DEPARTMENT OF THE TREASURY 31 CFR Part 33 RIN 1505-AC30 DEPARTMENT OF HEALTH AND HUMAN SERVICES 45 CFR Part 155 [CMS-9987-F] RIN 0938-AQ75 Application, Review, and Reporting Pr ocess for Waivers for State Innovation AGENCY: Centers for Medicare & Me dicaid Services (CMS) , HHS; Department of the Treasury. ACTION: Final rule. SUMMARY: This final rule sets forth a pr ocedural framework for submission and review of initial applications for a Waiver for State Innova tion described in section 1332 of the Patient Protection and the Affordable Care Act including processes to ensure opportunities for public input in th e development of such appli cations by States and in the Federal review of the applications. DATES: These regulations are effective on [ O F R

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p ub l i c a t i o n i n t h e F e d e r a l R e g i s t e r ]. FOR FURTHER INFORMATION CONTACT: Department of the Treasury : Cameron Arterton, (202)622-0044 Centers for Medicare & Medicaid Services: Ben Walker, (301)492-4430. SUPPLEMENTARY INFORMATION: I. Executive Summary:A. Purpose of the Regulatory Action Section 1332(a)(4)(B) of th e Patient Protection and Af fordable Care Act (the Affordable Care Act) (Pub. L. 111-148, en acted on March 23, 2010), requires the Secretary of Health and Human Services ( HHS) and the Secretary of the Treasury (the Secretaries) to issue regula tions regarding procedures for Waivers for State Innovation under section 1332 of the Affordable Care Act. On March 14, 2011, the Secretaries published proposed rules to satisfy this requirem ent. This finalizes those proposed rules. B. Summary of the Major Provisions of the Regulatory Action in Question These final rules make a small number of changes to the proposed rules based on comments received from the public. We have removed a requirement for applications to be submitted in printed format, to reduce administrative burden. We have clarified that evidence of the State public notice and comment must include, “a de scription of the key issues raised...” during such period, to provide the Secretar ies with a summary of public consultation to date. We have added a pr ovision to specify that States must submit waiver applications sufficiently in advance of the requested effective date to ensure that an appropriate amount of time is available for implementation if the wa iver is approved. We have also added a provision to specify th at a complete application must include an implementation timeline, to facilitate an anal ysis by States and the Secretaries regarding the feasibility of the proposed implementation schedule. We have also clarified that a State does not have to enact a new law in support of a section 1332 waiver if the State already has a law in place, to eliminate the need for re dundant legislative activities. Lastly, we have made some structural changes to one section of the rules to reduce complexity, without modifying the content. C. Costs and BenefitsThese regulations are not economically significant, under section 3(f) of Executive Order 12866. II. Background Section 1332 of the Affordable Care Act creates a new Waiver for State Innovation and authorizes the Secretaries to waive all or any of the following requirements falling under their respective jurisdictions for health insurance coverage within a State for plan years begi nning on or after January 1, 2017:

● Part I of subtitle D of Title I of the Affordable Care Act (relating to the establishment of qualified health plans);

● Part II of subtitle D of Title I of the Affordable Care Act (relating to consumer choices and insurance competition thr ough health benefit exchanges);

● Section 1402 of the Affordable Care Ac t (relating to reduced cost sharing for individuals enrolling in qua lified health plans); and

● Sections 36B (re lating to refundable credits for coverage under a qualified health plan), 4980H (relating to shared res ponsibility for employers regarding health coverage), and 5000A (relating to tax penalt ies for the failure to maintain minimum essential coverage) of th e Internal Revenue Code. Section 1332 of the Affordable Care Act provi des that references in that section to “Secretary” refer to the Secret ary of HHS for waivers relating to Parts I and II of subtitle D of Title I of the Affordable Care Act and section 1402 of the Affordable Care Act, and refer to the Secretary of th e Treasury for waivers relati ng to sections 36B, 4980H, and 5000A of the Internal Revenue Code. Section 1332(a)(4)(B) of the Affordable Care Act requires the Secretaries to issue regulations that provide the following:● A process for public notice and comment at the State level, including public hearings, that is sufficient to ensure a meaningful level of public input (section 1332(a)(4)(B)(i) of the Af fordable Care Act);

● A process for the submission of an app lication that ensures the disclosure of (A) the provisions of law th at the State involved seeks to waive, and (B) the specific plans of the State to ensure that the waiver will be in compliance with specified statutory requirements relating to the comprehensiveness of coverage, affordability of coverage, scope of coverage, and the effect on the Fe deral deficit (as desc ribed below) (section 1332(a)(4)(B)(ii) of the Af fordable Care Act);

● A process for providing public notice and comment after the application is received by the Secretary that is sufficient to ensure a mean ingful level of public input and that does not impose requirements that are in addition t o, or duplicative of, requirements imposed under the Administrativ e Procedure Act (APA), or requirements that are unreasonable or unn ecessarily burdensome with respect to State compliance (section 1332(a)(4)(B)(iii) of the Affordable Care Act);

● A process for the submission to the a pplicable Secretary or Secretaries of periodic reports by the State concerning the implementation of the program under a waiver (section 1332(a)(4)(B)(iv) of the Affordable Care Act); and

● A process for the periodic evaluation by the applicable Secretary or Secretaries of the program under a waiver (section 1332(a )(4)(B)(v) of the Affordable Care Act). Although section 1332 of the Affordable Care Act does not authorize waivers for related programs like Medicaid (title XIX of the Social Secu rity Act (the Act)) or the Children’s Health Insurance Program (CHIP, title XXI of the Act), those programs have existing waiver authorities. Section 1332(a)(5 ) of the Affordable Care Act requires theSecretaries to develop a process for coordi nating and consolidati ng the State waiver processes applicable under the provisions of section 1332 of the Affordable Care Act with the existing waiver processes appli cable under titles XVIII (Medicare), XIX (Medicaid), and XXI (CHIP) of the Act, a nd any waiver processes under other Federal laws relating to the provision of health care items or services. S ection 1332(a)(5) of the Affordable Care Act further requires the proc ess developed by the Secretaries to permit a State to submit a single application for a wa iver under any or all of those provisions. Proposed rules were issued on March 14, 2011, to implement the procedural requirements of section 1332 of the Affordable Care Act. The proposed rules were also intended to provide for a waiver applica tion process that can be coordinated and consolidated with the processe s for the submission of appli cations for waivers under titles XVIII, XIX, and XXI of the Act. III. Summary of the Provisions of the Proposed Regulations and Analysis of and Responses to Public Comments In the March 14, 2011 Federal Register (76 FR 13553), we published proposed rules addressing the procedural requirements of section 1332 of the Affordable Care Act. We received a total of 32 timely comments on the proposed rules. The modifications to the proposed regulations that are included in these final regulations reflect consideration of the comments submitted. A. Basis and Purpose (31 CFR 33.100 and 45 CFR 155.1300) To implement the provisions of section 1332 of the Affordable Care Act, the Department of the Treasury proposed to add new part 33 to 31 CFR Subtitle A and the CMS, on behalf of HHS, proposed to add new part 155 to 45 CFR Subtitle A. These new parts address procedures for State developm ent and submission of an application for aWaiver for State Innovation under section 1332 of the Affordable Care Act (referred to in the proposed regulations as a section 1332 wa iver), a process for providing public notice and opportunity for comment at the State and Fe deral levels, a process for the review of applications by the Secretaries, and pro cesses for the monitoring and evaluation of approved section 1332 waivers by the States and the Secretaries, incl uding the periodic submission of reports by the States to the Secretaries. The final regulations make no change to the proposed regulations regarding these provisions. B. Coordinated Waiver Process (31 CFR 33.102 and 45 CFR 155.1302) The proposed regulations at 31 CFR 33.102 and 45 CFR 155.1302 permitted, but did not require, States to submit a single application for a section 1332 waiver and a waiver under one or more of the existing waiv er processes applicable under titles XVIII, XIX, and XXI of the Act, or under any othe r Federal law relating to the provision of health care items or services, provided that the application is consistent with the procedures described in these proposed re gulations, the procedures for section 1115 demonstrations, if applicable, and the proced ures under any other applicable Federal law under which the State seeks a waiver. 1 The proposed regulations required a State seeking a section 1332 waiver to submit a waiver application to the Secretary of HHS. Upon receipt, the S ecretary of HHS would transmit any application that includes a re quest for a waiver of provisions under the jurisdiction of the Secretary of the Treasury (sec tions 36B, 4980H and 5000A of the Internal Revenue Code) to be reviewed in accordance with the provisions of the regulations. The Secretaries w ould coordinate the review of any application that includes
1 Although section 1332 of the Affordable Care Act does not authorize waivers for related programs like Medicaid (title XIX of the Act) or the Children’s Health Insurance Program (title XXI of the Act), those programs have existing waiver authorities.a request for a waiver of provisions fall ing under the jurisdiction of each of the Departments of HHS and the Trea sury (the Departments). We received the following comments concerning the proposed coordinated waiver process.
Comment : Commenters supported the proposal to permit the submission of a single, coordinated application for a section 1332 waiver and a waiver under one or more of the existing waiver processes. Several co mmenters asked that we provide more detail on the coordinated waiver process, and ali gn procedures and timelines. One commenter also asked that we allow States to submit a sing le analysis of cost a nd coverage to satisfy both processes. Response : The Departments plan to work clos ely with States that are considering submitting multiple waivers to craft a process that meets a State’s specific circumstances. We anticipate that there may be opportunities to streamline a nd align the processes. We also are mindful that each of the specif ic waiver provisions has unique statutory requirements. We encourage any State that is considering a coordinated submission to approach the Departments as soon as is prac ticable to discuss how best to proceed to minimize administrative complexity while ensu ring that the integrity of the review and approval processes is maintained.
Comment: One commenter requested that th e Secretaries require public comment on the market impacts of a combined waiver application. Response : We agree that public comment of this sort is useful, and we believe that 31 CFR 33.112 and 45 CFR 155.1312 of the pr oposed regulations, as finalized, allow stakeholders to provide such comments. C. Application Pro cedures (31 CFR 33.108 and 45 CFR 155.1308)The proposed regulations established procedures for the submission of applications for an initial section 1332 waiver. Under 31 CFR 33.108(a) and 45 CFR 155.1308(a) of the proposed regulations, each application for an initial section 1332 wa iver will undergo a preliminary review by the Secretaries that will be completed within 45 days after the application is submitted. During this preliminary revi ew period, the Secretaries would make a preliminary determination as to whether a State’s applic ation complies with the requirements set forth in 31 CFR 33.108(a)(2) and 45 CFR 155.1308(a)(2). If the Secretaries determined that an application is incomplete, the Secretary of HHS would send the State a written notice of the elements missing from the applicati on. The proposed regulations provided that a preliminary determination that an applica tion is complete does not preclude a finding during the 180-day Federal de cision-making period that a necessary element of the application is missing or insufficient, rendering the appli cation incomplete. The proposed regulations provided that a submitted application would not be considered received until the Secretaries have made this preliminary determination that the application is complete. The proposed regulations provided that, upon a preliminary determination by the Secretaries that an application they have received is complete, as defined under the proposed regulations, the S ecretary of HHS would send the State a written notice informing the State that the Secretaries have made such a preliminary determination, and the date upon which they have made that preliminary determination. That date would also mark the beginning of the Federal public notice and comment period and the 180- day Federal decision-making period.Under the proposed regulations, an applic ation for initial a pproval of a section 1332 waiver would not be considered complete unless the applicatio n: (1) complies with the application procedures of 31 CFR 33.108( a)(2)(iv) and 45 CFR 155.1308(a)(2)(iv); (2) provides written evid ence of the State’s complia nce with the public notice requirements set forth in 31 CFR 33.112 a nd 45 CFR 155.1312; and (3) provides all of the following:

● A comprehensive description of the en acted State legislation and program to implement a plan meeting the requirements for a waiver under section 1332, as required under section 1332(a)(1)(B)(i) of the Affordable Care Act;

● A copy of the enacted State legislati on authorizing such waiver request, as required under section 1332(a)(1)(C ) of the Affordable Care Act;

● A list of the provisions of law that the State seeks to waive including a brief description of the reason for the specific requests; and

● The analyses, actuarial certifications , data, assumptions, targets and other information sufficient to provide the Secretarie s with the necessary data to determine that the State’s proposed waiver: + As required under section 1332(b)(1)(A) of the Affordable Care Act (the comprehensive coverage requirement), would provide coverage that is at least as comprehensive as the coverage defined in se ction 1302(b) of the Affordable Care Act and offered through Exchanges established under Title I of the Affordable Care Act as certified by the Office of the Actuary of the Centers for Medicare & Medicaid Services based on sufficient data from the State and from comparable States about their experience with programs created by the Affordable Care Act and the provisions of the Affordable Care Act that would be waived;+ As required under section 1332(b)(1)(B) of the Affordable Care Act (the affordability requirement), would provide cove rage and cost sharing protections against excessive out-of-pocket spending that are at leas t as affordable as the provisions of Title I of the Affordable Care Act would provide; + As required under section 1332(b)(1)(B)(C) of the Affordable Care Act (the scope of coverage requirement), would provide coverage to at least a comparable number of its residents as the provisions of Title I of the Affordable Care Act would provide; and + As prohibited under sec tion 1332(b)(1)(D) of the Affordable Care Act (the Federal deficit requirement), would not increase the Federal deficit. Section 1332(a)(3) of the Affordable Care Act requires that the Secretaries provide for an alternative means by which the aggregate amount of tax credits or costsharing reductions that would have been paid had the State not received a waiver, be paid to the State for purposes of implementing th e waiver. This amount will be determined annually by the Secretaries, on a per capita basi s, taking into consider ation the experience of other States for participation in an Exchange and tax credits and cost-sharing reductions provided in such other States. To provide information necessary for the Secretaries to determine (1) that the State’s proposed waiver meets the comprehe nsive coverage requirement, the affordability requirement, the scope of coverage requireme nt and the Federal deficit requirement and (2) the annual amount, if any, of foregone tax credits and cost-sharing reductions that will be paid to the State for purposes of imp lementing the waiver pursuant to section 1332(a)(3) of the Affordable Care Act, the proposed regulations required that a State’s application contain:(1) Actuarial analyses and actuarial certif ications to support th e State’s estimates that the proposed waiver will comply with the comprehensive coverage requirement, the affordability requirement and the scope of coverage requirement. (2) Economic analyses to s upport the State’s estimates that the proposed waiver will comply with the comprehensive coverage requirement, the affordability requirement, the scope of coverage requirement and the Federal deficit requirement, including:

