Vol. 79 Wednesday, 

No. 48 March 12, 2014 

Part II 

Department of Health and Human Services 

Centers for Medicare & Medicaid Services 

42 CFR Part 600 

45 CFR Part 144 

Basic Health Program: State Administration of Basic Health Programs; 

Eligibility and Enrollment in Standard Health Plans; Essential Health 

Benefits in Standard Health Plans; Performance Standards for Basic Health 

Programs; Premium and Cost Sharing for Basic Health Programs; Federal 

Funding Process; Trust Fund and Financial Integrity; Final Rule 


tkelley on DSK3SPTVN1PROD with RULES2
14112 Federal Register / Vol. 79, No. 48 / Wednesday, March 12, 2014 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 600 

Office of the Secretary 

45 CFR Part 144 

[CMS–2380–F] 

RIN 0938–AR93 

Basic Health Program: State 

Administration of Basic Health 

Programs; Eligibility and Enrollment in 

Standard Health Plans; Essential 

Health Benefits in Standard Health 

Plans; Performance Standards for 

Basic Health Programs; Premium and 

Cost Sharing for Basic Health 

Programs; Federal Funding Process; 

Trust Fund and Financial Integrity 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule establishes the 

Basic Health Program (BHP), as required 

by section 1331 of the Affordable Care 

Act. The BHP provides states the 

flexibility to establish a health benefits 

coverage program for low-income 

individuals who would otherwise be 

eligible to purchase coverage through 

the Affordable Insurance Exchange 

(Exchange, also called Health Insurance 

Marketplace). The BHP complements 

and coordinates with enrollment in a 

QHP through the Exchange, as well as 

with enrollment in Medicaid and the 

Children’s Health Insurance Program 

(CHIP). This final rule also sets forth a 

framework for BHP eligibility and 

enrollment, benefits, delivery of health 

care services, transfer of funds to 

participating states, and federal 

oversight. Additionally, this final rule 

amends another rule issued by the 

Secretary of the Department of Health 

and Human Services (Secretary) in order 

to clarify the applicability of that rule to 

the BHP. 

DATES: Effective Date: These regulations 

are effective on January 1, 2015. 

FOR FURTHER INFORMATION CONTACT: 

Jessica Schubel (410) 786–3032; or 

Carey Appold (410) 786–2117. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

To assist readers in referencing 

sections contained in this document, we 

are providing the following table of 

contents. 

I. Executive Summary 

II. Background 

III. Summary of Proposed Provisions and 

Analysis of the Responses to Public 

Comments 

A. General Provisions and Definitions 

B. Establishment of the Basic Health 

Program 

C. Federal Program Administration 

D. Eligibility and Enrollment 

E. Standard Health Plan 

F. Enrollee Financial Responsibilities 

G. Payment to States 

H. BHP Trust Fund 

IV. Provisions of the Final Regulations 

A. General Provisions and Definitions 

B. Establishment and Certification of State 

Basic Health Programs 

C. Federal Program Administration 

D. Eligibility and Enrollment 

E. Standard Health Plan 

F. Enrollee Financial Responsibilities 

G. Payments to States 

H. BHP Trust Fund 

V. Collection of Information Requirements 

VI. Regulatory Impact Statement 

A. Overall Impact 

B. Unfunded Mandates Reform Act 

C. Regulatory Flexibility Act 

D. Federalism 

Regulation Text 

Acronyms 

Because of the many organizations 

and terms to which we refer by acronym 

in this final rule, we are listing these 

acronyms and their corresponding terms 

in alphabetical order below: 

[the] Act Social Security Act 

Affordable Care Act The collective term for 

the Patient Protection and Affordable Care 

Act (Pub. L. 111–148) and the Health Care 

and Education Reconciliation Act of 2010 

(Pub. L. 111–152)) 

APTC Advance Payments of the Premium 

Tax Credit 

BHP Basic Health Program 

CHIP Children’s Health Insurance Program 

CMS Centers for Medicare & Medicaid 

Services 

[the] Code Internal Revenue Code of 1986 

EHBs Essential Health Benefits 

FEHBP Federal Employees Health Benefits 

Program (5 U.S.C. 8901, et seq.) 

FPL Federal poverty line 

HCERA Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111– 

152, enacted March 30, 2010) 

HHS [U.S. Department of] Health and 

Human Services 

IHS Indian Health Service 

MEC Minimum Essential Coverage 

MAGI Modified adjusted gross income 

PHS Act Public Health Service Act 

PRA Paperwork Reduction Act of 1995 

QHP Qualified Health Plan 

SHOP Small Business Health Options 

Program 

I. Executive Summary 

This final rule implements section 

1331 of the Patient Protection and 

Affordable Care Act (Pub. L. 111–148, 

enacted on March 23, 2010) and the 

Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 

111.152, enacted on March 30, 2010), 

which are collectively referred to as the 

Affordable Care Act. Section 1331 of the 

Affordable Care Act directs the 

Secretary to establish the Basic Health 

Program (BHP). In addition, this final 

rule amends certain other federal 

regulations, clarifying their applicability 

to the new program. 

For coverage effective beginning on 

January 1, 2014, qualified individuals 

and small businesses will be able to 

purchase private health insurance 

coverage through competitive 

marketplaces, also termed ‘‘Exchanges’’ 

(or the Health Insurance Exchange). The 

premium tax credit and cost-sharing 

reductions are available to help lower 

income qualified individuals purchase 

and secure coverage and services 

through the plans operating on the 

Exchange. At the same time, states 

provide coverage under Medicaid for 

low-income individuals and other 

individuals, including certain 

individuals with significant medical 

needs. New administrative procedures 

discussed in prior rulemaking establish 

a system for coordinating coverage 

across all insurance affordability 

programs (IAP) which includes coverage 

obtained through an Exchange with the 

associated premium tax credit and costsharing reductions, Medicaid, and the 

Children’s Health Insurance Program. 

Beginning January 1, 2015, under this 

final rule, states will have an additional 

option to establish a BHP to provide 

coverage for certain individuals who are 

not eligible for Medicaid and would 

otherwise be eligible to obtain coverage 

through the Exchange. 

This final rule establishes: (1) The 

requirements for certification of state 

submitted BHP Blueprints, and state 

administration of the BHP consistent 

with that Blueprint; (2) eligibility and 

enrollment requirements for standard 

health plan coverage offered through the 

BHP; (3) the minimum requirements for 

the benefits covered by such standard 

health plans; (4) the availability of 

federal funding of certified state BHPs; 

(5) the purposes for which states can use 

such federal funding; (6) the parameters 

for enrollee financial participation; and 

(7) the requirements for state and federal 

administration and oversight of BHP 

funds. The specific methods for 

calculating and providing payment to 

states, consistent with this rule, will be 

issued separately in a final payment 

notice. 

II. Background 

Section 1331 of the Affordable Care 

Act provides states with a new coverage 

option, the Basic Health Program (BHP), 


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for specified individuals who do not 

qualify for Medicaid but whose income 

does not exceed 200 percent of the 

federal poverty level (FPL). This final 

rule also implements statutory 

provisions of the BHP and other 

provisions necessary to ensure 

coordination with the other coverage 

options that, along with BHP, are 

collectively referred to as insurance 

affordability programs. Coordination is 

necessary to ensure that consumers are 

determined eligible for the appropriate 

program through a streamlined and 

seamless process and are enrolled in 

appropriate coverage without 

unnecessary paperwork or delay. This 

final rule describes standards for state 

administration and federal oversight of 

the BHP. 

In the September 25, 2013 Federal 

Register (78 FR 59122), we published a 

proposed rule to provide states the 

opportunity to establish a BHP in 

coordination with other insurance 

affordability programs. Rather than 

establish new and different rules for the 

BHP, when possible, we align BHP rules 

with existing rules governing coverage 

through the Exchange, Medicaid, or 

CHIP. This approach is supported by the 

statutory linkage between the minimum 

benefit coverage, maximum cost 

sharing, and overall funding for the BHP 

with the Exchange. Where necessary to 

accommodate unique features of the 

BHP, we adapted existing regulations or 

established specific rules for the new 

program. Recognizing that states may 

choose different ways to structure their 

BHP, when possible, we offer states 

flexibility in choosing to administer the 

program in accordance with Exchange 

rules or those governing Medicaid or 

CHIP. In those sections in which we 

offer states the choice, states must adopt 

all of the standards in the referenced 

Medicaid or Exchange regulations. 

For a detailed description of the 

background of this rule, please refer to 

‘‘Basic Health Program: State 

Administration of Basic Health 

Programs; Eligibility and Enrollment in 

Standard Health Plans; Essential Health 

Benefits in Standard Health Plans; 

Performance Standards for Basic Health 

Programs; Premium and Cost Sharing 

for Basic Health Programs; Federal 

Funding Process; Trust Fund and 

Financial Integrity’’ proposed rule 

published in the September 25, 2013 

Federal Register (78 FR 59122). 

III. Summary of Proposed Provisions 

and Analysis of the Responses to Public 

Comments 

For a complete and full description of 

the BHP proposed provisions as 

required by the statute, see the 

September 25, 2013 proposed rule (78 

FR 59122). 

We received a total of 132 timely 

comments from state agencies, groups 

advocating on behalf of consumers, 

health care providers, employers, health 

insurers, health care associations, 

Tribes, tribal organizations, and the 

general public. In addition, we held an 

all-state/advocate consultation session 

on November 6, 2013 as well as a tribal 

consultation session on November 7, 

2013 to provide an overview of the BHP 

proposed rule where interested parties 

were afforded an opportunity to ask 

questions and make comments. We 

continued to meet during this time with 

interested states through the ‘‘learning 

collaborative’’ that was established prior 

to the publication of the proposed rule 

to solicit input related to program 

operations and coordination between all 

insurance affordability programs. At the 

consultation and learning collaborative 

sessions, participating parties were 

reminded to submit written comments 

before the close of the public comment 

period that was specified in the BHP 

proposed rule. 

The following sections, arranged by 

subject area, include a summary of the 

public comments that we received, and 

our responses. 

A. General Provisions and Definitions 

In the September 25, 2013 proposed 

rule, we proposed in § 600.1 the general 

authority for the BHP regulation as 

specified in section 1331 of the 

Affordable Care Act. The statute 

specifies that a state electing to 

implement a BHP must enter into 

contracts for the provision of standard 

health plan coverage, which must, at a 

minimum include the essential health 

benefits (EHB). A state implementing 

BHP will receive federal funding based 

on the amount of premium tax credit 

and cost-sharing reductions that would 

have otherwise been available to 

enrollees had they obtained coverage in 

the Exchange. We did not receive 

specific comments on this section and 

are finalizing the provision as proposed. 

In § 600.5, we proposed the 

definitions and use of terms that apply 

to BHP. For specific definitions, please 

see the September 25, 2013 proposed 

rule (78 FR 59142). 

We received several public comments 

for this section, which we discuss 

below. In addition to changes resulting 

from comments on this section, we have 

added a definition of ‘‘interim 

certification’’ in conformance with a 

change made to § 600.110. Interim 

certification is an approval status for the 

initial design of a state’s BHP. It does 

not confer any permission to begin 

enrollment or authority to seek funding 

from the federal government for BHP 

expenditures. 

Comment: Several commenters 

requested that the BHP use the 

Medicaid definition of Indian that is set 

forth in 42 CFR 447.51 for purposes of 

Medicaid premium and cost sharing 

reductions. The Affordable Care Act 

defines Indians for purposes of 

premium and cost sharing reductions in 

Exchange plans using the definition set 

out in section 4(d) of the Indian SelfDetermination Act and Education 

Assistance Act, (25 U.S.C. 450b(d)). The 

referenced Medicaid regulatory 

definition of Indian is broader. 

Response: We appreciate the 

commenters’ recommendation; 

however, because a BHP is required by 

statute only to provide that premium 

and cost sharing liability will not 

exceed such liability under Exchange 

coverage, the regulation adopts the 

Exchange definition. 

Comment: One commenter 

recommended that HHS define the term 

‘‘network of providers.’’ 

Response: We have revised the list of 

definitions to include a definition of 

‘‘network of healthcare providers.’’ 

B. Establishment of the Basic Health 

Program 

In § 600.100 to § 600.170, we 

proposed the administrative structure 

for BHP. Within this structure, we 

proposed that the BHP Blueprint would 

be the vehicle for BHP certification and 

specified the operational principles 

required to implement a BHP. 

In § 600.110(a), we proposed that the 

BHP Blueprint would be the 

comprehensive document submitted by 

states to the Secretary to receive 

certification of proposed BHP programs. 

For specific discussions on the 

proposed content of the Blueprint, refer 

to the September 25, 2013 proposed rule 

(78 FR 59142). 

In § 600.110(b), we proposed that the 

BHP Blueprint be accompanied by a 

funding plan that provides enrollment 

and cost projections for the first 12 

months of operation as well as 

additional funding sources if the state 

expects to use any non-federal funding. 

The funding plan must demonstrate that 

the federal funds will only be used to 

reduce premiums or cost-sharing or to 

provide additional benefits. In 

§ 600.110(c), we proposed that HHS post 

the state’s BHP Blueprint on-line. 

The following sections, arranged by 

subject area, include a summary of the 

public comments that we received, and 

our responses. 


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1. General 

Comment: We received a variety of 

supportive comments. One commenter 

supported the adoption of the Exchange 

approach of a Blueprint as opposed to 

utilizing a vehicle similar to a Medicaid 

state plan. A couple of commenters 

expressed support for the provision 

requiring Secretarial certification prior 

to implementation. We received several 

comments supporting the requirement 

that HHS post the Blueprint submitted 

by the state on-line. 

Response: We are finalizing the 

proposed provisions with some 

modifications. 

We are clarifying that HHS will post 

on line the Blueprint submitted by the 

state, and will update it to reflect 

subsequent amendments by the state 

(including amendments made to ensure 

certification by HHS). 

Comment: Several commenters shared 

concerns related to the timing of the 

Blueprint requirements, and provided 

several suggestions in how to address 

this issue. One suggestion was to permit 

an abridged Blueprint in the first year of 

implementation, to permit greater 

flexibility in establishing contracts for 

standard health plans and making 

administrative arrangements. The 

abridged Blueprint would be required to 

include a few key areas in the Blueprint, 

such as its eligibility and enrollment 

processes as well as the standard health 

plan benefit package. Another 

suggestion included the use of an 

‘‘interim certification’’ to outline basic 

program parameters until the 

contracting process concluded. One 

final suggestion was to permit a state to 

include contingencies in its Blueprint. 

Response: We have carefully 

considered the commenters’ concern 

that we were requiring too much detail 

and certainty in the initial Blueprint 

submission, because that level of detail 

would not be operationally feasible. In 

response to these comments, we are 

modifying the certification process to 

include an interim certification level, 

which we have defined in the 

definitions section. We expect that 

states will be able to provide their basic 

program design choices and we will be 

able to approve the structure of the 

program through the interim 

certification process, which will involve 

the submission of a limited set of 

Blueprint elements. We anticipate that 

interim certification will give states 

more certainty as they seek legislative 

and budget authority for their programs, 

with the understanding that full 

certification would be granted only 

when the Blueprint was fleshed out 

with additional detail. Full certification 

would still be required before states 

enroll individuals in a BHP. 

Comment: We received several 

comments expressing concern regarding 

the required content of the Blueprint. 

Several commenters, for example, 

requested that we make clear that we 

would not require exact premium 

amounts in the Blueprint (information 

that would not be available until later in 

implementation), but would only 

require a description of the process the 

state would use to establish premiums 

(information that would be available 

earlier.) 

Response: In our proposed rule we 

created some inconsistency which has 

now been corrected, at §§ 600.110(a)(6) 

and 600.505. Now both are consistent, 

requiring that the Blueprint contain 

only assurances that the premiums 

would be calculated in such a way that 

BHP enrollees would not pay more than 

they would have been required to pay 

if they had been enrolled in the 

applicable benchmark plan, taking into 

account any premium tax credit that 

would have been available. 

Comment: On later sections of the 

regulation, we received many comments 

suggesting that we need to allow greater 

flexibility for states around the start-up 

and establishment of the program. As 

with other aspects of program 

operations, this flexibility would need 

to be addressed in the Blueprint. 

Response: We appreciate the 

commenters’ interest in ensuring 

smooth and efficient BHP 

implementation, and as such, we have 

included a 15th content area for the 

Blueprint in § 600.110(a). We will 

require a transition plan if a state 

requests to phase in enrollment, which 

would include information about 

coordination of such a transition with 

the Exchange operating in the state. This 

additional Blueprint requirement 

corresponds to modifications made to 

§ 600.145. 

2. Development and Submission of the 

BHP Blueprint (§ 600.115) 

In § 600.115(a), we proposed that the 

Blueprint must be submitted by the 

Governor or the Governor’s designee, 

and in § 600.115(b) we proposed that 

the state must identify the agency and 

officials, by position or title, responsible 

for program administration, operations, 

and financial oversight. 

In § 600.115(c), we proposed that the 

state must seek public comment on the 

BHP Blueprint content before 

submission to the Secretary for 

certification, and ensure the comment 

process included federally recognized 

tribes located in the state. Additionally, 

we proposed that the state must seek 

comment on significant revisions which 

are those that alter core program 

operations required by § 600.145(e). 

In § 600.115(d), we proposed that 

states may not implement BHP prior to 

receiving full certification. The date of 

implementation for this purpose is 

proposed as the first day that enrollees 

would receive coverage under BHP. 

Comment: We received many 

comments on the public comment 

process. One commenter supported the 

flexibility that is afforded to states by 

not having a federally prescribed list of 

required public notice participants in 

the public notice standard. Another 

commenter expressed the opposite view 

and would like HHS to require a 

specific list of stakeholders that must be 

included in the public comment 

process, including consumer, health 

care and safety net advocacy groups. 

Another commenter suggested that the 

prescribed list of stakeholders should be 

the same as the Exchange. 

Response: We recognize that BHP will 

have a significant impact on consumers, 

providers, plans and other stakeholders, 

and we appreciate the commenters’ 

interest in ensuring the public is 

afforded the opportunity to provide 

meaningful comment. While ensuring 

appropriate public participation in the 

comment process is important, we are 

not mandating the participation of 

certain stakeholders because the 

circumstances in different states in 

serving low income populations are not 

the same. Moreover, such a requirement 

could be viewed as giving particular 

weight to those stakeholders over 

others. But we do not preclude any state 

from adopting such a procedure based 

on the circumstances in that state. Nor 

do we specify a calendar a state must 

use when soliciting public comment; 

the opportunity to comment, however, 

must be meaningful. We believe states 

will build on existing programs and 

approaches currently in place, and we 

want to provide the flexibility for them 

to do so. 

Comment: Some commenters 

specifically recommended that we 

should borrow the section 1115 

Medicaid demonstration transparency 

requirements under title XIX of the Act 

and apply those standards to BHP. The 

commenters expressed the sentiment 

that the level of rigor in the 1115 

standards would be appropriate for 

BHP. 

Response: Section 1115 transparency 

requirements are specified in statute in 

detail. Moreover, section 1115 

demonstration authority is used when 

states are requesting permission to 

depart from otherwise applicable federal 

law but nevertheless achieving the 


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objectives of federal law, and public 

input is essential to informing the 

federal decision whether to approve the 

demonstration request. In that 

circumstance, it is particularly 

important to have a full opportunity for 

public comment to determine if there 

would be any unforeseen or adverse 

impact. In contrast, there is no statutory 

public input requirement for the 

development of a BHP. Moreover, when 

developing a BHP Blueprint, the need 

and purpose for public comment is 

different. A state is not departing from 

federal law but rather engaging the 

public in the state’s political process to 

assist in choices the state is making in 

establishing or modifying a program 

within a set of options. The opportunity 

for public input will help to ensure that 

the state has fully considered whether 

its BHP approach will meet all statutory 

requirements and has given due 

consideration to the required factors in 

its processes to contract with standard 

health plans. Interested parties typically 

are already involved in those processes, 

and do not need formal notice and 

comment periods to provide input to 

states on these choices. It may be 

appropriate for states to adjust public 

input processes to reflect these 

circumstances. For these reasons, we are 

not accepting the commenters’ 

recommendation to provide a rigid 

structure for the public input process for 

a BHP Blueprint and Blueprint 

amendments. 

Comment: We received several 

comments recommending that HHS 

strengthen the definition of ‘‘significant 

revisions’’ in § 600.115(c)(1) beyond the 

proposed reference to those that alter 

‘‘core program operations required by 

§ 600.145(e).’’ 

Response: We thank the commenters 

for their recommendation and we are 

modifying the regulatory text to reflect 

this definition change and clarify when 

an amendment to a BHP Blueprint is 

necessary. 

Comment: Several commenters 

expressed concern that the timeline for 

BHP Blueprint submission and 

certification should be constructed to 

give sufficient notice to Qualified 

Health Plans (QHP) prior to the 

submission of Exchange premiums, 

QHP applications and the annual 

contract review process. 

Response: We appreciate that there 

are many timing decisions to make with 

regard to the submission and 

certification of a BHP Blueprint that will 

impact, and be impacted, by many 

variables in any given state. States must 

synchronize legislative and funding 

authority with contracting timelines and 

federal approval. Given the legislative 

and contracting calendar differences 

between states, we do not believe it 

would be appropriate to mandate a 

specific timetable, or calendar for the 

public notice process. However, we 

expect states to take the QHP issuer 

bidding timeframe into account and to 

work with issuers to avoid unnecessary 

disruption and uncertainty in the 

individual market, particularly as 

issuers look to set rates for the next year. 

With these considerations in mind, 

we are finalizing the provisions in this 

section as proposed except that in 

§ 600.115(c)(1). We are adding to the 

definition of ‘‘significant revisions’’ 

which will therefore, require an 

opportunity for public comment to 

‘‘those that alter core program 

operations required by § 600.145(f), as 

well as changes that alter the BHP 

benefit package, enrollment, 

disenrollment and verification 

policies.’’ 

3. Certification of a BHP Blueprint 

(§ 600.120) 

In, § 600.120(a), we proposed to 

establish the effective date of 

certification of the BHP Blueprint as the 

date of signature by the Secretary. 

In § 600.120(b), we proposed that the 

certification date is established as the 

first date for which any payments may 

be transmitted to the state for BHP 

operations. 

Under § 600.120(c), we proposed the 

period in which a certified Blueprint 

remains in effect. For specific 

discussions on this time period, refer to 

the September 25, 2013 proposed rule 

(78 FR 59143). 

Under § 600.120(d), we proposed 

Blueprint standards for certification. For 

specific discussions on the standards, 

refer to the September 25, 2013 

proposed rule (78 FR 59143). 

Comment: One commenter was 

concerned with our proposed Blueprint 

standard in § 600.120(d)(3) specifying 

that the Blueprint be free of 

contingencies or reserved decisions on 

operational features. The commenter 

noted that, at times, contingencies are 

appropriate and contribute to 

operational success. 

Response: We agree with the 

commenter regarding the need for 

contingencies and we will strive to 

develop a Blueprint template permissive 

of appropriate contingencies. We are 

deleting the word ‘‘contingencies’’ from 

paragraph (d). However, as the 

Blueprint will only collect information 

necessary for approval and oversight, 

we do not foresee being able to allow 

reserved decisions. 

Comment: We received one comment 

requesting state flexibility in program 

development through 2016, particularly 

with respect to transitioning of 

populations. 

Response: We have responded in 

other sections (§§ 600.110 and 600.145) 

regarding the need for flexibility around 

transitioning populations giving states 

with the shortest planning window, 

those that start in 2015, greater 

flexibility in planning for enrollment 

and service delivery needs. 

4. Revisions to a Certified BHP 

Blueprint (§ 600.125) 

In § 600.125(a), we proposed that a 

state seeking to make changes to its BHP 

Blueprint must submit those changes, if 

altering core program operations, to the 

Secretary for review and certification. 

In § 600.125(b), we proposed that the 

state must continue to operate under the 

existing certification unless and until a 

revised Blueprint is certified. 

5. Withdrawal of a BHP Blueprint Prior 

to Implementation (§ 600.130) 

In § 600.130, we proposed a process 

for a state deciding to terminate a BHP 

before enrolling participants. For 

specific discussions, refer to the 

September 25, 2013 proposed rule (78 

FR 59143). 

Comment: We received several 

comments expressing concern regarding 

the broad state authority to terminate its 

BHP at any time. 

Response: We appreciate the 

commenters’ concerns regarding this 

state authority; however, because BHP is 

an alternative health coverage program 

available at the state’s option, we do not 

believe we can prohibit a state from 

electing to terminate its program. 

Comment: Several commenters 

suggested that states be required to 

provide advance notification to standard 

health plan offerors and QHPs when 

they voluntarily withdraw Blueprints, to 

enable these entities the opportunity to 

adjust their offerings. Other commenters 

recommended Blueprint submission 

timelines to be specifically aligned with 

Exchange timeframes to enable the most 

accurate pricing of products. 

Response: We agree that states should 

make decisions about BHP operations in 

a timely manner, to allow orderly 

transitions for beneficiaries and ensure 

proper coordination with the Exchange, 

including the ability of QHPs to price 

their products properly. However, the 

standard that the commenter is 

suggesting is very significant in that it 

would have to be lengthy notice in 

advance of the annual QHP pricing 

process. Given that BHP is a voluntary 

program, we do not believe we can force 

continued participation on the part of 


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the state beyond that required for 

orderly shutdown. 

6. Notice and Timing of HHS Action on 

BHP Blueprint (§ 600.135) 

In § 600.135, we proposed that HHS 

respond to submissions in a timely 

manner and identify in writing 

impediments to certification if they 

exist. 

Comment: We received comments 

recommending that Blueprints should 

be deemed certified and states should be 

able to proceed if they have not been 

acted upon within 60 days of state 

submission. Other commenters 

requested an expedited review process 

in the first year. A further request was 

that we institute a conditional approval 

and make retrospective payment 

available to states. We also received 

comments that we should have an 

administrative review process to resolve 

disputes over certification or potential 

decertification. 

Response: We have carefully 

considered these comments and we are 

finalizing this section with the addition 

of a state option to request a 

reconsideration of an adverse 

certification decision. We believe this 

change, coupled with the addition of 

interim certification status discussed 

earlier and the requirement for HHS to 

respond timely to state submissions, 

will be sufficient to ensure 

responsiveness and opportunity for 

states to work effectively with HHS to 

secure necessary approvals to proceed 

with their programs. We have not 

included the request for a 60 day 

‘‘clock’’ because we wish to allow for 

maximum flexibility in working with 

states to achieve certification of 

Blueprints for this new program. 

7. State Termination of a BHP 

(§ 600.140) 

In § 600.140, we proposed a process 

for states to terminate a BHP program 

with active enrollees. The state must 

submit written notice to the Secretary 

120 days in advance along with a 

transition plan to assist enrollees 

switching to other coverage, submit 

written notice to participating standard 

health plan offerors and enrollees 90 

days in advance, and transmit all 

information provided as part of an 

application to other state agencies 

administering insurance affordability 

programs. Additionally, the state must 

fulfill contractual obligations to 

standard health plans, fulfill data 

reporting to HHS, complete the annual 

financial reconciliation process, and 

refund the remaining balance in the 

BHP trust fund. 

Comment: We received several 

comments requesting that the 

notification requirement for standard 

health plans be the same as it is for the 

Secretary (120 days). We also received 

a comment recommending that we 

require notification be sent to providers 

contracting with standard health plans. 

Response: We are finalizing this 

section as proposed, because we believe 

there is value in a Secretarial review of 

the state’s transition plan before others 

are notified. We also anticipate that the 

state’s transition plan will include 

specifications about plan and provider 

notification. 

8. HHS Withdrawal of Certification and 

Termination of a BHP (§ 600.142) 

In § 600.142, we proposed the process 

by which HHS would withdraw 

certification of a BHP Blueprint based 

on findings of non-compliance or 

significant beneficiary harm, financial 

malfeasance or fraud. This process is 

only invoked after notice to the state 

and a reasonable period (at least 120 

days) for the state to address findings. 

Comment: We received one comment 

requesting an appeal process for 

disagreement over findings of noncompliance or significant beneficiary 

harm, financial malfeasance or fraud. 

Response: Similar to § 600.135, we 

have decided to finalize this section as 

proposed with the addition of the right 

of the state to a reconsideration of the 

decision to withdraw certification if 

there is disagreement over findings that 

form the basis for that decision. 

9. State Program Administration and 

Operation (§ 600.145) 

In § 600.145, we proposed that a state 

must operate a BHP according to the 

certified Blueprint and all applicable 

law and regulations. This section also 

contains our proposed core operational 

features of a BHP beginning in 

paragraph (b) through (d). For additional 

discussions on the core operational 

features of a BHP, refer to the September 

25, 2013 proposed rule (78 FR 59144). 

Comment: We received many 

comments on this section in support of 

the establishment of BHP without the 

limitations characteristic of more 

limited programs such as waivers or 

demonstrations. Similarly, we received 

a comment commending the 

Department for including 

nondiscrimination provisions assuring 

equal access to services through BHP. 

Response: We appreciate the support 

for the content of this section. 

Comment: Several commenters 

questioned the operational reality of 

being able to implement a program for 

every eligible individual on day-one of 

operations. 

Response: We understand the concern 

raised by the commenters regarding dayone operations, particularly in 2015, the 

first operational year, for which states 

have a limited amount of time to 

coordinate with their Exchange and 

Medicaid programs. To address this 

comment, we are adding paragraph (e) 

providing states implementing in 2015 

the option to identify a transition period 

during initial implementation. These 

states will be required to submit a 

transition plan as part of their Blueprint 

describing their proposed alternative 

enrollment strategies. 

10. Enrollment Assistance and 

Information Requirements (§ 600.150) 

In § 600.150, we proposed that states 

make information available to potential 

applicants and enrollees about the BHP 

coverage option, including benefits and 

coverage, in a manner that is consistent 

with the requirements of the Exchange. 

Additionally, states must require 

standard health plans to provide 

information on premiums and covered 

services, including any limitations, costsharing, as well as other information 

conforming to the requirements of the 

Exchange. Finally, states must require 

participating standard health plans to 

provide current and complete 

information on the names and locations 

of participating providers. 

Comment: One commenter suggested 

a requirement that we have application 

materials designed with individuals 

who have limited English proficiency in 

mind and that we should encourage 

marketing to younger individuals. Other 

commenters want states to be required 

to conduct outreach highlighting BHP 

availability to non-citizens or for 

individuals with limited English 

proficiency. Several of these 

commenters request applying Medicaid 

managed care requirements (42 CFR 

438.10(c)) around enrollees with limited 

English proficiency to BHP. 

