethepremiumtrendwasnotstable,andthepremiumtrendisstillnotstable,citingthePPACApolicyandlegislativechangesmentionedinthisruleandthat2019isthefirstyearnewruleshavetakeneffectregardingshort-term,limited-durationinsurance(STLDI)plansandassociationhealthplans(AHP),whichmayfurtherdisruptthemarketandincreasepremiums.
Onecommenterrecommendedonlyusingindividualmarketpremiumincreasesforunderlyingmedicaltrends(inotherwords,notincludingpremiumincreasesresultingfromfederalpolicyandlegislativechanges),whileafewcommentersindicatedthatthechangeisnotstatutorilyrequired,andurgedHHStodelaythechangeuntilthepremiumtrendismorestable.
SeveralcommentersstatedHHS'sjustificationprovidedforthischangeisinadequateandcontrarytothelegislativeintentofthefinancialassistancestructureofthePPACA.
OnecommenternotedthattheprimarypurposeofprovidingAPTCtoExchangeenrolleesissothatthefederalgovernment,ratherthanlow-incomeindividualsandfamilies,bearstheburdenofanypremiumincreasesintheindividualmarket.
AfewcommentersurgedHHStoconsiderotherwaystoreducefederalexpenditures,ortofocusoneffortsatloweringtheoverallcostofhealthcare,ratherthanplacingtheburdenonhouseholds.
Onecommentersupportedkeepingfederalcostsreasonable,butwasconcernedaboutHHSdoingsobywayofreducingPTCtoconsumers,whichwillincreasethenumberofuninsuredindividuals.
AnothercommenternotedthatwhiletheproposedchangewillresultinfederalPTCsavings(adecreasedtaxpayerburden),consumersreceivingAPTCaretaxpayers,andthatthenegativeeffectsofreducingtheirAPTCwouldoutweighthebenefitsoflowertaxburden.
Anothercommenternotedthattheproposedchangewillimpactthecoverage''affordability''percentagesVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00087Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217540FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations175NoteforexamplethedifferencesinenrollmentbetweenEmployer-sponsoredInsuranceandDirectPurchasereflectedinTable17ofthe''NHEProjections2018–2027—Tables''availableintheDownloadssectionathttp://www.
cms.
gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.
html.
In2020,theOfficeoftheActuaryprojectsEmployer-sponsoredInsuranceenrollmentwillbe176.
6million,andDirectPurchaseenrollmentwillbe21.
3million.
176ASPEResearchBrief:2019HealthPlanChoiceandPremiumsinHealthcare.
govStates,showingadecreaseinsilverplanpremiumsforplanyear2019,availableathttps://aspe.
hhs.
gov/system/files/pdf/260041/2019LandscapeBrief.
pdf.
177Seeid.
178Id.
thatIRSreleaseseachspring,whichareusedbyapplicablelargeemployerstodeterminetheaffordabilityoftheiroffersofcoverageforpurposesoftheemployersharedresponsibilityprovisions.
Assuch,thecommenterurgedHHStoworkcloselywiththeIRSonthetimingofanychangeandrecognizethatemployerplansrelyonthetimelyreleaseofthisdataeachspringfortheirannualplan-developmentprocesses.
Response:Asstatedearlierinthispreamble,wearefinalizingourproposaltocalculatethepremiumadjustmentpercentageusingameasureofpremiumgrowththataccountsforindividualmarkethealthinsurancepremiums,aswellasemployer-sponsoredinsurance.
Section1302(c)(4)ofthePPACAand§156.
130(e)providethatthepremiumadjustmentpercentageisthepercentage(ifany)bywhichtheaveragepercapitapremiumforhealthinsurancecoveragefortheprecedingcalendaryearexceedssuchaveragepercapitapremiumforhealthinsurancefor2013.
Thepurposeofthisindexistomeasuregrowthinpremiums,andthestatutegivesHHSflexibilitytodeterminehowtomeasurepremiumgrowth.
Becausetheindividualmarketismuchsmallerthanthegroupmarket,175theincreaseinthepercentageamountduetothechangeinmethodologyfrommeasuringgrowthonlyinemployer-sponsoredinsurancetousingthenewmeasure,whichincludesindividualmarkethealthinsurance,isquitesmall.
Undertheemployer-sponsoredinsurancemeasure,thepremiumadjustmentpercentagewouldhavebeen1.
2551737602.
Asstatedabove,underthenewpremiummeasure,thepremiumadjustmentpercentageis1.
2895211380,oradifferenceofapproximately3.
4percentagepoints.
Thereforethenewpremiummeasuredoesnotresultinasignificantlylargerpremiumadjustmentpercentage;however,itdoesmorecomprehensivelyreflecttheactualgrowthinpremiumsintheinsurancemarkets.
Asstatedinthe2015PaymentNotice,wepreviouslyexcludedpremiumsfromtheindividualmarketbecausetheyweremostaffectedbythesignificantchangesinbenefitdesignandmarketcompositionintheearlyyearsofimplementationofthePPACAmarketrulesandweremostlikelytobesubjecttoriskpremiumpricing.
However,thePPACAisnowpasttheinitialyearsofimplementationandissuershavehadtheopportunitytocollectdataontheriskcompositionoftheindividualmarketandadjustpricingaccordingly.
Wehaveconcluded,basedonthegeneraltrendofstabilizingaveragepremiumsintheindividualmarket,176thatthelikelihoodofriskpremiumpricinghasdecreased.
Wefurtherbelievethatindividualmarketpremiumincreasesgoingforwardwillmoreaccuratelyreflecttruepremiumgrowth,therebyaddressingthebasesweidentifiedinthe2015PaymentNoticeforexcludingindividualmarketpremiumsfromthepremiumadjustmentpercentagecalculation.
Therefore,wearefinalizingourproposaltomeasuregrowthofpremiumsissuerschargedenrolleesmorecomprehensively,bynolongerexcludingindividualmarketpremiums.
WhilethePPACAdoescontainfinancialassistanceprovisionsthatshiftcostsfromconsumerstothefederalgovernmentasnotedbycommenters,italsorequirestheSecretarytomeasurepremiumgrowth,sothattheeffectsofpremiumgrowthcanbereflectedinotherpaymentparameters.
Assuch,althoughwearesensitivetocommenters'concernsaboutthepotentialimpactonconsumers,wecontinuetobelievethatapremiumgrowthmeasurethataffectscost-sharingandpaymentparametersintheemployergroupmarketsandindividualhealthinsurancemarketshouldcomprehensivelyreflectpremiumgrowthinallaffectedmarkets,andshouldnotbelimitedtoemployer-sponsoredinsurancegrowth.
Ineffect,thischangeisatechnicalcorrectionformeasuringpremiumgrowth,asthepreviousexclusionofindividualmarketdatawasnotthemostcomprehensivemethodofpremiumgrowthmeasurement,butwasdeemednecessaryasaresultofthepremiuminstabilityintheindividualmarketimmediatelyfollowingimplementationofthePPACAmarketreforms.
Additionally,whilewerecognizecommentsnotingthatrecipientsofPTCarealsotaxpayers,reducingfederalexpendituresisnotstrictlyabenefittothefederalgovernment,buttoalltaxpayers,whichincludesthosewhoarenotPTCrecipients.
Further,weunderstandthatthepremiumadjustmentpercentageisrelevanttodeterminetheaffordabilityofplansofferedbyapplicablelargeemployersforpurposesoftheemployersharedresponsibilityprovisions.
WewillcontinuetoworkcloselywiththeDepartmentoftheTreasuryandtheIRStotimelyreleaseinformationontheindexingofthevariousPPACAprovisions.
Withrespecttothecommentsrequestingweuseadifferentbaseyear,theapplicablestatute,section1302(c)(4)ofthePPACA,requirestheSecretaryofHHStoestablishapremiumadjustmentpercentagethatmeasurespremiumgrowthbetweentheprecedingcalendaryear(2019,inthiscase)and2013.
Itisnotlegallypermissibletochangethebaseyeartoanyyearotherthan2013,includingthebaseyearreflectedinthePPACAsectioncitedbycommenters,section1401.
Comment:ManycommentersopposedtheproposedchangeandindicatedHHSshouldcontinuetousethecurrentpremiummeasure;however,afewofthesecommentersstatedifHHSdoesadopttheproposedchangeitshouldchangesomeaspectsofitsapproach.
AfewcommentersrecommendedthatHHSconsideradelayedorgradualphaseinofindividualmarketpremiumsoverseveralyears.
Response:Asnotedearlierinthissectionofthepreamble,webelievethatthegrowthofaveragepremiumsintheindividualmarkethasstabilized,andthereasonsforexcludingindividualmarketpremiumsfromthepremiumadjustmentpercentagecalculationhavebeenaddressed.
177Althoughweconsideredaphase-inapproach,wedonotbelievethatfurtherdelaymeetsthestatutoryandregulatorygoalsofusingacomprehensivemeasureofpremiumgrowth.
Additionally,asstatedabove,webelievethattheindividualmarketisnowsufficientlystabletojustifytheimmediateinclusionofindividualmarketpremiumgrowthintheindexingmeasuregoingforward.
Forexample,inplanyear2019,premiumsforthesecondlowestcostsilverplandecreased2percent,thefirstdecreaseinthatpremiummeasuresincetheadventofthePPACA.
178Assuch,webelieveitisappropriatetoprioritizebetterachievingthegoalsofcomprehensivenessandaccuracyofthepremiumadjustmentpercentagemethodologyoverthelimitedeffectonmitigatingimpactsthatimplementingourproposalusingaVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00088Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217541FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations179Seehttp://www.
irs.
gov/pub/irs-drop/rp-13-25.
pdf.
phased-inapproachwouldbelikelytohave.
Comment:Onecommenterprovidedadetailedexplanationaboutwhattheyviewedtobelegaldeficiencieswithourstatutoryanalysis,ourjustificationfortheproposedchange,andtheproceduralapproach.
OnecommenterindicatedthatHHShasunderestimatedthesignificanceoftheproposedchange'simpactontheHealthInsuranceProvidersFeeandtheincreasedpremiumsinthecommercialandMedicaremarketsthatmayresultfromtheproposedchange.
Onecommenterexpressedthattheproposedchangewillbedoublypunitivetoitsstateresidentsbecauseaspartofthestate'smarketstabilizationefforts,residentsaresubjectedtoapenaltyfornotcarryinginsurance.
Additionally,thecommenternotedthatstatesthatdevelopedsection1332waiverswillbeundulypenalizedbythischangebecauseitwillresultinareductionofpremiumtaxcredits.
Anothercommenternotedthatifmorestatesimplementsection1332waivers,thenapremiumadjustmentpercentagethatincorporatesindividualmarketpremiumchangeswouldalsoreflecttheimpactofthesewaivers(thatis,reducedindividualmarketpremiums)andcouldresultinadditionalfederalexpendituresonpremiumtaxcreditsthroughreducedrequiredcontributions.
Thecommenternotedtherecouldbechallengesforstatesseekingnewwaiverstoreflecttheimpactofthisconsiderationwhenevaluatingcompliancewiththedeficitneutralityguardrailandtheavailableamountoffederalpass-throughfundingintheirwaiverapplications.
Response:Webelievethatsection1302(c)(4)ofthePPACAprovidestheSecretaryofHHSwiththeauthoritytoupdateandmodifythepremiumadjustmentpercentageandpremiumgrowthratemeasure,andthatourproposalwaswithinthisauthority.
WhilewerecognizethatanyreductionstofederalPTCspendingcouldreducethepass-throughamountsthatareavailabletostatesthatimplementStateReliefandEmpowermentWaiversundersection1332ofthePPACA,thosereductionsinpass-throughpaymentswouldbeconsistentwiththereductioninthefederalsavingsattributabletosuchwaivers.
Additionally,asnotedintheregulatoryimpactsectionofthisrule,weareawarethat,ifadoptedbytheDepartmentoftheTreasuryandtheIRS,thischangeinpremiummeasureswilllikelyhavetheeffectofraisingpremiums,andweunderstandthatsuchincreasescouldhaveadditionalconsequencesforconsumersinstateswheretheymaybepenalizedfornotcarryinginsurance.
Asexplainedinresponsestoothercommentsonthisproposal,webelievetheseimpactsareoutweighedbythegoalsofachievingcomprehensiveandaccuratecalculationsofpremiumgrowth.
Wewillcontinuetoconsiderpossibilitiesforappropriatemodificationstothecalculationofthepremiumadjustmentpercentagethatreflectthechanginghealthinsurancemarkets,andwewillconsidertheseandothercommentsaswedevelopfuturepolicyinthisarea.
Basedonthefinal2020premiumadjustmentpercentage,wearefinalizingthefollowingcost-sharingparametersforbenefityear2020.
MaximumAnnualLimitationonCostSharingforPlanYear2020Under§156.
130(a)(2),forthe2020calendaryear,costsharingforself-onlycoveragemaynotexceedthedollarlimitforcalendaryear2014increasedbyanamountequaltotheproductofthatamountandthepremiumadjustmentpercentagefor2020.
Forotherthanself-onlycoverage,thelimitistwicethedollarlimitforself-onlycoverage.
Under§156.
130(d),theseamountsmustberoundeddowntothenextlowestmultipleof$50.
Intheproposedrule,weproposedthatthe2020maximumannuallimitationoncostsharingwouldbe$8,200forself-onlycoverageand$16,400forotherthanself-onlycoverage,basedonthepreviouslyproposedpremiumadjustmentpercentageof1.
2969721275for2020,andthe2014maximumannuallimitationoncostsharingof$6,350forself-onlycoverage,whichwaspublishedbytheIRSonMay2,2013.
179Asstatedinthisrule,wearefinalizingthechangeinpremiummeasureusedtocalculatethepremiumadjustmentpercentageasproposed,andthusthefinalpremiumadjustmentpercentageforthe2020benefityearis1.
2895211380.
Basedonthispremiumadjustmentpercentage,andthe2014maximumannuallimitationoncostsharingof$6,350forself-onlycoverage,thefinal2020maximumannuallimitationoncostsharingwillbe$8,150forself-onlycoverage($6,350*1.
2895211380=$8,188.
46;roundeddowntothenextlowestmultipleof50dollarsis$8,150)and$16,300($8,150*2)forotherthanself-onlycoverage.
Thisrepresentsanapproximately3.
16percentincreaseabovethe2019parametersof$7,900forself-onlycoverageand$15,800forotherthanself-onlycoverage.
Comment:Severalcommentersexpressedoppositiontotheincreasedmaximumannuallimitationoncost-sharing.
Manycommentersstatedthattheyopposetheproposedchangeinpremiummeasureforthepremiumadjustmentpercentageinpartbecauseoftheeffectitwouldhaveoffurtherincreasingthemaximumannuallimitationoncost-sharingforindividualsandfamilies.
Multiplecommenterssuggestedthatifthepremiumadjustmentpercentageisnotfinalizedasproposed,giventhetimingofthefinalrule,issuersshouldbeallowedasafeharbortousetheproposedmaximumannuallimitationoncost-sharingfor2020.
OnecommenterrequestedHHSlowertheburdenofout-of-pocketcostsforpatientsorkeepcurrentcost-sharinglimitsat2019levels.
Anothercommentersupportedtheflexibilitytoincreasetheout-of-pocketmaximumtoahigherlimitandrequestedthatHHScoordinatewiththeIRSinsettingthemaximumout-of-pocketlimitsforHSA-eligibleHDHPssotheymatch.
Response:Werecognizecommenters'concernsabouttheburdenthatanincreaseinthemaximumannuallimitationoncost-sharingplacesonconsumerswhomeettheannuallimit.
However,theindexingofthisparameterisrequiredundersection1302(c)(1)(B)ofthePPACA,anddoesnotpermitHHStopostponeupdatestotheseparametersfortheapplicablebenefityear.
Therefore,wearefinalizingthe2020maximumannuallimitationoncostsharingof$8,150forself-onlycoverageand$16,300forotherthanself-onlycoverage,basedonthepremiumadjustmentpercentageforthe2020benefityearthatisfinalizedinthisrule.
Withregardtothemaximumout-of-pocketlimitthatappliesforpurposesofHSA-eligibleHDHPs,annualadjustmentsaredeterminedundersection223(g)oftheCode,whichbystatuteprovidesadifferentannualadjustmentthantheannualadjustmentprovidedundersection1302(c)ofPPACA.
Further,wenotethattheDepartmentoftheTreasuryandtheIRShavejurisdictionoverHSAsandHSA-eligibleHDHPsundersection223oftheCode.
f.
ReducedMaximumAnnualLimitationonCostSharing(§156.
130)Sections1402(a)through(c)ofthePPACAdirectissuerstoreducecostsharingforEHBsforeligibleindividualsenrolledinasilver-levelQHP.
Inthe2014PaymentNotice,weestablishedstandardsrelatedtotheprovisionofthesecost-sharingreductions.
Specifically,inpart156,subpartE,weVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00089Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217542FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsspecifiedthatQHPissuersmustprovidecost-sharingreductionsbydevelopingplanvariations,whichareseparatecost-sharingstructuresforeacheligibilitycategorythatchangehowthecostsharingrequiredundertheQHPistobesharedbetweentheenrolleeandthefederalgovernment.
At§156.
420(a),wedetailedthestructureoftheseplanvariationsandspecifiedthatQHPissuersmustensurethateachsilver-planvariationhasanannuallimitationoncostsharingnogreaterthantheapplicablereducedmaximumannuallimitationoncostsharingspecifiedintheannualHHSnoticeofbenefitandpaymentparameters.
Althoughtheamountofthereductioninthemaximumannuallimitationoncostsharingisspecifiedinsection1402(c)(1)(A)ofthePPACA,section1402(c)(1)(B)(ii)statesthattheSecretarymayadjustthecost-sharinglimitstoensurethattheresultinglimitsdonotcausetheAVofthehealthplanstoexceedthelevelsspecifiedinsection1402(c)(1)(B)(i)(thatis,73percent,87percent,or94percent,dependingontheincomeoftheenrollee).
Accordingly,weproposedtocontinuetousethemethodweestablishedinthe2014PaymentNoticefordeterminingtheappropriatereductionsinthemaximumannuallimitationoncostsharingforcost-sharingplanvariations.
Asdiscussedinthisrule,thefinalized2020maximumannuallimitationoncostsharingwillbe$8,150forself-onlycoverageand$16,300forotherthanself-onlycoverage.
WeanalyzedtheeffectonAVofthereductionsinthemaximumannuallimitationoncostsharingdescribedinthestatutetodeterminewhethertoadjustthereductionssothattheAVofasilverplanvariationwillnotexceedtheAVspecifiedinthestatute.
Inthisrule,wedescribeouranalysisforthe2020planyearandourproposedresults.
ConsistentwithouranalysisinthePaymentNoticesfor2014through2019,wedevelopedthreetestsilver-levelQHPs,andanalyzedtheimpactonAVofthereductionsdescribedinthePPACAtotheproposedestimated2020maximumannuallimitationoncostsharingforself-onlycoverage($8,200).
Thetestplandesignsarebasedondatacollectedfor2019planyearQHPcertificationtoensurethattheyrepresentarangeofplandesignsthatweexpectissuerstoofferatthesilverlevelofcoveragethroughtheExchanges.
For2020,thetestsilver-levelQHPsincludedaPPOwithtypicalcost-sharingstructure($8,200annuallimitationoncostsharing,$2,575deductible,and20percentin-networkcoinsurancerate);aPPOwithalowerannuallimitationoncostsharing($5,250annuallimitationoncostsharing,$3,500deductible,and20percentin-networkcoinsurancerate);andanHMO($8,200annuallimitationoncostsharing,$4,300deductible,20percentin-networkcoinsurancerate,andthefollowingserviceswithcopaymentsthatarenotsubjecttothedeductibleorcoinsurance:$500inpatientstayperday,$500emergencydepartmentvisit,$25primarycareofficevisit,and$55specialistofficevisit).
AllthreetestQHPsmeettheAVrequirementsforsilverlevelhealthplans.
Wethenenteredthesetestplansintotheproposed2020AVCalculatorandobservedhowthereductionsinthemaximumannuallimitationoncostsharingspecifiedinthePPACAaffectedtheAVsoftheplans.
WefoundthatthereductioninthemaximumannuallimitationoncostsharingspecifiedinthePPACAforenrolleeswithahouseholdincomebetween100and150percentofFPL(23reductioninthemaximumannuallimitationoncostsharing),and150and200percentofFPL(23reduction),willnotcausetheAVofanyofthemodelQHPstoexceedthestatutorilyspecifiedAVlevels(94and87percent,respectively).
Incontrast,thereductioninthemaximumannuallimitationoncostsharingspecifiedinthePPACAforenrolleeswithahouseholdincomebetween200and250percentofFPL(12reduction),willcausetheAVsoftwoofthetestQHPstoexceedthespecifiedAVlevelof73percent.
Asaresult,weproposedthatthemaximumannuallimitationoncostsharingforenrolleeswithahouseholdincomebetween200and250percentofFPLbereducedbyapproximately15,ratherthan12,consistentwiththeapproachtakenforbenefityears2017through2019.
Wefurtherproposedthatthemaximumannuallimitationoncostsharingforenrolleeswithahouseholdincomebetween100and200percentofFPLbereducedbyapproximately23,asspecifiedinthestatute,andasshowninTable9.
TheseproposedreductionsinthemaximumannuallimitationoncostsharingshouldadequatelyaccountforuniqueplandesignsthatmaynotbecapturedbyourthreetestQHPs.
WealsonotethatselectingareductionforthemaximumannuallimitationoncostsharingthatislessthanthereductionspecifiedinthestatutewillnotreducethebenefitaffordedtoenrolleesintheaggregatebecauseQHPissuersarerequiredtofurtherreducetheirannuallimitationoncostsharing,orreduceothertypesofcostsharing,iftherequiredreductiondoesnotcausetheAVoftheQHPtomeetthespecifiedlevel.
Wetestedagainusingthenumbersbasedonthefinalpremiumadjustmentpercentage,whicharereflectedbelow,andarrivedatthesameconclusions.
Wearethereforenotconsideringanychangestothelevelofthereductionsatthistime.
Inprioryearswefound,andwecontinuetofind,thatforindividualswithhouseholdincomesof250to400percentofFPL,withoutanychangeinotherformsofcostsharing,anyreductioninthemaximumannuallimitationoncostsharingwillcauseanincreaseinAVthatexceedsthemaximum70percentlevelinthestatute.
Asaresult,wedidnotproposetoreducethemaximumannuallimitationoncostsharingforindividualswithhouseholdincomesbetween250and400percentofFPL.
Wenotethatfor2020,asdescribedin§156.
135(d),statesarepermittedtosubmitforapprovalbyHHSstate-specificdatasetsforuseasthestandardpopulationtocalculateAV.
NostatesubmittedadatasetbytheSeptember1,2018deadline.
TABLE9—REDUCTIONSINMAXIMUMANNUALLIMITATIONONCOSTSHARINGFOR2020EligibilitycategoryReducedmaximumannuallimitationoncostsharingforself-onlycoveragefor2020Reducedmaximumannuallimitationoncostsharingforotherthanself-onlycoveragefor2020Individualseligibleforcost-sharingreductionsunder§155.
305(g)(2)(i)(100–150percentofFPL)2,700$5,400Individualseligibleforcost-sharingreductionsunder§155.
305(g)(2)(ii)(151–200percentofFPL)2,7005,400Individualseligibleforcost-sharingreductionsunder§155.
305(g)(2)(iii)(201–250percentofFPL)6,50013,000VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00090Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217543FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations180Sections2707(b)and2711ofthePHSActapplytheannualcost-sharinglimitationonEHBsandtheprohibitiononannualdollarlimitsonEHBstonon-grandfatherednon-federalgovernmentalgrouphealthplansofallsizes,andbyimplication,tolargegrouphealthinsuranceissuersthroughwhichsuchplanprovidecoverage.
Additionally,section715ofERISAandsection9815oftheCodeincorporatesthoseprovisionsbyreference,applyingthemtonon-grandfatheredprivatelysponsoredgrouphealthplansandtheirhealthinsuranceissuersinthesmallandlargegroupmarkets.
181Generally,forthispurpose,agrouphealthplanorhealthinsuranceissuerthatisnotrequiredtoprovideEHBmustdefinesuchbenefitsinamannerthatisconsistentwith—(1)oneoftheEHB-benchmarkplansapplicableinastateunder§156.
110,andincludinganyadditionalrequiredbenefitsthatareconsideredEHBunder§155.
170(a)(2)or(2)oneofthethreeFederalEmployeesHealthBenefitsProgramplanoptionsasdefinedby§156.
100(a)(3),supplemented,asnecessary,tomeetthestandardsin§156.
110.
FormoreinformationregardingtheapplicationofthePHSActsection2711togrouphealthplansandissuers,seetheDepartmentsimplementingregulationsat26CFR54.
9815–2711,29CRF2590.
715–2711,and§147.
126.
182FAQsAboutAffordableCareActImplementation(PartXIX).
May2,2014.
Availableathttps://www.
cms.
gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs19.
html.
ThisFAQremainsineffectforlargegroupmarketandself-insuredgrouphealthplansdespitethefactthattherelatedproposedpolicyfortheindividualandsmallgroupmarketsisnotbeingfinalized.
183Indeterminingwhetheragenericismedicallyappropriate,theFAQprovidesthataplanmayuseareasonableexceptionprocess.
Forexample,theplanmaydefertotherecommendationofanindividual'spersonalphysician,oritmayofferanexceptionsprocessmeetingtherequirementsof§156.
