6138 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

1PPACA (Pub. L. 111–148) was enacted on March 

23, 2010. The Health Care and Education 

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

amended and revised several provisions of PPACA, 

was enacted on March 30, 2010. In this rule, we 

refer to the two statutes collectively as the ‘‘Patient 

Protection and Affordable Care Act’’ or ‘‘PPACA’’. 

2As this rule is jointly published by HHS and the 

Department of the Treasury, HHS clarifies that 

throughout this final rule, the term ‘we’ refers only 

to HHS. 

DEPARTMENT OF THE TREASURY 

31 CFR Part 33 

RIN 1505–AC72 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Parts 155 and 156 

[CMS–9914–F] 

RIN 0938–AU18 

Patient Protection and Affordable Care 

Act; HHS Notice of Benefit and 

Payment Parameters for 2022; Updates 

to State Innovation Waiver (Section 

1332 Waiver) Implementing 

Regulations 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), Department 

of Health & Human Services (HHS), 

Department of the Treasury. 

ACTION: Final rule. 

SUMMARY: This final rule sets forth 

provisions related to user fees for 

federally-facilitated Exchanges and 

State-based Exchanges on the Federal 

Platform. It includes changes related to 

acceptance of payments by issuers of 

individual market Qualified Health 

Plans and clarifies the regulation 

imposing network adequacy standards 

with regard to Qualified Health Plans 

that do not use provider networks. It 

also adds a new direct enrollment 

option for federally-facilitated 

Exchanges and State Exchanges and 

implements changes related to section 

1332 State Innovation Waivers. 

DATES: These regulations are effective 

on March 15, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Jeff Wu, (301) 492–4305, Rogelyn 

McLean, (301) 492–4229, Usree 

Bandyopadhyay, (410) 786–6650, Grace 

Bristol, (410) 786–8437, or Kiahana 

Brooks, (301) 492–5229, for general 

information. 

Aaron Franz, (410) 786–8027, for 

matters related to user fees. 

Robert Yates, (301) 492–5151, for 

matters related to the direct enrollment 

option for federally-facilitated Exchange 

states, State-based Exchanges on the 

Federal Platform, and State Exchanges. 

Erika Melman, (301) 492–4348, for 

matters related to network adequacy 

standards. 

Emily Ames, (301) 492–4246, for 

matters related to acceptance of 

payments by QHP issuers. 

Lina Rashid, (443) 902–2823, 

Michelle Koltov, (301) 492–4225, or 

Kimberly Koch, (202) 622–0854, for 

matters related to State Innovation 

Waivers. 

SUPPLEMENTARY INFORMATION: In the 

December 4, 2020 Federal Register, 

HHS and the Department of the 

Treasury published the ‘‘Patient 

Protection and Affordable Care Act; 

HHS Notice of Benefit and Payment 

Parameters for 2022 and Pharmacy 

Benefit Manager Standards; Updates to 

State Innovation Waiver (Section 1332 

Waiver) Implementing Regulations’’ 

proposed rule (85 FR 78572) (hereinafter 

referred to as the ‘‘proposed 2022 

Payment Notice’’ or ‘‘proposed rule’’) 

that proposed revisions to regulations in 

31 CFR part 33 and 45 CFR parts 147, 

150, 153, 155, 156, 158, and 184, and 

policies that would reduce fiscal and 

regulatory burdens across related 

program areas and provide stakeholders 

with greater flexibility. This final rule 

addresses only a subset of the policies 

and proposed regulatory revisions 

addressed in the proposed 2022 

Payment Notice, including certain 

policies and related proposed revisions 

to regulations in 31 CFR part 33 and 45 

CFR parts 155 and 156. HHS continues 

to review comments to the proposed 

2022 Payment Notice and intends to 

address the remaining provisions in 

future rulemaking. 

Table of Contents 

I. Executive Summary 

II. Background 

A. Legislative and Regulatory Overview 

B. Stakeholder Consultation and Input 

C. Structure of Proposed Rule 

III. Summary of the Proposed Provisions to 

the HHS Notice of Benefit and Payment 

Parameters for 2022, Analysis of and 

Responses to Public Comments, and 

Provisions of the Final Rule 

A. Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

B. Part 156—Health Insurance Issuer 

Standards Under the Affordable Care 

Act, Including Standards Related to 

Exchanges 

IV. Summary of the Proposed Provisions for 

State Innovation Waivers, Analysis of 

and Responses to Public Comments, and 

Provisions of the Final Rule 

A. 31 CFR Part 33 and 45 CFR Part 155— 

State Innovation Waivers 

V. Collection of Information Requirements 

A. ICRs Regarding State Innovation 

Waivers 

B. ICRs Regarding Exchange Direct 

Enrollment Option 

C. Submission of PRA-Related Comments 

VI. Regulatory Impact Analysis 

A. Statement of Need 

B. Overall Impact 

C. Impact Estimates of the Payment Notice 

Provisions and Accounting Statement 

D. Regulatory Alternatives Considered 

E. Regulatory Flexibility Act 

F. Unfunded Mandates 

G. Federalism 

H. Congressional Review Act 

I. Reducing Regulation and Controlling 

Regulatory Costs 

I. Executive Summary 

American Health Benefit Exchanges, 

or ‘‘Exchanges,’’ are entities established 

under the Patient Protection and 

Affordable Care Act (PPACA) 1 through 

which qualified individuals and 

qualified employers can purchase health 

insurance coverage in qualified health 

plans (QHPs). Many individuals who 

enroll in QHPs through individual 

market Exchanges are eligible to receive 

a premium tax credit (PTC) to reduce 

their costs for health insurance 

premiums and to receive reductions in 

required cost-sharing payments to 

reduce out-of-pocket expenses for health 

care services. 

On January 20, 2017, the President 

issued an Executive Order which stated 

that, to the maximum extent permitted 

by law, the Secretary of HHS 

(hereinafter referred to as ‘‘Secretary’’) 

and heads of all other executive 

departments and agencies with 

authorities and responsibilities under 

PPACA should exercise all authority 

and discretion available to them to 

waive, defer, grant exemptions from, or 

delay the implementation of any 

provision or requirement of PPACA that 

would impose a fiscal burden on any 

state or a cost, fee, tax, penalty, or 

regulatory burden on individuals, 

families, health care providers, health 

insurers, patients, recipients of health 

care services, purchasers of health 

insurance, or makers of medical devices, 

products, or medications. In the 

December 4, 2020 Federal Register, we 2

published the proposed 2022 Payment 

Notice, which proposed to reduce fiscal 

and regulatory burdens across different 

program areas and to provide 

stakeholders with greater flexibility. 

In previous rulemaking, we 

established provisions and parameters 

to implement many PPACA 

requirements and programs. In this final 

rule, we are amending some of these 

provisions and parameters, with a focus 

on providing states with additional 

flexibilities, reducing unnecessary 

regulatory burdens on stakeholders, 

empowering consumers, and improving 

affordability. 


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Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 6139 

3https://www.govinfo.gov/content/pkg/FR-2018- 

10-24/pdf/2018-23182.pdf. 

4The term ‘‘group health plan’’ is used in title 

XXVII of the PHS Act and is distinct from the term 

‘‘health plan’’ as used in other provisions of title I 

of PPACA. The term ‘‘health plan’’ does not include 

self-insured group health plans. 

As we do every year in the HHS 

notice of benefit and payment 

parameters (Payment Notice), we are 

finalizing the user fee rates for issuers 

offering plans through the Exchanges 

using the federal platform. For the 2022 

plan year, we are lowering the federallyfacilitated Exchange (FFE) and Statebased Exchange on the Federal Platform 

(SBE–FP) user fees rates to 2.25 and 1.75 

percent of total monthly premiums, 

respectively, in order to reflect 

enrollment, premium and HHS contract 

estimates for the 2022 plan year. We are 

also finalizing a user fee rate for 2023 of 

1.5 percent of total monthly premiums 

for FFE and SBE–FP states that elect in 

2023 the direct enrollment option 

discussed later in the preamble. 

We are updating the standards related 

to QHP issuers’ acceptance of payments 

for premiums and cost sharing to 

require individual market QHP issuers 

to accept premium payments made by 

or on behalf of an enrollee in connection 

with an individual coverage health 

reimbursement arrangement (individual 

coverage HRA) or qualified small 

employer health reimbursement 

arrangement (QSEHRA). We are also 

providing a clarification to the network 

adequacy rules to reflect the 

longstanding interpretation that 

§ 156.230 does not apply to plans 

seeking QHP certification that do not 

differentiate benefits based on whether 

or not enrollees receive covered services 

from providers that are members of the 

plan’s provider network. 

We are establishing a new direct 

enrollment option under which a State 

Exchange, SBE–FP, or an FFE state can 

elect to rely on direct enrollment to offer 

individual market consumers an 

enhanced QHP shopping experience. 

Under this option, instead of operating 

a centralized enrollment website, states 

may, with HHS approval, use direct 

enrollment technology to establish 

pathways to QHP issuers, web-brokers, 

and agents and brokers, to allow 

consumers to apply for and receive a 

determination or assessment of 

eligibility for insurance affordability 

programs and enroll in a QHP, or if 

applicable, be transferred to Medicaid or 

the Children’s Health Insurance 

Program (CHIP). 

The Secretaries of HHS and the 

Treasury (collectively, the Secretaries) 

are finalizing the proposal regarding 

State Innovation Waivers under section 

1332 of PPACA, with modifications in 

response to comments, to codify many 

of the policies and interpretations 

outlined in the 2018 ‘‘State Relief and 

Empowerment Waivers’’ guidance (83 

FR 53575) 3 (hereinafter referred to as 

the 2018 Guidance) into section 1332 

regulations governing waiver 

application procedures, monitoring and 

compliance, and periodic evaluations in 

order to give states certainty regarding 

the requirements to receive and 

maintain approval by the HHS and the 

Department of the Treasury 

(collectively, the Departments) for State 

Innovation Waivers under section 1332 

of PPACA. 

We intend to address the other topics 

and proposed policies outlined in the 

proposed 2022 Payment Notice in future 

rulemaking, taking into account 

comments received on those proposals. 

II. Background 

A. Legislative and Regulatory Overview 

Title I of the Health Insurance 

Portability and Accountability Act of 

1996 (HIPAA) added a new title XXVII 

to the Public Health Service Act (PHS 

Act) to establish various reforms to the 

group and individual health insurance 

markets. 

These provisions of the PHS Act were 

later augmented by other laws, 

including PPACA. Subtitles A and C of 

title I of PPACA reorganized, amended, 

and added to the provisions of part A of 

title XXVII of the PHS Act relating to 

group health plans 4 and health 

insurance issuers in the group and 

individual markets. The term ‘‘group 

health plan’’ includes both insured and 

self-insured group health plans. 

Sections 1311(b) and 1321(b) of 

PPACA provide that each state has the 

opportunity to establish an individual 

market Exchange that facilitates the 

purchase of insurance coverage by 

qualified individuals through QHPs and 

meets other standards specified in 

PPACA. Section 1321(c)(1) of PPACA 

directs the Secretary to establish and 

operate such Exchange within states 

that do not elect to establish an 

Exchange or, as determined by the 

Secretary on or before January 1, 2013, 

will not have an Exchange operable by 

January 1, 2014. 

Section 1311(c)(1) of PPACA provides 

the Secretary the authority to issue 

regulations to establish criteria for the 

certification of QHPs, including network 

adequacy standards at section 

1311(c)(1)(B) of PPACA. Section 1311(d) 

of PPACA describes the minimum 

functions of an Exchange. Section 

1311(e)(1) of PPACA grants the 

Exchange the authority to certify a 

health plan as a QHP if the health plan 

meets the Secretary’s requirements for 

certification issued under section 

1311(c)(1) of PPACA, and the Exchange 

determines that making the plan 

available through the Exchange is in the 

interests of qualified individuals and 

qualified employers in the state. 

Section 1312(e) of PPACA directs the 

Secretary to establish procedures under 

which a state may permit agents and 

brokers to enroll qualified individuals 

and qualified employers in QHPs 

through an Exchange and to assist 

individuals in applying for financial 

assistance for QHPs sold through an 

Exchange. 

Sections 1313 and 1321 of PPACA 

provide the Secretary with the authority 

to oversee the financial integrity of State 

Exchanges, their compliance with HHS 

standards, and the efficient and nondiscriminatory administration of State 

Exchange activities. Section 1321 of 

PPACA provides for state flexibility in 

the operation and enforcement of 

Exchanges and related requirements. 

Section 1321(a) of PPACA provides 

broad authority for the Secretary to 

establish standards and regulations to 

implement the statutory requirements 

related to Exchanges, QHPs and other 

components of title I of PPACA. Section 

1321(a)(1) of PPACA directs the 

Secretary to issue regulations that set 

standards for meeting the requirements 

of title I of PPACA for, among other 

things, the establishment and operation 

of Exchanges. When operating an FFE 

under section 1321(c)(1) of PPACA, 

HHS has the authority under sections 

1321(c)(1) and 1311(d)(5)(A) of PPACA 

to collect and spend user fees. Office of 

Management and Budget (OMB) 

Circular A–25 establishes federal policy 

regarding user fees and specifies that a 

user charge will be assessed against 

each identifiable recipient for special 

benefits derived from federal activities 

beyond those received by the general 

public. 

Section 1321(d) of PPACA provides 

that nothing in title I of PPACA must be 

construed to preempt any state law that 

does not prevent the application of title 

I of PPACA. Section 1311(k) of PPACA 

specifies that Exchanges may not 

establish rules that conflict with or 

prevent the application of regulations 

issued by the Secretary. 

Section 1332 of PPACA provides the 

Secretaries with the discretion to 

approve a state’s proposal to waive 

specific provisions of PPACA, provided 

the state’s section 1332 waiver plan 

meets certain requirements. The 

Departments finalized implementing 


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6140 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

5https://www.govinfo.gov/content/pkg/FR-2011- 

03-14/pdf/2011-5583.pdf. 

6https://www.govinfo.gov/content/pkg/FR-2012- 

02-27/pdf/2012-4395.pdf. 

7https://www.govinfo.gov/content/pkg/FR-2015- 

12-16/pdf/2015-31563.pdf. 

8https://www.federalregister.gov/documents/ 

2020/11/06/2020-24332/additional-policy-andregulatory-revisions-in-response-to-the-covid-19- 

public-health-emergency. 

regulations on February 27, 2012 (76 FR 

13553) and published detailed guidance 

on the Departments’ application of 

section 1332 to proposed state waivers 

on October 24, 2018 (83 FR 53575). 

The 21st Century Cures Act (Cures 

Act), Public Law 114–255, 130 Stat. 

1033, was enacted on December 13, 

2016. Section 18001 of the Cures Act 

amends the Internal Revenue Code 

(Code), the Employee Retirement 

Income Security Act of 1974, and the 

PHS Act to permit an eligible employer 

to provide a QSEHRA to its eligible 

employees. Section 9831(d) of the Code, 

as amended by the Cures Act, 

establishes requirements for providing a 

QSEHRA. On October 31, 2017, the 

Department of the Treasury and the 

Internal Revenue Service (IRS) issued 

Notice 2017–67, 2017–47 IRB 517, to 

provide guidance on the requirements 

for providing a QSEHRA. 

1. Exchanges 

We published a request for comment 

relating to Exchanges in the August 3, 

2010 Federal Register (75 FR 45584). 

We issued initial guidance to states on 

Exchanges on November 18, 2010. In the 

July 15, 2011 Federal Register (76 FR 

41865), we published a proposed rule 

with proposals to implement 

components of the Exchanges, and a 

rule in the August 17, 2011 Federal 

Register (76 FR 51201) regarding 

Exchange functions in the individual 

market and Small Business Health 

Options Program (SHOP), eligibility 

determinations, and Exchange standards 

for employers. A final rule 

implementing components of the 

Exchanges and setting forth standards 

for eligibility for Exchanges was 

published in the March 27, 2012 

Federal Register (77 FR 18309) 

(Exchange Establishment Rule). 

In the 2014 Payment Notice and in the 

Amendments to the HHS Notice of 

Benefit and Payment Parameters for 

2014 interim final rule, published in the 

March 11, 2013 Federal Register (78 FR 

15541), we set forth standards related to 

Exchange user fees. We established an 

adjustment to the FFE user fee in the 

Coverage of Certain Preventive Services 

under the Affordable Care Act final rule, 

published in the July 2, 2013 Federal 

Register (78 FR 39869) (Preventive 

Services Rule). 

2. Health Reimbursement Arrangements 

On October 29, 2018, the Departments 

of HHS, Labor, and the Treasury 

published proposed regulations in the 

Federal Register (83 FR 54420) on 

health reimbursement arrangements 

(HRAs) and other account-based group 

health plans including individual 

coverage HRAs. On June 20, 2019, the 

Departments of HHS, Labor, and the 

Treasury published final regulations in 

the Federal Register (84 FR 28888) on 

HRAs and other account-based group 

health plans. 

3. State Innovation Waivers 

Section 1332(a)(4)(B) of PPACA 

requires the Secretaries to issue 

regulations regarding procedures for 

State Innovation Waivers. On March 14, 

2011, the Departments published the 

‘‘Application, Review, and Reporting 

Process for Waivers for State 

Innovation’’ proposed rule 5 in the 

Federal Register (76 FR 13553) to 

implement section 1332(a)(4)(B) of 

PPACA. On February 27, 2012, the 

Departments published the 

‘‘Application, Review, and Reporting 

Process for Waivers for State 

Innovation’’ final rule 6 in the Federal 

Register (77 FR 11700) (hereinafter 

referred to as the ‘‘2012 Final Rule’’). On 

October 24, 2018, the Departments 

issued the 2018 Guidance, which 

superseded the previous guidance 7

published on December 16, 2015 in the 

Federal Register (80 FR 78131) and 

provided additional information about 

the requirements that states must meet 

for waiver proposals, the Secretaries’ 

application review procedures, passthrough funding determinations, certain 

analytical requirements, and operational 

considerations. On November 6, 2020, 

the Departments issued an interim final 

rule 8 in the Federal Register (85 FR 

71142), which revised regulations 

relating to public notice procedures to 

set forth flexibilities in the public notice 

requirements and post-award public 

participation requirements for State 

Innovation Waivers under section 1332 

of PPACA during the Coronavirus 

Disease 2019 (COVID–19) public health 

emergency (PHE). 

B. Stakeholder Consultation and Input 

HHS has consulted with stakeholders 

on policies related to the operation of 

Exchanges. We have held a number of 

listening sessions with consumers, 

providers, employers, health plans, 

advocacy groups and the actuarial 

community to gather public input. We 

have solicited input from state 

representatives on numerous topics, 

particularly the direct enrollment option 

for FFE states and State Exchanges. 

We consulted with stakeholders 

through regular meetings with the 

National Association of Insurance 

Commissioners (NAIC), and regular 

contact with states, health insurance 

issuers, trade groups, consumer 

advocates, employers, and other 

interested parties. We considered all 

public input we received on the 

proposals addressed in this final rule as 

we developed the policies in this final 

rule. 

C. Structure of Final Rule 

The regulations outlined in this final 

rule are codified in 45 CFR parts 155 

and 156. In addition, the regulations 

outlined in this final rule governing 

State Innovation Waivers under section 

1332 of PPACA are codified in 31 CFR 

part 33 and 45 CFR part 155. 

We establish a new direct enrollment 

option for State Exchanges, SBE–FPs 

and FFE states to use direct enrollment 

technology and non-Exchange websites 

developed by approved web-brokers, 

issuers, and other direct enrollment 

partners to enroll qualified individuals 

in QHPs offered through the Exchange. 

As we do every year in the annual 

HHS notice of benefit and payment 

parameters, we set forth the user fee 

rates for the 2022 benefit year for all 

issuers participating on the Exchanges 

using the federal platform. We also 

finalize modifications to the regulations 

addressing network adequacy standards 

for non-network plans. Finally, we 

require individual market QHP issuers 

to accept premium payments made by 

or on behalf of an enrollee in connection 

with an individual coverage HRA or 

QSEHRA. 

The changes in 31 CFR part 33 and 45 

CFR part 155 related to State Innovation 

Waivers finalize with modifications the 

proposals to codify many of the policies 

and interpretations outlined in the 

existing 2018 Guidance into the section 

1332 waiver implementation regulations 

in order to give states certainty 

regarding the requirements to receive 

and maintain approval of State 

Innovation Waivers by the Departments. 

III. Summary of the Proposed 

Provisions of the HHS Notice of Benefit 

and Payment Parameters for 2022, 

Analysis of and Responses to Public 

Comments, and Provisions of the Final 

Rule—Department of Health and 

Human Services 

In the December 4, 2020 Federal 

Register (86 FR 78572), we published 

the ‘‘Patient Protection and Affordable 

Care Act; HHS Notice of Benefit and 

Payment Parameters for 2022 and 


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Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 6141 

9Classic DE is the original version of DE, which 

utilizes a ‘‘double redirect’’ from a DE entity’s nonExchange website to HealthCare.gov where the 

eligibility application is submitted and an eligibility 

determination is made by the Exchange, and then 

back to the DE entity’s non-Exchange website for 

QHP shopping and plan selection consistent with 

applicable requirements in §§ 155.220(c)(3)(i), 

155.221, 156.265, or 156.1230(b). EDE is the version 

of DE which allows consumers to complete all steps 

in the application, eligibility and enrollment 

processes on the DE entity’s non-Exchange website 

consistent with applicable requirements in 

§§ 155.220(c)(3)(ii), 155.221, 156.265, or 

156.1230(b). EDE uses application programming 

interfaces (APIs) that are made available, owned, 

and maintained by CMS to transfer data between 

HealthCare.gov and the DE entity’s non-Exchange 

website. 

10 77 FR 18310 (March 27, 2012). Available at 

https://www.govinfo.gov/content/pkg/FR-2012-03- 

27/pdf/2012-6125.pdf. 

11See, for example, 77 FR at 18313. 

Pharmacy Benefit Manager Standards; 

Updates To State Innovation Waiver 

(Section 1332 Waiver) Implementing 

Regulations’’ proposed rule. We 

received 542 comments in response to 

the policies in the proposed 2022 

Payment Notice. Comments were 

received from members of Congress, 

state entities, such as departments of 

insurance and State Exchanges, health 

insurance issuers, providers and 

provider groups, consumer groups, 

industry groups, national interest 

groups, and other stakeholders. The 

comments ranged from general support 

of or opposition to the proposed 

provisions to specific questions or 

comments regarding proposed changes. 

We received a number of comments and 

suggestions that were outside the scope 

of the proposed rule that are not 

addressed in this final rule. 

In this final rule, we provide a 

summary of the proposed provisions we 

are addressing in this final rule, a 

summary of the public comments 

received that relate to those proposals, 

our responses to these comments, and a 

description of the provisions we are 

finalizing. 

We first address comments regarding 

the publication of this final rule and the 

comment period. 

Comment: Multiple commenters 

criticized the length of the comment 

period, stating that a longer comment 

period is necessary to allow 

stakeholders to review the proposed 

rule and provide thoughtful comments. 

Some commenters also expressed 

concern that HHS would not adequately 

review and consider all comments 

before issuing a final rule; that HHS 

appears to be rushing to finalize 

substantial changes to regulations that 

would hamper access to coverage 

through the Exchanges; and that HHS 

should defer any major policy decisions 

affecting access to Exchange coverage to 

the incoming Administration. 

Response: We disagree that the 

comment period was not long enough to 

allow stakeholders to provide 

meaningful comments. Each year, we 

generally have set a 30-day comment 

period to accommodate issuer filing 

deadlines for the upcoming plan year 

and to avoid creating significant 

challenges for states, Exchanges, issuers, 

and other entities operating under strict 

deadlines related to approval of 

products. Moreover, we found 

commenters’ submissions to be 

thoughtful and reflective of a detailed 

review and analysis of the proposed 

rule. We further recognize the 

importance of federal agencies 

reviewing and considering all relevant 

comments before issuing a final rule. 

For this reason, HHS determined that it 

was appropriate to address in this final 

rule only those policies in the proposed 

2022 Payment Notice that were most 

important to advancing the policy goals 

of reducing fiscal and regulatory 

burdens across related program areas 

and providing stakeholders with greater 

flexibility. Limiting the policies 

addressed in this final rule allowed us 

to review all relevant comments and 

expedite the publication of this final 

rule. 

For reasons more fully reviewed in 

the preamble discussions related to 

specific policies in this final rule, we 

also disagree that the rule will hamper 

access to Exchange coverage. The 

policies we finalize in this rule have the 

potential to increase access to Exchange 

coverage. For example, the Exchange DE 

option we finalize in this rule has the 

potential to increase incentives for 

licensed agents, brokers, and webbrokers to promote Exchange enrollment 

through improvements to the consumer 

application and enrollment experience. 

The policies this final rule adopts in 

relation to section 1332 waivers are 

designed to provide flexibilities that 

will allow states to propose and 

implement waiver plans to increase 

access to Exchange coverage by 

reducing premiums. In addition, the 

policies related to individual coverage 

HRAs and QSEHRAs are being finalized 

to remove obstacles and ensure 

individuals offered these types of 

coverage have seamless access to enroll 

in individual market QHP coverage. 

Finally, we disagree that major policy 

decisions should be deferred until a 

new Administration is in place, as this 

final rule constitutes a valid exercise of 

the Departments’ rulemaking 

authorities. 

A. Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

1. Standards for Direct Enrollment 

Entities (§ 155.221) 

a. FFE, SBE–FP, and State Exchange 

Direct Enrollment Option 

Classic Direct Enrollment (Classic DE) 

and Enhanced Direct Enrollment (EDE) 

are pathways offered as part of the FFE’s 

DE program under which third-party 

entities (issuers, agents and brokers, and 

web brokers) are approved by HHS to 

assist consumers with QHP plan 

selection and enrollment through a nonExchange website in a manner 

considered to be through the Exchange.9

The Classic DE and EDE pathways are 

available in FFE and SBE–FP states. In 

light of the success of the FFEs’ DE 

program in improving the consumer 

experience, we proposed to provide 

additional options for states that wish to 

promote more flexible and lower-cost 

private sector approaches for assisting 

consumers with shopping and enrolling 

in individual market QHP coverage 

offered through Exchanges. 

While we have taken a number of 

actions to reduce the burden on states 

of establishing State Exchanges, we 

wish to maximize flexibility for all 

states to oversee their own health care 

markets and to address unique state 

market dynamics. In the Exchange Final 

Rule,10 we recognized that states are 

best equipped to adapt Exchange 

functions to their local markets and the 

unique needs of their residents.11 In 

addition, we recognized that for 

decades, issuers, licensed agents and 

brokers, and web-brokers have been 

engaging directly with consumers in 

offering health insurance and assisting 

consumers in selecting, enrolling in, 

and managing their coverage. We 

believe that the proposal to establish a 

new DE option for Exchanges would 

allow states to continue to more 

effectively exercise their traditional 

oversight authority over health 

insurance markets, while enhancing the 

consumer experience, increasing 

competition, and lowering costs. 

To date, Exchange eligibility 

application and enrollment activities 

have been supported through Exchangeoperated websites. One of the primary 

advantages of this design is that 

consumers can access one-stop 

shopping for all QHPs offered through 

an Exchange and can access relevant 

details on such plans in a standardized 

format. Before Exchanges existed, 

consumers shopping for individual 

health insurance coverage who searched 

for this information would generally 

have to contact multiple issuers or visit 


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6142 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

12For example, Federal contracting rules 

generally require full and open competitions under 

which federal agencies must seek proposals to 

fulfill an agency’s needs for contractor services. See 

10 U.S.C. 2304 and 41 U.S.C. 3301. These 

competitions generally last for months and may 

impede an agency’s ability to quickly engage a 

vendor for the information technology services like 

those that may be necessary to update, improve, or 

otherwise address issues with the consumer 

shopping, eligibility, and enrollment experience. 

Moreover, even if a federal or state agency has a 

suitable contract in place that covers such services, 

there may not be sufficient funds allocated to the 

contract or otherwise available to the agency to 

cover the services at the time they are needed or 

desired. In these situations, government agencies 

like State Exchanges and HHS may be required to 

delay the services until a future funding cycle. 

Commercial entities like DE and EDE entities 

generally do not face such impediments and may 

more readily respond to consumer needs and 

preferences. 

13See, for example, 45 CFR 155.220(c)(3)(i)(A) 

(for web-brokers) and 156.1230(a)(1)(ii) (for QHP 

issuers). 

14As detailed in the proposed 2022 Payment 

Notice, there is a growing cohort of consumers who 

may be interested in off-Exchange coverage options. 

See 85 FR 78616–78619. 

multiple websites, and the information 

would often be presented 

inconsistently, preventing true applesto-apples comparison shopping. 

Exchange-run eligibility application and 

enrollment websites also help to manage 

coordination of coverage between 

private health insurance coverage and 

Medicaid and CHIP by offering full 

eligibility and enrollment integration 

between the programs or by providing 

connections to those public programs 

for individuals who may qualify for 

participation. 

While Exchange-operated eligibility 

application and enrollment websites 

have undoubtedly helped many 

consumers shop for and compare plans, 

they also present some significant 

potential disadvantages given historical 

and current implementations of 

Exchange-operated websites. First, as 

we explained in the proposed rule, it 

can be costly and burdensome to create 

and operate Exchanges, including not 

only the cost of designing and 

maintaining a complex website, but also 

the burden of staffing and operating call 

centers that must be scaled up during 

each annual Open Enrollment Period 

(OEP), and then scaled down during 

lower-traffic periods. 

Second, the design of Exchangeoperated websites also tends to result in 

choke points when a large number of 

consumers use the same website at the 

same time to apply, shop for, and enroll 

in coverage. For example, on high traffic 

days near the end of the annual OEP, 

some consumers trying to access 

HealthCare.gov have been redirected to 

the FFE call center or told to come back 

to the website at a later time to complete 

their enrollment due to high volume. 

The ability for consumers to shop for 

coverage through any one of the 

websites operated by Classic DE and 

EDE entities with which HHS partners 

during these high traffic days provides 

an important, additional avenue to 

ensure consumers complete their plan 

selection and enroll in coverage. 

Although we recognize that without 

robust participation and competition 

among DE entities, a DE entity’s website 

may experience similar choke points 

due to high consumer traffic, we believe 

that providing Exchanges in states that 

elect this option with the flexibility to 

partner with more than one DE entity 

mitigates this risk. 

Third, we believe it is inherently 

difficult for Exchanges to keep up with 

the rapid pace of innovation in ecommerce and the ever-evolving 

preferences of online shoppers, who are 

accustomed to shopping for the 

products they buy in a manner that is 

not only tailored to their specific needs, 

but is also aesthetically appealing and 

constantly refreshed. Federal and state 

governments, for example, can be 

limited in their ability to frequently 

refresh and update the consumer 

experience due to the length of time it 

can take to award vendor contracts.12

Finally, we have heard criticisms from 

some stakeholders, including agents, 

brokers, and web-brokers, that the 

Exchange-operated eligibility 

application and enrollment website 

model competes directly with and may 

crowd out market players such as webbrokers, licensed agents and brokers, 

and issuers, dampening commercial 

investments in outreach and marketing 

by these market players to reach new 

consumers, including those who are 

currently uninsured. 

We believe that both the FFE’s DE and 

EDE pathways have promoted 

innovation and competition in states 

whose consumers use HealthCare.gov 

and have ultimately led to better 

experiences for consumers in these 

states. The FFE’s Classic DE pathway 

has been in operation since the launch 

of the FFE in 2013. The FFE EDE 

pathway has been in operation since 

2018. Together, for the 2020 Plan Year, 

the Classic DE and EDE pathways were 

responsible for approximately 29 

percent of FFE enrollments. The recent 

experience from the 2021 Open 

Enrollment Period shows substantial 

growth in the use of the EDE pathway. 

The number of consumers who enrolled 

through the EDE pathway more than 

doubled from the prior 2020 Open 

Enrollment Period—increasing from 

approximately 521,000 to 1,130,000 

plan selections, representing 37 percent 

of FFE enrollments. 