Response: We agree with the 

commenters’ request for application 

materials that serve individuals with 

limited English proficiency. We further 

clarify that states must satisfy rules 

concerning accessibility requirements 

for persons with disabilities. We also 

agree that Medicaid standards are 

appropriate to address these 

populations and have applied them in 

§ 600.310. 

Comment: Other commenters 

supported the requirement to make 

provider lists available to enrollees. One 

commenter specifically requested the 

inclusion of facility providers such as 

clinics and health centers, another 


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commenter wants the requirement to be 

strengthened by including a quarterly 

update standard because of churn 

between QHPs and Standard Health 

Plans. 

Response: We also agree that 

information requirements are only 

valuable if kept current so we have 

added ‘‘at least quarterly’’ to the 

requirement in paragraph (a)(5) that 

states must require participating plans 

to publicize and keep current their 

participating providers. Because this 

requirement is not limited to any classes 

or types of providers, we believe it is 

inclusive as written for all providers. 

11. Tribal Consultation (§ 600.155) 

In § 600.155, we proposed that states 

are required to consult with Indian 

tribes located in the state on the 

development and execution of the BHP 

Blueprint using the state or federal tribal 

consultation policy approved by the 

state or federal Exchange as applicable. 

Comment: We received a comment 

recommending the removal of the word 

‘‘federal’’ from the requirement to 

follow the approved state or federal 

tribal consultation policy. Also the 

commenter urges CMS to use the 

Washington State Exchange tribal 

consultation policy as the model. 

Response: We agree that it is not 

necessary to identify in this rule 

whether the state exchange was 

established by the state or federal 

government, or whether the tribal 

consultation policy was based on a state 

or federal policy. It is only necessary to 

make clear that the BHP should comply 

with the state Exchange’s tribal 

consultation policy. Therefore we will 

remove ‘‘State or Federal’’ as descriptors 

of the tribal consultation policy. We 

appreciate the reference to Washington 

State’s Exchange tribal consultation 

policy but because each state has a 

different tribal makeup and 

relationship, it is important to maintain 

state flexibility in determining an 

appropriate consultation policy. Thus, 

we are not specifying adoption of any 

specific state’s policy. 

12. Protections for American Indians 

and Alaska Natives (§ 600.160) 

In § 600.160, we proposed specific 

protections for American Indians and 

Alaska Natives. Specifically, we 

required the extension of the special 

enrollment status applicable in the 

Exchange, we require states to permit 

Indian tribes and tribal organizations to 

pay premiums on behalf of BHP 

enrolled individuals, cost-sharing is 

prohibited, and we require standard 

health plans to pay primary to health 

programs operated by the Indian Health 

Service or tribal organizations for 

services covered under the standard 

health plan. Because we realized that 

the proposed policy with respect to 

premium payment should not be limited 

to tribes, tribal organizations and urban 

Indian organizations, we are broadening 

that requirement and moving it into 

§ 600.520 as discussed below. 

Comment: We received a comment 

requesting that we further protect Indian 

health providers operating within 

standard health plans by prohibiting the 

offerors from reducing the payments to 

providers by the amount of any costsharing that would be due from Indians 

but for the prohibition on cost-sharing. 

This prohibition is equivalent to that 

extended to Indian health providers 

providing services to Indians enrolled in 

a QHP in the individual market through 

an Exchange at 45 CFR 156.430(g). 

Response: We agree with the 

commenter that, if the cost of protecting 

Indians from cost sharing was placed on 

providers, it would have the result of 

reducing access to care and would 

frustrate the purpose of the cost sharing 

protection. Therefore, we have added 

this protection as paragraph (c). 

13. Nondiscrimination Standards 

(§ 600.165) 

We proposed, in § 600.165 that the 

state and standard health plans must 

comply with all applicable civil rights 

statutes which are delineated in the 

proposed rule (78 FR 59145) as well as 

the non-discrimination provision 

applicable to the Exchange. 

Comment: One commenter 

specifically appreciated that the 

standards in this section clarify that 

BHP falls under protections of both 

Affordable Care Act and the Civil Rights 

Act bolstering the ability of the HHS 

Office for Civil Rights and individuals 

to hold states and contractors 

accountable. 

Response: We are finalizing the 

language as proposed without change. 

14. Annual Report Content and Timing 

(§ 600.170) 

In § 600.170, we proposed specific 

requirements for the content and timing 

of the BHP annual report. The report 

must include content establishing 

compliance with statutory requirements 

including eligibility verification, 

limitations on the use of federal funds, 

and quality and performance measures 

from participating standard health 

plans. Additionally, states are required 

to submit any evidence of fraud, waste, 

or abuse known to the state and any 

follow up that had been specified in 

findings from a federal review or audit. 

Comment: Several commenters made 

specific reference to the requirement to 

report quality and performance 

measures and requested the ability to 

align with reporting for other insurance 

affordability programs. A commenter 

further recommended the use of NCQA, 

HEDIS and CAHPs standards. Two 

commenters made specific suggestions 

for measures or offered assistance in the 

development of measures that would be 

appropriate for this purpose. Several 

commenters offered that 2 full years of 

data should be available before quality 

measures are collected. A commenter 

requested that we limit the use of 

measures based on patient surveys. 

Response: We agree that this standard 

warrants attention and that the 

Department should take into account 

the desirability of aligning measures 

across insurance affordability programs. 

As indicated in the preamble of the 

proposed rule, we intend to issue future 

subregulatory guidance on the quality 

and performance standards taking into 

account these comments. 

Comment: Several commenters 

questioned the timing of the annual 

report, pointing out that the data 

available to the state 60 days before the 

end of the operational year would be 

limited and perhaps of poor quality. 

Response: We agree that the timing of 

the annual report as proposed will 

prove problematic for states in that it 

will not enable the submission of 

complete data. In response to this 

concern, we are changing the timing to 

60 days following the end of the 

operational year. With this change, we 

are reserving the right to request 

information in advance specifically 

needed to substantiate the release of 

funds. Otherwise, the section is being 

finalized as proposed. 

C. Federal Program Administration 

1. Federal Program Reviews and Audits 

(§ 600.200) 

In § 600.200(a), we proposed that HHS 

review each state BHP as needed, but no 

less frequently than annually, to 

determine state compliance with federal 

requirements and provisions of its BHP 

Blueprint. For additional discussions on 

specific reports and other 

documentation, refer to the September 

25, 2013 proposed rule (78 FR 59126). 

We did not receive specific comments 

on this section and are finalizing the 

provision as proposed. 

In § 600.200(b), we proposed the types 

of action items that may result from 

such review. For specific discussions on 

the action items, see the September 25, 

2013 proposed rule (78 FR 59126). We 


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received specific comments on this 

section which are discussed below. 

In § 600.200(c), we proposed the HHS 

Office of Inspector General (OIG) may 

periodically audit state operations and 

standard health plan practices. For 

specific discussions on the periodically 

conducted OIG audit, see the September 

25, 2013 proposed rule (78 FR 59126). 

We did not receive specific comments 

on this section and are finalizing the 

provision as proposed. 

We received the following comments 

as they relate to federal program reviews 

and audits: 

Comment: One commenter 

recommended that the section title be 

renamed to ‘‘Federal program 

compliance reviews and audits.’’ In 

addition, the commenter noted that 

§ 600.200(b)(3) may be missing an 

‘‘and.’’ 

Response: We appreciate the 

commenter’s recommended changes, 

which reflect the underlying intent of 

the provision. The final rule has been 

revised to include these changes. 

Comment: One commenter expressed 

concern regarding the provision that 

permits HHS to withhold approval of 

Blueprint revisions in the event that the 

state has not resolved action items in 

which the state appears to be out of 

compliance. Specifically, the 

commenter expressed that withholding 

approval of Blueprint revisions that 

otherwise comply with federal 

requirements is inappropriate and 

potentially arbitrary given that the 

action to deny or disapprove a Blueprint 

revision should be directly related to the 

subject matter of that revision; therefore, 

the commenter recommended that we 

should delete paragraph (b)(3) under 

this section. 

Response: We believe that 

maintaining this provision in the final 

rule is appropriate as it provides a 

compliance remedy that permits the 

state the opportunity and necessary time 

to resolve compliance issues while 

maintaining its BHP certification. 

Removing this provision would result in 

having only one compliance remedy— 

the withdrawal of a state’s BHP 

certification—in the event that 

identified action items were not 

immediately resolved. We believe that 

this alternative is not in the best interest 

of the state, or in the best interest of the 

BHP enrollees, as it would result in 

program termination as well as coverage 

disruptions for BHP enrollees. 

Comment: We received a request to 

define the standard of review, especially 

as it relates to the use of BHP trust 

funds. 

Response: The standard of review for 

federal program reviews and audits is 

defined in § 600.200(a). Specifically, 

this standard of review includes all 

applicable laws, regulation, and 

interpretive guidance as it relates to 

federal BHP requirements as well as the 

provisions of the state’s certified BHP 

Blueprint. The standard of review with 

respect to the use of BHP trust funds 

includes all applicable laws, regulation, 

and interpretive guidance as it relates to 

BHP trust funds, with a focus on the 

requirements specified in § 600.705. We 

have modified the language in 

§ 600.200(b)(4) to clarify this standard. 

D. Eligibility and Enrollment 

The proposed content of Subpart D 

includes all eligibility and application, 

screening and enrollment standards and 

procedures. 

1. Basis, Scope and Applicability 

(§ 600.300) 

In proposed § 600.300 we provided 

the citation for the statutory basis for 

subpart D of this rule as section 1331(e) 

of the Affordable Care Act, which sets 

forth eligibility standards for the BHP 

and prohibits eligible individuals from 

being treated as qualified individuals for 

purposes of enrolling in QHPs through 

the Exchange. We did not receive 

specific comments on proposed 

§ 600.300 and are finalizing the 

provision as proposed. 

2. Eligible Individuals (§ 600.305) 

In § 600.305(a), we proposed that an 

individual is eligible for BHP if the 

individual: 

• Resides in the state offering the 

BHP, and is not eligible for coverage 

under the state’s Medicaid program that 

includes at least the essential health 

benefits (EHB) described in 45 CFR Part 

156; 

• Has household income that exceeds 

133 percent of the federal poverty level 

(FPL) and does not exceed 200 percent 

of the FPL for the applicable family size, 

or for a lawfully present non-citizen 

ineligible for Medicaid due to 

citizenship status, with household 

income not exceeding 200 percent of the 

FPL; and 

• Is not eligible to enroll in minimum 

essential coverage (MEC), including 

Medicaid coverage that covers the EHBs 

described above (individuals enrolled in 

Medicaid or CHIP that does not 

constitute MEC, or individuals eligible 

only for unaffordable employer 

sponsored insurance as determined 

under section 5000A(e)(1) of the 

Internal Revenue Code would meet this 

criterion); 

• Is under age 65; 

• Is a citizen, or lawfully present noncitizen; and 

• Is not incarcerated (other than 

during a period pending disposition of 

charges). 

In § 600.305(b), we proposed that a 

state may not impose limitations on 

eligibility through the imposition of 

waiting lists, caps on enrollment, 

restrictions based on geographic area or 

any other conditions. 

We are finalizing the provisions of 

this section as proposed but have made 

some changes in response to the 

comments described below. In addition, 

we have made several revisions for 

clarity. 

In § 600.305(a)(1) we have modified 

the standard to read ‘‘are residents of 

the state.’’ In § 600.305(a)(2), we 

changed the term ‘‘non-citizen’’ to 

‘‘immigration’’ status clarifying that it is 

immigration status that is a determinant 

for eligibility. Additionally we clarified 

that this same immigration status may 

apply to CHIP as well as Medicaid. In 

the proposed § 600.305(a)(1), the 

standard also referenced not being 

eligible for Medicaid consisting of at 

least the EHBs. Because this 

requirement is entirely subsumed under 

§ 600.305(a)(3) requiring ineligibility for 

MEC, we have deleted it from this 

section; this does not change the 

meaning of the regulations but rather 

makes the regulation more clear. 

Additionally, in § 600.305(a)(3) we have 

removed the word ‘‘affordable’’ to more 

closely reflect the underlying statutory 

language that connects affordability to 

employer sponsored insurance. In 

addition, we have also deleted the 

reference to CHIP in § 600.305(a)(3)(i), 

and have limited the reference to ‘‘such 

other programs’’ only to Medicaid, 

because the Department of Treasury’s 

final rule on MEC (78 FR 53646) now 

clarifies that all CHIP coverage is MEC 

(in contrast to Medicaid, which for some 

individuals may be limited and 

therefore not MEC). 

Comment: We received many 

comments supporting the proposed 

eligibility standards for BHP, including 

the provision permitting individuals in 

limited-benefit Medicaid programs to 

remain in such programs while also 

being determined eligible for BHP. 

Commenters expressed the importance 

of this provision as it relates to family 

planning, pregnancy related services, 

and HIV treatments. 

Response: We are finalizing the 

proposed provisions. 

Comment: We received one comment 

requesting that HHS provide an 

exception to the eligibility standards in 

states that do not expand Medicaid 

coverage citing the gap in coverage in 

those states that do not cover low 


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income adults under 133 percent of the 

FPL. 

Response: We share the commenter’s 

concern regarding the gap in coverage in 

states that have not elected to expand 

Medicaid to cover low income adults 

under 133 percent FPL; however, we 

have no authority to provide an 

exception as requested by the 

commenter given that the statute 

specifies the household income 

standard in BHP (that is, individuals 

with household income that exceeds 

133 percent of the FPL and does not 

exceed 200 percent of the FPL). 

Comment: Several commenters 

requested clarification that legally 

married same-sex couples will be 

recognized as married for purposes of 

BHP eligibility, in line with the 

Department’s policy in the Exchanges. 

Response: Marriage recognition is not 

a policy subject to federal regulation 

under either the Exchange or Medicaid, 

but it is necessary for the determination 

of household composition, which is a 

key element of calculating household 

income using the modified adjusted 

gross income (MAGI) methodology. 

Under section 1331(h) of the Affordable 

Care Act, BHP terms such as income, 

including the element of household 

composition, are required to have the 

same meaning as such terms have under 

section 36B of the Internal Revenue 

Code. Pursuant to September 2013 

guidance on this issue from the IRS in 

Revenue Ruling 2013–17, a marriage of 

same-sex individuals validly entered 

into is recognized for purposes of the 

Internal Revenue Code even if the state 

in which the individuals are domiciled 

does not recognize the validity of same 

sex marriages. Because BHP is required 

to use the same definitions as are 

applicable under the Internal Revenue 

Code and because it would promote 

consistency across federal programs, we 

agree that this same policy is applicable 

to BHP. We intend to address this issue 

in subregulatory interpretive guidance 

similar to the guidance issued under the 

Exchange and Medicaid on BHP 

implications of United States v. 

Windsor, 570 U.S. ____ (2013). Using 

interpretive guidance will allow a more 

specific and nuanced consideration of 

the issues raised. 

Comment: Several commenters 

requested flexibility in BHP to provide 

coverage for spouses affected by the 

affordability test for employer based 

insurance. Some spouses are not eligible 

for a premium tax credit because they 

would be considered eligible for 

affordable employer based insurance. 

Some commenters suggested that CMS 

provide a state option to cover such 

spouses but not to require such 

coverage, so as not to force states to 

cover individuals for whom there would 

be no federal reimbursement. The 

commenters urged CMS to revise the 

regulation to permit states the option for 

such spouses to enroll in BHP and for 

states to have as much flexibility in 

funding as possible. 

Response: To explain the changes 

made to the regulation in response to 

these comments, it is necessary to point 

out that there is a statutory error in 

section 1331 of the Affordable Care Act, 

which as part of the eligibility 

standards, sets the BHP standard of 

affordability of employer sponsored 

insurance by referencing section 

5000A(e)(2) of the Internal Revenue 

Code. Section 5000A(e)(2) is not an 

affordability test. Compounding the 

error, we cited the affordability test in 

the proposed rule as section 5000A(e)(1) 

which is not the statutory reference, but 

is an affordability test. Resolving this 

double error, we are clarifying that the 

affordability test that should have been 

cited in BHP is to the premium tax 

credit standard at section 36B(c)(2)(C) of 

the Code. As the commenters correctly 

point out, including the affordability 

test at 5000A(e)(1) creates a difference 

in eligibility between BHP and the PTC 

which does not seem to be supported by 

other sections of the statute and 

amounts to an unfunded mandate. 

These comments refer to statutory 

provisions concerning eligibility for the 

premium tax credit. Under current IRS 

rules, spouses are not eligible for the 

premium tax credit if the worker’s offer 

of individual coverage requires a 

contribution less than a certain 

percentage of household income, 

because they would be considered 

eligible for affordable coverage. Since 

we are applying the same affordability 

test for BHP eligibility that applies for 

the premium tax credit, the same 

policies concerning spousal eligibility 

would apply. The statutory definition of 

an eligible individual for purposes of 

BHP expressly excludes individuals 

who are eligible for affordable coverage. 

Comment: We received a comment 

recommending that HHS revise 

language regarding standards for noncitizens’ BHP eligibility to be more clear 

about the applicable income standard. 

Response: We have clarified the BHP 

eligibility standards for lawfully-present 

non-citizens ineligible for Medicaid by 

specifying the full income range (that is, 

lawfully present non-citizens who have 

household incomes from 0 to 200 

percent of the FPL). 

Comment: A few commenters 

supported, but wanted further clarity, 

regarding the provision in the proposed 

rule that a state must determine an 

individual eligible for BHP when they 

are enrolled in Medicaid or CHIP 

coverage that does not provide MEC. In 

particular, one commenter would like 

verification that pregnancy-related 

services provided through Medicaid, 

whether comprehensive or not, continue 

to be excluded under Department of 

Treasury rules regarding MEC and 

would not preclude eligibility for BHP. 

Response: The definition of MEC is 

outside the scope of this rule. Section 

1331(e) of the Affordable Care Act sets 

out two standards that are relevant to 

determining if individuals with 

household incomes from 133 up 

through 200 percent of the FPL, who are 

eligible for Medicaid, can enroll in BHP. 

First, such an individual may not be 

eligible for Medicaid benefits that 

consist of EHBs (as described in section 

1302(b) of the Affordable Care Act). In 

addition, to be eligible for BHP, 

individuals may not be eligible for MEC. 

MEC is defined in the Internal Revenue 

Code and implementing regulations. In 

general, Medicaid coverage is 

considered to be MEC and Medicaid 

coverage consisting of the EHBs would 

be MEC. A recent rule issued by the 

Department of Treasury (78 FR 53646), 

however, now provides that some 

limited-benefits categories of coverage 

under title XIX are not MEC. 

Additionally, HHS has miscellaneous 

MEC authority to determine Medicaid 

programs to be MEC on an individual 

basis. 

Comment: Another commenter 

wanted clarity that an individual may 

be eligible to enroll in a standard health 

plan through BHP if the individual has 

access to employer sponsored coverage 

that fails to meet the minimum value 

standards. 

Response: As noted above, the 

standard for eligibility for BHP is based 

on statutory language in section 

1331(e)(1) of the Affordable Care Act, 

which specifies that only individuals 

ineligible for MEC or individuals 

eligible for an employer-sponsored plan 

that is not affordable coverage are 

eligible for BHP. Minimum value is not 

a standard authorized by the statute. 

Comment: We received two comments 

requesting greater flexibility in states 

that implement a BHP for individuals 

who wish to remain in QHPs. The 

commenters expressed interest in 

providing such individuals with the 

choice to enroll in BHP, or remain 

enrolled in the Exchange with their 

premium tax credit and cost-sharing 

reductions. 

Response: We appreciate the 

commenters’ interest in providing 

flexibility to individuals eligible for 

BHP who wish to continue to receive 


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coverage through QHPs. Such 

individuals may continue to receive 

coverage through QHPs; however, the 

statute specifies that individuals eligible 

for BHP are not eligible to receive the 

premium tax credit or cost-sharing 

reductions. If an individual elects to 

remain enrolled in QHP coverage, and is 

determined to be eligible for the state’s 

BHP, no federal subsidies will be 

available to purchase the QHP coverage. 

Comment: One commenter expressed 

concern about Medicaid serving as a 

secondary payer to BHP, because the 

commenter believed Medicaid will 

likely be the better payer. The 

commenter recommended that HHS 

ensure that individuals have easy access 

to comparison information between 

Medicaid and BHP to help facilitate 

choice. 

Response: If a person has eligibility 

for both Medicaid that is not MEC and 

for BHP, the Medicaid statute at section 

1902(a)(25) of the Social Security Act 

and implementing Medicaid regulations 

require that Medicaid pay secondary to 

BHP. The provider is required to bill 

BHP primary to Medicaid; the 

individual is not given choice about 

who is the primary payer. 

Comment: A commenter requested 

clarification on whether a state 

implementing a BHP between open 

enrollment periods in the Exchange can 

allow any QHP enrollees with the 

premium tax credit to be transitioned to 

the BHP at the next open enrollment 

with no impact on the enrollees’ 

advance payments of the premium tax 

credits (APTCs). 

Response: We are finalizing 

§ 600.305(b) as proposed except that we 

have added language to conform with a 

change made in subpart B of this rule 

permitting states implementing BHP in 

2015 to seek approval for a transition 

plan enabling the state to propose 

alternative initial enrollment strategies 

for eligible individuals. This would 

address the commenters concern if the 

state implements BHP in 2015. After 

2015, we are requiring alignment of BHP 

with open enrollment in the Exchange 

at § 600.115(d). Following the 2015 

initial implementation year, a state 

implementing a BHP must coordinate 

implementation with open enrollment 

of the state’s Exchange. 

3. Application (§ 600.310) 

In § 600.310, we proposed that any 

state operating a BHP must use the 

single streamlined application or the 

state’s approved alternative. 

Additionally, we proposed that 

application assistance be made available 

to individuals applying for BHP equal to 

that which is available in Medicaid. We 

also proposed that if a state uses 

authorized representatives, it would 

follow the standards of either Medicaid 

or the Exchange. We noted in the 

preamble that call centers required by 

the Exchange at 45 CFR 155.205(a) are 

encouraged under those regulations to 

provide information on all insurance 

affordability programs including BHP. 

Comment: Several commenters 

requested that we require that 

application assistance be conducted in a 

manner accessible to those with limited 

English proficiency or individuals with 

disabilities. A commenter suggested 

requiring call center staff to refer 

consumers in real time to community 

resources if they are unable to answer 

questions about BHP. Another 

commenter wanted call centers to be 

required to provide information on BHP 

rather than encouraged to do so. 

Response: After consideration of the 

comments received, we are finalizing 

this section as proposed. We have 

required application assistance for BHP 

equal to that provided in the Medicaid 

program, which requires 

accommodation for individuals with 

limited English proficiency and for 

persons with disabilities. Additionally, 

the call center requirements set forth at 

45 CFR 155.205(a) are outside of the 

scope of this rule-making; therefore, we 

cannot make the suggestions proposed 

by the commenters. While we are 

unable to include specific call center 

requirements in this final rule, we 

expect that, in accordance with 

§ 600.330, the state will enter into an 

agreement with the state Exchange to 

ensure coordination of BHP and 

Exchange application and enrollment 

mechanisms. Since call centers are part 

of those mechanisms, we expect that the 

agreement will require that coordination 

will include call center activities. We 

expect that call centers will support all 

insurance affordability programs, 

including BHP. 

4. Certified Application Counselors 

(§ 600.315) 

In § 600.315, we proposed that if, a 

state chooses to use certified application 

counselors (CACs), the state must apply 

either the certification standards and 

processes of Medicaid or the Exchange. 

Comment: One commenter requested 

clarification on whether a state must use 

certified application counselors. 

Response: We are not mandating the 

use of certified application counselors. 

Comment: We received several 

comments requesting clarification on 

who can serve as certified application 

counselor. Specifically, commenters 

recommended that HHS permit health 

plans to serve as certified application 

counselors. The commenters noted that 

it would be desirable to have plans 

assist as ‘‘issuer customer service 

representatives.’’ 

Response: Certified application 

counselors are individuals who meet 

certain qualifications, not entities. To 

the extent that employees of health 

plans or any other entities meet the 

applicable qualifications, they would 

not be precluded from serving as CACs. 

These qualifications would be based on 

the certification standards of either 

Medicaid at 42 CFR 435.908 or the 

Exchange at 45 CFR 155.225 (at state 

option). We note that employees of 

health plans acting as CACs would need 

to be able to maintain confidential 

records, and would need to ensure that 

they will not operate with a conflict of 

interest (for example, they could not 

receive bonuses based on how many 

new enrollees sign up for the employing 

health plan). 

Comment: We also received a 

comment that the certification process 

should include specific training 

components on how to provide 

accessible services to individuals with 

disabilities and culturally and 

linguistically appropriate services. 

Commenters suggested that training 

should include components on how to 

access and work with interpreters as 

well as how to access and use 

augmentative and assistive 

communication devices. The 

commenter recommended that 

application counselors have access to 

population level data to assist in 

determining the needs of the population 

being served. A commenter 

recommended the inclusion of language 

directing assistance in the form of preenrollment outreach and education. 

Response: We share the commenter’s 

interest in ensuring that certified 

application counselors have sufficient 

training to assist individuals seeking 

health insurance coverage; however, we 

believe that the content of such training 

is best determined at the state-level 

given the state-specific needs and 

unique market features within the state. 

We anticipate that states will use a 

variety of application assistance 

techniques relying heavily on the 

strength of current operations in each 

state. Such state training still must be in 

accordance with 45 CFR 155.225 

(accessibility requirements for persons 

with disabilities), or 42 CFR 435.908 

(accessibility requirements for persons 

with disabilities and for individuals 

with limited English proficiency.) 


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5. Determination of Eligibility for and 

Enrollment in a BHP (§ 600.320) 

In § 600.320, we proposed that 

determining eligibility for BHP is a 

governmental function that must be 

done by a state or local governmental 

entity, including at state choice, an 

Exchange that is a government entity. 

Further, we proposed that the timeliness 

standards for making modified adjusted 

gross income (MAGI) based eligibility 

determinations under Medicaid apply 

equally to BHP. Regarding 

establishment of the effective date of 

eligibility, we proposed that states must 

establish a uniform method of 

determining the effective date for 

purposes of enrollment in standard 

health plans using either the Exchange 

standards or Medicaid rules. Likewise, 

we proposed that the state must offer 

either the enrollment and special 

enrollment periods of the Exchange or 

the state may choose to follow the 

continuous open enrollment standard of 

Medicaid. 

We received several comments on this 

section, which we have carefully 

considered and we offer a variety of 

modifications, as described below. 

Comment: One commenter offered 

endorsement of the policy of having 

eligibility determinations made by 

governmental agencies. With regard to 

enrollment, we also received general 

support for offering the choice between 

the enrollment policies of the Exchange 

or Medicaid; however, some 

commenters suggested we narrow the 

Medicaid option to be exclusive of 

§ 435.915(a), which establishes 

retroactive coverage. 

Response: In § 600.320(c) we have 

removed applicability of § 435.915(a) to 

eliminate retroactive coverage from the 

Medicaid enrollment policies that 

would be required if the state elects the 

Medicaid model; states can still provide 

retroactive eligibility in BHP following 

the Medicaid rules if they so choose but 

it is not required. 

Comment: A few commenters 

requested clarification on whether tax 

filing is required for enrollment. 

Response: Tax filing is not an 

eligibility standard for BHP; the 

eligibility standards for BHP eligible 

individuals are set forth in § 600.305. 

This section’s focus is on the processes, 

not the standards, for determining 

eligibility and enrollment. These 

processes should be used to determine 

eligibility against the standards given in 

§ 600.305(a). In § 600.305(b) we have 

made it clear that states may not add to 

the list of eligibility standards. 

Therefore, we have not altered the 

regulation text. 

Comment: A commenter suggested 

that we permit presumptive eligibility 

in BHP and that we permit hospitals to 

delegate authority to another entity, 

such as an eligibility service vendor. 

Response: There is no statutory 

provision that authorizes presumptive 

eligibility under BHP. As discussed 

above, states may elect to provide for 

retroactive effective dates for eligibility. 

This option may ensure that coverage is 

not delayed because of the eligibility 

and enrollment process. 

Comment: We received a comment 

advising us to state the goal of real-time 

eligibility determinations. 

Response: We agree with the 

commenters’ position that insurance 

affordability programs, including BHP, 

should be moving towards real-time 

eligibility determinations. Achieving 

this goal is dependent on the 

development and maintenance of 

effective systems and procedures, which 

may take a substantial investment and 

time. 

Comment: One commenter suggested 

that we not use the term ‘‘continuous 

eligibility’’, which the commenter noted 

could be confused with other eligibility 

policies. The commenter encouraged us 

to describe enrollment as continuing on 

a rolling basis throughout the year. 

Response: In response to the comment 

we have added the phrase ‘‘continuous 

open enrollment throughout the year’’ to 

§ 600.320(d) to clarify the Medicaid 

choice of enrollment. 

Comment: Several commenters raised 

concern that the Exchange standard 

does not include a special enrollment 

period for pregnancy and asked that we 

specifically address that in BHP. 

Response: We have modified the text 

to clarify that states choosing the 

Exchange enrollment policy must 

establish enrollment periods no more 

restrictive than those permitted by the 

Exchange, enabling states to add special 

enrollment periods based on pregnancy 

as suggested. 

6. Coordination With Other Insurance 

Affordability Programs (§ 600.330) 

In § 600.330, we proposed carrying 

over several of the coordination 

provisions from the Exchange and 

Medicaid regulations to BHP, including 

having agreements delineating lines of 

authority for making coordinated 

eligibility determinations. We have 

proposed that individuals applying to 

any insurance affordability program not 

be required to duplicate information 

already provided for purposes of 

applying for BHP, and that the state 

accomplish this through electronically 

transferring accounts between the BHP 

and other agencies as well as accepting 

determinations and assessments made 

by other insurance affordability 

programs and enrolling eligible 

individuals into coverage without delay. 

When accounts are transferred to the 

BHP from other agencies, we proposed 

a requirement that the BHP agency must 

notify the referring agency of any final 

determination. Also, we proposed that 

every application for BHP will result in 

a final determination of eligibility or 

ineligibility and that notices to 

applicants be coordinated with other 

insurance affordability programs. 

Comment: We received many 

comments supporting coordination 

between IAPs, some of the comments 

particularly pointed out the importance 

of having agreements between IAPs. No 

comments requesting change were 

received on this section. 

Response: We are finalizing this 

section as proposed. 