122(c).
184Forexample,theseplanshavetomeettheEHBdrugcountstandardat§156.
122(a)thatsetsaminimumthresholdfordrugcoverageandwhilethedrugcountstandardisbasedonchemicallydistinctdrugs,theseplanshavetoconsiderotherfactorsinestablishingtheirprescriptiondrugbenefit.
18578FR12834,12845(February25,2013).
18680FR10817.
Comment:Onecommenternotedthattheproposaltoreducethemaximumannuallimitationoncostsharingforenrolleeswithahouseholdincomebetween200and250percentofFPLbyapproximately15,ratherthan12,consistentwiththeapproachtakenforbenefityears2017through2019,hurtstheirmembers.
ThecommenterrecommendedthatHHSrescinditsplantogothroughwiththeseregulatorychangesandasksthattheAdministrationcontinuetosupportlegislationtoappropriateCSRfunding.
Response:Wesharethecommenter'sconcernabouttheimpactofasmallerreductionincost-sharingonindividualswithahouseholdincomebetween200–250percentofFPL.
WewillcontinuetomonitorplanAVandbenefitdesigninfutureyearsforimpactonpremiumsandout-of-pocketcosts.
Wearefinalizingthereductionswithmodificationstoreflectthefinalpremiumadjustmentpercentageandmaximumannuallimitationoncost-sharing.
g.
ApplicationtoCost-SharingRequirementsandAnnualandLifetimeDollarLimitations(§156.
130)Weproposedseveralpolicychangestocost-sharingrequirements,includingapolicychangeastowhatisincludedasEHB,whichwouldaffecttheannualout-of-pocketlimitationunderPHSActsection2707(b)andtheannualandlifetimedollarlimitprohibitionunderPHSActsection2711.
Althoughlargegroupmarketcoverageandself-insuredgrouphealthplansarenotrequiredtocoverallEHB,non-grandfatheredgrouphealthplansandhealthinsuranceissuersaresubjecttoPHSActsection2707(b),andallgrouphealthplansandgrouphealthinsuranceissuersaresubjecttoPHSActsection2711,whichareincorporatedbyreferenceintheEmployeeRetirementIncomeSecurityActof1974(ERISA)andtheCode.
180Tocomplywiththosesections,suchplansandissuersmustchooseadefinitionofEHBtodeterminewhichbenefitsaresubjecttotheannualout-of-pocketlimitationandtheprohibitiononlifetimeandannualdollarlimits.
181Therefore,theseproposalswererelevantto,andwouldapplyto,allhealthcoverageandplans.
i.
Cost-SharingRequirementsforGenericDrugsIn2014,theDepartmentsofLabor,HHS,andtheTreasury182(thetri-departments)releasedanFAQonthetreatmentbylargegroupmarkethealthinsuranceissuersandself-insuredgrouphealthplans,withregardtotheannualout-of-pocketlimitation,ofanindividual'sout-of-pocketcostsforabranddrugwhenagenericequivalentisavailableandmedicallyappropriate.
Becauselargegroupmarkethealthinsuranceissuersandself-insuredgrouphealthplansarenotrequiredtoofferEHB,theFAQstatesthatsuchplansmayincludeonlygenericdrugs,ifmedicallyappropriate(asdeterminedbytheindividual'spersonalphysician)andavailableasEHB,whileprovidingaseparateoption(notaspartofEHB)ofselectingabranddrugatahighercost-sharingamount,asnon-EHB.
Thus,suchplanscouldchoosenottocounttowardtheannuallimitoncostsharingsomeoralloftheamountspaidtowardthebranddrugsthatarenotEHB,iftheparticipantorbeneficiaryselectsabrandnameprescriptiondrugincircumstancesinwhichagenericwasavailableandmedicallyappropriate(asdeterminedbytheindividual'spersonalphysician).
183TheFAQalsostatesthatfornon-grandfatheredhealthplansintheindividualandsmallgroupmarketsthatmustprovidecoverageofEHB,additionalrequirementsapply.
184ThisreflectstheimplementationoftheEHBrequirementsasimplementedinthePatientProtectionandAffordableCareAct(PPACA);StandardsRelatedtoEssentialHealthBenefits,ActuarialValueandAccreditation;FinalRule(EHBFinalRule),185inwhichwestatedthatplansarepermittedtogobeyondthenumberofdrugsofferedbytheEHB-benchmarkplanwithoutexceedingEHB.
Wefurtherclarifiedinthe2016PaymentNoticethat,iftheplaniscoveringdrugsbeyondthenumberofdrugscoveredbytheEHB-benchmarkplan,allofthesedrugsareEHBandcostsharingpaidforthedrugsmustcounttowardtheannuallimitationoncostsharing.
186Giventheincreaseinthecostofprescriptiondrugs,andparticularlybranddrugs,intheproposedrule,westatedthatHHSbelievesadditionalflexibilityisneededforhealthplansintheindividualandsmallgroupmarketsthatmustprovidecoverageoftheEHBtoencourageconsumerstousemorecosteffectivegenericdrugs.
Weproposed,subjecttoapplicablestatelaw,toallowaplanthatcoversbothabrandprescriptiondruganditsgenericequivalent,forplanyearsbeginningonorafterJanuary1,2020,toconsiderthebranddrugtonotbeEHB,ifthegenericdrugisavailableandmedicallyappropriatefortheenrollee,unlesscoverageofthebranddrugisdeterminedtoberequiredunderanexceptionprocessat§156.
122(c).
Undersuchcircumstances,ifanenrolleepurchasesthebranddrugwhenthegenericequivalentwasavailableandmedicallyappropriate,weproposedthattheissuerwouldbepermittedtonotcountthedifferenceincostsharingbetweenthatwhichispaidforthebranddrugandthatwhichwouldbepaidforthegenericequivalentdrugtowardtheannuallimitationoncostsharingunder§156.
130,butwouldstillberequiredtoattributethecostsharingthatwouldhavebeenpaidforthegenericequivalenttowardtheannuallimitationoncostsharingunder§156.
130.
Thiswouldmaintainabalancebetweenincentivizingtheuseoflower-costdrugsandtheconsumerprotectionprovidedbytheannuallimitationoncostsharing.
Wefurtherproposedthatforaplantodoso,theplanmusthaveanexceptionprocessinplaceinaccordancewith§156.
122(c)fortheenrolleetorequestcoverageofthebranddrug.
VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00091Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217544FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations187VanNuys,K.
,Joyce,G.
,Ribero,R.
,&Goldman,D.
P.
(2018).
APerspectiveonPrescriptionDrugCopaymentCoupons.
LosAngeles,CA:LeonardD.
SchaefferCenterforHealthPolicy&Economics.
188Forexample,see,https://malegislature.
gov/Laws/GeneralLaws/PartI/TitleXXII/Chapter175H/Section3.
Iffinalized,thisinterpretationwouldhavepermittedallgrouphealthplansandgrouphealthinsuranceissuerstoimposelifetimeandannualdollarlimitsonsuchbranddrugsbecausetheywouldnolongerbeconsideredEHBandnotbesubjecttotheprohibitiononsuchlimits.
HHSalsoconsideredanalternateproposal,underwhichanissuerwouldhavebeenpermittedtoexcepttheentireamountpaidbyapatientforabranddrugforwhichthereisamedicallyappropriategenericalternativefromtheannuallimitationoncostsharingat§156.
130.
BecausethisalternateproposalalsoreliedonaninterpretationofwhatisconsideredEHB,thealternateproposalwouldhavealsoappliedtonon-grandfatheredgrouphealthplansandhealthinsuranceissuerssubjecttotheannuallimitoncost-sharingprovisionunderPHSAct2707(b),andinERISAsection715andCodesection9815.
Weproposedthatthesechangestotheannuallimitationsoncostsharingwouldbeeffectivestartingwiththe2020planyear.
Wesolicitedcommentsonthesealternatives,bothofwhichweproposedtoapplytogrouphealthplans,grouphealthinsurancecoverage,andindividualmarketcoverage,regardlessofwhethertheyarerequiredtocoverEHBs.
AnissuertakingadvantageofthisproposedflexibilitywouldbeexcludingthebranddrugfromcoverageasEHB.
Therefore,theissueralsocouldhaveimposedannualorlifetimedollarlimitsoncoverageofthebranddrugunderthosecircumstances.
Additionally,PTC(andAPTC)couldnotbeappliedtoanyportionofthepremiumattributabletocoverageofbrandnamedrugsnotcoveredasEHB,soissuersofQHPswouldberequiredtocalculatethatportionofQHPs'premiumsandreportittotheapplicableExchange.
Wealsosolicitedcommentsonanylimitationongrouphealthplans'andhealthinsuranceissuers'informationtechnologysystemsbeingabletoaccumulatethecostsharingconsistentwiththispolicy,whetherthisproposedpolicyshouldbesubjecttoorpreemptanystatelawregardingtheapplicationofcostsharingbetweenthegenericandbrandedversionofadrugthatwouldpreventtheapplicationofthisproposedpolicy,andwhetheranissuernotattributingcost-sharingtotheannuallimitationoncostsharingunderthisapproachshouldbeconsideredanadversecoveragedeterminationandsubjecttothecoverageappealsprocessesunder§147.
136.
Finally,wesoughtcommentregardingwhetherweshouldrequire,insteadofpermit,issuerstoexcludebranddrugsfrombeingEHBifthegenericdrugisavailableandmedicallyappropriatefortheenrollee,unlesscoverageofthebranddrugisdeterminedtoberequiredundertheexceptionprocessunder156.
122(c),andtoexcludethecostsharingforthebrandnamedrugfromaccumulatingtowardtheannuallimitationoncostsharingaccordingtooneoftheproposedalternatives.
Comment:Afewcommenterssupportedthepolicyasproposed.
Severalcommenterssuggestedthatwenotfinalizethispolicyduetotheadministrativecostandburdenofimplementingthepolicy,andthepotentiallyharmfulconsequencesforthosewithchronicmedicalconditions.
Severalcommentersalsoexpressedconcernaboutbeingabletoimplementthepolicyforthe2020planyear.
Manycommentersnotedtheproposalwouldincreaseout-of-pocketexpensesforenrollees.
Somecommentersexpressedconcernregardingthepolicies'impactonactuarialvalues,whicharebasedonEHBforcertainplans.
Othercommenterswerenotinfavorofthealternativeproposalduetothecomplexityandadministrativeburdenofdeterminingcostsharingundertheproposal.
Commentersalsostatedthatplansandissuersalreadyencourageenrolleestousegenericdrugs,andthattheproposedpolicyisunnecessaryandunderminesthedefinitionofEHB.
Therewereseveralcommentsrequestingclarificationoftheterm''genericdrug.
''Afewcommentersstatedthattheproposedpolicyshouldbeoptionalforissuers.
Response:Inlightofcommenters'concernsaboutthecomplexityofimplementingthisproposal,wearenotfinalizingthisproposalatthistime,andwillcontinuetoreviewthepointsraisedbycommenters.
ii.
Cost-SharingRequirementsandDrugManufacturers'CouponsDrugmanufacturersoftenoffercouponstopatientstoreducepatientout-of-pocketcosts.
Drugmanufacturersmayofferthesecouponsforvariousreasons:Tocompetewithanotherbrandnamedruginthesametherapeuticclass,tocompetewithagenericequivalentwhenreleased,ortoassistconsumerswhosedrugcostswouldotherwisebeextremelyhighduetoarareorcostlycondition.
187Somestatesprohibittheuseofsuchcouponsifagenericalternativeisavailable.
188Werecognizethatcopaymentsupportmayhelpbeneficiariesbyencouragingadherencetoexistingmedicationregimens,particularlywhencopaymentsmaybeunaffordabletomanypatients.
However,theavailabilityofacouponmaycausephysiciansandbeneficiariestochooseanexpensivebrand-namedrugwhenalessexpensiveandequallyeffectivegenericorotheralternativeisavailable.
Whenconsumersarerelievedofcopaymentobligations,manufacturersarerelievedofamarketconstraintondrugpriceswhichcandistortthemarketandthetruecostsofdrugs.
Suchcouponscanaddsignificantlong-termcoststothehealthcaresystemthatmayoutweightheshort-termbenefitsofallowingthecoupons,andcounter-balanceissuers'effortstopointenrolleestomorecosteffectivedrugs.
TheAdministrationhasidentifiedhighandrisingout-of-pocketcostsforprescriptiondrugs,amongotherissues,asachallengetoconsumers.
Insomecases,manufacturercouponsmaybeincreasingoveralldrugcostsandcanleadtounnecessaryspendingbyissuers,whichispassedontoallpatientsintheformofincreasedpremiumsandreducedcoverageofotherpotentiallyusefulhealthcareinterventions.
WhilethePPACAdoesnotspeakdirectlytotheaccountinganduseofdrugmanufacturercouponstotheannuallimitationoncostsharing,webelievethattheoverallintentofthelawwastoestablishannuallimitationsoncostsharingthatreflecttheactualcoststhatarepaidbytheenrollee.
TheproliferationofdrugcouponssupportshighercostbranddrugswhengenericalternativesareavailablewhichinturnsupportshigherdrugpricesandincreasedcoststoallAmericansandforotherfederalhealthprograms.
Forthesereasons,atnew§156.
130(h)(2),weproposed,forplanyearsbeginningonorafterJanuary1,2020,notwithstandinganyotherprovisionoftheannuallimitationoncostsharingregulation,thatamountspaidtowardcostsharingusinganyformofdirectsupportofferedbydrugmanufacturerstoinsuredpatientstoreduceoreliminateimmediateout-of-pocketcostsforspecificprescriptionbranddrugsthathaveagenericequivalentarenotrequiredtobecountedtowardtheannuallimitationoncostsharing.
NotcountingsuchamountstowardtheannuallimitationVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00092Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217545FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations18942CFR423.
4.
oncostsharingwouldpromote:(1)Prudentprescribingandpurchasingchoicesbyphysiciansandpatientsbasedonthetruecostsofdrugsand(2)pricecompetitioninthepharmaceuticalmarket.
Wenotedthatthisproposal,whichispermissive,wouldalsoapplytonon-grandfatheredgrouphealthplans,towhichtheannualout-of-pocketlimitationappliesunderPHSActsection2707(b)asincorporatedintotheCodeandERISA.
Wesoughtcommentonthisproposalandwhetherstatesshouldbeabletodecidehowcouponsaretreated.
Additionally,wesoughtcommentonwhetheritwouldbedifficultforissuerstocarveoutdirectsupportofferedbydrugmanufacturersfromtheircalculationofenrollees'paymentstowardtheirannuallimitationoncostsharing,andtocarveoutexceptions(forwhenagenericequivalentisnotavailable,forexample),whencostsharingpaidbydirectsupportofferedbydrugmanufacturerswillbecountedtowardtheannuallimitationoncostsharing,includingwhetherinformationtechnologysystemscouldbeeasilyupdatedforthispurpose.
Wealsosoughtcommentonissuers'abilitytodifferentiatebetweendrugmanufacturercouponsandotherdrugcoupons,whethertheirinformationtechnologysystemswouldneedmodificationstomakesuchdifferentiation,whatareasonableimplementationdatewouldbeifimplementationbarriersexist,andhowdrugdiscountprograms(asopposedtocoupons)shouldbetreatedunderthisproposal.
Finally,wesoughtcommentregardingwhetherthispolicyshouldbelimitedtoQHPsonly.
Wearefinalizingthepolicyasproposed,subjecttothemodificationsdiscussedinthefollowingresponsestocommentsandanon-substantivegrammaticalcorrection.
Inaddition,forconsistencywiththeterminologycurrentlyusedin§156.
130,wearemakinganon-substantivemodificationtothefinalizedregulatorytextfrom''insuredpatients''to''enrollees''.
Thismodificationisnotintendedtoreflectachangeinpolicy.
Underthisfinalrule,issuersarepermittedtoutilizethispolicyonlytotheextentpermissiblebyapplicablestatelaw.
Comment:ManycommenterssupportedHHS'proposal.
Somecommentersrecommendedthatallmanufacturersupportforcostsharingthatisprovideddirectlytothepatientbeexcludedfromtheannuallimitationoncostsharing,notjustforbranddrugswheregenericequivalentsareavailable.
SeveralcommentersrecommendedthatHHSupdatethepolicysothatenrolleeswhoindicatetheymayneedabrand-namedrugqualifyfortheappealsprocessin§147.
136orthedrugexceptionprocessunder§156.
122(c).
Thesecommentersstatedthatifenrolleesarefoundtorequireabrand-namedrug,theissuershouldberequiredtocountbranddrugcouponsforthatenrolleetowardtheircost-sharinglimits.
SomecommentersalsonotedthatcouponanddiscountprogramsarenottransparentandrecommendedthatHHSshouldstandardizethemtomaketheirfinancialaspectsmorevisibletopharmaciesandissuersforpurposesofimplementingthisproposal.
Response:Weappreciatetheimportantconsiderationsraisedbycommenters,inparticularregardingtheexclusionofallmanufacturersupportforcostsharingthatisprovideddirectlytothepatientsfromtheannuallimitationoncostsharing.
Asnotedintheproposedrule,thispolicyisintendedtoaddressthedistortioninthemarketcausedwhenconsumerschooseanexpensivebrand-namedrugwhenalessexpensiveandequallyeffectivegenericorotheralternativeisavailable.
Therefore,thefinalregulationlimitsthediscretiontoexcludemanufacturercouponsfromcountingtowardstheannuallimitationoncostsharingforspecificprescriptionbranddrugsthathaveagenericequivalent,astheavailabilityofacouponmaycausephysiciansandpatientstochooseanexpensivebrand-namedrugwhenalessexpensiveandequallyeffectivegenericorotheralternativeisavailable.
Wherethereisnogenericequivalentavailableormedicallyappropriate,itislesslikelythatthemanufacturer'scouponwoulddisincentivizealowercostalternativeandtherebydistortthemarket.
Similarly,whenanenrolleeisdeterminedthroughanappealsprocessin§147.
136orthedrugexceptionprocessunder§156.
122(c)torequireabranddrugbecausethegenericorotheralternativemaynotbeavailableormedicallyappropriate,theuseofthemanufacturercouponwouldnotdisincentivizealessexpensivechoice.
Therefore,underthosecircumstances,amountspaidtowardcostsharingusinganyformofdirectsupportofferedbydrugmanufacturersmustbecountedtowardtheannuallimitationoncostsharing.
Wehaveaddedlanguagetotheregulationtexttoaddressthisclarification.
Webelievethatstandardizingdrugmanufacturercouponanddiscountprogramsisoutsidethescopeofthisrulemaking.
Wewillconsidertheseandothercommentsaswedevelopfuturepolicyinthisarea.
Comment:Somecommenterswereconcernedthatexplicitlyallowinganissuertonotcountcertainthird-partypaymentstowardstheannuallimitationoncostsharingiscontrarytothePPACA.
Theyexpressedconcernsthattheproposalwouldincreaseout-of-pocketcostsforcertainpatientswithseriousconditions,makemedicallynecessarymedicationlessaffordableandaccessibleforthem,andjeopardizetheirhealthbecausetheyfinditmoredifficulttoadheretotheirdrugregimen.
Response:Werecognizecommenters'concernsabouttheburdenassociatedwiththeexclusionofmanufacturercouponsfromcountingtowardsthedeductibleandannuallimitationoncostsharingforspecificprescriptionbranddrugsthathaveagenericequivalent.
However,theavailabilityofacouponmaycausephysiciansandpatientstochooseanexpensivebrand-namedrugwhenalessexpensiveandequallyeffectivegenericorotheralternativeareavailable.
Suchcouponscanaddsignificantlong-termcoststothehealthcaresystemthatmayoutweightheshort-termbenefitsofallowingthecoupons,andcounter-balanceissuers'effortstopointenrolleestomorecosteffectivedrugs.
Comment:SomecommentersrequestedthatHHSclarifytheterm''genericequivalent.
''OnecommentersuggestedtheproposedrulebelimitedtosituationswherethegenericdrugisratedasatherapeuticequivalenttothebrandeddrugundertheFDAOrangeBook.
Anothercommenterstatedthattheterm''genericequivalent''wastoobroadandfailedtoreferencetheFDA'sprocessoftestingandapprovinggenericdrugsforusebyconsumers.
Response:Weintendedourproposaltorefertotheterm''genericequivalent''underacommonlyunderstoodmeaning.
GenericdrugsprimarilyareregulatedbytheFDAundertheFederalFood,Drug,andCosmeticAct(FDCA).
Therefore,inresponsetocomments,wearefinalizingregulationtexttodefine''generic''forthispurposebyreferencetotheFDCA.
ThisdefinitionisconsistentwiththedefinitionofgenericusedfortheMedicarePrescriptionDrugBenefit.
189Comment:Severalcommenterswereconcernedthatthesechangesshouldbepermissive,butnotrequiredforplansandissuers.
Theyhighlightedthatissuersmayhavedifficultyinidentifyingwhenacouponisusedbyenrolleestopurchasedrugsataretailpharmacy.
Itmaytakeissuerstimetoimplementoperationalsystemstotrackuseofcoupons.
VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00093Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217546FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations190TheHydeAmendmentascurrentlyineffectpermitsfederalfundstobeusedforabortionsonlyinthelimitedcasesofrape,incest,orifawomansuffersfromalife-threateningphysicaldisorder,physicalinjury,orphysicalillness,includingalife-endangeringphysicalconditioncausedbyorarisingfromthepregnancyitself,ascertifiedbyaphysician.
Itfurtherprohibitstheuseoffederalfundsforhealthbenefitscoveragethatincludescoverageofabortionsininstancesbeyondthoselimitedcircumstances.
Inthisrule,thoseservicesfallingoutsidethescopeoftheHydeAmendmentare''non-Hydeabortionservices.
''191''MeaningfulMeasuresHub.
''May5,2018.
Availableathttps://www.
cms.
gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/MMF/General-info-Sub-Page.
html.
192RemarksbyAdministratorSeemaVermaattheHealthCarePaymentLearningandActionNetwork(LAN)FallSummit,aspreparedfordeliveryonOctober30,2017.
Availableathttps://www.
cms.
gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-10-30.
html.
193Final2018CallLetterfortheQRSandQHPEnrolleeSurvey.
Availableathttps://www.
cms.
gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/Downloads/2018-QRS-Call-Letter_July2018.
pdf.
Response:Werecognizecommenters'concernsthatuseofthesecouponsmaybedifficulttotrack.
Undertheregulation,issuersmay,butarenotrequiredto,undertaketheoptiontoexcludemanufacturercouponsfromcountingtowardstheannuallimitationoncostsharing.
Comment:Severalcommentersnotedthatthefinallanguageshouldexpresslyprovidethattheselimitationsoncoverageonlyapplytotheextentconsistentwithstatelaw.
Response:Inresponsetocomments,weclarifythattheabilitytoexcludeamountspaidtowardcostsharingusinganyformofdirectsupportofferedbydrugmanufacturerstoinsuredpatientstoreduceoreliminateimmediateout-of-pocketcostsforspecificprescriptionbranddrugsthathaveagenericequivalentfrombeingcountedtowardtheannuallimitationoncostsharingissubjecttoapplicablestatelaw.
Thismeansthatstatescanrequirethatsuchamountsbecountedtowardtheannuallimitoncostsharing.
Wearemodifyingthefinalregulationtexttostatethisexplicitly.
5.
SegregationofFundsforAbortionServices(§156.
280)At§156.
280(c)(3),weproposedthat,beginningwithplanyear2020,ifaQHPissuerprovidescoverageofnon-Hydeabortionservices190inoneormoreQHPs,theQHPissuermustalsoofferatleastone''mirrorQHP''thatomitscoverageofnon-HydeabortionservicesthroughouteachserviceareainwhichitoffersQHPcoveragethroughtheExchange,totheextentpermissibleunderstatelaw.
Weproposedthata''mirrorQHP''provideidenticalbenefitcoveragetooneoftheQHPswithnon-Hydeabortioncoverage,withtheexceptionoftheinclusionofthecoverageofnon-Hydeabortionservices.
Wereceivedover25,000commentsonthisproposal,andareintheprocessofreviewingthem.
Aswearestillreviewingthecomments,wearenotabletofinalizethisproposalinthetimeframenecessarytoensurethatissuersareabletoimplementsuchachangebeforetheopeningoftheQHPcertificationapplicationwindowforthe2020benefityear.
Wemayfinalizeitinafuturerulemaking.
Ifwefinalizethisprovisioninfuturerulemaking,itwouldnottakeeffectsoonerthanthe2021benefityear.
6.
QualityStandards(§§156.
1120,156.
1125,156.
1130)Regulatoryreformandreducingregulatoryburdenarehighprioritiesforus.
Tolowerhealthcarecosts,enhancepatientcare,andreducetheregulatoryburdenonthehealthcareindustry,includingforhealthplanissuersandtheproviderswhodeliverservicesthroughtheirplans,inOctober2017,welaunchedtheMeaningfulMeasuresInitiative.
191Thisinitiativeisonecomponentofouragency-widePatientsOverPaperworkInitiative.
192TheMeaningfulMeasuresFrameworkisastrategictoolforputtingpatientsoverpaperworkbyidentifyingthehighestpriorityareasforqualitymeasurementandqualityimprovement,toassessthecorequalityofcareissuesthataremostvitaltoadvancingourworktoimprovepatientoutcomes.
Thisinitiativeisanewapproachtoqualitymeasuresthatwillfosteroperationalefficienciesthatincludedecreasingdatacollectionandreportingburdenwhilefocusingonqualitymeasurementalignedwithmeaningfuloutcomes.