● A detailed 10-year budget plan that is deficit neutral to the Federal government, as prescribed in section 1332(a)(1)( B)(ii) of the Affordable Care Act, and includes all costs under the waiv er, including administrative co sts and other costs to the Federal government, if applicable; and

● A detailed analysis regarding the es timated impact of the waiver on health insurance coverage in the State. (3) The data and assumptions used to dem onstrate that the State’s proposal is in compliance with the comprehensive coverage requirement, the affordability requirement, the scope of coverage requirement and th e Federal deficit requirement, including:

● Information on the age, income, health expenses and current health insurance status of the relevant State population; th e number of employers, categorized by number of employees and by whether the employer offers health insurance; cross-tabulations of these variables; and an explanati on of data sources and quality; and

● An explanation of the key assumptions and methodology used to develop the estimates of the effect of the waiver on hea lth insurance coverage in the State and on the Federal budget, such as individual and employe r participation rates, behavioral changes, premium and price effects, a nd other relevant factors. (4) Additional information supporting th e State's proposed waiver, including:● An explanation as to whether th e waiver increases or decreases the administrative burden on individuals, insure rs, and employers, and if so, how and why;

● An explanation of whether and how the waiver will affect the implementation of the provisions of the Affordable Care Act which the State is not requesting to waive in the State and at the Federal level;

● An explanation of how the waiver will affect residents who need to obtain health care services out-of-State, as well as the States in which such residents may seek such services;

● If applicable, an explanation of how the State will provide the Federal government with all information necessary to administer the waiver at the Federal level; and

● An explanation of how the State’s pr oposal will address potential individual, employer, insurer, or provider compliance, wa ste, fraud and abuse within the State or in other States. (5) For purposes of post-award monito ring, suggested quarterly, annual, and cumulative targets for the comprehensive coverage requirement, the affordability requirement, the scope of coverage requireme nt and the Federal deficit requirement of section 1332(b) of the Affordable Care Act. (6) Other information consistent with guidance provided by the Secretaries. Under the proposed regulations, there is no minimum time specified between the submission of an application and start date of the waiver. However, we solicited comments on whether a State should be requi red to submit an application at least 12 months in advance of the requested e ffective date, to allow for the effective implementation of approved waivers at the State level.The requirement in the proposed regulations that a State provide certain analysis, certifications, data, assumptions, targets and ot her information as part of a section 1332 waiver application was designed to ensure that a State’s development of a waiver proposal addresses major relevant issues for the State and provides the Secretaries with sufficient information to fully assess the projected impact of section 1332 waiver proposals for the statutory requirements and to accurately determine the amount to be paid to the State for purposes of implementing the waiver un der section 1332(a)(3) of the Affordable Care Act. The Secretaries also solicited comments re garding these proposed requirements, as well as what other types of analysis, certificati ons, data, assumptions, targets and information States would consider useful in supporting an application for a section 1332 waiver and whet her these regulations should specifically require such additional analyses, certifications, data, a ssumptions, targets and information to be included as part of a sec tion 1332 waiver application. Lastly, during the Federal review process, the proposed regulation provided that the Secretaries may request additional supporting information from the State as needed to address public comments or to address issues that arise in revi ewing the application. We received the following comments concerning application procedures. 1. Application Contents
Comment : In general, commenters supporte d the proposed application contents. Several commenters asked that the Secretar ies require additional information to be submitted with the application, includi ng background information on the State’s insurance market; the types of health plans or other arrangements a State will utilize to provide coverage and the criteria for participa tion in the plan; the health benefits that will be covered and how those compare to the esse ntial health benefits specified in section1302(b) of the Affordable Care Act; whether and how the wa iver will affect age rating and the value of financial assistance for individuals of different ages; how the waiver will affect children and youth with special hea lth care needs and women with high-risk pregnancies; how the State will select th e plans and monitor th eir performance; how payment rates for health plans and/or provide rs would be determined; how standards for provider network adequacy would be determined and met; how quality and appropriateness of care would be assessed; and how transp arency in coverage and consumer choice and access to essential co mmunity providers would be monitored. Commenters also requested that the Secret aries require a State to provide specific information for specific waiver requests. Fo r example, one commenter asked that the Secretaries require a State seeking a waiver th at would affect Federa lly-Qualified Health Centers (FQHCs) or essential community provid ers (ECPs) to provide a set of detailed information about the rationale for such a proposal and the financial impact of it on FQHCs and ECPs. Another made a similar reque st with respect to waivers that affect essential health benefits. Response : We recognize that a dditional information may be needed to determine whether a proposal meets the statutory criter ia for approval. As set forth in 31 CFR 33.108(a)(2)(iv)(D)(6) and 45 CF R 155.1308(a)(2)(iv)(D)(6), a State must also submit information consistent with guidance provide d by the Secretaries, in addition to the enumerated data and analyses. This provision of the regulations allows the Secretaries to request additional information, including info rmation suggested by commenters, which is relevant to determine whether a waiver proposal meets the statutory criteria for approval. As such, we finalized these provisions of the proposed regulations without change.Comment : One commenter requested that States provide an implementation timeline as part of a waiver application. Response : We agree with this comment and have added language to the final regulation in 31 CFR 33.108(f )(4)(iv) and 45 CFR 155.1308(f)(4)(iv). We believe that the inclusion of an implementation timeline will help the Secretaries work with States to address the concern raised by another commen ter that States implement a waiver in a manner that does not leave its residents without affordable coverage during the implementation period.
Comment : Several commenters asked the Secret aries to require States to provide a description of why the reque sted waivers are needed. Response : We agree that a discussion of the reasons for requesting the waiver is important and should be more than cursory. Accordingly, the fina l regulation at 31 CFR 33.108(a)(2)(iv)(C) and 45 CF R 155.1308(a)(2)(iv)(C) no lo nger characterizes the required description as “brief.”
Comment : One commenter asked that the Secretaries permit the application to use existing reports and data sources available to the Federal government. Response : We agree that the process shoul d be minimally burdensome for all involved entities, while still ensuring that the Secretaries are able to complete the analyses required by statute. We encourag e States to utilize existing data wherever possible to facilitate the waiv er approval process and we look forward to working closely with States to ensure that the proposed data sources are reliable and acceptable.
Comment : Several commenters asked that the Secretaries require applications to include a description of the key issues rais ed during the State public notice and commentperiod, along with how the State consider ed those comments in developing the application. Response : The provisions of 31 CF R 33.108(a)(2)(iv)(B) and 45 CFR 155.1308(a)(2)(iv)(B) of the proposed regulations require an application to provide, “...written evidence of the State’s complian ce with the public no tice requirements...” We agree with the commenter that this evid ence should include a description of the key issues raised during the St ate public notice and comment period, and are adding this clarification to 31 CFR 3 3.108(f)(2) and 45 CFR 155.1308(f)(2) of the final rule. We believe that the substantive contents of the application will allow the Secretaries and interested parties to discern how the State considered the comments in constructing the proposal.
Comment : Commenters asked that the Secretaries clarify that in addition to providing the proposed actuarial and economic analyses, a State must also provide the underlying data and assumptions us ed to develop the analyses. Response : We believe that the provisions of the proposed regulations require the State to submit the underlying data and assump tion used to develop the analysis. The proposed regulations at 31 CFR 33.108(a)(2)(iv)(D )(3) and 45 CFR 155.1308(a)(2)(iv)(D)(3) specified that an ap plication must include, “The data and assumptions used to demonstrate that the St ate's proposed waiver is in compliance with the comprehensive coverage requirement, the affordability requirement, the scope of coverage requirement and the Federal defici t requirement.” We are maintaining this language in the final regulations.Comment : One commenter suggested that th e Secretaries limit the amount of documentation required to be submitted if th e waiver proposal does not significantly impact the stability of the insurance market. Response : The statute requires the Secret aries to determine whether an application meets all the statutory approva l criteria, regardless of its scope. Consequently, the Secretaries must receive a nd review the data and analyses required to be included in the application as provided in the regulations. We have no interest in requiring States to submit unnecessary informa tion, and will work with States to ensure that the application process is appropriately tailored to the specific proposal and to the State’s circumstances.
Comment : One commenter asked that the Secretaries require that all actuarial estimates of coverage and ma rket stability be performed by independent experts. Response : The Secretaries plan to evaluate the analyses submitted with a State’s application. We expect the State analyses to adhere to generally- accepted standards for quality and the regulations require the St ates to submit the data and assumptions underlying such analyses, which will enable the Secretaries to conduct a thoughtful review. As such, the final regulations follow the proposed regulations without change.
Comment : One commenter asked the Secretaries to clarify that there is interaction between the statutory requirements for approval of a section 1332 waiver, for example, that the affordability of coverage will affect the number of individuals who will be covered. Response : We agree with the comment. We expect States to address such connections in the analyses supporting an application.Comment : One commenter asked that the Secr etaries require that any application that requested a waiver of the minimum coverage provision be accompanied by detailed projections demonstrating that comparable leve ls of coverage and affordability will be attained and maintained over at least a 10-year period in the individual market. Response : We appreciate this comment. The Secretaries intend to work with States to ensure that the required analyses ar e consistent with one another. For future guidance, we will consider requiring an analysis for applications requesting a waiver of specific provisions to be provide d over a specific time frame.
Comment : One commenter objected to propos ed questions regarding the impact of a proposed waiver on unwaived provisions an d how the State will provide the Federal government with information necessary to admini ster the waiver at th e Federal level. Response : We believe that these questions are important to assess whether the proposal complies with the statut ory criteria for approval. In particular, we believe that the question about Federal administration is important to understand the impact of the proposal on the Federal deficit.
Comment : One commenter suggested that th e Secretaries require States to provide analysis to ensure that proposed i nnovations do not have the unintended effect of increasing the cost of insurance for the rema ining market and decrea sing enrollment. Response : The analyses in 31 CFR 33.108(a)(2)(iv)(C)(4) and 45 CFR 155.1308(a)(2)(iv)(C)(4) of the proposed rules we re based on the statutory criteria for waiver approval, as specified in section 1332(b)(1) of the Affordable Care Act. In describing the scope of coverage and affordabili ty requirements, the statute specifies that comparisons are to be made with respect to th e provisions of title I of the Affordable Care Act, which contains the market reform provi sions that affect the individual and smallgroup markets -- inside and outside the Exchan ge. Consequently, we believe that the provisions of the proposed regul ations specified that a Stat e must provide the type of analysis that is requested by the commenter. We maintain this language in the final regulations. 2. Timing of Applications
Comment : We received a number of comments regarding whether the Secretaries should require a State to submit an applicati on for a section 1332 waiver 12 months (or some other amount of time) in advance of th e requested effective date, to allow for the careful implementation of what may be co mplex waivers. In general, commenters supported a timing requirement of either 12 or 24 months in advance. However, some commenters opposed any timing requirement. In addition, one commenter asked that the Secretaries require at least 18 months between approval and implementation. Response : In recognition of the range of time standards recommended by commenters, along with the like lihood that the scope of s ection 1332 waivers will vary widely based on the provisions a State proposes to waive and other rela ted factors, we are amending the proposed language to specify that applications must be submitted sufficiently in advance of the requested e ffective date to allow for an appropriate implementation timeline. In addition, as disc ussed previously, the fi nal regulations adopt a recommendation to include an implemen tation timeline as part of the waiver application. We believe this new timeline re quirement will help ensu re applications are submitted sufficiently in advance of the effec tive date. We further encourage States to contact the Secretaries during th e conceptual phase of a sec tion 1332 waiver to establish a reasonable timeframe for the submission of an application and the effective date of an approved proposal.Comment : One commenter asked the Secretaries to clarify that there can only be one 45-day preliminary review period per application. Response : We agree with the commenter’s cl arification. We note that to the extent that a State’s applicat ion is denied and the State resubmits the application, the Secretaries will treat the application as a ne w application that is subject to a 45-day preliminary review period. 3. Approval Standards We received a number of comments rega rding standards a section 1332 waiver proposal must meet to be approved by the S ecretaries. The proposed regulations covered only the procedural standards for secti on 1332 waivers, and did not address the substantive standards for approval beyond restating the statutory criteria.
Comment : Several commenters asked that the Secretaries define the comprehensive-coverage, affordability, and scope of coverage requirements specified in sections 1332(b)(1)(A), (B), and (C) of the Affordable Care Act. One commenter proposed a specific framework for the compre hensive-coverage standard based on the service categories specified in section 1302(b) of the Affordable Care Act, along with other analyses. Another commenter asked that the Secretaries clarify that affordability benchmarks will take into account the income of eligible individuals and the premium and cost-sharing subsidies they would r eceive. Another commenter asked that affordability analyses include consideration of services that are excluded from the proposed waiver. Lastly, one commenter aske d that the Secretaries provide benchmarks for the scope of coverage analysis and a llow public comment on such benchmarks. Commenters suggested that the Secretarie s should expand the criteria for approval to include providing a sufficient choice of hea lth plans. One commenter specified thatthe Secretaries should require the State to ensure a selection of health plans that meet the needs of low-income individuals. Another co mmenter asked that St ates be required to demonstrate the adequacy of provider networks as a condition of approval. Commenters also suggested that the S ecretaries condition waiver approval on the inclusion of specific services and categories of services in the benefit package; the coordination of private and public delivery sy stems; the integration of enrollment and renewal processes; and the ability of deliver y systems to measure acu ity and severity and adjust cost struct ures appropriately. One commenter asked the Secretaries to spec ify that if any waiver alters Medicaid and CHIP, a State must maintain Medicaid a nd CHIP protections and “enabling services” (such as transportation and tr anslation) for the Medicaid and CHIP population. Another commenter asked the Secretaries to require Stat es to demonstrate adequate protections for Medicaid beneficiaries who are included in a section 1332 waiver. Another commenter asked the Secretaries to require that States provide children who are currently covered by CHIP with coverage, cost-s haring protections, and benef its comparable to CHIP. A commenter asked that the Secretaries requ ire States seeking a waiver to provide for a similar age rating rule to the rule in section 1334 of the Affordable Care Act. Commenters also asked that the Secretarie s require States to comply with other provisions of the Affordable Care Act as a c ondition of waiver approval. These included the nondiscrimination provisions of section 1557 of the Affordable Care Act and the market reform rules that take effect in 2014. One commenter said that States and th e Secretaries must consider whether a proposal meets the statutory requirements fo r approval for both the overall population and specifically for American Indians and Alaska Natives.Lastly, one commenter asked the Secretarie s to require the CMS actuary to certify whether a State's proposal would provide cove rage to a comparable number of residents purchasing individual insurance policies. Response : We appreciate the comments subm itted on standards for approval and will consider them as we develop the subs tantive component of the waiver approval process. Further, we clarif y that section 1332(a)(2) of the Affordable Care Act clearly defines the scope of authority under secti on 1332, and does not exte nd to subtitle A of title I of the Affordable Care Act, which incl udes the market reform provisions, or section 1557 of the Affordable Care Act, which includes the nondiscrimination provisions. 4. General
Comment : Commenters asked the Secretaries to clarify that a State does not have to enact a new law and establish new program s if a sufficient law or program already exists. Response : We agree with this comment. The final regulations at 31 CFR 33.108(f)(3)(ii) and 45 CFR 155.1308(f)(3)(ii) were modified to make clear that States with an existing law or program that addresses the waiver process and requirements are not required to enact a new law.
Comment : One commenter suggested that th e Secretaries consider not requiring applications to be submitted in printed format. Response : We agree with the commenter’s suggestion, and are removing this requirement from the final rules.
Comment : One commenter asked the Secretaries to specify that they will process all submitted applications.Response : We agree with the comment and be lieve that the proposed regulations address it. As set forth in 31 CFR 33.108(a)(2) and 45 CFR 155.1308(a)(2), the Secretaries will make a determination as to whether each submitted application is complete, and 31 CFR 33.116(c) and 45 CFR 15 5.1316(c) of the proposed rules specified that the Secretaries will make a final decision regarding all ap plications that are found to be complete. We are maintaining thes e provisions in the final regulations. D. State Public Notice Requirem ents (31 CFR 33.112 and 45 CFR 155.1312) Consistent with the provisions of sec tion 1332 of the Affordable Care Act, to facilitate public involvement in the re view and approval of section 1332 waiver applications, 31 CFR 33.112(a)(1) and 45 CFR 155.1312(a)(1) of the proposed regulations required a State to provide a public notice and co mment period sufficient to ensure a meaningful level of public input fo r a section 1332 waiver application prior to the submission of that applica tion to the Secretary of HHS fo r review and consideration. In addition, the proposed regulations require d a State with one or more Federallyrecognized Indian tribes within its borders to consult with thos e Indian tribes in accordance with Executive Order 13175. Because meaningful input requires notice of the nature of the section 1332 waiver application, as part of th e State public notice and co mment period, the proposed regulations required a State to provide the public with the following information prior to the submission of an application:

● A comprehensive description of the section 1332 waiver application to be submitted to the Secretary of HHS, including information and assurances related to all statutory requirements and other informati on consistent with guidance provided by the Secretaries;● Where copies of the section 1332 waiver application are available for public review and comment;

● How and where written comments may be submitted and reviewed by the public, and the timeframe during which pub lic comments may be submitted; and

● The location, date and tim e of public hearings that will be convened by the State to seek public input on th e section 1332 waiver application. 31 CFR 33.112(a)(2) and 45 CFR 155.1312(a)(2 ) of the proposed regulations required States to conduct publ ic hearings that provide in terested parties with the opportunity to learn about and comment on th e contents of the section 1332 waiver application. The State public notice and comment process must comply with applicable civil rights rules for accessibility, which require, for example –

● The provision of auxiliary aids and serv ices such as interpreters for persons with disabilities where necessary for effective communication;

● The use of accessible meeting places for the hosting of public forums provided for in the Rule;

● Reasonable steps to provide meaningful access for limited English proficient (LEP) persons, such as the inclusion of “tag lines” on State web sites containing phone numbers for LEP persons to call to reach “langu age line” interpreters for assistance; and

● Other civil rights requir ements applicable to the States under the Americans with Disabilities Act, section 504 of the Re habilitation Act of 1973 and Title VI of the Civil Rights Act of 1964, among others. We received the following comments con cerning the proposed State public notice and comment process.1. Timing
Comment : In general, commenters expre ssed support for a r obust State public notice and comment process. Several commente rs suggested that the Secretaries should specify a minimum amount of time for the State public notice a nd comment process, ranging from 45 to 90 days. Response : We agree with commenters that the State public notice and comment period is an important element of a transp arent approach. The proposed regulations require that the State public notice period be, “s ufficient to ensure a meaningful level of public input”. Because section 1332 waiver applications may take on a wide range of proposals, we believe that this approach better suits section 1332 waivers. To the extent that a proposal is particularly wide-ra nging, the proposed regulations will support a longer State public notice and comment peri od, and if the proposal is minor, it can support a shorter period. As such, we are maintaining the language of the proposed regulations in the final rules. We further encourage States to contact the Secretaries during the conceptual phase of a section 1332 wa iver to establish a reasonable timeframe for the State public notice and comment period. 2. Tribal Consultation
Comment : One commenter suggested that the Secretaries encourage States to use Medicaid tribal consultation procedures in the section 1332 waiver process. Response : As set forth in 31 CFR 3 3.112(a)(2) and 45 CFR 155.1312(a)(2), a State with one or more Federally-recognized tribes within its borders must conduct a separate process for meaningful consultation with such tribes as part of the State public notice and comment process. In the preamble a ssociated with this section, the Secretaries noted that such process is in accordance with Executive Order 13175, which mandatedthe establishment of regular and meaningful consultation and collaboration with tribal officials in the development of Federal policie s that have “tribal implications,” which are defined as policies or actions “w ith substantial direct effects on one or more Indian tribes, on the relationship between the Federal G overnment and Indian tribes, or on the distribution of power and res ponsibilities between the Federal Government and Indian tribes.” As this executive order also app lies to Medicaid, a State could use a Medicaid consultation process to satisfy the consulta tion needed for a section 1332 waiver. We agree with the commenter and encourage States to consider whether the use of such a process would be appropriat e for section 1332 proposals. 3. Public Hearings
Comment : Commenters supported the re quirement for public hearings. Commenters suggested allowing States to determine the appropria te number of public hearings, with a minimum of one or two. One commenter asked the Secretaries to specify that hearings must happen in multiple geographic locations. Response : As set forth in 31 CFR 33.112( c)(1) and 45 CFR 155.1312(c)(1), “...a State must conduct public hearings regarding th e State’s application.” We believe that the proposed regulation permits a State to dete rmine the appropriate number of hearings, but, by definition, “hearings” mean s no less than two. As such, the final regulations were not changed. 31 CFR 33.112(c)(2) and 45 CFR 155.1312(c) (2) provides that “Such public hearings shall provide an inte rested party the opportunity to learn about and comment on the contents of the application for a section 1332 waiver.” We interpret this to mean that a State must provide the opport unity for parties throughout a State to comment, eitherthrough multiple hearings in different lo cations, or through the use of phone or videoconferencing. We will maintain this provision in the final regulations.
Comment : Commenters supported the provi sions in 31 CFR 33.112(c)(2) and 45 CFR 155.1312(c)(2) that specify th at public hearings must provide an opportunity for an interested party to comment on the contents of an applic ation for a section 1332 waiver. One commenter recommended that the Secretarie s specify that legislative hearings can substitute for the State pub lic notice and comment proces s. Other commenters opposed this recommendation, noting that legislat ive hearings may provide only limited opportunities for members of the public to comment. Response : While the proposed rules do not specifically address whether legislative hearings may satisfy the pub lic hearing requirement, 31 CFR 33.112(c)(2) and 45 CFR 155.1312(c)(2) of the proposed regulati on provide that, “Such public hearings shall provide an interested party the oppor tunity to learn about and comment on the contents of the application for a section 1332 wa iver.” If a legisla tive hearing provides an opportunity for interested parties to comme nt on the contents of a waiver application, then it meets the public hearing requiremen t; if, however, a legislative hearing does not allow the public to contribute, it does not m eet the requirement. Specifically, we believe that to use a legislative hearing towards mee ting this requirement, a State would need to provide a concrete proposal for comment well in advance of the hearing, as well as an opportunity for the public to speak at the heari ng. We are maintaini ng this approach in the final regulations to provide States with flexibility but at the same time ensure that the public has a meaningful opportunity to comment. 4. GeneralComment : One commenter recommended that the Secretaries require consumers to be full participants as waivers are de signed, implemented, and monitored, and that such participation should include serving on an advisory board and a governing board. Response : We agree with the commenter that States should involve consumers in the development, implementation, and monito ring of section 1332 waivers. We believe that the proposed State and Federal public notice and comm ent processes, along with the post-award public forum provision, ensure fo rmal opportunities for participation. To ensure that consumers can participate, we clarify that the State public notice and comment process, the post-award public fo rum, and the draft and final annual reports published on a State’s public web site mu st comply with applicable civil rights requirements for accessibility, which are discusse d in the preamble to this section. We also note that we expect that States will in form consumers and other interested parties regarding the availability of auxiliary aids and services for public forums. We encourage States to consider wh ere other opportunities for consumer involvement exist. Given that section 1332 wa ivers may be broad or narrow in scope, we have not modified the proposed regulation to add a provision requiring the establishment of advisory or governing boards. We believ e that such a requirement would be overly burdensome for a State seeking a waiver that is limited in scope. We will work closely with States to ensure that the State public notice and comment process is sufficient to ensure a meaningful level of public input , as proposed in 31 CFR 33.112(a)(1) and 45 CFR 155.1312(a)(1).
Comment : A commenter asked that the Secr etaries require that a State send a copy of any waiver proposal affecting FQHCs or ECPs directly to each FQHC in theState as well as to the State primary care a ssociation, and that the State allow the primary care association and at le ast two FQHCs time to speak at the public hearing. Response : We acknowledge the critical role that FQHCs and ECPs have in providing services to low-income and other vu lnerable populations. Given the potentially broad scope of section 1332 waivers, the Secr etaries opted to take a broad approach to describing the State public noti ce and comment process in the proposed rules, to ensure that it would remain flexible to accommodate comments from all key stakeholders. The provisions of 31 CFR 33.112(a)(1) and 45 CF R 155.1312(a)(1) specify that, “a State must provide public notice and comment period suffi cient to ensure a m eaningful level of public input...” This will give FQHCs, EC Ps, and other interested or affected stakeholders an opportunity for engagement.
Comment : A few commenters asked the Secretaries to clarify that the description of the proposal that is shared with the public must include sp ecific details of the proposal, including analyses of financing and enrollment. Response : We agree with the commenters that this information is important to ensuring that stakeholders have an opportunity to provide meaningful input. As set forth in 31 CFR 33.112(b)(1) and 45 CFR 155.1312(b)(1), the public notice must include the following: “A comprehensive description of the application for a section 1332 waiver to be submitted to the Secretary including information and assurances related to all statutory requirements and other information consistent with guidance provided by the Secretary and the Secretary of the Treasury.” We be lieve that this provision addresses the commenters’ recommendations by ensuring that the public will have access to in-depth information needed to assess the impact of the proposal. We also reta in the flexibility to clarify this provision in future guidance to address any areas in which additionalinformation is needed to ensure that th e State public notice an d comment period is sufficient to ensure a meani ngful level of public input. E. Federal Public Notice and Appr oval Process (31 CFR 33.116 and 45 CFR 155.1316) Consistent with section 1332 of the Affo rdable Care Act and the Secretaries’ desire to implement a State waiver applic ation process that promotes transparency, facilitates public involvement and input, a nd encourages sound decision-making at all levels of government, 31 CFR 33.116 and 45 CFR 155.1316 of the proposed regulations provided for a Federal public notice a nd comment period following a preliminary determination by the Secretaries that a State’s application for a section 1332 waiver is complete. To facilitate public pa rticipation in the section 1332 waiver application process, the proposed regulations required the Secretary of HHS to provide the public with notice of a section 1332 waiver application that ha s been preliminarily determined to be complete, including any supplemental material s received from a State during the Federal public notice and comment period, as well as re gular updates for the status of a State’s section 1332 waiver application. In additi on, the Secretary of HHS would provide the public with information relating to (A) where copies of the section 1332 waiver application are available for public review and comment; (B) how and where written comments may be submitted and reviewed by the public, and the timeframe during which comments may be submitted; and (C) any public comments received during the Federal public notice and comment period. Following the conclusion of the Federa l notice and comment period, but in no event later than 180 days following the prelim inary determination by the Secretaries thata State’s application for a section 1332 waiv er is complete, the final decision of the Secretaries on a State’s secti on 1332 waiver application woul d be issued by the Secretary of HHS. We received the following comments c oncerning the proposed Federal public notice and approval process. 1. Federal public notice process
Comment : Commenters suggested that the Secretaries post a pplications and supporting materials on a dedicated web site. Response : As set forth in 31 CFR 33.116( b)(2) and 45 CFR 155.1316(b)(2), the Secretary of HHS, “...will make available thr ough its Web site and otherwise, and shall update as appropriate, public notice....” The proposed rules list the contents of this public notice, which include applications and supporting materials. We will consider whether to implement this requirement thr ough a dedicated website, or through a page on the main HHS or CMS web site.
Comment : Several commenters asked that the Secretaries require a specific length for the Federal public notice and comment period. One commenter suggested 45 days. Response : We agree with commenters that the Federal public notice and comment period is an important element of a transparent approach. The proposed regulations require that the Federal public notice period be , “sufficient to ensure a meaningful level of public input”. Because the waiver applications may cover a wide range of proposals, we believe that this a pproach better suits sect ion 1332 waivers. To the extent that a proposal is particularly wide-ranging, the proposed regulation will support a longer Federal public notice and comme nt period, and if the proposal is minor,it can support a shorter period. As such, we are maintaining the la nguage of the proposed regulations in the final rules.
Comment : Commenters suggested that the Secretaries create an electronic mailing list to notify interested parties of the submission of an application and other actions taken. Response : We will consider this suggestion as we develop the details of the Federal public notice and comment process.
Comment : Commenters asked that the Secret aries specify that the Secretaries will electronically publish all comments rece ived during the Federal public notice and comment process. Response : We agree with the commenter’s suggestion. This provision was included in 31 CFR 33.116(b )(2)(iv) and 45 CFR 155.1316(b)(2)(iv) of the proposed regulations, and we will maintain this in the final regulations.
Comment : One commenter suggested that th e Secretaries modify the proposed process to incorporate a notific ation of the State primary care association in any State that is requesting to waive provisions related to FQHCs, and to require the Secretaries to provide written responses relate d to comments on this topic, as well as explanations and supporting information related to the approva l of any proposal that contains such provisions. Response : We acknowledge the critical role that FQHCs have in providing services to low-income and other vulnerab le populations. Given the potentially broad scope of section 1332 waivers, the Secretar ies opted to take a broad approach to describing the Federal public notice and commen t process in the proposed rules, to ensure that it would remain flexible to accommoda te comments from all key stakeholders.31 CFR 33.116(b)(1) and 45 CFR 155.1316(b)(1) sp ecified that, “the Secretary and the Secretary of the Treasury will provide for a public notice and comment period that is sufficient to ensure a meaningful level of public input...” This will give FQHCs, ECPs, and other interested or affected stake holders an opportunity for engagement.
Comment : One commenter expressed concerns as to whether comments from entities outside a State requesti ng a waiver would be applicable to the State’s proposal. Response : We recognize that entities within a State requesting a waiver are well positioned to contribute meaningful comments; we also recognize that there are entities throughout the country that will have an interest in and e xpertise in the to pics of waiver proposals, particularly to the extent that a State’s waiver proposal could affect other States. In the interests of cr eating a transparent process, th e Secretaries will consider all comments submitted during the Federal public notice and comment period, and make decisions in accordance with the stat utory criteria for approval. 2. Approval Process
Comment : One commenter suggested that th e Secretaries establish a waiver review panel that consists of consumers, providers, and federal and nongovernmental technical experts to review testimony and comments and make recommendations regarding the approval of a waiver. Response : We will consider this suggesti on, along with other approaches to creating an efficient and transparent process, as we move closer to the point at which States will begin to develop section 1332 proposals.
Comment : Commenters asked for clarification on how the Secretaries would implement the 180-day Federal decision-maki ng period. One commenter suggested that the Secretaries should allow reasonable adjust ments to an application without affectingtimeframes, when the adjustments are the resu lt of State-Federal negotiations. Another commenter asked the Secretaries to clarify wh ether the provision allowing the Secretaries to determine an application incomplete afte r first determining it complete was purposeful, and asked for the Secretaries to revise this pr ovision such that it w ould not affect the 180- day Federal decision-making period. Response : The Secretaries intend to devel op protocols related to the Federal decision-making process that are responsive to the needs of each State and promote efficiency and transparency. These protoc ols may vary from pr oposal to proposal, and will certainly evolve as States and the Secret aries gain additional expertise in navigating the process. We will strive to ensure cl ear and open lines of communication between a State and the Secretaries throughout th e Federal decision-making process. We agree with the comment regarding th e allowance to modify an application without affecting the timeframe as a result of negotiation. We anticipate that this will be a regular occurrence during th e Federal decision-making peri od, and that making agreedupon changes as the process moves forward will facilitate an efficient process for all involved parties. We clarify that the provision in 31 CFR 33.108(a)(2)(i)(C) and 45 CFR 155.1308(a)(2)(i)(C) of the proposed regulations was indeed purposeful in specifying that a preliminary finding that an application is complete does not preclude the Secretaries from later finding that an application is not complete. We anticipate that conversations between a State and the Secretar ies may reveal additional information that is needed to evaluate whether an application meets the statutory requirements for approval. When such a situation occurs without sufficient tim e for the State to respond before the end of the 180-day Federal decision-making period, the Secretaries can either deny theapplication or find the application incomplete; we believe that the latter option provides greater flexibility to States, and reduces dupl icate burden that would be placed on States and on the Federal government if an applica tion must be resubmitted. As such, we are maintaining this provision in the final regulations. As noted above, we intend to work closely with States to create an efficien t process for waiver approval, and preserve timeframes wherever possible. F. Monitoring and Complian ce (31 CFR 33.120 and 45 CFR 155.1320) As section 1332 waivers are likely to a have a significant impact on individuals, States and the Federal government, the propos ed regulations established processes and methodologies to ensure that the Secret aries receive adequate and appropriate information regarding section 1332 waivers (con sistent with section 1332(a)(4)(B)(iv) of the Affordable Care Act). Under 31 CFR 33.120(a) and 45 CFR 155.1320(a) of the proposed regulations, a State is required to comply with all a pplicable Federal laws, regulations, policy statements and Departmental guidance unless a law or regulation has specifically been waived. Further, the proposed regulations re quired a State to come into compliance with any changes in Federal law, regulation, or policy affecting secti on 1332 waivers within the timeframes specified in law, regulation, interpretive policy, or guidance, unless the provision being changed is e xpressly waived, and to co mply with the terms and conditions of the agreement entered into between the Secretaries and the State to implement a section 1332 waiver, or the se ction 1332 waiver would be suspended or terminated in whole or in part by the Secretaries. Under 31 CFR 33.120(b) and 45 CFR 155.1320(b) of the proposed regulations, as part of the terms and cond itions of any section 1332 waiver, a State must conductperiodic reviews related to the implementa tion of the waiver. The Secretaries would review, and when appropriate inve stigate, documented complaints that a State is failing to materially comply with requirements specified in the terms and conditions of the section 1332 waiver. In addition, the Secretaries woul d share with the Stat e any complaint that has been received and notify the State of any applicable monitoring and compliance issues. Under 31 CFR 33.120(c) and 45 CFR 155.1320(c) of the proposed regulations, to ensure continued public input after the initia l six months of the waiver’s implementation, and annually thereafter, States were required to hold a public forum at which members of the public have an opportunity to provide comments on the progress of the section 1332 waiver. The proposed regulation further requir ed States to include a summary of this forum to the Secretary of HHS as part of the quarterly and annual reporting requirements under 31 CFR 33.124 and 45 CFR 155.1324. Under 31 CFR 33.120(c)(1) and 45 CFR 155.1320(c)(1) of the proposed regulations, States were requi red to publish the date, time , and location of the public forum in a prominent location on the State’s pub lic Web site at least 30 days prior to the date of the planned public forum. Under 31 CFR 33.120(d) and 45 CFR 155.1320(d) of the proposed regulations, the Secretaries reserved the right to suspe nd or terminate a section 1332 waiver, in whole or in part, any time before the date of expi ration, if the Secretarie s determined that the State materially failed to comply with the terms and conditions of the section 1332 waiver. In the event that all or a portion of a section 1332 waiver is terminated or suspended by the Secretaries, or if all or a portion of a section 1332 waiver is withdrawn, Federal funding would be limited to normal cl oseout costs associated with an orderlytermination of the section 1332 waiver, as described in 31 CFR 33.120(e) and 45 CFR 155.1320(e). Under 31 CFR 33.120(f) and 45 CFR 155.1320(f) of the proposed regulations, in the event that the Secretaries undertook an independent evaluation of any component of the section 1332 waiver, the State must coope rate fully with the Secretaries or the independent evaluator selected by the Secretar ies. This cooperation would include, but is not limited to, the submission of all necessary data and information to the Secretaries or the independent evaluator. We received the following comments concerning the proposed provisions regarding monitoring and compliance. 1. Post-Award Public Forum
Comment : In general, commenters supporte d the proposal for an annual public forum. Some commenters re quested that the Secretaries provide additional detail on the post-award public forum requirement, including requiring the development of a formal advisory body similar to the Medical Care Advisory Committee (MCAC). Commenters also asked the Secretaries to clarify that th e public must have an opportunity to comment at a post-award public forum, and that the Secr etaries should require States to publish the date, time, and location of public foru ms in the State equivalent of the Federal Register