7. Appeals (§ 600.335) 

Section 1331 of the Affordable Care 

Act does not confer a federal level 

appeal for the BHP program. Therefore, 

we proposed in § 600.335 that states 

follow the Medicaid appeals rules and 

processes. Under these processes, there 

would be no direct appeal to the 

Department of Health and Human 

Services. Further, we proposed that 

eligibility determinations must include 

notice of the right to appeal and 

instructions for how to engage the 

appeals process. We proposed that this 

process must be conducted in a manner 

accessible to individuals with limited 

English proficiency and persons with 

disabilities. 

Comment: While we received a few 

comments commending the decision to 

use the Medicaid appeals process, we 

received several comments expressing 

concern about this section. Commenters 

favored the ability to choose the 

Marketplace (Exchange) appeals process 

to decrease variability within a given 

state. One commenter acknowledged 

that notices would have to specify that 

there is no federal level appeal for BHP. 

Response: We understand the 

commenters’ desire to have the 

Exchange appeals rules and processes 

available to BHP, decreasing variability 

in states with state-based Exchanges. 

(We note the Federally Facilitated 

Exchange will only have a federal 

process, and we do not anticipate that 

this federal process will be available for 

BHP.) Therefore, as in many other areas 

of the regulation, we are changing this 

provision to give states the choice of 

using the appeals rules of Medicaid or 

the Exchange. 


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8. Periodic Renewal of BHP Eligibility 

(§ 600.340) 

In § 600.340(a), we proposed a 12- 

month period of eligibility unless 

redetermination is warranted based on 

new information. Additionally, we 

proposed that states require individuals 

to report changes in circumstances at 

least equivalent to that which is 

required by the Exchange. In 

§ 600.340(b), we proposed that enrollees 

who remain eligible be given notice of 

a reasonable opportunity to change 

plans. Further, we proposed that 

enrollees will remain in the plans 

selected for the previous year if they 

choose not to take action on such 

notices and such plans remain available. 

In paragraphs (c) and (d), we proposed 

that states apply the redetermination 

procedures of either the Exchange or 

Medicaid and that states are required to 

verify information in accordance with 

§ 600.345. Finally, in § 600.340(e) we 

require states to provide an enrollee 

with an annual notice of 

redetermination of eligibility which 

includes all current information used as 

the basis of the individual’s eligibility. 

The enrollee is required to report 

changes within 30 days and the state 

must verify the information. 

Comment: Many comments were 

received on this section, with the vast 

majority urging us to allow 12 month 

continuous eligibility. Commenters 

frequently cited that half the individuals 

in the eligible income bracket for BHP 

are expected to experience changes in 

income within a 12 month period that 

would cause them to shift from BHP to 

Medicaid or the Exchange. Many 

commenters were concerned with the 

administrative burden this would place 

on a state. 

Response: We have carefully 

considered the comments received and 

we are sympathetic to the request for 12 

month continuous eligibility because we 

share the concern of the commenters 

both with regard to the shifts between 

different insurance affordability 

programs that could be experienced by 

the BHP enrollees and the 

administrative burden on states. 

Therefore, we are extending to states the 

option of only redetermining eligibility 

every 12 months, regardless of any 

changes in income or other 

circumstances, as long as the enrollee is 

under age 65, is not otherwise enrolled 

in MEC, and remains a resident of the 

state. We have singled out those 

exceptions because they are situations 

in which BHP coverage would either be 

duplicative or outside its overall scope. 

However, enrollees must report changes 

impacting eligibility within 30 days 

regardless. Additionally, to clarify the 

relationship between this new provision 

and the 12 month periodic review of 

eligibility (provision (a)) we have 

replaced the language that an individual 

is ‘‘determined eligible for a period of’’ 

with ‘‘subject to periodic review of 

eligibility every’’ 12 months in 

provision (a). States will not receive 

additional funding to account for any 

higher BHP enrollment under this state 

option. 

Comment: One comment requested 

clarification that enrollees must report 

all changes within 30 days. 

Response: The 30 day standard 

specified in 45 CFR 155.330(b) is 

applied by reference. 

9. Eligibility Verification (§ 600.345) and 

Privacy and Security of Information 

(§ 600.350) 

In § 600.345, we proposed that states 

verify the eligibility of an applicant or 

enrollee in BHP using either the 

standards and procedures of Medicaid 

or the Exchange. In § 600.350 we 

proposed that states are required to 

comply with standards and procedures 

protecting the privacy and security of 

eligibility information set forth by the 

Exchange. We did not receive specific 

comments on these sections and are 

finalizing the provisions as proposed. 

E. Standard Health Plan 

1. Basis, Scope and Applicability 

(§ 600.400) 

Proposed § 600.400 under subpart E 

specified the general statutory authority 

for, and the scope of, standards 

proposed in this subpart, which sets 

forth the minimum coverage standards 

under BHP and delivery of such 

coverage, including the competitive 

contracting process required for the 

provision of standard health plans. For 

specific discussions, see the September 

25, 2013 proposed BHP rule (78 FR 

59128 and 59129). We did not receive 

specific comments on this section and 

are finalizing the provision as proposed. 

2. Standard Health Plan Coverage 

(§ 600.405) 

In § 600.405(a), we proposed that 

standard health plan coverage must 

include, at a minimum, the EHBs as 

determined and specified under 45 CFR 

156.110, and 45 CFR 156.122 regarding 

prescription drugs. We also proposed 

that states be able to select more than 

one base benchmark option from the 

reference plans specified at 45 CFR 

156.100 when establishing EHBs for 

standard health plans. Additionally, we 

proposed that states comply with 45 

CFR 156.122(a)(2) by requiring 

participating standard health plans to 

submit a list of covered prescription 

drugs under the plan to the state. 

In proposed § 600.405(b), the state is 

required to adopt the determination of 

the Exchange at 45 CFR 155.170(a)(3) in 

determining which benefits subject to 

state insurance mandates enacted after 

December 31, 2011 are in addition to the 

EHBs. 

In proposed § 600.405(c) and (d), we 

required EHBs to include changes made 

through periodic review and prohibited 

discrimination in benefit design. 

Proposed § 600.405(e) is the 

prohibition on federal funding for 

abortion prescribed in section 1303 of 

the Affordable Care Act that applies in 

the same manner to BHP and standard 

health plans as it does to QHPs. 

Comment: We received several 

comments in support of requiring 

coverage for preventive services without 

cost-sharing. 

Response: We are finalizing the 

proposed provisions. 

Comment: We received several 

commenters requesting that states have 

the ability to use the alternative benefit 

plan in Medicaid as the reference or 

base-benchmark plan for BHP in order 

to incorporate EPSDT and other child 

specific benefits in the event that CHIP 

does not continue beyond 2019. 

Another group of commenters request 

that we require the state to use the same 

base-benchmark or reference plan that 

the state uses for either the Exchange or 

the Medicaid benchmark. 

Response: Sections 1331(a)(2)(B) and 

1331(b)(2) of the Affordable Care Act 

provide that the benefits offered through 

BHP must contain at least EHBs, which 

is determined by a comparison to a base 

benchmark plan set forth at 45 CFR 

156.100 using the processes set forth in 

45 CFR 156.110 and 45 CFR 156.122. 

The statute does not require benefits 

equivalent to a Medicaid alternative 

benefit plan. That said, states have the 

ability to negotiate for additional 

benefits through the competitive 

procurement process required by 

section 1331(c)(1) of the Affordable Care 

Act and can also provide additional 

benefits for BHP enrollees in addition to 

the standard health plan benefits, using 

BHP trust funds. 

Comment: Other commenters 

recommend additional benefits outside 

of the EHBs in the standard health plan. 

They also expressed concern that 

requiring the state to offer at least the 

EHBs ‘‘at a minimum’’ is insufficient to 

mean the state, at its option, may 

provide additional benefits to the 

standard health plan. 

Response: We have carefully 

considered the comments for this 


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section and we are finalizing without 

change. We believe that this regulation 

is explicit in establishing that states 

must provide EHBs as a minimum level 

of benefits, can negotiate with standard 

health plans in the competitive 

procurement process for more benefits, 

and can supplement those benefits with 

additional benefits for BHP enrollees, 

using BHP trust fund dollars. 

Comment: We received one comment 

requesting that HHS provide examples 

of additional benefits a state could 

provide. Another commenter requested 

clarification that a state must provide 

coverage of plasma protein therapies. 

Response: We hesitate to provide 

examples in this area where states are 

extended complete latitude because 

examples are often viewed as 

recommendations. For benefits coverage 

policy, we are requiring the statutory 

floor of the EHBs, and each state is free 

to add to the benefits as the state 

decides is appropriate. We are leaving 

this provision unchanged. 

Comment: Several commenters 

expressed concern that the preamble 

language concerning the abortion 

services standard appeared to be 

misleading in that it may be read to 

mean that states out of compliance with 

this requirement would not receive any 

federal funding for BHP, rather than just 

federal funding for abortion. 

Response: The regulation text requires 

compliance with the rules on abortion 

coverage applicable to Exchanges at 45 

CFR 156.280. The preamble explained 

that, consistent with that regulation, any 

abortion coverage for which public 

funding is prohibited could only be 

provided using segregated non-federal 

funding. If a state or standard health 

plan does not segregate funding for such 

abortion coverage, the state would be 

out of compliance with BHP 

requirements, and could lose program 

certification. Or the state could face 

disallowance of improperly spent funds. 

Comment: Another commenter 

requested the inclusion of additional 

guidance on substitution and 

supplementation of benefits. 

Response: Supplementation and 

substitution are policies that were 

developed for use by plans in the 

individual and group markets, and were 

adopted with some minor variations by 

Medicaid, for alternative benefit plans. 

In general, these policies are part of the 

determination of the scope of EHBs. 

Section 1302 of the Affordable Care Act 

sets forth 10 required EHBs, and then 

indicates that the full scope of EHBs 

should be based on the scope of benefits 

provided by a typical employer plan. To 

implement this requirement, under 

applicable regulations at 45 CFR 

156.100 et seq., states must select a base 

benchmark plan from among several 

options. While the state selects one base 

benchmark for individual and group 

plans, the state may select different and 

multiple base benchmarks for Medicaid. 

Supplementation allows a plan offeror 

to add to the base benchmark a required 

EHB that is missing, and substitution 

allows a plan offeror to substitute an 

actuarially equivalent essential health 

benefit into a reference plan. (In 

Medicaid, because the state acts as the 

plan offeror, it determines the 

supplementation and substitution 

procedures.) These flexibilities were 

created to make the definition of EHBs 

possible from existing commercial 

products. For BHP, we propose the same 

process to define EHBs, except that the 

state could select different and multiple 

base benchmarks for BHP. Any 

subregulatory guidance put forward by 

the Exchange will be made equally 

available under BHP. 

Comment: One commenter requested 

that HHS ensure payment for out-ofnetwork providers for emergency 

services and the extension of 

protections in section 1932(b)(2) of the 

Act, the prudent laypersons standard for 

emergency care, to BHP. 

Response: With respect to the 

provider rates, we do not believe that 

statute provides the authority to 

establish rate-setting standards in BHP. 

States are free to contract with standard 

health plan offerors to provide coverage 

which may take many forms including 

networks, fee-for-service or other 

models. States may impose additional 

requirements including mandatory 

benefits, rate structures, or delivery 

system limitations through law or 

contract. 

Regarding the prudent layperson 

standard for emergency services, EHBs 

are required by statute to be offered in 

BHP. Emergency services is an EHB, to 

which the prudent layperson standard is 

applied at 45 CFR 147.138(b)(4). 

Therefore, any base benchmark plan 

will necessarily include emergency 

services based on the prudent layperson 

standard. 

Comment: We received one comment 

expressing concern that the United 

States Phamacopeia (USP) classification 

system as specified in 45 CFR 156.122 

is not designed to be used with plans 

requiring EHBs, and are inadequate in 

providing for women’s health care 

needs. 

Response: This issue is not within the 

scope of this regulation. 

3. Competitive Contracting Process 

(§ 600.410) 

Under § 600.410(a), we propose that a 

state must assure in its BHP Blueprint 

that it meets the requirements of this 

section. 

We propose in § 600.410(b) elements 

required in the competitive contracting 

process for the provision of standard 

health plans. For the specific elements, 

see the September 25, 2013 proposed 

rule (78 FR 59147). 

In § 600.410(c), we proposed an 

exception to the competitive contracting 

process for program year 2015. For 

specific requirements associated with 

this exception, see the September 25, 

2013 proposed rule (78 FR 59130). 

We proposed in § 600.410(d) the 

specific negotiation criteria that the 

state must assure is included in its 

competitive contracting process. For the 

specific criteria, see the September 25, 

2013 proposed rule (78 FR 59147). 

In § 600.410(e), we proposed 

additional considerations specified in 

statute that a state must include in its 

competitive contracting process for the 

provision of standard health plans. For 

specific discussions, see the September 

25, 2013 proposed rule (78 FR 59147). 

We received the following comments on 

the competitive contracting process: 

Comment: We received several 

comments supporting the proposed 

competitive contracting process. 

Response: We are finalizing the 

competitive contracting process 

provisions with some modifications as 

discussed further below. 

Comment: We received several 

comments requesting clarification on 

whether a state could use its Medicaid, 

or QHP, contracting process for BHP if 

that process was competitive in nature. 

Two commenters specifically asked 

whether Medicaid managed care 

organizations currently under contract 

could provide standard health plans to 

allow the alignment of BHP with 

existing benefits offered to Medicaid 

beneficiaries, or would the state need to 

begin a new procurement process for 

BHP. Another commenter requested that 

CMS waive the competitive contracting 

process if the state’s Medicaid or 

Exchange-based contracting process 

aligns with the BHP requirements. 

Response: With respect to how the 

state executes its procurements (that is, 

the manner in which the state solicits 

for bids and effectuates a contract 

award), a state may use an already 

established competitive contracting 

process, such as the Medicaid or QHP 

process, to enter into contracts with 

standard health plan offerors as long as 

the process provides for negotiation and 


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consideration of each of the statutorily 

required factors for BHP procurement. 

This may require some adjustment to 

those established processes, since, for 

example, a Medicaid managed care 

procurement would not necessarily 

include negotiation or consideration of 

those required elements. Although the 

procurement process might have many 

standard elements, the state would have 

to adjust its solicitation of bids to reflect 

the differing requirements of each 

separate program, and contractors 

would likely need to adjust their 

offerings to meet the requirements of 

each separate program. In addition, the 

procurement process would have to 

ensure that there was no crosssubsidization between programs. Except 

for program year 2015, in which a state 

may request an exception to the 

competitive contracting process, the 

procurement process used to contract 

for the provision of standard health 

plans, whether it is a joint or standalone 

procurement, must include and comply 

with all of the statutorily required 

elements of competitive bidding for 

BHP standard health plans codified in 

§ 600.410. 

We understand the commenters’ 

interest in ensuring rapid and efficient 

implementation of BHP and, as a result, 

we have provided a state implementing 

BHP in program year 2015 with the 

option to request an exception to the 

competitive process. As specified in 

§ 600.410(c), the state must include a 

justification as to why it cannot meet 

this requirement and describe the 

process it will use to enter into contracts 

for the provision of standard health 

plans in 2015. This process can include, 

but is not limited to, amending existing 

Medicaid or Exchange-based contracts 

for the purpose of promoting 

coordination and efficiency in 

procurements. After the exception 

period has expired (that is, beginning 

for coverage effective in program year 

2016), simply amending an existing 

contract to include BHP, after the 

competition process is complete, is not 

permissible. The statute requires the use 

of a competitive contracting process, 

and we do not believe we have the 

authority to exempt states from the 

process beyond the startup year for the 

program. 

Comment: Several commenters 

requested clarification regarding the 

procurement bidding process. 

Specifically, commenters asked if a state 

is required to open the bidding to all 

interested parties, or whether the state 

has the ability to impose criteria that 

limits the number of eligible bidders. 

Another commenter suggested that the 

bidding process ensure the participation 

of local health plans. 

Response: The statute specifies that a 

state must establish a competitive 

contracting process for the provision of 

standard health plans. In order to meet 

this statutory requirement, we proposed 

that a state may establish such a process 

under state procedures that are 

consistent with the standards set out in 

section 45 CFR 92.36(b) through (i). 

These standards provide states 

considerable flexibility in the 

solicitation and evaluation of bids as 

well as in the awarding of contracts; 

therefore, to the extent that the state’s 

solicitation complies with such 

standards as well as ensures that the 

qualified bidders can provide standard 

health plan coverage in all contexts, the 

state has the flexibility to determine the 

criteria for eligible standard health plan 

bidders, including the participation of 

local health plans. 

Comment: We received many 

comments encouraging HHS to ensure 

the participation of Administrative 

Service Organizations (ASOs) in the 

competitive contracting process. They 

felt that permitting ASO participation 

would enable more states to implement 

BHP as it would allow interested states 

to build off of their existing Medicaid 

programs thereby reducing the 

administrative burden associated with 

implementing a new program. 

Response: The statute requires states 

to contract for the provision of standard 

health plans under BHP. Neither the 

statute, nor our regulations, specifically 

prescribe or restrict the participation of 

certain kinds of entities as standard 

health plan offerors. Rather, standard 

health plan offerors must meet the 

requirements delineated out in 

§ 600.415(a). ASOs may participate in 

the competitive contracting process to 

the extent that they can meet the criteria 

of a standard health plan offeror in 

§ 600.415(a). ASOs (who traditionally 

only offer administrative support) may 

expand their capabilities and practices 

to meet those requirements, or partner 

with other entities who do so. 

Comment: While we received several 

comments supporting the competitive 

contracting process exception for 

program year 2015, many commenters 

recommended that HHS extend this 

exception through 2016, or 

alternatively, provide this exception to 

states during their first year of 

implementation even if that occurs after 

2015. 

Response: We are finalizing the 

proposed provisions providing an 

exception only for 2015. Given the short 

time period in which states have to 

establish a BHP in time for the January 

1, 2015 effective date, we believe that 

the one year exception will not only 

help states quickly and efficiently 

implement BHP by leveraging existing 

contracts that may not have been 

procured consistent with the finalized 

regulation, but also promote 

coordination and continuity of care 

during the initial implementation of 

BHP in 2015. For states that elect to 

implement BHP after 2015, we believe 

that these states will have sufficient 

time between the issuance of these final 

rules and a post-2015 implementation to 

establish a competitive contracting 

process for the procurement of standard 

health plans. The statute requires such 

a process and we do not believe we have 

the authority to exempt states from the 

process beyond the startup year for the 

program. 

Comment: We received many 

comments recommending that we allow 

states to utilize a primary care case 

management (PCCM) delivery of care 

model under BHP. Many commenters 

expressed that the PCCM model not 

only meets the statutory requirement to 

use a process with as many attributes of 

managed care as possible, but that it 

would also encourage BHP 

implementation as it would allow 

interested states to build off of their 

existing Medicaid programs. 

Response: The statute requires states 

to contract for the provision of standard 

health plans under BHP. Neither the 

statute, nor our regulations, specifically 

prescribe or restrict the participation of 

certain kinds of entities as standard 

health offerors. Rather, standard health 

offerors must meet the requirements 

delineated in 600.415(a). Standard 

health plan offerors have the discretion 

to determine and utilize a delivery of 

care model, such as the PCCM model, of 

their choice. As such, standard health 

plan offerors electing to operate a PCCM 

delivery of care model may participate 

in the competitive contracting process 

to the extent that they can meet the 

criteria of a standard health plan offeror 

in § 600.415(a). Entities that 

traditionally only provide some of the 

services delineated in section 600.410(c) 

and (d) may expand their capabilities 

and practices to meet those 

requirements, or partner with other 

entities who do so. While we appreciate 

commenters’ suggested language 

changes throughout § 600.410 to include 

the use of PCCM, we are not including 

those suggested language changes into 

the final regulation. 

Comment: One commenter requested 

that CMS consider broadening the 

definition of what constitutes 

competitive contracting to permit fewer 

than two standard health plans to serve 


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a local health care market. The 

commenter believes this would 

encourage the development of 

innovative models of care delivery that 

coordinates care throughout a locality, 

without a division between standard 

health plan offerors. Specifically, the 

commenter recommended that 

providing additional flexibility in 

competitive contracting would 

encourage states interested in 

establishing local community-based 

coordinated care models to pursue such 

models. 

Response: We have considered the 

commenter’s request, but we believe 

that, as proposed, the regulation already 

affords a state with considerable 

flexibility and opportunity for state 

innovation as it establishes its 

competitive contracting process. The 

standards set forth simply require the 

state to be consistent with those found 

in 45 CFR 92.36(b) which provide a 

basic framework to the required 

procurement process. We believe that 

standard health plan offerors also have 

considerable flexibility in developing 

innovative models of care delivery, and 

encourage states to promote innovations 

in delivery system and payment reforms 

during the contracting process. Given 

that innovations in care coordination, 

utilization of preventive care services 

and patient-centered health decision 

making are specified in statute, we hope 

that states will make such innovations 

a high-ranking criterion in the 

solicitation process. A state interested in 

pursuing innovations that extend 

beyond the parameters of BHP and into 

other insurance affordability programs 

has the option, beginning in 2017, to 

request a waiver for state innovation as 

specified in section 1332 of the 

Affordable Care Act. Finally, as 

described below, we are clarifying the 

provision of the proposed regulation 

which requires availability of at least 

two standard health plan offerors; we do 

not believe that this provision will limit 

innovation. We view the choice of 

standard health plan offerors as an 

essential enrollee protection that is 

consistent with the requirement in 

section 1331(c)(3) to provide multiple 

plans to the maximum extent feasible. 

Comment: We received many 

comments recommending that the final 

regulation strengthen the network 

adequacy requirements in the 

competitive contracting process. 

Specifically, many commenters 

suggested that the standard health plan 

offerors be required to demonstrate that 

their provider networks not only have a 

sufficient number of providers, 

especially specialty providers, but also 

have a sufficient geographic distribution 

such that enrollees in rural areas, for 

example, have sufficient access to 

providers. In addition, to strengthen the 

overall network adequacy requirements, 

many commenters also recommended 

that states ensure the standard health 

plan offerors include essential 

community providers; federally 

qualified health centers (FQHCs), 

pediatric primary care providers and 

other specialists in their networks. 

Response: We appreciate and share 

the commenters’ interest in ensuring 

that BHP enrollees have sufficient 

access to providers; therefore, we have 

revised the language in § 600.410(e)(2) 

regarding access to providers. States 

will have some flexibility to determine 

the specific nature of the standards; 

however, we believe that at a minimum, 

the state should ensure that the standard 

health plan offerors maintain a network 

of providers that is sufficient in number, 

mix, and geographic distribution to 

meet the needs of the anticipated 

number of enrollees in the service area 

to the same extent that would be 

required under the standards applicable 

either to managed care providers in 

Medicaid under 42 CFR Part 438, 

Subpart D or to coverage offered through 

the Exchange under 45 CFR 156.230 and 

156.235. With respect to requiring states 

to ensure that standard health plan 

offerors contract with certain provider 

types, the strengthened language 

requiring that states ensure that 

standard health plans comply with 

either Medicaid or Exchange access 

standards should address this issue. 

While these access standards do not 

require that plans contract with any 

particular essential community 

providers, they address the inclusion of 

essential community providers in 

provider networks to ensure access to 

care. As a result of these stronger 

network adequacy standards, we 

anticipate that standard health plan 

offerors will need to include other 

providers, such as I/T/Us, FQHCs, OB/ 

GYNs, pediatric primary care providers 

and other specialists in their networks 

to ensure that there is a sufficient 

number, mix and geographic 

distribution of providers for BHP 

enrollees to access. Finally, we would 

also like to note that the consideration 

of access concerns for states that have 

Indian populations should include 

consideration of access to providers that 

serve such populations. 

Comment: Several commenters 

recommended that the final regulation 

require that as a condition of 

participating in BHP, a standard health 

plan offeror participate in either the 

state’s Medicaid program or in the 

state’s Exchange. Commenters offering 

this recommendation believe that 

participating in BHP, Medicaid and/or 

the Exchange would help mitigate any 

disruptions in care in the event that a 

BHP enrollee transitions from BHP into 

Medicaid or the Exchange as the 

individual could potentially stay with 

the same health plan during the 

transition out of BHP. 

Response: We share the commenters’ 

interest in having strategies in place 

between states and standard health plan 

offerors to promote continuity of care 

for BHP enrollees transitioning into, or 

out of, the program. States have the 

discretion to include standards and 

criteria in their competitive 

procurement process to further the goals 

of continuity of care that the 

commenters are expressing. We do not 

believe, however, that limiting 

competition to plan offerors who 

participate in other IAPs is the only 

method to assure continuity of care, and 

in fact, could prevent BHP enrollees 

from having access to a range of 

qualified standard health plan offerors 

and their networks of providers. The 

commenters’ concerns are addressed in 

part by the requirement specified in 

§ 600.425 that states must coordinate the 

continuity of care for enrollees across 

the insurance affordability programs, 

and describe in their Blueprints how 

they will do so. We anticipate that these 

descriptions will address how the state 

will ensure minimal disruptions in care 

for those who transition between 

insurance affordability programs. 

Comment: Many commenters 

expressed concern that the provisions 

regarding the negotiation of benefits, 

premiums and cost sharing in the 

proposed rule precluded a state from 

developing a standard benefit package, 

premium amount, and/or cost-sharing 

amount and including such a standard 

in its solicitation. One commenter asked 

if it was permissible for a state to 

establish a standard benefit package as 

well as standard premium and costsharing amounts and accept any willing 

providers that agree to meet such 

standards issued in the solicitation. 

Many commenters felt that the final 

regulation should clarify that such an 

approach (that is, establishing standard 

benefits, premiums and cost sharing) 

would satisfy the ‘‘negotiation of’’ 

requirement specified in statute. 

Response: While the statute specifies 

that there must be a negotiation of 

benefits, premiums and cost sharing 

during the competitive contracting 

process, nothing precludes a state from 

establishing standards that will serve as 

the starting point for negotiations with 

standard health plans offerors. Such 

negotiations around benefits, premiums, 


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cost sharing and other required 

elements specified in statute may 

include, but are not limited to price, the 

provision of benefits in addition to 

those specified in the state’s solicitation, 

lower premium and cost-sharing 

amounts than those specified in the 

state’s solicitation, or any other aspects 

of the state’s program that were 

included in its solicitation. While the 

state may propose a ‘‘standard’’ set of 

benefits, premiums and cost sharing, the 

state, at a minimum, must permit some 

level of negotiation, such as on price, or 

on additional benefits for enrollees, 

with the standard health plan offeror. 

Comment: Many commenters 

requested that HHS include additional 

negotiation criteria in § 600.410(d) and 

(e) that a state must include in its 

competitive contracting process. 

Recommendations included: (1) 

Requiring states to consider similarities 

between BHP enrollees, Medicaid 

beneficiaries, and Exchange consumers; 

(2) requiring the inclusion of specific 

quality and performance measures; (3) 

specifying that standard health plan 

offerors provide documentation that 

they can bear risk and meet the state’s 

financial solvency requirements; (4) 

including the negotiation of provider 

reimbursement rates; and (5) require 

standard health plan offerors to provide 

proof that they meet all of the 

negotiation criteria and other 

considerations specified in § 600.410(d) 

and (e) as well as all of the contract 

requirements specified in § 600.415(b). 

Response: We appreciate the 

commenters’ recommendations; 

however, we believe that the statute 

specifies the minimum requirements 

that a state must assure are included in 

its competitive contracting and leaves 

considerable flexibility for states to 

include additional negotiation criteria. 

Therefore, the requirements specified in 

§ 600.410(d) and (e) are the minimum 

federal requirements that the state must 

assure are included in its competitive 

contracting process. A state can, at its 

option, include additional criteria, such 

as those recommended by the 

commenters, to establish sound 

negotiating standards and criteria to 

ensure the ability of offerors to provide 

standard health plans in such a manner 

that promotes affordable, high quality 

health care coverage to BHP enrollees. 

4. Contracting Qualifications and 

Requirements (§ 600.415) 

We proposed in § 600.415(a) the 

entities that a state may contract with 

for the administration and provision of 

standard health plans. For specific 

discussions, see the September 25, 2013 

proposed rule (78 FR 59130). 

In § 600.415(b), we proposed the 

general contract requirements that must 

be included in the state’s standard 

health plan contracts. For specific 

discussions on these requirements as 

well as the proposed ‘‘safe harbor’’ 

approach, see the September 25, 2013 

proposed rule (78 FR 59130 and 59131). 

We proposed in § 600.415(c) that a 

state must include in its BHP Blueprint 

the standard set of contract 

requirements it will include in its 

standard health plan contracts. 

We received the following comments 

on contract qualifications requirements: 

Comment: We received several 

comments in support of the proposed 

‘‘safe harbor’’ approach enabling states 

to select either Medicaid or Exchange 

contracting provisions for their standard 

health plan contracts. 

Response: We thank the commenters 

for their support and we are finalizing 

the provisions as proposed. 

Comment: We received several 

comments in support of our proposed 

rule permitting states to contract with 

non-licensed health maintenance 

organizations participating in Medicaid 

and/or CHIP. 

Response: We thank the commenters 

for their support and we are finalizing 

the provisions as proposed. 

Comment: Several commenters 

recommended that HHS apply a 

standard set of qualification standards, 

specifically the QHP certification and 

licensure standards, to standard health 

plan offerors. 

Response: We appreciate the 

commenters’ recommendations; 

however, we are not requiring such an 

approach, in part because it may 

undermine the state’s efforts to 

encourage Medicaid managed care 

organizations and other health 

insurance issuers to participate in BHP. 

This, in turn, could undermine state 

efforts to promote coordination between 

all the insurance affordability programs. 

As commenters rightly pointed out, 

there are different standards applied to 

Medicaid managed care organizations 

relative to the standards applied to 

QHPs (for example, licensure and 

accreditation standards). In order to 

ensure that a state has the ability to 

contract with health maintenance 

organizations that operate in Medicaid 

and the Exchange, we believe that it is 

appropriate to impose a minimum 

standard at the federal level and permit 

state flexibility in determining whether 

the application of additional 

qualification standards are appropriate 

and in the best interest of the state’s 

goals and objectives. 

Comment: We received several 

comments requesting that HHS consider 

including safety net health plans, as 

defined in section 9010(c)(2)(C) of the 

Affordable Care Act, in the list of 

eligible standard health plan offerors. 