Currently, the HealthCare.gov 

eligibility application and enrollment 

website and approved private sector 

non-Exchange websites operate in 

parallel to enroll consumers in 

individual market QHPs offered through 

the FFEs and SBE–FPs. Like Exchangeoperated websites, non-Exchange 

websites operated by Classic DE and 

EDE entity partners in FFE and SBE–FP 

states are required to provide 

standardized comparative information 

to assist consumers shopping for 

coverage.13 DE entities are also able to 

provide assistance with a broader array 

of plan options, including both on- and 

off-Exchange plan options and ancillary 

products. These additional coverage 

options are important for many 

consumers who do not qualify for 

premium tax credits or have less 

incentive to enroll in Exchange 

coverage, including employees with an 

offer of an affordable individual 

coverage HRA who may wish to opt into 

that coverage, as well as employees 

offered both an individual coverage 

HRA and a cafeteria plan because 

section 125(f)(3) of the Code specifically 

prohibits using salary reduction 

contributions under a cafeteria plan to 

purchase on-Exchange coverage.14

Finally, the FFE’s EDE pathway helps to 

reduce costs to the federal government 

by enrolling many consumers without 

using the FFEs’ eligibility application 

intake and enrollment resources (for 

example, the Marketplace call center 

and the HealthCare.gov website). 

To build on the success of the FFE’s 

Classic DE and EDE pathways in FFE 

and SBE–FP states that use 

HealthCare.gov, and to offer additional 

flexibility to all Exchanges, we proposed 

a new opportunity for states to adapt 

Exchange activities to the needs of local 

state markets and leverage the benefits 

of direct enrollment to enhance the 

consumer experience through a private 

sector-focused consumer engagement 

and enrollment strategy. We proposed to 

add § 155.221(j) to establish a process 

for states to elect a new Exchange Direct 

Enrollment option (Exchange DE option) 

in which a state can request to allow 

private sector entities (including QHP 

issuers, web-brokers, agents and 

brokers) to operate enrollment websites 

through which consumers can apply, 

receive an eligibility determination from 

the Exchange, and purchase an 

individual market QHP offered through 

the Exchange with advance payments of 

the premium tax credit (APTC) and costsharing reductions (CSRs), if otherwise 

eligible. 


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Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 6143 

15Section 155.221(a) identifies QHP issuers and 

web-brokers as eligible direct enrollment entities. 

16Section 1401(a) of PPACA added new section 

36B to the Code, which provides for PTCs for 

eligible individuals, while section 1402 of PPACA 

provides for CSRs for eligible individuals. For 

individuals to be eligible to receive PTCs, among 

other requirements, PPACA requires that 

individuals be enrolled in a QHP through an 

Exchange. CMS has interpreted this statutory 

language to allow a QHP issuer to enroll an 

applicant who initiates enrollment directly with the 

QHP issuer. See § 156.1230, whereby individuals 

enrolling directly on the site of a QHP issuer are 

considered enrolled ‘‘through an Exchange’’ so long 

as the issuer meets applicable requirements. We 

adopted a similar approach to allow a web-broker 

to enroll an applicant who seeks to enroll through 

the web-broker’s website. See § 155.220(a)(2) and 

(c), whereby individuals enrolling directly through 

the site of a web-broker are considered enrolled 

‘‘through an Exchange’’ so long as the web-broker 

meets applicable requirements. 

17As detailed further below, states with an SBE– 

FP can request to pursue the Exchange DE option 

as an SBE–FP–DE. If a state that currently operates 

an SBE–FP is interested in transitioning to a full 

State Exchange that implements this Exchange DE 

option, it would need to update its Blueprint 

accordingly, and meet statutory and regulatory 

requirements to become a State Exchange 

implementing the Exchange DE option (an SBE– 

DE). Such requirements include operating its own 

eligibility and enrollment platform rather than 

relying on the federal platform. 

18See section 1413(e) of PPACA for a definition 

of the term ‘‘applicable state health subsidy 

program.’’ 

19Section 1311(d)(4)(F) of PPACA requires 

Exchanges to inform individuals of eligibility 

requirements for Medicaid, CHIP, or any applicable 

state or local public programs and, if through 

screening of the application the Exchange 

determines such individuals are eligible for any 

such program and refer such individuals to the 

appropriate state Medicaid agency for enrollment in 

such program(s). 

We proposed in § 155.221(j) that, 

subject to HHS approval, a state may 

elect for the Exchange in the state to 

engage one or more entities described in 

paragraph (a) 15 to facilitate QHP 

enrollments through its Exchange. 

Under this option, similar to the current 

FFE DE program, approved DE entities 

would enroll qualified individuals in a 

QHP in a manner that constitutes 

enrollment through the Exchange 16 and 

would also assist individuals in 

applying for, and receiving eligibility 

determinations from the Exchange, for 

APTCs and CSRs. 

In § 155.221(j)(1), we proposed 

requirements that would apply to 

traditional State Exchanges that do not 

rely on the federal eligibility and 

enrollment platform that want to pursue 

the Exchange DE option and become an 

SBE–DE. In § 155.221(j)(2), we proposed 

requirements that would apply to states 

with an FFE or SBE–FP 17 that want to 

pursue the Exchange DE option and 

become an FFE–DE or SBE–FP–DE. We 

proposed that, subject to HHS approval, 

the Exchange DE option may be 

implemented in states with a State 

Exchange starting in plan year 2022. We 

proposed that, subject to HHS approval, 

the Exchange DE option may be 

implemented in states with an FFE or 

SBE–FP starting in plan year 2023. 

Under the Exchange DE option, states 

would be able to request to adopt a 

private sector-based enrollment 

approach as an alternative to the 

consumer-facing enrollment website 

operated by the Exchange (for example, 

HealthCare.gov for the FFEs). This decentralized, private sector-focused 

approach would transition application 

and enrollment functions to websites 

operated by approved partners (DE 

partners) to serve as the online 

platform(s) through which consumers 

apply for and enroll in individual 

market QHPs offered through the 

Exchange in their state, as well as apply 

for and receive determinations of APTC 

and cost-sharing reduction (CSR) 

eligibility for QHP coverage offered 

through the Exchange. The Exchange in 

a state that elects this option would 

implement a direct enrollment pathway 

(or pathways) with secure connections 

between its back-end eligibility 

determination system and the websites 

(or systems) of approved issuers, webbrokers, or agents and brokers that 

enable consumers to complete and 

submit the single streamlined eligibility 

application as described in § 155.405, 

receive an eligibility determination from 

the Exchange, select a plan and enroll 

in a QHP, with or without APTC and 

CSRs (if otherwise eligible). Exchanges 

would continue to be responsible for 

meeting, and ensuring its approved DE 

partners meet, all applicable statutory 

and regulatory requirements governing 

application for and enrollment in QHPs 

and other applicable state health 

subsidy programs.18 Under the 

Exchange DE option, the Exchange 

would also remain the entity 

responsible for making all 

determinations of whether an applicant 

is eligible for QHP enrollment, APTC, 

and CSRs, assessing or determining 

whether an applicant is eligible for 

Medicaid or CHIP, and conducting 

required verifications of consumer 

eligibility against trusted data sources. 

The Exchange would also continue to be 

responsible for sharing eligibility 

determination and enrollment 

information in coordination with issuers 

and HHS in accordance with 45 CFR 

155.400, 155.430, and 155.340. The 

Exchange will continue to issue the 

applicable APTC to carriers on behalf of 

qualified individuals, and continue to 

be responsible for sharing this 

information with the IRS to support 

reconciliation of APTC on individual 

tax returns. 

Consistent with section 1311(d)(4)(F) 

of PPACA and 45 CFR 155.302, under 

the Exchange DE option, the Exchange 

would also continue to be responsible 

for conducting assessments or 

determinations of eligibility for 

Medicaid and CHIP, and where 

appropriate, for referring individuals 

who are assessed or determined eligible 

for Medicaid or CHIP to the appropriate 

state Medicaid agency for enrollment in 

those programs.19

In proposing the Exchange DE option, 

we noted that the applicable statutory 

provisions do not require Exchanges to 

operate an enrollment website. Rather, 

section 1311(d)(4)(C) of PPACA 

provides that an Exchange must 

maintain an internet website through 

which enrollees and prospective 

enrollees of QHPs may obtain 

standardized comparative information 

on QHPs available in the state. Within 

the statutory framework, these are some 

of the specific minimum functions an 

Exchange must undertake to facilitate 

the purchase of QHPs under section 

1311(b)(1)(A) of PPACA and make 

available QHPs to qualified individuals 

and employers under section 

1311(d)(2)(A) of PPACA. These 

minimum functions facilitate the 

purchase of QHPs by helping to make 

the purchase of QHPs easier and 

administering elements of the structure 

necessary to make QHPs available. An 

Exchange can continue to meet these 

obligations without operating a singular 

consumer-facing eligibility and 

enrollment website. In the context of 

operating an internet website, we 

interpret the statutory language at 

section 1311(c)(5) and (d)(4)(C) of 

PPACA to require that Exchanges 

provide consumers with the ability to 

view comparative information on QHP 

options, but that the Exchange may 

direct consumers to other entities or 

resources for purposes of submitting 

applications for eligibility and enrolling 

in QHPs, with APTC and CSRs, if 

otherwise eligible. We further explained 

that Exchanges, rather than DE entities, 

in states that elect to pursue this new 

option would continue to be responsible 

for determining eligibility for, and 

granting, exemption certifications under 

section 1311(d)(4)(H) of PPACA, as 

applicable; making available an 

electronic calculator consistent with 

section 1311(d)(4)(G) of PPACA; 

establishing a Navigator program as 

required under section 1311(d)(4)(K) of 

PPACA; and providing for the operation 

of a toll-free telephone hotline under 

section 1311(d)(4)(B) of PPACA. 


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20See 45 CFR 155.205(b). 

21See section 1311(d)(4)(D) of PPACA and 45 

CFR 155.205(b). Also see sections 1311(c)(3) and 

(c)(4) of PPACA and 45 CFR 155.1400 and 1405. 

22Covered entities such as States, recipients of 

Federal financial assistance from HHS, programs or 

activities administered by HHS under title I of 

PPACA (such as the FFE), and programs or 

activities administered by any entity established 

under Title I (such as State Exchanges), must 

comply with applicable federal civil rights laws that 

prohibit discrimination on the basis of race, color, 

national origin, sex, age, and disability. These laws 

include Section 1557 of PPACA (42 U.S.C. 18116) 

(Section 1557), Title VI of the Civil Rights Act of 

1964 (42 U.S.C. 2000d et seq.) (Title VI), Section 

504 of the Rehabilitation Act of 1973 (29 U.S.C. 

794) (Section 504), and the Americans with 

Disabilities Act of 1990 (29 U.S.C. 12101 et seq.) 

(ADA). 

23Removing this public-sector competitor may be 

of particular interest due to the competitive 

advantage Exchanges hold over web-brokers under 

federal user fee and medical loss ratio (MLR) 

regulations. Consumers pay for both Exchange user 

fees and web-broker commissions indirectly 

through higher premiums. However, Exchange user 

fees and web-broker commissions are accounted for 

differently in the MLR calculation. Exchange user 

fees, a portion of which are used to fund Exchangeoperated eligibility and enrollment websites that 

could be considered to be competitive with EDE 

interfaces, are treated as taxes, which makes it 

easier to meet the MLR requirement. In contrast, 

web-broker commissions count toward 

administrative costs, which makes it harder for 

issuers to meet the MLR requirements. This MLR 

accounting disparity on that portion of the 

Exchange user fees arguably disadvantages EDE 

entities. 

24See, for example, 45 CFR 155.220(l) and 

155.221(h). 25See 45 CFR 155.260 through 155.285. 

In connection with the Exchange DE 

option, the Exchange would also be 

required to make available a website 

listing basic QHP information for 

comparison, and a listing with links to 

approved partner websites for consumer 

shopping, plan selection, and 

enrollment activities. Consistent with 

section 1311(d)(4)(E) of PPACA, the 

comparative plan information presented 

on the Exchange website would need to 

continue to utilize a standardized 

format, including the use of the uniform 

summary of benefits and coverage 

established under section 2715 of the 

PHS Act.20 The standardized 

comparative information displayed on 

Exchange websites must also continue 

to include the quality ratings assigned to 

each QHP offered through the 

Exchange.21 Finally, the Exchange, 

along with its issuers and registered 

agents and brokers, which may also 

function as DE entities, would continue 

to be responsible for meeting federal 

accessibility standards under 45 CFR 

155.205(c) for individuals living with 

disabilities and for individuals who 

have limited English proficiency.22

Through private sector partners such 

as web-brokers and issuers, states may 

pursue alternatives to HealthCare.gov or 

other centralized, publicly-operated 

Exchange enrollment websites to 

enhance the consumer experience and 

provide additional incentives for 

insurers and licensed agents and brokers 

to conduct marketing and outreach to 

enroll more consumers in coverage. 

While states may consider creating 

enhanced commission structures or 

providing other market-based 

incentives, we also recognize the 

inherent incentive to issuers, webbrokers, and agents and brokers that will 

result from removing what some 

stakeholders view as a dominant publicsector competitor, making them the 

primary channels through which 

individuals shop for and enroll in 

individual market QHPs in those 

states.23 In the proposed rule we 

recognized that consumers who apply 

and enroll through a DE partner will 

have the benefit of assistance from a 

state-licensed agent or broker if they so 

choose. These agents and brokers will 

have been recognized by the relevant 

state as possessing the specialized 

expertise necessary to help consumers 

choose between health insurance 

options. 

(1) Federally-Facilitated Exchange 

Direct Enrollment (FFE–DE) and State 

Exchange on the Federal Platform Direct 

Enrollment (SBE–FP–DE) Option 

We proposed an option for any FFE or 

SBE–FP state to request the use of direct 

enrollment as the avenue through which 

individual market consumers and 

qualified individuals can shop for and 

purchase a QHP offered through the 

Exchange in the state, and apply and 

receive determinations of eligibility for 

APTC and CSRs. While SBE–FP states 

have the authority and responsibility for 

certifying QHPs and performing 

consumer outreach and assistance 

activities, because they rely on the 

federal eligibility and enrollment 

platform and consumer-facing website, 

in this respect they are more similar to 

the FFE–DE model than the SBE–DE 

model. In addition, the current FFE DE 

program and accompanying 

requirements also apply in SBE–FP 

states.24

Under the proposed FFE–DE and 

SBE–FP–DE option, HealthCare.gov 

would continue to provide the same 

standardized comparative information 

on QHP options that is available today. 

The FFE would post and maintain an 

up-to-date list on HealthCare.gov of 

approved direct enrollment partners 

operating in the state. As such, 

consumers would still be able to view 

comparative information on 

HealthCare.gov for all QHP options 

available in their area and would also be 

able to access information to connect 

with approved direct enrollment 

partners in that state. In the event that 

any approved direct enrollment partner 

does not have the technical capability to 

process a consumer eligibility 

application, HealthCare.gov would 

process that application. The Exchange 

would continue to have responsibility 

for operating a toll-free call center to 

provide eligibility and enrollment 

support for all consumers, pursuant to 

45 CFR 155.205(a). However, under the 

Exchange DE option, there may be some 

cases where the DE partner may be best 

able to provide additional support to a 

consumer in completing their 

enrollment through the DE partner’s 

website. We proposed to codify 

requirements at 45 CFR 155.221(j)(2)(ii), 

whereby a state that elects to implement 

the Exchange DE option must execute a 

federal agreement with HHS that defines 

the division of responsibilities between 

HHS and the state. This would include 

the Exchange’s responsibilities, as well 

as DE partners’ responsibilities for 

various activities, such as those 

pertaining to operating a toll-free call 

center to provide eligibility and 

enrollment support for consumers that 

enroll in coverage through an approved 

DE partner’s website. 

By leveraging private sector entities 

and directing consumers to approved 

direct enrollment partners, the vast 

majority of consumer traffic would flow 

to direct enrollment partners, leaving 

the HealthCare.gov structure in place 

primarily to provide the supporting 

functions that it does today, like the 

processing of data matching issues and 

special enrollment period verification 

documentation, casework, and 

eligibility appeals. 

As noted above, the FFE would 

remain the entity responsible for making 

eligibility determinations and verifying 

whether an applicant is eligible for QHP 

enrollment, APTC and CSRs. The FFE 

would also continue to reconcile 

eligibility and enrollment information 

with issuers, in accordance with 45 CFR 

155.340, 155.400, and 155.430, in order 

for HHS to issue the applicable APTC to 

carriers on behalf of qualified 

individuals, and would share similar 

information with the IRS to facilitate the 

IRS’ reconciliation of APTC on 

individual tax returns. Under this 

option, given that an FFE–DE state or 

SBE–FP–DE state would use one or 

more participating, federally-approved 

Classic DE and EDE entities, at a 

minimum, the FFE privacy and security 

standards 25 and the FFE DE program 


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Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 6145 

26See 45 CFR 155.220, 155.221, and 156.1230. 

27This approach is consistent with the framework 

established in prior rulemakings that require a state 

to notify HHS and receive written approval from 

HHS before significant changes are made to the 

Exchange Blueprint. See, for example, 77 FR at 

18316. Significant changes could include altering a 

key function of Exchange operations or other 

changes to the Exchange Blueprint that would have 

an impact on the operation of the Exchange. This 

includes, but is not limited to the process for 

enrollment in a QHP. See, for example, 76 FR at 

41871. 

28As detailed in § 155.105(e), HHS generally has 

60 days after receipt of a completed request to 

complete its review of a significant change to an 

Exchange Blueprint and, for good cause, may 

extend the review period by an additional 30 days 

up to a total of 90 days. 

29See generally CMS guidance for becoming a 

web-broker in the FFEs, available at: https://

www.cms.gov/CCIIO/Programs-and-Initiatives/ 

Health-Insurance-Marketplaces/Downloads/2020- 

WB-Program-Guidance-052120-Final.pdf. 

30 In addition to ensuring there is at least one 

website available in the state that satisfies all 

accessibility requirements under § 155.205(c), we 

proposed that there must also be at least one 

website available in the state through which 

consumers can view and enroll in all available 

QHPs in the state. 

requirements 26 would continue to 

apply. 

We proposed in § 155.221(j)(2) that a 

state with an FFE or SBE–FP may 

request to pursue the FFE–DE or SBE– 

FP–DE option starting in plan year 2023, 

as applicable. We proposed that, 

pursuant to a request from the state, 

HHS may partner with the requesting 

state to implement the direct enrollment 

option described in paragraph (j). The 

FFE or SBE–FP must meet all applicable 

federal statutory and regulatory 

requirements for the operation of an 

Exchange, including maintaining the 

single, streamlined eligibility 

application required under § 155.405. 

To obtain HHS approval to implement 

this option, the state must coordinate 

with HHS on an implementation plan 

and timeline that allows for a transition 

period, developed at the discretion of 

HHS in consultation with the state, 

necessary to operationalize the required 

changes to implement this option. We 

proposed to codify these new 

requirements at paragraph (j)(2)(i). 

Additionally, we proposed to codify 

requirements at paragraph (j)(2)(ii), 

whereby the state must execute a federal 

agreement with HHS that includes the 

terms and conditions for the 

arrangement and that defines the 

division of responsibilities between 

HHS and the state. Further, to obtain 

HHS approval to implement the FFE–DE 

or SBE–FP–DE option, we proposed at 

§ 155.221(j)(2)(iii) that the state must 

agree to procedures developed by HHS 

for the collection and remittance of the 

monthly user fee described in 

§ 156.50(c) in support of the 

responsibilities undertaken by the state 

and HHS. Finally, we proposed at 

paragraph (j)(2)(iv) that the state would 

be required to perform and cooperate 

with activities established by HHS 

related to oversight and financial 

integrity requirements in accordance 

with section 1313 of PPACA, including 

complying with reporting and 

compliance activities required by HHS 

and described in the Federal agreement 

entered into pursuant to paragraph 

(j)(2)(ii). 

(2) State Exchange Direct Enrollment 

Option (SBE–DE) 

We proposed that a State Exchange 

that does not rely on the federal 

eligibility and enrollment platform can 

also elect the Exchange DE option to 

engage approved private-sector entities 

as the pathway (or pathways) for 

consumers in their state to apply for, 

and enroll in, QHPs offered through the 

Exchange. Under this option, the State 

Exchange would remain responsible for 

continuing to operate an internet 

website to provide the same 

standardized comparative information 

on QHP options that is available today 

and for making eligibility 

determinations via its eligibility rules 

engine for consumers applying for 

APTC, CSRs, and enrollment in QHPs 

offered through the Exchange. However, 

this new option would permit multiple 

private entities, such as a combination 

of web-brokers and QHP issuers, to 

provide the consumer-facing resources 

for consumers to apply for and enroll in 

individual market coverage offered 

through the Exchange. State Exchanges 

that pursue this option could thereby 

leverage direct enrollment technology 

and direct consumers to approved 

partner non-Exchange websites to apply 

for APTC and CSRs, as well as select 

and enroll in a QHP offered through the 

Exchange (if otherwise eligible). In the 

event that direct enrollment partners in 

the state do not have the technical 

capability to process any consumer’s 

application, the State Exchange would 

be required to maintain the capability to 

process that application through its own 

consumer-facing website. 

We proposed in § 155.221(j)(1) that a 

state with a State Exchange that does 

not rely on the federal eligibility and 

enrollment platform may request 

approval to pursue the SBE–DE option 

by submitting a revised Exchange 

Blueprint within 90 days of their 

targeted launch date, in accordance with 

§ 155.105(e) to do so.27 We also 

proposed that the State Exchange must 

meet all other applicable federal 

statutory and regulatory requirements 

for the operation of an Exchange, 

including establishing and maintaining 

the single, streamlined eligibility 

application under § 155.405. Following 

submission of a revised Exchange 

Blueprint, HHS would have up to a total 

of 90 days 28 to review this revised 

submission and render a decision as to 

approval. We proposed to codify the 

new requirement at § 155.221(j)(2)(ii) 

that, to obtain HHS approval, the state 

would need to provide HHS an 

implementation plan and timeline that 

details the key activities, milestones, 

and communication and outreach 

strategy to support the transition of 

enrollment operations to direct 

enrollment entities. Additionally, in 

accordance with § 155.105(c)(2) and the 

new requirement proposed at 

§ 155.221(j)(1)(ii), a State Exchange that 

implements the SBE–DE option would 

be required to demonstrate to HHS 

operational readiness for the State 

Exchange and its proposed direct 

enrollment entities to enroll qualified 

individuals in a QHP in a manner that 

constitutes enrollment through the 

Exchange and to enable individuals to 

apply for APTC and cost sharing for 

QHPs. 

While we proposed that State 

Exchanges that elect to implement the 

Exchange DE option would retain the 

flexibility to determine their own 

business controls, as well as to decide 

the state-specific requirements and 

mechanisms for approval and oversight 

of direct enrollment entities operating in 

the state, we would encourage these 

states to review and adopt processes and 

standards similar to those in the existing 

FFE federal direct enrollment and EDE 

framework, as described in 45 CFR 

155.220, 155.221, 156.1230, and in subregulatory guidance.29 Moreover, we 

proposed to codify a new requirement at 

§ 155.221(j)(1)(iii) whereby State 

Exchanges that elect to implement the 

Exchange DE option are obligated to 

ensure that a minimum of one stateapproved direct enrollment entity meets 

the minimum federal requirements 

applicable to DE entities that seek 

approval to participate in the FFE DE 

program, including requirements at 45 

CFR 155.220 and 155.221, and is 

capable of enrolling all consumers in 

the state. In particular, we explained 

that we believe it is critical that State 

Exchanges that elect to implement the 

Exchange DE option ensure, at a 

minimum, that at least one approved 

web-broker DE entity meets 

requirements that align with the FFE 

standards under 45 CFR 

155.220(c)(3)(i)(A) and (D) 30 to ensure 


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31See, for example, 45 CFR 155.221(b)(1)–(3). In 

the proposed rule, we proposed to provide 

additional flexibilities regarding the plan display 

standards currently captured at 45 CFR 

155.221(b)(1) and (3) in certain circumstances. See 

85 FR at 78616–78618. We intend to address these 

proposals in future rulemaking and, if finalized, 

would also consider and address the intersection 

with the new Exchange DE option as necessary or 

appropriate. 

consumers have at least one option 

through which to view detailed QHP 

information for all available QHPs in the 

state that also meets accessibility 

requirements under 45 CFR 155.205(c). 

Therefore, we proposed that if no direct 

enrollment partner in an SBE–DE state 

meets these requirements, the state 

would be required to continue operation 

of its own Exchange website to ensure 

there is one enrollment pathway in the 

state that does. To assist states in 

meeting requirements to become an 

SBE–DE, we noted that states would 

have the flexibility to partner with an 

existing, HHS-approved web-broker 

direct enrollment partner as a starting 

point to develop their own direct 

enrollment programs, as these entities 

would have already met requirements 

for HHS approval to participate in the 

FFE’s DE program. 

We requested comment on all aspects 

of these proposals, including any 

comments related to timing, governance, 

and any other considerations needed to 

effectively operationalize these 

proposed FFE–DE, SBE–FP–DE, and 

SBE–DE options. The following is a 

summary of the comments we received 

and our responses. 

Comment: We received several 

comments that expressed support for 

the proposed Exchange DE option 

because of the flexibility it provides, 

noting that the Exchange DE option will 

increase consumer choice and 

competition among DE entities, 

potentially leading to reduced costs for 

consumers. These comments also 

included caveats or recommendations. 

For example, one commenter 

recommended delaying implementation 

of the proposed Exchange DE option 

pending additional stakeholder 

consultation to further explore potential 

advantages or disadvantages of the 

proposed Exchange DE option, 

including conducting consumer focus 

groups, accounting for operational 

considerations for QHPs and standalone dental plans (SADP), and 

conducting an assessment of the 

potential impact of the Exchange DE 

option on enrollment and premiums. 

One commenter recommended 

additional consumer support options be 

made available, namely the adoption of 

controls to ensure non-QHP options are 

readily-identifiable. Another commenter 

recommended that HHS work closely 

with DE entities, including issuers, in 

advance of implementation of the 

proposed Exchange DE option to further 

develop operational requirements. This 

commenter also recommended that 

there be one primary website available 

to consumers to enter their information 

so that they do not have to complete 

multiple eligibility applications. 

Response: We appreciate commenters’ 

support for this option and are 

finalizing with some minor clarifying 

edits to the regulatory text. We believe 

the Exchange DE option will provide 

states and Exchanges with additional 

flexibility to tailor consumers’ health 

insurance shopping experience, 

allowing states and their residents to 

reap the expected potential benefits of 

leveraging private sector DE partners, 

including increased choice in consumer 

experience to complete the enrollment 

process, access to information on 

additional plan options, and lower 

costs. We also underscore that this 

option is strictly permissive for states, 

and we welcome states that are 

interested in pursuing these options to 

undertake research, stakeholder 

consultation particularly with issuers 

and web-brokers, and data gathering at 

the state level to inform any operational 

requirements related to how the 

Exchange DE option is implemented to 

ensure it is tailored to meet the needs 

of their residents. 

We also believe it is important for 

consumers to have access to tools and 

resources to compare their coverage 

options. Under the Exchange DE option, 

consumers will be able to view 

standardized information to compare 

QHPs using the website of their choice, 

and will still be able to access 

HealthCare.gov (or similar information 

technology infrastructure in a state with 

a State Exchange) should they choose to, 

or if necessary. Consumers will also 

continue to have access to other 

Exchange tools and resources—such as 

the single, streamlined eligibility 

application, a toll-free telephone 

number to request assistance, an 

electronic calculator to determine the 

actual cost of coverage after the 

application of any APTC and CSRs, as 

well as Navigators, other Assisters, and 

licensed agents and brokers. As detailed 

elsewhere in this final rule, at a 

minimum, the existing FFE DE program 

requirements will continue to apply in 

any state that is approved to implement 

an FFE–DE or SBE–FP–DE. These 

existing requirements include several 

safeguards to ensure non-QHP options 

are readily identifiable.31 For SBE–DE 

states, we finalize in § 155.221(j)(1)(iii) 

the requirement for the state to ensure 

that a minimum of at least one DE entity 

approved by the state meets minimum 

federal requirements to participate in 

the FFE DE program (including the 

FFE’s plan display requirements) and 

we encourage these states to more 

broadly adopt standards similar to the 

existing FFE DE program for all DE 

partners approved by the state. 

We believe that the Exchange DE 

option will drive the private sector to 

make consumer-centric investments that 

will improve consumers’ shopping 

experiences, as these private entities are 

incentivized to provide the best possible 

consumer experience to retain their 

consumer base year-over-year and to 

attract new consumers each year. While 

the Exchange DE option is not available 

today, with an expanded available 

customer base, issuers, web-brokers, and 

individual agents and brokers will have 

an increased incentive to invest in 

providing the resources necessary to 

serve a majority of consumers, and in 

focusing marketing and outreach 

activities to attract new consumers, 

including the currently uninsured 

population. We believe these increased 

incentives to invest in the consumer 

enrollment experience will, over time, 

increase consumer enrollment by 

persons who would not otherwise have 

enrolled, a potentially healthier 

population who may improve the health 

of the risk pool and lead to lower 

premiums. 

Comment: Nearly all commenters on 

this rulemaking cautioned about 

potential harmful impacts to consumers 

from the introduction of the Exchange 

DE option. Commenters asserted that 

the Exchange DE option may effectively 

eliminate access to HealthCare.gov and 

State Exchange websites, by allowing 

access to apply and enroll for QHP 

coverage through multiple private 

websites operated by DE entities. 

Commenters believed that because 

existing Exchange consumers have 

established relationships with, and have 

relied on, the centralized Exchange 

enrollment website in their state to 

serve as an unbiased resource to provide 

eligibility determinations, enroll in 

QHPs, and receive APTC/CSR eligibility 

determinations, the Exchange DE option 

would result in a new, fragmented 

process that would likely lead to 

consumer confusion and mistrust. They 

further stated that the negative impacts 

of effectively eliminating the Exchangerun enrollment websites as an option 

would outweigh the benefits of making 

this new option available to consumers. 

One commenter, which operates as an 

EDE entity, noted that while DE entities 

account for a significant volume of 


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HealthCare.gov enrollment today, 

elimination of the centralized FFE or 

SBE enrollment platforms would lead to 

various forms of disruption for the 

majority of consumers who already are 

accustomed to relying on an Exchangeoperated website for enrollment. 

Response: We understand 

commenters’ concerns about the 

potential impact of the Exchange DE 

option and acknowledge that any 

transition or change can be unsettling 

and disruptive. However, we disagree 

that the potential negative impacts of 

the Exchange DE option outweigh the 

benefits given the success of the Federal 

DE and EDE pathways, and we note that 

the Exchange DE option is not a 

requirement for states, and that states 

have ample flexibility to tailor 

operational requirements and any 

transition steps to the needs of their 

health care markets. We also note that 

several states have made full transitions 

from the FFE to become an SBE, 

providing models of successful 

transitions to new enrollment platforms 

with minimal disruptions. In addition, 

an Exchange in a state that elects this 

option must at a minimum continue to 

operate an internet website that 

provides the same standardized 

comparative QHP information that is 

available today, along with an up-todate listing of approved DE entities 

operating in the state. We believe that 

the continued availability of this 

website will mitigate any potential 

consumer confusion caused by the 

availability of multiple enrollment 

pathways. We further note that in states 

that choose to implement the Exchange 

DE option, the Exchange will remain 

available to consumers whose eligibility 

applications cannot be processed by an 

approved DE entity. States choosing the 

Exchange DE option also have the 

flexibility to continue making available 

its Exchange eligibility and enrollment 

website despite the availability of DE 

partner websites, or to define other 

instances in which the Exchange 

enrollment website would be available 

to consumers, including instances in 

which a consumer makes a request to 

apply through an Exchange-run website. 

We are also requiring that Exchanges in 

states choosing to implement the 

Exchange DE option continue to meet 

all applicable statutory and regulatory 

requirements. This includes, but is not 

limited to, the Exchange retaining 

responsibility for making all 

determinations of whether an applicant 

is eligible for QHP enrollment, APTC, 

and CSRs, conducting required 

verifications of consumer eligibility 

against trusted data sources, and 

conducting assessments or 

determinations of eligibility for 

Medicaid and CHIP for all applicants, 

and where appropriate, refer individuals 

assessed or determined eligible for such 

coverage to the appropriate state 

Medicaid agency for enrollment in those 

programs. Consumers will therefore 

continue to have access to an unbiased 

resource for comparative QHP 

information and eligibility 

determinations in states that elect this 

option. We also strongly encourage DE 

entities to undergo appropriate 

coordination efforts with the Exchange. 