. Response : We believe that it is appropriate to provide a State with flexibility to determine the appropriate public forums. C onsequently, we have not added a provision requiring a State to establish an advisory boar d. Further, given the possibility for section 1332 waivers to be broad or narrow in scope, we want to avoid requ iring the creation of burdensome structures.We agree with commenters that the pub lic should have an opportunity to comment at a post-award public forum, wh ich was reflected in 31 CFR 33.120(c) and 45 CFR 155.1320(c) of the proposed regulations. We are main taining this provision in the final regulations. We also agree that the public should have notice of a public forum. As set forth in 31 CFR 33.120(c)(1) and 45 CFR 155.1320(c)(1), a State must publish the date, time, and location of a post-award public forum in a prominent location on the State’s public Web site at least 30 days prior to the forum. We believe that a State’s public web site is a more effective means of communication to the public than a State’s equivalent of the Federal Register , and as such, will maintain this pr ovision in the final regulation. With that said, we encourage States to publis h the notice of a post-award forum in other locations that will ensure appropriate public notice.
Comment : One commenter asked that the Secretaries consider delaying the initial post-award public forum and removing the requ irement after 2 to 3 years of operation, with the potential to trigger forums when changes occur. Response : We support the commenter’s desi re to reduce burden on States. However, we believe that post-award forums w ill be critical to ensu ring that public has a regular opportunity to learn a bout and comment on the progress of a waiver. As such, we are maintaining this provision in the final regulations. 2. General
Comment : One commenter suggested that 31 CFR §33.120(a) be modified to remove the term “interpretive guidance.” Th e commenter stated that States should be subject only to “laws, regulations, and interp retive policy that have been published and are of general applicability.Response : We believe that the authority available to States under section 1332 demands that the Federal government have a broad set of tools for ensuring ongoing compliance with the statutory criteria for th e approval of waivers and providing needed clarifications to States, including interpretiv e guidance. With that noted, we will work closely with States to provide as much a dvance notice as possible of upcoming guidance that affects waivers, as well as to incorpor ate State input in crafting such guidance where possible.
Comment : A commenter asked the Secretarie s to reduce Federal discretionary authority to discontinue waivers. Response : As set forth in 31 CFR 3 3.120(d) and 45 CFR 155.1320(d), the Secretaries’ authority to termin ate or suspend a waiver is limited to situations in which the Secretaries find, “...that a State has materi ally failed to comply with the terms of a section 1332 waiver.” We believe that this provision is sufficiently limited and is critical to ensuring that Federal dollars are spent in accordance with applicab le rules. As such, we will maintain this provision in the final regulations.
Comment : One commenter asked that the Secr etaries require States to develop a transition plan that would allow the public to continue to have access to quality, affordable health care should a State’s wa iver be terminated or suspended. Response : We agree that it would be useful for States to develop a transition plan, depending on the scope of the approved section 1332 waiver. We will consider including this as a standard component of the terms and conditions of an approved waiver.
Comment : One commenter asked the Secretaries to closely monitor approved waivers to ensure fair and adequate acce ss to and payment for FQHC services.Response : We believe that there are many areas in which monitoring will be particularly important to ensu re that approved waivers con tinue to meet the statutory criteria for approval. To the extent possible, we will align this monitoring with each State’s waiver design to re duce administrative burden. G. State Reporting Requirements (31 CFR 33.124 and 45 CFR 155.1324) Section 1332 of the Affordable Care Act re quires that the Secretaries provide for a process for the periodic submission of repor ts by a State concerning the implementation of the program under a section 1332 waiver. For the Secretaries to effectively mon itor the implementation of a waiver, the proposed regulations required a State to subm it a quarterly progress report in accordance with the terms and conditions of the State’s section 1332 wa iver. States were also required to submit an annual report, as described in 31 CFR 33.124(b) and 45 CFR 155.1324(b), documenting the following:

● The progress of the section 1332 waiver;

● Data on compliance with section 1332(b )(1)(A) through (D) of the Affordable Care Act;

● A summary of the annual post-awar d public forum, including all public comments received regarding the progress of th e section 1332 waiver and action taken in response to such concer ns or comments; and

● Other information consistent with the State’s approved terms and conditions. Under 31 CFR 33.124(c) and 45 CFR 155.1324(c) of the proposed regulations, States were required to submit a draft annual re port to the Secretary of Health and Human Services no later than 90 days after the e nd of each waiver year. Within 60 days of receipt of comments from the Secretary of H ealth and Human Servi ces, a State would berequired to submit a final annual report for the waiver year to the S ecretary of Health and Human Services. Finally, a State would be re quired to publish the dr aft and final annual reports on the State’s public web site. The Secretaries noted that they intended to issue fu ture guidance under section 1332 regarding periodic reports. We received the following comments con cerning the proposed process for State reporting on approved waivers.
Comment : Several commenters requested that the Secretaries require States and the Federal government to publish quarterly and annual reports on State and Federal web sites in a timely fashion. Response : The provisions of 31 CFR 33.124(c)(2) and 45 CFR 155.1324(c)(2) specify that a State must publish both draft a nd final annual reports on its public web site. We are maintaining this provision in the fina l regulations. We will consider the other elements of this comment in de veloping future guidance on reporting.
Comment : In general, commenters supporte d the proposed quarterly and annual reporting provisions. Some commenters reque sted that the Secretaries add specific reporting topics and analyses in regulation, as opposed to addressing this in future guidance. Response : We appreciate the commenters’ de tailed suggestions. We are not including additional specificity in the final re gulations at this time, given that the rules regarding the underlying provisions are not yet final. We will consider the specific suggestions in developing future guidan ce on reporting, as well as in crafting the reporting provisions that may be specific to an approved waiver.Comment : One commenter recommended that the frequency of reporting be reduced from quarterly to semi-annual for the first 2 to 3 years of a waiver period, with annual reporting after that. The commenter also suggested that annual reports be replaced with high-level summaries after th e first 2 to 3 years of a waiver period. Response : We support the commenter’s desi re to reduce burden on States. However, we believe that given the potent ially broad scope of section 1332 waivers, quarterly and annual reporting will be critical to ensuring that the Se cretaries can exercise appropriate oversight of approve d waivers, and States can formally communicate areas in which best practices have emerged or tech nical assistance may be needed. We also believe that such reporting is important to enable the Secretaries to calibrate future budgetary estimates. Within this construct, we intend to work with St ates to ensure that quarterly and annual reporting do not include duplicative or unnecessary information, and are closely aligned to the design of a State’s waiver.
Comment : One commenter objected to the provision that allows the Secretaries to review a draft version of the annual re port prior to its release to the public. Response : Consistent with the practice th at we are adopting for section 1115 waivers, which is specified in a concurrent ly issued final rule in 42 CFR 431.428(b), the provisions of 31 CFR 33.124(c)(2) and 45 CF R 155.1324(c)(2) specify that a State must publish the draft annual report on a public Web site within 30 days of submission to the Secretary of HHS. We believe that this is appropriate to allow the State to complete any internal process it has for preparing the doc ument for publication (for example, ensuring that the document meets electr onic accessibility standards) and posting it electronically. We are maintaining this provision in the final rules. H. Periodic Evaluation Requiremen ts (31 CFR 33.128 and 45 CFR 155.1328)Section 1332 of the Affordable Care Act re quires that the Secretaries provide for a process for the periodic evaluation of section 1332 waivers by the Secretary or Secretaries with jurisdiction over the provisi ons for which the waiver was granted. The proposed regulations required th at each periodic evaluation in clude a review of all annual reports submitted by the State in acco rdance with 45 CFR 155.1324 and 31 CFR 33.124 that relate to the period of time covered by the evaluation. As part of this proposed regulation, th e Secretaries solicited public comments regarding specific components of the periodic evaluation of a section 1332 waiver. The Secretaries noted that potential components of a periodic evaluation could include, but not be limited to, the impact of the waiver on the following:

● Choice of health plans for individuals and employers;

● Stability of coverage fo r individuals and employers;

● Small businesses, individuals with pr e-existing conditions, and the low-income population;