Response: We appreciate the 

commenter’s concern, and have 

modified the language in § 600.415(a) to 

clarify that states are not limited to 

contracting with the entities specified in 

this section for the provision of standard 

health plans. A state has the flexibility 

to establish the criteria included in its 

BHP solicitation, including specific 

qualifications of the standard health 

plan offeror. Assuming a safety net 

health plan, or another entity, meets 

both the federal requirements, as well as 

those specified in a state’s BHP 

solicitation, the state may enter into 

contracts with such entities for the 

provision of standard health plans. 

Comment: Several commenters 

requested that HHS require that a state 

include specific requirements in its 

standard health plan contracts. Specific 

recommendations include: (1) Requiring 

that payment rates to standard health 

plan offerors are actuarially sound; (2) 

inclusion of specific providers; (3) 

specific provider reimbursements, such 

as the prospective payment system rate 

used for payment to FQHCs; (4) specific 

provider performance and quality 

measures; and (5) prohibition on the 

inclusion of ‘‘all-products’’ clauses in 

physician contracts. 

Response: We appreciate the 

commenters’ recommendations; 

however, we believe that federal 

standard health plan contract 

requirements should reflect the 

competitive contracting requirements 

specified in statute rather than specific 

requirements that are not specified in 

the statute. We believe this approach 

promotes maximum flexibility for states 

that may wish to pursue different 

contracting approaches in BHP, or to 

blend elements from Medicaid and the 

Exchange. We are finalizing the 

proposed provision at § 600.415(b), 

which sets forth the minimum contract 

requirements that must be included in 

a state’s standard health plan contract. 

Because these are the minimum 

requirements and a state has the 

flexibility to include additional 

requirements based on its negotiation 

criteria, a state must assure and include 

in its BHP Blueprint the standard set of 

contract provisions that it intends to 

incorporate into its contracts. A state 

can, at its option, include additional 

contract requirements, such as those 

recommended by the commenters, to 

promote affordable, high quality health 

care coverage to BHP enrollees. 

Comment: We received several 

comments recommending that HHS 


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apply the 85 percent medical loss ratio 

requirement to all standard health plan 

offerors, and not just those that qualify 

as health insurance issuers. 

Response: We appreciate the 

commenters’ recommendation; 

however, we are finalizing the proposed 

provisions. The statute specifies the 

application of the medical loss ratio 

(MLR) requirement only to standard 

health plan offerors that are also health 

insurance issuers. As discussed above, 

this standard is the minimum standard 

that a state must adhere to. A state has 

the discretion to apply this MLR 

requirement to all standard health plan 

offerors if it determines that such a 

requirement furthers the objectives and 

goals of its program. However, we do 

not believe we have the authority to 

require the application of this standard 

to entities beyond those described by 

statute. 

Comment: One commenter requested 

clarification about ongoing eligibility to 

offer a standard health plan in the event 

that a standard health plan offeror does 

not comply with the MLR requirement. 

The commenter also asked what 

standard, or calculation methodology, 

would be used in determining whether 

the standard health plan offeror met the 

MLR requirement. 

Response: A standard health plan 

offeror that is also a health insurance 

issuer would not qualify for a contract 

award if that offeror was not able to 

comply with the MLR requirement. The 

statute as specified in section 1331(b)(3) 

of the Affordable Care requires that 

standard health plan offerors that are 

also health insurance issuers comply 

with the 85 percent MLR requirement. 

As described above, to the extent that 

the standard health plan offeror is, for 

example, a Medicaid managed care 

organization or a network of providers, 

the offeror would not need to meet the 

85 percent MLR requirement as a 

condition for contract award unless a 

state chose to impose that requirement. 

With respect to the MLR calculation, the 

same calculation used in the individual 

and small group market will be used in 

BHP. 

5. Enhanced Availability of Standard 

Health Plans (§ 600.420) 

We proposed in § 600.420(a) that a 

state must assure that at least two 

standard health plans are offered under 

BHP. 

In § 600.420(b), we proposed 

standards for a state entering into a joint 

procurement, or regional compact, with 

another state for the provision of 

standard health plans. For specific 

discussions on the regional compact, see 

the September 25, 2013 proposed rule 

(78 FR 59131). 

We received the following comments 

on enhancing the availability of 

standard health plans: 

Comment: While we received several 

comments in support of ensuring choice 

of standard health plans, the majority of 

the comments we received on this 

provision requested that HHS clarify 

whether states must ensure the 

availability of at least two standard 

health plans, or the availability of at 

least two standard health plan offerors. 

Response: After carefully considering 

this issue, we are adding clarifying 

language to require that states assure the 

availability of at least two standard 

health plan offerors. This standard is 

consistent with the Medicaid 

requirement set forth in 42 CFR 

438.52(a), which requires states to give 

Medicaid managed care beneficiaries a 

choice of at least two ‘‘entities.’’ We 

believe that requiring a state to contract 

with at least two standard health plan 

offerors will afford BHP applicants and 

enrollees the opportunity to compare 

and select their health coverage in a 

manner comparable to selecting health 

coverage from different health insurance 

issuers in the Exchange. In addition, we 

believe that requiring at least two 

standard health plan offerors to 

participate in BHP will lead to more 

robust competition, which could lead to 

better offered standard health plans and 

lower costs. BHP enrollees will also 

have the assurance that standard health 

plan coverage will always be available 

in the event that the participation of one 

of the two standard health plan offerors 

in the program is affected (that is, if one 

of the two offerors stopped participating 

in BHP). 

We believe that, in certain 

circumstances, the availability of two 

standard health plan offerors may not be 

feasible. For example, after completing 

its competitive contracting process, a 

state may only have one eligible 

standard health plan offeror qualified to 

award a standard health plan contract, 

or there may be an area within a state 

that only one standard health plan 

offeror provides coverage. As such, we 

have added an exception to the choice 

of standard health plan offerors in 

§ 600.420(a)(2). In its exception request, 

the state must include a justification as 

to why it cannot assure choice of 

standard health plan offeror as well as 

demonstrate that it has reviewed all its 

contract requirements and qualifications 

to determine whether they are required 

under the federal framework for BHP, 

determined whether additional 

negotiating flexibility would be 

consistent with the minimum statutory 

requirements and available BHP 

funding, and reviewed the information 

provided to bidders was sufficient to 

encourage participation in the BHP 

competitive contracting process. 

Comment: One commenter requested 

that states entering a regional compact 

ensure that certified registered nurse 

anesthetists (CRNAs) are used to their 

full scope of practice. 

Response: We appreciate the 

commenter’s interest in ensuring the 

issue of full scope of practice is 

addressed in regional compacts; 

however, we believe states entering into 

the regional compact have discretion in 

addressing this issue through the 

competitive contracting process. States 

entering into a regional compact must 

ensure that the standard health plans 

offered through the compact meet all of 

the required negotiation criteria set forth 

in § 600.415(d) and (e), including 

ensuring the sufficient number, mix and 

geographic distribution of providers that 

is sufficient to ensure the proper 

provision of standard health plan 

coverage. 

6. Coordination With Other Insurance 

Affordability Programs (§ 600.425) 

In § 600.425, we proposed that a state 

must ensure the coordination of health 

care services to promote continuity of 

care between Medicaid, CHIP, Exchange 

and other state-administered health 

insurance programs. The state must 

include in its BHP Blueprint a 

description of how it will assure such 

coordination. We received the following 

comments on insurance affordability 

program coordination: 

Comment: We received several 

comments expressing support for the 

requirement that a state in its Blueprint 

describe how it will coordinate the 

provision of services to ensure 

continuity of care between insurance 

affordability programs. 

Response: We thank the commenters 

for their support and are finalizing the 

provisions as proposed. 

Comment: Several commenters 

recommended that states submit 

detailed coordination plans to ensure 

continuity of care as well as require 

states to specifically include ‘‘churn’’ 

mitigation strategies for pregnant 

women and children. 

Response: We appreciate the 

commenters’ concerns regarding the 

scope and level of detail of the 

coordination descriptions; however, we 

believe that the language as proposed 

sufficiently addresses and incorporates 

the commenters concern. These 

descriptions will be reviewed and 

considered during the certification 

approval process thereby permitting 


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HHS to ask additional questions as 

needed to ensure the state has addressed 

this requirement and reflected it in its 

Blueprint. 

Comment: One commenter 

recommended that HHS include 

stronger continuity of care requirements 

under this section. 

Response: We share the commenter’s 

interest in ensuring continuity of care 

between the insurance affordability 

programs. We are not, however, revising 

the regulation because we believe that 

states have several strategies available to 

them to promote continuity of care and 

reduce disruptions in care. As such, we 

believe that the state should have the 

discretion to select the strategies that 

best fit within the confines of its 

program. Examples of how states can 

ensure coordination across the 

insurance affordability programs were 

included in the September 25, 2013 

proposed rule (78 FR 59131). 

F. Enrollee Financial Responsibilities 

1. Basis, Scope and Applicability 

(§ 600.500) 

Proposed § 600.500 under subpart F 

specified the general statutory authority 

for and scope of standards proposed in 

this subpart, which sets forth the 

calculation and imposition of monthly 

premiums and cost sharing for BHP 

enrollees. For specific discussions, see 

the September 25, 2013 proposed rule 

(78 FR 59131 and 59132). We did not 

receive specific comments on this 

section and are finalizing the provision 

as proposed. 

2. Premiums (§ 600.505) 

In § 600.505(a), we proposed that a 

state must assure that the monthly 

premiums imposed on BHP enrollees do 

not exceed what they would have been 

required to pay had he or she enrolled 

in the Exchange. The state must include 

this assurance along with several other 

premium requirements in its BHP 

Blueprint. For specific discussions on 

monthly BHP premiums, see the 

September 25, 2013 proposed rule (78 

FR 59132). 

We received the following comment 

on BHP monthly premiums: 

Comment: Several commenters 

recommended that HHS ensure that the 

American Indian and Alaska Native (AI/ 

AN) population is not at a disadvantage 

with respect to premiums. In the 

Exchange, this population receives 100 

percent of the cost-sharing reduction 

subsidy regardless of the metal level of 

the QHP that the individual enrolls in. 

Consequently, many commenters 

believe that premiums, and not cost 

sharing, will be the primary factor when 

selecting QHP coverage, which may 

result in many individuals in this 

population selecting bronze-level QHP 

coverage as these QHPs will have the 

lowest premiums. As such, commenters 

recommended that HHS require that 

states set premium levels for this 

population in BHP such that they do not 

exceed the lowest cost bronze plan 

premium in the state. If HHS is not able 

to afford this protection to the American 

Indian and Alaska Native population, 

many of the commenters requested that 

this population have the ability to opt 

out of BHP. 

Response: We appreciate and 

understand the commenters’ point 

regarding the premium levels for the 

American Indian and Alaska Native 

population. However, the statute does 

not support requiring the bronze plan 

premiums as a minimum standard nor 

does such a premium protection exist in 

the Exchange. We have, however, 

applied the Exchange’s cost-sharing 

protections afforded to this population 

to BHP. We would also note that states 

have the flexibility to use BHP trust 

funds (or state funds) to lower 

premiums for individuals eligible for 

BHP, and we encourage the commenters 

to work with their respective states on 

this issue. 

With respect to the commenter’s 

second recommendation that HHS 

permit this population to opt out of 

BHP, if individuals opt out of BHP, they 

would not be eligible to receive federal 

subsidies to purchase coverage in the 

Exchange. The statute specifies that 

individuals eligible for BHP are 

ineligible to receive the premium tax 

credit and cost-sharing reductions. As 

noted, states may lower premiums for 

BHP enrollees or decide not to charge 

premiums. 

3. Cost Sharing (§ 600.510) 

In § 600.510(a), we proposed that a 

state must assure compliance with the 

cost-sharing standards specified in 

§ 600.520(c). The state must include this 

assurance, along with a description of 

several elements as they relate to cost 

sharing in BHP, in the state’s BHP 

Blueprint. For specific discussions on 

BHP cost sharing, see the September 25, 

2013 proposed rule (78 FR 59132). 

We proposed in § 600.510(b) that a 

state may not impose cost sharing on 

preventive health services or items as 

defined in 45 CFR 147.130. We received 

the following comments on cost sharing 

in BHP: 

Comment: We received comments in 

support of the identification of BHP 

enrollees subject to cost sharing. 

Response: We thank the commenters 

for their support, and are finalizing the 

provisions as proposed. 

Comment: We received several 

comments recommending that HHS 

establish BHP cost-sharing amounts for 

specific services. In particular, one 

commenter suggested that cost sharing 

for dental services should not exceed 

levels imposed in CHIP for children and 

pregnant women. Another commenter 

opposed higher cost-sharing amounts 

for non-emergency use of the emergency 

department. 

Response: We appreciate the 

commenters’ interest in BHP costsharing amounts; however, we do not 

believe it is advisable to mandate the 

cost-sharing amounts for specific 

services in BHP. But we note that these 

regulations apply to BHP the Exchange’s 

cost-sharing protections, including the 

prohibition of cost sharing for 

preventive health services, as specified 

in §§ 600.510(b) and 600.520. 

Furthermore, providing states with 

discretion subject to these protections 

when establishing the cost-sharing 

levels for particular services; may 

encourage competition and could 

ultimately lower costs for BHP 

enrollees. 

Comment: One commenter expressed 

concern that permitting standard health 

plans to include varying cost-sharing 

amounts for prescription drugs (that is, 

through the use of drug tiers) would 

negatively affect access to such drugs. 

Response: We appreciate the 

commenter’s concern regarding the 

variation in cost-sharing amounts for 

prescription drugs and the potential 

effect this may have on their 

availability; however, we believe that 

such variation in benefit design and cost 

sharing is consistent with the practices 

of QHPs offering coverage in the 

Exchange. Specifically, we believe that 

the Exchange’s benefit and cost-sharing 

standards, which we apply to BHP as 

specified in § 600.405(a) and 

§ 600.520(c), afford BHP enrollees the 

same protections that they would have 

otherwise received in the Exchange. 

These protections serve as the minimum 

benefit and cost-sharing standards for 

states when establishing their program. 

In addition, states have the option to set 

additional limits on cost sharing not 

included in the final regulation. 

4. Public Schedule of Enrollee Premium 

and Cost Sharing (§ 600.515) 

We proposed in § 600.515(a) that the 

state must ensure that applicants and 

BHP enrollees have access to 

information related to premiums and 

cost sharing under BHP. For specific 

discussions, see the September 25, 2013 


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proposed rule (78 FR 59132). We did 

not receive specific comments on this 

section and are finalizing the provision 

as proposed. 

5. General Cost-Sharing Protections 

(§ 600.520) 

In § 600.520(a), we proposed that a 

state may vary premiums and cost 

sharing based on income only in a 

manner that does not favor enrollees 

with higher income over enrollees with 

lower income. We did not receive 

specific comments on this section and 

are finalizing the provision as proposed. 

We proposed in § 600.520(b) that the 

state must ensure standard health plans 

meet the cost-sharing standards 

applicable to Indians in accordance 

with 45 CFR 156.420(b)(1) and (d). We 

did not receive specific comments on 

this section and are finalizing the 

provision as proposed. 

In § 600.520(c), we proposed to apply 

the Exchange cost-sharing standards in 

BHP. For specific discussions, see the 

September 25, 2013 proposed rule (78 

FR 59132 and 59133). 

We also proposed in 600.160(b) that 

states must permit payment of 

premiums for Indians by Indian tribes, 

tribal organizations and urban Indian 

organizations. In our further 

consideration of that provision, we 

determined that this protection should 

be more broadly extended to all 

premiums and cost-sharing for all 

beneficiaries of state and federal 

programs. This will ensure coordination 

of benefits between these programs and 

BHP. As such, this protection is more 

logically located in the regulatory 

section governing general cost-sharing 

protections. Thus, in this final rule, we 

are including in 600.520(d) that states 

must permit payment of premiums and 

cost sharing by such programs for 

individuals by Indian tribes, tribal 

organizations, urban Indian 

organizations, Ryan White HIV/AIDS 

programs under title XXVI of the Public 

Health Service Act and other federal 

and state programs. 

We received the following comments 

related to cost-sharing protections: 

Comment: While we received many 

comments supporting our proposed 

provision to apply the Exchange’s costsharing standards (which establish the 

maximum annual limitation on cost 

sharing, among other provisions) to 

BHP, we also received several 

comments expressing concern that the 

Exchange standards would result in 

high BHP cost-sharing amounts making 

BHP unaffordable to its enrollees. 

Response: We thank the commenters 

that submitted comments in support of 

the proposed cost-sharing standards, 

and are finalizing the proposed 

provisions. With respect to the other 

commenters’ concern that BHP costsharing amounts will be high, we 

believe that the application of the 

Exchange’s cost-sharing standards, as 

specified in § 600.520(c), to BHP will 

help prevent such an occurrence. These 

standards afford BHP enrollees the same 

cost-sharing protections that they would 

have otherwise received had they 

enrolled in QHP coverage in the 

Exchange. Furthermore, while these 

protections set the minimum standards 

for permissible cost-sharing amounts, 

states have the discretion to include 

additional standards when contracting 

with standard health plan offerors and 

the negotiation process with standard 

health plan offerors may further reduce 

cost-sharing amounts for BHP enrollees. 

Comment: We received one comment 

expressing opposition to the application 

of the Exchange’s cost-sharing standards 

as the commenter felt that this should 

be left to the discretion of the state. 

Approval of the state’s approach to its 

BHP design is already subject to 

Secretarial approval, and as such, the 

commenter believes that HHS does not 

need to impose minimum requirements. 

Response: We appreciate the 

commenter’s concern; however, statute 

requires that, at a minimum, the same 

protections individuals would have 

otherwise received had they enrolled in 

a QHP in the Exchange apply to BHP. 

Comment: Several commenters 

recommended that BHP enrollees 

should not be required to pre-pay the 

full amount of cost sharing, including 

the value of the cost-sharing reduction 

subsidy, and seek reimbursement for the 

subsidy at a later date. Commenters 

suggested that this process be 

‘‘invisible’’ to the enrollee. 

Response: The standard health plan 

offered to BHP enrollees will account 

for the value of the cost-sharing subsidy, 

which will be represented by the 

actuarial value of the standard health 

plan. Specifically, standard health plans 

offered to individuals with household 

income below 150 percent of the FPL 

must have an actuarial value of 94 

percent, which, consistent with the 

Exchange’s standard, is subject to a de 

minimis standard of 1 percent. For BHP 

enrollees with income above 150 

percent of the FPL, the actuarial value 

must be 87 percent which, consistent 

with the Exchange’s standard, is subject 

to a de minimis standard of 1 percent. 

In this manner, the application of the 

cost-sharing reduction subsidy will be 

‘‘invisible’’ to the BHP enrollee as it will 

be accounted for in the design of the 

standard health plan that is offered to 

them. Any cost-sharing amounts that the 

enrollees would be required to pay 

would already include the consideration 

of the subsidy and any further 

negotiation between the state and the 

standard health plan offeror. 

6. Disenrollment Procedures and 

Consequences for Nonpayment of 

Premiums (§ 600.525) 

In § 600.525(a), we proposed the 

disenrollment procedures for 

nonpayment of premiums. For specific 

discussions, see the September 25, 2013 

proposed rule (78 FR 59133). 

In § 600.525(b), we proposed the 

consequences of nonpayment of 

premiums and reenrollment into BHP. 

For specific discussions, see the 

September 25, 2013 proposed rule (78 

FR 59133). 

We received the following comments 

on the disenrollment procedures and 

consequences for nonpayment of 

premiums: 

Comment: Several commenters 

expressed concern that providers will 

incur uncompensated care costs during 

the second and third months of the 3- 

month grace period as standard health 

plan offerors are not required to pay 

claims for services rendered during the 

last two months of the grace period. 

Response: We understand that pended 

claims increase uncertainty for 

providers and can potentially increase 

the amount of uncompensated care, and 

we share the concerns of the 

commenters regarding claims incurred 

during the grace period that are not 

ultimately paid. In accordance with 45 

CFR 156.270(d)(3), standard health plan 

offerors must notify providers of the 

possibility for denied claims for services 

incurred during months two and three 

of the grace period for enrollees who 

owe past due premiums. Similar to our 

expectation with issuers operating in 

the Exchange, we expect that standard 

health plan offerors will provide this 

notice within the first month of the 

grace period and throughout months 

two and three. 

Comment: We received several 

comments expressing concern that 

individuals would be disenrolled from 

BHP who failed to pay a de minimis 

amount of their premium, and suggested 

that the final regulation protect 

individuals from being disenrolled in 

such an instance. 

Response: We do not believe that the 

statute provides authority for CMS to 

require this type of protection in BHP. 

As with many other programmatic 

designs, states have the discretion to 

establish disenrollment policies that 

further the goals and objectives of their 

programs which may include not 


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terminating individuals for failure to 

pay de minimis amounts. 

Comment: Several commenters also 

offered an alternative to the 30-day 

premium grace period. Specifically, 

they recommended that HHS consider 

permitting a reinstatement period in 

which an individual is able to reinstate 

BHP coverage without a break in such 

coverage by paying the premium arrears 

by the 20th business day. 

Response: We appreciate the 

commenters’ alternative to the 30-day 

premium grace period; however, in 

keeping with our policy to adopt 

policies existing in other insurance 

affordability programs to ensure 

program consistencies, we are finalizing 

the proposed provision. As noted 

elsewhere, states have the discretion to 

establish additional standards that best 

fit the designs of their programs. 

Comment: We received one comment 

recommending that HHS only permit a 

90-day premium grace period rather 

than give states the option to select the 

grace period that most closely aligns 

with their enrollment policies. 

Response: We believe that providing 

states with the option to select the grace 

period that most closely aligns with 

their enrollment policies ensures 

program consistency and can help 

consumers understand program rules. 

G. Payment to States 

1. Basis, Scope and Applicability 

(§ 600.600) 

Proposed § 600.600 under subpart G 

specified the general statutory authority 

for and scope of standards proposed in 

this subpart, which sets forth provisions 

relating to the methodology used to 

calculate the federal BHP payment to a 

state in a given fiscal year and the 

process and procedures by which the 

Secretary establishes such amount for 

each state operating a BHP. For specific 

discussions, see the September 25, 2013 

proposed BHP rule (78 FR 59133). We 

did not receive specific comments on 

this section and are finalizing the 

provision as proposed. 

2. BHP Payment Methodology 

(§ 600.605) 

We proposed in § 600.605(a) the two 

components that comprise the BHP 

payment methodology—the premium 

tax component and the cost-sharing 

reduction component. For specific 

discussions, see the September 25, 2013 

proposed rule (78 FR 59133). 

In § 600.605(b), we proposed the 

factors specified in statute that the 

Secretary must consider when 

determining the federal BHP payment 

methodology. For specific discussions, 

see the September 25, 2013 proposed 

rule (78 FR 59133 and 59134). 

We proposed in § 600.605(c) that the 

Secretary will adjust the payment 

methodology on a prospective basis. 

We received the following comments 

regarding the BHP payment 

methodology: 

Comment: We received a comment 

supporting the relevant factors included 

in the BHP payment methodology as 

specified in § 600.605(b). 

Response: We thank the commenter 

for their support, and are finalizing the 

proposed provisions. 

Comment: One commenter expressed 

concern that the information regarding 

the BHP payment methodology in the 

proposed rule did not address how a 

state’s BHP could be financially selfsustainable, such as the authority to 

asses an administrative charge on 

standard health plan offerors. 

Response: We appreciate the 

commenter’s concern; however, we 

believe that the state has considerable 

flexibility to ensure the sustainability of 

its program through program design and 

market competition. In addition to the 

federal BHP deposits, the state has the 

option to also supplement its program 

with non-federal funding sources. 

Comment: We received many 

comments requesting that HHS 

reconsider applying 100 percent of the 

cost-sharing reduction that would have 

been available in the Exchange to the 

BHP payment methodology, as opposed 

to 95 percent. Many commenters argued 

that the statute provides for this 

interpretation given the placement of 

the comma in section 1331(d)(3)(i) of 

the Affordable Care Act. 

Response: We appreciate the 

commenters’ concern regarding this 

issue, and we have carefully considered 

and reviewed the commenters’ 

arguments. We have interpreted the 95 

percent specified in statute to refer to 

both the premium tax credit and the 

cost-sharing reduction component of the 

BHP payment methodology. We believe 

that applying the 95 percent to both 

components of the methodology 

represents the best reading of the statute 

and the intent of the drafters, and we are 

therefore finalizing the proposed 

provision. 

Comment: We received a comment 

recommending that the premium tax 

credit component of the methodology 

use an overall average for the state so 

that all geographic variations are 

accounted for in the calculation rather 

than over-weighting geographic areas 

with fewer individuals receiving the 

premium tax credit. 

Response: We appreciate the 

commenter’s suggestion; however, 

geographic variations are accounted for 

in the proposed payment methodology 

as we are proposing to use the second 

lowest cost silver plan premium, which 

may vary in amount by county, as the 

basis for the calculation of the premium 

tax credit component. Please refer to the 

final 2015 BHP Federal Funding 

Methodology for additional information 

on how we propose to calculate the 

premium tax credit component for 

program year 2015. 

Comment: One commenter expressed 

concern that the BHP payment 

methodology will result in narrower 

provider networks as states will only 

receive 95 percent of both the premium 

tax credit and cost-sharing reduction 

that an individual would have 

otherwise received had he or she 

enrolled in a QHP in the Exchange. 

Response: We appreciate the 

commenter’s concern, although we do 

not agree that this is necessarily the 

result. States, for example, that combine 

their contracting for BHP with Medicaid 

and/or CHIP will have significant 

market power to drive efficiencies. In 

any event, network adequacy is 

essential, and we have required, as 

specified in § 600.410(e)(2), that 

network adequacy must be considered 

during the state’s competitive 

contracting process. States must ensure 

that standard health plan offerors have 

a network of providers sufficient in 

number, mix, and geographic 

distribution to meet the needs of the 

anticipated number of enrollees in the 

service area of the standard health plan, 

at least consistent with the access 

standards under Medicaid or the 

Exchange. 

Comment: We received comments 

asserting that, to the extent that BHP 

eligibility exceeds the scope of 

eligibility for a PTC because the 

affordability test applied under BHP is 

less stringent than the affordability test 

for PTCs, there could be an unfunded 

mandate. These commenters explained 

that because federal BHP payment is 

limited to 95 percent of the amount of 

the PTCs and cost sharing reductions 

that would be paid if the individual was 

enrolled in coverage through the 

Exchange, there would be no federal 

BHP payment with respect to 

individuals eligible for BHP but not 

eligible for a PTC. One commenter 

suggested that, in light of the absence of 

funding, states should be given the 

option to restrict eligibility. 

Response: We understand the 

possibility raised by the commenters; 

however, as discussed in the eligibility 

section above, we believe this 

possibility was created through a 

statutory error which we are correcting 


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in this rule. We believe congressional 

intent was to align BHP eligibility 

seamlessly with premium tax credit 

eligibility, which eliminates the 

possibility of an unfunded mandate. 

The payment methodology has been 

aligned with this interpretation. 

Comment: We received several 

comments requesting that HHS ensure 

that BHP payment methodology 

adequately address the issue of risk 

adjustment. 

Response: Please refer to the final 

2015 BHP Federal Funding 

Methodology for additional discussions 

related to the population health factor in 

the BHP payment methodology for 

program year 2015, as well as the 

optional risk adjustment reconciliation 

process as both sections in the Funding 

Methodology address the issue of risk 

adjustment. 

Comment: One commenter requested 

that we include the relevant factors, 

their weight and applicability in the 

proposed payment notice. 

Response: We have included 

additional detail on the relevant factors, 

including their values and data sources, 

in the final 2015 BHP Federal Funding 

Methodology. 

Comment: Several commenters 

recommended that the BHP payment 

methodology include state-specific 

market factors to account for issues such 

as low premiums offered in the 

Exchange. 

Response: Please refer to the final 

2015 BHP Federal Funding 

Methodology for additional details on 

the option we are providing to states to 

use either 2014 premium data (trended 

forward) or actual 2015 premium data as 

the basis for calculating their 2015 

federal BHP payment rates. 

Comment: One commenter noted that 

the methodology specifies the use of 

factors much like those for adjusted 

community rating, but requested 

clarification whether that standard 

health plan offeror must also use 

adjusted community rating, or any other 

particular form of rating. 

Response: We believe that this is an 

issue to be determined, and resolved, 

through the competitive contracting 

process between the state and the 

standard health plan offeror. There are 

minimum negotiation criteria and other 

considerations specified in statute that 

the state must include in its process; 

however, the state has the discretion to 

add additional qualifications and 

standards to its solicitation that would 

further the objectives of its program. 

Comment: While we received several 

comments in support of the proposed 

provision to exclude BHP from the 

individual market’s risk pool, other 

commenters requested that HHS 

consider providing states with the 

option to include BHP in its individual 

market’s risk pool. Commenters also 

requested the HHS permit states to have 

the ability to apply aspects of the 

individual market’s reinsurance and risk 

adjustment programs to BHP. 

Response: We have carefully 

considered this issue and have 

determined that BHP should be 

excluded from the individual market 

because the market reform rules under 

the Public Health Service Act that were 

added by Title I, Subtitles A and B of 

the Affordable Care Act, such as the 

requirements for guaranteed issue, and 

premium rating do not apply to 

standard health plans participating in 

BHP. Moreover, in accordance with 45 

CFR 153.234 and 45 CFR 153.20, 

standard health plans operating under a 

BHP are not eligible to participate in the 

reinsurance program and the federallyoperated risk adjustment program. With 

respect to the risk corridor program, the 

statute, under section 1342 of the 

Affordable Care Act, precludes standard 

health plans from participation. To the 

extent that a state operating a BHP 

determines that, because of the riskprofile of its BHP population, standard 

health plans should be included in 

mechanisms that share risk, the state 

would need to use other methods for 

achieving this goal. But we are 

providing an opportunity in 2015 for 

states to elect to include in the BHP 

federal payment methodology a 

retroactive adjustment to reflect the 

effect of the different health status of the 

BHP population on PTC and CSRs if the 

BHP population had been enrolled in 

coverage through the Exchange, and we 

will consider in future years whether 

data supports a prospective adjustment. 

Comment: Several commenters 

requested clarification regarding a 

state’s ability to implement a risk 

corridor-like mechanism in BHP. 

Response: We appreciate the 

commenters’ interest in the 

implementation of risk corridors in 

BHP; to the extent that a state operating 

a BHP determines that, because of the 

risk-profile of its BHP population, 

standard health plans should be 

included in mechanisms that share risk, 

the state would need to establish statespecific methods for achieving this goal. 

Because section 1342 of the Affordable 

Care Act specifically limits the risk 

corridor program to QHPs, standard 

health plans operating under BHP are 

not eligible to participate. 