In particular, additional coordination 

will be required to ensure consumer 

communications, particularly consumer 

eligibility notices sent by the Exchange 

regarding coverage obtained by 

enrolling through a DE entity website do 

not result in consumer confusion. 

The FFE already has experience 

transitioning consumers already 

enrolled in Exchange coverage through 

HealthCare.gov between enrollment 

platforms to new State Exchange 

platforms as evidenced by the 

successful transitions of SBE–FP states 

to SBE states. Most recently, ahead of 

the plan year 2021 open enrollment 

period, New Jersey and Pennsylvania 

transitioned from SBE–FPs to SBEs. 

Among the most critical work streams 

associated with these transitions was 

the migration of these states’ consumer 

eligibility and enrollment data from 

HealthCare.gov to the respective State 

Exchange eligibility and enrollment 

platforms such that existing Exchange 

consumers could re-enroll directly 

through the State Exchange. We believe 

that any consumer disruptions can be 

minimized during a transition process 

by incorporating safeguards during the 

transition, such as robust stakeholder 

consultation with issuers and other 

partners, proactive coordination with 

other state agencies, targeted consumer 

outreach and education, and 

contingency planning to ensure 

consumers can fall back on 

HealthCare.gov if needed. The 

implementation plans developed under 

§ 155.221(j)(1)(ii) and (j)(2)(i) should 

include details on any such measures. 

In addition, for states pursuing the SBE– 

DE option, HHS intends to examine 

these types of issues as part of the 

operational readiness assessment under 

§ 155.221(j)(1)(i). Based on the FFE’s 

experience, we expect that given the 

ability of existing DE entities to meet 

consumer needs and reduce burden on 

Exchanges, introducing DE entities as 

the primary consumer-facing pathway to 

enroll in coverage in states that elect 

this new option will be beneficial to all 

stakeholders. 

Comment: An overwhelming majority 

of commenters on this rulemaking 

argued that there are potential conflicts 

of interest, particularly financial 

incentives, that would put DE entities at 

odds with consumers seeking coverage 

and the policy goals of PPACA. 

Commenters noted that the proposed 

Exchange DE option will increase the 

incentive for DE entities, particularly 

agents and brokers, to compete among 

each other for commissions, which 

could lead to consumers being directed 

to the most profitable products, rather 

than those best-suited for their health 

care needs. Several commenters 

emphasized that, in many cases, the 

most profitable product for DE entities 

is non-QHP coverage. Commenters thus 

fear that the Exchange DE option could 

lead to deceptive marketing practices 

and an increase in fraud, as well as 

more consumers who are uninsured, or 

who enroll in coverage even if it does 

not adequately meet their health care 

needs. Commenters were also concerned 

that the Exchange DE option could 

result in consumers being steered 

toward less robust non-comprehensive 

coverage (for instance, short-term 

limited duration insurance (STLDI) 

plans) that generally bring higher 

commissions to agents and brokers and 

web-brokers, but do not meet PPACA 

requirements. Commenters also asserted 

that consumers could be required to pay 

higher out-of-pocket costs because they 

did not receive information related to, 

or were misinformed about, the 

availability of Exchange financial 

assistance. A few commenters raised 

similar concerns related to Navigators 

and other Exchange assisters using DE 

entity websites to enroll consumers 

since consumers could be misled by the 

inclusion of non-QHP products on the 

DE entity websites, by the omission of 

critical information related to coverage 

options, or by confusion that could 

result when consumers are required to 

visit multiple DE entity websites to 

review comprehensive information on 

all available QHPs in a state. 

Several commenters also raised 

concerns about protecting consumer 

privacy and security under the 

Exchange DE option, under which a 

consumer must share personally 

identifiable information with a private 

DE entity that could be misused in the 

absence of a robust regulatory 

framework to protect against this abuse. 

We also received many comments that 

cautioned against potential negative 

impacts of working with DE entities to 

coordinate coverage with other 

insurance affordability programs. In 


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32See, for example, 45 CFR 155.220(j)(2)(i) and 

156.1230(b)(2). Also see supra note 30. 

33See Sec. 202 of Division BB of Public Law: 

116–260, the Consolidated Appropriations Act, 

2021, signed into law on 12/27/2020. https://

www.congress.gov/bill/116th-congress/house-bill/ 

133. 

particular, commenters noted that DE 

entities generally do not have the 

incentive or expertise to ensure 

consumers receive a Medicaid eligibility 

assessment or determination, and to 

subsequently transfer them to the 

appropriate state website to complete 

the enrollment process. These 

commenters requested additional 

information on how HHS would ensure 

that this coordination of coverage will 

occur in order for HHS to maintain its 

‘‘no wrong door’’ policy. 

Response: We acknowledge that there 

must be sufficient oversight of all states 

approved to implement the Exchange 

DE option, as well as oversight of the DE 

entities themselves, to ensure the proper 

alignment and management of 

incentives. The many comments we 

received that raised concerns around 

potential misalignment of incentives 

and conflicts of interest serve to 

highlight key areas where HHS and the 

states can be proactive to implement 

additional controls and work closely 

with DE entities to prevent fraud, waste, 

and abuse, particularly with respect to 

protecting against deceptive marketing 

and inappropriate steering. We reiterate 

that, at a minimum, the existing FFE DE 

program requirements will continue to 

apply in any state that is approved to 

implement an FFE–DE or SBE–FP–DE. 

These existing requirements include 

safeguards to protect against deceptive 

marketing practices and ensure 

consumers have the information they 

need to make informed decisions.32 For 

SBE–DE states, we finalize in 

§ 155.221(j)(1)(iii) the requirement for 

the state to ensure that a minimum of at 

least one DE entity approved by the 

state meets minimum federal 

requirements to participate in the FFE 

DE program (including the FFE’s 

safeguards to protect against deceptive 

marketing practices and ensure 

consumers have the information needed 

to make informed decisions) and we 

encourage these states to more broadly 

adopt standards similar to the existing 

FFE DE program for all DE partners 

approved by the state. We note too that 

recent federal legislation addressing 

surprise billing 33 generally requires 

issuers of STLDI plans to disclose to 

potential enrollees any broker 

commissions for STLDI plans prior to 

plan selection. This transparency 

requirement should further mitigate risk 

presented by any misalignment of 

incentives that could result in 

inappropriate steering. Other controls 

could also be implemented by states to 

check misalignment of incentives and 

mitigate the risk that DE entities will 

improperly steer consumers toward 

non-QHP products and allow consumers 

to make informed choices. 

We also reiterate that DE entities 

operating under the FFE–DE and SBE– 

FP–DE options would be required to 

meet FFE privacy and security 

standards while SBE–DEs have the 

flexibility to ensure similar standards 

are in place to protect consumer 

information. HHS intends to continue to 

strengthen the regulatory and 

operational controls that would apply to 

DE entities operating in FFE and SBE– 

FP states that elect this option to ensure 

that sufficient protections are in place. 

Generally, assuming due diligence and 

appropriate regulatory and operational 

safeguards to ensure oversight over DE 

entities, and taking into account that 

these organizations have a strong 

business interest in serving their 

customers effectively to maintain their 

customers, we believe that the balance 

of risk is acceptable. Thus, we believe 

that the potential benefits of the 

Exchange DE option outweigh the 

burdens of oversight and the risk of 

fraud, waste, and abuse. 

We also agree that it is important for 

consumers to continue receiving 

Medicaid and CHIP eligibility 

assessments or determinations when 

they apply for Exchange QHP 

enrollment and financial assistance 

through DE entities. In states 

implementing the Exchange DE option, 

the Exchange would still be required to 

establish and maintain the single, 

streamlined eligibility application as 

required under § 155.405, and make 

eligibility assessments and 

determinations of Medicaid or CHIP 

eligibility as required under § 155.302. 

Exchanges would also remain the entity 

responsible for making all 

determinations of whether an applicant 

is eligible for QHP enrollment, APTC, 

and CSRs, conducting required 

verifications of consumer eligibility 

against trusted data sources, and SBE– 

FPs and FFEs that elect this option can 

choose among HHS-approved entities 

already operating through the FFE’s DE 

program, and we are requiring SBE–DEs 

to have at least one DE entity with 

whom they partner that can display and 

allow for enrollment in all QHPs 

available in the state. We also intend to 

work closely with states electing this 

option to ensure that they meet these 

and other applicable requirements, and 

that there are appropriate back-end 

application interfaces in place between 

the Exchange’s eligibility platform and 

approved DE entities to ensure that all 

consumers have a seamless experience 

completing the single, streamlined 

eligibility application and receiving an 

eligibility determination just as if they 

were applying for coverage directly 

through the Exchange website. These 

are examples of the areas HHS intends 

to focus on when assessing an SBE–DE 

state’s operational readiness under 

§ 155.221(j)(1)(i) and implementation 

plan under § 155.221(j)(1)(ii). For states 

interested in pursuing the FFE–DE or 

SBE–FP–DE option, these are areas that 

would need to be considered and 

addressed, as appropriate, as part of the 

implementation plan under 

§ 155.221(j)(2)(i) and the Federal 

agreement under § 155.221(j)(2)(ii). 

While we acknowledge comments that 

the Exchange DE option could produce 

a disjointed enrollment process to a 

certain degree for some consumers, we 

believe that the benefits of providing 

consumers with more options outweigh 

the drawbacks, especially since they 

will still be completing the single, 

streamlined eligibility application on an 

approved DE partner’s website in order 

to access APTCs and CSRs, or access 

Medicaid and CHIP coverage, if eligible. 

We also believe our focus on 

coordinating closely with states as part 

of the rollout process and transition to 

the Exchange DE option will help 

mitigate any risk of a reduction in 

Exchange or Medicaid and CHIP 

enrollment, as well as any potential 

increase in the uninsured. 

Finally, the availability of the 

Exchange DE option does not directly 

affect the existence or operation of 

Navigator and other assister programs 

created by PPACA. As indicated above 

and detailed in the proposed rule, states 

that implement the Exchange DE option 

(DE states) will still be required to 

establish a Navigator program as 

required under section 1311(d)(4)(K) of 

PPACA. In all states that are approved 

to implement the DE option, the 

Exchange in the state must continue to 

make available an internet website that 

provides the same standardized 

comparative information on QHP 

options that is available on Exchange 

websites today. Therefore, Navigators 

and certified application counselors 

(collectively assisters), as well as agents 

and brokers, in DE states will still be 

able to view on State Exchange websites 

or HealthCare.gov, as applicable, 

comparative information for all QHP 

options available in the state, and will 

also be able to access information to 

connect with approved DE entities in 

their states. Moreover, each DE state 


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34See 85 FR 78613. 

35As detailed in the proposed rule, we are also 

revisiting our policy regarding the ability of FFE 

assisters’ use of web-broker non-Exchange websites. 

See 85 FR at 78611–78614. If finalized as proposed, 

this policy change would permit assisters in FFEs 

and SBE–FPs to also use web-broker non-Exchange 

websites to assist consumers with QHP selection 

and enrollment, provided certain conditions are 

met. 

36We further note that HHS met its obligations 

under section 1103 of PPACA when it established 

the internet Portal and developed the standardized 

format to be used for the presentation of 

information on coverage option by July 1, 2010. See, 

for example, Health Care Reform Insurance Web 

Portal Requirements; Interim Final Rule with 

Comment Period, 75 FR 24470 (May 5, 2010). We 

also disagree with commenters who suggested that 

sections 1302 or 1312 of PPACA are legal obstacles 

to the adoption of the Exchange DE option. Section 

1302 relates to the development of the essential 

health benefits package and accompanying benefit 

requirements (for example, requirements related to 

cost-sharing and actuarial value levels of coverage). 

Section 1312 establishes requirements related to 

consumer choice and the establishment of single 

risk pools by issuers. As such, section 1302 and 

section 1312’s single risk pool provisions generally 

outline benefits, plan design, and rating 

requirements applicable to issuers of nongrandfathered health insurance coverage, and 

issuers must continue to comply with these 

requirements in any state that elects to adopt the 

Exchange DE option. The other provisions in 

section 1312, such as those related to consumers’ 

choice of whether to enroll in coverage through an 

Exchange, the continued operation of the market 

outside the Exchanges, the option for states to allow 

agents or brokers to assist with Exchange 

enrollments, and the enrollment of members of 

Congress in plans offered through an Exchange also 

would continue to apply in states that elect to adopt 

the Exchange DE option and do not preclude our 

finalizing the Exchange DE option. 

37For FFE states that elect and are approved to 

transition to the FFE–DE option, CMS, on behalf of 

HHS will continue to be responsible for operation 

of the Exchange consistent with section 1321(c)(1). 

38See, for example, section 1311(f)(3). 

39See section 2723(a)(1) of the PHS Act and 

section 1321(c)(2). 

must ensure that at least one DE entity 

website is capable of processing all 

eligibility applications, including those 

that present complex enrollment 

scenarios, or else the state must 

continue to make available its own 

website that possesses such capability. 

Finally, we note that the DE option 

requirements we finalize in this rule 

will provide Navigators and certified 

application counselors greater flexibility 

to effectively assist consumers than 

currently exists under the FFE’s assister 

programs. For instance, in 2015 the FFE 

issued guidance (the 2015 guidance) 

instructing that FFE assisters should not 

use non-Exchange websites when 

providing enrollment assistance except 

as reference tools to supplement 

information on HealthCare.gov. But 

given the consumer protections that will 

apply in DE option states to ensure 

ready access to information on all QHPs 

available in a state (which include 

consumer-protective requirements that 

were not in place at the time we 

published the 2015 guidance),34 there is 

no need to similarly limit assisters’ 

ability to use DE entity websites to assist 

consumers.35 We appreciate that actual 

implementation of the DE option will 

require states and HHS to closely 

monitor the program to ensure that 

consumers are receiving complete and 

accurate information and effective 

assistance. In the event HHS becomes 

aware of the need for additional or 

different DE option requirements, or 

greater clarity regarding DE option 

requirements, HHS may issue future 

guidance or pursue future rulemaking. 

Comment: Many commenters argued 

that HHS does not have the legal 

authority under sections 1103,1302, 

1311, or 1312 of PPACA to permit states 

and Exchanges to implement the 

Exchange DE option. Some commenters 

also argued that the Exchange DE option 

violates the spirit and intent of PPACA 

and represents an attempt to replace 

congressional legislation in violation of 

the Administrative Procedure Act 

(APA). Other commenters argued that 

the Exchange DE option is not based on 

a reasonable interpretation of specific 

aspects of PPACA and implementing 

regulations. In particular, some 

commenters argued that the Exchange 

DE option violates Section 1311(d)(1) of 

PPACA that requires that Exchanges be 

operated by a ‘‘governmental agency or 

nonprofit entity that is established by a 

State.’’ Some commenters also argued 

that HHS does not have the authority to 

delegate essential government functions 

currently performed by Exchanges to 

private entities. 

Response: We disagree. The Exchange 

DE option requires that participating 

states and HHS continue to meet all 

applicable requirements of PPACA, 

including applicable requirements 

under section 1311 of PPACA. This is 

captured in the regulatory text at 

§ 155.221(j)(1) and (2), which states that 

Exchanges must meet all federal 

statutory and regulatory requirements 

for the operation of an Exchange. As 

detailed above and in the proposed rule, 

Exchanges in states that elect this option 

must continue to provide the required 

minimum functions established in 

PPACA and comply with applicable 

requirements. This includes the 

responsibility to make all 

determinations of whether an applicant 

is eligible for QHP enrollment, APTC, 

and CSRs; conducting required 

verifications of consumer eligibility 

against trusted data sources; conducting 

assessments or determinations of 

eligibility for Medicaid and CHIP, and 

where appropriate, referring individuals 

who are assessed or determined eligible 

for Medicaid or CHIP to the appropriate 

state agency for enrollment in those 

programs; certifying plans as QHPs, 

making QHPs available to consumers, 

and facilitating the purchase of QHPs; 

granting exemption certifications, as 

applicable; making an electronic 

calculator available; establishing a 

Navigator program; and providing for 

the operation of a toll-free telephone 

hotline. In the context of operating an 

internet website, we interpret the 

statutory language at section 1311(c)(5) 

and (d)(4)(C) of PPACA to require that 

Exchanges provide consumers with the 

ability to view comparative information 

on QHP options, but that the Exchange 

may direct consumers to other entities 

or resources for purposes of submitting 

applications for eligibility and enrolling 

in QHPs, with APTC and CSRs, if 

otherwise eligible. An Exchange can 

continue to meet these obligations 

without operating a consumer-facing 

enrollment website and Exchanges in 

states that elect this option must 

continue to operate a website that 

provides the same standardized 

comparative information about QHPs 

that is available today.36 In addition, we 

maintain that states choosing to 

transition to the SBE–DE or SBE–FP–DE 

option must still meet the requirements 

of Section 1311(d)(1) of PPACA.37 The 

arrangements that states would make 

with the DE entities approved to 

provide a consumer shopping and 

enrollment portal would be no different 

than the current contracting 

arrangements that HHS enters into today 

with approved partners who participate 

in the FFE DE program. It is also similar 

to the arrangements Exchanges may 

enter into today to provide other 

services, such as a call center, to their 

consumers.38 Finally, we note how the 

Exchange DE option aligns with the 

general structure of how PPACA assigns 

states substantial authority to 

administer provisions of the law— 

including giving states the primary 

responsibility to create Exchanges and 

relying on states as the primary 

enforcers of PPACA’s insurance 

regulations and Exchange 

requirements.39 Accordingly, HHS is of 

the view that the Exchange DE option is 

consistent with the language, spirit, and 

intent of PPACA and its implementing 

regulations and there is sufficient 

authority to permit states to pursue this 

option. Moreover, consumers would 

still have available to them a centralized 

website, operated by the Exchange, to 

obtain standardized comparative 

information about available QHPs, as 


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40As detailed in Georgia’s approval letter and 

Specific Terms and Conditions (STCs), the 

Exchange requirements in sections 1311(b), (c), (d), 

(e) and (i) are waived to the extent they conflict 

with the Georgia Access Model as described in the 

state’s approved waiver. See https://www.cms.gov/ 

CCIIO/Programs-and-Initiatives/State-InnovationWaivers/Section_1332_State_Innovation_Waivers-/ 

1332-GA-Approval-Letter-STCs.pdf. 

41See O.C.G.A. sec. 33–1–23, available at: https:// 

law.justia.com/codes/georgia/2019/title-33/chapter1/section-33-1-23. 

42See 45 CFR 155.260 through 155.285. 

43See 45 CFR 155.220, 155.221 and 156.1230. 

well as information about and links to 

approved partners’ enrollment websites. 

Finally, they would still have access to 

the Exchange itself to apply for, and 

enroll in, coverage should that be 

necessary. Given that states electing the 

Exchange DE option remain subject to 

the requirements of PPACA and its 

implementing regulations, we further 

disagree that the flexibility we are 

providing to meet those requirements 

constitutes an attempt to replace 

congressional legislation in violation of 

the APA. 

Comment: Many commenters argued 

that the Exchange DE option is not 

legally permissible in the absence of a 

section 1332 waiver, and should only be 

approved through the section 1332 

waiver process. Some commenters 

highlighted in particular the benefits of 

the section 1332 waiver public notice 

and comment process as an additional 

safeguard that they asserted would be 

beneficial to any state interested in 

pursuing the Exchange DE option. Some 

commenters further argued that 

Georgia’s recent section 1332 waiver 

proposal to implement activities similar 

to those proposed under the Exchange 

DE option was wrongfully approved and 

that even if another state were to apply 

for a section 1332 waiver to implement 

the Exchange DE option, such a waiver 

plan would violate section 1332’s 

coverage guardrail because they believe 

enrollment would generally be reduced. 

Response: The merits of the 

Departments’ decision to approve 

Georgia’s section 1332 waiver is not in 

the scope of this rulemaking. However, 

we clarify that a section 1332 waiver is 

not required for a state to be approved 

for and to implement the Exchange DE 

option. Georgia’s section 1332 waiver is 

distinguishable from the Exchange DE 

option we finalize here because states 

that elect and implement the Exchange 

DE option would still be required to 

meet all Exchange requirements under 

PPACA, while under its section 1332 

waiver plan Georgia waived certain 

Exchange requirements under section 

1311.40 Moreover, under Georgia’s 

section 1332 waiver, consumers in 

Georgia will no longer be able to access 

and utilize HealthCare.gov, and a state 

statute expressly prohibits the state from 

implementing a State Exchange and 

from establishing a Navigator program 

or its equivalent.41

In contrast, in states that elect the 

FFE–DE or SBE–FP–DE option, 

consumers will continue to have the 

HealthCare.gov website available to 

them to view standardized comparative 

information about QHPs and the 

Exchange will be required to continue to 

operate its respective Navigator 

program. States that elect to become or 

transition to an SBE–DE would similarly 

be required to maintain and make 

available the State Exchange website for 

standardized comparative information, 

the state’s respective Navigator program 

to assist consumers, and the state’s 

associated eligibility rules engine to 

make eligibility determinations, as well 

as the state’s enrollment platform, in the 

event that there is not a DE entity 

capable of processing a consumer’s 

application. We also recognize the 

importance of a meaningful public 

notice and comment process, and note 

that states that elect to pursue the 

Exchange DE option have the discretion 

to provide for a state public notice and 

comment process should they deem it to 

be beneficial. 

Comment: Many commenters noted 

that programmatic guardrails or 

operational parameters are not 

adequately defined and incorporated 

into the rule to allow for effective 

implementation of the Exchange DE 

option, particularly with respect to 

ensuring oversight over DE entities. In 

particular, commenters noted a lack of 

clarity about the responsibilities of DE 

entities regarding administering 

consumer education and assistance to 

ensure consumers are not confused or 

misled about their coverage options. In 

particular, commenters noted that it is 

not clear how HHS would ensure DE 

entities operate in an unbiased, 

transparent manner such that 

consumers can effectively compare and 

make an informed choice among all 

available QHP options, know when they 

are viewing non-QHP options, and 

receive information on public coverage 

options they may be determined eligible 

for, such as Medicaid and CHIP. Several 

commenters noted that we should be 

more definitive about the 

responsibilities of the DE entities 

regarding display of QHPs and choice of 

QHPs, including how DE entities and 

Exchanges should handle the scenario 

where a consumer wishes to enroll in an 

issuer’s QHP when a particular DE 

entity is not appointed to sell products 

by that issuer. 

Response: In proposing the Exchange 

DE option, we wanted to strike an 

appropriate balance to provide states 

with appropriate flexibility to 

implement the Exchange DE option in a 

manner that is tailored to the needs of 

their unique health care markets while 

still meeting the applicable federal 

requirements. We have included a broad 

framework of baseline federal 

requirements governing the Exchange 

DE option in this final rule and 

welcome states interested in pursuing 

this option to adopt any additional 

state-specific requirements they deem 

necessary to effectively oversee DE 

entities and protect consumers. It is 

important to note that the framework of 

programmatic parameters and federal 

requirements governing the Exchange 

DE option included in this final rule is 

meant to serve as a floor and not a 

ceiling. We also share commenters’ 

concerns about ensuring effective 

oversight over DE entities and 

protecting consumers. As explained in 

the proposed rule, given that an FFE–DE 

or SBE–FP–DE state would use one or 

more DE entities approved to participate 

in the FFE DE program, at a minimum, 

the FFE privacy and security 

standards 42 and the FFE DE program 

requirements 43 would continue to 

apply. This includes the requirement for 

web brokers under § 155.220(c)(3)(i)(B) 

to provide consumers with the ability to 

view all QHPs offered through the 

Exchange and the corresponding similar 

requirement for issuers at 

§ 156.1230(a)(1)(ii); the requirement for 

web brokers under § 155.220(c)(3)(i)(A) 

to display QHP information comparable 

to information available on the 

Exchange website or display a subset of 

QHP information and a disclaimer with 

a link to the Exchange and the 

corresponding similar requirement for 

issuers at § 156.1230(a)(1)(iv); as well as 

the requirements at §§ 156.1230(b)(2) 

and 155.220(j)(2)(i) applicable to all DE 

entities to provide consumers with 

correct information, without omission of 

material fact, and refrain from marketing 

or conduct that is misleading, coercive, 

or discriminatory. 

For SBE–DE states, we codify in 

§ 155.221(j)(1)(iii) the requirement for 

the state to ensure that a minimum of at 

least one DE entity approved by the 

state meets minimum federal 

requirements for HHS approval to 

participate in the FFE DE program 

(including the examples highlighted in 

the prior sentence) and we encourage 

these states to more broadly adopt 

processes and standards similar to the 


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existing FFE DE program for all DE 

partners approved by the state. At the 

same time, however, SBE–DE states 

would retain general flexibility to 

determine their own business controls, 

as well as to decide the state-specific 

requirements and mechanisms for 

approval and oversight of direct 

enrollment entities operating in the 

state. HHS would review and assess an 

SBE–DE state’s process, standards and 

oversight approach for DE entities as 

part of the operational readiness 

assessment under § 155.221(j)(1)(i). We 

also intend to continue engaging 

stakeholders on, and develop, 

additional programmatic and 

operational requirements through future 

rulemaking and sub-regulatory 

guidance, as necessary or appropriate. 

Furthermore, additional technical 

assistance and operational details 

related to implementation of the FFE– 

DE and SBE–FP–DE options may be best 

defined and addressed during the 

development of the implementation 

plan under § 155.221(j)(2)(i) and the 

federal agreement that states electing to 

implement the FFE–DE or SBE–FP–DE 

option must execute with HHS under 

§ 155.221(j)(2)(ii). This approach allows 

HHS to be responsive to programmatic 

and operational concerns in real time, as 

well as tailor the implementation to 

meet a state’s unique market conditions 

or needs of its residents. 

Comment: Several supportive 

commenters recommended that CMS 

delay implementation of the Exchange 

DE option pending further research, 

evidence gathering, stakeholder 

consultation, and a more robust public 

comment process to quantify potential 

impacts and adequately inform 

programmatic and operational 

parameters. Many opposing commenters 

requested that we strike it from this 

rulemaking entirely for the same 

reasons. In particular, commenters 

noted interest in potential impacts on 

premiums, as well as how enrollment in 

various insurance affordability programs 

and the uninsured could impact the risk 

pool. Other commenters noted that it is 

not clear that the Exchange DE option 

represents a better value proposition 

than the current centralized Exchange 

enrollment model and requested that 

HHS gather additional data to quantify 

the value of this new option. 

Commenters questioned the premise 

that a centralized consumer-facing 

website is less efficient than fracturing 

the consumer-facing pathway and 

consumer experience among multiple 

platforms, potentially leading to 

increased cost and burden on 

consumers. Many commenters also 

contend that a centralized consumerfacing website is the more efficient and 

effective model for states and 

Exchanges, as well, rather than the state 

or an Exchange having to manage 

multiple DE entity relationships and 

their associated technical infrastructure, 

including multiple DE entity websites 

and their interfaces to the back-end 

Exchange eligibility and enrollment 

platform that must be managed under 

the Exchange DE option. 

Response: We proposed and are 

finalizing this new Exchange DE option 

in response to our experience operating 

the HealthCare.gov platform and 

stakeholder feedback, including the 

comments about challenges related to 

Exchanges becoming a dominant publicsector competitor that can crowd out 

other market players. We also 

emphasize this option is strictly 

permissive for states. Whether the 

Exchange DE option or a centralized 

Exchange website is more efficient, or 

provides better value, for a given state 

is contingent on the unique 

circumstances of that state’s health care 

market and the needs of its residents. 

Therefore, we do not believe that one or 

the other can be characterized as 

generally more efficient, or a better 

value, across all states. As states 

consider and elect the Exchange DE 

option, we will coordinate and engage 

in information sharing with these states 

as appropriate to assess the efficacy and 

value of this option from the federal 

perspective. This will help inform our 

continued consideration and 

development of programmatic and 

operational parameters and any 

additional regulatory requirements 

related to these options. Given that the 

health care market of each state is 

unique, we also welcome states that are 

interested in pursuing the Exchange DE 

option to undertake their own research, 

stakeholder consultation, and data 

gathering to determine whether it 

represents a sensible value proposition 

for their consumers. We also welcome 

the sharing of any information and data 

on findings, best practices, and lessons 

learned. Finally, expected impacts to 

the premiums and the risk pool have 

been addressed in the Regulatory Impact 

Analysis (RIA) in this rulemaking. 

Comment: A few commenters noted 

that the potential consequences of the 

Exchange DE option, including 

Exchanges no longer serving as the 

single pathway for many to get covered, 

present potential barriers to accessing 

QHP or Medicaid coverage, and risks of 

being underinsured or becoming 

uninsured would disproportionately 

impact various vulnerable groups, 

namely historically-marginalized 

populations, individuals with preexisting conditions, individuals with 

substance-abuse disorders, rural and 

low-income populations, non-Englishspeaking populations, and others. One 

commenter noted that it could 

encourage health inequities between 

white communities and communities of 

color particularly with respect to 

substance abuse addiction. 

Response: We share concerns about 

health disparities and the 

disproportionate impact on vulnerable 

population groups or the creation of 

inequity that exist in today’s health care 

system, and commend commenters for 

identifying these issues as particular 

areas where HHS and states can remain 

proactive and diligent. States that elect 

to pursue the SBE–DE option should 

consider these issues and detail their 

communication and outreach strategy to 

target vulnerable populations as part of 

the implementation plan required under 

§ 155.221(j)(1)(ii). Similarly, HHS will 

partner with FFE–DE and SBE–FP–DE 

states to consider these issues when 

developing the implementation plan 

under § 155.221(j)(2)(i). Through the 

various requirements and controls we 

are finalizing, particularly accessibility 

and non-discrimination requirements, 

the requirement that the Exchange 

remain available to consumers who 

need it, as well as the flexibility states 

will have to implement additional 

requirements and controls to protect 

consumers, we believe that such 

disproportionate impacts can be 

prevented or mitigated. We note that the 

Exchange DE option offers a platform for 

multiple DE entities to compete to serve 

consumers, which creates an 

opportunity for DE entities to specialize 

to serve specific populations, including 

vulnerable populations. As such, the 

Exchange DE option holds potential to 

better connect vulnerable populations to 

coverage than a centralized one-size-fitsall Exchange model. Again, we welcome 

the sharing of any information and data 

on findings, best practices, and lessons 

learned. 

Following our review of the 

comments, we are finalizing this 

proposal but have amended the 

regulatory text to underscore our 

requirement that State Exchanges 

electing the DE option must ensure at a 

minimum, that at least one approved 

web-broker DE entity meets 

requirements that align with the FFE 

standards under §§ 155.220 and 155.221 

to ensure consumers have at least one 

option through which to view detailed 

QHP information for all available QHPs 

in the state and enroll in a QHP. We 

have also incorporated minor clarifying 

edits throughout the regulatory text. We 


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will also continue to assess the need for 

any additional programmatic and 

operational parameters, as well as any 

additions to the regulatory 

requirements, to ensure necessary 

protections for consumers in states that 

implement the Exchange DE option. 

B. Part 156—Health Insurance Issuer 

Standards Under the Affordable Care 

Act, Including Standards Related to 

Exchanges 

1. User Fee Rates for the 2022 Benefit 

Year (§ 156.50) 

a. FFE and SBE–FP User Fee Rates for 

the 2022 Benefit Year (§ 156.50(c)) 

Section 1311(d)(5)(A) of PPACA 

requires states to ensure that Exchanges 

are self-sustaining, which may include 

the state allowing an Exchange to charge 

assessments or user fees on participating 

health insurance issuers as a means of 

generating funding to support its 

operations. If a state does not elect to 

operate an Exchange or does not have an 

approved Exchange, section 1321(c)(1) 

of PPACA directs HHS to operate an 

Exchange within the state. Accordingly, 

in § 156.50(c), we specify that a 

participating issuer offering a plan 

through an FFE or SBE–FP must remit 

a user fee to HHS each month that is 

equal to the product of the annual user 

fee rate specified in the annual HHS 

notice of benefit and payment 

parameters for FFEs and SBE–FPs for 

the applicable benefit year and the 

monthly premium charged by the issuer 

for each policy where enrollment is 

through an FFE or SBE–FP. In addition, 

OMB Circular No. A–25 establishes 

federal policy regarding the assessment 

of user charges under other statutes and 

applies to the extent permitted by law. 