ByincludingMeaningfulMeasuresinourqualityreportingandqualityimprovementprogramssuchastheQualityRatingSystem,QHPEnrolleeExperienceSurveyandtheQualityImprovementStrategy,webelievethatwecanalsoaddressthefollowingcross-cuttingmeasurecriteria:Eliminatingdisparities;Trackingmeasurableoutcomesandimpact;Safeguardingpublichealth;Achievingcostsavings;Improvingaccessforruralcommunities;andReducingburden.
WeencourageQHPissuerstouseperformancemeasuresalignedwiththeMeaningfulMeasuresInitiativeinfulfillingtheircertificationrequirementtoimplementaQualityImprovementStrategythatprovidesincreasedreimbursementorothermarket-basedincentivesforimprovinghealthoutcomesofplanenrollees.
Inaddition,wewillcontinuetoassessqualitymeasuresinourprogramsincludingtheQualityRatingSystemandtheQHPEnrolleeExperienceSurvey,toensurethatweareusingaparsimonioussetofthemostmeaningfulmeasuresforpatients,clinicians,andhealthplansinthosequalityprograms.
Ifweproposeanychangesorremovalofmeasures,wewillincludethoseforpubliccommentintheAnnualCallLetterfortheQRSandQHPEnrolleeSurvey,193aswellasaddresspotentialchangestoinformationcollectionrequirementstocomplywiththePaperworkReductionAct.
Comment:SeveralcommenterssupportedqualitystandardsacrosstheExchanges,aswellastheMeaningfulMeasuresinitiativetohelpstreamlinemeasuresacrossqualityreportingandqualityimprovementprograms.
Onecommenterrecommendedthestratificationofqualitymeasuresbyrace,ethnicity,language,socioeconomicstatus,sex,genderidentity,sexualorientation,disability,andotherdemographicfactorsandthatweprioritizetheinclusionofdisparities-sensitiveandhealthequitymeasuresintheMeaningfulMeasuresareasacrossdomains.
Somecommentersmentionedthatqualityactivities,suchastheQualityRatingSystemandtheQHPEnrolleeSurvey,empowerconsumers,promotehighvaluecareandarecriticalfunctionsofanExchange.
Somecommentersurgedtransparencyofbothpriceandqualitydatatohelpconsumerschoosehighqualitycare.
Response:WedidnotproposeupdatestotheQualityRatingSystem,QHPEnrolleeSurveyorQualityImprovementSystemregulationsintheproposedrule.
WeappreciatethecommentsandwilltakethemintoconsiderationaswecontinueimplementingCMSqualityreportingprogramssuchastheQualityRatingSystem,QHPEnrolleeSurveyandQualityImprovementStrategy.
7.
DirectEnrollmentWiththeQHPIssuerinaMannerConsideredToBeThroughtheExchange(§156.
1230)Asdescribedinthepreambleto§§155.
220,155.
221,and155.
415,weproposedsignificantchangestotheseregulationstostreamlineandconsolidatetherequirementsapplicabletoalldirectenrollmententities—bothQHPissuersandweb-brokers.
Toreflectthesechanges,wealsoproposedconformingchangesin§156.
1230(a)(2)VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00094Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217547FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations194SeeMay2017BureauofLaborStatistics,OccupationalEmploymentStatistics,NationalOccupationalEmploymentandWageEstimates.
Availableathttps://www.
bls.
gov/oes/current/oes_nat.
htm.
and(b).
Weproposedtoamend§156.
1230(b)toaddanewparagraph(b)(1)thatwillrequireissuersparticipatingindirectenrollmenttocomplywiththeapplicablerequirementsin§155.
221.
Wealsoproposedtodeleteandreserveparagraph(a)(2)of§156.
1230toreduceredundanciesinlightoftheproposedchangesto§155.
415.
Wedidnotreceiveanycommentsspecifictotheproposedchangesto§156.
1230andarefinalizingthesechangesasproposed.
Foramorethoroughdiscussionofthesechanges,pleaseseethepreambleto§§155.
220,155.
221,and155.
415.
IV.
CollectionofInformationRequirementsUnderthePaperworkReductionActof1995(PRA),wearerequiredtoprovide30-daynoticeintheFederalRegisterandsolicitpubliccommentbeforeacollectionofinformationrequirementissubmittedtoOMBforreviewandapproval.
Thisfinalrulecontainsinformationcollectionrequirements(ICRs)thataresubjecttoreviewbyOMB.
Adescriptionoftheseprovisionsisgiveninthefollowingparagraphswithanestimateoftheannualburden,summarizedinTable11.
TofairlyevaluatewhetheraninformationcollectionshouldbeapprovedbyOMB,section3506(c)(2)(A)ofthePRArequiresthatwesolicitedcommentonthefollowingissues:Theneedfortheinformationcollectionanditsusefulnessincarryingouttheproperfunctionsofouragency.
Theaccuracyofourestimateoftheinformationcollectionburden.
Thequality,utility,andclarityoftheinformationtobecollected.
Recommendationstominimizetheinformationcollectionburdenontheaffectedpublic,includingautomatedcollectiontechniques.
Wesolicitedpubliccommentoneachoftherequiredissuesundersection3506(c)(2)(A)ofthePRAforthefollowinginformationcollectionrequirements.
A.
WageEstimatesToderivewageestimates,wegenerallyuseddatafromtheBureauofLaborStatisticstoderiveaveragelaborcosts(includinga100percentincreaseforfringebenefitsandoverhead)forestimatingtheburdenassociatedwiththeICRs.
194Table10inthisfinalrulepresentsthemeanhourlywage,thecostoffringebenefitsandoverhead,andtheadjustedhourlywage.
Asindicated,employeehourlywageestimateshavebeenadjustedbyafactorof100percent.
Thisisnecessarilyaroughadjustment,bothbecausefringebenefitsandoverheadcostsvarysignificantlyacrossemployers,andbecausemethodsofestimatingthesecostsvarywidelyacrossstudies.
Nonetheless,thereisnopracticalalternative,andwebelievethatdoublingthehourlywagetoestimatetotalcostisareasonablyaccurateestimationmethod.
TABLE10—ADJUSTEDHOURLYWAGESUSEDINBURDENESTIMATES*OccupationtitleOccupationalcodeMeanhourlywage($/hr.
)Fringebenefitsandoverhead($/hr.
)Adjustedhourlywage($/hr.
)AllOccupations00–0000$24.
34$24.
34$48.
68*NotethatonlytheoccupationsrelatedtotheICRsbeingfinalizedareincludedinthetable.
B.
ICRsRegardingRiskAdjustmentDataValidationExemptions(§153.
630(g))Inthisfinalrule,wearecodifying§153.
630(g)(3),underwhichanissuerwillbeexemptfromriskadjustmentdatavalidation,beginningwiththe2018benefityearofriskadjustmentdatavalidation,ifanissuerisinliquidation,orwillenterliquidationnolaterthanApril30thofthebenefityearthatis2benefityearsafterthebenefityearbeingaudited,providedthattheissuermeetscertainrequirements.
Toqualifyforthisexemption,theissuermustprovidetoHHS,inamannerandtimeframetobespecifiedbyHHS,anattestationthattheissuerwillenterliquidationnolaterthanApril30thofthebenefityearthatis2benefityearsafterthebenefityearbeingauditedthatissignedbyanindividualwhocanlegallyandfinanciallybindtheissuer.
Toqualifyfortheexemption,anissueralsocouldnothavebeenapositiveerrorrateoutlierinthepriorbenefityear'sriskadjustmentdatavalidation.
Wecontinuetoanticipatethatfewerthan10issuerswillsubmitthisinformationtoHHSannually.
Under5CFR1320.
3(c)(4),thisICRwillnotbesubjecttothePRA,asitwillaffectfewerthan10entitiesina12-monthperiod.
Wearefinalizingtheproposaltocodifyat§153.
630(g)(1)and(2)twoexemptionsforcertainissuersfromriskadjustmentdatavalidationthatwerefinalizedinthe2018and2019PaymentNotices.
Thereductioninburdenforissuerswhomeetthecriteriatobeexemptedunderproposed§153.
630(g)(1)and(2)wasestimatedinthoserules,andhavebeenincorporatedintoOMBControlNumber0938–1155(CMS–10401—''StandardsRelatedtoReinsurance,RiskCorridors,andRiskAdjustment).
CodifyingthesepoliciesaspartofHHSregulationsasfinalizedinthisrulemakingwillnotaffectcurrentburdenestimates.
C.
ICRsRegardingAgentorBrokerTerminationandWebBrokerDataCollection(§155.
220)Wearefinalizingtherequirementat§155.
220(c)(4)(i)(A),forweb-brokerstoprovideHHSalistofagentsorbrokersthatbycontractorotherarrangementusetheweb-broker'swebsitetoassistconsumerswithQHPselectionorcompletionoftheExchangeeligibilityapplication,inaformandmannertobespecifiedbyHHS.
Currently,§155.
220(c)(4)(i)(A)requirestheprovisionofthisinformationifrequestedbyHHS.
Theburdenonaweb-brokertocomplywiththisrequirementiscoveredbytheinformationcollectioncurrentlyapprovedunderOMBcontrolnumber0938–1349(CMS–10650—StatePermissionsforEnrollmentinQualifiedHealthPlansintheFederallyFacilitatedExchange&Non-ExchangeEntities).
Wearefinalizingtheprovisionat§155.
220(g)(3)(ii),toallowHHStoimmediatelyterminateanagent'sorbroker'sagreement(s)withtheFFEsforcausewithnoticeifanagentorbrokerfailstocomplywiththerequirementtomaintaintheappropriatelicensureineverystateinwhichtheagentorbrokeractivelyassistsconsumerswithenrollinginQHPsontheFFEsorSBE–FPs.
Anagentorbrokerwhoseagreement(s)withtheFFEsareimmediatelyterminatedforcauseunderVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00095Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217548FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations195ConsumersubmitteddocumentscurrentlyacceptedbytheFFEforpurposesofdemonstratingpriorcoverageandverifyingattestedincomeareavailableathttps://www.
healthcare.
gov/help/prove-coverage-loss/andhttps://www.
healthcare.
gov/verify-information/documents-and-deadlines/,respectively.
196AlthoughtheTaxCutsandJobsActreducesto$0theindividualsharedresponsibilitypaymentformonthsbeginningafterDecember31,2018,individualsmaystillhaveaneedtoseekahardshipexemptionfor2019andfutureyearsduetoalackofaffordablecoveragebasedonprojectedincome.
197HHSprocessesexemptionsforallSBEsexceptConnecticut.
thenewproposedparagraph(g)(3)(ii)willbeabletorequestreconsiderationunder§155.
220(h).
Althoughtheprocesstorequestreconsiderationimposesasmallburdenonagentsorbrokerssubjectedtoterminations,weanticipatefewerthan10terminationsannuallyunderthisnewauthority.
Under5CFR1320.
3(c)(4),thisICRwillnotbesubjecttothePRAasweanticipateitwillaffectfewerthan10entitiesina12-monthperiod.
Wearefinalizingtheproposalat§155.
220(m)(3),thattheExchangemaycollectfromaweb-brokerduringitsregistrationwiththeExchangeunder§155.
220(d)(1)oratanothertimeonanannualbasis,inaformandmannerspecifiedbyHHS,informationsufficienttoidentifytheindividualswhocomprisetheentity'scorporateleadershiporownership,aswellasanycorporateorbusinessrelationshipswithotherentitiesthatmayseektoregisterwiththeFFEasaweb-broker.
Webelievetheburdenonaweb-brokertocomplywiththeserequirementsiscoveredbytheinformationcollectioncurrentlyapprovedunderOMBcontrolnumber0938–1349(CMS–10650—StatePermissionsforEnrollmentinQualifiedHealthPlansintheFederallyFacilitatedExchange&Non-ExchangeEntities).
Inthesupportingstatementforthatinformationcollection,westatedweb-brokerswillalsoberequiredtoprovideotherdocumentationasrequestedinresponsetoemergingcomplianceissues,forHHStomonitorcompliance.
Theinformationweproposedtocollectbasedonproposed§155.
220(m)(3)isthetypeofinformationweanticipatedwhenwereferencedotherdocumentationinresponsetoemergingcomplianceissues.
D.
ICRsRegardingDirectEnrollmentEntityStandardizedDisclaimer(§155.
221)Wearefinalizingtheproposedprovisionat§155.
221(b)(2)torequiredirectenrollmententities(bothQHPissuersandweb-brokers)toprominentlydisplayastandardizeddisclaimer,intheformandmannerprovidedbyHHS,toassistconsumersindistinguishingbetweendirectenrollmententitywebsitepagesthatdisplayQHPsandthosethatdisplaynon-QHPsduringasingleshoppingexperience.
HHSwillprovidetheexacttextforthisdisclaimerandthelanguagewillnotneedtobecustomized.
Asdescribedinthepreamble,wewillprovidefurtherinformationonthetextandotherdisplaydetailsforthestandardizeddisclaimeringuidance.
Atthattime,wewillestimatetheburdenassociatedwiththisrequirement,solicitpubliccomment,andrequestOMBapprovalinaccordancewiththePRA,asmaybenecessary.
E.
ICRsRegardingSpecialEnrollmentPeriods(§155.
420)Wearefinalizingtheproposedspecialenrollmentperiodat§155.
420(d)(6)(v),whichwillbesubjecttopre-enrollmentverificationofeligibilityfortheFFEs.
Wherepossible,theFFEmakeseveryefforttoverifyanindividual'seligibilityfortheapplicablespecialenrollmentperiodthroughautomatedelectronicmeansinsteadofthroughanapplicant'ssubmissionofdocumentation.
Consistentwithotherspecialenrollmentperiodssubjecttopre-enrollmentverification,individualswillberequiredtoprovidesupportingdocumentation195within30daysofplanselection.
Weestimateanadditional4,700consumerswillsubmitdocumentsannuallytoverifytheireligibilitytoenrollthroughtheproposedspecialenrollmentperiodintheFFE,andthataconsumerwill,onaverage,spendapproximately1hourgatheringandsubmittingrequireddocumentation.
Usingtheaveragehourlywageforalloccupations(atanhourlyrateof$48.
68),weestimatetheopportunitycosttoaconsumercompletingthistasktobeapproximately$48.
68.
Weestimatethetotalannualburdenonthoseconsumerssubmittingdocumentationwillbeapproximately4,700hourswithanequivalentcostofapproximately$228,796.
WearerevisingtheinformationcollectioncurrentlyapprovedunderOMBcontrolnumber0938–1207(CMS–10468—MedicaidandChildren'sHealthInsurancePrograms:EssentialHealthBenefitsinAlternativeBenefitPlans,EligibilityNotices,FairHearingandAppealProcesses,andPremiumsandCostSharing;Exchanges:EligibilityandEnrollment)toaccountforthisadditionalburden.
SBEsthatchoosetooperationalizetheproposedspecialenrollmentperiodareencouragedtofollowthesameapproachforpre-enrollmentverificationofspecialenrollmentperiodeligibility.
F.
ICRsRegardingEligibilityStandardsforExemptions(§155.
605)Wedonotanticipatethattheamendmentto§155.
605(e)willcreateadditionalcostson,orburdensto,theExchanges.
Weanticipateitwilldecreaseburdenonthoseconsumerswho,whenapplyingforahardshipexemption,choosetoapplyfortheexemptionthroughtheIRSfor2018,savingthemapproximately16minutessincetheywillnotberequiredtocompletetheexemptionapplicationorsubmitsupportingdocumentation.
HHSwillcontinuetoprocessexemptionsundercurrentregulationsforallSBEsthatelectthisoption,andanticipatesadecreaseinthevolumeofexemptionsprocessed.
BasedonhistoricaldataoftheexemptionsprogramandanticipatingadecreaseinindividualsapplyingforexemptionsasaresultoftheTaxCutsandJobsActthatreducedto$0theindividualsharedresponsibilitypaymentformonthsbeginningafterDecember31,2018,weestimatethatapproximately50,000individualswillapplyforahardshipexemptionannuallythroughtheFFE.
196Weexpect60percentofthoseindividualswillapplyforahardshipexemptionthroughtheIRSfor2018,totaling30,000requests.
Weestimatethattheannualreductioninburdenfortheexpected30,000hardshipexemptionsthroughtheIRSfor2018willbeapproximately8,100hours.
Usingtheaveragehourlywageforalloccupations(atanhourlyrateof$48.
68perhour)weestimatethattheannualreductionincostforeachconsumerwillbeapproximately$13,andtheannualcostreductionforallconsumersapplyingforhardshipexemptionsthroughtheIRSfor2018willbeapproximately$394,308.
WeanticipatetheburdenwillalsobereducedforthoseconsumerswhocurrentlyapplythroughConnecticut.
197BasedonthepopulationofConnecticut,weexpect330consumersfromthatstatewillapplyforahardshipexemptionthroughtheIRSfor2018,asopposedtothroughthestateExchange.
Weestimatethattheannualreductioninburdenforthe330hardshipexemptionsthroughtheIRSwillbeapproximately89hours.
Usingtheaveragehourlywageforalloccupations(atanhourlyrateof$48.
68perhour)weestimatetheannualreductionincostforeachconsumerwillbeapproximately$13,andtheannualcostreductionforallconsumersinConnecticutapplyingforahardshipVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00096Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217549FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations198AdoptionoftheMethodologyfortheHHS-OperatedPermanentRiskAdjustmentProgramUnderthePatientProtectionandAffordableCareActforthe2017BenefitYear,FinalRule,83FR36456(July30,2018)andPatientProtectionandAffordableCareAct;AdoptionoftheMethodologyfortheHHS-OperatedPermanentRiskAdjustmentProgramforthe2018BenefitYear,FinalRule,83FR63419(Dec.
10,2018).
exemptionthroughtheIRSfor2018willbeapproximately$4,337.
WewillrevisetheinformationcollectioncurrentlyapprovedunderOMBcontrolnumber0938–1190(CMS–10466—PatientProtectionandAffordableCareAct:ExchangeFunctionsEligibilityforExemptions)toaccountforthisburdenreduction.
G.
SummaryofAnnualBurdenEstimatesforRequirementsTABLE11—NEWANNUALRECORDKEEPINGANDREPORTINGREQUIREMENTSRegulationsection(s)OMBcontrolNo.
RespondentsResponsesBurdenperresponse(hours)Totalannualburden(hours)Hourlylaborcostofreporting($)Totalcost($)155.
420(d)(6)(v)0938–1207.
.
.
.
.
4,7004,70014,700$48.
68$228,796Total4,7004,7004,700228,796*Therearenocapital/maintenancecostsassociatedwiththeinformationcollectionrequirementscontainedinthisfinalrule;therefore,wehaveremovedtheassociatedcolumnfromTable11.
H.
SubmissionofPRA-RelatedCommentsWehavesubmittedacopyofthisfinalruletoOMBforitsreviewoftherule'sinformationcollectionandrecordkeepingrequirements.
TheserequirementsarenoteffectiveuntiltheyhavebeenapprovedbytheOMB.
Toobtaincopiesofthesupportingstatementandanyrelatedformsforthecollectionsdiscussedinthisrule,pleasevisitCMS'websiteatwww.
cms.
hhs.
gov/PaperworkReductionActof1995,orcalltheReportsClearanceOfficeat410–786–1326.
Weinvitepubliccommentsonthesepotentialinformationcollectionrequirements.
Ifyouwishtocomment,pleasesubmityourcommentselectronicallyasspecifiedintheADDRESSESsectionofthisfinalruleandidentifythefinalrule(CMS–9926–F),theICR'sCFRcitation,CMSIDnumber,andOMBcontrolnumber.
ICR-relatedcommentsaredueMay28,2019.
V.
RegulatoryImpactAnalysisA.
StatementofNeedThisfinalrulefinalizesstandardsrelatedtotheriskadjustmentprogramforthe2020benefityear,clarificationsandimprovementstotheriskadjustmentdatavalidationprogram,aswellascertainmodificationsthatwillpromotetransparency,innovationintheprivatesector,reduceburdenonstakeholders,andimproveprogramintegrity.
ThePremiumStabilizationRule,previousPaymentNotices,andfinalriskadjustment198rulesprovideddetailsontheimplementationoftheriskadjustmentprogram,includingthespecificparametersapplicableforthe2014,2015,2016,2017,2018,and2019benefityears.
Thisfinalrulefinalizesadditionalstandardsrelatedtocost-sharingparameters;theExchanges,includingexemptions,eligibilityandenrollment;calculationofthepremiumadjustmentpercentage;andFFEandSBE–FPuserfees.
B.
OverallImpactWehaveexaminedtheimpactsofthisfinalruleasrequiredbyExecutiveOrder12866onRegulatoryPlanningandReview(September30,1993),ExecutiveOrder13563onImprovingRegulationandRegulatoryReview(January18,2011),theRegulatoryFlexibilityAct(RFA)(September19,1980,Pub.
L.
96–354),section202oftheUnfundedMandatesReformActof1995(March22,1995,Pub.
L.
104–4),ExecutiveOrder13132onFederalism(August4,1999),theCongressionalReviewAct(5U.
S.
C.
804(2)),andExecutiveOrder13771onReducingRegulationandControllingRegulatoryCosts(January30,2017).
ExecutiveOrders12866and13563directagenciestoassessallcostsandbenefitsofavailableregulatoryalternativesand,ifregulationisnecessary,toselectregulatoryapproachesthatmaximizenetbenefits(includingpotentialeconomic,environmental,publichealthandsafetyeffects,distributiveimpacts,andequity).
ExecutiveOrder13563emphasizestheimportanceofquantifyingbothcostsandbenefits,ofreducingcosts,ofharmonizingrules,andofpromotingflexibility.
Aregulatoryimpactanalysis(RIA)mustbepreparedforruleswitheconomicallysignificanteffects($100millionormoreinany1year).
Section3(f)ofExecutiveOrder12866definesa''significantregulatoryaction''asanactionthatislikelytoresultinarule:(1)Havinganannualeffectontheeconomyof$100millionormoreinany1year,oradverselyandmateriallyaffectingasectoroftheeconomy,productivity,competition,jobs,theenvironment,publichealthorsafety,orstate,localortribalgovernmentsorcommunities(alsoreferredtoas''economicallysignificant'');(2)creatingaseriousinconsistencyorotherwiseinterferingwithanactiontakenorplannedbyanotheragency;(3)materiallyalteringthebudgetaryimpactsofentitlementgrants,userfees,orloanprogramsortherightsandobligationsofrecipientsthereof;or(4)raisingnovellegalorpolicyissuesarisingoutoflegalmandates,thePresident'spriorities,ortheprinciplessetforthintheExecutiveOrder.
ARIAmustbepreparedformajorruleswitheconomicallysignificanteffects($100millionormoreinany1year),anda''significant''regulatoryactionissubjecttoreviewbyOMB.
HHShasconcludedthatthisfinalruleislikelytohaveeconomicimpactsof$100millionormoreinatleast1year,andtherefore,meetsthedefinitionof''significantrule''underExecutiveOrder12866.
Therefore,HHShasprovidedanassessmentofthepotentialcosts,benefits,andtransfersassociatedwiththisfinalrule.
InaccordancewiththeprovisionsofExecutiveOrder12866,thisregulationwasreviewedbytheOfficeofManagementandBudget.
Theprovisionsinthisfinalruleaimtoensuretaxpayermoneyismoreappropriatelyspentandthatstateshaveadditionalflexibilityandcontrolovertheirinsurancemarkets.
Theywillreduceregulatoryburden,andreduceadministrativecostsforconsumersanddirectenrollmententities.
HHSanticipatesthattheprovisionsofthisfinalrulewillhelpfurthertheHHS'goalofensuringthatallconsumershaveaccesstoqualityandaffordablehealthcareandareabletomakeinformedVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00097Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217550FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations199Asnotedearlierinthisfinalrule,nostatehaselectedtooperatetheriskadjustmentprogramforthe2020benefityear;therefore,HHSwilloperatetheprogramforall50statesandtheDistrictofColumbia.
choices,thattheinsurancemarketofferschoices,andthatstateshavemorecontrolandflexibilityovertheoperationandestablishmentofExchanges.
Affectedentitiessuchasdirectenrollmententities,andQHPissuerswillincurcoststocomplywiththeproposednewprovisions,forexample,thoserelatedtodirectenrollment;andstateswillincurcostsiftheychoosetoimplementthenewspecialenrollmentperiod.
InaccordancewithExecutiveOrder12866,HHSbelievesthatthebenefitsofthisregulatoryactionjustifythecosts.
C.
ImpactEstimatesofthePaymentNoticeProvisionsandAccountingTableInaccordancewithOMBCircularA–4,Table12depictsanaccountingstatementsummarizingHHS'assessmentofthebenefits,costs,andtransfersassociatedwiththisregulatoryaction.
Thisfinalruleimplementsstandardsforprogramsthatwillhavenumerouseffects,includingprovidingconsumerswithaccesstoaffordablehealthinsurancecoverage,reducingtheimpactofadverseselection,andstabilizingpremiumsintheindividualandsmallgrouphealthinsurancemarketsandinanExchange.
Weareunabletoquantifyallbenefitsandcostsofthisfinalrule.
TheeffectsinTable12reflectqualitativeimpactsandestimateddirectmonetarycostsandtransfersresultingfromtheprovisionsofthisfinalruleforhealthinsuranceissuersandconsumers.