3. Secretarial Determination of BHP 

Payment Amount (§ 600.610) 

We proposed in § 600.610(a) that each 

year in October the Secretary will 

publish the BHP payment methodology 

for the upcoming program year in a 

proposed payment notice in the Federal 

Register. We did not receive specific 

comments on this section and are 

finalizing the provision as proposed. 

In § 600.610(b), we proposed that the 

Secretary will publish the final BHP 

payment methodology and BHP 

payment amounts annually in February 

in a Federal Register notice. We did not 

receive specific comments on this 

section and are finalizing the provision 

as proposed. 

We proposed in § 600.610(c) that 

states will receive a prospective 

aggregate BHP payment amount on a 

quarterly basis. For specific discussion, 

see the September 25, 2013 proposed 

rule (78 FR 59135). 

We received the following questions 

related to the quarterly prospective BHP 

payment deposits: 

Comment: We received several 

comments expressing support for the 

proposed provision to make quarterly 

prospective deposits into a state’s BHP 

trust fund and for not making any 

retrospective adjustments that could 

cause a state to have to return federal 

BHP funding. 

Response: We thank commenters for 

their support. We generally do not 

anticipate making any retrospective 

adjustments in the certified per enrollee 

payment methodology that would cause 

a state to return federal BHP funding. 

But we would provide for retrospective 

adjustments to ensure that this 

methodology is applied based on actual 

enrollment. To the extent that actual 

enrollment is lower than the state’s 

projected enrollment, CMS will reduce 

the state’s next quarterly BHP deposit by 

the difference amount. Another instance 

in which a retrospective adjustment 

may occur is if a mathematical ‘‘error’’ 

was made during the calculation 

process. For specific discussions on 

what constitutes a mathematical 

‘‘error,’’ please refer to the September 

25, 2013 proposed notice (78 FR 59134). 

Finally, to the extent that the prevailing 

BHP funding methodology for a given 

program year permits adjustments to a 

state’s BHP payment amount due to 

insufficient data that is necessary for the 

Secretary to prospectively determine the 

relevant factors specified in the 

payment notice, retrospective 

adjustments to the state’s BHP payment 

amount may occur. For example, in 

light of the absence of any data in 2015 

to prospectively take into account 


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variance of the BHP population health 

status from the Exchange population, in 

the accompanying final payment 

methodology for 2015, we permit a state 

to elect to develop a protocol to support 

a retrospective adjustment for this 

factor. 

Comment: We received several 

comments requesting clarification on 

the timing of the deposits, as well as 

when any necessary adjustments in 

payment are to be made based on 

differences between actual and 

projected enrollment numbers. Some 

commenters also expressed concern that 

data used to determine some of the 

factors included in the payment 

methodology would negatively affect 

payment to states. 

Response: We anticipate providing 

future guidance on the specific 

timeframes for deposits made to state 

BHP trust funds; however, we anticipate 

that deposits will be made at the 

beginning of each fiscal year quarter 

assuming the state has submitted its 

projected enrollment data at least 60 

days prior to the beginning of each fiscal 

year quarter. For example, the deposit 

for fiscal year quarter one would occur 

on October 1st using enrollment data 

submitted by the state by July 31st. As 

stated in § 600.620(c)(2)(i), a 

retrospective adjustment will be made 

60 days after the end of each fiscal year 

quarter to account for any differences 

between projected and actual 

enrollment. 

With respect to the commenters’ 

concerns regarding the potential effect 

on the timing of payment and the 

release of data needed to calculate the 

factors included in the BHP payment 

methodology, we are generally not 

making any retrospective adjustment to 

the BHP payment methodology in a 

given year unless the payment notice 

specifies the availability of a 

retrospective adjustment due to the lack 

of sufficient data necessary for the 

Secretary to prospectively determine 

one or more relevant factors in the BHP 

funding methodology. We anticipate 

using new data, or adjustments to 

previously released data, to refine future 

prospective BHP funding 

methodologies, which will be published 

annually through a proposed notice 

process. 

Comment: We received several 

comments recommending that after the 

first or second year of BHP 

implementation, HHS adjust the 

aggregate federal BHP payment amounts 

upward should actual experience 

support such an adjustment. 

Commenters felt that such an 

adjustment would be similar to a risk 

corridor approach. 

Response: We appreciate the 

commenter’s concern, and have 

addressed the issue raised by the 

commenters in further detail in the 

Final BHP Federal Funding 

Methodology for Program Year 2015. As 

described in greater depth in the final 

methodology, we are providing states 

with the option to propose, and 

implement, a retrospective adjustment 

protocol to the extent that such a 

protocol is approved as part of the 

certified payment methodology by the 

CMS Chief Actuary 

Comment: We received several 

comments requesting clarification on 

the proposed retrospective adjustments. 

One commenter recommended that HHS 

revise language in the regulation text to 

clarify that HHS will not make 

retrospective adjustments to a state’s 

quarterly deposit based on enrollee 

income changes. 

Response: As explained elsewhere, 

HHS will not make any retrospective 

adjustments to a state’s quarterly 

deposit except for in three instances. 

The first instance in which HHS will 

adjust the payment is in the event that 

a mathematical error occurred during 

the calculation of the payment amount. 

For example, if HHS multiplied the 

payment rate to the incorrect number of 

enrollees associated with that payment 

rate, HHS would then make a 

retrospective adjustment to correct the 

mathematical error. The second instance 

occurs when there is a difference in 

projected and actual enrollment for a 

given fiscal year quarter. For example, if 

the state projected that there would be 

10,000 enrollees in payment rate cell A, 

but enrollment in payment rate cell A 

was actually 12,000, HHS would add 

the additional federal funds to the 

state’s upcoming quarterly deposit to 

account for the difference between the 

projected and actual enrollment. 

Finally, the third instance occurs only 

when the prevailing payment notice in 

a given program year permits 

retrospective adjustment to a state’s 

BHP federal payment amount to the 

extent that data necessary for the 

Secretary to prospectively determine the 

relevant factors included in the BHP 

funding methodology was not available. 

We believe that the regulation text at 

§ 600.605(c) and revised § 600.610(c)(2) 

sufficiently describes this policy. 

4. Deposit of Federal BHP Payment 

(§ 600.615) 

In § 600.615, we proposed that HHS 

will make a quarterly deposit into a 

state’s trust fund based on the aggregate 

quarterly payment amount described in 

§ 600.610(c). We did not receive specific 

comments on this section and are 

finalizing the provision as proposed. 

H. BHP Trust Fund 

1. Basis, Scope and Applicability 

(§ 600.700) 

Proposed § 600.700 under subpart G 

specified the general statutory authority 

for and scope of standards proposed in 

this subpart, which sets forth a 

framework for BHP trust funds and 

accounting, establishing sound fiscal 

policies and accountability standard 

and procedures for the restitution of 

unallowable BHP trust fund 

expenditures. For specific discussions, 

see the September 25, 2013 proposed 

rule (78 FR 59135). We did not receive 

specific comments on this section and 

are finalizing the provision as proposed. 

2. BHP Trust Fund (§ 600.705) 

In § 600.705(a), we proposed 

requirements for the BHP trust fund, 

including where to establish the trust 

fund and the identification of trustees 

and their authorities. 

We proposed in § 600.705(b) that 

states may deposit non-federal funds 

into its BHP trust fund; however, once 

deposited, those funds must meet the 

standards described in paragraphs (c) 

and (d) of this section. 

In § 600.705(c), we proposed that trust 

funds may only be used to reduce 

premiums and cost sharing and/or 

provide additional benefits to 

individuals eligible for BHP. 

We proposed in § 600.705(d) the 

limitations in expending BHP trust 

funds. For the specific limitations, see 

the September 25, 2013 proposed rule 

(78 FR 59150). 

In § 600.705(e), we proposed that a 

state may maintain a surplus of funds in 

its trust through the carryover of 

unexpended funds from year-to-year. 

We received a comment supporting this 

provision, and are subsequently 

finalizing the provision as proposed. We 

received the following comments 

related to the BHP trust fund: 

Comment: We received several 

comments in general support of using 

BHP trust funds, as specified in 

§ 600.705(c), to further reduce 

premiums and cost sharing and to 

provide additional benefits to 

individuals eligible for BHP. 

Response: We thank the commenters 

for their support, and are finalizing the 

provision as proposed. 

Comment: One commenter requested 

clarification on the establishment of the 

state’s BHP trust fund. Specifically, the 

commenter requested that the BHP trust 

fund be established at either an 

independent entity or in a segregated 


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account within a state’s fund structure 

rather than in a subset account to the 

state’s general fund. The commenter 

indicated that there are sufficient legal 

boundaries through various state laws 

with respect to the integrity of federal 

funding streams. 

Response: We appreciate the 

commenter’s suggestion, and have 

clarified the language in the final rule to 

reflect the suggested language change. 

Comment: We received a comment 

requesting that HHS further clarify the 

role of BHP trustees. 

Response: There are two fundamental 

activities required of the BHP trustees. 

One is to provide trust fund oversight to 

ensure that trust fund expenditures are 

made in an allowable manner, and the 

second is to specify individuals with the 

authority to make withdrawals from the 

fund to make allowable expenditures. 

The state, as specified in 

§ 600.110(a)(12), must describe any 

additional responsibilities, outside of 

these two activities, that the trustees 

may have. Specifically, § 600.110(a)(12) 

requires the state to describe the process 

by which the trustees will be appointed, 

the qualifications used to determine 

trustee appointment, and any 

arrangements used to insure or 

indemnify such trustees against claims 

for breaches of their fiduciary 

responsibilities. 

Comment: One commenter requested 

clarification that BHP trust funds are 

available to reduce premiums for 

American Indians and Alaska Natives. 

Response: Yes. The state has the 

option to further reduce premiums for 

eligible BHP enrollees that are American 

Indian and Alaska Natives with its trust 

funds. This is a permissible 

expenditure. 

Comment: Several commenters 

expressed support for the limitations on 

BHP trust fund expenditures; however, 

some emphasized that it was important 

to ensure that the limitations are 

applied consistently across functions 

and organizations. 

Response: We appreciate the 

commenters’ support, and are finalizing 

the proposed provisions. 

Comment: We received many 

comments expressing concern regarding 

the limitations on the use of BHP trust 

funds. Specifically, commenters 

requested that HHS permit trust funds 

to pay for program implementation and 

start-up costs as well as for 

administrative costs. Commenters 

argued that without the authority to use 

trust funds to pay for implementation 

and administrative costs, states would 

not be able to implement BHP. We 

received one comment requesting that 

HHS provide states with options for 

paying administrative costs, including 

some of the user-fee assessments built 

into the Exchange carrier rates. Another 

commenter suggested that HHS develop 

a funding formula similar to Medicaid, 

or set a ‘‘flat fee’’ to pay for 

administrative costs. 

In addition, several other commenters 

also expressed concern that these 

limitations do not permit states to 

finance consumer assistance programs 

with BHP trust funds, or promote 

payment innovations, quality 

improvement activities or pay-forperformance incentives under BHP. 

Response: We understand the 

concerns that the commenters have 

raised with respect to the use of trust 

funds to cover administrative costs; 

however, the statute prohibits the 

expenditure of BHP trust funds for any 

activities except for lowering premiums 

and cost sharing and providing 

additional benefits to individuals 

eligible for BHP. Through its 

competitive contracting process, a state 

can establish parameters for quality 

improvement projects and delivery 

system and payment reform innovations 

that it believes will further the 

objectives of its BHP. The state can then 

evaluate the innovation proposals 

submitted by standard health plan 

offerors in their BHP bids thereby 

including the negotiated projects into 

the contract awards. 

While the statute has limited the use 

of federal trust funds to lowering 

premiums and cost sharing as well as 

for the provision of additional benefits, 

states have the option to establish 

sources of non-federal funding to help 

offset administrative costs associated 

with BHP. Non-federal resources can 

include assessments imposed on BHP 

participating plans. A state with a statebased Exchange has the ability to apply 

a portion of the fee assessed to QHPs in 

its Exchange to BHP; however, this 

ability does not extend to states in 

which the Federally-Facilitated 

Exchange is operating. In accordance 

with OMB Circular No. A–25 Revised 

(Circular No. A–25R), which establishes 

federal policy regarding user fees, the 

Federally-Facilitated Exchange user fee 

is collected from issuers to recover the 

cost to the federal government of 

providing special benefits to QHP 

issuers participating in a FederallyFacilitated Exchange; those funds are 

not available to fund BHP as it is not a 

special benefit provided to issuers by 

the federal government. Non-federal 

resources can either remain outside of 

the BHP trust fund, such as in a state’s 

General Fund, or be deposited into the 

BHP trust fund. Should the state deposit 

these non-federal funds into the state’s 

BHP trust fund, all standards applied to 

federal sources of funding will also 

apply to the non-federal funds. While 

we are finalizing our proposed 

provision, we will continue to review 

this issue and publish additional 

guidance upon concluding our review. 

Comment: One commenter requested 

that we clarify whether enrollee 

premiums collected outside of the trust 

fund are subject to the limitations in 

§ 600.705(d). 

Response: If enrollee premiums are 

not deposited into the state’s trust fund, 

then they are not considered to be BHP 

trust funds and are therefore not subject 

to the limitations specified in 

§ 600.705(d). 

3. Fiscal Policies and Accountability 

(§ 600.710) 

We proposed in § 600.710(a) that the 

state maintain an accounting system and 

supporting fiscal records to assure the 

proper use of BHP trust funds. We did 

not receive specific comments on this 

section and are finalizing the provision 

as proposed. 

In § 600.710(b), we proposed that the 

state obtain an annual certification 

certifying the proper expenditure and 

maintenance of BHP trust funds. For the 

specific certification elements, see the 

September 25, 2013 proposed rule (78 

FR 59150). 

We proposed in § 600.710(c) that the 

state conduct an independent audit of 

BHP trust funds over a 3-year period to 

determine whether the expenditures 

during this period were allowable. For 

specific standards of this audit, see the 

September 25, 2013 proposed rule (78 

FR 59150). We did not receive specific 

comments on this section and are 

finalizing the provision as proposed. 

In § 600.710(d), we proposed that the 

state publish an annual report on the 

use of funds. We did not receive specific 

comments on this section and are 

finalizing the provision as proposed. 

We proposed in § 600.710(e) that the 

state establish and maintain BHP trust 

fund restitution procedures. We did not 

receive specific comments on this 

section and are finalizing the provision 

as proposed. 

In § 600.710(f) we proposed that the 

state maintain records for 3 years from 

the date of submitting its final 

expenditure report. We did not receive 

specific comments on this section and 

are finalizing the provision as proposed. 

We proposed in § 600.710(g) that the 

state retain all records beyond the 3-year 

retention period in the event litigation 

begins prior to the expiration of the 

retention period. We did not receive 

specific comments on this section and 

are finalizing the provision as proposed. 


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We received the following comment 

regarding the annual certification 

process in § 600.710(b): 

Comment: We received several 

comments requesting that HHS require 

that the annual certification include a 

certification that the payment rates 

made to the standard health plan 

offerors are actuarially sound. 

Response: As noted in the contract 

requirements section, the statutory 

actuarial soundness requirement found 

in Medicaid does not apply in BHP; 

therefore, we are not requiring that a 

state certify that its standard health plan 

offeror rates are actuarially sound. We 

anticipate that the competitive 

contracting process will help to ensure 

that the rates paid to the standard health 

plan offerors are reflective of the costs 

associated in the provision of standard 

health plans. 

4. Corrective Action, Restitution, and 

Disallowance of Questioned BHP 

Transactions (§ 600.715) 

In § 600.715(a), we proposed that a 

state review and develop written 

responses to questions identified 

concerning the authority for BHP trust 

fund expenditures. To the extent 

necessary, the state shall implement 

changes to fiscal procedures to ensure 

proper use of BHP trust funds. We did 

not receive specific comments on this 

section and are finalizing the provision 

as proposed. 

We proposed in § 600.715(b) that state 

must ensure restitution to its BHP trust 

fund such funds that have not been 

properly spent. We did not receive 

specific comments on this section and 

are finalizing the provision as proposed. 

In § 600.715(c), we proposed that the 

restitution period may not exceed a 2- 

year period, and that restitution may 

occur in a lump sum amount, or in 

equal installment amounts. We did not 

receive specific comments on this 

section and are finalizing the provision 

as proposed. 

We proposed in § 600.715(d) that HHS 

may disallow the improper BHP trust 

fund expenditures in the event that no 

restitution has been made back to the 

state’s trust fund. For specific 

discussions on the disallowance 

procedures, see the September 25, 2013 

proposed rule (78 FR 59151). We did 

not receive specific comments on this 

section and are finalizing the provision 

as proposed. 

In § 600.715(e), we proposed the 

administrative reconsideration 

procedures in the event of a 

disallowance. For specific discussions 

on such procedures, see the September 

25, 2013 proposed rule (78 FR 59151). 

We proposed in § 600.715(f) that 

disallowed federal BHP funding must be 

returned to HHS within 60 days after 

the disallowance notice, or the final 

administrative reconsideration 

upholding the disallowance. Such 

repayment cannot be made from BHP 

trust funds. We did not receive specific 

comments on this section and are 

finalizing the provision as proposed. 

We received the following comments 

on the administrative procedures in the 

event of a disallowance of questioned 

BHP transactions: 

Comment: We received a comment 

requesting clarification on the 

administrative process for 

reconsideration. The commenter 

suggested that HHS consider using 

either the Medicaid procedures found in 

42 CFR 430.42(f) for disallowances, or 

the procedures at 42 CFR 430.38 which 

provides for judicial review without 

further administrative process. 

Response: We appreciate the 

commenter’s suggestions; however, 

given the numerous processes available 

to the state prior to the corrective action 

stage, we believe that requiring the 

additional administrative 

reconsideration procedures found in 42 

CFR 430.42(f) or in 42 CFR 430.38 is 

unnecessary. Therefore, we are 

finalizing the proposed provisions. 

Comment: We received several 

comments in general support of the 

proposed provisions as they relate to 

benefits, premiums, cost sharing and 

expanding coverage to low-income 

individuals. 

Response: We thank the commenters 

for their support, and are finalizing the 

proposed provisions. 

Comment: Several commenters 

expressed support for the various 

market reforms authorized under the 

Affordable Care Act, such as the ability 

to remain on a parent’s health insurance 

policy and the expansion of health 

insurance coverage to all those that are 

uninsured. 

Response: While we appreciate the 

support for these important reforms, this 

comment is beyond the scope of this 

rulemaking. 

Comment: We received one comment 

requesting more information on BHP in 

order for states to decide whether to 

implement the program. 

Response: We hope that the 

clarifications provided in this 

rulemaking as well as the BHP Final 

Federal Funding Methodology for 

program year 2015 have provided 

sufficient information for states during 

their decision making process. We also 

anticipate continuing to work closely 

with states as they contemplate their 

options and responding in writing to 

questions posed about implementation. 

Comment: We received several 

comments on how, and when, 

individuals can enroll in BHP. 

Response: States that elect to 

implement a BHP will determine the 

effective date for their programs, which 

will be no earlier than January 1, 2015. 

As indicated in § 600.145, initial 

implementation in 2015 may involve an 

alternate enrollment strategy as a 

transition to BHP operation. In order to 

enroll, individuals must complete the 

single streamlined application and be 

determined eligible for a state BHP. As 

discussed elsewhere in these 

regulations, states have the option to use 

a limited open enrollment period 

approach or to allow applications to be 

submitted throughout the year. 

Comment: One commenter requested 

that HHS delay the implementation of 

BHP until January 1, 2017 in order to 

provide the Exchange sufficient time to 

ensure efficient and effective operability 

before additional coverage programs are 

launched. 

Response: We appreciate the 

commenter’s interest in ensuring the 

operability of the Exchange. We are 

committed to ensuring the availability 

of this insurance affordability coverage 

option to states effective January 1, 

2015. To comply with BHP 

requirements, however, states will need 

to coordinate the BHP with Exchange, 

Medicaid and CHIP. As the commenter 

noted, in determining an 

implementation date, states need to 

consider the time and resources needed 

to achieve such coordination by January 

1, 2015. 

Comment: Several commenters 

expressed interest in how BHP will 

affect costs associated with emergency 

department care. Specifically, 

commenters hoped that BHP would 

reduce such costs. 

Response: We share the commenters’ 

interest in lowering the costs associated 

with emergency department care. 

Although this comment is beyond the 

scope of this rulemaking, we will be 

interested to observe the impact of BHP 

over time. 

Comment: One commenter 

recommended that HHS design BHP in 

such a fashion as to ensure appropriate 

coverage for children who may lose 

CHIP coverage in the event that CHIP is 

not authorized in 2019. 

Response: We appreciate the 

commenter’s recommendation. We 

believe that the BHP statute provides 

states with a vehicle to provide such 

coverage without any change in design 

or administrative requirements. 


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Comment: We received several 

comments expressing concern that the 

implementation of BHP will increase 

the temporary shifting of low-income 

individuals from one insurance 

affordability program to another 

(‘‘churn’’). 

Response: While BHP does introduce 

an additional insurance affordability 

program, the amount of churn is not 

clear at this time. It is our 

understanding that many states and 

other observers believe that BHP will 

reduce churn between BHP and 

Medicaid. Regardless of how a state 

might establish its BHP, as specified in 

§ 600.425, states are required describe 

how they will ensure coordination for 

the provision of health care services to 

promote enrollee continuity of care 

among the insurance affordability 

programs. In addition, and as described 

further above, another feature in BHP 

that can promote continuity of coverage 

and care is the provision specified in 

§ 600.340 permitting states to adopt a 

policy of limited redeterminations 

during a 12 month period, reducing 

churn based on fluctuations in income. 

Comment: Several commenters 

expressed concern regarding the effect 

of BHP on Exchange enrollment as well 

as the risk profile of those enrolled in 

Exchange coverage. 

Response: Because the BHP 

population is the lower income range of 

the population that would otherwise be 

enrolled in coverage through the 

Exchange, states that elect to implement 

BHP will experience somewhat lower 

enrollment in coverage through the 

Exchange. We do not believe the 

reduction will impair the Exchange’s 

ability to operate effectively. With 

respect to the commenters’ concerns on 

the Exchange’s risk profile, it is unclear 

at this time the effect BHP will have 

(that is, whether healthier, or sicker, 

individuals will enroll in BHP relative 

to those enrolled in the Exchange). We 

anticipate that this will be the subject of 

research once all of the programs are 

operational. 

Comment: We received one comment 

requesting that standard health plan 

offerors be subject to the annual insurer 

fee. 

Response: The annual insurer fee is 

administered by the Department of the 

Treasury and its applicability is beyond 

the scope of this rulemaking. 

IV. Provisions of the Final Regulations 

For the most part, this final rule 

incorporates the provisions of the 

proposed rule. Those provisions of this 

final rule that differ from the proposed 

rule are as follows: 

A. General Provisions and Definitions 

We have amended § 600.5 to add two 

new definitions: interim certification 

and network of providers to reflect 

clarifications made in subsequent 

sections of this final rule. 

We have clarified, in this section, the 

definition of Essential Health Benefits to 

include the citation to the implementing 

regulations. 

We have clarified in the reference 

plan definition that ‘‘reference’’ is 

synonymous to ‘‘base’’ benchmark by 

adding the word ‘‘base.’’ 

B. Establishment and Certification of 

State Basic Health Programs 

We are amending § 600.110(a)(6) to 

clarify the BHP Blueprint content to 

align with the premium standards 

specified in § 600.505. 

We are adding § 600.110(a)(15) to 

conform with a later change to 

§ 600.145. The change adds a 

requirement for the inclusion of a 

transition plan as a required element of 

the Blueprint if a state participating in 

2015 plans to propose an alternative 

enrollment strategy. Additionally, the 

transition plan must include a plan for 

the coordination of any proposed 

implementation strategies with the 

Exchange operating in the state. 

We amended § 600.110(c) to include 

the requirement that HHS post revisions 

to Blueprints on line. 

We amended §§ 600.115(c)(1) and 

600.125(a) clarifying that significant 

change includes changes that alter the 

BHP benefit package, enrollment, 

disenrollment and verification policies. 

To conform the addition of an interim 

certification level, we amended 

§ 600.115(a) and (d) as well as 

§ 600.120(a) and (b). To § 600.115(a) we 

added the sentence, ‘‘A State may 

choose to submit its BHP Blueprint in 

two parts: the first limited submission to 

secure interim certification and the 

second full submission to secure full 

certification.’’ To § 600.115(d) we added 

the word ‘‘full’’ to indicate that states 

must receive full certification to 

implement a program. To § 600.120(a) 

we clarified that the effective date of 

interim certification is also the date of 

signature of the Secretary, and to 

§ 600.120(b) we clarified that full 

certification is needed before payments 

may be made. 

We further amended § 600.115(d) to 

require states implementing after 2015 

to coordinate with open enrollment of 

the state’s Exchange. 

We amended § 600.120(d) by deleting 

the word ‘‘contingencies’’. 

We added § 600.135(c) to require HHS 

to accept a state request for 

reconsideration and to provide an 

impartial review against the certification 

standards if requested. We also 

extended the state’s ability to request 

reconsideration for termination 

decisions made by the Secretary in 

§ 600.142. 

We added § 600.145(e) providing 

states implementing BHP in 2015 the 

opportunity to create a transition plan 

for approval delineating any proposed 

alternative enrollment strategies. 

We amended § 600.150(a)(5) to 

include a minimum timeliness standard 

of at least quarterly regarding standard 

health plans provision of updated 

provider lists. 

We amended § 600.155 to remove the 

qualifying language ‘‘State or Federal’’ 

describing the tribal consultation policy. 

We amended § 600.160 to include a 

new paragraph (c) prohibiting BHP 

offerors from reducing the payments to 

providers by the amount of cost-sharing 

that would be due from Indians if it was 

not prohibited. Additionally, we are 

amending § 600.520 to add paragraph 

(d) incorporating and broadening the 

protection set forth in the proposed rule 

at § 600.160(b), to require that states 

permit payment of premiums and costsharing for individuals in Indian tribes, 

tribal organizations, urban Indian 

organizations, Ryan White HIV/AIDS 

programs, and other federal and states 

programs. We have renamed the 

proposed paragraphs to reflect these 

changes. 

We have amended the timeliness 

standard in § 600.170(b) to be 60 days 

after the end of each operational year for 

the submission of the state’s required 

annual report. 

C. Federal Program Administration 

We amended the section title to 

‘‘Federal program compliance review 

and audits’’ to better represent the 

nature of this section. 

In § 600.200(b)(3) we made an 

editorial revision to add the word ‘‘add’’ 

to the paragraph. 

We amended § 600.200(b)(4) by 

clarifying that the standards of review 

during federal program reviews and 

audits for the improper use of BHP trust 

funds are the provisions specified in 

§ 600.705. 

We amended § 600.200(c) to clarify 

that all paragraphs, and not only 

paragraph (a), under § 430.33 apply. We 

have also clarified the language in this 

paragraph to clarify the timing of the 

final report and state opportunity for 

correction. 

D. Eligibility and Enrollment 

We amended § 600.305(a)(1) to limit it 

to requiring residency. 


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We amended § 600.305(a)(2) to clarify 

that lawfully present non-citizens, 

ineligible for Medicaid, must have 

household income between zero and 

200 percent of the FPL. We further 

clarified this standard by changing 

‘‘non-citizen’’ status to ‘‘immigration’’ 

status to increase technical accuracy 

and we clarified that a person may also 

be ineligible for CHIP due to 

immigration status. 

We amended § 600.305(a)(3) by 

removing the word ‘‘affordable’’ to more 

closely reflect the underlying statutory 

language connecting affordability to 

employer sponsored insurance. We also 

added a parenthetical to conform to our 

definition of MEC, clarifying that an 

individual may not have access to MEC 

other than a standard health plan. 

We deleted the reference to CHIP in 

§ 600.305(a)(3)(i) and have limited the 

proposed reference to ‘‘such other 

programs’’ only to Medicaid to conform 

with Department of Treasury rules on 

MEC. 

We changed the parenthetical in 

§ 600.305(a)(3)(ii) to tie the definition of 

affordable employer sponsored 

insurance to section 36B(c)(2)(C) of the 

Internal Revenue Code. 

We amended § 600.305(b) to provide 

a conforming exception for a change 

made in § 600.145 permitting states to 

submit a transition plan in certain 

circumstances. 

We amended § 600.310(b) to include 

the requirements of § 435.907(g) of this 

chapter regarding accessibility of 

written applications in addition to the 

other standards of accessibility for 

individuals with limited English 

proficiency and individuals with 

disabilities. 

We amended § 600.320(a) to clarify 

that states permitting local government 

entities to make eligibility 

determinations do so through 

delegation. 

We amended § 600.320(c) to be 

exclusive of § 435.915(a). 

We amended § 600.320(d) to clarify 

the Medicaid choice of enrollment as 

being ‘‘continuous open enrollment 

throughout a year’’ and the Exchange 

choice of enrollment policy as being no 

‘‘more’’ restrictive than that used by the 

Exchange. 

We have amended § 600.335(b) to give 

the states the choice of following the 

appeals process or either Medicaid or 

the Exchange. 

We amended § 600.340(a) to remove 

the reporting requirement exception 

clause ‘‘Except as provided in paragraph 

(d)’’ because paragraph (d) did not 

include reporting requirements. 

We added language to § 600.340(b) to 

clarify that the opportunity to change 

plans must be offered ‘‘at least 

annually,’’ and that enrollees in plans 

that are no longer available will be given 

a reasonable opportunity to select a new 

plan. 

Finally, we have added § 600.340(f) to 

offer states the option of not 

redetermining eligibility for a 12-month 

period as long as enrollees are under age 

65, are not otherwise enrolled in MEC 

and remain residents of the state. 

Additionally, we have further amended 

§ 600.340(a) to draw the distinction 

between it and the new paragraph (f). 

We have replaced the proposed 

language that an individual is 

‘‘determined eligible for a period of’’ 

with ‘‘subject to periodic review of 

eligibility every’’ 12 months. 

E. Standard Health Plan 

We are amending § 600.415(a) to 

clarify that a state can contract with an 

entity for one standard health plan 

rather than contracting with at least two 

or more standard health plans. This 

clarification is needed to conform to the 

changes made in § 600.420 regarding 

choice of standard health plan offeror. 

Ensuring choice of standard health plan 

offeror is a beneficiary protection not a 

contracting issue, and not related to the 

eligibility of the offeror; therefore, we 

have removed the reference to choice in 

this paragraph. 