● The overall health care system in the State; and

● Other States and the Federal government. The Secretaries noted that they intended to issue fu ture guidance under section 1332 regarding period ic evaluations. We received the following comments concerning the proposals regarding the evaluation of approved waivers.
Comment : Several commenters asked the Se cretaries to include additional specific evaluation criteria in regulation, including, the use of Healthcare Effectiveness Data and Information Set (HEDIS) and th e Consumer Assessme nt of Healthcare Providers and Systems (CAHPS); system-wide, audited quality outcome measures; andmetrics on accessibility, cost, health and wellness, administrative expenses, evidencebased practices, and the impact of the waiver on individuals with pr e-existing conditions and low-income populations. Commenters also offered additional s uggestions for the evaluation process, including requiring comparisons with States w ithout waivers; requiring that evaluations be conducted by objective, independent, peer-rev iewed evaluators at least every 3 years; and allowing States flexibility in constructing evaluations. Response : We have carefully reviewed the submitted comments and will consider them as we develop guidance on this topic. We intend to work closely with States and stakeholders to ensure that evalua tions are aligned with the design and goals of a State’s waiver and section 1332.
Comment : Commenters asked that evaluati on criteria not necessarily include choice of health plans, to allow evaluation cr iteria to accommodate different approaches that States may take in section 1332 waivers. Response : The potential evaluation criteria offered in the preamble to the proposed regulations represents a starting poi nt for the development of guidance on the evaluation of approved section 1332 waivers. We anticipate that the primary focus of the evaluation will be the four st atutory criteria for approval specified in section 1332(b)(1) of the Affordable Care Act. As noted above, we intend to work closely with States to ensure that evaluations are aligned with th e design and goals of a State’s waiver and section 1332.
Comment : Commenters asked that the Secr etaries, and not the States, conduct evaluations.Response : We are maintaining the language in 31 CFR 33.128(a)(1) and 45 CFR 155.1328(a)(1), as the law requires periodic ev aluations by the Secretaries. We will consider how best to carry out this responsibil ity as we develop future guidance related to the evaluation process. I. Other Comments We received the following comments, whic h were not related to a specific section of the proposed regulation. 1. Scope of Waivers
Comment : We received a number of comments th at requested that the Secretaries clarify or restrict waiver au thority in various ways, incl uding prohibiting States from: imposing more stringent coverage require ments on employers; waiving the minimum coverage provision; waiving provisions re lated to essential community providers; granting exceptions from the medical loss ratio requirement; or affecting employersponsored insurance. One commenter also asked that the Secretaries emphasize the importance of preserving employer-based coverage. In particular, a number of commenters asked the Secretaries to clarify the interaction between section 1332 waivers and the Employee Retirement Income Security Act (ERISA). In addition, one commenter asked whether States will be permitted to use redirected premium tax credits and cost-s haring reductions to fund Health Savings Accounts (HSAs). Response : Section 1332(a)(2) of the Affordable Care Act specifies that waiver authority is limited to parts I and II of subtit le D of the Affordable Care Act; section 1402 of the Affordable Care Act; and sections 36B, 4980H, and 5000A of the Internal RevenueCode. Further, section 1332(c) of the Affordable Care Act states while the Secretaries have broad discretion to determine the sc ope of a waiver, no Federal laws or requirements may be waived that are not within the Secretaries’ authority. As previously noted, we encourage States to contact the Secr etaries to discuss specific waiver proposals, particularly after the substa ntive rules subject to section 1332 waivers are finalized. 2. General
Comment : One commenter asked that the Secretaries include provisions for waiver amendments and renewals, and clar ify which requirements apply in these situations. Another commenter recommended th at the renewal proc ess include a thorough reevaluation. Response : We acknowledge that information regarding waiver amendments and renewals will be needed as we move clos er to the date on which section 1332 waivers could be effective. However, amendments and renewals are beyond the purview of the proposed rules, which were limited in accordance with section 1332(a)(4)(B) of the Affordable Care Act.
Comment : A commenter asked that the Secr etaries clarify that waivers are approved for a fixed timeframe. Response : We note that section 1332(e) of th e Affordable Care Act specifies that the initial term of a sect ion 1332 waiver may not extend longer than five years.
Comment : One commenter asked how HHS will determine the total amount of Federal funding under an approved waiver. Response : We will provide additional inform ation on this issue as we move closer to the date on which section 1332 wa ivers could be effec tive and regulations regarding the underlying pr ovisions are promulgated.IV. Provisions of the Final Regulations For the most part, these final rules in corporate the provisions of the proposed rules. Those provisions of these final rule s that differ from the proposed rules are as follows: A. Coordinated Waiver Pro cess (31 CFR 33.102 and 45 CFR 155.1302) We have clarified that “section 1115 demonstration” in 31 CFR 33.102(a) and 45 CFR 155.1302(a) refers to a demonstr ation under secti on 1115 of the Act. We have replaced the word “and” with the word “or” in 31 CFR 33.102(b) and 45 CFR 155.1302(b) to clarify th at the Secretary of Health and Human Services will transmit any proposal that requests to waiv e one or more of the provisions under the authority of the Secretary of the Treasu ry to the Secretar y of the Treasury. B. Definitions (31 CFR 33.104 and 45 CFR 155.1304) We have revised the definition of “Compl ete application” to reflect structural changes in 31 CFR 33.108 and 45 CFR 155.1308. C. Application Procedures (31 CFR 33.108 and 45 CFR 155.1308) We have revised 31 CFR 33.108 and 45 CFR 155.1308 substantially to adopt a simpler structural layout. We have revised a nd added headings and sections for (a), (b), (c), (d), (e), and (f), now titled, “Acceptable formats for applications”; “Application timing”; “Preliminary review”; “Notificati on of preliminary determination”; “Public notice of completed application”; and, “Criteria for a complete application”, respectively. We also made changes to cross-references to reflect the new layout . With the exception of the new headings, revised cross-references , and the below modifications, all content is the same.We have modified 31 CFR 33.108(a) and 45 CFR 155.1308(a) to remove the requirement that a State submit a pplications in printed format. We have added a provision at 31 CFR 33.108(b) and 45 CFR 155.1308(b) to specify that States must submit waiver a pplications sufficiently in advance of the requested effective date to allow for an appropriate implementation timeline. We have modified 31 CFR 33.108(f)(2) a nd 45 CFR 155.1308(f)(2) to clarify that written evidence of the Stat e’s compliance with the public notice and comment process includes, “a description of the key issues raised duri ng the State public notice and comment period.” We have amended 31 CFR 33.108(f)(3)(i i) and 45 CFR 155.1308(f)(3)(ii) to clarify that the requirement to provide a c opy of a law that provides the State with authority to implement the proposed waiver can be satisfied through the submission of an existing law, if such a law exists. We have amended 31 CFR 33.108(f)(3)(iii ) and 45 CFR 155.1308(f)(3)(iii) to remove the word “brief” from the provision describing information that States must provide regarding the rationale for a State’s specific waiver requests. We have made minor wording chan ges to 31 CFR 33.108(f)(3)(v)(A)-(D) and 45 CFR 155.1308(f)(3)(v)(A-D) to improve clarity. We have added a provision at 31 CFR 33.108(f)(4)(iv) and 45 CFR 155.1308(f)(4)(iv) to specify that States must submit an implementation timeline as part of the supporting information required for a complete in itial application. We have modified 31 CFR 33.108(g)(1 ) and 45 CFR 155.1308(g)(1) to clarify that requests for additional information from the Secretary of the Treasury will betransmitted to a State through the Secretary of Health and Human Services, which follows the process used elsewhere in the rules. D. General Throughout 45 CFR 155 subpa rt N, we have added, “as applicable” after references to the Secretary of the Treasury, to clarify that the speci fied requirements only involve the Secretary of the Tr easury to the extent that a waiver proposal or approved waiver includes a waiver of a provision unde r the authority of the Secretary of the Treasury. V. Collection of Information Requirements Under the Paperwork Reduction Act of 1995 (PRA), the Departments are required to provide notice in the Federal Register and solicit public comment before a collection of information requirement is approved by the Office of Management and Budget (OMB). To fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the PRA requi res that the Departments solicit comment on the following issues:

● The need for the information collecti on and its usefulness in carrying out the proper functions of the Departments.

● The accuracy of the Departments’ estimate of the information collection burden.

● The quality, utility, and clarity of the information to be collected.

● Recommendations to minimize the information collection burden on the affected public, including auto mated collection techniques. The Departments will be able to more accurately estimate the burden until the provisions that section 1332 aut horizes the Secretaries to waiv e pursuant to an applicationby a State take effect in 2014. The Departments solicited public comments on the annual number of waiver applications that the Departments may rece ive, but did not receive any responses. With that said, the Departments developed estimates of the burden associated with information collection re quirements in the proposed regulations, and has modified them based on the below comments. Furt her, the burden estimates provided are estimated averages, and the actual burden will vary based on the scope of the waiver and the State’s existing infrastructure for these activities. We received the following comments on information collection requirements.
Comment : One commenter asked that we estima te the number of States that will seek waivers. Response : We solicited comment on this in the proposed rules, and did not receive any responses. Given the lack of res ponse and length of time before the earliest possible effective date for section 1332 wa ivers, the Secretaries have no way to accurately quantify the number of States that will seek waivers. With that said, we believe that the per-State burden estimates provided in the proposed rule provide adequate information regarding the collections related to these rules. As such, for the purpose of this estimate, we use one State.
Comment : One commenter asked that we explain the average wage used in the burden analyses. Another suggested that the calculated burden estim ates were too low. Response : We have revisited the averag e wage used and agree with the commenter that it was too low. We have al so revisited some of the estimates of the number of hours and adjusted them. The combin ed impact of these changes is to increase the overall burden estimate, both in terms of hours and dollars. We have recomputed the average wage based on a 75 percent/25 pe rcent blend for a Management Analyst(Occupation No. 13-1111 in the Bureau of Labor Statistics’ May 2010 National Occupational Employment and Wage Estimate; Industry: State Government; Category: Business and Financial Operations Occupati ons) and a General and Operations Manager (Occupation No. 11-1021 in the May 2010 Bu reau of Labor Statistics’ National Occupational Employment and Wage Estimate; Industry: State Government; Category: Management Occupations). We believe that th is better reflects wages for these activities by using actual average wages for State government employees at an expected staff/management mix. In addition, we have incorporated a factor of 31.2 percent to account for additional employer costs (pai d leave, supplemental pay, insurance, retirement and savings, and legally-require d benefits) by using the State and local government rate for such costs for manageme nt, professional, and related workers from the Bureau of Labor Statistics’ September 2011 Employer Costs for Employee Compensation survey. By using this met hodology, we have revised the average wage from $20.67 per hour to $46.67 per hour, which re sults in commensurate increases to all of the burden estimates. The Departments solicited public comme nt on each of these issues for the following sections of this document that contain information collection requirements (ICRs): A. ICRs Regarding the Coordinated Waiver Process (31 CFR 33.102 and 45 CFR 155.1302) and Application Procedures (31 CFR 33.108 and 45 CFR 155.1308) Under certain conditions, 31 CFR 33.102 and 45 CFR 155.1302(a) and (b) provide that a State may submit a single a pplication for a waiver under section 1332 of the Affordable Care Act and a waiver under one or more of the existing waiver processes applicable under titles XVIII, XIX, and XXI of the Act, or under any other Federal lawrelating to the provision of health care items or services. 31 CFR 33.108 and 45 CFR 155.1308 establish the application process for section 1332 waivers. Under 31 CFR 33.108(a) and 45 CFR 155.1308(a), a State’s application for a pproval of a section 1332 waiver must be submitted to the Secretary as an electronic document. Paragraph (f) of 31 CFR 33.108 and 45 CFR 155.1308 specifi es that an application for a section 1332 waiver will not be considered complete unless the application meets all of the conditions set out those sections. The burden associated with the re quirements in 31 CFR 33.102 and 33.108 and 45 CFR 155.1302 and 155.1308 is the time and effort necessary for a State to develop and submit a complete application for a sect ion 1332 waiver. The Departments estimate that it will take 400 hours for a State to develop and submit a complete section 1332 waiver application, at a cost of $18,668. B. ICRs Regarding State Public Noti ce Requirements (31 CFR 33.112 and 45 CFR 155.1312) Paragraph (a) of 31 CFR 33.112 and 45 CF R 155.1312 require a State to provide a public notice and comment period prior to submitting an application for a section 1332 waiver. The public notice must address the inform ation requirements listed in paragraphs (b)(1) through (4) of 31 CFR 33.112 and 45 CFR 155.1312. The burden estimate associated with the requirements in paragraph (a)(1) and (b) of this section is the time and effort necessary to develop and provide public notice and obtain and consider public comments. The Departments estimate that each State submitting an application for a section 1332 waiver will require 80 hours to comply with the requirements in this section, at a total cost of $3,734 per State.Paragraph (a)(2) of 31 CFR 33.112 and 45 CFR 155.1312 require States with 1 or more Federally-recognized Indian tribes to consult with such tribes before submitting a section 1332 waiver application. Pa ragraph (f)(2) of 31 CFR 33.108 and 45 CFR 155.1308 explain that documentation of the State’ s public notice, which incorporates this consultation, must be include d in the waiver application. The burden associated with these requ irements is both the time and effort necessary for a State to conduct its tribal c onsultations and the time and effort necessary to notify CMS of the State’s compliance w ith paragraph (f)(2) of 31 CFR 33.108 and 45 CFR 155.1308. The Departments estimate that each State with federally recognized tribes that submits an applic ation for a section 1332 waiver will require 40 hours to both conduct its tribal consultations and to submit the aforementioned evidence to CMS, at a total cost of $1,867. Paragraph (c) of 31 CFR 33.112 and 45 CF R 155.1312 specify that after issuing the public notice and prior to submitting an a pplication for a section 1332 waiver, a State must conduct public hearings regarding the State's waiver application. While this requirement is subject to the PRA, the De partments believe the associated burden is exempt under 5 CFR 1320.3(h)(4). Facts or op inions submitted in response to general solicitations of comments from the public, published in the Federal Register or other publications, regardless of the form or format thereof, pr ovided that no person is required to supply specific information pertaining to th e commenter, other than that necessary for self-identification, as a condition of the agen cy’s full consideration of the comment are not subject to the PRA. C. ICRs Regarding Monitoring and Co mpliance (31 CFR 33.120 and 45 CFR 155.1320) 31 CFR 33.120(b) and 45 CFR 155.1320(b) require States to periodically performreviews of the implementation of the sect ion 1332 waiver. The Departments estimate that it will take a State 80 hours annua lly to periodically re view the waiver’s implementation, at a total cost of $3,734. Paragraph (c) of 31 CFR 33.120 and 45 CF R 155.1320 further specifies that at least 6 months after the implementation date of the waiver and a nnually thereafter, the State must hold a public forum to solicit comments on the progress of a section 1332 waiver. As specified in paragra ph (c)(1) of 31 CFR 33.120 and 45 CFR 155.1320, the State must publish the date, time, and location of the public forum in a prominent location on the State’s public web site, at leas t 30 days prior to the date of the planned public forum. The burden associated with these prov isions includes the time and effort necessary to conduct the public meeting and the time and effort nece ssary for a State to publish the date, time, and lo cation of the public forum in a prominent location on the State’s public web site, at least 30 days prior to the date of the planned public forum. While these requirements are subject to the PR A, the Departments believe the associated burden is exempt from the PRA. As discu ssed previously in this collection, facts or opinions submitted in response to general solicitations of comments from the public, published in the Federal Register or other publications, regard less of the form or format thereof, provided that no person is required to supply specific information pertaining to the commenter, other than that necessary fo r self-identification, as a condition of the agency’s full consideration of the comment ar e not subject to the PRA. Therefore, the burden associated with the a nnual public hearing requirement is exempt. Similarly, the Departments believe the time and effort nece ssary for a State to publish the date, time, and location of the public forum in a prominen t location on the State’s public web site isa burden that would be incurred in the cour se of usual and customary State business practices and is therefore exempt from the PRA under 5 CFR 1320.3(b)(3). D. ICRs Regarding State Reporting Requirements (31 CFR 33.124 and 45 CFR 155.1324) Paragraph (a) of 31 CFR 33.124 and 45 CFR 155.1324 requires States to submit quarterly reports to CMS in accordance with the terms and conditions of a State’s approved section 1332 waiver. The burden associ ated with this reporting requirement is the time and effort necessary to develop and submit quarterly reports to CMS. The Departments estimate that it will take 10 hours per quarter for each State to comply with this reporting requirement, for a total of 40 hours per year, at a total annual cost of $3,734. Paragraph (b) of 31 CFR 33.124 and 45 CF R 155.1324 requires States to submit annual reports to CMS documenting the inform ation listed in paragr aphs (b)(1) through (4) of 31 CFR 33.124 and 45 CFR 155.1324. As part of the submission process, paragraph (c) of 31 CFR 33.124 and 45 CFR 155.1324 requires States to submit draft annual reports to CMS no later than 90 days after the end of each waiver year, or as specified in the State’s terms and conditions. The burden associated with this reporting requirement is the time and effort necessary to develop and submit dr aft annual reports to CMS. The Departments estimate that it will take 40 hours for each State to comply with this reporting requirement, at a total cost of $1,867. Paragraph (c)(1) of 31 CFR 33.124 and 45 CFR 155.1324 specifies that within 60 days of receipt of comments from CMS, the State must submit to CMS the final annual report for the waiver year. While this requirement is subject to the PRA, the Departments believe the associated burden is exempt under 5 CFR 1320.3(h)(9). Facts oropinions obtained or solicite d through non-standardized fo llow-up questions designed to clarify responses to approved collections of information are not subject to the PRA. Paragraph (c)(2) of 31 CFR 33.124 and 45 CFR 155.1324 specify that the draft and final annual reports must be published on the State’s public we b site. The burden associated with this is the time and effort required for a State to post the aforementioned information on the State’s public web site. The Departments estimate that it will take 4 hours for each State to comply with th is requirement, at a total cost of $187. E. ICRs Regarding Periodic Evalua tion Requirements (31 CFR 33.128 and 45 CFR 155.1328) 31 CFR 33.128 and 45 CFR 155.1328 specify th at the Secretary of Health and Human Services and the Secretary of the Tr easury shall periodically evaluate the implementation of section 1332 waivers. The Departments recognize that evaluation will likely involve information collections, but ar e not seeking OMB approval for collections related to this provision at this time. The Departments will seek OMB approval, as needed, once it develops guidance for States re garding this evaluation requirement. Such approval will be requested following the 60- and 30-day comment periods required by the
PRA.TABLE 1: Estimated Annual Record keeping and Reporting Burden