TheannualizedmonetizedcostsdescribedinTable12reflectdirectadministrativecostsandsavingstohealthinsuranceissuersandconsumersasaresultoftheprovisionsregardingspecialenrollmentperiods,useofdirectenrollmententityapplicationassisterstocarryoutresponsibilitiescurrentlyperformedbyagentsorbrokers,andapplyingforhardshipexemptions.
TheannualizedmonetizedtransfersdescribedinTable12includechangestocostsassociatedwiththeriskadjustmentuserfeepaidtoHHSbyissuers,thepotentialincreaseinPTCforthosequalifyingindividualsthatusethenewspecialenrollmentperiod,andthepotentialdecreaseinPTCandincreaseinhealthinsuranceproviderfeesandemployersharedresponsibilitypaymentsduetothechangeinthepremiumadjustmentpercentage,andthecorrespondingchangestheDepartmentoftheTreasuryandtheIRSareexpectedtomakewithregardtotheirpoliciesoncalculatingtheseparameters.
Wearefinalizingtheriskadjustmentuserfeeof$2.
16perbillablememberperyearforthe2020benefityeartooperatetheriskadjustmentprogramonbehalfofstates,199whichweestimatetocostapproximately$50millioninbenefityear2020.
Weexpectriskadjustmentuserfeetransfersfromissuerstothefederalgovernmenttoincreaseby$10million,comparedtothe$40millionestimatedforthe2019benefityear;thisincreaseisincludedinTable12.
Additionally,wearefinalizinganFFEuserfeerateof3.
0percentofpremiumsforthe2020benefityear,whichislowerthanthe3.
5percentFFEuserfeeratefinalizedfor2014to2019benefityears.
WearealsofinalizinganSBE–FPuserfeerateof2.
5percentofpremiumsforthe2020benefityear,whichislowerthanthe3.
0percentSBE–FPuserfeeratewefinalizedforthe2019benefityear.
Also,weareupdatingthepremiumadjustmentpercentageforthe2020benefityear,resultinginafinalpremiumadjustmentpercentageof1.
2895211380percent.
TABLE12—ACCOUNTINGTABLEBenefits:Qualitative:Greatermarketstabilityresultingfromupdatestotheriskadjustmentmethodology.
Potentialincreasedenrollmentintheindividualmarketstemmingfromlowerpremiumsduetoexpansionofdirectenrollmentopportuni-ties,leadingtoimprovedaccesstohealthcareforthepreviouslyuninsured,especiallyindividualswithmedicalconditions,whichwillre-sultinimprovedhealthandprotectionfromtheriskofcatastrophicmedicalexpenditures.
Greatercontinuityofcoverageforconsumersrelatedtothespecialenrollmentperiod.
ReducedNavigatortrainingcomplianceburdenandincreasedflexibilityintrainingdesignforExchangesbystreamliningtheexistingtrainingtopicsintofourbroadcategories.
ReducedburdentoFFENavigatorsbymakingthedutieslistedat§155.
210(e)(9)permissibleforFFENavigators,notrequired.
Strengthenedprogramintegrityrelatedtoagentsandbrokersanddirectenrollmententities.
Reductioninburdenassociatedwithriskadjustmentdatavalidationforissuerseligiblefortheliquidationexemption.
Potentialreductionineconomicdistortions,andimprovementineconomicefficiencyasaresultofthereductioninExchangeenrollmentduetothechangeinthemethodofcalculatingthepremiumadjustmentpercentage.
Costs:Estimate(million)YeardollarDiscountrate(percent)PeriodcoveredAnnualizedMonetized($/year)14.
042201872019–2023$14.
037201832019–2023Quantitative:Costsincurredbyissuersandconsumerstocomplywithprovisionsrelatedtospecialenrollmentperiods.
ReductioninburdenandcostsforconsumersapplyingforhardshipexemptionsthroughIRS.
Reductioninburdenandcostfordirectenrollmententitiesthatchoosetousedirectenrollmententityapplicationassisterstocarryoutre-sponsibilitiescurrentlyperformedbyagentsorbrokers.
Regulatoryfamiliarizationcosts.
Qualitative:Coststoissuersduetoincreasesinprovidingmedicalservicesifhealthinsuranceenrollmentincreases.
PotentialcoststoExchangesthatopttoimplementthespecialenrollmentperiodforqualifiedindividualswhoexperienceadecreaseinhouseholdincomeandarenewlydeterminedeligibleforAPTC,andtoissuersforprocessingrelatedenrollmentsandterminations.
VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00098Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217551FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsTABLE12—ACCOUNTINGTABLE—ContinuedTransfers:Estimate(million)YearDollarDiscountRate(percent)PeriodCoveredFederalAnnualizedMonetized($/year)954201872019–2023$976.
6201832019–2023Quantitative:Transferfromhealthinsuranceissuerstothefederalgovernmentof$50millionasriskadjustmentuserfeesfor2023(theamountwillin-creaseby$10millionfromthatpreviouslyestimatedfor2020–2022).
Transferfromfederalgovernmentof$15.
3millioninpremiumtaxcreditstoconsumersenrollingthroughspecialenrollmentperiod.
HealthInsuranceProvidersFeesofapproximately$50millionin2020and$70millionperyearbetween2021and2023,whichisatransferfromissuerstothefederalgovernment,andEmployerSharedResponsibilityPaymentsof$100millionin2020and$110millionperyearbetween2021and2023,whichisatransferfromemployerstothefederalgovernment.
Reductionsinfederalpremiumtaxcreditspendingofapproximately$980millionin2020,$1.
04billionin2021,$1.
09billionin2022and$1.
15billionin2023,whichisatransferfromconsumerstothefederalgovernment,duetothechangeinthemethodofcalculatingthepremiumadjustmentpercentage.
Between2020and2023,netpremiumincreasesofapproximately1percentor$181millioninadditionalnetpremiumsperyear,whichisatransferfromconsumersandthefederalgovernmenttoissuers.
Qualitative:Theneteffectonpremiumsisuncertain.
PotentialincreaseinfederalandstateuncompensatedcarecostsasaresultoflowerExchangeenrollmentduetothechangeinthemethodofcalculatingthepremiumadjustmentpercentage.
ThisRIAexpandsupontheimpactanalysesofpreviousrulesandutilizestheCongressionalBudgetOffice's(CBO)analysisofthePPACA'simpactonfederalspending,revenuecollection,andinsuranceenrollment.
ThePPACAtransitionalreinsuranceandtemporaryriskcorridorsprogramsendedafterthe2016benefityear.
Therefore,thecostsassociatedwiththoseprogramsarenotincludedinTables12or13forfiscalyears2020–2023.
Table13summarizestheeffectsoftheriskadjustmentprogramonthefederalbudgetfromfiscalyears2019through2023,withtheadditional,societaleffectsofthisfinalrulediscussedinthisRIA.
WedonotexpecttheprovisionsofthisfinalruletosignificantlyalterCBO'sestimatesofthebudgetimpactoftheriskadjustmentprogramthatisdescribedinTable13.
WenotethattransfersassociatedwiththeriskadjustmentprogramwerepreviouslyestimatedinthePremiumStabilizationRule;therefore,toavoiddouble-counting,wedonotincludethemintheaccountingstatementforthisfinalrule(Table12).
InadditiontoutilizingCBOprojections,HHSconductedaninternalanalysisoftheeffectsofitsregulationsonenrollmentandpremiums.
Basedonthisinternalanalysis,weanticipatethatthequantitativeeffectsoftheprovisionsinthisfinalruleareconsistentwithourpreviousestimatesinthe2019PaymentNoticefortheimpactsassociatedwiththeAPTC,thepremiumstabilizationprograms,andFFEuserfeerequirements.
TABLE13—ESTIMATEDFEDERALGOVERNMENTOUTLAYSANDRECEIPTSFORTHERISKADJUSTMENTPROGRAMSFROMFISCALYEAR2019–2023[Inbillionsofdollars]Year201920202021202220232019–2023RiskAdjustmentProgramPayments.
.
.
.
.
.
.
5666730RiskAdjustmentProgramCollections*.
.
.
5667731Note1:Riskadjustmentprogrampaymentsandreceiptslagbyonequarter.
Receiptswillfullyoffsetpaymentsovertime.
Note2:TheCBOscorereflectsanadditional$1millioninpaymentsinFY2018thatarecollectedinpriorfiscalyears.
CBOdoesnotexpectashortfallintheseprograms.
Source:CongressionalBudgetOffice.
FederalSubsidiesforHealthInsuranceCoverageforPeopleUnderAge65:2018to2028Table2.
May2018.
Availableathttps://www.
cbo.
gov/system/filesfile=2018-06/51298-2018-05-healthinsurance.
pdf.
1.
RiskAdjustmentTheriskadjustmentprogramisapermanentprogramcreatedbysection1343ofthePPACAthatcollectschargesfromissuerswithlower-than-averageriskpopulationsandusesthosefundstomakepaymentstoissuerswithhigher-than-averageriskpopulationsintheindividual,smallgroup,andmergedmarkets(asapplicable),insideandoutsidetheExchanges.
WeestablishedstandardsfortheadministrationoftheriskadjustmentprograminsubpartsA,B,D,G,andHof45CFRpart153.
AstateapprovedorconditionallyapprovedbytheSecretarytooperateanExchangemayestablishariskadjustmentprogram,orhaveHHSdosoonitsbehalf.
Consistentwith§153.
610(f),ifHHSoperatesriskadjustmentonbehalfofastate,itwillfunditsriskadjustmentprogramoperationsbyassessingariskadjustmentuserfeeonissuersofriskadjustmentcoveredplans.
Forthe2020benefityear,weestimatedthatthetotalcostforHHStooperatetheriskadjustmentprogramonbehalfofallstateswillbeapproximately$50million,andthattheriskadjustmentuserfeewillbeapproximately$2.
16perbillablememberperyear,or$0.
18PMPM.
TheupdatedcostestimatesattributeallcostsrelatedtotheEDGEserverdatacollectionanddataevaluation(quantityandqualityevaluations)activitiestotheriskadjustmentprogram,ratherthansharingVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00099Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217552FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsthemwiththereinsuranceprogram,whichisnolongeroperational.
Previously,wehadcollectedamountsforreinsuranceadministrativeexpenses,whichpartiallyfundedcontractsthatwereusedforboththeriskadjustmentandreinsuranceprograms.
Now,thosecostsarebornebytheriskadjustmentprogramalone.
Additionally,basedonexperiencewiththeriskadjustmentdatavalidationprogram'sdevelopmentandexecution,includingdevelopmentofthenewriskadjustmentdatavalidationaudittoolandadditionalcontractorsupportforprocessingriskadjustmentdatavalidationdiscrepanciesandappeals,weestimatehighercostsassociatedwiththeriskadjustmentdatavalidationprogram.
Finally,weareincorporatingthefullamountofeligiblepersonnelandadministrativecostsassociatedwithriskadjustmentprogramdevelopmentandoperations,includingindirectcosts,intheriskadjustmentuserfeeforthe2020benefityear.
Thepersonnelandadministrativecostsincludedinthecalculationofthe2019benefityearriskadjustmentuserfeesinthe2019PaymentNoticefinalruleincorporatedonlyaportionoftheeligiblepersonnelcosts,andexcludedindirectcosts.
Finally,weestimatesimilarbillablemembermonthenrollmentforthe2020benefityearasthemostrecent2017benefityearindividualandsmallgroupmarketenrollment.
Webelievethattheapproachofblending(oraveraging)3yearsofseparatelysolvedcoefficientsfromthe2016and2017benefityearenrollee-levelEDGEdatawiththe2015MarketScandatawillprovidestabilitywithintheriskadjustmentprogramandminimizevolatilityinchangestoriskscoresfromthe2019benefityeartothe2020benefityearduetodifferencesinthedatasets'underlyingpopulations.
Furthermore,wearefinalizingtheuseofenrollee-levelEDGEdataandreportsextractedfromissuerEDGEserverstocalibrateandoperationalizeHHSprogramsfortheindividualandsmallgroup(includingmerged)marketprograms,aswellastomorebroadlyconductpolicyanalysisfortheindividualandsmallgroup(includingmerged)markets.
2.
RiskAdjustmentDataValidation(§153.
630)Under§153.
630,weproposedafewchangestotherequirementsforriskadjustmentdatavalidation.
Wearefinalizingthechangestothepairwisemeanstestthatwillincreasethesecondvalidationauditsampletothefull200enrolleesamplesize(ratherthan100)incertaincases.
WedonotbelievethispolicywillincreasetheburdenonissuersbecausethesecondvalidationauditisconductedbyHHS,notissuers,andissuersarealreadyrequiredtoprovidetheinitialandsecondvalidationauditentitieswiththedocumentationnecessarytocompletetheauditsforall200enrolleessampled.
Instead,webelievethatincreasingthesecondvalidationauditsamplesizetothefullinitialvalidationsampleof200enrollees,incertaincases,mayincreasethecoststothefederalgovernmentofconductingthesecondvalidationaudit,asHHSwillnowreviewthedocumentationsubmittedforall200enrollees,ratherthanonly100incertaincases.
However,webelievethatthebenefitsfromimprovingtheprocessforvalidatingthesecondvalidationauditresultsandtheaccompanyingprecisionitwillbringtoriskscoreerrorrateadjustmentswilloutweightheincreasedcoststothefederalgovernmentandbetterensuretheintegrityoftheriskadjustmentprogram.
Wearefinalizingourproposaltoincorporateprescriptiondrugsintoriskadjustmentdatavalidationaspartofthedatavalidationprocess.
Webelievethatitisimportantthatprescriptiondrugsarevalidatedaspartofriskadjustmentdatavalidation,astheHHS-operatedriskadjustmentmethodologystartedincorporatingprescriptiondrugfactorsbeginningwiththe2018benefityear.
HHSpreviouslyestimatedtheburdenofincorporatingdrugsinriskadjustmentdatavalidationinthe2018PaymentNotice.
Theexemptionsinthisfinalruleforriskadjustmentdatavalidationcodifytwopoliciesfinalizedinthe2018and2019PaymentNoticesandalsoincludeonenewexemptionpolicyforissuersinorenteringliquidation.
Theimpactofthepreviouslyfinalizedexemptionswasaddressedinthe2018and2019PaymentNotices.
Webelievethatthenumberofissuersthatwillqualifyfortheexemptionforissuersinliquidationwillbeverysmalleachyear,andtherefore,webelievethattheoverallreductioninburdenwillbelimited.
However,thoseissuersthatareexemptedfromriskadjustmentdatavalidationwillhavelessburdenandadministrativecoststhananissuersubjecttotheserequirements.
3.
AbilityofStatesToPermitAgentsandBrokersToAssistQualifiedIndividuals,QualifiedEmployers,orQualifiedEmployeesEnrollinginQHPs(§155.
220)In§155.
220(c)(3)(i),thenewparagraph(c)(3)(i)(L)prohibitsweb-brokersfromdisplayingQHPrecommendationsontheirwebsitesbasedoncompensationaweb-broker,agent,orbrokerreceivesfromQHPissuers.
Web-brokersoftencollectcertaininformationfromconsumersandonthebasisofthatinformationdisplayorsortQHPs,orapplyascoretoallavailableQHPs,indicatingwhichQHPtheybelieveisthebestoptionforthoseconsumers.
Wesupportthedevelopmentanduseofinnovativeconsumer-assistancetoolsthatmayhelpconsumersselectQHPsthatbestfittheirneeds.
However,webelievesuchrecommendationsshouldbebasedoninformationconsumershaveprovidedtoweb-brokersandnotbasedoncompensationreceivedfromQHPissuerswhenconsumersenrollintheirplans.
Wearenotawareofanyweb-brokerscurrentlyrecommendingQHPsbasedoncompensationreceivedfromQHPissuers,soweexpecttheimpactofthisprovisiontobeverylimited.
Wearefinalizingtherequirementin§155.
220(c)(4)(i)(A)forweb-brokerstoprovideHHSwithalistofagentsorbrokerswho,throughacontractorotherarrangement,usetheweb-brokers'websitestoassistconsumerswithQHPselectionorcompletionoftheExchangeeligibilityapplication,inaformormannertobespecifiedbyHHS.
TheauthoritycurrentlyexistsforHHStoobtainthisinformationbyrequest.
However,duetothetrendofincreaseduseandexpansionofdirectenrollmentpathways,webelieveitisappropriateandnecessarytocollectthisinformationproactively,sothatwemayrespondmoreefficientlyandeffectivelytoanypotentialinstancesofnoncompliancethatmayinvolveuseofaweb-broker'sdirectenrollmentpathway.
Havingthisinformationwill,forexample,enableustoidentifymorequicklywhethernoncomplianceisattributabletoaspecificindividualorindividuals,insteadoftheweb-brokerentity.
Wewillreleaseguidancethatprovidesdetailsontheformandmannerofthesesubmissions.
Weanticipatethatitwillrequirethelisttoinclude,atminimum,eachagent'sorbroker'sname,state(s)oflicensure,andNationalProducerNumber.
Webelievetheburdenassociatedwiththisdatacollectionwillberelativelylimited,asweunderstandthatweb-brokerscollectandstorethisinformationaspartoftheirnormalbusinessoperationstoidentifyindividualagentsorbrokersutilizingtheirsystems.
TheburdenrelatedtothisprovisionisdiscussedpreviouslyintheCollectionofInformationRequirementssection.
Undernew§155.
220(g)(3)(ii),HHSisallowedtoimmediatelyterminateanagent'sorbroker'sagreementiftheagentorbrokerfailstomaintainVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00100Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217553FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations200Directenrollmentoperationalreadinessreviewrequirementsarecurrentlycapturedat§155.
220(c)(3)(i)(K)forweb-brokersand§156.
1230(b)(2)forQHPissuers.
201See§156.
1230(b)(2)forissuersparticipatingindirectenrollmentand§155.
220(c)(3)(i)(K)forweb-brokers.
applicablestatelicensureasanagent,broker,orinsuranceproducerineverystateinwhichtheagentorbrokeractivelyassistsconsumerswithapplyingforAPTCorCSRsorwithenrollinginQHPsthroughtheFFEsorSBE–FPs.
Statelicensureforagentsandbrokersineverystateinwhichtheyareassistingconsumersisafundamentalconsumerprotectionandcriticalforprogramintegrity.
IthasbeenarequirementintheFFEagreementswithagentsandbrokerssincetheinceptionoftheFFEs,andisadheredtobytheoverwhelmingmajorityofagentsandbrokers.
Therefore,webelievetheimpactofthisprovisiononagentsandbrokerswillbeminimal,buttheproposalwillbenefitconsumerswhomightotherwiseinteractwithunlicensedindividualsandwillimproveExchangeprogramintegrity.
In§155.
220(k)anewparagraph(k)(3)isaddedthatwillallowHHStoimmediatelysuspendanagent'sorbroker'sabilitytotransactinformationwiththeExchangeifHHSdiscoverscircumstancesthatposeunacceptablerisktoExchangeoperationsorExchangeinformationtechnologysystemsuntiltheincidentorbreachisremediedorsufficientlymitigatedtoHHS'satisfaction.
Thislanguageisidenticaltoanexistingprovisionthatappliestoweb-brokersat§155.
220(c)(3)(i)(L)andasimilarprovisionapplicabletoQHPissuersparticipatingindirectenrollmentat§156.
1230(b)(1).
Thoseprovisionsarebeingreplacedwithaverysimilarnewrequirementthatappliestobothtypesofdirectenrollmententitiesinnew§155.
221(d).
BecausethepotentialrisksposedbyagentsandbrokerswithaccesstoFFEsystemsaresimilartothoseposedbyweb-brokersandQHPissuersparticipatingindirectenrollment,webelievethischangeisnecessaryandappropriatetoprovideauniformprocessandabilitytoprotectExchangesystemsandoperationsfromunacceptablerisks,aswellastoprotectsensitiveconsumerdata.
WenotethatagentsandbrokerswhoseabilitytotransactinformationwiththeExchangeissuspendedunderthisauthoritywillremainregisteredandauthorizedtoassistconsumersusingtheMarketplace(orside-by-side)pathway,unlessanduntiltheiragreementsaresuspendedorterminatedunder§155.
220(f)or(g).
Webelievethisauthoritywillbeusedinfrequentlyandonlyincaseswheretherewilllikelybethereasonablebasistosuspendtheiragreementsunder§155.
220(g)(5)(i)butthereisaneedtotakeimmediateactiontoprotectsensitiveconsumerdataorExchangesystemsandoperations.
Thereforeitseffectonagentsandbrokersisexpectedtoberelativelylimited.
In§155.
220(m)(1),wearefinalizingtheprovisiontoallowaweb-broker'sagreementtobesuspendedorterminatedforcauseunder§155.
220(g),andaweb-brokertobedeniedtherighttoenterintoagreementswiththeFFEsunderparagraph(k)(1)(i)ofthissectionbasedontheactionsofitsofficers,employees,contractors,oragents,evenifthosepersonsarenotagentsorbrokersregisteredwiththeFFE.
In§155.
220(m)(2),wearefinalizingtheprovisiontoallowaweb-broker'sagreementtobesuspendedorterminatedunder§155.
220(g),andfortheentitytobedeniedtherighttoenterintoagreementswiththeFFEsunder§155.
220(k)(1)(i),ifitisunderthecommonownershiporcontrol,orisanaffiliatedbusiness,ofanotherweb-brokerthathashaditsagreementsuspendedorterminatedforcause.
Weexpecttheseprovisionstohavelimitedimpact,astheyaredesignedtoprotectprogramintegrityandwillonlybeutilizedinlimitedcaseswhenthereisevidenceofsignificantmisconductornon-compliance.
Inthosecases,weanticipatebenefitstoconsumersstemmingfromourenhancedabilitytoaddressprogramintegrityconcernsandnon-complianceissues.
In§155.
220(m)(3),wearefinalizingtherequirementfortheExchangetocollectinformationfromaweb-brokersufficienttoestablishtheidentitiesofindividualswhocompriseitscorporateleadershipandtodetermineanybusinessrelationshipswithotherentitiesthatmayseektoregisterwiththeExchangeasweb-brokers.
TheseprovisionsarealsointendedtoprotectprogramintegritybyenablingtheExchangetohaveinformationnecessarytodetermineifanyindividualsseekingtobeweb-brokersareattemptingtocircumventapreviousterminationorsuspensionforcauseofFFEagreements.
TheburdenrelatedtothisprovisionisdiscussedintheCollectionofInformationRequirementssection.
4.
DirectEnrollment(§§155.
20,155.
220,155.
221,155.
415,156.
1230)Thechangesto§155.
220arediscussedabove.
In§155.
221,weamendandredesignatetheexistingparagraphs(a),(b)and(c)tonewparagraphs(e),(f),and(g).
Innew§155.
220(e),weaddlanguagetorequirethatthethird-partyentitiesthatconductannualreviewsofdirectenrollmententitiestodemonstrateoperationalreadinessconsistentwithnew§155.
221(b)(4)200beindependentoftheentitiestheyareauditing.
Webelieveanindependentauditislesslikelytobeinfluencedbyadirectenrollmententity'sbusinessconsiderations,andtherefore,ismorereliable.
Weexpectnoimpactfromthisprovisionasitwasincludedasarequirementintheagreementsweexecutedwithdirectenrollmententitiessubjecttotheseauditsforplanyear2019.
Wealsoclarifyin§155.
221(e)thataninitialauditisrequired,inadditiontosubsequentannualaudits.
Thisclarificationdoesnotrepresentachangefromthecurrentapproach,asdirectenrollmententitiesarecurrentlyrequiredtodemonstrateoperationalreadinessbeforetheirwebsitesmaybeusedtocompleteQHPselections.
201Thereforeweanticipatenoimpactofthisproposedchange.
In§155.
221(f),werequirethatawrittenagreementmustbeexecutedbetweenadirectenrollmententityanditsauditorstatingthattheauditorwillcomplywiththerequirementsofparagraph(f).
Webelievethemosteffectivewaytoensureadirectenrollmententityhasthenecessarycontrolandoversightoveritsauditortoensurecompliancewiththeapplicablestandardsin§155.
221isforthosestandardstobememorializedinawrittenagreement.
Weexpectmost,ifnotall,directenrollmententitiesalreadyexecutewrittenagreementswiththeircontractorsthatwillincorporateanyregulatoryrequirementsthatfallwithinthescopeoftheworkthecontractorisperformingfortheentity,soweexpectlittletonoimpactfromthischange.
Inthenew§155.
221(a),wearecodifyinginregulationthetypesofentitiestheFFEspermittooffernon-ExchangewebsitestofacilitatedirectenrollmentincoverageofferedthroughtheExchangeinamannerthatisconsideredtobethroughtheExchange.
TherearetwotypesofentitiesthatareauthorizedbytheFFEstoofferdirectenrollmentpathways:QHPissuersandweb-brokers.
WeexpectthisprovisiontohavelittleornoimpactasQHPissuersandweb-brokersarealreadyauthorizedbytheFFEstoparticipateindirectenrollment.
Inthenew§155.
221(b),weestablishandconsolidatecertainrequirementsthatapplytoalldirectenrollmententities.
Specifically,weaddin§155.
221(b)(1)thatQHPsandnon-VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00101Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217554FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations202BureauofLaborStatisticsmeanhourlywageforanInsuranceSalesAgent(OccupationalCode41–3021)at$32.
21anhour,plus100percentfringe.
203BureauofLaborStatisticsmeanhourlywageforanInsuranceClaimsandPolicyProcessingClerk(OccupationalCode43–9041)at$19.
76anhour,plus100percentfringe.