We are amending § 600.415(e)(2) to 

clarify that a state must consider the 

local availability and access to providers 

to ensure a sufficient number, mix and 

geographic distribution to meet the 

needs of enrollees in a service area, 

including but not limited to services 

provided by essential community 

providers as defined in 45 CFR 156.235 

so that access to services is least be 

sufficient to meet the access standards 

applicable under 42 CFR Part 438, 

Subpart D, or 45 CFR 156.230 and 

156.235. 

We are amending § 600.420(a)(1) to 

clarify that a state must ensure choice of 

at least two standard health plan 

offerors. We are also amending this 

section to clarify that the state must 

assure to choice of standard health plan 

offeror and that this assurance be 

reflected in the state’s BHP Blueprint 

along with a description of how it will 

further enrollee choice of standard 

health plans. 

We are also adding a new paragraph 

to § 600.420(a) to provide an exception 

to the choice of standard health plan 

offeror requirement set forth in 

paragraph (a)(1). This new paragraph 

provides the procedural steps for a state 

to submit a request for such an 

exception. 

We are adding a new paragraph to 

§ 600.420(b) to clarify that a state 

entering into a regional compact with 

another state for the provision of a 

geographically specific standard health 

plan must assure that enrollees, 

regardless of residency within the state, 

continue to have choice of at least two 

standard health plans. This new 

requirement is specified in 

§ 600.420(b)(2). 

We are amending 

§ 600.420(b)(3)(ii)(A) to clarify that a 

state entering into a regional compact 

for the provision of a geographically 

specific standard health plan, must 

continue to assure that enrollees, 

regardless of location, continue to have 

choice of at least two standard health 

plan offerors. 

In § 600.425, we have revised the 

regulatory text to clarify that the state 

must ensure coordination between all 

other insurance affordability programs. 

We are also clarifying that the state’s 

BHP Blueprint must describe how it 

will ensure such coordination. 

F. Enrollee Financial Responsibilities 

We are amending § 600.505(a) to 

clarify the premium requirements that 

the state must assure to and that such 

an assurance must be included in the 

state’s BHP Blueprint along with the 

other requirements specified in 

§ 600.505(a)(2). 

In § 600.510(a), we are clarifying the 

cost-sharing requirements that the state 

must assure to and that such an 

assurance must be included in the 

state’s BHP Blueprint along with the 

other requirements specified in 

§ 600.510(a)(2). 

We have added § 600.520(d) to 

broaden the protection in the proposed 

rule under § 600.160(b) as described 

above and we have modified 

§ 600.510(a)(ii) to reflect the inclusion of 

the new paragraph (d). 

We are amending § 600.525(a) to 

clarify that the state must assure that it 

is in compliance with the disenrollment 

procedures described in 45 CFR 

155.430. We are also clarifying that this 

assurance is reflected in the state’s BHP 

Blueprint. 

G. Payments to States 

We are amending § 600.605(c) to 

clarify the Secretary will adjust the 

payment methodology on a prospective 

basis to adjust for any changes in the 

calculation of the premium tax credit 

and cost-sharing reduction components 

that to the extent that necessary data is 

available for the Secretary to 

prospectively determine all relevant 

factors, as specified in paragraph (b) of 

this section. 


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We are adding new paragraph 

§ 600.610(c)(2)(iii) to reflect that to the 

extent that the final payment notice 

permits retrospective adjustments to the 

state’s BHP payment amount (due to the 

lack of necessary data for the Secretary 

to prospectively determine the relevant 

factors comprising the premium tax 

credit and cost-sharing reductions 

components of the BHP funding 

methodology), the Secretary will 

recalculate the state’s BHP payment 

amount and make any necessary 

adjustments in accordance with 

paragraph (c)(2)(iv) of this section, 

which was previously (c)(2)(iii). 

H. BHP Trust Fund 

In § 600.705(a), we have amended this 

provision by deleting the option for the 

state to establish its BHP trust fund in 

a subset account within its General 

Fund and replaced it with the option to 

establish it in a segregated account 

within the state’s fund structure to 

provide states with the opportunity to 

utilize state financial management 

services while maintaining 

accountability. The option to establish 

the trust fund at an independent entity 

remains. We believe this change will 

provide states with more flexibility 

given the unique features each state may 

have in its accounting and fiscal 

structures. 

We are amending § 600.710 to clarify 

that the state must assure to the fiscal 

policies and accountability standards 

set forth in that section. We are also 

clarifying that this assurance must be 

reflected in the state’s BHP Blueprint. 

V. Collection of Information 

Requirements 

The information collection 

requirements/burden that were set out 

in the September 25, 2013, proposed 

rule estimated one respondent per year. 

Based on comments received, we 

continue to estimate one respondent in 

this final rule. Since we estimate fewer 

than the Paperwork Reduction Act’s 10 

respondent per year threshold, the 

information collection requirements/

burden that are associated with this 

final rule are not subject to the 

requirements of the Paperwork 

Reduction Act (5 CFR 1320.3(c)). 

VI. Regulatory Impact Statement 

A. Overall Impact 

We have examined the impacts of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (January 18, 

2011), the Regulatory Flexibility Act 

(RFA) (September 19, 1980, Pub. L. 96– 

354), section 1102(b) of the Social 

Security Act, section 202 of the 

Unfunded Mandates Reform Act of 1995 

(March 22, 1995; Pub. L. 104–4), 

Executive Order 13132 on Federalism 

(August 4, 1999) and the Congressional 

Review Act (5 U.S.C. 804(2)). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Section 3(f) of Executive Order 

12866 defines a ‘‘significant regulatory 

action’’ as an action that is likely to 

result in a rule: (1) having an annual 

effect on the economy of $100 million 

or more in any 1 year, or adversely and 

materially affecting a sector of the 

economy, productivity, competition, 

jobs, the environment, public health or 

safety, or state, local or tribal 

governments or communities (also 

referred to as ‘‘economically 

significant’’); (2) creating a serious 

inconsistency or otherwise interfering 

with an action taken or planned by 

another agency; (3) materially altering 

the budgetary impacts of entitlement 

grants, user fees, or loan programs or the 

rights and obligations of recipients 

thereof; or (4) raising novel legal or 

policy issues arising out of legal 

mandates, the President’s priorities, or 

the principles set forth in the Executive 

Order. 

A regulatory impact analysis (RIA) 

must be prepared for major rules with 

economically significant effects ($100 

million or more in any 1 year). The 

Basic Health Program provides states 

the flexibility to establish an alternative 

coverage program for low-income 

individuals who would otherwise be 

eligible to purchase coverage through 

Exchange. The effects of this rulemaking 

will be ‘‘economically significant’’ as 

measured by the $100 million threshold, 

and hence a major rule under the 

Congressional Review Act. We did not 

receive any public comments on the 

impact analysis section of the proposed 

rule. We received a variety of comments 

from six states on other sections of the 

rule. These comments did not provide 

further information that would 

contribute to the assessment of 

economic impact. We have received a 

solid commitment of participation from 

one state and we expect that a midrange participation estimate over the 

first 5 years would be 3 states. In 

accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

The aggregate economic impact of this 

rule of this final rule is estimated to be 

-$900 million from CY 2015 to 2019 

(measured in real 2015 dollars). The 

federal government is expected to 

reduce its overall expenditures, as the 

payments to the states for BHP are 

anticipated to be less than the payments 

that would have been made to qualified 

health plans (QHPs) for PTCs and CSR, 

if persons had been enrolled in those 

plans instead of in BHP. In general, we 

expect that federal payments to states 

for BHP would be 5 percent less than 

the federal payments for PTCs and CSR 

to QHPs if persons had been enrolled in 

those plans through the exchange. 

CMS’ Office of the Actuary (OACT) 

developed estimates for the impact of 

this section of the Affordable Care Act, 

which were initially published in April 

2010, (https://www.cms.gov/

ActuarialStudies/downloads/PPACA_

2010-04-22.pdf ). These estimates are 

consistent with the assumptions and 

projections in the President’s FY 2014 

Budget. In particular, these estimates 

rely on many of the same data and 

assumptions used to project the federal 

costs related to the health insurance 

Exchanges. (The original estimates that 

appeared in the April 2010 estimates 

were based off of the President’s Fiscal 

Year 2010 Budget Mid-Session Review.) 

To determine the impact of BHP on 

federal expenditures, OACT developed 

estimates of the number of persons who 

would enroll in BHP if the program 

were implemented in all states. In 

general, this estimate was based on 

projections of the number of people who 

would be eligible for BHP based on their 

household income and other eligibility 

criteria, and the number of people who 

would enroll in BHP. The percentage of 

people who would enroll in BHP among 

those eligible is affected by estimates of 

the likelihood of persons having other 

forms of health insurance (in particular, 

for persons who have employer 

sponsored insurance) and the estimated 

participation rate of those without other 

forms of coverage. The participation rate 

may be affected by a number of factors, 

which include the health status and 

expected health care costs of eligible 

persons (in general, persons with higher 

expected health care costs are assumed 

to be more likely to enroll), the cost to 

the enrollee for participating (in general, 

lower premiums and fewer cost sharing 

requirements are assumed to lead to 

greater participation), and the 

effectiveness of enrollment systems and 

outreach efforts. These assumptions are 

consistent with those used to estimate 


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the number of people that would enroll 

in QHPs through the Exchanges. 

OACT also developed estimates of 

health care costs and the amounts of 

PTCs and CSR that the federal 

government would pay for persons who 

would enroll in BHP. These estimates 

relied on historical health care cost 

expenditure data for eligible persons, 

adjusted for the effect that having health 

insurance would have on health care 

costs. (For persons who were previously 

uninsured, their costs were adjusted to 

reflect that having health insurance is 

expected to lead to greater utilization of 

health care services than compared to 

not having insurance. In addition, for 

persons who were previously uninsured 

or had different forms of health 

insurance, their costs were adjusted to 

reflect differences in cost sharing 

requirements on health care 

expenditures, and differences in 

provider payment rates between types of 

insurance. 

To determine the impact of BHP, 

OACT has developed estimates 

compared to those of the impacts of the 

Exchanges (CMS–9989–F). As the 

implementation of BHP would result in 

a decrease in the number of persons 

enrolled through the Exchange, and thus 

the amount of PTCs and CSR that would 

be paid by the federal government, we 

believe it is appropriate to develop the 

impact analysis using the net effects of 

BHP relative to the previously estimated 

impacts of the Exchanges. 

For the purpose of this analysis, 

OACT has assumed that 3 states would 

implement BHP between 2015 and 

2019. This assumption is based off of 

information on states’ preliminary 

interest in BHP; however, in actuality 

more or fewer states may decide to 

implement BHP, and may decide to 

implement BHP after 2015. Accordingly, 

more or fewer states implementing BHP 

would increase or decrease the impact 

of the program, and the particular 

number of enrollees and the costs of the 

BHP may vary state to state. These 

estimates are not specific to any 3 

particular states. 

OACT has also assumed that persons 

would be enrolled in BHP plans at the 

same participation rate as they would 

have been expected to enroll in QHPs 

through the Exchanges. The 

participation rate may depend on a 

number of factors (including the amount 

of premium and cost sharing a person 

would be required to pay in BHP, the 

choice of BHP plans, and the benefits 

offered in BHP), and in actuality could 

vary from the participation rate of 

persons eligible for QHPs. OACT has 

assumed that BHP plans would have 

similar premium and cost-sharing 

requirements as QHPs on the Exchange 

(net of the effects of PTCs and CSR) and 

would offer similar benefits to QHPs. 

Thus, the effects of implementing BHP 

on enrollees would be no different than 

the effects of the Exchanges; however, to 

the extent that BHP plans offer 

additional benefits or further reduce the 

amount of costs enrollees would pay for 

their health care, enrollees may 

experience some additional benefit. 

Lastly, OACT has assumed that states 

would not contribute any other state 

funds to BHP and that federal BHP 

payments and enrollees’ premiums and 

cost sharing would be sufficient to pay 

for the required benefits under BHP. To 

the extent that a state contributes 

additional funds (possibly to provide 

additional benefits or reduce enrollees’ 

premiums or cost sharing), the state 

would experience an increase in 

expenditures. 

The estimated effects of BHP on 

federal government are shown in Table 

1. 

TABLE 1—ESTIMATED FEDERAL IMPACTS FOR THE BASIC HEALTH PROGRAM

[Millions of 2015 dollars] 

2015 2016 2017 2018 2019 Total 

BHP Expenditures ............................................................ $2,610 $3,000 $3,410 $4,000 $4,170 $17,190 

PTC and CSR Expenditures ............................................ –$2,750 –$3,160 –$3,590 –$4,210 –$4,390 –$18,100 

Net Federal Impact .......................................................... –$140 –$160 –$180 –$210 –$220 –$900 

The estimated number of BHP 

enrollees is shown in Table 2. 

TABLE 2—ESTIMATED NUMBER OF BASIC HEALTH PROGRAM ENROLLEES

2015 2016 2017 2018 2019 

BHP Enrollment ....................................................................................... 460,000 550,000 710,000 970,000 1,020,000 

B. Accounting Statement and Table 

As required by OMB’s Circular A–4 

(available at http://

www.whitehouse.gov/omb//circulars_

a004_a-4/), in Table 3 we have prepared 

an accounting statement illustrating the 

classification of the federal and state 

expenditures associated with this final 

rule. 

TABLE 3—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES FOR BASIC HEALTH PROGRAM

DURING CALENDAR YEARS 2015 THROUGH 2019 

[Millions of 2015 dollars] 

Category Transfers 

Annualized monetized transfers 

Discount rate 

Period covered 

7% 3% 

Primary Estimate .................................................................................................. $3,561 $3,594 CYs 2015–2019 


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1Hwang, A., S. Rosenbaum, and B. D. Sommers. 

‘‘Creation Of State Basic Health Programs Would 

Lead To 4 Percent Fewer People Churning Between 

Medicaid And Exchanges.’’ Health Affairs 31.6 

(2012): 1314–1320. 

Buettgens, M., A. Nichols, and S. Dorn. 

‘‘Churning Under the ACA and State Policy Options 

for Mitigation: Timely Analysis of Immediate 

Health Policy Issues.’’ Urban Institute (2012). 

Available at http://www.urban.org/UploadedPDF/

412587-Churning-Under-the-ACA-and-State-PolicyOptions-for-Mitigation.pdf. 

TABLE 3—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES FOR BASIC HEALTH PROGRAM

DURING CALENDAR YEARS 2015 THROUGH 2019—Continued 

[Millions of 2015 dollars] 

Category Transfers 

Annualized monetized transfers 

Discount rate 

Period covered 

7% 3% 

From/To ................................................................................................................ Qualified Health Plans to Federal Government 

Primary Estimate .................................................................................................. $3,382 $3,414 CYs 2015–2019 

From/To ................................................................................................................ Federal Government to State Governments 

1. Need for the Rule 

Section 1331 of the Affordable Care 

Act (codified at 42 U.S.C. 18051) 

requires the Secretary to establish a 

Basic Health Program. This final rule 

implements that section. 

2. Benefits 

We anticipate that the Basic Health 

Program will provide benefits to both 

consumers and states. 

a. Benefits to Consumers 

The Basic Health Program (BHP) 

targets low-income individuals who 

would be eligible for premium and costsharing reductions, if they purchased 

health insurance through an Exchange. 

These individuals may have variable 

income that causes them to move 

between insurance programs. For 

example, if their income drops, they 

may be eligible for Medicaid, and when 

their income rises, they would be 

eligible to purchase insurance (with 

premium and cost-sharing reductions) 

on an Exchange. This phenomenon is 

known as ‘‘churning.’’ Because 

Medicaid health plans and health plans 

offered on Exchanges vary in terms of 

benefits, provider networks, costsharing, and administration, churn can 

be disruptive. Researchers have 

estimated that the Basic Health Program 

will significantly reduce the number of 

individuals that churn between 

Medicaid and Exchanges 1. We have 

modified the rule to include the option 

of 12 month continuous eligibility. This 

option will further reduce churn in 

states that adopt it, by enabling those 

enrolled to remain eligible for a full 12 

months regardless of income 

fluctuation. However, we are not 

adjusting the payment methodology and 

have clarified in the response to 

comment that states will bear the 

associated financial burden to the extent 

there is one. 

b. Benefits to States 

Several states currently operate health 

insurance programs for low-income 

adults with income above Medicaid 

eligibility levels. These states believe 

that the programs confer benefit to their 

residents beyond what those individuals 

could obtain by purchasing health 

insurance on an Exchange. The Basic 

Health Program established by this rule 

will give states the option to maintain 

these programs rather than having those 

individuals purchase insurance through 

the Exchange. 

3. Costs 

The provisions of this rule were 

designed to minimize regulatory costs. It 

minimizes new administrative 

structures, because the Basic Health 

Program does not include 

administrative funding and because of 

the need for states to coordinate with 

other insurance affordability programs. 

To the extent possible, we borrowed 

structures from existing programs. In 

finalizing the rule, we further extended 

the use of existing administrative 

infrastructure by permitting the use of 

the Exchange appeals process for BHP. 

Additionally, we created an interim 

certification level to mitigate the risk 

associated with state expenditure of 

start- up funding prior to receiving any 

conceptual approval for the program. 

4. Transfers 

The provisions of this rule are 

designed to transfer funds that will be 

available to individuals for premium 

and cost-sharing reductions for coverage 

purchased on an Exchange to states to 

offer coverage through a Basic Health 

Program. In states that choose to 

implement a Basic Health Program, 

eligible individuals will not be able to 

purchase health insurance through the 

Exchange. As a result, fewer individuals 

will use the Exchange to purchase 

health insurance. Depending on the 

profile of the people in BHP, this may 

result in adjustments to the risk profile 

of the Exchange. 

5. Regulatory Alternatives 

Many of the structures of the Basic 

Health Program are set out in statute, 

and therefore we were limited in the 

alternatives we could consider. When 

we had options, we attempted to limit 

the number of new regulatory structures 

we created. To make the program easier 

for states to implement, we adopt or 

adapt regulations from existing 

programs—Medicaid, the Children’s 

Health Insurance Program, and the 

Exchanges—whenever possible, rather 

than create new structures. Two areas in 

which we had choices are reporting 

compliance with federal rules and 

contracting with standard health plans. 

a. Reporting Compliance With Federal 

Rules to HHS 

We followed the paradigm of adopting 

or adapting existing structures when 

creating a process for reporting state 

compliance with federal rules. Two 

existing structures we considered were 

the Exchange model of Blueprints and 

the Medicaid model of state plans. We 

chose to use the Blueprint model, which 

we believe will be less burdensome to 

states than the state plan model. 

Additionally, we indicated in the final 

rule that we would be accepting a 

limited set of data elements from the 

Blueprint to establish and interim level 

of certification giving states design 

approval before further investment. 

b. Contracting Requirements 

Similarly when choosing how to 

regulate state contracts with standard 

health plans, we looked to models in the 

Exchange and Medicaid rather than 

creating new regulatory schemes. We 

have adopted, where possible, existing 


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procurement requirements in order to 

minimize the burden on states. In 

addition, we have allowed states the 

option to seek an exemption from 

competitive contracting requirements 

for program year 2015 if they are unable 

to meet the requirements in the first 

year of the program. 

C. Unfunded Mandates Reform Act 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation, 

by state, local, or tribal governments, in 

the aggregate, or by the private sector. In 

2014, that threshold is approximately 

$141 million. States have the option, but 

are not required, to establish a BHP. 

Thus, this final rules does not mandate 

expenditures by state governments, 

local governments, or tribal 

governments 

D. Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) (RFA) requires 

agencies to prepare an initial regulatory 

flexibility analysis to describe the 

impact of the final rule on small 

entities, unless the head of the agency 

can certify that the rule will not have a 

significant economic impact on a 

substantial number of small entities. 

The Act generally defines a ‘‘small 

entity’’ as (1) a proprietary firm meeting 

the size standards of the Small Business 

Administration (SBA); (2) a not-forprofit organization that is not dominant 

in its field; or (3) a small government 

jurisdiction with a population of less 

than 50,000. Individuals and states are 

not included in the definition of a small 

entity. 

We have clarified in the final rule that 

we do not have statutory authority to 

mandate the inclusion or exclusion of 

particular providers. This final rule is 

focused on eligibility and enrollment in 

public programs, and it sets out broad 

contracting standards but it does not 

contain provisions that would have a 

significant direct impact on hospitals, 

and other health care providers that are 

designated as small entities under the 

RFA. However, the provisions in this 

final rule may have a substantial, 

positive indirect effect on hospitals and 

other health care providers due to the 

substantial increase in the prevalence of 

health coverage among populations who 

are currently unable to pay for needed 

health care, leading to lower rates of 

uncompensated care at hospitals. The 

Department determines that this final 

rule will not have a significant 

economic impact on a substantial 

number of small entities. 

Section 1102(b) of the Act requires us 

to prepare a regulatory impact analysis 

if a proposed rule may have a significant 

economic impact on the operations of a 

substantial number of small rural 

hospitals. For purposes of section 

1102(b) of the Act, we define a small 

rural hospital as a hospital that is 

located outside of a metropolitan 

statistical area and has fewer than 100 

beds. As indicated in the preceding 

discussion, there may be indirect 

positive effects from reductions in 

uncompensated care, but we have 

concluded that there is not a direct 

economic impact of these facilities. 

E. Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a final 

rule that imposes substantial direct 

effects on States, preempts State law, or 

otherwise has Federalism implications. 

The BHP is entirely optional for states, 

and if implemented in a state, provides 

access to a pool of funding that would 

not otherwise be available to the state. 

We conclude that there is not an 

impact on Federalism by this voluntary 

state program. 

List of Subjects 

42 CFR Part 600 

Administrative practice and 

procedure, Health care, Health 

insurance, Penalties, and Reporting and 

recordkeeping requirements, State and 

local governments. 

45 CFR Part 144 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, under the authority at section 

1331(a)(1) of the Affordable Care Act, 

the Centers for Medicare & Medicaid 

Services and the Office of the Secretary 

amends 42 CFR chapter IV and 45 CFR 

subtitle A, respectively, as set forth 

below: 

Title 42—Public Health 

■ 1. Subchapter I, consisting of part 600, 

is added to chapter IV to read as 

follows: 

Subchapter I— Basic Health Program 

PART 600—ADMINISTRATION, 

ELIGIBILITY, ESSENTIAL HEALTH 

BENEFITS, PERFORMANCE 

STANDARDS, SERVICE DELIVERY 

REQUIREMENTS, PREMIUM AND 

COST SHARING, ALLOTMENTS, AND 

RECONCILATION 

Subpart A—General Provisions and 

Definitions 

Sec. 

600.1 Scope. 

600.5 Definitions and use of terms. 

Subpart B—Establishment and Certification 

of State Basic Health Programs 

600.100 Program description. 

600.105 Basis, scope, and applicability of 

subpart B. 

600.110 BHP Blueprint. 

600.115 Development and submission of 

the BHP Blueprint. 

600.120 Certification of a BHP Blueprint. 

600.125 Revisions to a certified BHP 

Blueprint. 

600.130 Withdrawal of a BHP Blueprint 

prior to implementation. 

600.135 Notice and timing of HHS action 

on a BHP Blueprint. 

600.140 State termination of a BHP. 

600.142 HHS withdrawal of certification 

and termination of a BHP. 

600.145 State program administration and 

operation. 

600.150 Enrollment assistance and 

information requirements. 

600.155 Tribal consultation. 

600.160 Protections for American Indian 

and Alaska Natives. 

600.165 Nondiscrimination standards. 

600.170 Annual report content and timing. 

Subpart C—Federal Program 

Administration 

600.200 Federal program compliance 

reviews and audits. 

Subpart D—Eligibility and Enrollment 

600.300 Basis, scope, and applicability. 

600.305 Eligible individuals. 

600.310 Application. 

600.315 Certified application counselors. 

600.320 Determination of eligibility for and 

enrollment in a standard health plan. 

600.330 Coordination with other insurance 

affordability programs. 

600.335 Appeals. 

600.340 Periodic determination and 

renewal of BHP eligibility. 

600.345 Eligibility verification. 

600.350 Privacy and security of 

information. 

Subpart E—Standard Health Plan 

600.400 Basis, scope, and applicability. 

600.405 Standard health plan coverage. 

600.410 Competitive contracting process. 

600.415 Contracting qualifications and 

requirements. 

600.420 Enhanced availability of standard 

health plans. 

600.425 Coordination with other insurance 

affordability programs. 


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Subpart F—Enrollee Financial 

Responsibilities 

600.500 Basis, scope, and applicability. 

600.505 Premiums. 

600.510 Cost-sharing. 

600.515 Public schedule of enrollee 

premium and cost sharing. 

600.520 General cost-sharing protections. 

600.525 Disenrollment procedures and 

consequences for nonpayment of 

premiums. 

Subpart G—Payment to States 

600.600 Basis, scope, and applicability. 

600.605 BHP payment methodology. 

600.610 Secretarial determination of BHP 

payment amount. 

600.615 Deposit of Federal BHP payment. 

Subpart H—BHP Trust Fund 

600.700 Basis, scope, and applicability. 

600.705 BHP trust fund. 

600.710 Fiscal policies and accountability. 

600.715 Corrective action, restitution, and 

disallowance of questioned BHP 

transactions. 

Authority: Section 1331 of the Patient 

Protection and Affordable Care Act of 2010 

(Pub. L. 111–148, 124 Stat. 119), as amended 

by the Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111–152, 

124 Stat 1029). 

Subpart A—General Provisions and 

Definitions 

§ 600.1 Scope. 

Section 1331 of the Affordable Care 

Act, provides for the establishment of 

the Basic Health Program (BHP) under 

which a State may enter into contracts 

for standard health plans providing at 

least essential health benefits to eligible 

individuals in lieu of offering such 

individuals the opportunity to enroll in 

coverage through an Affordable 

Insurance Exchange. States that elect to 

operate a BHP will receive federal 

funding based on the amount of the 

premium tax credit and cost-sharing 

reductions that would have been 

available if enrollees had obtained 

coverage through the Exchange. 

§ 600.5 Definitions and use of terms. 

For purposes of this part, the 

following definitions apply: 

Advance payments of the premium 

tax credit means payment of the tax 

credit authorized by 26 U.S.C. 36B and 

its implementing regulations, which are 

provided on an advance basis to an 

eligible individual enrolled in a QHP 

through an Exchange in accordance 

with sections 1402 and 1412 of the 

Affordable Care Act. 

Affordable Care Act is the Patient 

Protection and Affordable Care Act of 

2010 (Pub. L. 111–148) as amended by 

the Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111– 

152). 

Basic Health Program (BHP) Blueprint 

is the operational plan that a State must 

submit to the Secretary of Health and 

Human Services (HHS) for certification 

to operate a BHP. 

Certification means authority to 

operate the program which is required 

for program operations but it does not 

create an obligation on the part of the 

State to implement a BHP. 

Code means the Internal Revenue 

Code of 1986. 

Cost sharing means any expenditure 

required by or on behalf of an enrollee 

with respect to covered health benefits; 

such term includes deductibles, 

coinsurance, copayments, or similar 

charges, but excludes premiums, 

balance billing amounts for nonnetwork providers and spending for 

non-covered services. 

Enrollee means an eligible individual 

who is enrolled in a standard health 

plan contracted to operate as part of a 

BHP. 

Essential health benefits means the 

benefits described under section 1302(b) 

of the Affordable Care Act, as 

determined in accordance with 

implementing regulations at 45 CFR 

156.100 through 156.110 and 156.122 

regarding prescription drugs. 

Family and family size is as defined 

at 26 CFR 1.36B–1(d). 

Federal fiscal year means the time 

period beginning October 1st and 

ending September 30th. 

Federal poverty level or FPL means 

the most recently published Federal 

poverty level, updated periodically in 

the Federal Register by the secretary of 

Health and Human Services under the 

authority of 42 U.S.C. 9902(2). 

Household income is as defined in 26 

CFR 1.36B–1(e)(1) and is determined in 

the same way as it is for purposes of 

eligibility for coverage through the 

Exchange. 

Indian means any individual as 

defined in section 4 (d) of the Indian 

Self-Determination and Education 

Assistance Act (Pub. L 93–638). 

Interim certification is an approval 

status for the initial design of a state’s 

Basic Health Program. It does not confer 

any permission to begin enrollment or 

seek federal funding. 

Lawfully present has the meaning 

given in 45 CFR 152.2. 

Minimum essential coverage has the 

meaning set forth at 26 CFR 1.5000A– 

2, including coverage recognized by the 

Secretary as minimum essential 

coverage pursuant to 26 CFR 1.5000A– 

2(f). Under that authority, the Secretary 

recognizes coverage through a BHP 

standard health plan as minimum 

essential coverage. 

Modified adjusted gross income is as 

defined in 26 CFR 1–36B–1(e)(2). 

Network of health care providers 

means an entity capable of meeting the 

provision and administration of 

standard health plan coverage, 

including but not limited to, the 

provision of benefits, administration of 

premiums and applicable cost sharing 

and execution of innovative features, 

such as care coordination and care 

management, and other requirements as 

specified under the Basic Health 

Program. Such entities may include but 

are not limited to: Accountable Care 

Organizations, Independent Physician 

Associations, or a large health system. 

Premium means any enrollment fee, 

premium, or other similar charge paid to 

the standard health plan offeror. 

Preventive health services and items 

includes those services and items 

specified in 45 CFR 147.130(a). 

Program year means a calendar year 

for which a standard health plan 

provides coverage for eligible BHP 

enrollees. 

Qualified health plan or QHP means 

a health plan that has in effect a 

certification that it meets the standards 

described in subpart C of 45 CFR part 

156 issued or recognized by each 

Exchange through which such plan is 

offered in accordance with the process 

described in subpart K of 45 CFR part 

156, except that such term must not 

include a qualified health plan which is 

a catastrophic plan described in 45 CFR 

155.20. 

Reference plan is a synonym for the 

EHB base benchmark plan and is 

defined at 45 CFR 156.100. 

Regional compact means an 

agreement between two or more States 

to jointly procure and enter into 

contracts with standard health plan 

offeror(s) for the administration and 

provision of a standard health plan 

under the BHP to eligible individuals in 

such States. 

Residency is determined in 

accordance with 45 CFR 155.305(a)(3). 

Single streamlined application has 

the same meaning as application 

defined at 42 CFR 431.907(b)(1) of this 

chapter and 45 CFR 155.405(a) and (b). 

Standard health plan means a health 

benefits package, or product, that is 

provided by the standard health plan 

offeror. 

Standard health plan offeror means 

an entity that is eligible to enter into 

contracts with the State for the 

administration and provision of a 

standard health plan under the BHP. 