Regulation Section(s) OMB Control

No. Respondents Responses Burden per Response

(hours) Total Annual Burden (hours) Hourly Labor Cost of Reporting ($) Total Labor Cost of Reporting ($) Total Capital/ Maintenance

Costs ($) Total Cost ($) 31 CFR 33.108 and 45 CFR 155.1308 0938-New 1 1 400 400 46.67 $18,668 0 $18,668

Paragraph (a)(1) of 31 CFR 33.112 and 45 CFR 155.1312 0938-New 1 1 80 80 46.67 $3,734 0 $3,734

Paragraph (a)(2) of 31 CFR 33.112 and 45 CFR 155.1312 0938-New 1 1 40 40 46.67 $1,867 0 $1,867

Paragraph (b)(1) of 31 CFR 33.120 and 45 CFR 155.1320 0938-New 1 1 80 80 46.67 $3,734 0 $3,734

Paragraph (a) of 31 CFR 33.124 and 45 CFR 155.1324 0938-New 1 4 10 40 46.67 $1,867 0 $1,867

Paragraph (b) of 31 CFR 33.124 and 45 CFR 155.1324 0938-New 1 1 40 40 46.67 $1,867 0 $1,867

Paragraph (c)(2) of 31 CFR 33.124 and 45 CFR 155.1324 0938-New 1 1 4 4 46.67 $187 0 $187