QHPsmustbedisplayedandmarketedonseparatewebsitepagesonthedirectenrollmententity'snon-Exchangewebsite.
Weconsiderthisaclarificationofexistingstandardsthatwillhaveminimalimpactondirectenrollmententities,andwillminimizethechancethatconsumersareconfusedbythedisplayormarketingofQHPsandnon-QHPsonasinglewebsitepage.
Inthenew§155.
221(b)(2)werequiretheprominentdisplayofastandardizeddisclaimerinaformandmannerprovidedbyHHS.
Similaruniformdisclaimerrequirementsalreadyexistforalldirectenrollmententities.
Asaresult,andbecausewewillprovidethedisclaimertext,weexpecttheoverallimpactofthisprovisiontobeminimal.
Inthenew§155.
221(b)(3),welimitthemarketingofnon-QHPsduringtheExchangeeligibilityapplicationandQHPselectionprocessondirectenrollmententities'websitesinamannerthatminimizesthelikelihoodthatconsumerswillbeconfusedastowhatproductsareavailablethroughtheExchangeandwhatproductsarenot.
ThiswillalsoassistconsumersinunderstandingtheapplicabilityofAPTCandCSRsthattheymaybeeligiblefor.
Mostdirectenrollmententitieshaverefrainedfrommarketingnon-QHPsinconjunctionwithQHPscitingalackofclearguidanceonwhatwaspermissible.
Thereforeweexpecttheimpactofthisprovisiontobeminimal,andtobeperceivedasallowingincreasedflexibility.
Inthenew§155.
221(b)(4),weconsolidateaprovisionrequiringdirectenrollmententitiesdemonstrateoperationalreadinessandcompliancewithapplicablerequirementspriortotheentities'websitesbeingusedtocompleteanExchangeeligibilityapplicationoraQHPselection.
Becausethisisanexistingrequirement,weexpectnoimpact.
Inthenew§155.
221(c),theauthoritytouseapplicationassistersandthecorrespondingrequirementswhendoingsoapplyforallissuersanddirectenrollmententitiesandnotsolelyQHPissuers.
Wearefinalizinganewdefinitionof''directenrollmententityapplicationassister''in§155.
20thatmirrorstheexistingdefinitionof''issuerapplicationassister'',aswellasfinalizingamendmentsto§155.
415tocapturetherequirementsforentitiesusingapplicationassistersthatalignwiththeexistingrequirementscurrentlyin§156.
1230(a)(2)forQHPissuerapplicationassisters.
Thereisonesignificantdeviationfromtheexistingrequirementsforapplicationassisters.
Currently,§156.
1230(a)(2)(i)requiresallapplicationassisterstoreceivetrainingonQHPoptionsandinsuranceaffordabilityprograms,eligibility,andbenefitsrulesandregulations.
LicensedagentsandbrokerscurrentlyassistingconsumerswithQHPenrollmentthroughtheFFEsorSBE–FPsmusthavecredentialstoaccessFFEsystemstoofferthatassistance.
ThosecredentialsareobtainedduringtheFFEregistrationandtrainingprocessesforagentsandbrokers.
ForapplicationassisterstohavesimilaraccesstoFFEsystems,sothattheyarealsoabletoassistconsumersasdescribedhereandinthepreambleinthisrule,theywillneedcredentialssimilartothoseobtainedbyagentsandbrokersduringFFEregistrationandtraining.
Therefore,werequirethatapplicationassistersprovidingassistanceintheFFEsandSBE–FPscomplywiththistrainingrequirementbycompletingasimilarregistrationandtrainingprocess,inaformandmannertobespecifiedbyHHS,sothattheywillhavethenecessarycredentialstoprovideconsumerassistance.
Thisnewtrainingandregistrationrequirementforapplicationassistersiscapturedinthenew§155.
415(b)(1).
TheburdenplacedonapplicationassisterstocompletetheFFEtrainingmayexceedwhatmayhaveotherwiseexistedifdirectenrollmententitiesweredevelopingandmanagingtheirowntrainingprograms.
However,byrequiringtheFFEtrainingtobecompletedbyapplicationassistersassistingconsumersintheFFEsandSBE–FPs,itwillrelievedirectenrollmententitiesfromtheburdensassociatedwithhavingtodevelopandmanagetheirowntrainingprograms.
Importantly,FFEsystemswillrequirethisapproachtocomplywithsystemsecurityrequirementsandtoenableapplicationassisterstomeaningfullybeabletoassistconsumersintheFFEsandSBE–FPs.
Therefore,takentogether,webelievethenetburdenassociatedwiththisrequirementwillbeminimalandwillbeacceptabletoparticipatingdirectenrollmententitiesthatelecttouseapplicationassisters,whenpermittedunderstatelaw.
ThereasonwebelievethenetburdenwillbeminimalisbecausethebulkoftimeassociatedwithapplicationassisterscompletingthetrainingrequirementwilllikelybecomparablewhetherthetrainingisdevelopedandadministeredbydirectenrollmententitiesorbyHHS.
However,therewilllikelybeasmallincreaseintheamountoftimeapplicationassisterswillhavetodevotetotheregistrationprocessapartfromtraining,specificallytocreatinganFFEaccountandcompletingidentityproofing.
Incontrast,therewilllikelybeasubstantialreductioninburdenondirectenrollmententities,becausetheywillnothavetodevelopandmanagetheirowntrainingprograms.
InsteadtheywillbeabletosimplyconfirmtheirapplicationassistershavecompletedtheFFEregistrationandtrainingprocess.
WeanticipatethatallowingQHPissuerstouseapplicationassistersintheFFEsandSBE–FPs,andexpandingthatoptiontootherissuersandweb-brokerswillprovidecostsavingstotheseentities.
Itisdifficulttopreciselyestimatethenumberofapplicationsforwhichadirectenrollmententityapplicationassisterprovidedhelpmaybesubmitted.
However,basedonavailabledata,weestimatethatapproximately980,000agentorbroker-assisteddirectenrollmentapplicationswillbesubmittedinplanyear2019.
Weestimatethatitwilltakeaninsurancesalesagent202(atanhourlyrateof$64.
42)onehourtocompleteanapplication.
Wedonothaveinformationrelatedtothenumberofstatesthatwillallowforunlicensedapplicationassisters,aswellashowmanydirectenrollmententitieswillhireapplicationassistersortrainexistingstaffasapplicationassisters.
Therefore,weestimatethathalfofassisteddirectenrollmentapplicationswillbecompletedwiththeassistanceofanapplicationassisterinsteadofanagentorbroker.
Basedontheseassumptions,weestimatethatitwilltakeaninsuranceclaimsandpolicyprocessingclerk203(atanhourlyrateof$39.
52)onehourtocompleteeachapplication.
Thus,weestimatethattheapplicationsfor490,000applicantswillresultinanestimatedtotalburdenofapproximately490,000hourswithanassociatedcostofapproximately$19,364,800.
Iftheapplicationsarecompletedbyanagentorbrokerinstead,thetotalcostwillbeapproximately$31,565,800.
Basedontheseassumptions,weestimateanoverallannualsavingsofapproximately$12.
2millionfordirectenrollmententitiesusingapplicationassistersinsteadofonlyagentsorbrokers.
Inaddition,weexpectthatthetimethatagentsorbrokersmayotherwisehavespentassistingconsumerswiththeireligibilityapplicationswillofteninsteadbedevotedtoassistingmoreconsumerswithplanselectionandfinalizingtheirenrollments.
Asaresult,weexpectthispolicymayalsoresultinanoverallincreaseinenrollmentVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00102Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217555FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsthroughtheFFEsandSBE–FPs.
Lastly,theseprovisionsprovideincreasedflexibilityandalevelplayingfieldtoalldirectenrollmententitiesandissuers.
Inthenew§155.
221(d),weconsolidateexistingauthoritytoimmediatelysuspendadirectenrollmententity'sabilitytotransactinformationwiththeExchangeifHHSdiscoverscircumstancesthatposeunacceptablerisktotheExchange'sabilitytomakeaccurateeligibilitydeterminations,orExchangeoperationsorsystemsuntilsuchcircumstancesareremediedorsufficientlymitigatedtoHHS'satisfaction.
Weexpectlittleornoimpactfromthisproposal,sincethisislargelybasedonanexistingauthority.
Wealsocodifynewdefinitionsforthefollowingtermsin§155.
20:''directenrollmententity'',''directenrollmenttechnologyprovider'',and''web-broker''.
Wedefine''directenrollmententity''asanentitythatanExchangepermitstoassistconsumerswithdirectenrollmentinQHPsofferedthroughanExchangeinamannerconsideredtobethroughtheExchangeasauthorizedby§§155.
220(c)(3),155.
221,or156.
1230.
WeexpectnoimpactfromthisprovisionasitmerelycodifiesadefinitionfortheterminsuchawaythattheentitiesthatarecurrentlyauthorizedbytheFFEtohostadirectenrollmentenvironmentaredirectenrollmententities.
Wealsoamend§155.
20todefine''directenrollmenttechnologyprovider''asatypeofweb-brokerbusinessentitythatisnotalicensedagent,broker,orproducerunderstatelawandhasbeenengagedorcreatedby,orisownedby,anagentorbroker,toprovidetechnologyservicestofacilitateparticipationindirectenrollmentasaweb-brokerinaccordancewith§§155.
220(c)(3)and155.
221.
Theremaybeinstanceswhenanindividualagentorbroker,agroupofagentsorbrokers,oranagentorbrokerbusinessentityengagestheservicesoforcreatesatechnologycompanythatisnotlicensedasanagentorbrokertoassistwiththedevelopmentandmaintenanceofanon-ExchangewebsitethatinterfaceswithanExchangetoassistconsumerswithdirectenrollmentinQHPsofferedthroughtheExchangesasdescribedin§§155.
220(c)(3)and155.
221.
Insuchcases,whenthetechnologycompanyisnotitselflicensedasaninsuranceagencyorbrokerage,thesetechnologycompanieswillbeconsideredatypeofweb-brokerthatmustcomplywithapplicableweb-brokerrequirementsunder§§155.
220and155.
221,unlessnotedotherwise.
Weexpectnonewburdenassociatedwiththisrequirementasitmerelyallowssomeflexibilityintermsofhowlicensedagentsorbrokersmayorganizetheirbusinessesorpursuebusinessrelationshipswhenseekingtobecomeweb-brokers.
Wealsocodifyadefinitionof''web-broker''asanindividualagentorbroker,groupofagentsorbrokers,orbusinessentityregisteredwithanExchangeunder§155.
220(d)(1)thatdevelopsandhostsanon-ExchangewebsitethatinterfaceswithanExchangetoassistconsumerswithdirectenrollmentinQHPsofferedthroughtheExchangesasdescribedin§§155.
220(c)(3)and155.
221.
Asexplainedinthepreamble,wealsodefinetheterm''web-broker''togenerallyincludedirectenrollmenttechnologyproviders.
Importantly,thisdefinitionwillreplaceHHS'currentweb-brokerdefinition,whichisslightlydifferent.
However,weexpectnoimpact,becauseallexistingweb-brokerswillfallwithinthenewproposeddefinitionofweb-broker.
Conformingeditswerealsomadeto§156.
1230aspartoftheefforttostreamlineandconsolidatesimilarrequirementsthatapplytoalldirectenrollmententitiesinoneregulation.
Weamend§156.
1230(b)toaddanewparagraph(b)(1)thatrequiresissuersparticipatingindirectenrollmenttocomplywiththeapplicablerequirementsin§155.
221.
Therewereminimalsubstantivechangestotheunderlyingrequirementsapplicabletoissuersparticipatingindirectenrollment.
Wethereforeexpectnonewimpacttoissuersexcepttotheextentpreviouslydiscussed.
Wealsodeleteandreserve§156.
1230(a)(2)toalignwiththechanges,describedinthisrule,to§155.
415regardingapplicationassisters.
5.
ConsumerAssistanceToolsandProgramsofanExchange(§155.
205)Sinceimplementingthedirect-to-issuerenrollmentsysteminplanyear2018,wehaveseenamarkeddecrease(greaterthanfiftypercent)inthevolumeofSHOPCallCentercalls.
WeanticipatethattheSHOPCallCentervolumewillcontinuetodecreaseinplanyear2020,asemployerswillbeinthethirdyearofenrollinginSHOPdirectlywithissuers,oftenwiththeassistanceofagentsandbrokers.
Inaddition,agentsandbrokersandsmallemployerscannowresolvemostissuesdirectlywithimpactedissuersusingwell-establishedissuercallcentersandsmallgroupprocessesuniquetoeachmarket.
WeanticipateaminimalnumberofnewappealsofSHOPeligibilityandspecialenrollmentperiodsgivenanticipatedemployerparticipationandourobservationthatveryfewemployerseverappealSHOPdeterminations.
Inshort,wewillmaintainatoll-freetelephonehotlinethatthestatuterequires(atpresent12full-timeequivalentemployeesaredevotedtoSHOPCallCenteroperations).
Weenvisionminimalcontractorandstaffsupporttomaintainthehotlinecontentandtorespondtoveryfewvoicemailmessages.
Althoughwewillmaintainlanguagetranslationserviceandincurtheassociatedcosts,weanticipatethatsuchcostswillbeminimalgivencallvolume.
Movingtoaninteractivevoiceresponsesystemwilleliminatestaffingfor12full-timeequivalentemployeesrequiredatthecallcenterundertheSHOPPlanAggregateandCallCentercontractandwillprovideanetsavingstothegovernmentofapproximately$2millionannually.
6.
NavigatorProgramStandards(§§155.
210and155.
215)WeprovidemoreflexibilitytoFFENavigatorsbymakingtheprovisionofcertaintypesofassistance,includingpost-enrollmentassistance,permissibleforFFENavigators,notrequired.
Theamendmentof§155.
210toremovetherequirementthatNavigatorsinFFEsprovidetheassistancespecifiedat§155.
210(e)(9)willreduceregulatoryburdenandallowFFENavigatorstobetterprioritizeworkaccordingtoconsumerdemand,communityneeds,andorganizationalresources.
Undertheprovision,NavigatorsinFFEsmaycontinuetoprovidethetypesofassistancelistedat§155.
210(e)(9),butwillnotberequiredtodoso.
ThetimeFFENavigatorscurrentlyspendprovidingassistancewiththe§155.
210(e)(9)topicsvaries.
Tohelpquantifythisburdenreduction,werequestedcommentonhowmanyhourspermonthFFENavigatorgranteesandindividualNavigatorscurrentlyspendprovidingtheassistanceactivitiesin§155.
210(e)(9),whatpercentageoftheircurrentworkinvolvesprovidingthesetypesofassistance,andhowthatamountofworkwouldbeimpactedifprovidingthesetypesofassistancewouldnolongerberequired.
WealsorequestedcommentonhowNavigatorgranteesandindividualNavigatorsmightreprioritizeworkandspendtimefulfillingtheirotherduties,ifnotrequiredtoprovidethetypesofassistancedescribedunder§155.
210(e)(9).
Inparticular,wesoughtcommentonwhattasksNavigatorsmightprioritizeandcompleteduringthetimetheyotherwisemighthaveprovidedthesetypesofassistance.
CommentersstatedthattheamountoftimeNavigatorsreportedthattheyspentprovidingpost-enrollmentassistancevariedwidely.
OnecommenterstatedVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00103Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217556FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations204BureauofLaborStatisticsmeanhourlywageforaSoftwareDeveloper,SystemsSoftware(OccupationalCode15–1133)at$53.
74anhour,plus100percentfringe.
205ASPE''2019HealthPlanChoiceandPremiumsinHealthCare.
govstates.
''https://aspe.
hhs.
gov/system/files/pdf/260041/2019LandscapeBrief.
pdf.
thatabroadrangeofpost-enrollmentactivitieswereamongthemostcommonareasofassistancerequestedbyconsumers.
Anothercommentedthatwhiletheydidnotspendmuchtimeontaxprocesses,forms,appeals,orexemptions,thetimetheyspenteducatingconsumersaboutbasichealthconceptsandhowtousetheirhealthcoveragewasextensive.
Anothercommentedthat,onaverage,Navigatorsvisitedeachenrolledconsumertentimes,andthatthreeofthosevisitswerededicatedtoprovidingpost-enrollmentassistance.
AnothercommenterstatedthatoneoftheirNavigatorsspent6monthsandmorethan40hourshelpingaconsumerfileanappeal.
WeamendNavigatortrainingrequirementsat§§155.
210(b)(2)and155.
215(b)(2)toprovidegreaterflexibilitytoExchangesindesigningtheirNavigatortrainingprogramstoensurecoverageofthemostinstructiveandtimelytopicsinastreamlinedfashionandtoalignthetrainingwithfuturechangesintheNavigatorprogramortheoperationoftheExchanges,whilestillensuringthatNavigatorsarequalifiedtocarryouttheiractivitiesasrequiredbytheNavigatorstatuteandregulations.
ThisadditionalflexibilitywillallowExchangestofocusontrainingareastheydeterminetobemostrelevanttothepopulationsintheExchangeservicearea,whilestilladdressingallrequiredorauthorizedNavigatorfunctions.
Becauseitwillprovidegreaterflexibilitytotailorthetrainingtocurrent,localconditionsineachExchange,therevisedapproachmightalsohelptoensurecost-effectiveuseofExchangeNavigatorfunding.
Moreover,webelievethesechangeswillalsograntgreaterflexibilitytoSBEs,includingSBE–FPs,indesigningtheirrespectiveNavigatortraining,sinceSBEsthatdecidetoauthorizeorrequiretheirNavigatorstoprovidetheassistancespecifiedunder§155.
210(e)(9)willnothavecorrespondingtrainingtopicsprescribed,butwillhavetheflexibilitytodecidehowbesttopreparetheirNavigatorstoprovidesuchassistance.
ThisissimilartotheflexibilitySBEshaveforcreatingtrainingforotherrequiredNavigatorduties.
WebelievegrantingSBEstheflexibilitytofocusonthetopicstheyfindbestsuitedtopreparetheirNavigatorsforassistingconsumerswillallowforamoreeffectivetrainingprogram,andwillreducetheregulatorycomplianceburdenontheseExchanges.
However,theburdenreductionthatthiswillachievecannotbeestimatedsincethesechangesarenotintendedtoreducethetotalnumberofhoursofNavigatortrainingannuallyandweareuncertainhoweachExchangewillchoosetostructureitsrespectiveNavigatortraininggiventhisincreaseinflexibility.
WecontinuetobelievethateachExchangeisinthebestpositiontodeterminethetrainingthatismostappropriatefortheactivitiesofitsNavigators.
7.
SpecialEnrollmentPeriods(§155.
420)Weanticipatethatamended§155.
420willimposemoderatecostsonExchangesthatopttoimplementtheproposedspecialenrollmentperiodtoupdatetheiruserinterfacesandmakechangestotheireligibilitysystems,butalsoacknowledgethatExchangesmaychoosetoofferthespecialenrollmentperiodthroughtheircallcenterorotherexistingenrollmentavenuesthatcouldgreatlyreduceimplementationcoststoanExchange.
Additionally,weanticipatethatverificationrequirementswillimposecostsrelatingtospecialenrollmentperiodpre-enrollmentverificationsystems,caseloads,andconsumermessagingforExchangesthatperformpre-enrollmentverificationofspecialenrollmentperiodeligibility.
WeexpectutilizationofthespecialenrollmentperiodmayvaryamongExchangesdependingontotalExchangeenrollmentandExchangeplanratesandpricingpractices.
Giventhesevariablefactors,werequestedcommentsregardinganticipatedcosts,benefitsandimplementationapproachesamongExchangestoassistinformingafutureestimate.
Wedonotanticipatethisprovisiontosignificantlyincreaseregulatoryburdenonissuers,butacknowledgeissuersmayencountermarginalcostsassociatedwithprocessingnewenrollmentsandterminationsrelatedtothespecialenrollmentperiod,anddirectenrollmententitiesmayalsofaceminorimplementationcostsassociatedwithupdatingtheirapplicationsandsystemstoincludethenewspecialenrollmentperiod.
Weestimatethatitwilltakeamid-levelsoftwaredeveloper204(atanhourlyrateof$107.
48)approximately10hourstomaketherequiredmodificationstothedirectenrollmententity'sapplicationsandsystemlogic.
Weestimateaone-timecostburdenofapproximately$1,075perdirectenrollmententity.
Wefurtherestimateatotalone-timeburdenfor35directenrollmententitieswillbeapproximately350hourswithanequivalentcostofapproximately$37,618.
Becausethispolicyprovidesimprovedpathwaystocontinuouscoverageforspecialenrollmentperiod-eligibleconsumers,weanticipatethattheproposalwillpromotecontinuouscoverageforconsumersandtherebyhaveapositiveeffectontheindividualmarketriskpool.
Additionally,weanticipatethateligibleconsumersmayexperiencereducedout-of-pocketcostsrelatedtohealthcareexpensesresultingfromaccesstomoreaffordablehealthplansandanewpathwaytomaintainingcontinuoushealthcarecoverage,comparedtoiftheyhadtodropoutofoff-Exchangecoverageandpayout-of-pocketforallhealthcareexpensesincurredfortheremainderoftheyear.
Weestimatethatapproximately4,700newconsumerswillusethisspecialenrollmentperiodonanannualbasistoenrollinExchangecoverage,andthattheseconsumerswillbeenrolledforanaverageof6monthsofExchangecoverageduringthebenefityear.
Usingtheplanyear2019averagemonthlyAPTCamountof$544,weestimatetotalAPTCtransferredtoconsumersasaresultoftheproposedspecialenrollmentperiodwillbeapproximately$15,340,800annually.
205WeinvitedcommentsonthepotentialcostsandsavingstoExchanges,issuers,directenrollmententities,andconsumersassociatedwiththeproposedspecialenrollmentperiod.
Wedidnotreceivecommentsonthecostestimatescontainedintheseproposal.
8.
EligibilityStandardsforExemptions(§155.
605)Wedonotanticipatethattheamendmentto§155.
605(e)willcreateadditionalcostsorburdensonExchanges,andweanticipateitwilldecreaseburdenonconsumers.
Theadditionof§155.
605(e)(5)willenableindividualstoclaimageneralhardshipexemptionontheirfederalincometaxreturnfor2018withoutanexemptioncertificatenumberfromanExchange.
Thispolicywillallowformoreflexibilityandwillnotresultinanyadditionalcostsorburdensforissuers.
ThereductioninburdentoconsumersisdiscussedintheCollectionofInformationRequirementssection.
9.
FFEandSBE–FPUserFees(§156.
50)TosupporttheoperationofFFEs,werequirein§156.
50(c)thataparticipatingissuerofferingaplanthroughanFFEorSBE–FPmustremitVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00104Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217557FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations206Asexplainedin§155.
605(d)(2),forplanyearsafter2014,section5000A(e)(1)(D)oftheCodeandTreasuryregulationsat26CFR1.
5000A–3(e)(2)(ii)providethattherequiredcontributionpercentageisthepercentagedeterminedbytheSecretaryofHHSthatreflectstheexcessoftherateofpremiumgrowthbetweentheprecedingcalendaryearand2013,overtherateofincomegrowthforthatperiod.
Tocalculatethefinalrequiredcontribution,weusedthefinalpremiumadjustmentpercentageinthecalculation:8.
00*1.
0296274251(1.
2895211380/1.
2524152976),or8.
24percent.
207CMSOfficeoftheActuary'sestimatesarebasedontheirhealthreformmodel,whichisanamalgamofvariousestimationapproachesinvolvingfederalprograms,employer-sponsoredinsurance,andindividualinsurancechoicemodelsthatensureconsistentestimatesofcoverageandspendinginconsideringlegislativechangestocurrentlaw.
auserfeetoHHSeachmonthequaltotheproductofthemonthlyuserfeeratespecifiedintheannualHHSnoticeofbenefitandpaymentparametersfortheapplicablebenefityearandthemonthlypremiumchargedbytheissuerforeachpolicyundertheplanwhereenrollmentisthroughanFFEorSBE–FP.
Inthisfinalrule,forthe2020benefityear,wefinalizeanFFEuserfeerateof3.
0percentofthemonthlypremium,andSBE–FPuserfeerateof2.
5percentofthemonthlypremium.
WeestimatesimilarFFEandSBE–FPuserfeetransfersasthoseestimatedforpriorbenefityears,andtherefore,wefinalizednochangestotransfersfromissuerstothefederalgovernmentduetothefinalizedlowerFFEandSBE–FPuserfeerates.
10.
ProhibitiononDiscrimination(§156.
125)Inthepreambleto§156.
125,wediscussapotentiallydiscriminatorybenefitdesignunder§156.
125:theexclusionofMATdrugsforthetreatmentofopioidusedisorderwhilecoveringthesamedrugsforothermedicallynecessarypurposes,suchasanalgesiaoralcoholusedisorder.
Becausewedidnotproposeachangetothispolicy,wedonotanticipateanyadditionalburdenonstatesorissuers.
However,totheextentthisclarificationcausesissuerstoceaseprohibiteddiscriminatorypractices,theclarificationcouldhelpconsumersobtainneededMAT,leadtobetterhealthoutcomes,andreducetheburdenandout-of-pocketcostsindividualsmayhaveotherwiseincurredinattemptstoobtainMAT.
11.
ProvisionsRelatedtoCost-Sharing(§156.
130)Wearefinalizingapremiumadjustmentpercentageof1.
2895211380forthe2020benefityear.
TheannualpremiumadjustmentpercentageisusedtosettherateofincreaseforseveralparametersdetailedinthePPACA,including:theannuallimitationoncostsharing(definedat§156.