State means each of the 50 states and 

the District of Columbia as defined by 

section 1304 of the Act. 


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Subpart B—Establishment and 

Certification of State Basic Health 

Programs 

§ 600.100 Program description. 

A State Basic Health Program (BHP) is 

operated consistent with a BHP 

Blueprint that has been certified by the 

Secretary to meet the requirements of 

this part. The BHP Blueprint is 

developed by the State for certification 

by the Secretary in accordance with the 

processes described in this subpart. 

§ 600.105 Basis, scope, and applicability 

of subpart B. 

(a) Statutory basis. This subpart 

implements the following sections of 

the Act: 

(1) Section 1331(a)(1) which defines a 

Basic Health Program. 

(2) Section 1331(a)(2) which requires 

the Secretary to certify a Basic Health 

Program before it may become 

operational. 

(3) Section 1331(f) which requires 

Secretarial oversight through annual 

reviews. 

(b) Scope and applicability. (1) This 

subpart sets forth provisions governing 

the administration of the BHP, the 

general requirements for development of 

a BHP Blueprint required for 

certification, for program operations and 

for voluntary program termination. 

(2) This subpart applies to all States 

that submit a BHP Blueprint and request 

certification to operate a BHP. 

§ 600.110 BHP Blueprint. 

The BHP Blueprint is a 

comprehensive written document 

submitted by the State to the Secretary 

for certification of a BHP in the form 

and manner specified by HHS which 

will include an opportunity for states to 

submit a limited set of elements 

necessary for interim certification at the 

state option. The program must be 

administered in accordance with all 

aspects of section 1331 of the Affordable 

Care Act and other applicable law, this 

chapter, and the certified BHP 

Blueprint. 

(a) Content of a Blueprint. The 

Blueprint will establish compliance 

with applicable requirements by 

including a description, or if applicable, 

an assurance of the following: 

(1) The minimum benefits offered 

under a standard health plan that 

assures inclusion of essential health 

benefits as described in section 1302(b) 

of the Affordable Care Act, in 

accordance with § 600.405. 

(2) The competitive process, 

consistent with § 600.410, that the State 

will undertake to contract for the 

provision of standard health plans. 

(3) The standard contract 

requirements, consistent with § 600.415, 

that the State will incorporate in its 

standard health plan contracts. 

(4) The methods by which the State 

will enhance the availability of standard 

health plan coverage as described in 

§ 600.420. 

(5) The methods by which the State 

will ensure and promote coordination 

with other insurance affordability 

programs as described in § 600.425. 

(6) The premium standards set forth 

in § 600.505. 

(7) The cost sharing imposed under 

the BHP, consistent with the standards 

described in § 600.510. 

(8) The disenrollment procedures and 

consequences for nonpayment of 

premiums consistent with § 600.525, 

respectively. 

(9) The standards, consistent with 

§ 600.305 used to determine eligibility 

for the program. 

(10) The State’s policies regarding 

enrollment, disenrollment and 

verification consistent with §§ 600.320 

and 600.345, along with a plan to ensure 

coordination with and eliminate gaps in 

coverage for individuals transitioning to 

other insurance affordability programs. 

(11) The fiscal policies and 

accountability procedures, consistent 

with § 600.710. 

(12) The process by which BHP trust 

fund trustees shall be appointed, the 

qualifications and responsibilities of 

such trustees, and any arrangements to 

insure or indemnify such trustees 

against claims for breaches of their 

fiduciary responsibilities. 

(13) A description of how the State 

will ensure program integrity, including 

how it will address potential fraud, 

waste, and abuse and ensure consumer 

protections. 

(14) An operational assessment 

establishing operating agency readiness. 

(15) A transition plan if a state 

participating in 2015 plans to propose 

an alternative enrollment strategy for 

initial implementation consistent with 

§ 600.145. Such a transition plan must 

include a plan for coordination of this 

initial implementation strategy with the 

Exchange operating in the state, and if 

beneficiaries will be transitioning from 

Medicaid, with the Medicaid agency. 

(b) Funding plan. (1) The BHP 

Blueprint must be accompanied by a 

funding plan that describes the 

enrollment and cost projections for the 

first 12 months of operation and the 

funding sources, if any, beyond the BHP 

trust fund. 

(2) The funding plan must 

demonstrate that Federal funds will 

only be used to reduce premiums and 

cost-sharing or to provide additional 

benefits. 

(c) Transparency. HHS shall make a 

State’s BHP Blueprint available on line 

after it is submitted for certification, and 

will update the posted Blueprint to the 

extent that it is later revised by the state. 

§ 600.115 Development and submission of 

the BHP Blueprint. 

(a) State authority to submit the State 

Blueprint. A State BHP Blueprint must 

be signed by the State’s Governor or by 

the official with delegated authority 

from the Governor to sign it. A State 

may choose to submit its BHP Blueprint 

in two parts: The first limited 

submission to secure interim 

certification and the second full 

submission to secure full certification. 

(b) State Basic Health Program 

officials. The State must identify in the 

BHP Blueprint the agency and officials 

within that agency, by position or title, 

who are responsible for program 

administration, operations, and 

financial oversight. 

(c) Opportunity for public comment. 

The State must provide an opportunity 

for public comment on the BHP 

Blueprint content described in § 600.110 

before submission to the Secretary for 

certification. 

(1) The State must seek public 

comment on any significant subsequent 

revisions prior to submission of those 

revisions to the Secretary for 

certification. Significant revisions are 

those that alter core program operations 

required by § 600.145(f), as well as 

changes that alter the BHP standard 

health plan benefit package, or 

enrollment, disenrollment and 

verification policies. 

(2) The process of seeking public 

comment must include Federally 

recognized tribes as defined in the 

Federally Recognized Indian Tribe List 

Act of 1994, 25 U.S.C. 479a, located in 

the State. 

(d) Submission and timing. The BHP 

Blueprint must be submitted in a 

manner and format specified by HHS. 

States may not implement the BHP prior 

to receiving full certification. The date 

of implementation for this purpose is 

the first day enrollees would receive 

coverage under the BHP. Following the 

2015 initial implementation year, a state 

implementing a BHP must coordinate 

implementation with open enrollment 

of the state’s exchange. 

§ 600.120 Certification of a BHP Blueprint. 

(a) Effective date of certification. The 

effective date of either interim or full 

certification is the date of signature by 

the Secretary. 

(b) Payments for periods prior to 

certification. No payment may be made 


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under this part for periods of BHP 

operation prior to the date of full 

certification. 

(c) Period in which a certified 

Blueprint remains in effect. The 

certified Blueprint remains in effect 

until: 

(1) The Blueprint is replaced by 

Secretarial certification of updated 

Blueprint containing revisions 

submitted by the State. 

(2) The State terminates the program 

consistent with § 600.140. 

(3) The Secretary makes a finding that 

the BHP Blueprint no longer meets the 

standards for certification based on 

findings in the annual review, or reports 

significant evidence of beneficiary 

harm, financial malfeasance, fraud, 

waste or abuse by the BHP agency or the 

State consistent with § 600.142. 

(d) Blueprint approval standards for 

certification. The Secretary will certify a 

BHP Blueprint provided it meets all of 

the following standards: 

(1) The Blueprint contains sufficient 

information for the Secretary to 

determine that the BHP will comply 

with the requirements of section 1331 of 

the Affordable Care Act and this Part. 

(2) The BHP Blueprint demonstrates 

adequate planning for the integration of 

BHP with other insurance affordability 

programs in a manner that will permit 

a seamless, coordinated experience for a 

potentially eligible individual. 

(3) The Blueprint is a complete and 

comprehensive description of the BHP 

and its operations, demonstrating 

thorough planning and a concrete 

program design, without reserved 

decisions on operational features. 

§ 600.125 Revisions to a certified BHP 

Blueprint. 

(a) Submission of revisions. In the 

event that a State seeks to make 

significant change(s) that alter program 

operations the BHP benefit package, 

enrollment, disenrollment and 

verification policies described in the 

certified BHP Blueprint, the State must 

submit a revised Blueprint to the 

Secretary for review and certification. 

(b) Continued operation. The State is 

responsible for continuing to operate 

under the terms of the existing certified 

Blueprint until and unless a revised 

Blueprint is certified. 

§ 600.130 Withdrawal of a BHP Blueprint 

prior to implementation. 

To the extent that a State has not 

enrolled eligible individuals into the 

BHP: 

(a) The State may submit a written 

request to stop any further consideration 

of a previously submitted BHP 

Blueprint, whether certified or not. 

(b) The written request must be signed 

by the governor, or the State official 

delegated to sign the BHP Blueprint by 

the governor. 

(c) HHS will respond with a written 

confirmation that the State has 

withdrawn the Blueprint. 

§ 600.135 Notice and timing of HHS action 

on a BHP Blueprint. 

(a) Timely response. HHS will act on 

all certification and revision requests in 

a timely manner. 

(b) Issues preventing certification. 

HHS will notify the State in writing of 

any impediments to certification that 

arise in reviewing a proposed BHP 

Blueprint. 

(c) Reconsideration of decision. HHS 

will accept a State request for 

reconsideration of a certification 

decision and provide an impartial 

review against the standards for 

certification if requested. 

§ 600.140 State termination of a BHP. 

(a) If a State decides to terminate its 

BHP, the State must complete all of the 

following prior to the effective date of 

the termination or the indicated dates: 

(1) Submit written notice to the 

Secretary no later than 120 days prior to 

the proposed termination date 

accompanied by a proposed transition 

plan that describes procedures to assist 

consumers with transitioning to other 

insurance affordability programs. 

(2) Resolve concerns expressed by the 

Secretary and obtain approval by the 

Secretary of the transition plan. 

(3) Submit written notice to all 

participating standard health plan 

offerors, and enrollees that it intends to 

terminate the program at least 90 days 

prior to the termination date. The 

notices to enrollees must include 

information regarding the State’s 

assessment of their eligibility for all 

other insurance affordability programs 

in the State. Notices must meet the 

accessibility and readability standards 

at 45 CFR 155.230(b). 

(4) Transmit all information provided 

as part of an application, and any 

information obtained or verified by the 

State or other agencies administering 

insurance affordability programs via 

secure electronic interface, promptly 

and without undue delay to the agency 

administering the Exchange and the 

Medicaid agency as appropriate. 

(5) Fulfill its contractual obligations 

to participating standard health plan 

offerors including the payment of all 

negotiated rates for participants, as well 

as plan oversight ensuring that 

participating standard health plan 

offerors fulfill their obligation to cover 

benefits for each enrollee. 

(6) Fulfill data reporting requirements 

to HHS. 

(7) Complete the annual financial 

reconciliation process with HHS to 

ensure full compliance with Federal 

financial obligations. 

(8) Refund any remaining balance in 

the BHP trust fund. 

(b) [Reserved] 

§ 600.142 HHS withdrawal of certification 

and termination of a BHP. 

(a) The Secretary may withdraw 

certification for a BHP Blueprint based 

on a finding that the BHP Blueprint no 

longer meets the standards for 

certification based on findings in the 

annual review, findings from a program 

review conducted in accordance with 

§ 600.200 or from significant evidence of 

beneficiary harm, financial malfeasance, 

fraud, waste or abuse. 

(b) Withdrawal of certification for a 

BHP Blueprint shall occur only after the 

Secretary provides the State with notice 

of the proposed finding that the 

standards for certification are not met or 

evidence of harm or misconduct in 

program operations, a reasonable period 

for the State to address the finding 

(either by substantiating compliance 

with the standards for certification or 

submitting revisions to the Blueprint, or 

securing HHS approval of a corrective 

action plan), and an opportunity for a 

hearing before issuing a final finding. 

(c) The Secretary shall make every 

reasonable effort to resolve proposed 

findings without requiring withdrawal 

of BHP certification and in the event of 

a decision to withdraw certification, 

will accept a request from the State for 

reconsideration. 

(d) The effective date of an HHS 

determination withdrawing BHP 

certification shall not be earlier than 120 

days following a final finding of 

noncompliance with the standards for 

certification. 

(e) Within 30 days following a final 

finding of noncompliance with the 

standards for certification, the State 

shall submit a transition plan that 

describes procedures to assist 

consumers with transitioning to other 

insurance affordability programs, and 

shall comply with the procedures 

described in § 600.140(a)(2) through (8). 

§ 600.145 State program administration 

and operation. 

(a) Program operation. The State must 

implement its BHP in accordance with 

the approved and fully certified State 

BHP Blueprint, any approved 

modifications to the State BHP 

Blueprint and the requirements of this 

chapter and applicable law. 

(b) Eligibility. All persons have a right 

to apply for a determination of 


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eligibility and, if eligible, to be enrolled 

into coverage that conforms to the 

regulations in this part. 

(c) Statewide program operation. A 

state choosing to operate a BHP must 

operate it statewide. 

(d) No caps on program enrollment. A 

State implementing a BHP must not be 

permitted to limit enrollment by setting 

an income level below the income 

standard prescribed in section 1331 of 

the Affordable Care Act, having a fixed 

enrollment cap or imposing waiting 

lists. 

(e) Transition plan. States 

implementing in 2015 may identify a 

transition period following initial 

implementation during which the state 

may propose alternative enrollment 

strategies for approval. The transition 

plan is required to be submitted as part 

of the state’s BHP Blueprint consistent 

with § 600.110. 

(f) Core operations. A State operating 

a BHP must perform all of the following 

core operating functions: 

(1) Eligibility determinations as 

specified in § 600.320. 

(2) Eligibility appeals as specified in 

§ 600.335. 

(3) Contracting with standard health 

plan offerors as specified in § 600.410. 

(4) Oversight and financial integrity 

including, but not limited to, operation 

of the Trust Fund specified at 

§§ 600.705 and 600.710, compliance 

with annual reporting at § 600.170, and 

providing data required by § 600.610 for 

Federal funding and reconciliation 

processes. 

(5) Consumer assistance as required in 

§ 600.150. 

(6) Extending protections to American 

Indian/Alaska Natives specified at 

§ 600.160, as well as comply with the 

Civil Rights and nondiscrimination 

provisions specified at § 600.165. 

(7) Data collection and reporting as 

necessary for efficient and effective 

operation of the program and as 

specified by HHS to support program 

oversight. 

(8) If necessary, program termination 

procedures at § 600.145. 

§ 600.150 Enrollment assistance and 

information requirements. 

(a) Information disclosure. (1) The 

State must make accurate, easily 

understood information available to 

potential applicants and enrollees about 

the BHP coverage option along with 

information about other insurance 

affordability programs. 

(2) The State must provide accessible 

information on coverage, including 

additional benefits that may be provided 

outside of the standard health plan 

coverage, any tiers of coverage it has 

built into the BHP, including who is 

eligible for each tier. 

(3) The State must require 

participating standard health plans to 

provide clear information on premiums; 

covered services including any limits on 

amount, duration and scope of those 

services; applicable cost-sharing using a 

standard format supplied by the State, 

and other data specified in, and in 

accordance with, 45 CFR 156.220. 

(4) The State must provide 

information in a manner consistent with 

45 CFR 155.205(c). 

(5) The State must require 

participating standard health plans to 

make publicly available, and keep up to 

date (at least quarterly), the names and 

locations of currently participating 

providers. 

(b) [Reserved] 

§ 600.155 Tribal consultation. 

The State must consult with Indian 

tribes located in the State on the 

development and execution of the BHP 

Blueprint using the tribal consultation 

policy approved by the State Exchange. 

§ 600.160 Protections for American Indian 

and Alaska Natives. 

(a) Enrollment. Indians must be 

extended the same special enrollment 

status in BHP standard health plans as 

applicable to enrollment in a QHP 

through the Exchange under 45 CFR 

155.420(d)(8). Indians will be allowed to 

enroll in, or change enrollment in, 

standard health plans one time per 

month. 

(b) Cost sharing. No cost sharing may 

be imposed on Indians under the 

standard health plan. 

(c) Payments to providers. Equal to 

the protection extended to Indian health 

providers providing services to Indians 

enrolled in a QHP in the individual 

market through an Exchange at 45 CFR 

156.430(g), BHP offerors may not reduce 

the payment for services to Indian 

health providers by the amount of any 

cost-sharing that would be due from the 

Indian but for the prohibition in 

paragraph (b) of this section. 

(d) Requirement. Standard health 

plans must pay primary to health 

programs operated by the Indian Health 

Service, Indian tribes, tribal 

organizations, and urban Indian 

organizations for services that are 

covered by a standard health plan. 

§ 600.165 Nondiscrimination standards. 

(a) The State and standard health 

plans, must comply with all applicable 

civil rights statutes and requirements, 

including Title VI of the Civil Rights Act 

of 1964, Title II of the Americans with 

Disabilities Act of 1990, Section 504 of 

the Rehabilitation Act of 1973, the Age 

Discrimination Act of 1975, Section 

1557 of the Affordable Care Act, and 45 

CFR part 80, part 84, and part 91 and 

28 CFR part 35. 

(b) The State must comply with the 

nondiscrimination provision at 45 CFR 

155.120(c)(2). 

§ 600.170 Annual report content and 

timing. 

(a) Content. The State must submit an 

annual report that includes any 

evidence of fraud, waste, or abuse on 

the part of participating providers, 

plans, or the State BHP agency known 

to the State, and a detailed data-driven 

review of compliance with the 

following: 

(1) Eligibility verification 

requirements for program participation 

as specified in § 600.345. 

(2) Limitations on the use of Federal 

funds received by the BHP as specified 

in § 600.705. 

(3) Requirements to collect quality 

and performance measures from all 

participating standard health plans 

focusing on quality of care and 

improved health outcomes as specified 

in sections 1311(c)(3) and (4) of the 

Affordable Care Act and as further 

described in § 600.415. 

(4) Requirements specified by the 

Secretary at least 120 days prior to the 

date of the annual report as requiring 

further study to assess continued State 

compliance with Federal law, 

regulations and the terms of the State’s 

certified Blueprint, based on a Federal 

review of the BHP pursuant to 

§ 600.200, and/or a list of any 

outstanding recommendations from any 

audit or evaluation conducted by the 

HHS Office of Inspector General that 

have not been fully implemented, 

including a statement describing the 

status of implementation and why 

implementation is not complete. 

(b) Timing. The annual reports, in the 

format specified by the Secretary, are 

due 60 days after the end of each 

operational year. Information that may 

be required to secure the release of 

funding for the subsequent year may be 

requested in advance. 

Subpart C—Federal Program 

Administration 

§ 600.200 Federal program compliance 

reviews and audits. 

(a) Federal compliance review of the 

State BHP. To determine whether the 

State is complying with the Federal 

requirements and the provisions of its 

BHP Blueprint, HHS may review, as 

needed, but no less frequently than 

annually, the compliance of the State 


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BHP with applicable laws, regulations 

and interpretive guidance. This review 

may be based on the State’s annual 

report submitted under § 600.170, or 

may be based on direct Federal review 

of State administration of the BHP 

Blueprint through analysis of the State’s 

policies and procedures, reviews of 

agency operation, examination of 

samples of individual case records, and 

additional reports and/or data as 

determined by the Secretary. 

(b) Action on compliance review 

findings. The compliance review will 

identify the following action items: 

(1) Requirements that need further 

study or data to assess continued State 

compliance with Federal law, 

regulations and the terms of the State’s 

certified Blueprint. Such findings must 

be addressed in the next State annual 

report due no more than 120 days after 

the date of the issuance of the Federal 

compliance review. 

(2) Requirements with which the State 

BHP does not appear to be in 

compliance that could be the basis for 

withdrawal of BHP certification. Such 

findings must be resolved by the State 

(either by substantiating compliance 

with the standards for certification or 

submitting revisions to the Blueprint). If 

not resolved, such action items can be 

the basis for a proposed finding for 

withdrawal of BHP certification. 

(3) Requirements with which the State 

BHP does not appear to be in 

compliance and are not a basis for 

withdrawal of BHP certification but 

require revision to the Blueprint must 

be resolved by the State. If not resolved, 

such action items can be the basis for 

denial of other Blueprint revisions. 

(4) Improper use of BHP trust fund 

resources. The State and the BHP 

trustees shall be given an opportunity to 

review and resolve concerns regarding 

improper use of BHP trust funds, 

including failure to use these funds as 

specified in § 600.705. As indicated in 

§ 600.715(a) through (c), the state may 

do this either by substantiating the 

proper use of trust fund resources as 

specified in § 600.705(c) or by taking 

corrective action, which include 

changes to procedures to ensure proper 

use of trust fund resources, and 

restitution of improperly used resources 

to the trust fund. 

(c) The HHS Office of Inspector 

General (OIG) may periodically audit 

State operations and standard health 

plan practices as described in § 430.33 

of this chapter. Final reports on those 

audits shall be transmitted to both the 

State and the Secretary for actions on 

findings. The State and the BHP trustees 

shall be given an opportunity to resolve 

concerns about improper use of BHP 

trust funds as indicated in § 600.715(a) 

through (c): either by substantiating the 

proper use of trust fund, or by taking 

corrective action that includes changes 

to procedures to ensure proper use of 

trust fund resources, and restitution of 

improperly used resources to the trust 

fund. 

Subpart D—Eligibility and Enrollment 

§ 600.300 Basis, scope, and applicability. 

(a) Statutory basis. This subpart 

interprets and implements section 

1331(e) of the Affordable Care Act, 

which sets forth eligibility standards for 

the BHP and prohibits eligible 

individuals from being treated as 

qualified individuals under section 

1312 of the Affordable Care Act and 

enrolling in qualified health plans 

offered through the Exchange. 

(b) Scope and applicability. This 

subpart sets forth the requirements for 

all BHPs established under section 1331 

of the Affordable Care Act regarding 

eligibility standards and application 

screening and enrollment procedures. 

§ 600.305 Eligible individuals. 

(a) Eligibility standards The State 

must determine individuals eligible to 

enroll in a standard health plan if they: 

(1) Are residents of the State. 

(2) Have household income which 

exceeds 133 percent but does not exceed 

200 percent of the FPL for the 

applicable family size, or, in the case of 

an individual who is a lawfully present 

non-citizen, ineligible for Medicaid or 

CHIP due to such immigration status, 

whose household income is between 

zero and 200 percent of the FPL for the 

applicable family size. 

(3) Are not eligible to enroll in 

minimum essential coverage (other than 

a standard health plan). If an individual 

meets all other eligibility standards, 

and— 

(i) Is eligible for, or enrolled in, 

coverage that does not meet the 

definition of minimum essential 

coverage, including Medicaid that is not 

minimum essential coverage, the 

individual is eligible to enroll in a 

standard health plan without regard to 

eligibility or enrollment in Medicaid; or 

(ii) Is eligible for Employer Sponsored 

Insurance (ESI) that is unaffordable (as 

determined under section 36B(c)(2)(C) 

of the Internal Revenue Code), the 

individual is eligible to enroll in a 

standard health plan. 

(4) Are 64 years of age or younger. 

(5) Are either a citizen or lawfully 

present non-citizen. 

(6) Are not incarcerated, other than 

during a period pending disposition of 

charges. 

(b) Eligibility restrictions. With the 

exception of during an approved 

implementation period specified in a 

transition plan in accordance with 

§ 600.145, the State may not impose 

conditions of eligibility other than those 

identified in this section, including, but 

not limited to, restrictions on eligibility 

based on geographic location or 

imposition of an enrollment cap or a 

waiting period for individuals 

previously eligible for or enrolled in 

other coverage. 

§ 600.310 Application. 

(a) Single streamlined application. 

The State must use the single 

streamlined application used by the 

State in accordance with § 435.907(b) of 

this chapter and 45 CFR 155.405(a) and 

(b). 

(b) Opportunity to apply and 

assistance with application. The terms 

of §§ 435.906, 435.907(g) and 435.908 of 

this chapter, requiring the State to 

provide individuals the opportunity to 

apply and receive assistance with an 

application in the Medicaid program, 

apply in the same manner to States in 

the administration of the BHP. 

(c) Authorized representatives. The 

State may choose to permit the use of 

an authorized representative designated 

by an applicant or beneficiary to assist 

with the individual’s application, 

eligibility renewal and other ongoing 

communication with the BHP. If the 

State chooses this option, the State must 

follow the standards set forth at either 

45 CFR 155.227 or 42 CFR 435.923. 

§ 600.315 Certified application counselors. 

The State may have a program to 

certify application counselors to assist 

individuals to apply for enrollment in 

the BHP and other insurance 

affordability programs. If the State 

chooses this option, the State must 

follow the procedures and standards for 

such a program set forth in the 

regulations at either 45 CFR 155.225 or 

42 CFR 435.908. 

§ 600.320 Determination of eligibility for 

and enrollment in a standard health plan. 

(a) Determining eligibility to enroll in 

a standard health plan may be 

performed by a State or through 

delegation to a local governmental 

entity, including a governmental entity 

that determines eligibility for Medicaid 

or CHIP, and may be delegated by the 

State to an Exchange that is a 

government agency. 

(b) Timely determinations. The terms 

of 42 CFR 435.912 (relating to timely 

determinations of eligibility under the 

Medicaid program) apply to eligibility 

determinations for enrollment in a 


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standard health plan exclusive of 

§ 435.912(c)(3)(i). The standards 

established by the State must be 

included in the BHP Blueprint. 

(c) Effective date of eligibility. The 

State must establish a uniform method 

of determining the effective date of 

eligibility for enrollment in a standard 

health plan following either the 

Exchange standards at 45 CFR 

155.420(b)(1) or the Medicaid process at 

42 CFR 435.915 exclusive of 

§ 435.915(a). 

(d) Enrollment periods. The State 

must either offer enrollment and special 

enrollment periods no more restrictive 

than those required for an Exchange at 

45 CFR 155.410 and 155.420 or follow 

the Medicaid process permitting 

continuous open enrollment throughout 

the year. 

§ 600.330 Coordination with other 

insurance affordability programs. 

(a) Coordination. The State must 

establish eligibility and enrollment 

mechanisms and procedures to 

maximize coordination with the 

Exchange, Medicaid and CHIP. The 

terms of 45 CFR 155.345(a) regarding 

the agreements between insurance 

affordability programs apply to a BHP. 

The State BHP agency must fulfill the 

requirements of 42 CFR 435.1200(d) and 

(e) and, if applicable, paragraph (c) for 

BHP eligible individuals. 

(b) Coordinated determinations of 

eligibility. The agency administering 

BHP must establish and maintain 

processes to make income eligibility 

determinations using modified adjusted 

gross income, and to ensure that 

applications received by the agency, to 

the extent warranted and permitted 

under delegations from other agencies 

administering insurance affordability 

programs, also result in eligibility 

assessments or determinations for those 

other programs. The BHP must also 

accept applications transferred from 

other agencies administering insurance 

affordability programs, and ensure that 

individuals assessed or determined 

eligible for BHP by such other agencies 

are afforded the opportunity to enroll in 

a standard health plan without undue 

delay. Individuals submitting 

applications to any of the 

aforementioned agencies must not be 

required to duplicate the submission of 

information. 

(c) Account transfers. The agency 

administering the BHP must participate 

in the secure exchange of information 

with agencies administering other 

insurance affordability programs, using 

the standards set forth under 45 CFR 

155.345(h) regarding electronic account 

transfers. 

(d) Notification to referring agency. 

The terms in § 435.1200(d)(5) regarding 

the notification to other programs of the 

final determination of eligibility apply 

equally to States administering a BHP. 

(e) Notice of decision concerning 

eligibility. Every application for BHP 

shall result in a determination of 

eligibility or ineligibility, unless the 

application has been withdrawn, the 

applicant has died, or the applicant 

cannot be located. Written notices of 

eligibility determinations shall be 

provided and shall be coordinated with 

other insurance affordability programs 

and Medicaid. Electronic notices shall 

be provided to the extent consistent 

with § 435.918(b). 

§ 600.335 Appeals. 

(a) Notice of eligibility appeal rights. 

Eligibility determinations must include 

a notice of the right to appeal the 

determination, and instructions 

regarding how to file an appeal. 

(b) Appeals process. Individuals must 

be given the opportunity to appeal BHP 

eligibility determinations through the 

appeals rules of the state’s Medicaid 

program or the Exchange. However, this 

process may not include an appeal to 

the federal Department of Health and 

Human Services. 

(c) Accessibility. Notices must be 

provided and the appeals process must 

be conducted in a manner accessible to 

individuals with limited English 

proficiency and persons with 

disabilities. 

§ 600.340 Periodic redetermination and 

renewal of BHP eligibility. 

(a) Periodic review of eligibility. An 

individual is subject to periodic review 

of eligibility every 12 months unless the 

eligibility is redetermined sooner based 

on new information received and 

verified from enrollee reports or data 

sources. The State must require 

enrollees to report changes in 

circumstances, at least to the extent that 

they would be required to report such 

changes if enrolled in coverage through 

the Exchange, consistent with 45 CFR 

155.330(b). 

(b) Renewal of coverage. If an enrollee 

remains eligible for coverage in the 

BHP, the enrollee will be afforded 

notice of a reasonable opportunity at 

least annually to change plans to the 

extent the BHP offers a choice of plans, 

and shall remain in the plan selected for 

the previous year unless such enrollee 

terminates coverage from the plan by 

selecting a new plan or withdrawing 

from a plan, or the plan is no longer 

available as a standard health plan in 

BHP. Enrollees in plans that are no 

longer available will be given a 

reasonable opportunity to select a new 

plan, and if they do not select a new 

plan will be enrolled in another plan 

pursuant to a methodology set forth in 

the State’s Blueprint. 

(c) Procedures. The State shall choose 

to apply equally all the redetermination 

procedures described in either 45 CFR 

155.335 or 42 CFR 435.916(a) in 

administering a BHP. 

(d) Verification. The State must verify 

information needed to redetermine and 

renew eligibility in accordance with 

§ 600.345 and comply with the 

requirements set forth in § 600.330 

relating to screening individuals for 

other insurance affordability programs 

and transmitting such individuals’ 

electronic accounts and other relevant 

information to the other program, as 

appropriate. 

(e) Notice to enrollee. The State must 

provide an enrollee with an annual 

notice of redetermination of eligibility. 

The annual notice should include all 

current information used for the most 

recent eligibility determination. The 

enrollee is required to report any 

changes with respect to information 

listed within the notice within 30 days 

of the date of the notice. The State must 

verify information in accordance with 

§ 600.345. 

(f) Continuous eligibility. The state is 

not required to redetermine eligibility of 

BHP enrollees more frequently than 

every 12 months, regardless of changes 

of circumstances, as long as the 

enrollees are under age 65, are not 

otherwise enrolled in minimum 

essential coverage and remain residents 

of the State. 