Furthermore, OMB Circular A–25 

specifically provides that a user fee 

charge will be assessed against each 

identifiable recipient of special benefits 

derived from federal activities beyond 

those received by the general public. 

Activities performed by the federal 

government that do not provide issuers 

participating in an FFE with a special 

benefit are not covered by this user fee. 

As in benefit years 2014 through 2021, 

issuers seeking to participate in an FFE 

in the 2022 benefit year will receive two 

special benefits not available to the 

general public: (1) The certification of 

their plans as QHPs; and (2) the ability 

to sell health insurance coverage 

through an FFE to individuals 

determined eligible for enrollment in a 

QHP. 

For the 2022 benefit year, issuers 

participating in an FFE will receive 

special benefits from the following 

federal activities: 

• Provision of consumer assistance 

tools; 

• Consumer outreach and education; 

• Management of a Navigator 

program; 

• Regulation of agents and brokers; 

• Eligibility determinations; 

• Enrollment processes; and 

• Certification processes for QHPs 

(including ongoing compliance 

verification, recertification, and 

decertification). 

Activities through which FFE issuers 

receive a special benefit also include the 

Health Insurance and Oversight System 

(HIOS) and Multidimensional Insurance 

Data Analytics System (MIDAS) 

platforms, which are partially funded by 

Exchange user fees. Based on estimated 

costs, enrollment (accounting for 

anticipated establishment of state 

Exchanges in certain states in which 

FFEs are currently operating), and 

premiums for the 2021 plan year, we 

proposed a 2022 user fee rate for all 

participating FFE issuers at 2.25 percent 

of total monthly premiums. This 

proposed user fee rate reflects our 

estimates for the 2022 benefit year of 

costs for operating the FFEs, premiums, 

enrollment, and transitions in Exchange 

models (from the FFE and SBE–FP 

models to either the SBE–FP, FFE–DE or 

State Exchange models (state 

transitions)). The proposed FFE user fee 

rate is lower than the 3.0 percent FFE 

user fee rate that we established for 

benefit years 2020 and 2021, and the 3.5 

percent FFE user fee rate that we 

established for benefit years 2014 

through 2019. After accounting for the 

impact of the lower user fee rate, we 

estimated that we would have the 

necessary funding available to fully 

fund user-fee eligible Exchange 

activities in 2022. We sought comment 

on this proposed 2022 FFE user fee rate. 

As previously discussed, OMB 

Circular No. A–25 establishes federal 

policy regarding user fees, and specifies 

that a user charge will be assessed 

against each identifiable recipient for 

special benefits derived from federal 

activities beyond those received by the 

general public. SBE–FPs enter into a 

federal platform agreement with HHS to 

leverage the systems established for the 

FFEs to perform certain Exchange 

functions, and to enhance efficiency and 

coordination between state and federal 

programs. Accordingly, in 

§ 156.50(c)(2), we specify that an issuer 

offering a plan through an SBE–FP must 

remit a user fee to HHS, in the 

timeframe and manner established by 

HHS, equal to the product of the 

monthly user fee rate specified in the 

annual HHS notice of benefit and 

payment parameters for the applicable 

benefit year, unless the SBE–FP and 

HHS agree on an alternative mechanism 

to collect the funds from the SBE–FP or 

state. 

The benefits provided to SBE–FP 

issuers by the federal government 

include use of the federal information 

technology platform and call center 

infrastructure used to support eligibility 

determinations for enrollment in QHPs 

and other applicable state health 

subsidy programs as defined at section 

1413(e) of PPACA, and QHP enrollment 

functions under § 155.400. The user fee 

rate for SBE–FPs is calculated based on 

the proportion of FFE costs that are 

associated with the FFE information 

technology infrastructure, the consumer 

call center infrastructure, and eligibility 

and enrollment services, and allocating 

a share of those costs to issuers in the 

relevant SBE–FPs. Based on this 

methodology, we proposed to charge 

issuers offering QHPs through an SBE– 

FP a user fee rate of 1.75 percent of the 

monthly premium charged by the issuer 

for each policy under plans offered 

through an SBE–FP. This proposed rate 

is lower than the 2.5 percent user fee 

rate that we had established for the 2021 

benefit year. The lower proposed user 

fee rate for SBE–FP issuers for the 2022 

benefit year reflects our estimates of 

costs for operating the Federal 

Exchanges, premiums, enrollment, as 

well as state Exchange transitions for 

the 2022 benefit year, and the costs 

associated with performing these 

services that benefit SBE–FP issuers. We 

sought comment on the proposed 2022 

SBE–FP user fee rate. 

We received public comments on the 

proposed FFE and SBE–FP user fee rates 

for the 2022 benefit year (§ 156.50(c)). 

The following is a summary of the 

comments we received and our 

responses. 

Comment: Several commenters 

supported lowering the FFE and SBE– 

FP user fee rates as proposed, with some 

commenters supporting the lower user 

fee rates so long as the reduction does 

not adversely impact FFE operations. 

Other commenters opposed the 

proposed user fee rates and asked that 

HHS raise the user fee rates to previous 

levels, 3.5 percent for FFE issuers and 

2.5 percent for SBE–FP issuers, and use 

any excess user fees for education, 

consumer outreach, improving 

HealthCare.gov, or to otherwise increase 

funding levels for these activities. Some 

commenters asked that HHS maintain 

the current 2021 user fee rates of 3.0 

percent for FFE issuers and 2.5 percent 

for SBE–FPs issuers. Other commenters 

recommended HHS finalize a lesser 

reduction to the user fee rates than the 

0.75 percentage point reductions we 


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44See above for more information on the direct 

enrollment option under § 155.221(j). 

proposed. Several other commenters 

opposed the proposed user fee rates, 

noting that the reduction in user fee 

rates could negatively affect State 

Exchanges by limiting the funding 

available for national marketing and 

outreach, which those states rely on to 

encourage enrollment in all Exchange 

types. However, one commenter 

suggested further lowering the FFE and 

SBE–FP user fee rates to 2 percent and 

1.5 percent respectively. This 

commenter stated that the additional 

reductions would better align the user 

fee rates with the reduced scope of 

operations performed by HHS. 

Several commenters asked that HHS 

use user fees to improve Exchange 

services for populations facing 

heightened barriers to enrollment, such 

as those in rural areas and those with 

limited English proficiency. One 

commenter questioned whether 

lowering the user fee rate was sound 

budgeting practice. 

Response: We are finalizing the 2022 

benefit year user fee rates at 2.25 

percent for FFE issuers and 1.75 percent 

for SBE–FP issuers, which is lower than 

the user fee rates for the 2021 benefit 

year. We estimate that these user fee 

rates will provide the necessary funding 

for the full functioning of the federal 

platform for the 2022 benefit year. Based 

on future projected changes in costs, 

enrollment, and premiums, we project 

that HHS can fully fund federal platform 

costs associated with providing special 

benefits to these issuers. 

HHS remains committed to providing 

a seamless enrollment experience for 

consumers who enroll in coverage 

through an Exchange that uses the 

federal platform and to providing a 

value based approach to outreach and 

marketing activities. We believe that the 

services offered by the FFEs are 

sufficient to support all consumers 

seeking to enroll in coverage through 

the FFEs and SBE–FPs. The experience 

from the recently closed 2021 Open 

Enrollment Period shows 

HealthCare.gov and the call center 

operated well with the investments 

made over recent years to improve 

stability and the consumer experience 

on the federal platform. Specifically, the 

reduced user fee rates we adopt in this 

final rule will not impede federal 

platform services and will continue to 

apply resources to cost-effective, highimpact outreach and marketing 

activities that offer the highest return on 

investment. We will continue to 

evaluate consumer outreach and 

education needs within the normal 

budget process. Additionally, we will 

continue to evaluate the user fee rates 

and the associated costs to operate the 

federal platform for future benefit years. 

Comment: Some commenters 

requested more transparency and data 

on how user fees are calculated and 

allocated, and information on how 

funding for HealthCare.gov is allocated. 

Several commenters noted that without 

data transparency, it is difficult to 

meaningfully comment on the proposed 

user fee reductions. One commenter 

requested that HHS delay finalization of 

the 2022 benefit year user fee rates until 

more data is made publicly available. 

Response: We believe that the 

information provided in the proposed 

rule in support of the user fee rate 

proposals was sufficient to allow 

commenters to meaningfully assess and 

comment on the appropriateness of our 

user fee rate proposals. As we explained 

in the preamble to the proposed rule, 

the FFE and SBE–FP user fee rates for 

the 2022 benefit year are based on 

expected total costs to offer the special 

benefits to issuers offering plans on 

FFEs or SBE–FPs, and evaluation of 

expected enrollment and premiums for 

the 2022 benefit year. To calculate these 

expected costs, we make reasonable 

assumptions about the expected market 

for the upcoming benefit years and we 

reconsider these assumptions and reestimate these costs on an annual basis 

with the most recent data available. For 

example, for the 2022 benefit year, we 

considered whether we needed to make 

changes to our cost, premium, and 

enrollment assumptions based on data 

from the 2020 benefit year and made 

updates to our projections as 

appropriate. 

User fee-eligible costs are estimated in 

advance of the benefit year and are 

based upon cost targets for specific 

contracting activities that are not yet 

finalized, and therefore, proprietary. We 

will continue to outline user fee-eligible 

functional areas in the annual HHS 

notice of benefit and payment 

parameters, and will evaluate contract 

activities related to operation of the FFE 

user fee-eligible functions. The 

categories that are considered user feeeligible include activities that provide 

special benefits to issuers offering QHPs 

through the federal platform, and do not 

include activities that are provided to 

all QHP issuers. For example, functions 

related to risk adjustment program 

operations and operations associated 

with APTC calculation and payment, 

which are provided to all issuers in 

states where HHS operates the risk 

adjustment program (all 50 states and 

the District of Columbia for the 2022 

benefit year), are not included in the 

FFE or SBE–FP user fee-eligible costs. 

However, costs related to Exchangerelated information technology, health 

plan review, management and oversight, 

eligibility and enrollment determination 

functions including the call center, and 

consumer information and outreach are 

considered FFE user fee-eligible costs. 

SBE–FPs conduct their own health plan 

certification reviews and consumer 

information and outreach, and therefore, 

the SBE–FP user fee rate is determined 

based on the portion of FFE costs that 

are also applicable to issuers offering 

QHPs through SBE–FPs. 

Based on our estimates and after 

considering comments, we continue to 

believe that a user fee rate of 2.25 

percent for FFE issuers and 1.75 percent 

for SBE–FP issuers will provide the 

necessary funding for the full 

functioning of the federal platform for 

the 2022 benefit year, and therefore, we 

are finalizing the FFE and SBE–FP user 

fee rates as proposed. 

b. FFE–DE and SBE–FP–DE User Fee 

Rates for the 2023 Benefit Year 

(§ 156.50(c)(3)) 

In the proposed rule, we proposed to 

allow states served by an FFE or SBE– 

FP to implement the proposed direct 

enrollment option under § 155.221(j) 

beginning with plan year 2023, under 

which one or more private direct 

enrollment entities approved by the FFE 

would operate non-Exchange websites 

through which consumers may apply for 

and enroll in a QHP, with or without 

APTC or CSR (if otherwise eligible), in 

a manner considered to be through the 

Exchange. Under the Exchange DE 

option, QHP issuers offering plans 

through an FFE–DE or SBE–FP–DE 

would continue to receive some of the 

benefits received by FFE and SBE–FP 

issuers; however, some consumer 

outreach, education, and support 

activities would be provided by the state 

or through the approved DE partners.44

As previously discussed, OMB Circular 

No. A–25 establishes federal policy 

regarding user fees, and specifies that a 

user charge will be assessed against 

each identifiable recipient for special 

benefits derived from federal activities 

beyond those received by the general 

public. As such, we proposed in new 

§ 156.50(c)(3) to charge issuers offering 

QHPs through an FFE–DE or an SBE– 

FP–DE a user fee for the services and 

benefits provided to those issuers by 

HHS as the administrator of the FFE. We 

proposed to charge issuers offering 

QHPs through an FFE–DE or SBE–FP– 

DE a user fee rate calculated based on 

the proportion of FFE user fee-eligible 

costs incurred by HHS that are 


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45We note that even if this further consideration 

does not lead us to propose a change to the FFE– 

DE or SBE–FP–DE user fee rates applicable for the 

2023 benefit year, we intend to address the 2023 

FFE–DE and SBE–FP–DE user fee in the 2023 

Payment Notice proposed rule in compliance with 

our regulations. See 45 CFR 156.50(c). 

associated with implementation and 

operation of the FFE–DE or SBE–FP–DE. 

We assumed that the use of FFE services 

will be less for FFE–DE and SBE–FP–DE 

states in 2023 than for FFE and SBE–FP 

states during the same time period. 

Therefore, to provide some certainty for 

states that consider a transition to a 

proposed FFE–DE or SBE–FP–DE, we 

proposed a 2023 user fee rate of 1.5 

percent of the monthly premium 

charged by the issuer for each policy 

under plans offered through an FFE–DE 

or SBE–FP–DE in plan year 2023. 

In a state that implements the 

Exchange DE option, the Exchange in 

the state would no longer provide many 

of the consumer-facing enrollmentrelated activities that are currently being 

performed through the federal platform, 

or such activities would be substantially 

reduced. For example, the use of the 

Marketplace call center and 

HealthCare.gov website will be 

substantially diminished. Because of the 

role of the state in operating SBE–FPs, 

the value to issuers and the associated 

costs of operating these functions in 

FFEs are typically higher. The reduction 

of these functions and costs is reflected 

by a larger proposed reduction in the 

user fee rate for issuers in FFE–DEs from 

the rate applicable in FFEs (from 2.25 

percent to 1.5 percent) than the 

reduction in the user fee rate for issuers 

in SBE–FP–DEs from the rate applicable 

in SBE–FPs (from 1.75 percent to 1.5 

percent), resulting in the same proposed 

user fee rate for FFE–DEs and SBE–FP– 

DEs. We sought comment on the FFE– 

DE or SBE–FP–DE user fee rate, 

including whether the rate should be 

state-specific or higher or lower 

depending on whether the Exchange is 

an FFE–DE or SBE–FP–DE. We also 

sought comment on the specific services 

HHS will provide consistent with the 

Federal agreement we proposed to 

require under new § 155.221(j)(2)(ii). We 

sought comment on the FFE–DE and 

SBE–FP–DE user fee rates for the 2023 

benefit year. 

We are finalizing the 2023 FFE–DE 

and SBE–FP–DE user fee rate as 

proposed. We also make clear that HHS 

intends to collect these user fees on a 

monthly basis as it does with the FFE 

and SBE–FP user fees, consistent with 

the netting regulations at 45 CFR 

156.1210. The following is a summary 

of the public comments we received on 

the FFE–DE and SBE–FP–DE user fee 

rate proposal for the 2023 benefit year 

and our responses. 

Comment: We received several 

comments in support of a lower user fee 

rate for FFE–DE and SBE–FP–DE states. 

Other commenters expressed a general 

skepticism or disapproval of this user 

fee rate as an extension of their 

disapproval of the proposed Exchange 

DE option. One commenter believed 

that increased reliance on agents and 

brokers calls for increased spending on 

their oversight, and thus a higher FFE– 

DE and SBE–FP–DE user fee rate than 

that proposed would be appropriate. 

Response: We are finalizing the 

proposed 1.5 percent of premium user 

fee rate for issuers offering plans 

through FFE–DEs and SBE–FP–DEs for 

the 2023 benefit year. We proposed this 

user fee rate to provide clarity and 

predictability regarding the user fee rate 

HHS would assess in FFE–DE and SBE– 

FP–DE states in order to allow states to 

evaluate whether to elect the Exchange 

DE option beginning with the 2023 

benefit year. As discussed earlier in the 

preamble, this user fee rate is reflective 

of the costs incurred by HHS to support 

FFE–DE and SBE–FP–DE operations. 

Changes to HHS’s costs, such as those 

related to oversight of agents and 

brokers, changes to underlying estimates 

of premiums and enrollment, or changes 

to the models adopted by states for their 

Exchanges could impact the user fee 

rate for 2023 or future benefit years. 

Therefore, we will continue to evaluate 

our estimates and will revisit the 2023 

FFE–DE and SBE–FP–DE user fee rates 

in the 2023 Payment Notice proposed 

rule in compliance with our 

regulations.45

Comment: One commenter questioned 

the validity of a single user fee rate for 

issuers in FFE–DE and SBE–FP–DE 

states. The commenter asserted that 

even where differences between the 

services provided to FFE–DE and SBE– 

FP–DE issuers were minimized, a single 

user fee rate may not be justified. 

Response: The 1.5 percent of 

premium user fee rate we proposed for 

FFE–DE and SBE–FP–DE issuers was 

calculated based on the proportion of 

FFE user-fee eligible costs that HHS 

anticipates it would incur to support the 

operation of an FFE–DE or SBE–FP–DE. 

We assumed that the use of federal 

platform services will be less for FFE– 

DEs and SBE–FP–DEs in 2023 than for 

an FFE or SBE–FP during the same time 

period. 

Under the Exchange DE option, an 

Exchange would no longer provide 

many of the consumer-facing 

enrollment-related activities that are 

currently being performed through the 

federal platform for FFEs and SBE–FPs, 

or such activities would be substantially 

reduced. For example, the use of the 

Marketplace call center and 

HealthCare.gov website will be 

substantially diminished. Because of the 

role of the state in operating SBE–FPs, 

the value to issuers and the associated 

costs of operating these functions in 

FFEs is typically higher. The reduction 

of these functions and costs is reflected 

by a larger proposed reduction in the 

user fee rate for issuers in FFE–DEs from 

the rate applicable in FFEs (from 2.25 

percent to 1.5 percent) than the 

reduction in the user fee rate for issuers 

in SBE–FP–DEs from the rate applicable 

in SBE–FPs (from 1.75 percent to 1.5 

percent). These reductions resulted in 

the same user fee rate for issuers 

offering QHPs through FFE–DEs and 

SBE–FP–DEs. 

2. Network Adequacy Standards 

(§ 156.230) 

We are finalizing the proposed 

revisions to 45 CFR 156.230, which 

implements section 1311(c)(1)(B) of 

PPACA and describes network adequacy 

standards for plans seeking certification 

as QHPs. As we stated in the proposed 

rule, we have received questions 

regarding whether § 156.230 

requirements apply to a plan that does 

not vary benefits based on whether 

enrollees receive services from an innetwork or out-of-network provider. 

As we stated in the proposed rule, 

nothing in PPACA requires a QHP 

issuer to use a provider network and 

§ 156.230 does not impose any network 

adequacy certification requirement for 

QHPs that do not use a provider 

network. Accordingly, an issuer might 

design and seek QHP certification for a 

plan that does not use a provider 

network and provides equal benefits for 

the same covered services without 

regard to whether the issuer has a 

network participation agreement with 

the provider that furnishes the covered 

services. To address any ambiguity in 

this section, we proposed to codify this 

longstanding interpretation at paragraph 

(f) to provide that a plan that does not 

vary benefits based on whether the 

issuer has a network participation 

agreement with a provider that 

furnishes covered services is not 

required to comply with the network 

adequacy standards at paragraphs (a) 

through (e) of § 156.230 to qualify for 

certification as a QHP. In the proposed 

rule, we explained that this proposal 

would simply clarify existing QHP 

requirements and would not add to, 

change, or remove any QHP certification 

requirements. 

We received public comments on the 

proposed updates to the QHP network 


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46 80 FR at 10830 (February 27, 2015). Available 

at https://www.govinfo.gov/content/pkg/FR-2015- 

02-27/pdf/2015-03751.pdf. 

47See 80 FR at 10830, 10873 (February 27, 2015) 

(explaining HHS’s proposal to modify § 156.230(a) 

‘‘to specify that this section only applies to QHPs 

that use a provider network’’ and finalizing 

§ 156.230(a) to state that ‘‘[e]ach QHP issuer that 

uses a provider network must ensure that the 

provider network consisting of in-network 

providers, as available to all enrollees, meets . . . 

standards [under § 156.230(a)] . . . .’’) (italics 

added). Available at https://www.govinfo.gov/ 

content/pkg/FR-2015-02-27/pdf/2015-03751.pdf. 

48Twelve such plans were approved as QHPs in 

Wisconsin for plan year 2016. See plan type data 

for QHPs, available at: https://www.cms.gov/CCIIO/ 

Resources/Data-Resources/marketplace-puf. 

49See 84 FR 28888. 

50See 84 FR at 28950–51 (‘‘[E]mployer funds paid 

from an HRA go directly to a participant or a health 

insurance issuer because the economic substance of 

the transaction is the same—that is, the funds are 

being used to discharge an employee’s premium 

payment obligations.’’). 

adequacy standards under § 156.230. 

The following is a summary of the 

comments we received and our 

responses. 

Comment: Of the comments received 

addressing this provision, a plurality 

supported this clarification, asserting 

that it will encourage variety in the 

kinds of plans certified as QHPs, lower 

costs by fostering more competition 

between issuers, increase enrollee 

access to providers, and reduce pressure 

on providers to enter into network 

agreements with issuers. 

Response: We agree with commenters 

and are finalizing this clarification as 

proposed. Since plan year 2016, 

§ 156.230(a) has applied only to QHPs 

that utilize a provider network.46 The 

provision finalized here only clarifies 

this existing policy by adding explicit 

regulatory text reflecting the regulation’s 

inapplicability to plans that do not 

utilize a provider network and do not 

vary benefits for covered services based 

on whether or not they are provided by 

an in-network or out-of-network 

provider. 

Comment: A few commenters 

opposed the proposed clarification, 

asserting that it would reduce CMS’s 

ability to oversee QHP issuers and 

ensure issuer accountability. A few 

commenters requested clarification on 

whether plans that do not utilize a 

provider network must comply with 

other QHP certification and marketwide requirements, such as 

requirements related to maximum outof-pocket limits, cost-sharing 

protections, coverage of essential health 

benefits (EHB), actuarial value 

standards, inclusion of essential 

community providers, and nondiscrimination standards under 

§ 156.125. Some of these commenters 

opposed finalization of this provision 

until CMS could be assured that such 

plans would comply with these 

requirements. 

Response: The provision finalized 

here only clarifies that plans that do not 

utilize a provider network are not 

required to satisfy the network adequacy 

standards at § 156.230 to obtain QHP 

certification. This final rule does not 

add to, change, or remove QHP 

certification requirements, nor does it 

add to, change, or remove any 

requirement for these plans to comply 

with the market reform provisions 

under title I of PPACA. Plans that do not 

utilize a provider network must still 

comply with all applicable QHP 

certification requirements to obtain QHP 

certification, which ensures that any 

plan that does not comply with 

applicable QHP certification 

requirements will be denied QHP 

certification. 

Comment: A few commenters 

cautioned about the potential 

proliferation of QHPs that do not utilize 

a provider network, which could place 

consumers in the middle of payment 

disputes between issuers and providers. 

One commenter asserted that, while 

CMS should do more to encourage 

issuers to develop plans that do not 

utilize a provider network, QHP 

certification should be reserved for 

plans that utilize adequate provider 

networks and meet all other QHP 

certification requirements. 

Response: We proposed no 

substantive changes to QHP certification 

requirements and decline to disqualify 

plans that do not utilize provider 

networks from obtaining QHP 

certification. Since plan year 2016, the 

text of § 156.230(a) has stated that the 

section only applies to QHPs that utilize 

a provider network.47 While plans that 

do not utilize a provider network have 

always been eligible to apply for QHP 

certification, only 12 plans that did not 

utilize a provider network have ever 

been approved as QHPs in the FFEs.48

Comment: One commenter requested 

that CMS disclose the plans that do not 

utilize a provider network that have 

sought or received certification as QHPs. 

Response: CMS releases QHP 

certification information in Public Use 

Files (PUFs) at https://www.cms.gov/ 

CCIIO/Resources/Data-Resources/ 

marketplace-puf. The Plan Attributes 

PUF lists the plan type for each plan 

approved as a QHP. There were 12 plans 

certified as QHPs in Wisconsin for plan 

year 2016 that did not utilize a provider 

network. No such plans have been 

granted QHP certification in an FFE 

since. 

We are finalizing this policy as 

proposed. 

3. Enrollment Process for Qualified 

Individuals (§ 156.1240) 

We are finalizing the proposed 

revisions to § 156.1240, with a 

modification in response to comments. 

Under § 156.1240(a), QHP issuers are 

required to accept a variety of payment 

methods so that individuals without a 

bank account or a credit card will have 

readily available options for making 

monthly premium payments. 

Specifically, paragraph (a)(1) of 

§ 156.1240 requires QHP issuers to 

follow the premium payment process 

established by an Exchange in 

accordance with 45 CFR 155.240. 

Paragraph (a)(2) requires QHP issuers to 

accept for all payments in the 

individual market, at a minimum, paper 

checks, cashier’s checks, money orders, 

EFT, and all general-purpose pre-paid 

debit cards as methods of payment and 

to present equally all payment method 

options to allow a consumer to select 

their preferred payment method. We 

proposed to add new paragraph (a)(3) to 

require individual market QHP issuers 

to also accept payments on behalf of an 

enrollee from an individual coverage 

HRA or QSEHRA. As explained in the 

proposed rule, we received questions 

indicating that there is some confusion 

over whether issuers must accept 

payments on behalf of an enrollee from 

an individual coverage HRA or 

QSEHRA. Individual coverage HRAs are 

a new type of health reimbursement 

arrangement that employers may offer to 

employees as of January 1, 2020.49

QSEHRAs are another new type of HRA 

that qualified small employers can 

provide to their employees pursuant to 

section 9831 of the Code. In general, 

employers may offer individual 

coverage HRAs or provide QSEHRAs to 

their employees as a means of providing 

tax-advantaged reimbursements for 

medical care expenses, including 

premiums for individual health 

insurance coverage that they purchase 

for themselves and their families. 

Reimbursement from individual 

coverage HRAs and QSEHRAs may 

include employee-initiated payments 

made through use of financial 

instruments, such as pre-paid debit 

cards, as well as direct payments 

(individual or aggregate) by the 

employer, employee organization, or 

other plan sponsor to the health 

insurance issuer.50

We proposed to add a new 

§ 156.1240(a)(3) to require issuers 

offering individual market QHPs to 

accept payments of premiums that are 

received directly from an individual 


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51 85 FR 78572, 78644. 

coverage HRA or QSEHRA that are 

made on behalf of an enrollee who is 

covered by the individual coverage HRA 

or QSEHRA. We proposed that QHP 

issuers would be required to accept 

such payments when they are made 

using a method of payment described in 

§ 156.1240(a)(2). We recognized some 

individual coverage HRAs and 

QSEHRAs prefer to make aggregate 

payments on behalf of multiple 

employees to a QHP issuer. We further 

encouraged QHP issuers to work with 

employers and administrators of 

individual coverage HRAs and 

QSEHRAs to facilitate these aggregate 

payments, as this approach could ease 

administration of individual coverage 

HRAs and QSEHRAs. We also explained 

that this proposal would help ensure 

that individual coverage HRAs or 

QSEHRAs operate as intended, and 

would address potential stakeholder 

confusion regarding whether QHP 

issuers must accept payments made 

from individual coverage HRAs or 

QSEHRAs. However, we did not 

propose to require QHP issuers to accept 

payments from individual coverage 

HRAs or QSEHRAs when made using a 

form of payment that is not described in 

§ 156.1240(a)(2) or to accept aggregate 

payments from an individual coverage 

HRA or QSEHRA made on behalf of 

multiple enrollees. 

We are finalizing this policy, but with 

a modification to clarify that QHP 

issuers not only must accept payments 

made on behalf of an enrollee directly 

from an individual coverage HRA or 

QSEHRA, but must also accept 

payments made directly by an enrollee 

using funds from an individual coverage 

HRA or QSEHRA, so long as such 

payments are made using a form of 

payment that is described in 

§ 156.1240(a)(2). 

We received public comments on the 

proposed updates to § 156.1240. The 

following is a summary of the comments 

we received and our responses. 

Comment: Most commenters who 

commented on this proposal supported 

it. Several commenters noted that it 

would help overcome issuer confusion 

about whether they must accept 

payments from an individual coverage 

HRA or QSEHRA, which commenters 

stated has been an obstacle to the 

implementation of these options. One 

commenter reported that some issuers 

have refused to accept payments from 

an individual coverage HRA or 

QSEHRA when it was used to purchase 

coverage through a special enrollment 

period, and that this change would 

ensure that individuals offered an 

individual coverage HRA or provided a 

QSEHRA would be able to enroll in 

individual market QHP coverage. A few 

commenters encouraged CMS to require 

that QHP issuers accept aggregate 

payments from individual coverage 

HRAs or QSEHRAs made on behalf of 

multiple enrollees. 

A smaller number of commenters 

opposed the proposal and stated that 

whether to accept premium payments 

made by an individual coverage HRA or 

QSEHRA on behalf of an enrollee 

should be at the option of the issuer, 

rather than required by HHS. A few 

commenters were concerned that 

accepting these payments, particularly 

aggregate payments, was not issuer 

standard practice and would be 

operationally difficult to implement. 

They raised concerns about the issuer 

burden associated with building the IT 

infrastructure to facilitate roster, or list, 

billing. 

Response: We did not propose and are 

not finalizing a requirement for QHP 

issuers to accept aggregate payments 

from individual coverage HRAs or 

QSEHRAs.51 We also did not propose 

and are not finalizing any requirement 

that QHP issuers facilitate roster, or list, 

billing. We instead encourage QHP 

issuers to work with employers and 

administrators of individual coverage 

HRAs and QSEHRAs to facilitate 

acceptance of aggregate payments from 

these HRA vehicles. We are not inclined 

to require more at this time given the 

relative infancy of individual coverage 

HRAs and QSEHRAs, but we expect the 

proposal we are finalizing that requires 

QHP issuers to accept premium 

payments received directly from an 

individual coverage HRA or QSEHRA to 

ease administration of individual 

coverage HRAs and QSEHRAs. This rule 

will also make the individual coverage 

HRA and QSEHRA experience more 

seamless for employees by ensuring that 

individual coverage HRAs and 

QSEHRAs may pay employee premiums 

directly, rather than only reimbursing 

employees after they have paid first out 

of their own pockets. 

We understand that some QHP issuers 

are working to build IT systems to 

accommodate aggregate payments. 

However, because not all QHP issuers 

can accept aggregate payments using 

their existing IT infrastructure, it could 

be costly and time-consuming to require 

all QHP issuers to accept them. As 

individual coverage HRAs and 

QSEHRAs grow in popularity, we 

anticipate the benefits of making such 

an IT investment may outweigh the 

costs for most QHP issuers. However, at 

this time, with individual coverage 

HRAs and QSEHRAs still in their 

infancy, the final rule does not require 

QHP issuers to accept such aggregate 

payments, even if such payments are 

made using a form of payment that is 

described in § 156.1240(a)(2). 

Additionally, we recognize that it may 

not previously have been standard 

practice for every individual market 

QHP issuer to accept payments of 

premiums that are received directly 

from an individual coverage HRA or 

QSEHRA. Although some QHP issuers 

may incur administrative costs for 

operational changes necessary to 

comply with the payment acceptance 

requirement adopted in this final rule, 

such costs should be minimal because 

QHP issuers are already required to 

accept the forms of payment described 

in § 156.1240(a)(2) for all payments in 

the individual market. Therefore, we 

believe the benefits of requiring 

individual market QHP issuers to accept 

payments from individual coverage 

HRAs and QSEHRAs, rather than 

employees having to pay premiums outof-pocket and then seek reimbursement 

at a later time, outweighs these 

administrative costs and is in the best 

interests of consumers. 

Comment: Several commenters stated 

that individual coverage HRAs and 

QSEHRAs constitute third party 

payments, which issuers are not 

required to accept under § 156.1250. 