130(a)),therequiredcontributionpercentageusedtodetermineeligibilityforcertainexemptionsundersection5000AoftheCode(definedat§155.
605(d)(2)),andtheemployersharedresponsibilitypaymentsundersections4980H(a)and4980H(b)oftheCode.
Additionally,wefinalizedothercost-sharingparametersusinganindexbasedonthefinalpremiumadjustmentpercentageforthe2020benefityear.
In§155.
605(d)(2),wearefinalizingarequiredcontributionof8.
24percentforthe2020benefityear,whichreflectsthepremiumadjustmentpercentagecalculationforthe2020benefityeardetailedinpreamble.
206In§156.
130(a)(2),wearefinalizingamaximumannuallimitationoncostsharingof$8,150forself-onlycoverage,and$16,300forotherthanself-onlycoverage.
TheCMSOfficeoftheActuaryestimatesthattheproposedchangeinmethodologyforthecalculationofthepremiumadjustmentpercentagemayhavethefollowingimpactsbetween2019and2023:207TABLE14—IMPACTSOFMODIFICATIONSTOTHE2020BENEFITYEARPREMIUMADJUSTMENTPERCENTAGECalendaryear20192020202120222023ExchangeEnrollmentImpact(enrollees,thousands)N/A70707070PremiumImpacts:GrossPremiumImpact(changefrom2018,N/A0%0%0%0%NetPremiumImpact(changefrom2018,N/A1%1%1%1%FederalImpacts(dollars,millions):PremiumTaxCredits(million,N/A9801,0401,0901,150HealthInsuranceProvidersFeeImpact(million,N/A50707070EmployerSharedResponsibilityPaymentImpact(mil-lion,N/A100110110110TotalFederalImpact(million,1,1301,2201,2701,330*Note:WhilethepremiumtaxcreditimpactfiguresarenegativetosignifyreductionsinFederaloutlays,andtheHealthInsuranceProvidersFeeandtheemployersharedresponsibilitypaymentfiguresarepositivetosignifyincreasedrevenuetotheFederalgovernment,theyaretotaledtogethertoindicatesavingsfortheFederalgovernment.
AsnotedinTable14,weexpectthattheproposedchangeinmeasureofpremiumgrowthusedtocalculatethepremiumadjustmentpercentageforthe2020benefityearmayresultin:Netpremiumincreasesofapproximately$181millionperyear,whichisapproximatelyonepercentof2018benefityearnetpremiums,forthe2020through2023benefityears.
NetpremiumsarecalculatedforExchangeenrolleesaspremiumchargedbyissuersminusAPTC.
Grosspremiumswillbevirtuallyunchanged.
AdecreaseinfederalPTCspendingof$980millionto$1.
15billionbetween2020and2023,duetoanincreaseinthePTCapplicablepercentageandadeclineinExchangeenrollmentofapproximately70,000individualsineachbenefityear,basedonanassumptionthattheDepartmentoftheTreasuryandtheIRSwilladopttheuseofthesamepremiummeasureproposedforthecalculationofthepremiumadjustmentpercentageinthisfinalruleforpurposesofcalculatingtheindexingofthePTCapplicablepercentageandtherequiredcontributionpercentageundersection36BoftheCode.
IncreasedHealthInsuranceProvidersFeesonhealthinsuranceissuersofapproximately$50millionin2020,and$70millioninyears2021to2023,basedonanassumptionthattheDepartmentoftheTreasuryandtheIRSwilladopttheuseofthesamepremiummeasureproposedforthecalculationofthepremiumadjustmentpercentageinthisfinalruleforpurposesofcalculatingtheindexingoftheHealthInsuranceProvidersFee.
VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00105Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217558FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations208Manning,W.
G.
,Newhouse,J.
P.
,Duan,N.
,Keeler,E.
B.
,&Leibowitz,A.
(1987).
Healthinsuranceandthedemandformedicalcare:evidencefromarandomizedexperiment.
TheAmericaneconomicreview,251–277;Keeler,E.
B.
,&Rolph,J.
E.
(1988).
Thedemandforepisodesoftreatmentinthehealthinsuranceexperiment.
Journalofhealtheconomics,7(4),337–367;Finkelstein,A.
,etal.
(2012).
TheOregonhealthinsuranceexperiment:evidencefromthefirstyear.
TheQuarterlyjournalofeconomics,127(3),1057–1106.
209https://www.
bls.
gov/oes/current/oes_nat.
htm.
IncreasedEmployerSharedResponsibilityPaymentsof$100millionin2020,and$110millioneachyearbetween2021and2023.
Comment:Onecommenter,citingtheCenteronBudgetandPolicyPriorities,suggeststheproposalwouldreducepremiumtaxcreditsformillionsofconsumers.
Forexample,afamilyoffourwithanannualincomeof$90,000wouldpay$220morefortheircoverage(theeffectwouldbesmallerforpremiumtaxcreditrecipientswithlowerhouseholdincomes).
Thecommenternotedthatthesechangeswouldalsomeanmorepeoplewouldbeconsideredtohavean''affordable''offerofemployercoverage,andtherefore,wouldbeineligibleforthepremiumtaxcredit.
Thesechangeswouldreducetheoverallaffordabilityofcoverageandthenumberofpeoplecovered.
Response:Asstatedelsewhereinthisrule,whileweacknowledgetheimpactofthedecreaseinpremiumtaxcredits,webelievethisisatechnicaladjustmenttoreflectpremiumgrowthintheentireindividualmarket.
Moreover,thebenefitsduetothedecreaseinfederalexpendituresoutweighthoseconcernsandwillbeultimatelybeneficialtotaxpayers.
Furthermore,wenotethatthe2020requiredcontributionpercentageislowerthanthe2019requiredcontributionpercentageunderthefinalizedmethodformeasuringpremiumgrowth.
Someofthe70,000individualsestimatedtonotenrollinExchangecoverageeachyearasaresultoftheproposedchangeinthemeasureofpremiumgrowthusedtocalculatethepremiumadjustmentpercentagemaypurchaseshort-term,limited-durationinsuranceorjoinaspouse'splan,thoughamajorityislikelytobecomeuninsured.
Eithertransitionmayresultingreaterexposuretohealthcarecosts,whichpreviousresearchsuggestsreducesutilizationofhealthcareservices.
208Economicdistortionsmaybereduced,andeconomicefficiencyandsocialbenefitsimproved,becausetheseindividualswillbebearingalargershareofthecostsoftheirownhealthcareconsumption,potentiallyreducingspendingonhealthcareservicesthatarepersonallyonlymarginallyvaluedbutthatimposescostsonthefederalgovernmentthroughsubsidies.
Inaddition,totheextentthatthisfinalrulereducesfederaloutlaysandtherebyreducestheneedtocollecttaxesinthefuture,thedistortionaryeffectsoftaxationontheeconomymaybereduced.
However,theincreasednumberofuninsuredmayincreasefederalandstateuncompensatedcarecosts.
Asnotedinthisrule,thepremiumadjustmentpercentageisthemeasureofpremiumgrowththatisusedtosettherateofincreaseforthemaximumannuallimitationoncostsharing,definedat§156.
130(a).
In§156.
130(a)(2),weproposedamaximumannuallimitationoncostsharingof$8,200forself-onlycoverage.
Wearefinalizingamaximumannuallimitationoncostsharingof$8,150.
Additionally,weproposedandarefinalizingreductionsinthemaximumannuallimitationoncostsharingforsilverplanvariations.
ConsistentwithouranalysesinpreviousPaymentNotices,wedevelopedthreetestsilverlevelQHPsandanalyzedtheimpactontheirAVsofthereductionsdescribedinthePPACAtotheestimated2020maximumannuallimitationoncostsharingforself-onlycoverage.
Wedonotbelievethefinalizedchangestothereductionsinthemaximumannuallimitationoncostsharingforsilverplanvariationswillresultinasignificanteconomicimpact.
12.
RegulatoryReviewCostsIfregulationsimposeadministrativecostsonprivateentities,suchasthetimeneededtoreadandinterpretthisfinalrule,weshouldestimatethecostassociatedwithregulatoryreview.
Duetotheuncertaintyinvolvedwithaccuratelyquantifyingthenumberofentitiesthatwillreviewthefinalrule,weassumethatthetotalnumberofuniquecommentersontheproposedrulewillbethenumberofreviewersofthisfinalrule.
Weacknowledgethatthisassumptionmayunderstateoroverstatetheproposedruleindetail,anditisalsopossiblethatsomereviewerschosenottocommentontherule.
Forthesereasonswethoughtthatthenumberofpastcommenterswillbeafairestimateofthenumberofreviewersofthisfinalrule.
Wearerequiredtoissueasubstantialportionofthisfinalruleeachyearunderourregulationsandweestimatethatapproximatelyhalfoftheremainingprovisionswillcauseadditionalregulatoryreviewburdenthatstakeholdersdonotalreadyanticipate.
Wealsorecognizethatdifferenttypesofentitiesareinmanycasesaffectedbymutuallyexclusivesectionsofthisfinalrule,andtherefore,forthepurposesofourestimateweassumethateachreviewerreadsapproximately50percentoftherule,excludingtheportionoftherulethatwearerequiredtoissueeachyear.
UsingthewageinformationfromtheBLSformedicalandhealthservicemanagers(Code11–9111),weestimatethatthecostofreviewingthisfinalruleis$107.
38perhour,includingoverheadandfringebenefits.
209Wereceived26,129commentsontheproposedrule,ofwhich497commentswereuniqueand25,632commentsweresubstantiallysimilartooneofeightdifferentletters.
Weassumethatforformletters,onlythestaffattheorganizationthatarrangedforthoseletterswillreviewthefinalrule.
Assuminganaveragereadingspeed,weestimatethatitwouldtakeapproximately1hourforthestafftoreviewtherelevantportionsofthisfinalrulethatcausesunanticipatedburden.
Weassumethat497entitieswillreviewthisfinalrule.
Foreachentitythatreviewstherule,theestimatedacostofapproximately$107.
38.
Therefore,weestimatethatthetotalcostofreviewingthisregulationisapproximately$53,368($107.
38*497reviewers).
D.
RegulatoryAlternativesConsideredIndevelopingthepoliciescontainedinthisfinalrule,weconsiderednumerousalternativestothepresentedproposals.
Inthisrule,wediscussthekeyregulatoryalternativestothefinalizedprovisionsthatweconsidered.
Inproposingtheriskadjustmentmodelrecalibrationinpart153,weconsideredmultiplealternativessuchasmaintainingtheprioryear'srecalibrationmethodologyofrecalibratingthemodelsusing2yearsofMarketScandataandthemostrecentyearofEDGEdata.
WealsoconsideredrecalibratingthemodelsusingthemostrecentyearofMarketScandataavailable(2017)andthe2mostrecentyearsofenrollee-levelEDGEdata(2016and2017).
However,wearefinalizingrecalibrationofthemodelsusing3yearsofblendeddatafromthefollowingsources:the2mostrecentyearsofenrollee-levelEDGEdata(2016and2017)availableand2015MarketScandata.
Regardingproposedchangesto§§155.
210and155.
215,weconsideredtakingnoactiontoamendcertainNavigatortrainingrequirementsandduties,butdeterminedthattheproposedchangesregardingtrainingrequirementswillprovideExchangesVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00106Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217559FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationswithneededflexibility,andtheproposedchangesregardingdutiesofFFENavigatorswillhelpreduceburdenonFFENavigators.
Inproposingrevisionsto§155.
221,weconsideredmaintainingtheexistingregulatoryframeworkthatestablishedstandardsforissuersandweb-brokersparticipatingindirectenrollmentinseparatesections,butwebelievestreamliningandconsolidatingtherequirementsapplicabletoalldirectenrollmententities,whenpossible,improvesclarityandpromotesfaircompetition.
Forthedisplayrequirementsat§155.
221(b),wecontemplatedmaintainingthecurrentstandardsinregulationsandguidance,butbasedonfeedbackreceivedfromdirectenrollmententities,webelievethecurrentframeworkmayhavecausedconfusionandlimitedinnovation.
Therefore,wedeterminedthattheestablishmentofclarifiedstandardsforthemarketinganddisplayofQHPsandnon-QHPsisthebestwaytoprovidegreaterclarityfordirectenrollmententitiesaboutwhatisrequiredtominimizethepotentialforconsumerconfusion,whileallowingdirectenrollmententitiesmoreflexibilitytobeinnovativeinthemarketingofnon-QHPstoconsumerswhoareinterestedinthoseproducts.
Fortheadditionofanew§155.
221(c),weconsideredcontinuingtolimittheauthoritytouseapplicationassisterstoQHPissuers.
However,topromotefaircompetitionforalldirectenrollmententitiesandissuers,webelieveabetterapproachistoexpandthisauthoritytoincludealldirectenrollmententitiesandallissuers.
Inproposingrevisionsto§155.
420governingExchangespecialenrollmentperiods,weconsideredbroadereligibilityrequirementsforthespecialenrollmentperiodproposedat§155.
420(d)(6)(v).
WeconsideredifaspecialenrollmentperiodcouldbeofferedwithoutadecreaseinhouseholdincometoallExchangeapplicantswhowereenrolledinMECanddeterminedeligibleforAPTCbytheExchange,orifchangesintheapplicant'shouseholdsizecouldbeconsideredintheeligibilitycriteriaforthisspecialenrollmentperiod.
WedeterminedthateliminatingthecriteriaforadecreaseinhouseholdincomewillbeproblematicbecauseiteliminatesatriggeringeventforthespecialenrollmentperiodandcouldallowforconsumerswhoarepotentiallyAPTC-eligibletoavoidthemetallevelrestrictionsinparagraph(a)(4)ofthissectionbyinitiallyenrollinginoff-Exchangecoverageandthenlaterchoosingtobuyahigherorlowerlevelofcoveragemid-year.
Wealsodeterminedthatverificationofhouseholdsizechangeswillbeoperationallyproblematic,aselectronicdatasourceswillnotreflectrecentchangestohouseholdsize.
Further,thespecialenrollmentperiodsat§155.
420(d)(2)(i)arecurrentlyavailabletoqualifiedindividualswhosehouseholdsizechangesduetogainingorbecomingadependentandalreadyprovidesapathwaytoExchangecoverageforindividualsinthissituation.
Wealsoconsideredifthespecialenrollmentperiodproposedat§155.
420(d)(6)(v)couldbeofferedwithoutapriorcoveragerequirementanddeterminedthatthisrequirementisnecessarytoensurethespecialenrollmentperiodisonlyavailabletotheintendedpopulation,topromotecontinuouscoverageamongindividualmarketenrollees,andtoprotecttheindividualmarketriskpoolsagainstadverseselection.
Finallyweconsideredtheimpactofnotproposingthisspecialenrollmentperiod.
Withouttheproposedspecialenrollmentperiodat§155.
420(d)(6)(v),unsubsidizedoff-ExchangeconsumerswhoexperienceadecreaseinhouseholdincomemidyearandaredeterminedAPTCeligiblewillremainwithoutapathwaytoExchangecoverage.
Theseconsumerswillremainatriskofterminatingtheirunsubsidizedcoveragemidyearbecauseitisunaffordable,ratherthanmaintainingcontinuousenrollmentinhealthcoveragebytransitioningtoanExchangeplan.
Regardingtheproposedchangeto§155.
605(e)toallowconsumerstoclaimallgeneralhardshipexemptionsthroughthefederaltaxfilingprocessforthe2018taxyear,weconsideredthatwithouttherecommendedrevisionsto§155.
605(e),individualsmayexperienceageneralhardshipthatpreventsthemfromobtainingqualifyinghealthcoverage,andmayexperienceundueburdentoapplyandqualifyforanexemptionfromtheindividualsharedresponsibilityprovision.
ThischangeallowsformoreflexibilityforindividualstoclaimtheseexemptionsthroughtheIRStaxfilingprocessforthe2018taxyear.
Wearefinalizingourproposedchangetothepremiummeasureusedinthepremiumadjustmentpercentagecalculationunder§156.
130touseaprivatehealthinsurancepremiummeasure(excludingMedigapandpropertyandcasualtyinsurance)inadditiontoemployersponsoredhealthinsurancepremiums.
However,weconsideredotheralternativestothefinalpremiummeasureandmethodologyforcalculatingthepremiumadjustmentpercentageforthe2020benefityear.
Weconsideredfinalizingourproposedmethodwithagradualphase-in.
Wealsoconsideredmaintainingourpreviousprocessofusingemployer-sponsoredinsurancepremiumamounts.
Inaddition,weconsideredusingNHEAestimatesandprojectionsofprivatehealthinsurancepremiummeasure,whichincludespremiumsforemployer-sponsoredinsurance,directpurchaseinsurance(whichincludesMedigapinsurance),andpropertyandcasualtyinsurance.
However,weultimatelydecidednottoproposeorfinalizetheuseofaprivatehealthinsurancemeasurethatincludedMedigapinsurancebecausewebelieveditwasinappropriatetoincludeMedigappremiumsinthemeasureasthistypeofcoverageisnotconsideredprimarycoverageforthoseenrolleeswhosupplementtheirMedicarecoveragewiththeseplans.
Moreover,althoughtotalspendingforprivatehealthinsuranceintheNHEAsincludesthemedicalportionofaccidentinsurance(propertyandcasualtyinsurance),wedidnotbelieveitwouldbeappropriatetoincludethoseexpendituresforthispurposeastheyareassociatedwithpoliciesthatdonotserveasaprimarysourceofhealthinsurancecoverage.
Forthereasonsexplainedinmoredetailinthepreamblefor§156.
130,weultimatelydecidedtofinalizetheproposalasproposed.
At§156.
130wealsoproposedthatplansnotberequiredtocountdrugmanufacturercouponstowardtheannuallimitationoncostsharing,startingwithplanyearsbeginningonorafterJanuary1,2020.
Weconsiderednotproposingthisflexibility,asthesecouponsmayresultinlowercoststoindividualconsumers.
However,manufacturercouponsmayincentivizeselectionofhigher-costdrugswhenalesscostlytherapeuticequivalentisavailablewhichcandistortthemarketandthetruecostsofdrugs,addingsignificantlong-termcoststothehealthcaresystem.
E.
RegulatoryFlexibilityActTheRegulatoryFlexibilityAct,(5U.
S.
C.
601,etseq.
),requiresagenciestoprepareaninitialregulatoryflexibilityanalysistodescribetheimpactoftheruleonsmallentities,unlesstheheadoftheagencycancertifythattherulewillnothaveasignificanteconomicimpactonasubstantialnumberofsmallentities.
TheRFAgenerallydefinesa''smallentity''as(1)aproprietaryfirmmeetingthesizestandardsoftheSmallBusinessAdministration(SBA),(2)anot-for-profitorganizationthatisnotdominantinitsfield,or(3)asmallVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00107Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217560FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations210https://www.
sba.
gov/document/support—table-size-standards.
211Availableathttps://www.
cms.
gov/CCIIO/Resources/Data-Resources/mlr.
html.
212Weestimatecostsavingsofapproximately$14.
3millionin2019andannualcostsavingofapproximately$14millionthereafter.
Thustheannualizedvalueofcostsavings,asof2016andcalculatedoveraperpetualtimehorizonwitha7percentdiscountrate,is$8.
51million.
governmentjurisdictionwithapopulationoflessthan50,000.
Statesandindividualsarenotincludedinthedefinitionof''smallentity.
''HHSusesachangeinrevenuesofmorethan3to5percentasitsmeasureofsignificanteconomicimpactonasubstantialnumberofsmallentities.
Inthisfinalrule,thestandardsfortheriskadjustmentandriskadjustmentdatavalidationprogramsareintendedtostabilizepremiums.
Becausewebelievethatinsurancefirmsofferingcomprehensivehealthinsurancepoliciesgenerallyexceedthesizethresholdsfor''smallentities''establishedbytheSBA,wedonotbelievethataninitialregulatoryflexibilityanalysisisrequiredforsuchfirms.
WebelievethathealthinsuranceissuersandgrouphealthplanswouldbeclassifiedundertheNorthAmericanIndustryClassificationSystemcode524114(DirectHealthandMedicalInsuranceCarriers).
AccordingtoSBAsizestandards,entitieswithaverageannualreceiptsof$38.
5millionorlesswouldbeconsideredsmallentitiesfortheseNorthAmericanIndustryClassificationSystemcodes.
Issuerscouldpossiblybeclassifiedin621491(HMOMedicalCenters)and,ifthisisthecase,theSBAsizestandardwouldbe$32.
5millionorless.
210Webelievethatfew,ifany,insurancecompaniesunderwritingcomprehensivehealthinsurancepolicies(incontrast,forexample,totravelinsurancepoliciesordentaldiscountpolicies)fallbelowthesesizethresholds.
BasedondatafromMLRannualreport211submissionsforthe2016MLRreportingyear,approximately85outofover520issuersofhealthinsurancecoveragenationwidehadtotalpremiumrevenueof$38.
5millionorless.
Thisestimatemayoverstatetheactualnumberofsmallhealthinsurancecompaniesthatmaybeaffected,sincealmost79percentofthesesmallcompaniesbelongtolargerholdinggroups,andmanyifnotallofthesesmallcompaniesarelikelytohavenon-healthlinesofbusinessthatwillresultintheirrevenuesexceeding$38.
5million.
Inaddition,section1102(b)oftheActrequiresustopreparearegulatoryimpactanalysisifarulemayhaveasignificantimpactontheoperationsofasubstantialnumberofsmallruralhospitals.
Thisanalysismustconformtotheprovisionsofsection604oftheRFA.
Forpurposesofsection1102(b)oftheAct,wedefineasmallruralhospitalasahospitalthatislocatedoutsideofametropolitanstatisticalareaandhasfewerthan100beds.
Thisfinalrulewillnotaffectsmallruralhospitals.
Therefore,theSecretaryhasdeterminedthatthiswillnothaveasignificantimpactontheoperationsofasubstantialnumberofsmallruralhospitals.
F.
UnfundedMandatesSection202oftheUnfundedMandatesReformActof1995(UMRA)requiresthatagenciesassessanticipatedcostsandbenefitsandtakecertainotheractionsbeforeissuingarulethatincludesanyfederalmandatethatmayresultinexpendituresinany1yearbyastate,local,orTribalgovernments,intheaggregate,orbytheprivatesector,of$100millionin1995dollars,updatedannuallyforinflation.
In2019,thatthresholdisapproximately$154million.
Althoughwehavenotbeenabletoquantifyallcosts,weexpectthecombinedimpactonstate,local,orTribalgovernmentsandtheprivatesectortobebelowthethreshold.
G.
FederalismExecutiveOrder13132establishescertainrequirementsthatanagencymustmeetwhenitissuesarulethatimposessubstantialdirectcostsonstateandlocalgovernments,preemptsstatelaw,orotherwisehasFederalismimplications.
IncompliancewiththerequirementofExecutiveOrder13132thatagenciesexaminecloselyanypoliciesthatmayhaveFederalismimplicationsorlimitthepolicymakingdiscretionofthestates,wehaveengagedineffortstoconsultwithandworkcooperativelywithaffectedstates,includingparticipatinginconferencecallswithandattendingconferencesoftheNationalAssociationofInsuranceCommissioners,andconsultingwithstateinsuranceofficialsonanindividualbasis.
Whiledevelopingthisfinalrule,weattemptedtobalancethestates'interestsinregulatinghealthinsuranceissuerswiththeneedtoensuremarketstability.
Bydoingso,itisourviewthatwehavecompliedwiththerequirementsofExecutiveOrder13132.
BecausestateshaveflexibilityindesigningtheirExchangeandExchange-relatedprograms,statedecisionswillultimatelyinfluencebothadministrativeexpensesandoverallpremiums.
StatesarenotrequiredtoestablishanExchangeorriskadjustmentprogram.
ForstatesthatelectedpreviouslytooperateanExchange,orriskadjustmentprogram,muchoftheinitialcostofcreatingtheseprogramswasfundedbyExchangePlanningandEstablishmentGrants.
Afterestablishment,Exchangesmustbefinanciallyself-sustaining,withrevenuesourcesatthediscretionofthestate.
CurrentStateExchangeschargeuserfeestoissuers.
Inourview,whilethisfinalrulewillnotimposesubstantialdirectrequirementcostsonstateandlocalgovernments,thisregulationhasFederalismimplicationsbecauseitfinalizesachangetotheAlabamariskadjustmentprograminthesmallgroupmarketbaseduponaproposalprovidedbythestate.
Wealsoproposedtomakethespecialenrollmentperiodat§155.
420(d)(6)(v)attheoptionofExchanges,togivestatesflexibilityinwhethertheychoosetoimplementit.
H.
CongressionalReviewActThisfinalruleissubjecttotheCongressionalReviewActprovisionsoftheSmallBusinessRegulatoryEnforcementFairnessActof1996(5U.
S.
C.
801,etseq.
),whichspecifiesthatbeforearulecantakeeffect,thefederalagencypromulgatingtheruleshallsubmittoeachHouseofCongressandtotheComptrollerGeneralareportcontainingacopyoftherulealongwithotherspecifiedinformation,andhasbeentransmittedtoCongressandtheComptrollerforreview.
I.
ReducingRegulationandControllingRegulatoryCostsExecutiveOrder13771,titledReducingRegulationandControllingRegulatoryCosts,wasissuedonJanuary30,2017.
Section2(a)ofExecutiveOrder13771requiresanagency,unlessprohibitedbylaw,toidentifyatleasttwoexistingregulationstoberepealedwhentheagencypubliclyproposesfornoticeandcomment,orotherwiseissues,anewregulation.