Total 1 10 684 $31,922 0 $31,922
If you comment on these information colle ction and recordkeeping requirements, please submit your comments to the Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: CMS Desk Officer, [CMS-9987-F] Fax: (202) 395-6974; or Email: OIRA_submission@omb.eop.gov An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it obtai ns a control number assigned by OMB. VI. Regulatory Impact StatementThe Departments have examined the imp acts of these final rules as required by Executive Order 13563 on Improving Re gulation and Regulatory Review (January 18. 2011), Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), the Regulatory Flexibil ity Act (RFA) (5 U.S.C. 601 et seq.), section 202 of the Unfunded Mandates Refo rm Act of 1995 (Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C. 804(2)). Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternativ es and, if regulation is necessary, to select regulatory approaches that maximize net benefits (inc luding potential economi c, environmental, public health and safety effects, distributive im pacts, and equity). These rules have been designated “significant regulat ory actions” although not econo mically significant, under section 3(f) of Executive Order 12866. Accord ingly, these rules have been reviewed by the Office of Management and Budget. The RFA requires agencies to analyze options for regulatory relief for small entities, if a rule has a significant economi c impact on a substantial number of small entities. For purposes of the RFA, sma ll entities include small businesses, nonprofit organizations, and small governmental jurisdic tions. Most hospitals and most other health care providers and suppliers are sm all entities, either by being nonprofit organizations or by meeting the SBA definiti on of a small business and having revenues of less than $7 million to $34.5 million in a ny 1 year. (For details, see the Small Business Administration's final rule that set fo rth size standards for h ealth care industries, at 65 FR 69432, November 17, 2000). Individua ls and States are not included in the definition of a small entity. The Department s are not preparing an analysis for the RFAbecause the Departments have determined, a nd the Secretaries certify, that these final rules will not have a significant economic impact on a substantial number of small entities. Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4) also requires that agenci es assess anticipated costs and benefits before issuing any rule whose mandates require spending in a ny 1 year of $100 million or more in 1995 dollars, updated annually for inflation. In 2011, that threshold is approximately $136 million. Because these rules do not mandate State participation in section 1332 waivers, there is no obligation for the Stat e to make any change to their existing programs. As a result, there is no mandate for the State. Therefore, the Departments estimate these rules will not mandate e xpenditures in the th reshold amount of $136 million in any 1 year. Executive Order 13132 establishes certain requ irements that an agency must meet when it promulgates a proposed rule (and subseq uent final rule) that imposes substantial direct requirement costs on State and local gov ernments, preempts State law, or otherwise has Federalism implications. Since these re gulations would not impose costs on State or local governments, the requirements of Execu tive Order 13132 are not applicable. In accordance with the provisions of Execu tive Order 12866, these regulations were reviewed by the Office of Management and Budget.List of Subjects 31 CFR Part 33 Health care, Health insurance, Repor ting and Recordkeeping requirements. 45 CFR Part 155 Health care, Health insurance, Repor ting and Recordkeeping requirements.Department of the Treasury 31 CFR Subtitle A For the reasons set forth in the preamble, the Department of the Treasury amends 31 CFR subtitle A by adding part 33 to read as follows: PART 33--WAIVERS FOR STATE INNOVATION
Sec. 33.100 Basis and purpose. 33.102 Coordinated waiver process. 33.104 Definitions. 33.108 Application procedures. 33.112 State public notice requirements. 33.116 Federal public notice and approval process. 33.120 Monitoring and compliance. 33.124 State reporting requirements. 33.128 Periodic evaluation requirements. Authority : Sec. 1332, Pub. L. 111-148, 124 Stat. 119 § 33.100 Basis and purpose. (a) Statutory basis . This part implements provisions of section 1332 of the Patient Protection and Affordable Care Act (Affordable Care Act), Pub. L. 111-148, relating to Waivers for State Innovation, whic h the Secretary may authorize for plan years beginning on or after January 1, 2017. Section 1332 of the Affordable Care Act requires the Secretary to issue regulations that provide for all of the following: (1) A process for public notice and commen t at the State level, including public hearings, sufficient to ensure a m eaningful level of public input.(2) A process for the submission of an app lication that ensures the disclosure of all of the following: (i) The provisions of law that th e State involved seeks to waive. (ii) The specific plans of the State to ensure that the waiver will meet all requirements specified in section 13 32 of the Affordable Care Act. (3) A process for the provision of pub lic notice and comment after a waiver application is received by th e Secretary of Health and Huma n Services, that is sufficient to ensure a meaningful level of public input and that does not impose requirements that are in addition to, or duplicative of, requi rements imposed under the Administrative Procedures Act, or requirements that are unreasonable or unnecessari ly burdensome with respect to State compliance. (4) A process for the submission of reports to the Secretary by a State relating to the implementation of a waiver. (5) A process for the periodic evaluation by the Secretary of programs under waivers. (b) Purpose . This part sets forth certain proc edural requirements for Waivers for State Innovation under sec tion 1332 of the Affordable Care Act. § 33.102 Coordinated waiver process. (a) Coordination with ap plications for waivers under other Federal laws . A State may submit a single application to the Secret ary of Health and Human Services for a waiver under section 1332 of the Affordable Ca re Act and a waiver under one or more of the existing waiver processes applicable unde r titles XVIII, XIX, and XXI of the Social Security Act, or under any other Federal law re lating to the provision of health care items or services, provided that such application is consistent with the procedures described inthis part, the procedures for demonstrations under section 1115 of the Social Security Act, if applicable, and th e procedures under any other applicable Federal law under which the State seeks a waiver. (b) Coordinated process for section 1332 waivers . A State seeking a section 1332 waiver must submit a waiver application to th e Secretary of Health and Human Services. Any application submitted to th e Secretary of Health and Huma n Services that requests to waive sections 36B, 4980H, or 5000A of the Inte rnal Revenue Code, in accordance with section 1332(a)(2)(D) of the Affordable Care Act, shall upon receipt be transmitted by the Secretary of Health and Human Services to the Secretary to be reviewed in accordance with this part. § 33.104 Definitions. For the purposes of this part: Complete application means an application that has been submitted and for which the Secretary and the Secretar y of Health and Human Services have made a preliminary determination that it includes all required info rmation and satisfies all requirements that are described in § 33.108(f). Public notice means a notice issued by a govern ment agency or legislative body that contains sufficient detail to notify the public at large of a pr oposed action consistent with §33.112. Section 1332 waiver means a Waiver for State In novation under section 1332 of the Affordable Care Act. § 33.108 Application procedures.(a) Acceptable formats for applications . Applications for initial approval of a section 1332 waiver shall be submitted in electr onic format to the Secretary of Health and Human Services. (b) Application timing . Applications for initial appr oval of a section 1332 waiver must be submitted sufficiently in advance of the requested effective date to allow for an appropriate implementation timeline. (c) Preliminary review . Each application for a sec tion 1332 waiver will be subject to a preliminary review by the Secretar y and the Secretary of Health and Human Services, who will make a preliminary determin ation that the application is complete. A submitted application will not be deemed recei ved until the Secretary and the Secretary of Health and Human Services have made the preliminary determination that the application is complete. (1) The Secretary and the Secretary of H ealth and Human Services will complete the preliminary review of the application within 45 days after it is submitted. (2) If the Secretary and the Secretary of Health and Human Services determine that the application is not complete, the S ecretary of Health and Human Services will send the State a written notice of the el ements missing from the application. (3) The preliminary determination that an application is complete does not preclude a finding during the 180-day Federal decision-making peri od that a necessary element of the application is missing or insufficient. (d) Notification of preliminary determination . Upon making the preliminary determination that an application is complete , as defined in this part, the Secretary of Health and Human Services will send the Stat e a written notice informing the State that the Secretary and the Secret ary of Health and Human Services have made such apreliminary determination. That date will al so mark the beginning of the Federal public notice process and the 180-day Fe deral decision-making period. (e) Public notice of completed application . Upon receipt of a complete application for an initial section 1332 waiver, the Secr etary of Health and Human Services will-- (1) Make available to the public the application, and a ll related State submissions, including all supplemental information received from the State follo wing the receipt of a complete application for a section 1332 waiver. (2) Indicate the status of the application. (f) Criteria for a complete application . An application for initial approval of a section 1332 waiver will not be considered complete unless the application meets all of the following conditions: (1) Complies with paragraphs (a ) through (f) of this section. (2) Provides written evidence of the St ate’s compliance with the public notice requirements set forth in §33.112, including a desc ription of the key issues raised during the State public notice and comment period. (3) Provides all of the following: (i) A comprehensive description of th e State legislation and program to implement a plan meeting the requiremen ts for a waiver under section 1332; (ii) A copy of the enacted St ate legislation that provides the State with authority to implement the proposed waiver, as requi red under section 133 2(a)(1)(C) of the Affordable Care Act; (iii) A list of the provisions of law th at the State seeks to waive, including a description of the reason fo r the specific requests; and(iv) The analyses, actuarial certifications , data, assumptions, analysis, targets and other information set forth in paragraph (f)(4 ) of this section sufficient to provide the Secretary and the Secretary of Health and Hu man Services with the necessary data to determine that the State’s proposed waiver: (A) As required under section 1332(b)(1)(A) of the Affordable Care Act (the comprehensive coverage requirement), will provide coverage that is at least as comprehensive as the coverage defined in se ction 1302(b) of the Affordable Care Act and offered through Exchanges established under the Affordable Care Act as certified by the Office of the Actuary of the Centers fo r Medicare & Medicaid Services based on sufficient data from the State and from comp arable States about their experience with programs created by the Affordable Care Act an d the provisions of the Affordable Care Act that the State seeks to waive; (B) As required under section 1332(b)(1)(B) of the Affordable Care Act (the affordability requirement), will provide coverage and cost sharing protections against excessive out-of-pocket spending that are at leas t as affordable as the provisions of Title I of the Affordable Care Act would provide; (C) As required under section 1332(b)(1)(C) of the Affordable Care Act (the scope of coverage requirement), will provide co verage to at least a comparable number of its residents as the provisions of Title I of the Affordable Care Act would provide; and (D) As prohibited under sect ion 1332(b)(1)(D) of the Affordable Care Act (the Federal deficit requirement), will not increase the Federal deficit. (4) Contains the following supporting information: (i) Actuarial analyses an d actuarial certifications . Actuarial analyses and actuarial certifications to support the State’s estimates that the proposed waiver will comply withthe comprehensive coverage requirement, the affordability requirement, and the scope of coverage requirement. (ii) Economic analyses . Economic analyses to suppor t the State’s estimates that the proposed waiver will comply with th e comprehensive coverage requirement, the affordability requirement, the scope of coverage requirement and the Federal deficit requirement, including: (A) A detailed 10-year budget plan that is deficit neutral to the Federal government, as prescribed by section 1332(a)(1)( B)(ii) of the Affordable Care Act, and includes all costs under the waiv er, including administrative co sts and other costs to the Federal government, if applicable; and (B) A detailed analysis regarding the es timated impact of the waiver on health insurance coverage in the State. (iii) Data and assumptions . The data and assumptions used to demonstrate that the State’s proposed waiver is in comp liance with the comprehensive coverage requirement, the affordability requirement, the scope of coverage requirement and the Federal deficit requirement, including: (A) Information on the age, income, health expenses and current health insurance status of the relevant State population; th e number of employers by number of employees and whether the employer offers insurance; cr oss-tabulations of thes e variables; and an explanation of data s ources and quality; and (B) An explanation of the key assumptions used to develop the estimates of the effect of the waiver on coverage and the Fe deral budget, such as individual and employer participation rates, behavioral changes, pr emium and price effects, and other relevant factors.(iv) Implementation timeline . A detailed draft timeline for the State’s implementation of the proposed waiver. (v) Additional information . Additional information supporting the State's proposed waiver, including: (A) An explanation as to whether th e waiver increases or decreases the administrative burden on individuals, insure rs, and employers, and if so, how and why; (B) An explanation of how the waiver will affect the implementation of the provisions of the Affordable Care Act which the State is not requesting to waive in the State and at the Federal level; (C) An explanation of how the waiver will affect residents who need to obtain health care services out-of-State, as well as the States in which such residents may seek such services; (D) If applicable, an explanation as to how the State will provide the Federal government with all information necessary to administer the waiver at the Federal level; and (E) An explanation of how the State’s pr oposal will address potential individual, employer, insurer, or provider compliance, wa ste, fraud and abuse within the State or in other States. (vi) Reporting targets . Quarterly, annual, and cumulative targets for the comprehensive coverage requirement, the a ffordability requirement, the scope of coverage requirement, and the Federal deficit requirement. (vii) Other information . Other information consistent with guidance provided by the Secretary and the Secretary of Health and Human Services.(g) Additional supporting information . (1) During the Federal review process, the Secretary may request additional supporting info rmation from the State via the Secretary of Health and Human Services as needed to address public comments or to address issues that arise in reviewi ng the application. (2) Requests for additional information, a nd responses to such requests, will be made available to the public in the same manner as information described in §33.116(b). § 33.112 State public notice requirements. (a) General . (1) Prior to submitting an application for a new section 1332 waiver to the Secretary of Health and Human Services for review and consid eration, a State must provide a public notice and comment period su fficient to ensure a meaningful level of public input for the application for a section 1332 waiver. (2) Such public notice and comment period shall include, for a State with one or more Federally-recognized Indian tribes w ithin its borders, a separate process for meaningful consultation with such tribes. (b) Public notice and comment period . The State shall make available at the beginning of the public notice and comment peri od, through its web site or other effective means of communication, and shal l update as appropriate, a public notice that includes all of the following: (1) A comprehensive description of the application for a section 1332 waiver to be submitted to the Secretary of Health and Human Services including information and assurances related to all statutory requirem ents and other information consistent with guidance provided by the Secretary and the Se cretary of Health and Human Services. (2) Information relating to where copies of the application for a section 1332 waiver are available for pub lic review and comment.(3) Information relating to how and where written comments may be submitted and reviewed by the public, and the timeframe during which comments will be accepted. (4) The location, date, and tim e of public hearings th at will be convened by the State to seek public input on the a pplication for a section 1332 waiver. (c) Public hearings . (1) After issuing the public notice and pr ior to submitting an application for a new section 1332 waiver , a State must conduct public hearings regarding the State' s application. (2) Such public hearings shall provide an interested party the opportunity to learn about and comment on the contents of th e application for a section 1332 waiver. (d) Submission of initial application . After the State publ ic notice and comment period has concluded, the State may submit an a pplication to the Secretary of Health and Human Services for an initial waiver in accordance with the requirements set forth in §33.108. § 33.116 Federal public notice and approval process. (a) General . The Federal public notice and appr oval process begins on the first business day after the Secretary and the S ecretary of Health and Human Services determine that all elements for a complete application were documented and submitted to the Secretary of Health and Human Services. (b) Public notice and comment period . (1) Following a determination that a State’s application for a section 1332 waiver is complete, the Secret ary and the Secretary of Health and Human Services will provide for a public notice and comment period that is sufficient to ensure a meaningful leve l of public input and that does not impose requirements that are in a ddition to, or duplicative of, requirements imposed under theAdministrative Procedures Act, or require ments that are unreas onable or unnecessarily burdensome with respect to State compliance. (2) At the beginning of the Federal noti ce and comment perio d, the Secretary of Health and Human Services will make availa ble through its web site and otherwise, and shall update as appropriate , public notice that include s all of the following: (i) The complete application for a secti on 1332 waiver, updates for the status of the State’s application, and a ny supplemental materials received from the State prior to and during the Federal public notice and comment period. (ii) Information relating to where copies of the application for a section 1332 waiver are available for pub lic review and comment. (iii) Information relating to how and where written comments may be submitted and reviewed by the public, and the timeframe during which comments will be accepted. (iv) Any public comments received dur ing the Federal public notice and comment period. (c) Approval of a sectio n 1332 waiver application . The final decision of the Secretary and the Secretary of Health and Hu man Services on a State application for a section 1332 waiver will be issued by the Secretary of Health and Human Services no later than 180 days after the determination by the Secretary and the Secretary of Health and Human Services that a complete app lication was received in accordance with §33.108. § 33.120 Monitoring and compliance. (a) General . (1) Following the issuance of a fi nal decision to approve a section 1332 waiver by the Secretary and the Secretar y of Health and Human Services, a State must comply with all applicable Federal laws , regulations, interpretive policy statementsand interpretive guidance unless expressly waiv ed. A State must, within the timeframes specified in law, regulation, policy, or guidance, come into compliance with any changes in Federal law, regulation, or policy affecting section 1332 wa ivers, unless the provision changed is expressly waived. (2) A State must comply with the terms and conditions of the agreement between the Secretary, the Secretary of Health and Hu man Services, and the State to implement a section 1332 waiver. (b) Implementation reviews . (1) The terms and conditions of an approved section 1332 waiver will provide that the State will perform periodi c reviews of the implementation of the section 1332 waiver. (2) The Secretary and the Secretary of Health and Human Services will review documented complaints that a State is failing to comply with requirements specified in the terms and conditions of any approved section 1332 waiver. (3) The Secretary and the Secretary of H ealth and Human Services will promptly share with a State any complaint that the Secretary and the Secr etary of Health and Human Services has received and will also provide notif ication of any applicable monitoring and compliance issues. (c) Post award . Within 6 months after the implementation date of a section 1332 waiver and annually thereafte r, a State must hold a public forum to solicit comments on the progress of a section 1332 waiver. The State must hold the public forum at which members of the public have an opportunity to provide comments and must provide a summary of the forum to the Secretary of H ealth and Human Services as part of the quarterly report specified in § 33.124(a) that is associated wi th the quarter in which theforum was held, as well as in the annual repo rt specified in § 33.124(b) that is associated with the year in which the forum was held. (1) The State must publish the date, time , and location of the public forum in a prominent location on the State’s public web site, at least 30 days prior to the date of the planned public forum. (2) [Reserved] (d) Terminations and suspensions . The Secretary and the Secretary of Health and Human Services reserve the right to suspend or terminate a section 1332 waiver in whole or in part, at any time before the date of expiration, whenever the Secretaries determine that a State has materially failed to comply with the terms of a section 1332 waiver. (e) Closeout costs . If all or part of a secti on 1332 waiver is terminated or suspended, or if a portion of a section 1332 waiver is withdrawn, Federal funding is limited to normal closeout co sts associated with an orde rly termination, suspension, or withdrawal, including service costs du ring any approved transition period, and administrative costs of disenrolling participants. (f) Federal evaluators . (1) A State must fully cooperate with the Secretary, the Secretary of Health and Human Services, or an independent eval uator selected by the Secretary or the Secretary of Health and Human Services to undertake an independent evaluation of any component of a section 1332 waiver. (2) As part of this required cooperation, a State must submit all requested data and information to the Secretary, the Secretar y of Health and Human Services, or the independent evaluator. § 33.124 State reporting requirements.(a) Quarterly reports . A State must submit quarterly reports to the Secretary of Health and Human Services in accordance with the terms and conditions of the State’s section 1332 waiver. These quarterly reports must include, but are not limited to, reports of any ongoing operational challenges and plans for and results of a ssociated corrective actions. (b) Annual reports . A State must submit an annua l report to the Secretary of Health and Human Services doc umenting all of the following: (1) The progress of the section 1332 waiver. (2) Data on compliance with section 1332(b )(1)(A) through (D) of the Affordable
Care Act. (3) A summary of the annual post-award public forum, held in accordance with §33.120(c), including all public comments receive d at such forum regarding the progress of the section 1332 waiver and action taken in response to su ch concerns or comments. (4) Other information consistent with th e State’s approved terms and conditions. (c) Submitting and publishing annual reports . A State must submit a draft annual report to the Secretary of Hea lth and Human Services no late r than 90 days after the end of each waiver year, or as specified in the waiver’s terms and conditions. (1) Within 60 days of receipt of comments from the Secretary of Health and Human Services, a State must submit to the Secretary of Health and Human Services a final annual report for the waiver year. (2) The draft and final annua l reports are to be publis hed on a State’s public web site within 30 days of submission to and approval by the Secretary of Health and Human Services, respectively. § 33.128 Periodic evaluation requirements.(a) The Secretary and the Secretary of Health and Human Services shall periodically evaluate the implementation of a program under a section 1332 waiver consistent with guidance published by the S ecretary and the Secretary of Health and Human Services and any terms and conditions governing the sect ion 1332 waiver. (b) Each periodic evaluation must include a review of the annual report or reports submitted by the State in accordance with § 33.124 that relate to the period of time covered by the evaluation.Department of Health and Human Services 45 CFR Subtitle A For the reasons set forth in the preamble , the Department of Health and Human Services amends 45 CFR subtitle A, subchapt er B by adding part 155 to read as follows: PART 155--WAIVERS FOR STATE INNOVATION Subparts A through M [Reserved] Subpart N – State Flexibility
Sec. 155.1300 Basis and purpose. 155.1302 Coordinated waiver process. 155.1304 Definitions. 155.1308 Application procedures. 155.1312 State public notice requirements. 155.1316 Federal public notice and approval process. 155.1320 Monitoring and compliance. 155.1324 State reporting requirements. 155.1328 Periodic evaluation requirements. Authority : Sec. 1332, Pub. L. 111-148, 124 Stat. 119