Response: Individual coverage HRAs 

and QSEHRAs are structured to 

reimburse an employee for eligible 

medical care expenses that are paid by 

the employee. HHS considers any 

payments for eligible medical care 

expenses that are reimbursed by an 

employer through an individual 

coverage HRA or a QSEHRA per the 

terms of the employee’s compensation 

package, including payments for eligible 

individual market premiums, to be 

payments by the employee, not the 

employer. This remains true regardless 

of whether funds from an individual 

coverage HRA or QSEHRA are 

transmitted directly by an enrollee or by 

an employer. As such, payments from 

these HRA vehicles for individual 

market coverage do not constitute third 

party payments. To ensure that QHP 

issuers do not erroneously reject 

payments as third party payments when 

the payments are made in connection 

with an individual coverage HRA or 

QSEHRA that are transmitted directly 

by an enrollee or by an employer, we are 

finalizing revisions to § 156.1240(a)(3) 

that make clear that all such payments 

must be accepted so long as they are 

made using a form of payment described 

in § 156.1240(a)(2). 

We recognize that individual coverage 

HRAs and QSEHRAs may differ in how 


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52See 84 FR at 28951 (‘‘[U]nder the [HRA] final 

rules, ‘reimbursement’ may include employeeinitiated payments made through use of financial 

instruments, such as pre-paid debit cards, as well 

as direct payments, individual or aggregate, by the 

employer, employee organization, or other plan 

sponsor to the health insurance issuer.’’). 53 83 FR 53575 (Oct. 24, 2018). 

they are administered. While some 

individual coverage HRAs and 

QSEHRAs may pay premiums directly 

to issuers on behalf of covered 

individuals, others may reimburse 

covered individuals for incurred or paid 

covered expenses. It is important that, 

regardless of how an individual 

coverage HRA or QSEHRA is 

administered, individuals covered by 

individual coverage HRAs and 

QSEHRAs be able to use HRA funds to 

enroll in QHP coverage. We can identify 

no compelling reason to treat payments 

from an individual coverage HRA and 

QSEHRA differently based on whether 

the payments are made directly to the 

QHP issuer or to the covered individual. 

In either case, the payment functions as 

a reimbursement to the employee for the 

employee’s premium payment as part of 

the employee’s compensation 

package.52

After considering comments, we are 

finalizing § 156.1240(a)(3) to require 

issuers offering individual market QHPs 

to accept payments of premiums that are 

received directly from an individual 

coverage HRA or QSEHRA that are 

made on behalf of an enrollee who is 

covered by the individual coverage HRA 

or QSEHRA. To address potential 

confusion about the payment 

acceptance requirements, in response to 

comments, we specify in the regulation 

text that QHP issuers must also accept 

payments that are made directly by an 

enrollee in connection with an 

individual coverage HRA or QSEHRA. 

These requirements apply so long as 

such premium payments are made using 

a payment method described in 

§ 156.1240(a)(2). 

IV. Summary of the Proposed 

Provisions of the HHS Notice of Benefit 

and Payment Parameters for 2022, 

Analysis of and Responses to Public 

Comments, and Provisions of the Final 

Rule—Department of Health and 

Human Services and Department of the 

Treasury 

A. 31 CFR Part 33 and 45 CFR Part 

155—State Innovation Waivers 

1. Section 1332 Application Procedures 

(31 CFR 33.108 and 45 CFR 155.1308), 

Monitoring and Compliance (31 CFR 

33.120 and 45 CFR 155.1320), and 

Periodic Evaluation Requirements (31 

CFR 33.128 and 45 CFR 155.1328) 

Section 1332 of PPACA permits states 

to apply for a State Innovation Waiver 

(also referred to as a section 1332 waiver 

or State Relief and Empowerment 

Waiver) to pursue innovative strategies 

for providing their residents with access 

to higher value, more affordable health 

coverage. The overarching goal of 

section 1332 waivers is to give all 

Americans the opportunity to obtain 

high value and affordable health 

coverage regardless of income, 

geography, age, sex, or health status, 

while simultaneously empowering 

states to develop health coverage 

strategies that best meet the needs of 

their residents. In the proposed rule, the 

Departments sought to provide states 

with consistency and predictability by 

proposing to codify the Departments’ 

interpretative guidance published in the 

Federal Register in 2018, regarding how 

the Departments will apply section 1332 

of PPACA to determine whether 

applications for section 1332 waivers 

will be approved. In this final rule, the 

Departments are finalizing these 

policies, with modifications to 

explicitly incorporate major policies 

outlined in the 2018 Guidance into the 

text of relevant section 1332 regulations. 

Under section 1332 of PPACA, the 

Secretaries may exercise their discretion 

to approve a request for a section 1332 

waiver only if the Secretaries determine 

that the proposal for the section 1332 

waiver meets the following four 

requirements (referred to as the 

statutory guardrails): (1) The proposal 

will provide coverage that is at least as 

comprehensive as coverage defined in 

PPACA section 1302(b) and offered 

through Exchanges established by title I 

of PPACA, as certified by the Office of 

the Actuary of CMS, based on sufficient 

data from the state and from comparable 

states about their experience with 

programs created by PPACA and the 

provisions of PPACA that would be 

waived; (2) the proposal will provide 

coverage and cost-sharing protections 

against excessive out-of-pocket 

spending that are at least as affordable 

for the state’s residents as would be 

provided under title I of PPACA; (3) the 

proposal will provide coverage to at 

least a comparable number of the state’s 

residents as would be provided under 

title I of PPACA; and (4) the proposal 

will not increase the federal deficit. The 

Secretaries retain their discretionary 

authority under section 1332 to deny 

waivers when appropriate given 

consideration of the application as a 

whole, even if an application meets the 

four statutory guardrails. 

The Departments are also responsible 

under section 1332 of PPACA for 

monitoring a waiver’s compliance with 

the statutory guardrails and for 

conducting evaluations to determine the 

impact of the waiver. Specifically, 

section 1332 of PPACA requires that the 

Secretaries provide for and conduct 

periodic evaluations of approved 

section 1332 waivers. The Secretaries 

must also provide for a process under 

which states with approved waivers 

must submit periodic reports 

concerning the implementation of the 

state’s waiver program. 

In October 2018, the Departments 

issued the 2018 Guidance,53 which 

provides additional guidance for states 

that wish to submit section 1332 waiver 

proposals regarding the Secretaries’ 

application review procedures, passthrough funding determinations, certain 

analytical requirements, and operational 

considerations. The 2018 Guidance also 

includes information regarding how the 

Departments will apply the section 1332 

statutory guardrails to evaluate whether 

a waiver is approvable. Section 1332 of 

PPACA and the 2018 Guidance 

empower states to address problems 

with their individual insurance markets 

and increase coverage options for their 

residents, and to encourage states to 

evaluate and adopt innovative strategies 

to reduce future overall health care 

spending. Together, the statutory 

guardrails and the 2018 Guidance 

provide states a reliable roadmap to 

follow in designing section 1332 waiver 

programs that will promote a stable 

health insurance market that offers more 

choice and affordability to state 

residents. 

In this final rule, the Departments 

provide certainty to states that the 

requirements and expectations of the 

section 1332 program will not change 

abruptly, or without notice to states and 

the public, and an opportunity to 

comment. Specifically, the Departments 

proposed to incorporate by reference the 

2018 Guidance in full in the regulations 


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6158 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

54Under section 1332 of PPACA, the Departments 

may approve a state’s section 1332 waiver 

application when the Departments determine the 

waiver plan will meet the four criteria specified in 

section 1332(b)(1), including the guardrails related 

to comprehensiveness, affordability, and coverage, 

as well as a fourth guardrail related to deficit 

neutrality. 

governing section 1332 waiver 

application procedures, monitoring and 

compliance, and periodic evaluation 

requirements. The Departments are 

finalizing the policies, with 

modifications made in response to 

public comments to codify many of the 

policies and interpretations outlined in 

the 2018 Guidance specifically in the 

text of the section 1332 implementing 

regulations. The Departments are of the 

view that this rulemaking will give 

states greater certainty regarding how 

the Departments will apply section 

1332’s statutory guardrails when 

determining whether a state’s waiver 

proposal can receive and maintain 

approval by the Departments. 

31 CFR 33.108 and 45 CFR 155.1308 

specify the application procedures a 

section 1332 waiver proposal must meet 

to be approved by the Secretaries. Under 

these regulations, an application for 

initial approval of a section 1332 waiver 

will not be considered complete unless 

the application complies with the 

application procedures under 31 CFR 

33.108(f) and 45 CFR 155.1308(f), 

including written evidence of the state’s 

compliance with the public notice 

requirements set forth in 31 CFR 33.112 

and 45 CFR 155.1312. Furthermore, an 

application must provide a 

comprehensive description of the 

enacted state legislation and program to 

implement a plan meeting the 

requirements for a waiver under section 

1332; a copy of the enacted state 

legislation authorizing such waiver 

request; a list of the provisions of law 

that the state seeks to waive including 

a brief description of the reason for the 

specific request; and the analyses, 

actuarial certifications, data, 

assumptions, targets and other 

information sufficient to provide the 

Secretaries with the necessary data to 

determine that the state’s proposed 

waiver meets the statutory guardrails. 

The 2018 Guidance provides 

supplementary information about the 

Departments’ analysis as to whether a 

proposed section 1332 waiver plan 

meets requirements for approval, the 

Secretaries’ application review 

procedures, the calculation of passthrough funding, certain analytical 

requirements, and operational 

considerations. The 2018 Guidance also 

clarifies adjustments the Secretaries 

may make to maintain federal deficit 

neutrality, and explains how states may 

rely on existing legislative authority in 

certain circumstances as authorization 

for section 1332 waivers. 

The Departments are of the view that 

formalizing these policies and 

interpretations through rulemaking will 

encourage more states to pursue waivers 

without being concerned that some of 

the rules may change without sufficient 

notice after they have submitted a 

waiver application. As such, the 

Departments are finalizing 

modifications to 31 CFR 

33.108(f)(3)(iv)(A)–(C) and 45 CFR 

155.1308(f)(3)(iv)(A)–(C) to codify in 

regulation the manner in which the 

Departments will apply the 

comprehensiveness, affordability, and 

coverage ‘section 1332 guardrails’ 54 as 

outlined in the 2018 Guidance. 

Specifically, this final rule adds 

regulatory language to 31 CFR 

33.108(f)(3)(iv)(A) and 45 CFR 

155.1308(f)(3)(iv)(A) explaining that the 

Departments will consider the 

comprehensive coverage guardrail to be 

met by a state waiver plan if the plan 

will provide consumers access to 

coverage options that are at least as 

comprehensive as the coverage options 

provided without the waiver, to at least 

a comparable number of people as 

would have had access to such coverage 

absent the waiver. This final rule also 

adds language to 31 CFR 

33.108(f)(3)(iv)(B) and 45 CFR 

155.1308(f)(3)(iv)(B) providing that the 

Departments will consider the 

affordability requirement to be met by a 

state waiver plan that will provide 

consumers access to coverage options 

that are at least as affordable as the 

coverage options provided without the 

waiver, to at least a comparable number 

of people as would have had access to 

such coverage absent the waiver. These 

modifications also provide, consistent 

with the 2018 Guidance, that the 

Departments will consider the 

comprehensiveness and affordability 

guardrails met if a waiver plan provides 

access to coverage that is as 

comprehensive and affordable as 

coverage forecasted to have been 

available in the absence of the waiver, 

and is projected to be available to a 

comparable number of people under the 

waiver. 

This final rule also adds regulatory 

language to 31 CFR 33.108(f)(3)(iv)(C) 

and 45 CFR 155.1308(f)(3)(iv)(C) 

providing that for purposes of the 

coverage guardrail, coverage refers to 

minimum essential coverage as defined 

in 26 U.S.C. 5000A(f) and 26 CFR 

1.5000A–2, and health insurance 

coverage as defined in 45 CFR 144.103. 

No changes are being made to the 

Federal deficit neutrality guardrail 

under 31 CFR 33.108(f)(3)(iv)(D) and 45 

CFR 155.1308(f)(3)(iv)(D), which 

prohibits approval of any waiver plan 

that is projected to increase the Federal 

deficit. 

The Departments are also finalizing a 

modification to 31 CFR 33.108(f)(3)(i) 

and 45 CFR 155.1308(f)(3)(i) to provide 

that the Departments may consider 

existing legislation in analyzing whether 

the state has satisfied the requirement 

that the state enact a law under section 

1332(b)(2)(A) of PPACA that provides 

statutory authority to enforce PPACA 

provisions or the state plan, combined 

with a duly-enacted state regulation or 

executive order. The Departments are of 

the view that these modifications will 

allow states to better plan for future 

section 1332 waiver applications and 

provide certainty to states as they invest 

significant state resources toward the 

submission of a section 1332 waiver 

application and the implementation of a 

section 1332 waiver plan, particularly 

waivers that require multi-year 

preparation. 

In the proposed rule, the Departments 

proposed to incorporate the 2018 

Guidance in full into the Departments’ 

monitoring and compliance regulations 

at 31 CFR 155.1320 and 45 CFR 

155.1320. Specifically, under the 

current regulations, the Secretaries 

reserve the right to suspend or terminate 

a waiver, in whole or in part, any time 

before the date of expiration, if the 

Secretaries determine that the state 

materially failed to comply with the 

terms and conditions of the waiver. The 

Departments will review and, when 

appropriate, investigate documented 

complaints that the state is failing to 

materially comply with requirements 

specified in the approved waiver and 

the specific terms and conditions (STCs) 

for the approval of the waiver signed by 

the Departments and the state. In 

addition, the Departments will promptly 

share with the state any complaint that 

they may receive and will notify the 

state of any applicable monitoring and 

compliance issues. States with approved 

section 1332 waivers must comply with 

all applicable federal laws and 

regulations (unless specifically waived) 

and must come into compliance with 

any changes in federal law or 

regulations affecting section 1332 

waivers. 

The Departments are finalizing a 

modification to 31 CFR 33.120(a)(1) and 

45 CFR 155.1320(a)(1) to explicitly 

require that the Departments examine 

monitoring and compliance consistent 

with 31 CFR 33.108(f)(3)(iv) and 45 CFR 

155.1308(f)(3)(iv)and guidance 

published by the Departments. The 


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55The Departments’ research shows that H.R. 

3010, the Regulatory Flexibility Act of 2011, was 

never signed into law. Notwithstanding, the 

Departments respond to the commenter’s concerns 

here and in the RIA, section VI.C.3 of this final rule. 

Departments are of the view that 

codifying many of the policies and 

interpretations outlined in the 2018 

Guidance into the section 1332 waiver 

implementing regulations will provide 

certainty regarding how the 

Departments will evaluate and review 

section 1332 waiver programs, as states 

submit information concerning the 

implementation of their waiver 

programs. 

In the proposed rule, the Departments 

also proposed to incorporate the 2018 

Guidance in full in the periodic 

evaluation requirements regulations at 

31 CFR 33.128 and 45 CFR 155.1328. 

Under current regulations, the 

Departments are responsible for 

evaluating the waiver using federal data, 

information reported by states, and the 

waiver application itself to ensure that 

the Departments can exercise 

appropriate oversight of the approved 

waiver. Per 31 CFR 33.120(f) and 45 

CFR 155.1320(f), the state must fully 

cooperate with the Departments or an 

independent evaluator selected by the 

Departments, to undertake an 

independent evaluation of any 

component of the section 1332 waiver. 

As part of this required cooperation, the 

state must submit all requested data and 

information to the Departments or the 

independent evaluator. The state 

generally must meet the statutory 

requirements in each year that the 

waiver is in effect; as such the primary 

focus of the periodic evaluations will be 

the four statutory guardrails. However, 

the Departments will consider the 

longer-term impacts of a state’s waiver 

plan. 

The Departments are finalizing a 

modification to 31 CFR 33.128 and 45 

CFR 155.1328 to require that the 

Departments periodically evaluate 

approved waivers to ensure the program 

is consistent with 31 CFR 

33.108(f)(3)(iv) and 45 CFR 

155.1308(f)(3)(iv) and guidance 

published by the Departments. The 

Departments are of the view that 

codifying many of the policies and 

interpretations outlined in the 2018 

Guidance into the section 1332 waiver 

implementing regulations will provide 

certainty regarding how the 

Departments will evaluate whether a 

state may maintain approval of its 

section 1332 waiver. The Departments 

also are of the view that this policy will 

help states to anticipate the data that 

will be most relevant and helpful to the 

Departments’ analyses of a state’s 

compliance with the specific terms and 

conditions approved by the 

Departments and other applicable 

requirements. 

The Departments are finalizing the 

policies, as stated above, with 

modifications to 31 CFR 33.108, 31 CFR 

33.120, 31 CFR 33.128, 45 CFR 

155.1308, 45 CFR 155.1320, and 45 CFR 

155.1328 to codify many of the policies 

and interpretations outlined in the 2018 

Guidance in the section 1332 

implementing regulations. The 

Departments are of the view that the 

increased certainty that would result 

from incorporating these policies in the 

2018 Guidance into the section 1332 

implementing regulations will allow 

states to have greater confidence that the 

significant time and monetary 

investments necessary to plan for, 

submit, and implement a section 1332 

waiver will not result in wasted 

resources and taxpayer dollars. The 

Departments are also of the view that 

these modifications finalized in this 

final rule will help to increase state 

innovation, which could lead to more 

affordable health coverage for 

individuals and families in states that 

implement a section 1332 waiver 

program. 

The Departments sought comments on 

these proposals. The Departments 

received public comments on the 

proposed updates to the regulations 

detailing the section 1332 application 

procedures (31 CFR 33.108 and 45 CFR 

155.1308), monitoring and compliance 

(31 CFR 33.120 and 45 CFR 155.1320), 

and periodic evaluation requirements 

(31 CFR 33.128 and 45 CFR 155.1328). 

In addition, the Departments previously 

solicited public comments on the 2018 

Guidance for a 60-day period (October 

22, 2018 through December 24, 2018). 

During that period, the Departments 

received approximately 2,100 public 

comments. 

Based on the Departments’ review and 

consideration of comments in response 

to the proposed rule and the 2018 

Guidance, their experience with section 

1332 waivers, and the positive market 

effects that have been attained as a 

result of existing section 1332 waiver 

programs, the Departments will not 

revise the 2018 Guidance or otherwise 

modify the policies that they are now 

explicitly incorporating into regulation 

in this final rule. However, in response 

to comments, the Departments will not 

incorporate by reference the 2018 

Guidance in the section 1332 

implementing regulations, but are 

finalizing modifications to the text of 

those implementing regulations to 

codify many of the policies and 

interpretations outlined in the 2018 

Guidance. Later in this section of the 

preamble, the Departments review and 

respond to comments received in 2018 

in response to the 2018 Guidance, as 

well as those received in response to the 

proposals to incorporate the 2018 

Guidance into the section 1332 

implementing regulations in the 

proposed rule, which were largely 

similar to comments submitted on the 

2018 Guidance. 

Comment: A few commenters stated 

that it is not proper to incorporate by 

reference the 2018 Guidance under 1 

CFR 51.7(b) because it is an HHS 

publication or under 1 CFR 51.7(c)(1) 

because it has previously been 

published in the Federal Register. 

Another commenter stated that the 2018 

Guidance is amorphous and imprecise, 

such that the proposed cross-references 

to the 2018 Guidance do not fit the 

definition of a rule under 5 U.S.C. 551. 

Other commenters asserted that it was 

bad policy to codify the 2018 Guidance 

by reference rather than by crafting 

concrete regulatory language. 

One commenter stated that the 

Departments failed to comply with H.R. 

3010, the Regulatory Flexibility Act of 

2011, which the commenter believes to 

include a legal mandate that a federal 

agency, as part of an agency’s evaluation 

of any proposed regulatory change, must 

analyze its distributional effects, which 

specifically refers to the impact of a 

regulatory action across the population 

and economy, divided up in various 

ways (for example, income groups, race, 

sex, industrial sector, geography).55 The 

commenter further stated that the 

Departments failed to adequately 

identify and analyze the effects of 

codifying the 2018 Guidance. One 

commenter noted that the Department of 

the Treasury’s participation was 

necessary for any regulation issued 

regarding section 1332 waivers and 

CMS cannot act alone. 

Response: The Departments 

appreciate these commenters’ concerns 

and want to ensure the requirements are 

clear to the public. The goal of the 

proposal to incorporate the 2018 

Guidance into the section 1332 

implementing regulations was to 

provide stability and certainty to states 

with existing waivers and to those who 

may be in the process of or interested 

in pursuing such a waiver. The 

Departments agree with commenters 

that suggested the Departments craft 

more specific regulatory text, rather 

than finalize the proposed incorporation 

of the 2018 Guidance by reference, to 

codify the Departments’ interpretations 

in these regulations. As such, in this 

rule, the Departments are finalizing 


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6160 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

56See CCIIO Data Brief Series, State Relief and 

Empowerment Waivers: State-based Reinsurance 

Programs (June 2020), available at https://

www.cms.gov/CCIIO/Programs-and-Initiatives/ 

State-Innovation-Waivers/Downloads/1332-DataBrief-June2020.pdf. 

modifications to 31 CFR 33.108, 31 CFR 

33.120, 31 CFR 33.128, 45 CFR 

155.1308, 45 CFR 155.1320, and 45 CFR 

155.1328 to codify many of the policies 

and interpretations outlined in the 2018 

Guidance in the section 1332 waiver 

program’s implementing regulations. 

Specifically, the Departments are adding 

language to 31 CFR 33.108(f)(3)(i) and 

45 CFR 155.1308(f)(3)(i) providing that 

the Departments may consider existing 

legislation in analyzing whether the 

state has satisfied the requirement that 

the state enact a law under section 

1332(b)(2)(A) of PPACA if that 

legislation provides statutory authority 

to enforce PPACA provisions or the 

state plan, combined with a dulyenacted state regulation or executive 

order. Additionally, the Departments are 

finalizing changes to 31 CFR 

33.108(f)(3)(iv)(A)–(C) and 45 CFR 

155.1308(f)(3)(iv)(A)–(C) to codify many 

of the 2018 Guidance guardrail 

interpretations into regulations. The 

Departments are also finalizing changes 

to 31 CFR 33.120(a)(1) and 45 CFR 

155.1320(a)(1) to explicitly require that 

the Departments examine monitoring 

and compliance requirements consistent 

with the guardrail interpretations 

outlined in 31 CFR 33.108(f)(3)(iv) and 

45 CFR 155.1308(f)(3)(iv) and guidance 

published by the Departments. Lastly, 

the Departments are finalizing changes 

to 31 CFR 33.128 and 45 CFR 155.1328 

to require that the Departments 

periodically evaluate approved waivers 

to ensure the program is consistent with 

the guardrail interpretations outlined in 

31 CFR 33.108(f)(3)(iv) and 45 CFR 

155.1308(f)(3)(iv) and guidance 

published by the Departments. As 

described below, the policies and 

interpretations outlined in the 2018 

Guidance remain unchanged. These 

regulatory modifications are being made 

in response to commenters’ 

recommendations to craft concrete 

regulatory language and to further 

ensure that these finalized requirements 

are clear to the public. 

Regarding some commenters’ 

concerns that the Departments’ did not 

analyze the distributional effect on the 

population and economy across 

subgroups that could result from 

incorporating the 2018 Guidance into 

regulation, the Departments are of the 

view that the data and information 

necessary to such an analysis are 

unavailable at this time. In particular, 

the Departments are unable to estimate 

or determine how many or which states 

may apply for a waiver using the 

regulatory modifications finalized in 

this final rule. As discussed in detail in 

the RIA under section VI.C.3 of this 

final rule, it would be difficult for the 

Departments to predict and analyze the 

impact of various state waiver plans that 

have not been submitted, including the 

distributional effects on various 

segments of the population. The 

Departments are of the view that 

meaningful analyses of the 

distributional effects of waiver 

proposals will be possible upon states’ 

submissions to the Departments of 

complete section 1332 waiver 

applications. Pursuant to section 1332 

of PPACA, the Departments must 

conduct reviews of section 1332 waiver 

applications on an individual basis. The 

distributional effects of each proposed 

waiver plan will be analyzed as part of 

the Departments’ review, and members 

of the public and other stakeholders will 

have two distinct opportunities to 

comment on the distributional effects of 

a waiver during the state and federal 

public comment periods. 

The Departments also agree that the 

Department of the Treasury’s 

participation was necessary to the 

section 1332 proposals in the proposed 

rule. Thus, HHS did not act alone in 

developing or publishing the section 

1332 proposals in the proposed rule. 

The proposed rule’s section 1332 

proposals were issued by both HHS and 

the Department of the Treasury, and in 

this final rule, the Departments are 

finalizing changes to relevant provisions 

in both 31 CFR part 33 (Treasury 

regulations) and 45 CFR part 155 (HHS 

regulations). 

Comment: A few commenters 

expressed their support for the 2018 

Guidance and its incorporation into the 

section 1332 implementing regulations. 

These commenters supported 

simplifying and streamlining the 

process for obtaining section 1332 

waivers and affording states flexibility 

in meeting the guardrails for obtaining 

a waiver. Another commenter supported 

this proposal because it will provide 

certainty and allow states to utilize 

section 1332 waivers as intended, 

without adding unnecessary cost and 

time dealing with proposals that do not 

meet the necessary standards. The 

commenter further noted that such 

action is especially appreciated as state 

budgets are stretched thin due to the 

COVID–19 pandemic. One commenter 

noted that codifying the Departments’ 

2018 Guidance is especially important 

because of the significant time and 

taxpayer resources to develop and 

submit a waiver application. One 

commenter also noted that the process 

of developing a proposal and submitting 

it may take significant time and 

taxpayer resources, such that states may 

not want to undertake section 1332 

waivers if the probability of success is 

low and the probability of the 

Departments changing requirements is 

high. 

Furthermore, a few commenters noted 

that incorporating the 2018 Guidance 

into regulation will continue to improve 

the ability of states to access the 

flexibilities allowed by section 1332 

waivers, empowering new innovation in 

the push to lower health costs. One 

commenter noted that a June 2020 CMS 

analysis of the effect of implemented 

section 1332 state-based reinsurance 

waivers found that premiums were an 

average of 17.7 percent lower during the 

2020 plan year in the 12 states that had 

approved section 1332 waivers in place 

than they would have been without 

those waivers. The same commenter 

also noted that the results of 1332 

waivers have been impressive thus far 

and that CMS should allow states to rely 

on existing regulatory direction across 

administrations, particularly when the 

existing framework demonstrates clear, 

positive results. 

Response: The Departments 

appreciate commenters’ support for 

these proposals. The Departments agree 

that codifying many of the policies and 

interpretations outlined in the 2018 

Guidance into the implementing 

regulations will provide stability and 

certainty to states as they invest 

significant state resources towards 

submission of a section 1332 waiver 

application and implementation of an 

approved section 1332 waiver, 

particularly waivers that require multiyear preparation. The Departments also 

agree that implemented section 1332 

waivers are lowering premiums for 

consumers, and that section 1332 

waivers are an important tool to lower 

costs and strengthen state health 

insurance markets by providing a 

variety of coverage options. The 

Departments note that all states that 

have implemented a section 1332 

reinsurance waiver plan have reduced 

premiums compared to a scenario 

without these waivers in place.56 As 

described in this preamble, the 

Departments are finalizing these 

policies, with modifications, to codify 

many of the policies and interpretations 

outlined in the 2018 Guidance into the 

section 1332 waiver implementing 

regulations and are not otherwise 

making changes to the 2018 Guidance. 

Comment: A majority of commenters 

did not support either the 2018 


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57Waivers for State Innovation, 80 FR 78131, 

available at https://www.govinfo.gov/content/pkg/ 

FR-2015-12-16/pdf/2015-31563.pdf. 

Guidance or its incorporation into the 

section 1332 regulations. Many of these 

commenters stated that the 2018 

Guidance and its proposed codification 

would undermine the congressional 

intent underlying the section 1332 

guardrails and effectively codify policy 

they believe is based on a 

misinterpretation of the statute. A few 

commenters recommended rescinding 

and abandoning the 2018 Guidance 

completely and that the Departments 

return to the prior interpretation of the 

guardrails described in now superseded 

guidance issued in 2015 (referred to as 

the 2015 Guidance).57

Response: The Departments 

acknowledge commenters’ concerns, but 

do not agree that the 2018 Guidance 

suffers from the purported flaws these 

commenters describe. The Departments 

note that the 2018 Guidance has been in 

place for more than 2 years and states 

have relied upon it to better understand 

the submission requirements for a 

section 1332 waiver application and 

how the Departments apply and 

interpret these requirements. The 

Departments are of the view that the 

changes finalized in this rule provide 

predictability and certainty for states as 

they decide whether to invest resources 

in developing and implementing 

innovative wavier proposals. Further, 

the 2018 Guidance aims to lower 

barriers to innovation for states seeking 

to reform their health insurance 

markets. As described more fully below, 

the Departments maintain that the 

policies announced in the 2018 

Guidance are based on a sound 

interpretation of section 1332 of 

PPACA. 

Comment: A majority of commenters 

did not support the policies outlined in 

the 2018 Guidance, specifically those 

related to how the Departments would 

analyze and determine whether a waiver 

proposal complies with the section 1332 

guardrails. All of these commenters 

expressed concerns regarding the 

legality of the coverage, affordability, 

and comprehensiveness guardrail 

interpretations included in the 2018 

Guidance. 

Many commenters expressed 

concerns with the focus on the 

‘‘availability of comprehensive and 

affordable coverage’’ in the 2018 

Guidance and its effect on how the 

Departments could apply the coverage, 

affordability, and comprehensiveness 

guardrails. Some commenters raised a 

fundamental concern that the 

Department’s current interpretation 

conflicts with the plain language and 

Congressional intent of the statute, and 

stated that the Departments should 

revert to the previous approach (as 

outlined in the 2015 Guidance) 

requiring that only those actually 

covered in EHB-compliant plans be 

counted toward compliance with the 

guardrails. Some commenters asserted 

that the statute requires the Departments 

to consider the estimated number of 

state residents who would actually 

enroll in comprehensive, affordable 

coverage if the waiver were approved 

and implemented, not just the estimated 

number of residents who would have 

the opportunity to enroll in such 

coverage. The commenters were 

concerned that the focus on the 

interpretation of the availability of 

comprehensive and affordable coverage 

in the 2018 Guidance would result in 

fewer residents enrolled in 

comprehensive and affordable coverage, 

and would contradict the congressional 

intent behind the statutory guardrails. 

Other commenters asserted that the 

interpretation of the availability of 

comprehensive and affordable coverage 

for the coverage guardrail allows for a 

disjointed application of the guardrails 

whereby a state can meet the coverage 

guardrail, while its waiver plan reduces 

the overall comprehensiveness and 

affordability of coverage in a state. 

Some commenters were concerned 

that the Departments’ consideration of 

all forms of private coverage in addition 

to public coverage, including employerbased coverage, individual market 

coverage, and other forms of private 

health coverage would include forms of 

coverage that are not subject to the 

federal market reform requirements, 

including short-term, limited duration 

insurance (STLDI) plans and association 

health plans (AHPs). Other commenters 

were concerned that, because the 2018 

Guidance would allow for STLDI to be 

included as a form of coverage under 

the analysis of whether a proposed 

waiver plan meets the section 1332 

guardrails, there may be consumer 

confusion regarding what STLDI plans 

cover and do not cover in terms of 

benefits and out-of-pocket spending. 

Commenters also expressed 

generalized concern that the 2018 

Guidance could permit states to 

implement waiver programs that 

support consumer uptake of alternative 

plan options, including plans such as 

STLDI and AHPs that can be 

underwritten, or plans that do not meet 

EHB standards. In particular, 

commenters were concerned, in relation 

to the affordability guardrail, that 

measures taken under a state waiver 

program to facilitate coverage in such 

alternative plan options (for example, 

allowing the use of subsidies for such 

coverage) would result in fewer 

comprehensive plans in the market, and 

that those comprehensive plans would 

be less affordable. Commenters asserted 

that this would perpetuate a tendency 

for comprehensive coverage to attract 

higher-risk consumers, while healthier, 

lower-risk consumers would tend to 

enroll in alternative plan options, with 

non-comprehensive coverage. This, the 

commenters assert, would change the 

risk pool, bifurcating the market into 

low-risk consumers enrolled in 

alternative plan options and high-risk 

consumers enrolled in comprehensive 

coverage and comprehensive coverage 

would become less affordable and less 

available. Commenters thus asserted 

concerns related to the 

comprehensiveness and affordability 

guardrails that fewer individuals would 

be covered by comprehensive, 

affordable coverage with cost-sharing 

protections, and any interpretation of 

the section 1332 guardrails that allows 

approval of a waiver plan that promotes 

less comprehensive forms of coverage 

such as STLDI and AHPs is inconsistent 

with the statute. 