Infurtheranceofthisrequirement,section2(c)ofExecutiveOrder13771requiresthatthenewincrementalcostsassociatedwithnewregulationsshall,totheextentpermittedbylaw,beoffsetbytheeliminationofexistingcostsassociatedwithatleasttwopriorregulations.
ThisfinalruleisanE.
O.
13771deregulatoryaction.
212J.
ConclusionTheanalysisinthisrule,togetherwiththeremainderofthispreamble,providesaRegulatoryImpactAnalysis.
InaccordancewiththeprovisionsofExecutiveOrder12866,thisregulationVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00108Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217561FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationswasreviewedbytheOfficeofManagementandBudget.
ListofSubjects45CFRPart146Healthcare,Healthinsurance,Reportingandrecordkeepingrequirements.
45CFRPart147Healthcare,Healthinsurance,Reportingandrecordkeepingrequirements.
45CFRPart148Administrativepracticeandprocedure,Healthcare,Healthinsurance,Insurancecompanies,Penalties,Reportingandrecordkeepingrequirements.
45CFRPart153Administrativepracticeandprocedure,Healthcare,Healthinsurance,Healthrecords,Intergovernmentalrelations,Organizationandfunctions(Governmentagencies),Reportingandrecordkeepingrequirements.
45CFRPart155Administrativepracticeandprocedure,Advertising,Brokers,Conflictofinterests,Consumerprotection,Grantsadministration,Grantprograms—health,Healthcare,Healthinsurance,Healthmaintenanceorganizations(HMO),Healthrecords,Hospitals,Indians,Individualswithdisabilities,Intergovernmentalrelations,Loanprograms—health,Medicaid,Organizationandfunctions(Governmentagencies),Publicassistanceprograms,Reportingandrecordkeepingrequirements,Technicalassistance,Womenandyouth.
45CFRPart156Administrativepracticeandprocedure,Advertising,Advisorycommittees,Brokers,Conflictofinterests,Consumerprotection,Grantprograms—health,Grantsadministration,Healthcare,Healthinsurance,Healthmaintenanceorganization(HMO),Healthrecords,Hospitals,Indians,Individualswithdisabilities,Loanprograms—health,Medicaid,Organizationandfunctions(Governmentagencies),Publicassistanceprograms,Reportingandrecordkeepingrequirements,Stateandlocalgovernments,SunshineAct,Technicalassistance,Women,Youth.
Forthereasonssetforthinthepreamble,undertheauthorityat5U.
S.
C.
301,theDepartmentofHealthandHumanServicesamends45CFRassetforthbelow.
PART146—REQUIREMENTSFORTHEGROUPHEALTHINSURANCEMARKET1.
Theauthoritycitationforpart146continuestoreadasfollows:Authority:42U.
S.
C.
300gg–1through300gg–5,300gg–11through300gg–23,300gg–91,and300-gg–92.
2.
Section146.
152isamendedbyrevisingparagraph(a)toreadasfollows:§146.
152Guaranteedrenewabilityofcoverageforemployersinthegroupmarket.
(a)Generalrule.
Subjecttoparagraphs(b)through(f)ofthissection,ahealthinsuranceissuerofferinghealthinsurancecoverageinthesmallorlargegroupmarketisrequiredtoreneworcontinueinforcethecoverageattheoptionoftheplansponsorortheindividual,asapplicable.
PART147—HEALTHINSURANCEREFORMREQUIREMENTSFORTHEGROUPANDINDIVIDUALHEALTHINSURANCEMARKETS3.
Theauthoritycitationforpart147continuestoreadasfollows:Authority:42U.
S.
C.
300ggthrough300gg–63,300gg–91,and300gg–92asamended.
4.
Section147.
106isamendedbyrevisingparagraph(a)toreadasfollows:§147.
106Guaranteedrenewabilityofcoverage.
(a)Generalrule.
Subjecttoparagraphs(b)through(e)ofthissection,ahealthinsuranceissuerofferinghealthinsurancecoverageintheindividual,smallgroup,orlargegroupmarketisrequiredtoreneworcontinueinforcethecoverageattheoptionoftheplansponsorortheindividual,asapplicable.
PART148—REQUIREMENTSFORTHEINDIVIDUALHEALTHINSURANCEMARKET5.
Theauthoritycitationforpart148isrevisedtoreadasfollows:Authority:42U.
S.
C.
300ggthrough300gg–63,300gg–11300gg–91,and300–gg92,asamended.
6.
Section148.
122isamendedbyrevisingparagraph(b)(1)toreadasfollows:§148.
122Guaranteedrenewabilityofindividualhealthinsurancecoverage.
(b)***(1)Exceptasprovidedinparagraphs(c)through(g)ofthissection,anissuermustreneworcontinueinforcethecoverageattheoptionoftheindividual.
PART153—STANDARDSRELATEDTOREINSURANCE,RISKCORRIDORS,ANDRISKADJUSTMENTUNDERTHEAFFORDABLECAREACT7.
Theauthoritycitationforpart153isrevisedtoreadasfollows:Authority:42U.
S.
C.
18031,18041,and18061through18063.
8.
Section153.
20isamendedbyrevisingthedefinitionof''Riskadjustmentcoveredplan''toreadasfollows:§153.
20Definitions.
Riskadjustmentcoveredplanmeans,forthepurposeoftheriskadjustmentprogram,anyhealthinsurancecoverageofferedintheindividualorsmallgroupmarketwiththeexceptionofgrandfatheredhealthplans,grouphealthinsurancecoveragedescribedin§146.
145(b)ofthissubchapter,individualhealthinsurancecoveragedescribedin§148.
220ofthissubchapter,andanyplandeterminednottobeariskadjustmentcoveredplanintheapplicableFederallycertifiedriskadjustmentmethodology.
9.
Section153.
320isamendedbyrevisingparagraph(d)toreadasfollows:§153.
320Federallycertifiedriskadjustmentmethodology.
(d)Stateflexibilitytorequestreductionstotransfers.
Beginningwiththe2020benefityear,StatescanrequesttoreduceriskadjustmenttransfersintheState'sindividualcatastrophic,individualnon-catastrophic,smallgroup,ormergedmarketsriskpoolsbyupto50percentinStateswhereHHSoperatestheriskadjustmentprogram.
(1)Staterequests.
Staterequestsforareductiontotransfersmustinclude:(i)SupportingevidenceandanalysisdemonstratingtheState-specificfactorsthatwarrantanadjustmenttomorepreciselyaccountforthedifferencesinactuarialriskintheStatemarketriskpool;(ii)Theadjustmentpercentageofupto50percentrequestedfortheStateindividualcatastrophic,individualnon-catastrophic,smallgroup,ormergedmarketriskpool;and(iii)AjustificationforthereductionrequesteddemonstratingtheState-specificfactorsthatwarrantanadjustmenttomorepreciselyaccountVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00109Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217562FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsforrelativeriskdifferencesintheStateindividualcatastrophic,individualnon-catastrophic,smallgroup,ormergedmarketriskpool,ordemonstratingtherequestedreductionwouldhavedeminimisimpactonthenecessarypremiumincreasetocoverthetransfersforissuersthatwouldreceivereducedtransferpayments.
(2)Timeframetosubmitreductionrequests.
Statesmustsubmitrequestsforareductiontotransfersintheindividualcatastrophic,individualnon-catastrophic,smallgroup,ormergedmarketriskpoolbyAugust1ofthebenefityearthatis2calendaryearspriortotheapplicablebenefityear,intheformandmannerspecifiedbyHHS.
(3)Publicationofreductionrequests.
HHSwillpublishStatereductionrequestsintheapplicablebenefityear'sHHSnoticeofbenefitandpaymentparametersruleandmakethesupportingevidenceavailabletothepublicforcomment,excepttotheextenttheStaterequestsHHSnotpublishcertainsupportingevidencebecauseitcontainstradesecretsorconfidentialcommercialorfinancialinformationasdefinedinHHS'FreedomofInformationregulationsunder45CFR5.
31(d).
HHSwillpublishanyapprovedordeniedStatereductionrequestsintheapplicablebenefityear'sHHSnoticeofbenefitandpaymentparametersfinalrule.
(4)HHSapproval.
(i)Subjecttoparagraph(d)(4)(ii)ofthissection,HHSwillapproveStatereductionrequestsifHHSdetermines,basedonthereviewoftheinformationsubmittedaspartoftheState'srequest,alongwithotherrelevantfactors,includingthepremiumimpactofthetransferreductionfortheStatemarketriskpool,andrelevantpubliccomments:(A)ThatState-specificrulesorotherrelevantfactorswarrantanadjustmenttomorepreciselyaccountforrelativeriskdifferencesintheState'sindividualcatastrophic,individualnon-catastrophic,smallgroup,ormergedmarketriskpoolandsupportthepercentagereductiontoriskadjustmenttransfersrequested;or(B)ThatState-specificrulesorotherrelevantfactorswarrantanadjustmenttomorepreciselyaccountforrelativeriskdifferencesintheState'sindividualcatastrophic,individualnon-catastrophic,smallgroup,ormergedmarketriskpoolandtherequestedreductionwouldhavedeminimisimpactonthenecessarypremiumincreasetocoverthetransfersforissuersthatwouldreceivereducedtransferpayments.
(ii)HHSmayapproveareductionamountthatislowerthantheamountrequestedbytheStateifthesupportingevidenceandanalysisdonotfullysupporttherequestedreductionamount.
HHSwillassessotherrelevantfactors,includingthepremiumimpactofthetransferreductionfortheapplicableStatemarketriskpool.
10.
Section153.
630isamendedby—a.
Revisingparagraphs(b)(10)and(d)(2);andb.
Addingparagraph(g)Therevisionsandadditionreadasfollows:§153.
630DatavalidationrequirementswhenHHSoperatesriskadjustment.
(b)***(10)IfanissuerofariskadjustmentcoveredplanfailstoengageaninitialvalidationauditorortosubmittheresultsofaninitialvalidationaudittoHHS,HHSwillimposeadefaultdatavalidationcharge.
(d)***(2)Within30calendardaysofthenotificationbyHHSofthefindingsofasecondvalidationaudit(ifapplicable)orthecalculationofariskscoreerrorrate,inthemannersetforthbyHHS,anissuermustconfirmthefindingsofthesecondvalidationaudit(ifapplicable)orthecalculationoftheriskscoreerrorrateasaresultofriskadjustmentdatavalidation,orfileadiscrepancyreporttodisputethefindingsofasecondvalidationaudit(ifapplicable)orthecalculationofariskscoreerrorrateasaresultofriskadjustmentdatavalidation.
(g)Exemptions.
AnissuerofariskadjustmentcoveredplanwillbeexemptedbyHHSfromthedatavalidationrequirementsetforthinparagraph(b)ofthissectionforagivenbenefityearif:(1)Theissuerhas500orfewerbillablemembermonthsofenrollmentintheindividual,smallgroupandmergedmarkets(asapplicable)fortheapplicablebenefityear,calculatedonaStatewidebasis;(2)TheissuerisatorbelowthematerialitythresholdasdefinedbyHHSandisnotselectedbyHHStoparticipateinthedatavalidationrequirementsinanapplicablebenefityearunderrandomandtargetedsamplingconductedapproximatelyevery3years(barringanyrisk-basedtriggersbasedonexperiencethatwillwarrantmorefrequentaudits);or(3)Theissuerisinliquidation,orwillenterliquidationnolaterthanApril30thofthebenefityearthatis2benefityearsafterthebenefityearbeingaudited,providedthat:(i)TheissuerprovidestoHHS,inthemannerandtimeframespecifiedbyHHS,anattestationthattheissuerisinliquidationorwillenterliquidationnolaterthanApril30thofthebenefityearthatis2benefityearsafterthebenefityearbeingauditedthatissignedbyanindividualwiththeauthoritytolegallyandfinanciallybindtheissuer;and(ii)Theissuerisnotapositiveerrorrateoutlierundertheerrorestimationmethodologyinriskadjustmentdatavalidationforthepriorbenefityearofriskadjustmentdatavalidation.
(iii)Forpurposesofthisparagraph(g)(3),liquidationmeansthataStatecourthasissuedanorderofliquidationfortheissuerthatfixestherightsandliabilitiesoftheissueranditscreditors,policyholders,shareholders,members,andallotherpersonsofinterest.
PART155—EXCHANGEESTABLISHMENTSTANDARDSANDOTHERRELATEDSTANDARDSUNDERTHEAFFORDABLECAREACT11.
Theauthoritycitationforpart155isrevisedtoreadasfollows:Authority:42U.
S.
C.
18021–18024,18031–18033,18041–18042,18051,18054,18071,and18081–18083.
12.
Section155.
20isamendedbyaddingdefinitionsof''Directenrollmententity,''''Directenrollmententityapplicationassister,''''Directenrollmenttechnologyprovider,''and''Web-broker''toreadasfollows:§155.
20Definitions.
DirectenrollmententitymeansanentitythatanExchangepermitstoassistconsumerswithdirectenrollmentinqualifiedhealthplansofferedthroughtheExchangeinamannerconsideredtobethroughtheExchangeasauthorizedby§155.
220(c)(3),§155.
221,or§156.
1230ofthissubchapter.
Directenrollmententityapplicationassistermeansanemployee,contractor,oragentofadirectenrollmententitywhoisnotlicensedasanagent,broker,orproducerunderStatelawandwhoassistsindividualsintheindividualmarketwithapplyingforadeterminationorredeterminationofeligibilityforcoveragethroughtheExchangeorforinsuranceaffordabilityprograms.
Directenrollmenttechnologyprovidermeansatypeofweb-brokerbusinessentitythatisnotalicensedagent,broker,orproducerunderStatelawandhasbeenengagedorcreatedby,orisownedbyanagentorbroker,toprovidetechnologyservicestofacilitateVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00110Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217563FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsparticipationindirectenrollmentunder§§155.
220(c)(3)and155.
221.
Web-brokermeansanindividualagentorbroker,groupofagentsorbrokers,orbusinessentityregisteredwithanExchangeunder§155.
220(d)(1)thatdevelopsandhostsanon-ExchangewebsitethatinterfaceswithanExchangetoassistconsumerswithdirectenrollmentinqualifiedhealthplansofferedthroughtheExchangeasdescribedin§§155.
220(c)(3)and155.
221.
Thetermalsoincludesadirectenrollmenttechnologyprovider.
13.
Section155.
205isamendedbyrevisingparagraph(a)toreadasfollows:§155.
205ConsumerassistancetoolsandprogramsofanExchange.
(a)Callcenter.
TheExchangemustprovideforoperationofatoll-freecallcenterthataddressestheneedsofconsumersrequestingassistanceandmeetstherequirementsoutlinedinparagraphs(c)(1),(2)(i),and(3)ofthissection,unlessitisanExchangedescribedinparagraphs(a)(1)or(2)ofthissection,inwhichcase,theExchangemustprovideataminimumatoll-freetelephonehotlinethatincludesthecapabilitytoprovideinformationtoconsumersabouteligibilityandenrollmentprocesses,andtoappropriatelydirectconsumerstotheapplicableExchangewebsiteandotherapplicableresources.
(1)AnExchangedescribedinthisparagraphisonethatentersintoaFederalplatformagreementthroughwhichitreliesonHHStooperateitseligibilityandenrollmentfunctions,asapplicable.
(2)AnExchangedescribedinthisparagraphisaSHOPthatdoesnotprovideforenrollmentinSHOPcoveragethroughanonlineSHOPenrollmentplatform,butratherprovidesforenrollmentthroughSHOPissuersoragentsandbrokersregisteredwiththeExchange.
14.
Section155.
210isamendedby—a.
Revisingparagraphs(b)(2)introductorytext,(b)(2)(iii),and(iv);b.
Removingparagraphs(b)(2)(v)through(ix);andc.
Revisingparagraph(e)(9)introductorytext.
Therevisionsreadasfollows:§155.
210Navigatorprogramstandards.
(b)***(2)Asetoftrainingstandards,tobemetbyallentitiesandindividualscarryingoutNavigatorfunctionsunderthetermsofaNavigatorgrant,toensuretheentitiesandindividualsarequalifiedtoengageinNavigatoractivities,includingtrainingstandardsonthefollowingtopics:(iii)TherangeofQHPoptionsandinsuranceaffordabilityprograms;and(iv)Theprivacyandsecuritystandardsapplicableunder§155.
260.
(e)***(9)TheExchangemayrequireorauthorizeNavigatorstoprovideinformationandassistancewithanyofthefollowingtopics.
InFederally-facilitatedExchanges,NavigatorsarerequiredtoprovideinformationandassistancewithallofthefollowingtopicsunderNavigatorgrantsawardedin2018,andwillbeauthorizedtoprovideinformationandassistancewithallofthefollowingtopicsunderNavigatorgrantsawardedin2019oranylateryear.
15.
Section155.
215isamendedbyrevisingparagraph(b)(2)toreadasfollows:§155.
215StandardsapplicabletoNavigatorsandNon-NavigatorAssistancePersonnelcarryingoutconsumerassistancefunctionsunder§§155.
205(d)and(e)and155.
210inaFederally-facilitatedExchangeandtoNon-NavigatorAssistancePersonnelfundedthroughanExchangeEstablishmentGrant.
(b)***(2)Trainingmodulecontentstandards.
Allindividualswhocarryouttheconsumerassistancefunctionsunder§§155.
205(d)and(e)and155.
210mustreceivetrainingconsistentwithstandardsestablishedbytheExchangeconsistentwith§155.
210(b)(2).
16.
Section155.
220isamendedby—a.
Revisingthesectionheading;b.
Revisingparagraphs(a)introductorytext,(c)introductorytext,(c)(1),(c)(3)(i)introductorytextand(c)(3)(i)(A),(c)(3)(i)(K)and(L),(c)(3)(ii)introductorytext,(c)(4)introductorytext,(c)(4)(i)introductorytext,(c)(4)(i)(A),(c)(4)(i)(E),(c)(4)(i)(F),(c)(4)(ii),(c)(5),(d)introductorytext,(d)(2),(e),(f)(1),(f)(2),(f)(3)introductorytext,(f)(3)(i),(f)(4),(g)(1),(g)(2)introductorytext,(g)(2)(iii),(g)(2)(iv),(g)(3),(g)(4),(g)(5)(i),(g)(5)(ii),(g)(5)(iii),(h)(1),(h)(2),(h)(3),(i),(j)(1)introductorytext,(j)(3),(k)(1)introductorytext,(k)(2);c.
Addingparagraph(k)(3);d.
Revisingparagraph(l);ande.
Addingparagraph(m).
Theadditionsandrevisionsreadasfollows:§155.
220AbilityofStatestopermitagentsandbrokersandweb-brokerstoassistqualifiedindividuals,qualifiedemployers,orqualifiedemployeesenrollinginQHPs.
(a)Generalrule.
AStatemaypermitagents,brokers,andweb-brokersto—(c)EnrollmentthroughtheExchange.
AqualifiedindividualmaybeenrolledinaQHPthroughtheExchangewiththeassistanceofanagent,broker,orweb-brokerif—(1)Theagent,broker,orweb-brokerensurestheapplicant'scompletionofaneligibilityverificationandenrollmentapplicationthroughtheExchangeinternetwebsiteasdescribedin§155.
405,orensuresthattheeligibilityapplicationinformationissubmittedforaneligibilitydeterminationthroughtheExchange-approvedwebservicesubjecttomeetingtherequirementsinparagraphs(c)(3)(ii)and(c)(4)(i)(F)ofthissection;(3)(i)Whenaninternetwebsiteofaweb-brokerisusedtocompletetheQHPselection,ataminimumtheinternetwebsitemust:(A)DiscloseanddisplayallQHPinformationprovidedbytheExchangeordirectlybyQHPissuersconsistentwiththerequirementsof§155.
205(b)(1)and(c),andtotheextentthatnotallinformationrequiredunder§155.
205(b)(1)isdisplayedontheweb-broker'sinternetwebsiteforaQHP,prominentlydisplayastandardizeddisclaimerprovidedbyHHSstatingthatinformationrequiredunder§155.
205(b)(1)fortheQHPisavailableontheExchangewebsite,andprovideaWeblinktotheExchangewebsite;(K)Complywiththeapplicablerequirementsin§155.
221;and(L)NotdisplayQHPrecommendationsbasedoncompensationtheagent,broker,orweb-brokerreceivesfromQHPissuers.
(ii)Whenaninternetwebsiteofaweb-brokerisusedtocompletetheExchangeeligibilityapplication,ataminimumtheinternetwebsitemust:(4)Whenanagentorbroker,throughacontractorotherarrangement,usestheinternetwebsiteofaweb-brokertohelpanapplicantorenrolleecompleteaQHPselectionorcompletetheExchangeeligibilityapplicationintheFederally-facilitatedExchange:(i)Theweb-brokerwhomakesthewebsiteavailablemust:(A)ProvideHHSwithalistofagentsandbrokerswhoenterintosuchacontractorotherarrangementtousetheVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00111Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217564FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsweb-broker'swebsite,inaformandmannertobespecifiedbyHHS;(E)ReporttoHHSandapplicableStatedepartmentsofinsuranceanypotentialmaterialbreachofthestandardsinparagraphs(c)and(d)ofthissection,ortheagreemententeredintounder§155.
260(b),bytheagentorbrokeraccessingtheinternetwebsite,shoulditbecomeawareofanysuchpotentialbreach.
Aweb-brokerthatprovidesaccesstoitswebsitetocompletetheQHPselectionortheExchangeeligibilityapplicationorabilitytotransactinformationwithHHStoanotherweb-brokerwebsiteisresponsibleforensuringcompliancewithapplicablerequirementsinparagraph(c)(3)ofthissectionforanywebpagesoftheotherweb-broker'swebsitethatassistconsumers,applicants,qualifiedindividuals,andenrolleesinapplyingforAPTCandCSRsforQHPs,orincompletingenrollmentinQHPs,offeredintheExchanges.
(F)Whenaninternetwebsiteofaweb-brokerisusedtocompletetheExchangeeligibilityapplication,obtainHHSapprovalverifyingthatallrequirementsinthissectionaremet.
(ii)HHSretainstherighttotemporarilysuspendtheabilityofaweb-brokermakingitswebsiteavailabletotransactinformationwithHHS,ifHHSdiscoversasecurityandprivacyincidentorbreach,fortheperiodinwhichHHSbeginstoconductaninvestigationanduntiltheincidentorbreachisremediedtoHHS'satisfaction.
(5)HHSoritsdesigneemayperiodicallymonitorandauditanagent,broker,orweb-brokerunderthissubparttoassessitscompliancewiththeapplicablerequirementsofthissection.
(d)Agreement.
Anagent,broker,orweb-brokerthatenrollsqualifiedindividualsinaQHPinamannerthatconstitutesenrollmentthroughtheExchangeorassistsindividualsinapplyingforadvancepaymentsofthepremiumtaxcreditandcost-sharingreductionsforQHPsmustcomplywiththetermsofanagreementbetweentheagent,broker,orweb-brokerandtheExchangeunderwhichtheagent,broker,orweb-brokeratleast:(2)ReceivestrainingintherangeofQHPoptionsandinsuranceaffordabilityprograms,exceptthatalicensedagentorbrokerentitythatregisterswiththeFederally-facilitatedExchangeinitscapacityasabusinessorganizedunderthelawsofaState,andnotasanindividualperson,anddirectenrollmenttechnologyprovidersareexemptfromthisrequirement;and(e)CompliancewithStatelaw.
Anagent,broker,orweb-brokerthatenrollsqualifiedindividualsinaQHPinamannerthatconstitutesenrollmentthroughtheExchangeorassistsindividualsinapplyingforadvancepaymentsofthepremiumtaxcreditandcost-sharingreductionsforQHPsmustcomplywithapplicableStatelawrelatedtoagents,brokers,orweb-brokersincludingapplicableStatelawrelatedtoconfidentialityandconflictsofinterest.
(f)***(1)Anagent,broker,orweb-brokermayterminateitsagreementwithHHSbysendingtoHHSawrittennoticeatleast30daysinadvanceofthedateofintendedtermination.
(2)Thenoticemustincludetheintendeddateoftermination,butifitdoesnotspecifyadateoftermination,orthedateprovidedisnotacceptabletoHHS,HHSmaysetadifferentterminationdatethatwillbenolessthan30daysfromthedateontheagent's,broker's,orweb-broker'snoticeoftermination.
(3)Priortothedateoftermination,anagent,broker,orweb-brokershould—(i)Notifyapplicants,qualifiedindividuals,orenrolleesthattheagent,broker,orweb-brokerisassisting,oftheagent's,broker's,orweb-broker'sintendeddateoftermination;(4)Whentheagreementbetweentheagent,broker,orweb-brokerandtheExchangeunderparagraph(d)ofthissectionisterminatedunderparagraph(f)ofthissection,theagent,broker,orweb-brokerwillnolongerberegisteredwiththeFederally-facilitatedExchanges,orbepermittedtoassistwithorfacilitateenrollmentofqualifiedindividuals,qualifiedemployersorqualifiedemployeesincoverageinamannerthatconstitutesenrollmentthroughaFederally-facilitatedExchange,orbepermittedtoassistindividualsinapplyingforadvancepaymentsofthepremiumtaxcreditandcost-sharingreductionsforQHPs.
Theagent's,broker's,orweb-broker'sagreementwiththeExchangeunder§155.
260(b)willalsobeterminatedthroughtheterminationwithoutcauseprocesssetforthinthatagreement.