§ 600.345 Eligibility verification. 

(a) The State must verify the 

eligibility of an applicant or beneficiary 

for BHP consistent either with the 

standards and procedures set forth in— 

(1) Medicaid regulations at §§ 435.945 

through 435.956 of this chapter; or 

(2) Exchange regulations at 45 CFR 

155.315 and 155.320. 

(b) [Reserved] 

§ 600.350 Privacy and security of 

information. 

The State must comply with the 

standards and procedures set forth in 45 

CFR 155.260(b) and (c) as are applicable 

to the operation of the BHP. 

Subpart E—Standard Health Plan 

§ 600.400 Basis, scope, and applicability. 

(a) Statutory basis. This subpart 

implements sections 1331(b), (c), and (g) 

of the Affordable Care Act, which set 

forth provisions regarding the minimum 

coverage standards under BHP, as well 

as the delivery of such coverage, 


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including the contracting process for 

standard health plan offerors 

participating in the BHP. 

(b) Scope and applicability. This 

subpart consists of provisions relating to 

all BHPs for the delivery of, at a 

minimum, the ten essential health 

benefits as described in section 1302(b) 

of the Affordable Care Act, the 

contracting process by which States 

must contract for the provision of 

standard health plans, the minimum 

requirements States must include in 

their standard health plan contracts, the 

minimum coverage standards provided 

by the standard health plan offeror, and 

other applicable requirements to 

enhance the coordination of the 

provision of standard health plan 

coverage. 

§ 600.405 Standard health plan coverage. 

(a) Essential Health Benefits (EHB). 

Standard health plan coverage must 

include, at a minimum, the essential 

health benefits as determined and 

specified under 45 CFR 156.110, and 45 

CFR 156.122 regarding prescription 

drugs, except that States may select 

more than one base benchmark option 

from those codified at 45 CFR 156.100 

for establishing essential health benefits 

for standard health plans. Additionally, 

States must comply with 45 CFR 

156.122(a)(2) by requiring participating 

plans to submit their drug list to the 

State. 

(b) Additional required benefits. 

Where the standard health plan for BHP 

is subject to State insurance mandates, 

the State shall adopt the determination 

of the Exchange at 45 CFR 155.170(a)(3) 

in determining which benefits enacted 

after December 31, 2011 are in addition 

to EHB. 

(c) Periodic review. Essential health 

benefits must include any changes 

resulting from periodic reviews required 

by section 1302(b)(4)(G) of the 

Affordable Care Act. The provision of 

such essential health benefits must meet 

all the requirements of 45 CFR 156.115. 

(d) Non-discrimination in benefit 

design. The terms of 45 CFR 156.125 

applies to standard health plans offered 

under the BHP. 

(e) Compliance. The State and 

standard health plans must comply with 

prohibitions on federal funding for 

abortion services at 45 CFR 156.280. 

§ 600.410 Competitive contracting 

process. 

(a) General requirement. In order to 

receive initial HHS certification as 

described in § 600.120, the State must 

assure in its BHP Blueprint that it 

complies with the requirements set forth 

in this section. 

(b) Contracting process. The State 

must: 

(1) Conduct the contracting process in 

a manner providing full and open 

competition consistent with the 

standards of 45 CFR 92.36(b) through (i); 

(2) Include a negotiation of the 

elements described in paragraph (d) of 

this section on a fair and adequate basis; 

and 

(3) Consider the additional elements 

described in paragraph (e) of this 

section. 

(c) Initial implementation exceptions. 

(1) If a State is not able to implement a 

competitive contracting process 

described in paragraph (b) of this 

section for program year 2015, the State 

must include a justification as to why it 

cannot meet the conditions in paragraph 

(b), as well as a description of the 

process it will use to enter into contracts 

for the provision of standard health 

plans under BHP. 

(2) The State must include a proposed 

timeline that implements a competitive 

contracting process, as described in 

paragraph (b) of this section, for 

program year 2016. 

(3) Initial implementation exceptions 

are subject to HHS approval consistent 

with the BHP Blueprint review process 

established in § 600.120, and may only 

be in effect for benefit year 2015. 

(d) Negotiation criteria. The State 

must assure that its competitive 

contracting process includes the 

negotiation of: 

(1) Premiums and cost sharing, 

consistent with the requirements at 

§§ 600.505 and 600.510(e); 

(2) Benefits, consistent with the 

requirements at § 600.405; 

(3) Inclusion of innovative features, 

such as: 

(i) Care coordination and care 

management for enrollees, with a 

particular focus on enrollees with 

chronic health conditions; 

(ii) Incentives for the use of 

preventive services; and 

(iii) Establishment of provider-patient 

relationships that maximize patient 

involvement in their health care 

decision-making, including the use of 

incentives for appropriate health care 

utilization and patient choice of 

provider. 

(e) Other considerations: The State 

shall also include in its competitive 

process criteria to ensure: 

(1) Consideration of health care needs 

of enrollees; 

(2) Local availability of, and access, to 

health care providers to ensure the 

appropriate number, mix and 

geographic distribution to meet the 

needs of the anticipated number of 

enrollees in the service area (including 

but not limited to services provided by 

essential community providers, as 

defined in 45 CFR 156.235) so that 

access to services is at least sufficient to 

meet the access standards applicable 

under 42 CFR Part 438, Subpart D, or 45 

CFR 156.230 and 156.235; 

(3) Use of a managed care process, or 

a similar process to improve the quality, 

accessibility, appropriate utilization, 

and efficiency of services provided to 

enrollees; 

(4) Performance measures and 

standards focused on quality of care and 

improved health outcomes as specified 

in § 600.415; 

(5) Coordination between other health 

insurance affordability programs to 

ensure enrollee continuity of care as 

described in § 600.425; and 

(6) Measures to prevent, identify, and 

address fraud, waste and abuse and 

ensure consumer protections. 

(f) Discrimination. Nothing in the 

competitive process shall permit or 

encourage discrimination in enrollment 

based on pre-existing conditions or 

other health status-related factors. 

§ 600.415 Contracting qualifications and 

requirements. 

(a) Eligible offerors for standard 

health plan contracts. A State may enter 

into contracts for the administration and 

provision of standard health plans 

under the BHP with, but not limited to, 

the following entities: 

(1) Licensed health maintenance 

organization. 

(2) Licensed health insurance insurer. 

(3) Network of health care providers 

demonstrating capacity to meet the 

criteria set forth in § 600.410(d). 

(4) Non-licensed health maintenance 

organizations participating in Medicaid 

and/or CHIP. 

(b) General contract requirements. (1) 

A State contracting with eligible 

standard health plan offerors described 

in paragraph (a) of this section must 

include contract provisions addressing 

network adequacy, service provision 

and authorization, quality and 

performance, enrollment procedures, 

disenrollment procedures, noticing and 

appeals, provisions protecting the 

privacy and security of personally 

identifiable information, and other 

applicable contract requirements as 

determined by the Secretary to the 

extent that the service delivery model 

furthers the objectives of the program. 

(2) All contracts under this part must 

include provisions that define a sound 

and complete procurement contract, as 

required by 45 CFR 92.36(i). 

(3) To the extent that the standard 

health plan is health insurance coverage 

offered by a health insurance issuer, the 


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contract must provide that the medical 

loss ratio is at least 85 percent. 

(c) Notification of State election. To 

receive HHS certification, the State must 

include in its BHP Blueprint the 

standard set of contract requirements 

described in paragraph (b) of this 

section that will be incorporated into its 

standard health plan contracts. 

§ 600.420 Enhanced availability of 

standard health plans. 

(a) Choice of standard health plans 

offerors. (1) The State must assure that 

standard health plans from at least two 

offerors are available to enrollees under 

BHP. This assurance shall be reflected 

in the BHP Blueprint, which if 

applicable, shall also include a 

description of how it will further ensure 

enrollee choice of standard health plans. 

(2) If a State is not able to assure 

choice of standard health plan offerors, 

the State may request an exception to 

the requirement set forth in paragraph 

(a)(1) of this section, which must 

include a justification as to why it 

cannot assure choice of standard health 

plan offeror as well as demonstrate that 

the State has reviewed its competitive 

contracting process to determine the 

following: 

(i) Whether all contract requirements 

and qualifications are required under 

the federal framework for BHP; 

(ii) Whether additional negotiating 

flexibility would be consistent with the 

minimum statutory requirements and 

available BHP funding: and 

(iii) Whether potential bidders have 

received sufficient information to 

encourage participation in the BHP 

competitive contracting process. 

(b) Use of regional compacts. (1) A 

State may enter into a joint procurement 

with other States to negotiate and 

contract with standard health plan 

offerors to administer and provide 

standard health plans statewide, or in 

geographically specific areas within the 

States, to BHP enrollees residing in the 

participating regional compact States. 

(2) A State electing the option 

described in paragraph (b)(1) of this 

section that also contracts for the 

provision of a geographically specific 

standard health plan must assure that 

enrollees, regardless of residency within 

the State, continue to have choice of at 

least two standard health plans. 

(3) A State electing the option 

described in paragraph (b)(1) of this 

section must include in its BHP 

Blueprint all of the following: 

(i) The other State(s) entering into the 

regional compact. 

(ii) The specific areas within the 

participating States that the standard 

health plans will operate, if applicable. 

(A) If the State contracts for the 

provision of a geographically specific 

standard health plan, the State must 

describe in its BHP Blueprint how it 

will assure that enrollees, regardless of 

location within the State, continue to 

have choice of at least two standard 

health plan offerors. 

(B) [Reserved] 

(iii) An assurance that the competitive 

contracting process used in the joint 

procurement of the standard health 

plans complies with the requirements 

set forth in § 600.410. 

(iv) Any variations that may occur as 

a result of regional differences between 

the participating states with respect to 

benefit packages, premiums and cost 

sharing, contracting requirements and 

other applicable elements as determined 

by HHS. 

§ 600.425 Coordination with other 

insurance affordability programs. 

A State must ensure coordination for 

the provision of health care services to 

promote enrollee continuity of care 

between Medicaid, CHIP, Exchange and 

any other state-administered health 

insurance programs. The State’s BHP 

Blueprint must describe how it will 

ensure such coordination. 

Subpart F—Enrollee Financial 

Responsibilities 

§ 600.500 Basis, scope, and applicability. 

(a) Statutory basis. This subpart 

implements section 1331(a) of the 

Affordable Care Act, which sets forth 

provisions regarding the establishment 

of the BHP and requirements regarding 

monthly premiums and cost sharing for 

enrollees. 

(b) Scope and applicability. This 

subpart consists of provisions relating to 

the imposition of monthly premiums 

and cost-sharing under all state BHPs. 

§ 600.505 Premiums. 

(a) Premium requirements. (1) For 

premiums imposed on enrollees, the 

State must assure that the monthly 

premium imposed on any enrollee does 

not exceed the monthly premium that 

the enrollee would have been required 

to pay had he or she enrolled in a plan 

with a premium equal to the premium 

of the applicable benchmark plan, as 

defined in 26 CFR 1.36B–3(f). The State 

must assure that when determining the 

amount of the enrollee’s monthly 

premium, the State took into account 

reductions in the premium resulting 

from the premium tax credit that would 

have been paid on the enrollee’s behalf. 

(2) This assurance must be reflected 

in the BHP Blueprint, which shall also 

include: 

(i) The group or groups of enrollees 

subject to premiums. 

(ii) The collection method and 

procedure for the payment of an 

enrollee’s premium. 

(iii) The consequences for an enrollee 

or applicant who does not pay a 

premium. 

(b) [Reserved] 

§ 600.510 Cost-sharing. 

(a) Cost-sharing requirements. (1) For 

cost sharing imposed on enrollees, the 

State must assure the following: 

(i) The cost sharing imposed on 

enrollees meet the standards detailed in 

§ 600.520(c). 

(ii) The establishment of an effective 

system to monitor and track the costsharing standards consistent with 

§ 600.520(b) through (d). 

(2) This assurance must be reflected 

in the BHP Blueprint, which shall also 

include the group or groups of enrollees 

subject to the cost sharing. 

(b) Cost sharing for preventive health 

services. A State may not impose cost 

sharing with respect to the preventive 

health services or items, as defined in, 

and in accordance with 45 CFR 147.130. 

§ 600.515 Public schedule of enrollee 

premium and cost sharing. 

(a) The State must ensure that 

applicants and enrollees have access to 

information about all of the following, 

either upon request or through an 

Internet Web site: 

(1) The amount of and types of 

enrollee premiums and cost sharing for 

each standard health plan that would 

apply for individuals at different 

income levels. 

(2) The consequences for an applicant 

or an enrollee who does not pay a 

premium. 

(b) The information described in 

paragraph (a) of this section must be 

made available to applicants for 

standard health plan coverage and 

enrollees in such coverage, at the time 

of enrollment and reenrollment, after a 

redetermination of eligibility, when 

premiums, cost sharing, and annual 

limitations on cost sharing are revised, 

and upon request by the individual. 

§ 600.520 General cost-sharing 

protections. 

(a) Cost-sharing protections for lower 

income enrollees. The State may vary 

premiums and cost sharing based on 

household income only in a manner that 

does not favor enrollees with higher 

income over enrollees with lower 

income. 

(b) Cost-sharing protections to ensure 

enrollment of Indians. A State must 

ensure that standard health plans meet 


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the standards in accordance with 45 

CFR 156.420(b)(1) and (d). 

(c) Cost-sharing standards. A State 

must ensure that standard health plans 

meet: 

(1) The standards in accordance with 

45 CFR 156.420(c) and (e); and 

(2) The cost-sharing reduction 

standards in accordance with 45 CFR 

156.420(a)(1) for an enrollee with 

household income at or below 150 

percent of the FPL, and 45 CFR 

156.420(a)(2) for an enrollee with 

household income above 150 percent of 

the FPL. 

(3) The State must establish an 

effective system to monitor compliance 

with the cost-sharing reduction 

standards in paragraph (c) of this 

section, and the cost-sharing protections 

to ensure enrollment of Indians in 

paragraph (b) of this section to ensure 

that enrollees are not held responsible 

for such monitoring activity. 

(d) Acceptance of certain third party 

payments. States must ensure that 

standard health plans must accept 

premium and cost-sharing payments 

from the following third party entities 

on behalf of plan enrollees: 

(1) Ryan White HIV/AIDS Programs 

under title XXVI of the Public Health 

Service Act; 

(2) Indian tribes, tribal organizations 

or urban Indian organizations; and 

(3) State and federal government 

programs. 

§ 600.525 Disenrollment procedures and 

consequences for nonpayment of 

premiums. 

(a) Disenrollment procedures due to 

nonpayment of premium. (1) A State 

must assure that it is in compliance 

with the disenrollment procedures 

described in 45 CFR 155.430. This 

assurance must be reflected in the 

state’s BHP Blueprint. 

(2) A State electing to enroll eligible 

individuals in accordance with 45 CFR 

155.410 and 155.420 must comply with 

the premium grace period standards set 

forth in 45 CFR 156.270 for required 

premium payment prior to 

disenrollment. 

(3) A State electing to enroll eligible 

individuals throughout the year must 

provide an enrollee a 30-day grace 

period to pay any required premium 

prior to disenrollment. 

(b) Consequences of nonpayment of 

premium. (1) A State electing to enroll 

eligible individuals in accordance with 

45 CFR 155.410 and 155.420 may not 

restrict reenrollment to BHP beyond the 

next open enrollment period. 

(2) A State electing to enroll eligible 

individuals throughout the year must 

comply with the reenrollment standards 

set forth in § 457.570(c) of this chapter. 

If applicable, the State must define the 

length of its premium lockout period in 

its BHP Blueprint. 

Subpart G—Payment to States 

§ 600.600 Basis, scope, and applicability. 

(a) Statutory basis. This subpart 

implements section 1331(d)(1) and (3) of 

the Affordable Care Act regarding the 

transfer of Federal funds to a State’s 

BHP trust fund and the Federal payment 

amount to a State for the provision of 

BHP. 

(b) Scope and applicability. This 

subpart consists of provisions relating to 

the methodology used to calculate the 

amount of payment to a state in a given 

Federal fiscal year for the provision of 

BHP and the process and procedures by 

which the Secretary establishes a State’s 

BHP payment amount. 

§ 600.605 BHP payment methodology. 

(a) General calculation. The Federal 

payment for an eligible individual in a 

given Federal fiscal year is the sum of 

the premium tax credit component, as 

described in paragraph (a)(1) of this 

section, and the cost-sharing reduction 

component, as described in paragraph 

(a)(2) of this section. 

(1) Premium tax credit component. 

The premium tax credit component 

equals 95 percent of the premium tax 

credit for which the eligible individual 

would have qualified had he or she been 

enrolled in a qualified health plan 

through an Exchange in a given calendar 

year, adjusted by the relevant factors 

described in paragraph (b) of this 

section. 

(2) Cost-sharing reduction component. 

The cost-sharing reduction component 

equals 95 percent of the cost of the costsharing reductions for which the eligible 

individual would have qualified had he 

or she been enrolled in a qualified 

health plan through an Exchange in a 

given calendar year adjusted by the 

relevant factors described in paragraph 

(b) of this section. 

(b) Relevant factors in the payment 

methodology. In determining the 

premium tax credit and cost-sharing 

reduction components described in 

paragraph (a) of this section, the 

Secretary will consider the following 

factors to determine applicable 

adjustments: 

(1) Age of the enrollee; 

(2) Income of the enrollee; 

(3) Self-only or family coverage; 

(4) Geographic differences in average 

spending for health care across rating 

areas; 

(5) Health status of the enrollee for 

purposes of determining risk adjustment 

payments and reinsurance payments 

had the enrollee been enrolled in a 

qualified health plan through an 

Exchange; 

(6) Reconciliation of the premium tax 

credit or cost-sharing reductions had 

such reconciliation occurred if an 

enrollee had been enrolled in a qualified 

health plan through an Exchange; 

(7) Marketplace experience in other 

states with respect to Exchange 

participation and the effect of the 

premium tax credit and cost-sharing 

reductions provided to residents, 

particularly those residents with income 

below 200 percent of the FPL; and 

(8) Other factors affecting the 

development of the methodology as 

determined by the Secretary. 

(c) Annual adjustments to payment 

methodology. The Secretary will adjust 

the payment methodology on a 

prospective basis to adjust for any 

changes in the calculation of the 

premium tax credit and cost-sharing 

reduction components to the extent that 

necessary data is available for the 

Secretary to prospectively determine all 

relevant factors, as specified in 

paragraph (b) of this section. 

§ 600.610 Secretarial determination of BHP 

payment amount. 

(a) Proposed payment notice. (1) 

Beginning in FY 2015 and each 

subsequent year thereafter, the Secretary 

will determine and publish in a Federal 

Register document the next fiscal year’s 

BHP payment methodology. The 

Secretary will publish this document 

annually in October upon receiving 

certification from the Chief Actuary of 

CMS. 

(2) A State may be required to submit 

data in accordance with the published 

proposed payment document in order 

for the Secretary to determine the State’s 

payment rate as described in paragraph 

(b) of this section. 

(b) Final payment notice. (1) The 

Secretary will determine and publish 

the final BHP payment methodology 

and BHP payment amounts annually in 

February in a Federal Register 

document. 

(2) Calculation of payment rates. State 

payment rates are determined by the 

Secretary using the final BHP payment 

methodology, data requested in the 

proposed payment notice described in 

paragraph (a) of this section, and, if 

needed, other applicable data as 

determined by the Secretary. 

(c) State specific aggregate BHP 

payment amounts. (1) Prospective 

aggregate payment amount. The 

Secretary will determine, on a quarterly 

basis, the prospective aggregate BHP 

payment amount by multiplying the 


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payment rates described in paragraph 

(b) of this section by the projected 

number of enrollees. This calculation 

would be made for each category of 

enrollees based on enrollee 

characteristics and the other relevant 

factors considered when determining 

the payment methodology. The 

prospective aggregate BHP payment 

amount would be the sum of the 

payments determined for each category 

of enrollees for a State. 

(2) Retrospective adjustment to state 

specific aggregate payment amount for 

enrollment and errors. (i) Sixty days 

after the end of each fiscal year quarter, 

the Secretary will calculate a 

retrospective adjustment to the previous 

quarter’s specific aggregate payment 

amount by multiplying the payment 

rates described in paragraph (b) of this 

section by actual enrollment for the 

respective quarter. This calculation 

would be made for each category of 

enrollees based on enrollee 

characteristics and the other relevant 

factors considered when determining 

the payment methodology. The adjusted 

BHP payment amount would be the sum 

of the payments determined for each 

category of enrollees for a State. 

(ii) Upon determination that a 

mathematical error occurred during the 

application of the BHP funding 

methodology, the Secretary will 

recalculate the state’s BHP payment 

amount and make any necessary 

adjustments in accordance with 

paragraph (c)(2)(iv) of this section. 

(iii) To the extent that the final 

payment notice described in paragraph 

(b) of this section permits retrospective 

adjustments to the state’s BHP payment 

amount (due to the lack of necessary 

data for the Secretary to prospectively 

determine the relevant factors 

comprising the premium tax credit and 

cost-sharing reductions components of 

the BHP funding methodology), the 

Secretary will recalculate the state’s 

BHP payment amount and make any 

necessary adjustments in accordance 

with paragraph (c)(2)(iv) of this section. 

(iv) Any difference in the adjusted 

payment and the prospective aggregate 

payment amount will result in either: 

(A) A deposit of the difference 

amount into the State’s BHP trust fund; 

or 

(B) A reduction in the upcoming 

quarter’s prospective aggregate payment 

as described in paragraph (c)(1) of this 

section by the difference amount. 

§ 600.615 Deposit of Federal BHP 

payment. 

HHS will make quarterly deposits into 

the state’s BHP trust fund based on the 

aggregate quarterly payment amounts 

described in § 600.610(c). 

Subpart H—BHP Trust Fund 

§ 600.700 Basis, scope, and applicability. 

(a) Statutory basis. This subpart 

implements section 1331(d)(2) of the 

Affordable Care Act, which set forth 

provisions regarding BHP trust fund 

expenditures, fiscal policies and 

accountability standards and restitution 

to the BHP trust fund for unallowable 

expenditures. 

(b) Scope and applicability. This 

subpart sets forth a framework for BHP 

trust funds and accounting, establishing 

sound fiscal policies and accountability 

standards and procedures for the 

restitution of unallowable BHP trust 

fund expenditures. 

§ 600.705 BHP trust fund. 

(a) Establishment of BHP trust fund. 

(1) The State must establish a BHP trust 

fund with an independent entity, or in 

a segregated account within the State’s 

fund structure. 

(2) The State must identify trustees 

responsible for oversight of the BHP 

trust fund. 

(3) Trustees must specify individuals 

with the power to authorize withdrawal 

of funds for allowable trust fund 

expenditures. 

(b) Non-Federal deposits. The State 

may deposit non-Federal funds, 

including such funds from enrollees, 

providers or other third parties for 

standard health plan coverage, into its 

BHP trust fund. Upon deposit, such 

funds will be considered BHP trust 

funds, must remain in the BHP trust 

fund and meet the standards described 

in paragraphs (c) and (d) of this section. 

(c) Allowable trust fund expenditures. 

BHP trust funds may only be used to: 

(1) Reduce premiums and cost sharing 

for eligible individuals enrolled in 

standard health plans under BHP; or 

(2) Provide additional benefits for 

eligible individuals enrolled in standard 

health plans as determined by the State. 

(d) Limitations. BHP trust funds may 

not be expended for any purpose other 

than those specified in paragraph (c) of 

this section. In addition, BHP trust 

funds may not be used for other 

purposes including but not limited to: 

(1) Determining the amount of nonFederal funds for the purposes of 

meeting matching or expenditure 

requirements for Federal funding; 

(2) Program administration of BHP or 

any other program; 

(3) Payment to providers not 

associated with BHP services or 

requirements; or 

(4) Coverage for individuals not 

eligible for BHP. 

(e) Year-to-year carryover of trust 

funds. A State may maintain a surplus, 

or reserve, of funds in its trust through 

the carryover of unexpended funds from 

year-to-year. Expenditures from this 

surplus must be made in accordance 

with paragraphs (b) and (c) of this 

section. 

§ 600.710 Fiscal policies and 

accountability. 

The BHP administering agency must 

assure the fiscal policies and 

accountability set forth in paragraphs (a) 

through (g) of this section. This 

assurance must be reflected in the BHP 

Blueprint. 

(a) Accounting records. Maintain an 

accounting system and supporting fiscal 

records to assure that the BHP trust 

funds are maintained and expended in 

accord with applicable Federal 

requirements, such as OMB Circulars 

A–87 and A–133. 

(b) Annual certification. Obtain an 

annual certification from the BHP 

trustees, the State’s chief financial 

officer, or designee, certifying all of the 

following: 

(1) The State’s BHP trust fund 

financial statements for the fiscal year. 

(2) The BHP trust funds are not being 

used as the non-Federal share for 

purposes of meeting any matching or 

expenditure requirement of any 

Federally-funded program. 

(3) The use of BHP trust funds is in 

accordance with Federal requirements 

consistent with those specified for the 

administration and provision of the 

program. 

(c) Independent audit. Conduct an 

independent audit of BHP trust fund 

expenditures, consistent with the 

standards set forth in chapter 3 of the 

Government Accountability Office’s 

Government Auditing Standards, over a 

3-year period to determine that the 

expenditures made during the 3-year 

period were allowable as described in 

§ 600.705(b) and in accord with other 

applicable Federal requirements. The 

independent audit may be conducted as 

a sub-audit of the single state audit 

conducted in accordance with OMB 

Circular A–133, and must follow the 

cost accounting principles in OMB 

Circular A–87. 

(d) Annual reports. Publish annual 

reports on the use of funds, including a 

separate line item that tracks the use of 

funds described in § 600.705(e) to 

further reduce premiums and cost 

sharing, or for the provision of 

additional benefits within 10 days of 

approval by the trustees. If applicable 

for the reporting year, the annual report 

must also contain the findings for the 


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audit conducted in accordance with 

paragraph (c) of this section. 

(e) Restitution. Establish and maintain 

BHP trust fund restitution procedures. 

(f) Record retention. Retain records for 

3 years from date of submission of a 

final expenditure report. 

(g) Record retention related to audit 

findings. If any litigation, claim, 

financial management review, or audit 

is started before the expiration of the 3- 

year period, the records shall be 

retained until all litigation, claims or 

audit findings involving the records 

have been resolved and final action 

taken. 

§ 600.715 Corrective action, restitution, 

and disallowance of questioned BHP 

transactions. 

(a) Corrective action. When a question 

has been raised concerning the authority 

for BHP trust fund expenditures in an 

OIG report, other HHS compliance 

review, State audit or otherwise, the 

BHP trustees and the State shall review 

the issues and develop a written 

response no later than 60 days upon 

receipt of such a report, unless 

otherwise specified in the report, review 

or audit. To the extent determined 

necessary in that review, the BHP 

trustees and State shall implement 

changes to fiscal procedures to ensure 

proper use of trust fund resources. 

(b) Restitution. To the extent that the 

State and BHP trustees determine that 

BHP trust funds may not have been 

properly spent, they must ensure 

restitution to the BHP trust fund of the 

funds in question. Restitution may be 

made directly by the BHP trustees, by 

the State, or by a liable third party. The 

State or the BHP trustees may enter into 

indemnification agreements assigning 

liability for restitution of funds to the 

BHP trust fund. 

(c) Timing of restitution. Restitution 

to the BHP trust fund for any 

unallowable expenditure may occur in a 

lump sum amount, or in equal 

installment amounts. Restitution to the 

BHP trust fund cannot exceed a 2-year 

period from the date of the written 

response in accordance with paragraph 

(a) of this section. 

(d) HHS disallowance of improper 

BHP trust fund expenditures. The State 

shall return to HHS the amount of 

federal BHP funding that HHS has 

determined was expended for 

unauthorized purposes, when no 

provision has been made to restore the 

funding to the BHP trust fund in 

accordance with paragraph (b) of this 

section (unless the restitution does not 

comply with the timing conditions 

described in paragraphs (c) of this 

section). When HHS determines that 

federal BHP funding is not allowable, 

HHS will provide written notice to the 

state and BHP Trustees containing: 

(1) The date or dates of the improper 

expenditures from the BHP trust fund; 

(2) A brief written explanation of the 

basis for the determination that the 

expenditures were improper; and 

(3) Procedures for administrative 

reconsideration of the disallowance 

based on a final determination. 

(e) Administrative reconsideration of 

BHP trust fund disallowances. (1) BHP 

Trustees or the State may request 

reconsideration of a disallowance 

within 60 days after receipt of the 

disallowance notice described in 

paragraph (d)(1) of this section by 

submitting a written request for review, 

along with any relevant evidence, 

documentation, or explanation, to HHS. 

(2) After receipt of a reconsideration 

request, if the Secretary (or a designated 

hearing officer) determines that further 

proceedings would be warranted, the 

Secretary may issue a request for further 

information by a specific date, or may 

schedule a hearing to obtain further 

evidence or argument. 

(3) The Secretary, or designee, shall 

issue a final decision within 90 days 

after the later of the date of receipt of 

the reconsideration request or date of 

the last scheduled proceeding or 

submission. 

(f) Return of disallowed BHP funding. 

Disallowed federal BHP funding must 

be returned to HHS within 60 days after 

the later of the date of the disallowance 

notice or the final administrative 

reconsideration upholding the 

disallowance. Such repayment cannot 

be made from BHP trust funds, but must 

be made with other, non-Federal funds. 

Title 45—Public Welfare 

PART 144—REQUIREMENTS 

RELATING TO HEALTH INSURANCE 

COVERAGE 

■ 2. The authority citation for part 144 

continues to read as follows: 

Authority: Secs. 2701 through 2763, 2791, 

and 2792 of the Public Health Service Act, 

42 U.S.C. 300gg through 300gg-63, 300gg-91, 

and 300gg-92. 

■ 3. Section 144.103 is amended by 

revising the definition of ‘‘individual 

market’’ to read as follows: 

§ 144.103 Definitions. 

* * * * * 

Individual market means the market 

for health insurance coverage offered to 

individuals other than in connection 

with a group health plan, or other than 

coverage offered pursuant to a contract 

between the health insurance issuer 

with the Medicaid, Children’s Health 

Insurance Program, or Basic Health 

programs. 

* * * * * 

(Catalog of Federal Domestic Assistance 

Program No. 93.778, Medical Assistance 

Program) 

Dated: February 19, 2014. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: February 21, 2014. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2014–05299 Filed 3–7–14; 4:15 pm] 

BILLING CODE 4120–01–P 


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