Commenters also expressed concern 

that these alternative plan options are 

not subject to the same limitations as 

comprehensive coverage in terms of 

consumer protections and could also 

impact the affordability guardrail. For 

instance, these alternative plan options 

generally lack financial limitations like 

out-of-pocket maximums and are not 

subject to the federal prohibition on 

annual and lifetime limits for EHB. 

These commenters asserted that lowerrisk consumers would tend to enroll in 

such alternative plan options because of 

these plan options’ lower premiums and 

that these consumers would bear the 

financial risks associated with having 

coverage that places no limit on enrollee 

out-of-pocket expenses. Furthermore, 

commenters asserted that these 

consumers could then experience an 

unexpected, catastrophic health event, 

and could therefore be forced to pay 

substantially more in out-of-pocket costs 

than if they had enrolled in 

comprehensive coverage. Commenters 

asserted that such out-of-pocket costs 

would far exceed any savings 

consumers might achieve by rejecting 

comprehensive coverage and choosing a 

cheaper alternative. 

There were a variety of other 

comments related to potential market 

impacts of the interpretation of the 

guardrails included in the 2018 

Guidance. Some commenters noted that 

issuers offering comprehensive coverage 

might be more prone to exit a market 


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58Merriam Webster. Available at https://

www.merriam-webster.com/dictionary/provide. 

59See 80 FR 78132–33 (discussion of the 

affordability guardrail in the 2015 Guidance). 

due to instability caused by the entry of 

alternative plan options. These 

commenters raised concerns regarding 

the potential degradation of the risk 

pool due to the increased likelihood of 

high health care costs with healthier 

consumers tending to choose alternative 

plan options. Other commenters raised 

concerns that the 2018 Guidance would 

lead to increased uninsured and 

underinsured populations, which would 

in turn increase emergency room 

utilization and health care costs. Some 

commenters were also concerned about 

the impact on the risk pool that they 

stated could occur as a result of the 

inclusion of alternative plan options as 

a form of coverage and allowing 

subsidies to be used towards purchasing 

these plans. 

Response: The Departments 

acknowledge commenters’ concerns and 

agree that section 1332 waivers should 

be designed to improve a state’s health 

care market while protecting those in 

vulnerable populations, including 

consumers with pre-existing conditions. 

However, the Departments are of the 

view that the 2018 Guidance is based on 

a sound interpretation of section 1332 of 

PPACA and represents a reasonable and 

appropriate application of the section 

1332 guardrails. The Departments also 

are of the view that the 2018 Guidance 

provides states more flexibility to 

address problems caused by PPACA and 

to give Americans more options to get 

health coverage that better meets their 

needs. Under the framework outlined in 

the 2018 Guidance, states can pursue 

waivers to improve their individual 

insurance markets, increase affordable 

coverage options for their residents, and 

ensure that people with pre-existing 

conditions are protected. For all waiver 

requests, the Departments retain the 

discretion to decide whether to approve 

a section 1332 waiver based on the 

particular circumstances of each state’s 

application, provided that the 

Departments determine that all of the 

guardrails are satisfied, and the 

Departments must in all cases evaluate 

each application for compliance with 

section 1332 statutory requirements. 

The Departments are of the view that 

the framework outlined in 2018 

Guidance is based upon a sound 

interpretation of section 1332 and its 

requirements for approval of a section 

1332 waiver. Under section 1332, the 

Departments may approve a state’s 

section 1332 waiver application when 

the Departments determine the waiver 

plan will meet the section 1332 

guardrails. For example, section 

1332(b)(1)(C) of PPACA, the coverage 

guardrail, requires that a state’s plan 

under a waiver will provide coverage 

‘‘to at least a comparable number of its 

residents’’ as would occur without the 

waiver. However, the statutory text for 

the coverage guardrail is silent as to the 

type of coverage that is required or must 

be considered as part of this analysis. In 

addition, sections 1332(b)(1)(A) and (B) 

of PPACA state only that the state’s 

waiver plan must ‘‘provide’’ coverage 

that is as comprehensive and affordable 

as would occur without a waiver, but do 

not require that people actually 

purchase and enroll in this coverage 

under a waiver. By its plain language, 

the term provide means ‘‘to supply or 

make available’’ and does not require or 

imply that people must use what is 

provided.58 Prior to the publication of 

the 2018 Guidance, the interpretations 

and policies outlined in the 2015 

Guidance focused on the number of 

individuals actually estimated to enroll 

in comprehensive and affordable 

coverage that meets all requirements 

under title I of PPACA, in effect reading 

the ‘‘to at least a comparable number of 

its residents’’ language from the 

coverage guardrail into the 

comprehensiveness and affordability 

guardrails as well.59 However, neither 

the language nor structure of the statute 

compels that reading. 

The Departments are of the view that 

the interpretations of the guardrails in 

the 2018 Guidance are reasonable and 

encourage states to provide, alongside 

coverage options that comply with 

PPACA market reforms, innovative 

coverage options that, while potentially 

less comprehensive than coverage 

established under PPACA, could be 

better suited to consumer needs and 

potentially more affordable and 

attractive to a broad range of a state’s 

residents. Regarding the commenters’ 

concerns about the focus on 

‘‘availability of comprehensive and 

affordable coverage’’ as outlined in the 

2018 Guidance (83 FR 53578) and its 

impact on how the Departments would 

analyze the guardrails when reviewing 

section 1332 waiver applications, the 

Departments are of the view that this 

focus loosens restrictions imposed by 

the interpretations outlined in the 2015 

Guidance that were not required by 

PPACA and that previously limited state 

flexibility and consumer choice. While 

the 2015 Guidance focused on the 

number of individuals who would 

actually be provided comprehensive 

and affordable coverage under a 

proposed state waiver plan, the 2018 

Guidance shifted focus to whether a 

waiver plan would actually make 

available comprehensive and affordable 

coverage to state residents. Under the 

2018 Guidance and the regulatory 

changes finalized in this rule, the 

coverage available under the proposed 

waiver must be both as comprehensive 

and affordable as coverage available 

without the waiver. As noted 

previously, this shift comports with the 

plain language of the statute by 

establishing that ‘‘provide coverage’’ 

does not mean anything more than for 

such coverage to be supplied or 

available to consumers under the 

waiver. This shift would allow states to 

provide access to health insurance 

coverage at different price points and 

benefit levels. This shift ensures that 

state residents who wish to retain 

comprehensive coverage similar to that 

provided under PPACA can continue to 

do so, while permitting a state waiver 

plan to also provide access to other 

coverage options that may be better 

suited to consumer needs and more 

attractive to many other individuals. In 

addition, the 2018 Guidance focuses on 

the aggregate effects of a waiver on all 

state residents, rather than requiring 

that the guardrails be met for specific 

sub-populations. This interpretation 

provides states more flexibility to 

consider the effects on all categories of 

residents and to decide that 

improvements in comprehensiveness 

and affordability for state residents as a 

whole offset any small detrimental 

effects for particular residents. As 

explained in the 2018 Guidance, the 

state’s analysis should address in the 

application for the section 1332 waiver 

how the section 1332 state waiver plan 

supports and empowers those with low 

income as well at those with high 

expected health care costs. 

When applying the coverage 

guardrail, a comparable number of 

residents must still be covered as would 

have been covered absent the waiver. 

The 2018 Guidance also explains that 

the Departments conduct an assessment 

that takes into account whether the 

section 1332 state plan sufficiently 

prevents gaps in or discontinuations of 

coverage to address any decreases in 

coverage for specific sub-populations. 

The Departments generally have 

discretion to interpret the statutory 

guardrails, including ambiguous or 

undefined terms, and continue to be of 

the view that the interpretations and 

policies outlined in the 2018 Guidance 

are consistent with the statute. As such, 

the Departments are finalizing 

amendments to 31 CFR 33.108(f)(3)(iv) 

and 45 CFR 155.1308(f)(3)(iv) to codify 

policies and interpretations outlined in 


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60See 45 CFR 144.103 (defining STLDI and 

providing the language of the required consumer 

disclosure notice). 

61See 45 CFR 155.221(b)(1) (direct enrollment 

entities must ‘‘[d]isplay and market QHPs and nonQHPs on separate website pages on its nonExchange website. . . .’’); 45 CFR 155.221(b)(3) 

(direct enrollment entities must ‘‘[l]imit marketing 

of non-QHPs during the Exchange eligibility 

application and QHP plan selection process in a 

manner that minimizes the likelihood that 

consumers will be confused as to what products are 

available through the Exchange and what products 

are not. . . .’’). 

the 2018 Guidance into the section 1332 

waiver implementing regulations. 

In response to commenters’ concerns 

regarding the Departments’ 

consideration of ‘‘all forms of private 

coverage in addition to public coverage, 

including employer-based coverage, 

individual market coverage, and other 

forms of private health coverage’’ (85 FR 

53579) for the purposes of the coverage 

guardrail as outlined in the 2018 

Guidance, the Departments are of the 

view that consumers are best suited to 

determine what coverage best suits their 

individual or family’s needs, whether 

that is a QHP, a major medical nonQHP, an STLDI plan, or another 

available coverage option. Section 1332 

waivers should empower states to 

present innovative plans to provide 

access to coverage to every state 

resident, including those individuals 

who are not eligible for Medicaid or 

CHIP or who cannot afford 

comprehensive, major-medical 

coverage, but still want or need some 

form of coverage to protect against 

catastrophic expenses. In addition, 

regarding some commenters’ concerns 

that fewer people may actually be 

covered, the Departments note that 

when applying the coverage guardrail, a 

comparable number of residents must 

still be covered as would have been 

covered absent the waiver. In response 

to commenters’ concerns regarding the 

impact on the affordability guardrail 

due to the alternative plan options that 

are not subject to the same consumer 

protections as comprehensive coverage, 

the Departments previously noted that 

the affordability guardrail refers to state 

residents’ ability to pay for health care 

expenses relative to their incomes and 

may generally be measured by 

comparing each individual’s expected 

out-of-pocket spending for health 

coverage and services to his or her 

income. Therefore, states are required to 

include such analyses in waiver 

applications. As such, the Departments 

are finalizing amendments to 31 CFR 

33.108(f)(3)(iv) and 45 CFR 

155.1308(f)(3)(iv) as discussed in this 

section of the preamble. 

We generally disagree with the 

commenters’ suggestion that the 

consideration of alternative plan 

options, including STLDI plans, in the 

analysis of whether a proposed waiver 

meets the section 1332 guardrails, may 

result in consumer confusion about the 

benefits and coverage offered by STLDI 

plans. If a waiver were approved that 

included alternative plan options, 

residents in the state would continue to 

have access under the state’s waiver 

plan to the same metal level plans and 

catastrophic plans that include EHB that 

are available today. Consumers would 

therefore have access to at least the 

same coverage and cost-sharing 

protections against excessive out-ofpocket spending as without the waiver. 

The availability of alternative plan 

options would be another option for 

consumers to consider as they shop for 

and enroll in coverage. However, 

recognizing the need and importance to 

ensure consumers are making informed 

choices, the Departments note that 

existing federal regulation requires 

issuers of STLDI plans to prominently 

display in the contract and in any 

application materials a consumer 

disclosure notice that informs 

consumers about the limitations of 

STLDI plans.60 The Departments further 

note that, to the extent STLDI plans are 

displayed on non-Exchange direct 

enrollment websites approved by the 

FFE to assist with Exchange 

applications and enrollment, those 

websites must clearly distinguish QHPs 

from other available coverage options 

and are prohibited from displaying 

STLDI plans side-by-side on the same 

website page with QHPs.61 These 

display requirements ensure that 

consumers can easily discern which 

plans are QHPs eligible for APTC and 

which are not. In addition, many states 

have adopted state-specific marketing 

and other consumer protection laws 

intended to help consumers understand 

the differences between the different 

available coverage options. 

The Departments are of the view that 

concerns related to the potential 

increase in the cost of comprehensive 

coverage are not warranted because the 

application of the guardrails would 

prevent the approval of a waiver that 

would reduce access to comprehensive 

health coverage. Under the guardrails, a 

waiver clearly cannot be approved if it 

raises the cost of the comprehensive 

coverage that is available to consumers. 

The Departments are confident that the 

review process applicable to section 

1332 waiver applications and the 

Departments’ discretion to reject waiver 

applications that would result in 

unreasonable harm to a state’s risk pool 

are sufficient to mitigate commenters’ 

concerns that the cost of comprehensive 

coverage will increase, in terms of 

premiums and out of pocket spending. 

Specifically, the Departments are 

required to evaluate each state’s 

proposal to determine that it meets the 

section 1332 requirements. The 

Departments undertake extensive 

analysis and reviews of research and 

program information as part of these 

determinations. As provided in 31 CFR 

part 33 and 45 CFR part 155, subpart N, 

the waiver application must include 

analysis and supporting data that 

demonstrates that the waiver satisfies 

the guardrails. As such, a state is 

required to include an actuarial analysis 

and actuarial certification, economic 

analysis, data and assumptions and 

other necessary information to support 

the state’s estimates that the proposed 

waiver will meet the requirements of 

section 1332. The actuarial and 

economic analysis must appropriately 

model the impact of the waiver plan, 

including impacts on enrollment and 

affordability for individual market 

single risk pool coverage, relative to a 

without-waiver baseline. Any net 

increase in premiums in the individual 

market risk pool in a with waiver 

scenario, compared to a without-waiver 

scenario, would likely not meet the 

guardrails and would not be an 

approvable waiver application. In 

addition the Departments maintain the 

discretion to deny waivers when 

appropriate given consideration of the 

application as a whole, even if an 

application meets the four statutory 

guardrail requirements. As such, the 

Departments can deny a proposed 

waiver plan that meets the guardrails, if 

the Departments determine the waiver 

would cause more harm than good to 

the state’s residents or to a state’s risk 

pool. 

Comment: Some commenters raised 

concerns regarding how the 

interpretation of the guardrails, 

including the focus on the ‘‘availability 

of comprehensive and affordable 

coverage’’, in the 2018 Guidance would 

impact maintaining protections for 

vulnerable populations and consumers 

with pre-existing conditions. In 

particular, commenters raised concerns 

that alternative plan options can 

terminate or deny coverage based on 

health status, which would tend to 

affect high-risk individuals. 

Commenters asserted that coupled with 

the diminished affordability of 

comprehensive coverage, this possibility 

puts high-risk individuals at great risk 

of going without effective coverage for 

their health care needs. Commenters 

also raised concerns that the guidance 


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62From 2018 Guidance principles: ‘‘Support and 

empower those in need. Americans should have 

access to affordable, high value health insurance. 

Some Americans, particularly those with low 

incomes or high expected health care costs, may 

require financial assistance. Policies in section 1332 

waiver applications should support state residents 

in need in the purchase of private coverage with 

financial assistance that meets their specific health 

care situations.’’ (83 FR 53577). 

63See 31 CFR 33.112 and 45 CFR 155.1312; 31 

CFR 33.116 and 45 CFR 155.1316. Also note that 

there is flexibility under 31 CFR 33.118 and 45 CFR 

155.1318 for states to request, subject to approval 

by the Departments, modification from the normal 

public notice requirements during the COVID–19 

PHE when a delay would undermine or 

compromise the purpose of the proposed waiver 

request and be contrary to the interest of 

consumers. 

provides the flexibility to craft 

hypothetical EHB-benchmarks that 

could further diminish the quality and 

affordability even of comprehensive 

coverage under a waiver program. 

Some commenters also expressed 

concern that the potential market effects 

would generally have a disparate impact 

on vulnerable populations, especially 

low-income consumers and those with 

pre-existing conditions. Additionally, 

these commenters expressed concern 

that a disparate impact on any particular 

group would not necessarily cause the 

Departments to deny a waiver 

application, even though the impact on 

vulnerable population groups would be 

taken into account. Many vulnerable 

population groups were represented in 

the comments, including the elderly and 

those with pre-existing conditions like 

cystic fibrosis, ostomy/continent 

diversion, heart disease, arthritis, 

epilepsy, muscular dystrophy, 

leukemia/lymphoma, hemophilia, and 

others. Commenters raised the 

importance of ensuring compliance with 

specific PPACA market reforms 

including coverage of preventive 

services without cost sharing, the 

prohibition of pre-existing condition 

exclusions, the rating rules, and EHB 

coverage requirements, including 

prescription drugs and mental health 

and substance use disorder services. 

Commenters also stated concern for 

young adults who heavily rely on 

comprehensive coverage and key 

benefits like mental health care. 

Response: The Departments 

understand commenters’ concerns 

regarding potential impacts on 

vulnerable populations. The 

Departments are of the view that it is 

important that vulnerable populations 

have the support they need to obtain 

affordable and comprehensive coverage 

that meets their individual or family 

needs. As outlined in the 2018 

Guidance, the Departments are 

committed to supporting and 

empowering those in need.62

Furthermore, as discussed in the 2018 

Guidance, the state should address in 

the application for the section 1332 

waiver how the section 1332 state plan 

addresses the principles outlined in the 

2018 Guidance to support and empower 

those with low incomes as well at those 

with high expected health care costs as 

it relates to the coverage, 

comprehensiveness, and affordability 

guardrails. The Departments also note 

that state section 1332 waiver 

applications are reviewed by the 

Departments on an individual basis, and 

in the 2018 Guidance, the Departments 

explained that state waiver applications 

should also identify any types of 

individuals for whom affordability of 

coverage would be reduced by the 

waiver and any types of individuals for 

whom affordability of coverage would 

be improved under the waiver. In 

addition, the Departments have 

encouraged and continue to encourage 

states to develop waiver proposals that 

support and empower those with low 

incomes as well at those with high 

expected health care costs. The 

Departments further note and 

emphasize that section 1332 waiver 

authority cannot be used to waive many 

of PPACA’s consumer protections, 

including coverage of preventive 

services without cost sharing, the 

prohibition against pre-existing 

conditions exclusions, guaranteed issue, 

or the rating rules. As such, consumers 

will continue to have access to 

comprehensive coverage options that 

are subject to and must comply with 

PPACA market reforms identified by 

commenters. 

Comment: A few commenters 

recommended that the Departments 

provide more flexibility for states to 

meet the requirement that a waivers will 

not increase the federal deficit. They 

recommended that instead of mandating 

that all waiver applications meet the 

deficit neutrality guardrail for each and 

every year of the waiver, they should 

instead be required to meet the deficit 

neutrality guardrail over a 10-year 

period. These commenters noted that 

this approach would be consistent with 

how CBO scores are generally analyzed 

for budget neutrality over a 10-year 

period, and would be consistent with 

the current requirement for states to 

include a 10-year budget projection in a 

state section 1332 waiver application. 

Response: The Departments 

appreciate these commenters’ 

recommendation, but the Departments 

are not making any changes to the 

Departments’ interpretation or 

application of the federal deficit 

guardrail. Therefore, the Departments 

continue to require that a waiver must 

not increase the federal deficit over the 

period of the waiver (which may not 

exceed 5 years unless renewed) or in 

total over the 10-year budget plan 

submitted by the state as part of the 

application. 

Comment: A few commenters 

expressed concern that allowing states 

to rely on existing general authority to 

enforce PPACA, in conjunction with a 

duly enacted regulation or Executive 

Order, delays stakeholder notification of 

a state’s proposal and does not provide 

stakeholders adequate time to prepare 

comments or work with state 

legislatures to address concerns with 

proposed legislation. 

Response: The Departments 

acknowledge these commenters’ 

concerns, but note that the section 1332 

implementing regulations include 

requirements for public notice at the 

state and federal level for new waiver 

applications.63 In addition, states are 

not precluded from providing additional 

notice of an intent to submit a section 

1332 waiver application under the 

section 1332 implementing regulations. 

The Departments therefore are not 

making any changes to this policy and 

will continue to apply the interpretation 

that permits states to rely on existing 

general authority to enforce PPACA, in 

conjunction with a duly enacted 

regulation or Executive Order. 

Comment: A few commenters stated 

that the revisions in the 2018 Guidance 

constituted a significant change to prior 

section 1332 waiver policy and should 

have been proposed through 

rulemaking. Several commenters 

requested the Departments consider the 

comments submitted and publish a 

revised version of the guidance. 

Additional commenters stated that the 

30-day comment period for the 

proposed 2022 Payment Notice was too 

short and did not provide sufficient 

opportunity for commenters to address 

the impact of these requirements to date 

and the potential prospective impact, 

including the potential negative 

consequences for consumers seeking 

affordable coverage to meet their health 

needs. Other commenters recommended 

that this rule is not an appropriate place 

to propose moving the 2018 Guidance 

into regulation and if the Departments 

want to pursue these policies, then the 

Departments must retract these 

provisions from this rule and repost the 

entire 2018 Guidance through the full 

APA rulemaking process with a separate 

notice-and-comment period. 

Response: The Departments 

appreciate commenters’ interest in 

policies affecting section 1332 waivers. 

The Departments are of the view that a 


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64Specifically, the FQHC protections in section 

1311(c)(1)(C)) of PPACA and section 10104(b)(2) of 

PPACA (adding (g) to section 1311 of PPACA)) 

should not be compromised in any waiver granted 

to a state under section 1332. 

65See 85 FR 71142 (Nov. 6, 2020) (adopting 

flexibilities in the public notice requirements and 

post award public participation requirements for 

section 1332 waivers during the COVID–19 PHE). 

66See https://www.usa.gov/coronavirus. 

longer comment period would have 

delayed the publication of this final rule 

and created significant challenges in 

providing certainty for states developing 

section 1332 waiver proposals or those 

with existing approved waivers. 

Furthermore, while the Departments 

generally disagree that the 2018 

Guidance should have been formalized 

in rulemaking initially or that there is a 

need to codify amendments to the 

section 1332 regulations through a 

separate rulemaking, stakeholders and 

the general public have now had two 

opportunities to provide feedback on 

the policies and interpretations 

outlined. The Departments have 

considered comments received in 

response to the 2018 Guidance, as well 

as those received in response to the 

section 1332 policies in the proposed 

rule. After consideration of these 

comments, for the reasons outlined 

earlier in this section of the preamble, 

the Departments are finalizing 

amendments to the section 1332 

implementing regulations to codify 

many of the policies and interpretations 

outlined in the 2018 Guidance. The 

Departments, however, are not changing 

any of the substantive policies or 

interpretations in the 2018 Guidance, as 

the goal of this effort is to provide 

stability and certainty to states with 

existing approved waiver plans and 

those who may be interested in 

pursuing a section 1332 waiver. 

Comment: Commenters requested that 

the Departments closely monitor waiver 

proposals to ensure fair and adequate 

access to affordable and comprehensive 

coverage, particularly in light of the 

COVID–19 PHE. A few commenters 

highlighted that the timing of this 

proposal could be particularly harmful 

given the current COVID–19 PHE. These 

commenters were concerned that this 

policy will have a disproportionate 

impact on certain populations, that have 

also been disproportionally impacted by 

COVID–19, such as certain racial and 

ethnic populations. 

Several commenters requested that 

CMS closely monitor waiver proposals 

to ensure fair and adequate access and 

payment for Federally Qualified Health 

Centers (FQHC) services.64 Commenters 

also encouraged CMS to prioritize 

section 1332 waiver proposals that 

maintain the statutory requirement for 

qualified health plans to include 

essential community providers, like 

FQHCs, that serve predominately lowincome individuals, and that CMS 

encourage states to explore section 1332 

waivers that expand the vital enabling 

services, including outreach and 

enrollment assistance. 

Response: The Departments note that 

the purpose of section 1332 waivers is 

for states to pursue innovative strategies 

for providing their residents with access 

to higher value, more affordable health 

coverage. For instance, to date, 

reinsurance waivers have delivered 

measurable premium reductions. These 

benefits may be particularly important 

to address COVID–19, and the 

Departments have already issued 

regulations to provide states with 

flexibility to take advantage of section 

1332 waivers to address the immediate 

issues COVID–19 presents.65 The 

Departments are of the view that this 

rule further supports state efforts to take 

advantage of section 1332 waivers to 

address the COVID–19 PHE. 

The Departments are of the view there 

are many areas, including those 

identified by commenters, in which 

compliance monitoring will be 

particularly important to ensure that 

approved waivers continue to meet the 

statutory criteria for approval, especially 

during the current COVID–19 PHE. 

Given that all policy changes can have 

a range of impacts due to the specifics 

of the state, such as the time the policy 

was implemented, the specific 

operational choices, and other market 

factors, the Departments may include 

strict safeguards and monitoring 

protocols in the approval letter and 

waiver terms and conditions to ensure 

that the waiver continues to meet the 

guardrails, including the impact on 

certain populations, for the duration of 

the waiver period. The federal 

government is committed to an all of 

government approach to providing 

COVID–19 relief.66 In addition, 

throughout the COVID–19 PHE, CMS 

has worked to ensure the safety of the 

American public and has offered states, 

providers, suppliers, and group health 

plans and health insurance issuers 

flexibilities in furnishing and providing 

services to combat COVID–19. To the 

extent possible, the Departments intend 

to align this monitoring with each 

state’s waiver design to effectively 

evaluate waiver program performance, 

while keeping administrative burdens to 

a minimum. 

V. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995 (PRA), we are required to 

provide 30-day notice in the Federal 

Register and solicit public comment 

before a collection of information 

requirement is submitted to OMB for 

review and approval. This final rule 

contains information collection 

requirements (ICRs) that are subject to 

review by OMB. A description of these 

provisions is given in the following 

paragraphs. To fairly evaluate whether 

an information collection should be 

approved by OMB, section 3506(c)(2)(A) 

of the PRA requires that we solicited 

comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

We solicited public comment on each 

of the required issues under section 

3506(c)(2)(A) of the PRA for the 

following ICRs. 

A. ICRs Regarding State Innovation 

Waivers (31 CFR 33.108, 45 CFR 

155.1308, 31 CFR 33.120, 45 CFR 

155.1320, 31 CFR 33.128 and 45 CFR 

155.1328) 

The Departments are finalizing 

regulatory revisions codifying into 

section 1332 regulations policies 

initially announced in the 2018 

Guidance governing waiver application 

procedures, monitoring and compliance, 

and periodic evaluations to give states 

certainty regarding the requirements to 

receive and maintain approval of a 

section 1332 waiver by the Departments. 

The Departments are not altering any of 

the requirements related to state 

innovation waiver applications, 

compliance and monitoring, or 

evaluation in a way that would create 

any additional costs or burdens for 

states seeking waiver approval or those 

states with approved waiver plans. The 

Departments anticipate that 

implementing these provisions will not 

significantly change the associated 

burden. The burden related to this 

information collection (Review and 

Approval Process for Waivers for State 

Innovation (CMS–10383)) is currently 

under review by OMB. CMS did not 

receive comments on these ICRs. 


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B. ICRs Regarding Exchange Direct 

Enrollment (DE) Option (§ 155.221) 

Current SBEs that elect to implement 

the Exchange DE option will need to 

revise their Exchange Blueprint 

(Blueprint) under § 155.221(j)(1) to 

describe precisely how the state 

proposes to implement the Exchange DE 

option in compliance with related 

requirements. We believe that any costs 

of revising the Blueprint will be 

nominal, as this process involves 

logging into a CMS web interface that 

serves as the repository for all states’ 

Exchange Blueprints to input additional 

information on the updated processes 

and controls the state will implement to 

manage its new Exchange DE program. 

The burden related to completing the 

Blueprint is currently approved under 

OMB Control Number 0938–1172 

(Blueprint for Approval of Affordable 

State-based and State Partnership 

Insurance Exchanges (CMS–10416)). We 

sought comment on the burden 

associated with this activity, but did not 

receive any. 

Prospective DE entities must contract 

with an independent third-party auditor 

to complete a security and privacy 

controls assessment, which must be 

submitted to HHS for review. Once 

approved, a DE entity must submit 

quarterly plans of action and milestones 

(POA&Ms) to HHS to document the 

identification and resolution of any new 

or existing security or privacy risks. We 

will prepare an ICR submission for 

review and approval by OMB through 

the normal PRA notice-and-comment 

process. 

C. Submission of PRA-Related 

Comments 

We have submitted a copy of this final 

rule to OMB for its review of the rule’s 

information collection requirements. 

The requirements are not effective until 

they have been approved by OMB. 

To obtain copies of the supporting 

statement and any related forms for the 

collections discussed in this rule, please 

visit the CMS website at 

www.cms.hhs.gov/ 

PaperworkReductionActof1995, or call 

the Reports Clearance Office at 410– 

786–1326. 

VI. Regulatory Impact Analysis 

A. Statement of Need 

This final rule includes provisions 

related to FFE and SBE–FP user fees for 

the 2022 benefit year. It also includes 

changes related to acceptance of 

payments by issuers of individual 

market QHPs. It clarifies the regulation 

imposing network adequacy standards 

with regard to QHPs that do not 

differentiate benefits based on whether 

an enrollee receives services from an innetwork or out-of-network provider. It 

also creates a new direct enrollment 

(DE) option for states served by State 

Exchanges, FFEs, and SBE–FPs. In 

addition, relating to State Innovation 

Waivers, this rule finalizes regulatory 

revisions codifying into section 1332 

regulations policies initially announced 

in the section 1332 2018 Guidance, 

governing waiver application 

procedures, monitoring and compliance, 

and periodic evaluations to give states 

certainty regarding the requirements to 

receive and maintain approval of a 

section 1332 waiver. 

B. Overall Impact 

The Departments 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), Public 

Law 96–354 (September 19, 1980), 

section 202 of the Unfunded Mandates 

Reform Act of 1995, Public Law 104–4 

(March 22, 1995), Executive Order 

13132 on Federalism (August 4, 1999), 

the Congressional Review Act, 5 U.S.C. 

804(2), and Executive Order 13771 on 

Reducing Regulation and Controlling 

Regulatory Costs (January 30, 2017). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. An RIA 

must be prepared for rules with 

economically significant effects ($100 

million or more in any one year). 

Section 3(f) of Executive Order 12866 

defines a ‘‘significant regulatory action’’ 

as an action that is likely to result in a 

rule: (1) Having an annual effect on the 

economy of $100 million or more in any 

one 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. An RIA 

must be prepared for major rules with 

economically significant effects ($100 

million or more in any one year), and 

a ‘‘significant’’ regulatory action is 

subject to review by OMB. The 

Departments have concluded that this 

rule is likely to have economic impacts 

of $100 million or more in at least one 

year, and therefore, meets the definition 

of ‘‘significant rule’’ under Executive 

Order 12866. Therefore, the 

Departments have provided an 

assessment of the potential costs, 

benefits, and transfers associated with 

this rule. In accordance with the 

provisions of Executive Order 12866, 

this regulation was reviewed by OMB. 

The provisions in this final rule aim 

to ensure that consumers continue to 

have access to affordable coverage and 

health care, and that states have 

flexibility and control over their 

insurance markets. The changes related 

to the Exchange DE option and section 

1332 waivers will reduce regulatory 

burdens for states. Through the 

reduction in financial uncertainty for 

states and issuers and increased 

affordability for consumers, these 

provisions are expected to promote 

greater market stability and to increase 

access to affordable health coverage. In 

states that implement the Exchange DE 

option, there will be start-up costs for 

states, DE entities (including webbrokers, agents and brokers, and 

issuers), and the federal government 

related to start-up, approval, 

implementation, and oversight. 

However, consumers in such states will 

likely have more options to shop for 

coverage and an improved shopping 

experience. Some issuers may incur 

minimal costs to make operational 

changes in order to accept payments on 

behalf of an enrollee from an individual 

coverage HRA or QSEHRA. 

Comment: A few commenters stated 

that the RIA in the proposed rule was 

inadequate. 