Theagent,broker,orweb-brokermustcontinuetoprotectanypersonallyidentifiableinformationaccessedduringthetermofeitheroftheseagreementswiththeFederally-facilitatedExchanges.
(g)***(1)If,inHHS'determination,aspecificfindingofnoncomplianceorpatternofnoncomplianceissufficientlysevere,HHSmayterminateanagent's,broker's,orweb-broker'sagreementwiththeFederally-facilitatedExchangeforcause.
(2)Anagent,broker,orweb-brokermaybedeterminednoncompliantifHHSfindsthattheagent,broker,orweb-brokerviolated—(iii)AnyStatelawapplicabletoagents,brokers,orweb-brokers,asrequiredunderparagraph(e)ofthissection,includingbutnotlimitedtoStatelawsrelatedtoconfidentialityandconflictsofinterest;or(iv)AnyFederallawapplicabletoagents,brokers,orweb-brokers.
(3)(i)Exceptasprovidedinparagraph(g)(3)(ii)ofthissection,HHSwillnotifytheagent,broker,orweb-brokerofthespecificfindingofnoncomplianceorpatternofnoncompliancemadeunderparagraph(g)(1)ofthissection,andafter30daysfromthedateofthenotice,mayterminatetheagreementforcauseifthematterisnotresolvedtothesatisfactionofHHS.
(ii)HHSmayimmediatelyterminatetheagreementforcauseuponnoticetotheagentorbrokerwithoutanyfurtheropportunitytoresolvethematterifanagentorbrokerfailstomaintaintheappropriatelicenseunderStatelawasanagent,broker,orinsuranceproducerineveryStateinwhichtheagentorbrokeractivelyassistsconsumerswithapplyingforadvancepaymentsofthepremiumtaxcreditorcost-sharingreductionsorwithenrollinginQHPsthroughtheFederally-facilitatedExchanges.
(4)Aftertheapplicableperiodinparagraph(g)(3)ofthissectionhaselapsedandtheagreementunderparagraph(d)ofthissectionisterminated,theagent,broker,orweb-brokerwillnolongerberegisteredwiththeFederally-facilitatedExchanges,orbepermittedtoassistwithorfacilitateenrollmentofaqualifiedindividual,qualifiedemployer,orqualifiedemployeeincoverageinamannerthatconstitutesenrollmentthroughaFederally-facilitatedExchange,orbepermittedtoassistindividualsinapplyingforadvancepaymentsofthepremiumtaxcreditandcost-sharingreductionsforQHPs.
Theagent's,broker's,orweb-broker'sagreementwiththeExchangeunder§155.
260(b)(2)willalsobeterminatedthroughtheprocesssetforthinthatagreement.
Theagent,broker,orweb-brokermustcontinuetoprotectanypersonallyVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00112Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217565FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsidentifiableinformationaccessedduringthetermofeitheroftheseagreementswiththeFederally-facilitatedExchanges.
(5)***(i)(A)IfHHSreasonablysuspectsthatanagent,broker,orweb-brokermayhavemayhaveengagedinfraud,orinabusiveconductthatmaycauseimminentorongoingconsumerharmusingpersonallyidentifiableinformationofanExchangeenrolleeorapplicantorinconnectionwithanExchangeenrollmentorapplication,HHSmaytemporarilysuspendtheagent's,broker's,orweb-broker'sagreementsrequiredunderparagraph(d)ofthissectionandunder§155.
260(b)forupto90calendardays.
SuspensionwillbeeffectiveonthedateofthenoticethatHHSsendstotheagent,broker,orweb-brokeradvisingofthesuspensionoftheagreements.
(B)Theagent,broker,orweb-brokermaysubmitevidenceinaformandmannertobespecifiedbyHHS,torebuttheallegationduringthis90-dayperiod.
Iftheagent,broker,orweb-brokersubmitssuchevidenceduringthesuspensionperiod,HHSwillreviewtheevidenceandmakeadeterminationwhethertoliftthesuspensionwithin30daysofreceiptofsuchevidence.
IftherebuttalevidencedoesnotpersuadeHHStoliftthesuspension,oriftheagent,broker,orweb-brokerfailstosubmitrebuttalevidenceduringthesuspensionperiod,HHSmayterminatetheagent's,broker's,orweb-broker'sagreementsrequiredunderparagraph(d)ofthissectionandunder§155.
260(b)forcauseunderparagraph(g)(5)(ii)ofthissection.
(ii)IfthereisafindingordeterminationbyaFederalorStateentitythatanagent,broker,orweb-brokerengagedinfraud,orabusiveconductthatmayresultinimminentorongoingconsumerharm,usingpersonallyidentifiableinformationofExchangeenrolleesorapplicantsorinconnectionwithanExchangeenrollmentorapplication,HHSwillterminatetheagent's,broker's,orweb-broker'sagreementsrequiredunderparagraph(d)ofthissectionandunder§155.
260(b)forcause.
TheterminationwillbeeffectivestartingonthedateofthenoticethatHHSsendstotheagent,broker,orweb-brokeradvisingoftheterminationoftheagreements.
(iii)Duringthesuspensionperiodunderparagraph(g)(5)(i)ofthissectionandfollowingterminationoftheagreementsunderparagraph(g)(5)(i)(B)or(g)(5)(ii)ofthissection,theagent,broker,orweb-brokerwillnotberegisteredwiththeFederally-facilitatedExchanges,orbepermittedtoassistwithorfacilitateenrollmentofqualifiedindividuals,qualifiedemployers,orqualifiedemployeesincoverageinamannerthatconstitutesenrollmentthroughaFederally-facilitatedExchange,orbepermittedtoassistindividualsinapplyingforadvancepaymentsofthepremiumtaxcreditandcost-sharingreductionsforQHPs.
Theagent,broker,orweb-brokermustcontinuetoprotectanypersonallyidentifiableinformationaccessedduringthetermofeitheroftheseagreementswiththeFederally-facilitatedExchanges.
(h)***(1)Requestforreconsideration.
Anagent,broker,orweb-brokerwhoseagreementwiththeFederally-facilitatedExchangehasbeenterminatedmayrequestreconsiderationofsuchactioninthemannerandformestablishedbyHHS.
(2)Timeframeforrequest.
Theagent,broker,orweb-brokermustsubmitarequestforreconsiderationtotheHHSreconsiderationentitywithin30calendardaysofthedateofthewrittennoticefromHHS.
(3)Noticeofreconsiderationdecision.
TheHHSreconsiderationentitywillprovidetheagent,broker,orweb-brokerwithawrittennoticeofthereconsiderationdecisionwithin30calendardaysofthedateitreceivestherequestforreconsideration.
ThisdecisionwillconstituteHHS'finaldetermination.
(i)Useofagents'andbrokers'andweb-brokers'internetwebsitesforSHOP.
ForplanyearsbeginningonorafterJanuary1,2015,inStatesthatpermitthisactivityunderStatelaw,aSHOPmaypermitagents,brokers,andweb-brokerstouseaninternetwebsitetoassistqualifiedemployersandfacilitateenrollmentofenrolleesinaQHPthroughtheExchange,underparagraph(c)(3)ofthissection.
(j)***(1)Anagent,broker,orweb-brokerthatassistswithorfacilitatesenrollmentofqualifiedindividuals,qualifiedemployers,orqualifiedemployees,incoverageinamannerthatconstitutesenrollmentthroughaFederally-facilitatedExchange,orassistsindividualsinapplyingforadvancepaymentsofthepremiumtaxcreditandcost-sharingreductionsforQHPssoldthroughaFederally-facilitatedExchange,must—(3)Ifanagent,broker,orweb-brokerfailstoprovidecorrectinformation,he,she,oritwillnonethelessbedeemedincompliancewithparagraphs(j)(2)(i)and(ii)ofthissectionifHHSdeterminesthattherewasareasonablecauseforthefailuretoprovidecorrectinformationandthattheagent,broker,orweb-brokeractedingoodfaith.
(k)***(1)IfHHSdeterminesthatanagent,broker,orweb-brokerhasfailedtocomplywiththerequirementsofthissection,inadditiontoanyotheravailableremedies,thatagent,broker,orweb-broker—(2)HHSwillnotifytheagent,broker,orweb-brokeroftheproposedimpositionofpenaltiesunderparagraph(k)(1)(i)ofthissectionaspartoftheterminationnoticeissuedunderparagraph(g)ofthissectionand,after30calendardaysfromthedateofthenotice,mayimposethepenaltyiftheagent,broker,orweb-brokerhasnotrequestedareconsiderationunderparagraph(h)ofthissection.
Theproposedimpositionofpenaltiesunderparagraph(k)(1)(ii)ofthissectionwillfollowtheprocessoutlinedunder§155.
285.
(3)HHSmayimmediatelysuspendtheagent'sorbroker'sabilitytotransactinformationwiththeExchangeifHHSdiscoverscircumstancesthatposeunacceptablerisktoExchangeoperationsorExchangeinformationtechnologysystemsuntiltheincidentorbreachisremediedorsufficientlymitigatedtoHHS'satisfaction.
(l)ApplicationtoStateExchangesusingaFederalplatform.
Anagent,broker,orweb-brokerwhoenrollsqualifiedindividuals,qualifiedemployers,orqualifiedemployeesincoverageinamannerthatconstitutesenrollmentthroughaStateExchangeusingtheFederalplatform,orassistsindividualmarketconsumerswithsubmissionofapplicationsforadvancepaymentsofthepremiumtaxcreditandcost-sharingreductionsthroughaStateExchangeusingtheFederalplatformmustcomplywithallapplicableFederally-facilitatedExchangestandardsinthissection.
(m)Web-brokeragreementsuspension,termination,anddenialandinformationcollection.
(1)Aweb-broker'sagreementexecutedunderparagraph(d)ofthissection,maybesuspendedorterminatedunderparagraph(g)ofthissection,andaweb-brokermaybedeniedtherighttoenterintoagreementswiththeFederally-facilitatedExchangesunderparagraph(k)(1)(i)ofthissection,basedontheactionsofitsofficers,employees,contractors,oragents,whetherornottheofficer,employee,contractor,orVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00113Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217566FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsagentisregisteredwiththeExchangeasanagentorbroker.
(2)Aweb-broker'sagreementexecutedunderparagraph(d)ofthissectionmaybesuspendedorterminatedunderparagraph(g)ofthissection,andaweb-brokermaybedeniedtherighttoenterintoagreementswiththeFederally-facilitatedExchangesunderparagraph(k)(1)(i)ofthissection,ifitisunderthecommonownershiporcontrolorisanaffiliatedbusinessofanotherweb-brokerthathaditsagreementsuspendedorterminatedunderparagraph(g)ofthissection.
(3)TheExchangemaycollectinformationfromaweb-brokerduringitsregistrationwiththeExchangeunderparagraph(d)(1)ofthissection,oratanothertimeonanannualbasis,inaformandmannertobespecifiedbyHHS,sufficienttoestablishtheidentitiesoftheindividualswhocompriseitscorporateownershipandleadershipandtoascertainanycorporateorbusinessrelationshipsithaswithotherentitiesthatmayseektoregisterwiththeFederally-facilitatedExchangeasweb-brokers.
17.
Section155.
221isamendedby—a.
Revisingthesectionheading;b.
Redesignatingparagraphs(a),(b),and(c)asparagraphs(e),(f),and(g),respectively;c.
Addingparagraphs(a),(b),(c),and(d);d.
Revisingnewlyredesignatedparagraph(e),paragraph(f)introductorytext,paragraphs(f)(2),(3),(4),(6)and(7),andparagraph(g);ande.
Addingparagraph(h).
Therevisionsandadditionsreadasfollows:§155.
221Standardsfordirectenrollmententitiesandforthird-partiestoperformauditsofdirectenrollmententities.
(a)Directenrollmententities.
TheFederally-facilitatedExchangeswillpermitthefollowingentitiestoassistconsumerswithdirectenrollmentinQHPsofferedthroughtheExchangeinamannerthatisconsideredtobethroughtheExchange,totheextentpermittedbyapplicableStatelaw:(1)QHPissuersthatmeettheapplicablerequirementsinthissectionand§156.
1230ofthissubchapter;and(2)Web-brokersthatmeettheapplicablerequirementsinthissectionand§155.
220.
(b)Directenrollmententityrequirements.
FortheFederally-facilitatedExchanges,adirectenrollmententitymust:(1)DisplayandmarketQHPsandnon-QHPsonseparatewebsitepagesonitsnon-Exchangewebsite;(2)ProminentlydisplayastandardizeddisclaimerintheformandmannerprovidedbyHHS;(3)Limitmarketingofnon-QHPsduringtheExchangeeligibilityapplicationandQHPplanselectionprocessinamannerthatminimizesthelikelihoodthatconsumerswillbeconfusedastowhatproductsareavailablethroughtheExchangeandwhatproductsarenot;(4)Demonstrateoperationalreadinessandcompliancewithapplicablerequirementspriortothedirectenrollmententity'sinternetwebsitebeingusedtocompleteanExchangeeligibilityapplicationoraQHPselection;and(5)ComplywithapplicableFederalandStaterequirements.
(c)Directenrollmententityapplicationassisterrequirements.
FortheFederally-facilitatedExchanges,totheextentpermittedunderstatelaw,adirectenrollmententitymaypermititsdirectenrollmententityapplicationassisters,asdefinedat§155.
20,toassistindividualsintheindividualmarketwithapplyingforadeterminationorredeterminationofeligibilityforcoveragethroughtheExchangeandforinsuranceaffordabilityprograms,providedthatsuchdirectenrollmententityensuresthateachofitsdirectenrollmententityapplicationassistersmeetstherequirementsin§155.
415(b).
(d)Federally-facilitatedExchangedirectenrollmententitysuspension.
HHSmayimmediatelysuspendthedirectenrollmententity'sabilitytotransactinformationwiththeExchangeifHHSdiscoverscircumstancesthatposeunacceptablerisktotheaccuracyoftheExchange'seligibilitydeterminations,Exchangeoperations,orExchangeinformationtechnologysystemsuntiltheincidentorbreachisremediedorsufficientlymitigatedtoHHS'satisfaction.
(e)Thirdpartiestoperformauditsofdirectenrollmententities.
Adirectenrollmententitymustengageanindependent,third-partyentitytoconductaninitialandannualreviewtodemonstratethedirectenrollmententity'soperationalreadinessandcompliancewithapplicabledirectenrollmententityrequirementsinaccordancewithparagraph(b)(4)ofthissectionpriortothedirectenrollmententity'sinternetwebsitebeingusedtocompleteanExchangeeligibilityapplicationoraQHPselection.
Thethird-partyentitywillbeadownstreamordelegatedentityofthedirectenrollmententitythatparticipatesorwishestoparticipateindirectenrollment.
(f)Third-partyauditorstandards.
Adirectenrollmententitymustsatisfytherequirementtodemonstrateoperationalreadinessunderparagraph(e)ofthissectionbyengagingathird-partyentitythatexecutesawrittenagreementwiththedirectenrollmententityunderwhichthethird-partyentityagreestocomplywitheachofthefollowingstandards:(2)AdherestoHHSspecificationsforcontent,format,privacy,andsecurityintheconductofanoperationalreadinessreview,whichincludesensuringthatdirectenrollmententitiesareincompliancewiththeapplicableprivacyandsecuritystandardsandotherapplicablerequirements;(3)Collects,stores,andshareswithHHSalldatarelatedtothethird-partyentity'sauditofdirectenrollmententitiesinamanner,format,andfrequencyspecifiedbyHHSuntil10yearsfromthedateofcreation,andcomplieswiththeprivacyandsecuritystandardsHHSadoptsfordirectenrollmententitiesasrequiredinaccordancewith§155.
260;(4)DisclosestoHHSanyfinancialrelationshipsbetweentheentityandindividualswhoownorareemployedbyadirectenrollmententityforwhichitisconductinganoperationalreadinessreview;(6)Ensures,onanannualbasis,thatappropriatestaffsuccessfullycompleteoperationalreadinessreviewtrainingasestablishedbyHHSpriortoconductingauditsunderparagraph(e)ofthissection;(7)PermitsaccessbytheSecretaryandtheOfficeoftheInspectorGeneralortheirdesigneesinconnectionwiththeirrighttoevaluatethroughaudit,inspection,orothermeans,tothethird-partyentity'sbooks,contracts,computers,orotherelectronicsystems,relatingtothethird-partyentity'sauditsofadirectenrollmententity'sobligationsinaccordancewithstandardsunderparagraph(e)ofthissectionuntil10yearsfromthedateofcreationofaspecificaudit;and(g)Multipleauditors.
Adirectenrollmententitymayengagemultiplethird-partyentitiestoconducttheauditunderparagraph(e)ofthissection.
(h)ApplicationtoStateExchangesusingaFederalplatform.
AdirectenrollmententitythatenrollsqualifiedindividualsincoverageinamannerthatconstitutesenrollmentthroughaStateExchangeusingtheFederalplatform,orassistsindividualmarketconsumerswithsubmissionofapplicationsforVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00114Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217567FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulationsadvancepaymentsofthepremiumtaxcreditandcost-sharingreductionsthroughaStateExchangeusingaFederalplatformmustcomplywithallapplicableFederally-facilitatedExchangestandardsinthissection.
18.
Section155.
415isrevisedtoreadasfollows:§155.
415Allowingissuerordirectenrollmententityapplicationassisterstoassistwitheligibilityapplications.
(a)Exchangeoption.
AnExchange,totheextentpermittedbyStatelaw,maypermitissuerapplicationassistersanddirectenrollmententityapplicationassisters,asdefinedat§155.
20,toassistindividualsintheindividualmarketwithapplyingforadeterminationorredeterminationofeligibilityforcoveragethroughtheExchangeandinsuranceaffordabilityprograms,providedthatsuchissuerapplicationassistersordirectenrollmententityapplicationassistersmeettherequirementssetforthinparagraph(b)ofthissection.
(b)Applicationassisterrequirements.
IfpermittedbyanExchangeunderparagraph(a)ofthissection,andtotheextentpermittedbyStatelaw,anissuermaypermititsissuerapplicationassistersandadirectenrollmententitymaypermititsdirectenrollmententityapplicationassisterstoassistindividualsintheindividualmarketwithapplyingforadeterminationorredeterminationofeligibilityforcoveragethroughtheExchangeandforinsuranceaffordabilityprograms,providedthatsuchissuerordirectenrollmententityensuresthateachofitsissuerapplicationassistersordirectenrollmententityapplicationassistersatleast—(1)ReceivestrainingonQHPoptionsandinsuranceaffordabilityprograms,eligibility,andbenefitsrulesandregulations,andforapplicationassistersprovidingassistanceintheFederally-facilitatedExchangesoraStateExchangeusingtheFederalplatform,theassistersmustfulfillthisrequirementbycompletingregistrationandtraininginaformandmannertobespecifiedbyHHS;(2)ComplieswiththeExchange'sprivacyandsecuritystandardsadoptedconsistentwith§155.
260;and(3)ComplieswithapplicableStatelawrelatedtothesale,solicitation,andnegotiationofhealthinsuranceproducts,includinganyStatelicensurelawsapplicabletothefunctionstobeperformedbytheissuerapplicationassisterordirectenrollmententityapplicationassister,aswellasStatelawrelatedtoconfidentialityandconflictsofinterest.
19.
Section155.
420isamended—a.
Byrevisingparagraphs(a)(5)and(b)(2)(iv);b.
Inparagraph(d)(6)(ii)byremoving'';or''andaddinginitsplace'';'';c.
Inparagraph(d)(6)(iii)byremoving''.
''andaddinginitsplace'';'';d.
Inparagraph(d)(6)(iv)byremoving'';''andaddinginitsplace'';or'';ande.
Byaddingparagraph(d)(6)(v).
Theadditionreadsasfollows:§155.
420Specialenrollmentperiods.
(a)***(5)Priorcoveragerequirement.
Qualifiedindividualswhoarerequiredtodemonstratecoverageinthe60dayspriortoaqualifyingeventcaneitherdemonstratethattheyhadminimumessentialcoverageasdescribedin26CFR1.
5000A–1(b)ordemonstratethattheyhadcoverageasdescribedinparagraphs(d)(1)(iii)or(iv)ofthissectionfor1ormoredaysduringthe60daysprecedingthedateofthequalifyingevent;livedinaforeigncountryorinaUnitedStatesterritoryfor1ormoredaysduringthe60daysprecedingthedateofthequalifyingevent;areanIndianasdefinedbysection4oftheIndianHealthCareImprovementAct;orlivedfor1ormoredaysduringthe60daysprecedingthequalifyingeventorduringtheirmostrecentprecedingenrollmentperiod,asspecifiedin§§155.
410and155.
420,inaserviceareawherenoqualifiedhealthplanwasavailablethroughtheExchange.
(b)***(2)***(iv)Ifaqualifiedindividual,enrollee,ordependent,asapplicable,losescoverageasdescribedinparagraph(d)(1)or(d)(6)(iii)ofthissection,gainsaccesstoanewQHPasdescribedinparagraph(d)(7)ofthissection,becomesnewlyeligibleforenrollmentinaQHPthroughtheExchangeinaccordancewith§155.
305(a)(2)asdescribedinparagraph(d)(3)ofthissection,orbecomesnewlyeligibleforadvancepaymentsofthepremiumtaxcreditinconjunctionwithapermanentmoveasdescribedinparagraph(d)(6)(iv)ofthissection,andiftheplanselectionismadeonorbeforethedayofthetriggeringevent,theExchangemustensurethatthecoverageeffectivedateisthefirstdayofthemonthfollowingthedateofthetriggeringevent.
Iftheplanselectionismadeafterthedateofthetriggeringevent,theExchangemustensurethatcoverageiseffectiveinaccordancewithparagraph(b)(1)ofthissectionoronthefirstdayofthefollowingmonth,attheoptionoftheExchange.
(d)***(6)***(v)AttheoptionoftheExchange,thequalifiedindividual,orhisorherdependent—(A)Experiencesadecreaseinhouseholdincome;(B)IsnewlydeterminedeligiblebytheExchangeforadvancepaymentsofthepremiumtaxcredit;and(C)Hadminimumessentialcoverageasdescribedin26CFR1.
5000A–1(b)foroneormoredaysduringthe60daysprecedingthedateofthefinancialchange.
20.
Section155.
605isamendedbyaddingparagraph(e)(5)toreadasfollows:§155.
605Eligibilitystandardsforexemptions.
(e)***(5)Generalhardship.
TheIRSmayallowanapplicanttoclaimtheexemptionspecifiedinHHSGuidancepublishedSeptember12,2018,entitled,''GuidanceonClaimingaHardshipExemptionthroughtheInternalRevenueService(IRS)''(seehttps://www.
cms.
gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Authority-to-Grant-HS-Exemptions-2018-Final-91218.
pdf)andinIRSNotice2019–05(seehttps://www.
irs.
gov/pub/irs-drop/n-19-05.
pdf),forthe2018taxyear.
PART156—HEALTHINSURANCEISSUERSTANDARDSUNDERTHEAFFORDABLECAREACT,INCLUDINGSTANDARDSRELATEDTOEXCHANGES21.
Theauthoritycitationforpart156isrevisedtoreadasfollows:Authority:42U.
S.
C.
18021–18024,18031–18032,18041–18042,18044,18054,18061,18063,18071,18082,and26U.
S.
C.
36B.
22.
Section156.
20isamendedbyaddingthedefinitionof''Generic''inalphabeticalordertoreadasfollows:§156.
20Definitions.
Genericmeansadrugforwhichanapplicationundersection505(j)oftheFederalFood,Drug,andCosmeticAct(21U.
S.
C.
355(j))isapproved.
23.
Section156.
130isamendedbyaddingparagraph(h)toreadasfollows:§156.
130Cost-sharingrequirements.
(h)Useofdrugmanufacturercoupons.
ForplanyearsbeginningonorafterJanuary1,2020:VerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00115Fmt4701Sfmt4700E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES217568FederalRegister/Vol.
84,No.
80/Thursday,April25,2019/RulesandRegulations(1)Notwithstandinganyotherprovisionofthissection,andtotheextentconsistentwithstatelaw,amountspaidtowardcostsharingusinganyformofdirectsupportofferedbydrugmanufacturerstoenrolleestoreduceoreliminateimmediateout-of-pocketcostsforspecificprescriptionbranddrugsthathaveanavailableandmedicallyappropriategenericequivalentarenotrequiredtobecountedtowardtheannuallimitationoncostsharing(asdefinedinparagraph(a)ofthissection).
(2)[Reserved]24.
Section156.
1230isamendedby—a.
Removingandreservingparagraph(a)(2);b.
Revisingparagraph(b)(1);c.
Removingparagraph(b)(2);andd.
Redesignatingparagraph(b)(3)as(b)(2).
Therevisionsreadasfollows:§156.
1230DirectenrollmentwiththeQHPissuerinamannerconsideredtobethroughtheExchange.
(a)***(2)[Reserved](b)***(1)TheQHPissuermustcomplywithapplicablerequirementsin§155.
221ofthissubchapter.
Dated:March26,2019.
SeemaVerma,Administrator,CentersforMedicare&MedicaidServices.
Dated:April2,2019.
AlexM.
AzarII,Secretary,DepartmentofHealthandHumanServices.
[FRDoc.
2019–08017Filed4–18–19;4:15pm]BILLINGCODE4150–28–PVerDateSep201417:19Apr24,2019Jkt247001PO00000Frm00116Fmt4701Sfmt9990E:\FR\FM\25APR2.
SGM25APR2khammondonDSKBBV9HB2PRODwithRULES2