Subparts A through M [Reserved] Subpart N – State Flexibility § 155.1300 Basis and purpose. (a) Statutory basis . This subpart implements pr ovisions of section 1332 of the Affordable Care Act, relating to Waivers for State Innovation, which the Secretary may authorize for plan years beginning on or after January 1, 2017. Section 1332 of theAffordable Care Act requires the Secretary to issue regulations that provide for all of the following: (1) A process for public notice and commen t at the State level, including public hearings, sufficient to ensure a m eaningful level of public input. (2) A process for the submission of an app lication that ensures the disclosure of all of the following: (i) The provisions of law that th e State involved seeks to waive. (ii) The specific plans of the State to ensure that the waiver will meet all requirements specified in section 1332. (3) A process for the provision of pub lic notice and comment after a waiver application is received by the Secretary, that is sufficient to ensure a meaningful level of public input and that does not impose requirements that are in addition to, or duplicative of, requirements imposed under the Administrati ve Procedures Act, or requirements that are unreasonable or unnecessa rily burdensome with resp ect to State compliance. (4) A process for the submission of reports to the Secretary by a State relating to the implementation of a waiver. (5) A process for the periodic evaluation by the Secretary of programs under waivers. (b) Purpose . This subpart sets forth certain procedural requirements for Waivers for State Innovation under section 13 32 of the Affordable Care Act. § 155.1302 Coordinated waiver process. (a) Coordination with ap plications for waivers under other Federal laws . A State may submit a single applicati on to the Secretary for a wa iver under section 1332 of the Affordable Care Act and a waiver under one or more of the existing waiver processesapplicable under titles XVIII, XIX, and XXI of the Act, or under any other Federal law relating to the provision of health care items or services, provided that such application is consistent with the procedures described in this part, the procedures for demonstrations under section 1115 of the Act, if applicable, and the procedures under any other applicable Federal law under which the State seeks a waiver. (b) Coordinated process for section 1332 waivers . A State seeking a section 1332 waiver must submit a waiver application to the Secretary. Any application submitted to the Secretary that requests to waive sections 36B, 4980H, or 5000A of the Code, in accordance with section 1332(a)(2)( D) of the Affordable Care Act, shall upon receipt be transmitted by the Secretary to the Secretar y of the Treasury to be reviewed in accordance with 31 CFR Part 33. § 155.1304 Definitions. For the purposes of this subpart: Complete application means an application that has been submitted and for which the Secretary and the Secretary of the Treasur y, as applicable, have made a preliminary determination that it includes all required info rmation and satisfies all requirements that are described in §155.1308(f). Public notice means a notice issued by a govern ment agency or legislative body that contains sufficient detail to notify the public at large of a pr oposed action consistent with §155.1312. Section 1332 waiver means a Waiver for State In novation under section 1332 of the Affordable Care Act. § 155.1308 Application procedures.(a) Acceptable formats for applications . Applications for initial approval of a section 1332 waiver shall be submitted in electronic format to the Secretary. (b) Application timing . Applications for initial a pproval of a section 1332 waiver must be submitted sufficiently in advance of the requested effective date to allow for an appropriate implementation timeline. (c) Preliminary review . Each application for a sec tion 1332 waiver will be subject to a preliminary review by the Secretary and the Secretary of the Tr easury, as applicable, who will make a preliminary determination that the application is complete. A submitted application will not be deemed received until the Secretary and the Secretary of the Treasury, as applicable, have ma de the preliminary determination that the application is complete. (1) The Secretary and the Secretary of th e Treasury, as applicable, will complete the preliminary review of the application within 45 days after it is submitted. (2) If the Secretary and the Secretary of the Treasury, as applicable, determine that the application is not complete, the S ecretary will send the State a written notice of the elements missing from the application. (3) The preliminary determination that an application is complete does not preclude a finding during the 180-day Federal decision-making peri od that a necessary element of the application is missing or insufficient. (d) Notification of preliminary determination . Upon making the preliminary determination that an application is complete, as defined in this part, the Secretary will send the State a written notice informing the St ate that the Secretary and the Secretary of the Treasury, as applicable, have made such a preliminary determination. That date willalso mark the beginning of the Federal publ ic notice process and the 180-day Federal decision-making period. (e) Public notice of completed application . Upon receipt of a complete application for an initial section 1332 waiver, the Secretary will-- (1) Make available to the public the application, and a ll related State submissions, including all supplemental information received from the State following the receipt of a complete application for a section 1332 waiver. (2) Indicate the status of the application. (f) Criteria for a complete application . An application for initial approval of a section 1332 waiver will not be considered complete unless the application meets all of the following conditions: (1) Complies with paragraphs (a ) through (f) of this section. (2) Provides written evidence of the St ate’s compliance with the public notice requirements set forth in § 155.1312, including a description of the key issues raised during the State public no tice and comment period. (3) Provides all of the following: (i) A comprehensive description of th e State legislation and program to implement a plan meeting the requiremen ts for a waiver under section 1332; (ii) A copy of the enacted St ate legislation that provides the State with authority to implement the proposed waiver, as requi red under section 133 2(a)(1)(C) of the Affordable Care Act; (iii) A list of the provisions of law th at the State seeks to waive including a description of the reason fo r the specific requests; and(iv) The analyses, actuarial certifications , data, assumptions, analysis, targets and other information set forth in paragraph (f)(4 ) of this section sufficient to provide the Secretary and the Secretary of the Treasury, as applicable, with the necessary data to determine that the State’s proposed waiver: (A) As required under section 1332(b)(1)(A) of the Affordable Care Act (the comprehensive coverage requirement), will provide coverage that is at least as comprehensive as the coverage defined in se ction 1302(b) of the Affordable Care Act and offered through Exchanges established under the Affordable Care Act as certified by the Office of the Actuary of the Centers fo r Medicare & Medicaid Services based on sufficient data from the State and from comp arable States about their experience with programs created by the Affordable Care Act an d the provisions of the Affordable Care Act that the State seeks to waive; (B) As required under section 1332(b)(1)(B) of the Affordable Care Act (the affordability requirement), will provide coverage and cost sharing protections against excessive out-of-pocket spending that are at leas t as affordable as the provisions of Title I of the Affordable Care Act would provide; (C) As required under section 1332(b)(1)(C) of the Affordable Care Act (the scope of coverage requirement), will provide co verage to at least a comparable number of its residents as the provisions of Title I of the Affordable Care Act would provide; and (D) As prohibited under sect ion 1332(b)(1)(D) of the Affordable Care Act (the Federal deficit requirement), will not increase the Federal deficit. (4) Contains the following supporting information: (i) Actuarial analyses an d actuarial certifications . Actuarial analyses and actuarial certifications to support the State’s estimates that the proposed waiver will comply withthe comprehensive coverage requirement, the affordability requirement, and the scope of coverage requirement; (ii) Economic analyses . Economic analyses to suppor t the State’s estimates that the proposed waiver will comply with th e comprehensive coverage requirement, the affordability requirement, the scope of coverage requirement and the Federal deficit requirement, including: (A) A detailed 10-year budget plan that is deficit neutral to the Federal government, as prescribed by section 1332(a)(1)( B)(ii) of the Affordable Care Act, and includes all costs under the waiv er, including administrative co sts and other costs to the Federal government, if applicable; and (B) A detailed analysis regarding the es timated impact of the waiver on health insurance coverage in the State. (iii) Data and assumptions . The data and assumptions used to demonstrate that the State’s proposed waiver is in comp liance with the comprehensive coverage requirement, the affordability requirement, the scope of coverage requirement and the Federal deficit requirement, including: (A) Information on the age, income, health expenses and current health insurance status of the relevant State population; th e number of employers by number of employees and whether the employer offers insurance; cr oss-tabulations of thes e variables; and an explanation of data s ources and quality; and (B) An explanation of the key assumptions used to develop the estimates of the effect of the waiver on coverage and the Fe deral budget, such as individual and employer participation rates, behavioral changes, pr emium and price effects, and other relevant factors.(iv) Implementation timeline . A detailed draft timeline for the State’s implementation of the proposed waiver. (v) Additional information . Additional information supporting the State's proposed waiver, including: (A) An explanation as to whether th e waiver increases or decreases the administrative burden on individuals, insure rs, and employers, and if so, how and why; (B) An explanation of how the waiver will affect the implementation of the provisions of the Affordable Care Act which the State is not requesting to waive in the State and at the Federal level; (C) An explanation of how the waiver will affect residents who need to obtain health care services out-of-State, as well as the States in which such residents may seek such services; (D) If applicable, an explanation as to how the State will provide the Federal government with all information necessary to administer the waiver at the Federal level; and (E) An explanation of how the State’s pr oposal will address potential individual, employer, insurer, or provider compliance, wa ste, fraud and abuse within the State or in other States. (vi) Reporting targets . Quarterly, annual, and cumulative targets for the comprehensive coverage requirement, the a ffordability requirement, the scope of coverage requirement and the Federal deficit requirement. (vii) Other information . Other information consistent with guidance provided by the Secretary and the Secretary of the Treasury, as applicable.(g) Additional supporting information . (1) During the Federal review process, the Secretary may request additional supporting in formation from the State as needed to address public comments or to address issues that arise in reviewi ng the application. (2) Requests for additional information, a nd responses to such requests, will be made available to the public in the sa me manner as information described in § 155.1316(b). § 155.1312 State public notice requirements. (a) General . (1) Prior to submitting an applic ation for a new section 1332 waiver to the Secretary for review and considerat ion, a State must provide a public notice and comment period sufficient to ensure a meaningf ul level of public input for the application for a section 1332 waiver. (2) Such public notice and comment period shall include, for a State with one or more Federally-recognized Indian tribes w ithin its borders, a separate process for meaningful consultation with such tribes. (b) Public notice and comment period . The State shall make available at the beginning of the public notice and comment peri od, through its web site or other effective means of communication, and shal l update as appropriate, a public notice that includes all of the following: (1) A comprehensive description of the application for a section 1332 waiver to be submitted to the Secretary including information and assurances related to all statutory requirements and other information consistent with guidance provided by the Secretary and the Secretary of the Treasury, as applicable. (2) Information relating to where copies of the application for a section 1332 waiver are available for pub lic review and comment.(3) Information relating to how and where written comments may be submitted and reviewed by the public, and the timeframe during which comments will be accepted. (4) The location, date, and tim e of public hearings th at will be convened by the State to seek public input on the a pplication for a section 1332 waiver. (c) Public hearings . (1) After issuing the public notice and prior to submitting an application for a new section 1332 waiver , a State must conduct public hearings regarding the State' s application. (2) Such public hearings shall provide an interested party the opportunity to learn about and comment on the contents of th e application for a section 1332 waiver. (d) Submission of initial application . After the State publ ic notice and comment period has concluded, the State may submit an a pplication to the Secretary for an initial waiver in accordance with the requirements set forth in § 155.1308. § 155.1316 Federal public notice and approval process. (a) General . The Federal public notice and appr oval process begins on the first business day after the Secretary and the S ecretary of the Treasury, as applicable, determine that all elements for a complete application were documented and submitted to the Secretary. (b) Public notice and comment period . (1) Following a determination that a State’s application for a section 1332 waiver is complete, the Secret ary and the Secretary of the Treasury, as applicable, will provide fo r a public notice and comment period that is sufficient to ensure a meaningful level of public input and that does not impose requirements that are in a ddition to, or duplicative of, requirements imposed under the Administrative Procedures Act, or require ments that are unreas onable or unnecessarily burdensome with respect to State compliance.(2) At the beginning of the Federal notice and comment period, the Secretary will make available through its web site and otherw ise, and shall update as appropriate, public notice that includes all of the following: (i) The complete application for a secti on 1332 waiver, updates for the status of the State’s application, and a ny supplemental materials received from the State prior to and during the Federal public notice and comment period. (ii) Information relating to where copies of the application for a section 1332 waiver are available for pub lic review and comment. (iii) Information relating to how and where written comments may be submitted and reviewed by the public, and the timeframe during which comments will be accepted. (iv) Any public comments received dur ing the Federal public notice and comment period. (c) Approval of a sectio n 1332 waiver application . The final decision of the Secretary and the Secretary of the Treasury, as applicable, on a State application for a section 1332 waiver will be issued by th e Secretary no later th an 180 days after the determination by the Secretary and the Secret ary of the Treasury, as applicable, that a complete application was rece ived in accordance with § 155.1308. § 155.1320 Monitoring and compliance. (a) General . (1) Following the issuance of a fi nal decision to approve a section 1332 waiver by the Secretary and the Secretar y of the Treasury, as applicable, a State must comply with all applicable Federal laws , regulations, interpretive policy statements and interpretive guidance unless expressly wa ived. A State must, within the timeframes specified in law, regulation, policy or guidan ce, come into compliance with any changes in Federal law, regulation, or policy affecting section 1332 wa ivers, unless the provisionbeing changed is expressly waived. (2) A State must comply with the terms and conditions of the agreement between the Secretary, the Secretary of the Treasury, as applicable, and the State to implement a section 1332 waiver. (b) Implementation reviews . (1) The terms and conditions of an approved section 1332 waiver will provide that the State will perform periodi c reviews of the implementation of the section 1332 waiver. (2) The Secretary and the Secretary of the Treasury, as applicable, will review documented complaints that a State is failing to comply with requirements specified in the terms and conditions of any approved section 1332 waiver. (3) The Secretary and the Secretary of th e Treasury, as applicable, will promptly share with a State any complaint that the S ecretary and the Secretary of the Treasury has received and will also provide notification of any applicable monitoring and compliance issues. (c) Post award . Within at least 6 months af ter the implementation date of a section 1332 waiver and annually thereafter, a State must hold a public forum to solicit comments on the progress of a section 1332 waiver. The State must hold the public forum at which members of the public have an opportunity to provide comments and must provide a summary of the forum to the Secretary as part of the quarterly report specified in § 155.1324(a) that is associated with the quart er in which the forum was held, as well as in the annual report specified in § 155.1324(b) that is associated with the year in which the forum was held.(1) The State must publish the date, time , and location of the public forum in a prominent location on the State’s public web site, at least 30 days prior to the date of the planned public forum. (2) [Reserved] (d) Terminations and suspensions . The Secretary and the Secretary of the Treasury, as applicable, reserve the right to suspend or term inate a section 1332 waiver in whole or in part, at any time before the date of expiration, whenever the Secretary or the Secretary of the Treasury, as applicable, determ ines that a State has materially failed to comply with the terms of a section 1332 waiver. (e) Closeout costs . If all or part of a secti on 1332 waiver is terminated or suspended, or if a portion of a section 1332 waiver is withdrawn, Federal funding is limited to normal closeout co sts associated with an orde rly termination, suspension, or withdrawal, including service costs du ring any approved transition period, and administrative costs of disenrolling participants. (f) Federal evaluators . (1) A State must fully cooperate with the Secretary, the Secretary of the Treasury, as applicable, or an independent evaluator selected by the Secretary or the Secretary of the Treasury, as applicable, to unde rtake an independent evaluation of any component of a section 1332 waiver. (2) As part of this required cooperation, a State must submit all requested data and information to the Secretary, the Secretar y of the Treasury, as applicable, or the independent evaluator. § 155.1324 State reporting requirements. (a) Quarterly reports . A State must submit quarterly reports to the Secretary in accordance with the terms and conditions of the State’s section 1332 waiver. Thesequarterly reports must incl ude, but are not limited to, re ports of any ongoing operational challenges and plans for and results of associated corrective actions. (b) Annual reports . A State must submit an annual report to the Secretary documenting all of the following: (1) The progress of the section 1332 waiver. (2) Data on compliance with section 1332(b )(1)(A) through (D) of the Affordable
Care Act. (3) A summary of the annual post-award public forum, held in accordance with §155.1320(c), including all public comments rece ived at such forum regarding the progress of the section 1332 waiver and action taken in response to such concerns or

comments. (4) Other information consistent with the State’s approved terms and conditions. (c) Submitting and publishing annual reports . A State must submit a draft annual report to the Secretary no later than 90 days after the end of each waiver year, or as specified in the waiver’s terms and conditions. (1) Within 60 days of receipt of comments from the Secretary, a State must submit to the Secretary the final annual report for the waiver year. (2) The draft and final annua l reports are to be publis hed on a State’s public web site within 30 days of submission to and approval by the Secretary, respectively. § 155.1328 Periodic evaluation requirements. (a) The Secretary and the Secretary of the Treasury, as applicable, shall periodically evaluate the implementation of a program under a section 1332 waiver consistent with guidance published by the Secr etary and the Secretary of the Treasury, as applicable, and any terms and conditions governing the section 1332 waiver.(b) Each periodic evaluation must include a review of the annual report or reports submitted by the State in accordance with § 155.1324 that relate to the period of time covered by the evaluation.

Authority : Sec. 1332 of the Patient Protection and Affordable Care Act (Pub. L. 111- 148).

Approved: January 26, 2012

__________________________________ Marilyn Tavenner, Acting Administrator, Centers for Medicare & Medicaid Services.

Approved: January 30, 2012

__________________________________ Kathleen Sebelius, Secretary of Health and Human Services.Approved: Emily S. McMahon, Acting Assistant Secretary (Tax Policy), Department of the Treasury.

BILLING CODE 412 0-01-P; 4510-29-P

[FR Doc. 2012-4395 Filed 02/22/2012 at 11: 15 am; Publication Date: 02/27/2012]