Response: As explained in the 

proposed rule, the Departments are 

unable to quantify all the effects of the 

provisions of this rule. There are 

uncertainties regarding the impact of 

several provisions. For example, it is not 

certain how many states will implement 

the Exchange DE option or how many 

states will submit section 1332 waiver 

applications. Therefore, the 

Departments have included qualitative 


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discussions of costs and benefits related 

to the provisions in this final rule. 

C. Impact Estimates of the Payment 

Notice Provisions and Accounting 

Statement 

In accordance with OMB Circular A– 

4, Table 1 depicts an accounting 

statement summarizing the 

Departments’ assessment of the benefits, 

costs, and transfers associated with this 

regulatory action. 

This final rule implements standards 

for programs that will have numerous 

effects, including allowing consumers to 

have continued access to coverage and 

health care, and stabilizing premiums in 

the individual and small group health 

insurance markets and in an Exchange. 

Although we are unable to quantify all 

benefits and costs of this final rule, the 

effects in Table 1 reflect qualitative 

impacts and estimated direct monetary 

costs and transfers resulting from some 

of the provisions of this rule. 

For 2022, we are finalizing a 

reduction in the FFE user fee rate from 

3.0 percent of total premiums charged to 

2.25 percent of total premiums charged, 

and a reduction in the SBE–FP user fee 

rate from 2.5 percent of total premiums 

charged to 1.75 percent of total 

premiums charged. For the 2023 benefit 

year, we are finalizing the FFE–DE and 

SBE–FP–DE user fee rate of 1.5 percent 

of total premiums charged. While our 

current budget estimates may change in 

the future, we believe that it is 

important to keep the user fee in all 

markets at the lowest level possible to 

cover the costs of the Exchanges and 

keep premiums low for consumers and 

issuers. We expect transfers from the 

issuers to federal government to be 

reduced by approximately $270 million 

in 2022 and by approximately $60 

million in 2023 due to changes in user 

fee rates and state transitions; 

transitions from FFE or SBE–FP to State 

Exchange, SBE–FP in 2022, or to FFE– 

DE in 2023 are included in the 

reduction in user fee transfers from 

issuers to federal government. 


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1. Exchange Direct Enrollment (DE) 

Option (§ 155.221) 

We are finalizing the proposal to add 

§ 155.221(j) to establish a new Exchange 

direct enrollment (DE) option by which 

states can use direct enrollment 

technology to transition to private 

sector-focused enrollment pathways 

operated by QHP issuers, web-brokers, 

and agents and brokers, instead of or in 

addition to a centralized eligibility and 

enrollment website operated by an 

Exchange. State Exchanges, as well as 

SBE–FP and FFE states can elect, 

subject to HHS approval, to implement 

the Exchange DE option. The impact of 

the new Exchange DE option will 

depend on the specific Exchange model 

and the number of states that take 

advantage of the new option. There are 

various stakeholders in states that elect 

to implement the Exchange DE option 

that could be impacted, including 

consumers, State Exchanges, webbrokers, issuers, and agents and brokers, 

as well as the federal government. 

However, we note that the FFEs’ current 

direct enrollment pathways (Classic DE 

and EDE) generally reduce operational 

costs to the federal government while 

alleviating certain burdens on 

consumers. 

The Exchange DE option may have 

varied impacts on consumers, and we 

solicited public comments to help us to 

understand how implementation of the 

Exchange DE option and a 

corresponding increase in the number of 

potential websites through which 

consumers could shop for QHP coverage 

might impact consumers and consumer 

behavior with respect to QHP 

enrollment. 

At this time, we do not anticipate that 

any of the 15 current SBEs will 

implement the Exchange DE option in 

plan year 2022 because these states have 

not implemented direct enrollment 

interfaces with web-brokers or other 

direct enrollment entities similar to 

those implemented by the FFE. 

However, current SBEs that elect to 

implement the Exchange DE option will 

be responsible for meeting certain 

requirements for approval, in particular 

revising their Exchange Blueprint 

(Blueprint) under new § 155.221(j)(1) to 

describe precisely how the state 

proposes to implement the Exchange DE 

option. We believe that any costs of 

revising the Blueprint will be nominal, 

as this process involves logging into a 

CMS web interface that serves as the 

repository for all states’ Exchange 

Blueprints to input additional 

information on the updated processes 

and controls the state will implement to 

manage its new Exchange DE program. 

However, we sought comment on the 

burden associated with this activity, 

noting that the Blueprint is currently 

approved under the PRA under OMB 

Control Number 0938–1172. 

For states seeking to transition to an 

SBE in future plan years and implement 

the SBE–DE option, we anticipate that 

start-up costs may potentially be higher 

than the start-up costs for states seeking 

to transition to an SBE without 

implementing the Exchange DE option, 

due to the additional interfaces that 

must be implemented between the 

Exchange’s eligibility platform and each 

approved DE entity and managed on an 

ongoing basis by the Exchange. States 

transitioning to an SBE–DE will be 

required to complete the Exchange 

Blueprint in the same manner as 

required prior to this final rule and will 

be required to meet all required 

minimum functions of an Exchange. In 

terms of implementation costs, these 

states can realize savings by virtue of 

not having to maintain and operate a 

consumer-facing enrollment website 

capable of handling all Exchange-related 

internet traffic for all state residents, 

instead relying on DE entities and their 

websites to provide the majority of the 

Exchange’s consumer-facing enrollment 

functionality. 

The costs associated with consumerfacing enrollment functionality may be 

relatively lower than those associated 

with building the back-end Exchange 

eligibility platform, interfaces with DE 

entities to accept Exchange applications 

and complete eligibility determinations, 

the connections required from an 

Exchange’s back-end eligibility platform 

to the Federal Data Services Hub for 

eligibility verifications, connections 

from the Exchange’s back-end eligibility 

platform to the respective state 

Medicaid agency for coordinating 

Medicaid and CHIP eligibility 

determinations, and the Exchange’s data 

management and reporting functionality 

necessary to submit required eligibility 

and enrollment data regarding all 

Exchange enrollees to HHS and the IRS. 

Based on recent state transitions to the 

SBE model, the design, development, 

and implementation costs for an 

Exchange depend on a number of 

factors. Recent design, development, 

and implementation costs have ranged 

from $4 million for a smaller state, to 

almost $24 million for a larger state. As 

no SBE to date has implemented direct 

enrollment, however, we are not able to 

provide accurate cost estimates in this 

regard. States may be able to partner 

with existing federal DE partners who 

are already fully-compliant with federal 

operational requirements to achieve 

administrative savings related to the 

approval process for DE entities seeking 

to operate in their state. Any operational 

cost increases or savings may, in turn, 

affect an SBE’s user fee and premium 

costs. 

We do anticipate that an SBE electing 

the Exchange DE option will have 

increased operational costs for ongoing 

monitoring and oversight of the 

approved DE entities, as well as for 

maintaining and managing the 

individual interfaces and transactions 

with each DE entity. However, any 

savings achieved through a decrease in 

call center volume or other consumer 

supports due to DE partners assisting 

consumers with enrollment would offset 

any increased operational costs. Any 

operational cost increases or savings 

stemming from implementation of the 

Exchange DE option could, in turn, 

affect an SBE’s user fee and consumer 

premium costs. 

We also anticipate that the Exchange 

DE option can have significant impacts 

on prospective DE entities (including 

web-brokers, agents and brokers, and 

issuers) and the federal government as 

a result of start-up, approval, and 

implementation costs. Such costs may 

be incurred by entities who enter a 

state’s market as a new DE entity for the 

first time, or by existing DE entities that 

expand into new markets. We presume 

that DE entities will act rationally and 

enter a state’s market or expand into 

new markets if the benefits exceed the 

costs. For the SBE–FP–DE and FFE–DE 

option, prospective federal DE entities 

pursuing approval to host their own DE 

platforms will incur a number of costs 

associated with startup and 

implementation activities, including 

costs to implement the appropriate 

privacy and security infrastructure, 

business controls, and with meeting 

eligibility application technical 

requirements related to ensuring the 

proper coordination with state Medicaid 

and CHIP programs. 

In terms of privacy/security approval 

and startup costs, prospective DE 

entities operating through the SBE–FP– 

DE and FFE–DE option will be required 

to implement almost 300 security and 

privacy controls consistent with a 

system security and privacy plan 

provided by CMS. After control 

implementation, prospective DE entities 

must contract with an independent 

third-party auditor to complete a 

security and privacy controls 

assessment test plan, which must be 

submitted to CMS for review. Once 

approved, a DE entity must submit 

quarterly POA&Ms to CMS to document 

the identification and resolution of any 

new or existing security or privacy risks. 

DE entities must also incur costs to 


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67https://www.hhs.gov/guidance/sites/default/ 

files/hhs-guidance-documents/smart_2018_9.pdf. 

contract with a third-party auditor to 

perform an annual assessment of their 

security and privacy posture consistent 

with continuous monitoring 

requirements published by CMS, and 

feedback provided on their quarterly 

POA&Ms. 

In terms of approval and startup costs 

of implementing appropriate business 

controls, prospective DE entities that 

wish to serve an SBE–FP–DE or FFE–DE 

option state and host an eligibility 

application also will be required to 

implement a dynamic user interface (UI) 

that adapts to consumer scenarios based 

on complex business rules and 

integration with a range of application 

programming interfaces (APIs). They 

must also implement post-enrollment 

support functionality. After 

development, integration, and testing 

are complete, a prospective DE entity 

serving an SBE–FP–DE or FFE–DE 

option state must contract with a thirdparty auditor to evaluate its 

implementation consistent with 

business audit report toolkits provided 

by CMS. The audit consists of 

evaluation of the UI to ensure its 

consistency with program requirements, 

as well as completion of functional and 

integration testing. Once approved, a DE 

entity is required to implement CMSinitiated change requests to update its 

DE implementation as needed. In 

addition, DE entities are subject to 

periodic application audits to confirm 

their platforms continue to meet 

program requirements and remain 

functional. 

There are additional technical startup 

and approval costs related to the 

eligibility application functionality that 

DE entities serving SBE–FP–DE or FFE– 

DE option states are required to 

implement. They must have the ability 

to provide the Exchange with all the 

information necessary for it to 

determine eligibility to enroll in QHPs, 

as well as to determine eligibility for 

APTC, CSRs, Medicaid, and CHIP. 

Consumers who complete an eligibility 

application on a DE entity’s website 

must be provided with an eligibility 

determination notice (EDN) from the 

Exchange, and related information must 

display within the DE entity’s website 

UI about consumers’ eligibility. 

Therefore, if a consumer is determined 

eligible for Medicaid or CHIP after 

completing an eligibility application 

through a DE entity’s website, they will 

receive the same information in their 

EDN about that eligibility and next steps 

as if they completed the application on 

HealthCare.gov. 

We also anticipate that there will be 

costs specific to web-brokers and issuers 

that choose to enter into fee-based 

arrangements with other agents, brokers, 

or issuers, or that choose to enter new 

economic or legal arrangements with 

states, that help to offset the costs of the 

DE services provided. In terms of costs 

to issuers, generally any changes in 

issuer costs associated with the 

Exchange DE option could have 

downstream effects on premium rates. 

Issuers will be impacted by adjustments 

in Exchange user fees, and may have an 

incentive to promote direct enrollment 

if user fees are lower under the 

Exchange DE option, and the savings 

achieved through those lower user fees 

exceed the new costs of arrangements 

with web-brokers. Issuers may also be 

impacted if the Exchange DE option 

leads to shifts in consumer enrollment 

patterns, such as movement from a QHP 

offered by one issuer to another QHP. If 

issuers choose to build out standalone 

consumer-facing applications to enroll 

in coverage under the Exchange DE 

option, this would be another cost to 

consider that could impact them 

directly and have downstream impacts. 

There are a number of additional 

anticipated costs to the federal 

government associated with the 

Exchange DE option beyond startup and 

approval. Under the FFE–DE and SBE– 

FP–DE option, for instance, we will 

continue to provide back-end eligibility 

services, notice and tax form generation, 

the processing of data matching and 

special enrollment verification issues, 

eligibility appeals, casework, advanced 

customer service, enrollment 

reconciliation, IRS reporting, and an 

alternate/backup consumer-facing 

eligibility and enrollment platform (as 

we do today). In addition, the 

HealthCare.gov website will continue to 

provide standardized comparative 

information for QHPs offered through an 

SBE–FP or FFE and will remain 

available for enrollment, as well to 

ensure there is an avenue to handle 

eligibility applications that approved DE 

partners are unable to process. 

Assuming an FFE–DE state chooses 

existing DE entities with whom HHS 

has partnered for the FFE’s DE and EDE 

programs, we anticipate that there will 

be minimal increases in federal 

administrative costs associated with 

implementing the FFE–DE option since 

we have already implemented these 

programs. Any changes in payment 

amounts of the federal user fee for these 

services or any changes in issuer costs 

associated with the DE option may have 

downstream impacts on premiums, and 

therefore, federal tax expenditures on 

PTCs, which are benchmarked to 

premiums. We anticipate that any HHS 

costs associated with supporting the 

additional monitoring and oversight in 

states that elect to implement the SBE– 

DE option will be nominal given that 

SBEs will retain primary responsibility 

for overseeing their approved DE 

entities and HHS can leverage its 

existing SBE oversight mechanism 67

and associated processes to ensure that 

this is occurring. 

We sought comment on this proposal, 

including any additional consumer, 

state, SBE, HHS, issuer, web-broker, or 

other costs, benefits or transfers that 

should be considered. We also sought 

data and information that would help us 

to quantify the potential impacts 

associated with this proposal. Comment 

summaries and our responses are 

included earlier in the preamble. 

2. FFE and SBE–FP User Fees (§ 156.50) 

We are finalizing an FFE user fee rate 

of 2.25 percent for the 2022 benefit year, 

which is lower than the 3.0 percent FFE 

user fee rate finalized for 2021 benefit 

year. We are also finalizing an SBE–FP 

user fee rate of 1.75 percent for the 2022 

benefit year, which is lower than the 2.5 

percent SBE–FP user fee rate we 

finalized for the 2021 benefit year. We 

are finalizing an FFE–DE and SBE–FP– 

DE user fee rate of 1.5 percent for the 

2023 benefit year. Subject to HHS 

approval, SBE–FP or FFE states may 

implement the Exchange DE option 

starting in 2023. Based on our estimated 

costs, enrollment (including anticipated 

transitions of states from the FFE and 

SBE–FP models to either the SBE–FP or 

State Exchange models), premiums for 

the 2021 and 2022 benefit years, and the 

finalized user fee rates, we are 

estimating FFE and SBE–FP user fee 

transfers from issuers to the federal 

government will be lower by $270 

million in 2022 compared to those 

estimated for the prior benefit year. 

Costs may be shifted to approved DE 

entities (including QHP issuers) that 

states elect to use, so there may not 

actually be any cost savings on the part 

of issuers in SBE or FFE states that elect 

the Exchange DE option. As such, there 

may not be an incentive for issuers in 

FFE–DE or SBE–FP–DE states to adopt 

these models solely as a result of the 

lower user fee rate. While there will be 

reduced transfers to the federal 

government in FFE–DE or SBE–FP–DE 

states, we expect that available user fee 

collections from current and prior years 

will be sufficient to fund Exchange 

operations. Based on our finalization of 

the FFE–DE and SBE–FP–DE user fee 

rates, transfers to the federal 


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Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 6171 

68OMB Circular A–4, Regulatory Analysis (Sept. 

17, 2003). 

69 Information about the pass-through amounts 

states received is available on HHS’s CCIIO 1332 

website, and information on the methodology and 

key components of the pass-through calculation is 

available under the ‘‘pass-through funding tools and 

resources’’ section and data brief on state relief and 

Empowerment Waivers, available at https://

www.cms.gov/CCIIO/Programs-and-Initiatives/ 

State-Innovation-Waivers/Section_1332_State_

Innovation_Waivers-. 

70The Secretaries retain their discretionary 

authority under section 1332 to deny waivers when 

appropriate given consideration of the application 

as a whole, even if an application meets the four 

statutory guardrail requirements. 

71All section 1332 waiver approval letters 

available at https://www.cms.gov/CCIIO/Programsand-Initiatives/State-Innovation-Waivers/Section_

1332_State_Innovation_Waivers-#Section_1332_

State_Application_Waiver_Applications. 

government will be reduced by $60 

million in 2023. 

Comment: While some commenters 

supported the reduced user fee rates 

stating that these rates could lead to 

lower premiums, many other 

commenters expressed concern 

regarding the reduced user fee rates and 

the potential impact on Exchange 

operations, specifically how these rates 

could impact enrollment. However, two 

commenters specifically criticized the 

information provided in the RIA section 

of the proposed rule. Both commenters 

expressed concern that HHS had not 

sufficiently analyzed the financial and 

health impacts of the proposed user fee 

rate reductions, as HHS had not 

investigated how reduced Exchange 

operations, Navigator services, 

marketing and outreach, health plan 

oversight, call center and consumer 

appeals services, among others may 

translate into reduced enrollment, and 

the health costs associated. The second 

commenter further suggested that the 

proposed user fee rate would not be 

sufficient to enable the Exchange to 

reduce premiums. 

Response: We are finalizing 2022 

benefit year user fee rates at 2.25 

percent for FFE issuers and 1.75 percent 

for SBE–FP issuers as proposed. We 

have addressed the general concern for 

reductions in user fees in the earlier 

preamble response sections. With 

respect to the specific comment of the 

RIA, we have sufficiently analyzed the 

financial and health impacts of the 

proposed user fee rate reductions and 

our internal analysis suggests that user 

fees will provide the necessary funding 

for the full functioning of Exchange 

operations including Navigator services, 

oversight functions, call center, and 

appeals services, among others for the 

2022 benefit year. Based on prior years’ 

additional collections and future 

projected changes in costs, enrollment, 

and premiums, we project that HHS can 

fully fund Federal platform costs 

associated with providing special 

benefits to these issuers. 

3. State Innovation Waivers 

The Departments are finalizing the 

policies, with modifications, to codify 

many of the policies and interpretations 

outlined in the 2018 Guidance into the 

section 1332 waiver implementing 

regulations governing waiver 

application procedures, monitoring and 

compliance, and periodic evaluations to 

give states certainty regarding the 

requirements to receive and maintain 

approval of a section 1332 waiver by the 

Departments. As such, the Departments 

are finalizing changes to 31 CFR 33.108, 

31 CFR 33.120, 31 CFR 33.128, 45 CFR 

155.1308, 45 CFR 155.1320, and 45 CFR 

155.1328. This final rule does not alter 

any of the requirements related to state 

innovation waiver applications, 

compliance and monitoring, nor 

evaluation in a way that would create 

any additional costs or burdens for 

states seeking waiver approval or those 

states with approved waiver plans. The 

Departments are of the view that the 

increased certainty regarding the 

application requirements will allow 

states to have greater confidence that the 

significant time and monetary 

investments necessary to plan for and 

submit a section 1332 waiver 

application will not result in wasted 

resources and taxpayer dollars. This 

increased certainty could help increase 

the number of states that apply for 

waivers and increase state innovation, 

which in turn could lead to more 

affordable health coverage for 

individuals and families in states that 

consider implementing a section 1332 

waiver program. 

Comment: The Departments received 

many comments on the proposal and 

the potential impacts of the 2018 

Guidance. Some commenters were 

concerned that finalization of the policy 

would increase health care costs, though 

the commenters did not define these 

costs further, and could potentially lead 

to increased premiums. A commenter 

stated that the Departments failed to 

analyze the distributional effects of the 

proposal, including its impact across the 

population and economy. The 

commenters asserted that the 

Departments failed to adequately 

identify and analyze the effects of 

codifying the policies in the 2018 

Guidance in regulation. 

Response: The Departments 

acknowledge that federal agencies, 

where appropriate, should analyze and 

consider the distributional effects of 

regulatory actions, which are the 

impacts of a regulatory action across the 

population and economy, divided up in 

various ways (for example, by income 

groups, race, sex, industrial sector, 

geography).68 The Departments must 

analyze and determine whether each 

state waiver proposal complies with the 

section 1332 guardrails, which include 

comprehensiveness, affordability, 

coverage, and Federal deficit neutrality. 

As explained earlier in section IV. of 

this final rule, a state’s application and 

accompanying actuarial and economic 

analysis must appropriately model the 

impact of the waiver plan, including 

impacts on enrollment and affordability 

for individual market single risk pool 

coverage. Any increase in premiums in 

the individual market risk pool with the 

waiver, compared to a without-waiver 

scenario, would likely not meet the 

guardrails and would not be an 

approvable waiver application. To date, 

waivers have reduced premiums in 

comparison to premiums anticipated in 

the absence of the waivers.69 In 

addition, the Departments maintain the 

discretion to reject any proposed waiver 

plan that meets the guardrails, such as 

if the Departments determine would 

cause more harm than good to the state’s 

residents, or for example to a state’s risk 

pool.70 The Departments’ approval 

letters for state waivers include 

information regarding the Departments’ 

determination of whether a state’s 

analysis and waiver plan satisfies the 

requirements of the section 1332 

guardrails, as well as information on the 

projected impacts of waiver proposals.71

The Departments also acknowledge 

commenters’ interest in the distributive 

impacts of incorporating the policies 

described in the 2018 Guidance into 

regulation text. As noted by 

commenters, OMB Circular A–4 is 

guidance issued by OMB and instructs 

that agencies should analyze the 

‘‘distributional effect’’ of regulatory 

actions, which refers to the impact of a 

regulatory action across the population 

and economy, divided up in various 

ways (for example, income groups, race, 

sex, industrial sector, geography). 

However, the policies announced in the 

2018 Guidance, specifically those that 

explain how the Departments will 

analyze compliance with the section 

1332 guardrails, are not determinative of 

the specific waiver plans states may 

propose. Section 1332 waivers allow 

states to pursue innovative strategies for 

providing their residents with access to 

higher value, more affordable health 

coverage. The Departments have 

encouraged states to propose innovative 

approaches to meet the unique needs of 

their population through the flexibilities 


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72https://www.cms.gov/CCIIO/Programs-andInitiatives/State-Innovation-Waivers/Downloads/ 

1332-Data-Brief-June2020.pdf. 

73 Information about the pass-through amounts 

states received is available on the CCIIO 1332 

website and information on the methodology and 

key components of the pass-through calculation is 

available, under the ‘‘pass-through funding tools 

and resources’’ section and data brief on state relief 

and Empowerment Waivers ‘‘here: https://

www.cms.gov/CCIIO/Programs-and-Initiatives/ 

State-Innovation-Waivers/Section_1332_State_

Innovation_Waivers-. 

74The guidance on State Relief and 

Empowerment Waivers is available online at 

https://www.federalregister.gov/documents/2018/ 

10/24/2018-23182/state-reliefand-empowermentwaivers. 

75An example of information showing the 

distributional impact of a waiver on the population 

by age can be found in Table 3C. See https://

www.cms.gov/CCIIO/Programs-and-Initiatives/ 

State-Innovation-Waivers/Downloads/Delaware1332-Waiver-Application-July-10-2019.pdf. 

76Also note that there is flexibility under 31 CFR 

33.118 and 45 CFR 155.1318 for states to request, 

subject to approval by the Departments, 

modification from the normal public notice 

requirements during the COVID–19 PHE when a 

delay would undermine or compromise the purpose 

Congress made available to states under 

section 1332 of PPACA. As such, the 

Departments are unable to predict or 

analyze the impact of various state 

waiver plans that have not yet been 

submitted, including the distributional 

effects on various segments of the 

population. Based on previous waiver 

applications, the Departments know that 

the impact of waivers vary widely based 

on the state’s specific wavier plan. For 

example, the actual impact of the waiver 

on statewide average premiums 

compared to the estimated impact on 

statewide average premiums (that is, as 

estimated in the original state waiver 

application) for each waiver year varies 

based on the state’s specific waiver 

program. In plan year 2020, states that 

implemented reinsurance waivers have 

lowered premiums ranging from 3.8 

percent in Rhode Island to 37.1 percent 

in Alaska when comparing with and 

without the waivers, depending on a 

variety of factors of the states’ plans and 

the composition of the state’s 

population.72

A potential distributional impact for 

certain section 1332 waivers includes 

the substitution of pass-through funds 

from the federal government to the state 

in lieu of PTC, SBTC, or CSR, if a state 

waiver plan eliminates or reduces the 

amount of PTC, SBTC, or CSR that 

individuals and employers in the state 

receive (‘‘pass-through funding’’). 73

Pass-through funding amounts are 

adjusted to ensure that waivers remain 

deficit neutral, as required by statute. As 

discussed in the 2018 Guidance and 

consistent with the Departments’ 

regulations, when applying for a section 

1332 waiver, the state should include in 

the waiver application sufficient 

analysis and supporting data to inform 

the estimate of any pass-through 

funding amount; states with approved 

waivers must report additional data and 

information to support the annual 

estimate of pass-through funding. 

Furthermore, pass-through funding may 

be for the amount of federal financial 

assistance pursuant to the PPACA not 

paid due to an individual not qualifying 

for financial assistance or qualifying for 

a reduced level of financial assistance 

resulting from a waived provision as a 

direct result of the waiver plan.74

Although pass-through funding 

payments would be operationalized by 

the federal government, the transfers, as 

categorized for purposes of this 

regulatory impact analysis, would flow 

from the individuals and employers 

who would otherwise receive PTC, 

SBTC, or CSR (not from the federal 

government) to the relevant states for 

the purposes of implementing the 

waiver plan. 

The Departments are unable to 

estimate or determine how many or 

which states will apply for a section 

1332 waiver once the policies described 

in the 2018 Guidance are codified in 

regulation. Based on our interactions 

with states that previously proposed or 

considered proposing section 1332 

waiver plans, the Departments 

anticipate that more states will be able 

to take advantage of section 1332 

waivers if approval standards are 

reasonable, appropriate, and sufficiently 

flexible to allow states to design waiver 

plans that are capable of addressing the 

specific needs and circumstances of 

their residents. The Departments are 

also of the view that, despite the 

significant investment of tax dollars and 

other state resources necessary to 

consider, design, and submit a section 

1332 waiver proposal, more states will 

consider a waiver as a viable option to 

improve or address specific problems in 

their health care markets if they do not 

have to be concerned that the 

Departments’ standards will change 

without notice or an opportunity to 

comment. For these reasons, the 

Departments are of the view that 

codifying the policies announced in the 

2018 Guidance in rulemaking, as a 

general matter, will likely provide 

greater opportunities for states to lower 

premiums, provide greater health care 

support for state residents at a greater 

variety of income levels, and develop 

innovative strategies to address the 

needs of vulnerable populations. 

The Departments note that the 

distributive impact of a state’s particular 

waiver plan would be analyzed as part 

of the waiver application and review 

process. Specifically, as part of a state 

waiver application, final regulations at 

31 CFR part 33 and 45 CFR part 155, 

subpart N, require a state to provide 

actuarial analyses and actuarial 

certifications, economic analyses, data 

and assumptions, targets, an 

implementation timeline, and other 

necessary information to support the 

state’s estimates that the proposed 

waiver will comply with section 1332 

requirements to satisfy the section 1332 

waiver guardrails. The 2012 regulation 

also specified that data and assumptions 

used should include information on the 

age, income, health expenses, and 

current health insurance status of the 

relevant state population; the number of 

employers by number of employees and 

whether the employer offers insurance; 

cross tabulations of these variables; and 

an explanation of data sources and 

quality that the Departments would use 

to evaluate any waiver application and 

address regulatory impact across the 

population and economy. For example, 

state waiver applications’ actuarial and 

economic analysis showed that 

enrollment increased when comparing 

the with and without-waiver scenarios 

over different age ranges and income 

levels for states that are implementing a 

reinsurance program.75 Furthermore, 

the Departments complete a preliminary 

review of any waiver application 

received in accordance with 45 CFR 

155.1308(c) and 3l CFR 33.108(c), and if 

an application does not have the 

aforementioned information the 

Secretaries can make a preliminary 

determination that the application is not 

complete. In that case, the waiver 

application would not be reviewed 

further unless additional information is 

provided. 

Furthermore, section 1332(a)(4)(B) of 

PPACA provides that the Secretary of 

HHS and the Secretary of the Treasury 

shall issue regulations providing a 

process for public notice and comment 

at the state level, including public 

hearings, and a process for providing 

public notice and comment after the 

application is received by the 

Secretaries, that are both sufficient to 

ensure a meaningful level of public 

input. Current regulations at 31 CFR 

33.112 and 45 CFR 155.1312 specify 

state public notice and participation 

requirements for proposed waiver 

requests, and 31 CFR 33.116(b) and 45 

CFR 155.1316(b) specify the 

accompanying public notice and 

comment period requirements under the 

Federal public notice and approval 

process.76 Under the current regulations 


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of the proposed waiver request and be contrary to 

the interest of consumers. 77 85 FR 78572, 78644. 78https://www.bls.gov/oes/current/oes_nat.htm. 

at 31 CFR 33.112 and 45 CFR 155.1312, 

states are required to provide a public 

notice and comment period prior to 

submitting an application for a new 

section 1332 waiver. In addition, under 

section 1332(a)(4)(B)(iii) of PPACA and 

the existing implementing regulations at 

31 CFR 33.116(b) and 45 CFR 

155.1316(b), the Secretary of HHS and 

the Secretary of the Treasury are 

required to provide a Federal public 

notice and comment period following 

their preliminary determination that a 

state’s section 1332 waiver application 

is complete. As such, the Departments 

are of the view that the public has a 

meaningful opportunity to provide 

comments on waiver proposals and to 

understand the distributional effects on 

various segments of the population prior 

to waiver approval. 

4. Network Adequacy Standards 

(§ 156.230) 

We are finalizing the proposal to 

revise § 156.230 to reflect the 

longstanding interpretation that plans 

that do not utilize a provider network 

are not required to comply with network 

adequacy standards to obtain QHP 

certification. We make no other changes 

to QHP certification requirements or 

requirements under the market reform 

provisions under title I of PPACA; plans 

that do not utilize a provider network 

must still comply with all other 

applicable QHP certification 

requirements to obtain QHP 

certification. Because the codified 

interpretation is the status quo, we do 

not anticipate any burden to result from 

finalization of this policy. We disagree 

with some commenters’ assertions that 

finalization of this policy will create 

increased costs for consumers or a 

proliferation of plans that do not 

differentiate benefits based on whether 

enrollees receive covered services from 

in-network providers, which may not be 

advantageous for certain consumers. As 

we explain earlier in the preamble, the 

changes to the QHP network adequacy 

standard we are finalizing make no 

changes to QHP certification 

requirements. There have only been 12 

such plans that did not utilize a 

provider network approved as QHPs, 

which were approved for sale in 

Wisconsin for plan year 2016. In the last 

five plan years, there have been no such 

plans approved for QHP certification. 

Accordingly, we do not expect this 

policy to result in increased consumer 

costs or any proliferation appreciable 

increases to such plans seeking QHP 

certification. 

5. Enrollment Process for Qualified 

Individuals (§ 156.1240) 

We are finalizing this policy with 

some minor modifications to the 

regulatory text and the adoption of 

additional language specifying that QHP 

issuers must also accept premium 

payments using a payment method 

described in § 156.1240(a)(2) that are 

made directly by enrollees who are 

enrolled in an individual coverage HRA 

or QSEHRA. We expect this approach 

will ease administration of individual 

coverage HRAs and QSEHRAs by 

altering the behavior of QHP issuers 

who do not yet accept premium 

payments using such payment methods. 

It will also make the individual 

coverage HRA and QSEHRA experience 

more seamless for employers and 

employees by ensuring that individual 

coverage HRAs and QSEHRAs may pay 

premiums for employees through direct 

payments to the issuer, rather than 

through reimbursements of premium 

payments to employees. 

We received several comments 

asserting that finalizing these changes 

would place cost burdens on issuers and 

have addressed them earlier in the 

preamble. As discussed, we did not 

propose and are not finalizing a 

requirement for QHP issuers to accept 

payments from individual coverage 

HRAs or QSEHRAs when such 

payments are made using a form of 

payment that is not described in 

§ 156.1240(a)(2) or to accept aggregate 

payments from an individual coverage 

HRA or QSEHRA made on behalf of 

multiple enrollees.77 While it may be 

possible that some issuers may incur 

administrative costs to implement 

operational changes necessary to 

comply with this requirement, such 

issuer costs should be minimal because 

QHP issuers, as a general matter, are 

already required to accept premium 

payments that are made using the forms 

of payment described in 

§ 156.1240(a)(2). Accordingly, the rule 

we finalize here does not require issuers 

to incur additional costs to invest in 

information technology infrastructure 

that can generally accommodate roster, 

or list, billing. 

6. Regulatory Review Costs 

If regulations impose administrative 

costs on private entities, such as the 

time needed to read and interpret this 

final rule, the Departments should 

estimate the cost associated with 

regulatory review. Due to the 

uncertainty involved with accurately 

quantifying the number of entities that 

will review the rule, the Departments 

assume that the this rule will be 

reviewed by all affected issuers, states, 

and some individuals and other entities 

that commented on the proposed rule. 

The Departments acknowledge that this 

assumption may understate or overstate 

the costs of reviewing this rule. It is 

possible that not all commenters 

reviewed the proposed rule in detail, 

and it is also possible that some 

reviewers chose not to comment on the 

proposed rule. For these reasons, the 

Departments consider the number of 

affected entities and commenters to be 

a fair estimate of the number of 

reviewers of this rule. 

HHS is required to issue a portion of 

this rule each year under their 

regulations and the Departments 

estimate that approximately half of the 

remaining provisions would cause 

additional regulatory review burden that 

stakeholders do not already anticipate. 

The Departments also recognize that 

different types of entities are in many 

cases affected by mutually exclusive 

sections of this final rule, and therefore, 

for purposes of our estimate, the 

Departments assume that each reviewer 

reads approximately 50 percent of the 

rule, excluding the portion of the rule 

that HHS is required to issue each year. 

Using the wage information from the 

BLS for medical and health service 

managers (Code 11–9111), the 

Departments estimate that the cost of 

reviewing this rule is $110.74 per hour, 

including overhead and fringe 

benefits.78 Assuming an average reading 

speed, the Departments estimate that it 

will take approximately 1 hour for staff 

to review the relevant portions of this 

final rule that causes unanticipated 

burden. The Departments assume that 

approximately 725 entities will review 

this final rule. For each entity that 

reviews the rule, the estimated cost is 

approximately $110.74. Therefore, the 

Departments estimate that the total cost 

of reviewing this regulation is 

approximately $80,287 ($110.74 × 725 

reviewers). 

D. Regulatory Alternatives Considered 

In developing the policies contained 

in this final rule, the Departments 

considered numerous alternatives. 

Below the Departments discuss the key 

regulatory alternatives that were 

considered. 

As an alternative to the proposed 

reduction in user fee rates, we 

considered maintaining the FFE and 

SBE–FP user fee rates at their current 

2021 levels. However, our analysis 

supported reducing the user fee rate. In 


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6174 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

79Section 1311(d)(4)(C) of PPACA requires only 

that ‘‘[a]n Exchange shall, at a minimum . . . 

maintain an Internet website through which 

enrollees and prospective enrollees of qualified 

health plans may obtain standardized comparative 

information on such plans . . .’’ 

80https://www.sba.gov/document/support--tablesize-standards. 

81Available at https://www.cms.gov/CCIIO/ 

Resources/Data-Resources/mlr.html. 

light of the projected premium and 

enrollment increases, HHS believed that 

a reduction in FFE and SBE–FP user 

fees was warranted for 2022. 

We considered including a 

requirement for states to submit and be 

approved for a State Innovation Waiver 

under section 1332 of PPACA as part of 

the proposed Exchange DE option 

described at new § 155.221(j). However, 

nothing under the plain terms of section 

1311(d)(4) PPACA governing the 

functions of an Exchange requires an 

Exchange to host a single, consumerfacing enrollment website to receive 

applications or support plan shopping 

and selection.79 Thus we concluded that 

there is no requirement in PPACA that 

must be waived to allow a state to 

implement the Exchange DE option, and 

requiring states to expend taxpayer 

dollars to file a waiver application 

would be unnecessary and unduly 

burdensome. We also considered 

aligning the implementation timeframe 

for all Exchange models interested in 

the Exchange DE option to plan year 

2023; however, because we believe that 

this option could improve health 

insurance markets and that State 

Exchanges could implement the option 

by plan year 2022, we chose not to do 

so. 

Regarding the section 1332 waiver 

policies in this rule, the Departments 

considered not proposing to codify the 

2018 Guidance. Additionally, the 

Departments considered proposing the 

2018 Guidance through separate notice 

and comment rulemaking. The 

Departments did not take either of these 

options because it would be contrary to 

the interest of states. Specifically, the 

Departments concluded that not 

proposing codifying the 2018 Guidance 

would lead to uncertainty for states 

considering section 1332 waiver 

applications, and the Departments 

concluded that separate notice and 

comment rulemaking was unnecessary 

because this rulemaking provided a 

public notice and comment period. 

In this final rule, the Departments 

seek to provide certainty to states that 

the requirements and expectations of 

the section 1332 waiver program will 

not change abruptly during a period in 

which states are doing the work to 

prepare a waiver proposal. The 

Departments considered alternatives to 

the interpretations set forth in the 2018 

Guidance, including interpretations that 

could further increase flexibility. 

However, the Departments determined 

that changing guidance and the criteria 

required for approval would increase 

regulatory uncertainty and make states 

less likely to submit section 1332 

waivers. The Departments are of the 

view that finalizing these policies with 

modifications will help states that are 

interested in undertaking the 

complicated and potentially expensive 

work to design a waiver program that 

meets the four guardrails, as described 

in the 2018 Guidance. Codification of 

many of the policies described in the 

2018 Guidance could also encourage 

more states to apply for section 1332 

waivers. As discussed section IV.A. of 

this the preamble, this consideration is 

especially important because the 

process of developing and submitting a 

proposal may take significant time and 

taxpayer resources at the state level, and 

states do not want to undertake these 

efforts if the probability of success is 

low and the probability of the 

Departments changing requirements is 

high. As part of this rulemaking, the 

Departments substantively considered 

comments and determined that changes 

to 2018 Guidance were not warranted 

based on comments received. 

E. Regulatory Flexibility Act 

The Regulatory Flexibility Act, (5 

U.S.C. 601, et seq.), requires agencies to 

prepare an initial regulatory flexibility 

analysis to describe the impact of the 

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 RFA 

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. States and individuals are 

not included in the definition of ‘‘small 

entity.’’ HHS uses a change in revenues 

of more than 3 to 5 percent as its 

measure of significant economic impact 

on a substantial number of small 

entities. 

The provisions in this rule will affect 

health insurance issuers in the 

individual and small group markets. 

The Departments are of the view that 

health insurance issuers and group 

health plans would be classified under 

the North American Industry 

Classification System code 524114 

(Direct Health and Medical Insurance 

Carriers). According to SBA size 

standards, entities with average annual 

receipts of $41.5 million or less are 

considered small entities for these North 

American Industry Classification 

System codes. Issuers could possibly be 

classified in 621491 (HMO Medical 

Centers) and, if this is the case, the SBA 

size standard would be $35 million or 

less.80 The Departments are of the view 

that few, if any, insurance companies 

underwriting comprehensive health 

insurance policies (in contrast, for 

example, to travel insurance policies or 

dental discount policies) fall below 

these size thresholds. Based on data 

from MLR annual report 81 submissions 

for the 2019 MLR reporting year, 

approximately 77 out of 479 issuers of 

health insurance coverage nationwide 

had total premium revenue of $41.5 

million or less. This estimate may 

overstate the actual number of small 

health insurance companies that may be 

affected, since over 67 percent of these 

small companies belong to larger 

holding groups, and many, if not all, of 

these small companies are likely to have 

non-health lines of business that will 

result in their revenues exceeding $41.5 

million. Therefore, the Departments do 

not expect the provisions of this rule to 

affect a substantial number of small 

entities. 

The changes related to section 1332 

waivers may have an impact on small 

businesses. Section 1332 allows a state 

to waive Part I of Subtitle D of Title I 

of the ACA (relating to establishing 

QHPs); Part II of Subtitle D of Title I of 

the ACA (relating to consumer choices 

and insurance competition through 

Exchanges); sections 36B of the Code 

and 1402 of the ACA (relating to 

premium tax credits and cost-sharing 

reductions for plans offered through 

Exchanges); section 4980H of the Code 

(relating to employer shared 

responsibility); and section 5000A of the 

Code (relating to individual shared 

responsibility). To date, the 

Departments have approved one waiver 

that impacts small businesses. Hawaii’s 

waiver waived the small business health 

options program (SHOP) and related 

provisions in order to allow Hawaii to 

operate its own state program consistent 

with its state law. The state program, the 

Prepaid Health Care Act, requires 

virtually all employers to offer coverage 

to their employees and provides small 

employers premium assistance. As part 

of its the waiver, Hawaii waived the 

SBTC under section 45R of the Code. As 

such, the SBTC amounts that would 

otherwise be paid to small employers in 

Hawaii has been provided as a passthrough payment to the state, which it 


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used to support a state fund that helps 

small businesses cover their health carerelated costs. 

In addition, section 1102(b) of the Act 

requires us to prepare a RIA if a rule 

under title XVIII, title XIX, or part B of 

title 42 of the Act may have a significant 

impact on the operations of a substantial 

number of small rural hospitals. This 

analysis must conform to the provisions 

of section 604 of the RFA. For purposes 

of section 1102(b) of the Act, the 

Departments define a small rural 

hospital as a hospital that is located 

outside of a metropolitan statistical area 

and has fewer than 100 beds. While this 

rule is not subject to section 1102 of the 

Act, the Departments have determined 

that this rule will not affect small rural 

hospitals. Therefore, the Secretaries 

have determined that this rule will not 

have a significant impact on the 

operations of a substantial number of 

small rural hospitals. 

F. Unfunded Mandates 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

requires that agencies assess anticipated 

costs and benefits and take certain other 

actions before issuing a final rule that 

includes any federal mandate that may 

result in expenditures in any one year 

by a state, local, or Tribal governments, 

in the aggregate, or by the private sector, 

of $100 million in 1995 dollars, updated 

annually for inflation. Currently, that 

threshold is approximately $156 

million. Although the Departments have 

not been able to quantify all costs, the 

Departments expect the combined 

impact on state, local, or Tribal 

governments and the private sector to be 

below the threshold. 

G. Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it issues a final rule 

that imposes substantial direct costs on 

state and local governments, preempts 

state law, or otherwise has federalism 

implications. In the Departments’ view, 

while this final rule will not impose 

substantial direct requirement costs on 

state and local governments, this 

regulation has federalism implications 

due to potential direct effects on the 

distribution of power and 

responsibilities among the state and 

federal governments relating to 

determining standards relating to health 

insurance that is offered in the 

individual and small group markets. 

In compliance with the requirement 

of Executive Order 13132 that agencies 

examine closely any policies that may 

have federalism implications or limit 

the policy making discretion of the 

states, the Departments have engaged in 

efforts to consult with and work 

cooperatively with affected states, 

including participating in conference 

calls with and attending conferences of 

the NAIC, and consulting with state 

insurance officials on an individual 

basis. 

While developing this rule, the 

Departments attempted to balance the 

states’ interests in regulating health 

insurance issuers with the need to 

ensure market stability. By doing so, the 

Departments complied with the 

requirements of Executive Order 13132. 

Because states have flexibility in 

designing their Exchange and Exchangerelated programs, state decisions will 

ultimately influence both administrative 

expenses and overall premiums. States 

are not required to establish an 

Exchange. For states that elected 

previously to operate an Exchange, 

those states had the opportunity to use 

funds under Exchange Planning and 

Establishment Grants to fund the 

development of data. Accordingly, some 

of the initial cost of creating programs 

was funded by Exchange Planning and 

Establishment Grants. After 

establishment, Exchanges must be 

financially self-sustaining, with revenue 

sources at the discretion of the state. A 

user fee is assessed on issuers under all 

existing Exchange models, including 

State Exchanges where the user fee is 

assessed by the state, SBE–FPs, and the 

FFEs. 

H. Congressional Review Act 

This final rule is subject to the 

Congressional Review Act provisions of 

the Small Business Regulatory 

Enforcement Fairness Act of 1996 (5 

U.S.C. 801, et seq.), which specifies that 

before a rule can take effect, the federal 

agency promulgating the rule shall 

submit to each House of the Congress 

and to the Comptroller General a report 

containing a copy of the rule along with 

other specified information, and has 

been transmitted to the Congress and 

the Comptroller for review. Under the 

Congressional Review Act, the Office of 

Information and Regulatory Affairs 

designated this final rule as a ‘‘major 

rule’’ as that term is defined in 5 U.S.C. 

804(2), because it is likely to result in 

an annual effect on the economy of $100 

million or more. 

I. Reducing Regulation and Controlling 

Regulatory Costs 

Executive Order 13771, titled 

Reducing Regulation and Controlling 

Regulatory Costs, was issued on January 

30, 2017. Section 2(a) of Executive 

Order 13771 requires an agency, unless 

prohibited by law, to identify at least 

two existing regulations to be repealed 

when the agency publicly proposes for 

notice and comment, or otherwise 

issues, a new regulation. In furtherance 

of this requirement, section 2(c) of 

Executive Order 13771 requires that the 

new incremental costs associated with 

new regulations shall, to the extent 

permitted by law, be offset by the 

elimination of existing costs associated 

with at least two prior regulations. 

This final rule primarily results in 

transfers and is thus not a regulatory or 

deregulatory action for the purposes of 

E.O. 13771. 

List of Subjects 

31 CFR Part 33 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements, Waivers for State 

Innovation. 

45 CFR Part 155 

Administrative practice and 

procedure, Advertising, Age 

discrimination, Brokers, Civil rights, 

Citizenship and naturalization, Conflict 

of interests, Consumer protection, Grant 

programs—health, Grants 

administration, Health care, Health 

insurance, Health maintenance 

organizations (HMO), Health records, 

Hospitals, Indians, Individuals with 

disabilities, Intergovernmental relations, 

Loan programs—health, Medicaid, 

Organization and functions 

(Government agencies), Public 

assistance programs, Reporting and 

recordkeeping requirements, Sex 

discrimination, State and local 

governments, Technical assistance, 

Taxes, Women, Youth. 

45 CFR Part 156 

Administrative practice and 

procedure, Advertising, Advisory 

committees, Age discrimination, Alaska, 

Brokers, Citizenship and naturalization, 

Civil rights, Conflict of interests, 

Consumer protection, Grant programs— 

health, Grants administration, Health 

care, Health insurance, Health 

maintenance organization (HMO), 

Health records, Hospitals, Indians, 

Individuals with disabilities, 

Intergovernmental relations, Loan 

programs—health, Medicaid, 

Organization and functions 

(Government agencies), Prescription 

drugs, Public assistance programs, 

Reporting and recordkeeping 

requirements, Sex discrimination, State 

and local governments, Sunshine Act, 

Technical assistance, Women, Youth. 

For the reasons set forth in the 

preamble, the Department of the 


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6176 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

Treasury amends 31 CFR subtitle A as 

set forth below: 

PART 33—WAIVERS FOR STATE 

INNOVATION 

■ 1. The authority citation for part 33 

continues to read as follows: 

Authority: Sec. 1332, Pub. L. 111–148, 124 

Stat. 119. 

■ 2. Section 33.108 is amended by 

revising paragraphs (f)(3)(i), (f)(3)(iv) 

introductory text, and (f)(3)(iv)(A) 

through (C) to read as follows: 

§ 33.108 Application procedures. 

* * * * * 

(f) * * * 

(3) * * * 

(i) A comprehensive description of 

the State legislation and program to 

implement a plan meeting the 

requirements for a waiver under section 

1332 of PPACA. In analyzing whether 

the State has satisfied the requirement 

under section 1332(b)(2)(A) of PPACA 

that the State enact a law authorizing a 

waiver under section 1332 of PPACA, 

the Secretary and the Secretary of 

Health and Human Services, as 

applicable, may consider existing State 

legislation combined with duly-enacted 

State regulation or an executive order so 

long as the State legislation provides 

statutory authority to enforce PPACA 

provisions or the State plan; 

* * * * * 

(iv) The analyses, actuarial 

certifications, data, assumptions, targets, 

and other information set forth in 

paragraph (f)(4) of this section sufficient 

to provide the Secretary and the 

Secretary of Health and Human 

Services, as applicable, with the 

necessary data to determine that the 

State’s proposed waiver satisfies the 

general requirements for approval under 

section 1332(b)(1) of the Affordable Care 

Act consistent with the provisions of 

this paragraph (f)(3)(iv) and interpretive 

guidance published by the Secretary 

and the Secretary of Health and Human 

Services: 

(A) As required under section 

1332(b)(1)(A) of the Affordable Care Act 

(the comprehensive coverage 

requirement), will provide coverage that 

is at least as comprehensive as the 

coverage defined in section 1302(b) of 

the Affordable Care Act and offered 

through Exchanges established under 

the Affordable Care Act as certified by 

the Office of the Actuary of the Centers 

for Medicare & Medicaid Services based 

on sufficient data from the State and 

from comparable States about their 

experience with programs created by the 

Affordable Care Act and the provisions 

of the Affordable Care Act that the State 

seeks to waive. To satisfy the 

comprehensive coverage requirement, 

the Secretary and the Secretary of 

Health and Human Services, as 

applicable, must determine that the 

State plan will provide consumers 

access to coverage options that are at 

least as comprehensive as the coverage 

options provided without the waiver, to 

at least a comparable number of people 

as would have had access to such 

coverage absent the waiver. These 

coverage options must also satisfy the 

affordability requirement in paragraph 

(f)(3)(iv)(B) of this section; 

(B) As required under section 

1332(b)(1)(B) of the Affordable Care Act 

(the affordability requirement), will 

provide coverage and cost sharing 

protections against excessive out-ofpocket spending that are at least as 

affordable as the provisions of Title I of 

the Affordable Care Act would provide. 

To satisfy the affordability requirement, 

the Secretary and the Secretary of 

Health and Human Services, as 

applicable, must determine that the 

State plan will provide consumers 

access to coverage options that are at 

least as affordable as the coverage 

options provided without the waiver, to 

at least a comparable number of people 

as would have had access to such 

coverage absent the waiver. These 

coverage options must also satisfy the 

comprehensive coverage requirement in 

paragraph (f)(3)(iv)(A) of this section; 

(C) As required under section 

1332(b)(1)(C) of the Affordable Care Act 

(the scope of coverage requirement), 

will provide coverage to at least a 

comparable number of its residents as 

the provisions of Title I of the 

Affordable Care Act would provide. 

Coverage refers to minimum essential 

coverage as defined in 26 U.S.C. 

5000A(f) and 26 CFR 1.5000A–2, and 

health insurance coverage as defined in 

45 CFR 144.103; and 

* * * * * 

■ 3. Section 33.120 is amended by 

revising paragraphs (a)(1) and (2) to read 

as follows: 

§ 33.120 Monitoring and compliance. 

(a) * * * 

(1) Following the issuance of a final 

decision to approve a section 1332 

waiver by the Secretary and the 

Secretary of Health and Human 

Services, as applicable, a State must 

comply with all applicable Federal 

laws, regulations, and interpretive 

policy statements, as well as 

interpretive guidance published by the 

Secretary and the Secretary of Health 

and Human Services, unless expressly 

waived. A State must, within the 

timeframes specified in law, regulation, 

interpretive policy or guidance, come 

into compliance with any changes in 

Federal law, regulation, or policy 

affecting section 1332 waivers, unless 

the provision being changed is expressly 

waived. 

(2) The Secretary and the Secretary of 

Health and Human Services will 

examine compliance with Federal and 

regulatory requirements consistent with 

§ 33.108(f)(3)(iv) and interpretive 

guidance published by the Secretary 

and the Secretary of Health and Human 

Services when conducting 

implementation reviews under 

paragraph (b) of this section. 

* * * * * 

■ 4. Section 33.128 is amended by 

revising paragraph (a) to read as follows: 

§ 33.128 Periodic evaluation requirements. 

(a) The Secretary and the Secretary of 

Health and Human Services, as 

applicable, shall periodically evaluate 

the implementation of a program under 

a section 1332 waiver consistent with 

§ 33.108(f)(3)(iv) and interpretive 

guidance published by the Secretary 

and the Secretary of Health and Human 

Services, as applicable, and any terms 

and conditions governing the section 

1332 waiver. 

* * * * * 

For the reasons set forth in the 

preamble, the Department of Health and 

Human Services amends 45 CFR parts 

155 and 156 as set forth below. 

PART 155—EXCHANGE 

ESTABLISHMENT STANDARDS AND 

OTHER RELATED STANDARDS 

UNDER THE AFFORDABLE CARE ACT 

■ 5. The authority citation for part 155 

continues to read as follows: 

Authority: 42 U.S.C. 18021–18024, 18031– 

18033, 18041–18042, 18051, 18054, 18071, 

and 18081–18083. 

■ 6. Section 155.221 is amended by— 

■ a. Redesignating paragraphs (c) 

through (h) as paragraphs (d) through 

(i), respectively. 

■ b. Adding a reserved paragraph (c); 

■ c. In newly redesignated paragraphs 

(g) introductory text, (g)(6) and (7), and 

(h) by removing the reference to 

‘‘paragraph (e)’’ and adding in its place 

a reference to ‘‘paragraph (f)’’; and 

■ d. Adding paragraph (j). 

The additions and revisions read as 

follows: 

§ 155.221 Standards for direct enrollment 

entities and for third parties to perform 

audits of direct enrollment entities. 

* * * * * 


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Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 6177 

(c) [Reserved] 

* * * * * 

(j) Process for States to elect the 

Exchange direct enrollment option. 

Subject to HHS approval, and in 

addition to or in lieu of the Exchange 

operating its own consumer-facing 

eligibility application and enrollment 

website, a State may elect for the State 

Exchange, State Exchange on the 

Federal platform, or federally-facilitated 

Exchange in the State to approve one or 

more enrollment entities described in 

paragraph (a) of this section to make 

available a non-Exchange online website 

to enroll qualified individuals in a QHP 

offered through the Exchange in the 

State in a manner that constitutes 

enrollment through the Exchange, as 

specified in paragraph (j)(1) or (2) of this 

section. Through the websites of these 

approved entities, consumers in the 

State apply for and enroll in coverage 

using an eligibility application as 

described in § 155.405, and receive 

eligibility determinations from the 

Exchange for QHP enrollment, advance 

payments of the premium tax credit and 

cost-sharing reductions, as well as 

receive assessments or determinations 

from the Exchange for Medicaid and 

CHIP eligibility in accordance with 

§§ 155.302 and 155.405. 

(1) Direct enrollment option for a 

State Exchange. A State may receive 

approval, under §§ 155.105(b) and 

155.106(a), to operate a State Exchange 

using the direct enrollment option 

described in this paragraph (j). The State 

Exchange must meet all Federal 

statutory and regulatory requirements 

for the operation of an Exchange. An 

approved State Exchange that wishes to 

implement this option must submit a 

revised Exchange Blueprint in 

accordance with § 155.105(e). In order 

to obtain approval for the State 

Exchange to implement this option, the 

State must: 

(i) Demonstrate to HHS operational 

readiness for the State Exchange to 

enroll qualified individuals in a QHP 

through approved direct enrollment 

entity websites in a manner that 

constitutes enrollment through the 

Exchange, including enabling 

individuals to apply for, and receive 

eligibility determinations from the 

Exchange for QHP enrollment and 

advance payments of the premium tax 

credit and cost-sharing reductions, as 

well as receive assessments or 

determinations of Medicaid and CHIP 

eligibility from the Exchange as 

described in § 155.302, using the 

eligibility application described in 

§ 155.405; 

(ii) Provide HHS an implementation 

plan and timeline that details the key 

activities, milestones, and 

communication and outreach strategy to 

support the transition of enrollment 

operations to direct enrollment entities; 

and 

(iii) Ensure that a minimum of one 

direct enrollment entity approved by the 

State meets minimum Federal 

requirements for HHS approval to 

participate in the federally-facilitated 

Exchange direct enrollment program, 

including requirements at § 155.220 and 

this section, particularly 

§ 155.220(c)(3)(i)(A) and (D) so that at 

least one approved web-broker in the 

state displays detailed information for 

all available QHPs and meets 

accessibility requirements under 

§ 155.205(c) and is capable of enrolling 

all consumers in the State, including 

those who present complex eligibility 

scenarios. Where no direct enrollment 

entity approved by the State meets such 

minimum Federal requirements or 

possesses the capability to enroll all 

consumers in the State, the State must 

offer a consumer-facing website that 

meets such requirements and possesses 

such capability. 

(2) Direct enrollment option for a 

State with a federally-facilitated 

Exchange or State Exchange on the 

Federal platform. Pursuant to a request 

from a State, the federally-facilitated 

Exchange or a State Exchange on the 

Federal platform may partner with the 

requesting State to implement the direct 

enrollment option described in this 

paragraph (j). The federally-facilitated 

Exchange or State-based Exchange on 

the Federal platform must meet all 

Federal statutory and regulatory 

requirements for the operation of an 

Exchange. In order to obtain approval 

for the federally-facilitated Exchange or 

State Exchange on the Federal platform 

in a State to implement this option, a 

State must: 

(i) Coordinate with HHS on an 

implementation plan and timeline that 

allows for a transition period, developed 

at the discretion of HHS in consultation 

with the State, necessary for the 

federally-facilitated Exchange to 

operationalize the necessary changes to 

implement this option; 

(ii) Execute a Federal agreement with 

HHS that includes the terms and 

conditions for the arrangement and 

which defines the division of 

responsibilities between HHS and the 

State; 

(iii) Agree to procedures developed by 

HHS for the collection and remittance of 

the monthly user fee described in 

§ 156.50(c) of this subchapter; and 

(iv) Perform and cooperate with 

activities established by HHS related to 

oversight and financial integrity 

requirements in accordance with section 

1313 of the Affordable Care Act, 

including complying with reporting and 

compliance activities required by HHS 

and described in the Federal agreement. 

■ 7. Section 155.1308 is amended by 

revising paragraphs (f)(3)(i), (f)(3)(iv) 

introductory text, and (f)(3)(iv)(A) 

through (C) to read as follows: 

§ 155.1308 Application procedures. 

* * * * * 

(f) * * * 

(3) * * * 

(i) A comprehensive description of 

the State legislation and program to 

implement a plan meeting the 

requirements for a waiver under section 

1332 of PPACA. In analyzing whether 

the State has satisfied the requirement 

under section 1332(b)(2)(A) of PPACA 

that the State enact a law authorizing a 

waiver under section 1332 of PPACA, 

the Secretary and the Secretary of the 

Treasury, as applicable, may consider 

existing State legislation combined with 

duly-enacted State regulation or an 

executive order so long as the State 

legislation provides statutory authority 

to enforce PPACA provisions or the 

State plan; 

* * * * * 

(iv) The analyses, actuarial 

certifications, data, assumptions, targets, 

and other information set forth in 

paragraph (f)(4) of this section sufficient 

to provide the Secretary and the 

Secretary of the Treasury, as applicable, 

with the necessary data to determine 

that the State’s proposed waiver satisfies 

the general requirements for approval 

under section 1332(b)(1) of the 

Affordable Care Act consistent with the 

provisions of this paragraph (f)(3)(iv) 

and interpretive guidance published by 

the Secretary and the Secretary of the 

Treasury; 

(A) As required under section 

1332(b)(1)(A) of the Affordable Care Act 

(the comprehensive coverage 

requirement), will provide coverage that 

is at least as comprehensive as the 

coverage defined in section 1302(b) of 

the Affordable Care Act and offered 

through Exchanges established under 

the Affordable Care Act as certified by 

the Office of the Actuary of the Centers 

for Medicare & Medicaid Services based 

on sufficient data from the State and 

from comparable States about their 

experience with programs created by the 

Affordable Care Act and the provisions 

of the Affordable Care Act that the State 

seeks to waive. To satisfy the 

comprehensive coverage requirement, 


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6178 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

the Secretary and the Secretary of the 

Treasury, as applicable, must determine 

that the State plan will provide 

consumers access to coverage options 

that are at least as comprehensive as the 

coverage options provided without the 

waiver, to at least a comparable number 

of people as would have had access to 

such coverage absent the waiver. These 

coverage options must also satisfy the 

affordability requirement in paragraph 

(f)(3)(iv)(B) of this section; 

(B) As required under section 

1332(b)(1)(B) of the Affordable Care Act 

(the affordability requirement), will 

provide coverage and cost sharing 

protections against excessive out-ofpocket spending that are at least as 

affordable as the provisions of Title I of 

the Affordable Care Act would provide. 

To satisfy the affordability requirement, 

the Secretary and the Secretary of the 

Treasury, as applicable, must determine 

that the State plan will provide 

consumers access to coverage options 

that are at least as affordable as the 

coverage options provided without the 

waiver, to at least a comparable number 

of people as would have had access to 

such coverage absent the waiver. These 

coverage options must also satisfy the 

comprehensive coverage requirement in 

paragraph (f)(3)(iv)(A) of this section; 

(C) As required under section 

1332(b)(1)(C) of the Affordable Care Act 

(the scope of coverage requirement), 

will provide coverage to at least a 

comparable number of its residents as 

the provisions of Title I of the 

Affordable Care Act would provide. 

Coverage refers to minimum essential 

coverage as defined in 26 U.S.C. 

5000A(f) and 26 CFR 1.5000A–2, and 

health insurance coverage as defined in 

45 CFR 144.103; and 

* * * * * 

■ 8. Section 155.1320 is amended by 

revising paragraphs (a)(1) and (2) to read 

as follows: 

§ 155.1320 Monitoring and compliance. 

(a) * * * 

(1) Following the issuance of a final 

decision to approve a section 1332 

waiver by the Secretary and the 

Secretary of the Treasury, as applicable, 

a State must comply with all applicable 

Federal laws, regulations, and 

interpretive policy statements, as well 

as interpretive guidance published by 

the Secretary and the Secretary of the 

Treasury, unless expressly waived. A 

State must, within the timeframes 

specified in law, regulation, interpretive 

policy or guidance, come into 

compliance with any changes in Federal 

law, regulation, or policy affecting 

section 1332 waivers, unless the 

provision being changed is expressly 

waived. 

(2) The Secretary and the Secretary of 

the Treasury will examine compliance 

with Federal and regulatory 

requirements consistent with 

§ 155.1308(f)(3)(iv) and interpretive 

guidance published by the Secretary 

and the Secretary of the Treasury when 

conducting implementation reviews 

under paragraph (b) of this section. 

* * * * * 

■ 9. Section 155.1328 is amended by 

revising paragraph (a) to read as follows: 

§ 155.1328 Periodic evaluation 

requirements. 

(a) The Secretary and the Secretary of 

the Treasury, as applicable, shall 

periodically evaluate the 

implementation of a program under a 

section 1332 waiver consistent with 

§ 155.1308(f)(3)(iv) and interpretive 

guidance published by the Secretary 

and the Secretary of the Treasury, as 

applicable, and any terms and 

conditions governing the section 1332 

waiver. 

* * * * * 

PART 156—HEALTH INSURANCE 

ISSUER STANDARDS UNDER THE 

AFFORDABLE CARE ACT, INCLUDING 

STANDARDS RELATED TO 

EXCHANGES 

■ 10. The authority citation for part 156 

is revised to read as follows: 

Authority: 42 U.S.C. 18021–18024, 18031– 

18032, 18041–18042, 18044, 18054, and 26 

U.S.C. 36B. 

■ 11. Section 156.230 is amended by 

adding paragraph (f) to read as follows: 

§ 156.230 Network adequacy standards. 

* * * * * 

(f) Exception. Paragraphs (a) through 

(e) of this section do not apply to a plan 

for which an issuer seeks QHP 

certification or to any certified QHP that 

does not use a provider network, 

meaning that the plan or QHP does not 

condition or differentiate benefits based 

on whether the issuer has a network 

participation agreement with the 

provider that furnishes covered services. 

■ 12. Section 156.1240 is amended by 

adding paragraph (a)(3) to read as 

follows: 

§ 156.1240 Enrollment process for 

qualified individuals. 

(a) * * * 

(3) For payments in the individual 

market made using a payment method 

described in paragraph (a)(2) of this 

section, accept premium payments 

made by or on behalf of an enrollee in 

connection with an individual coverage 

HRA (as described in § 146.123(b) of 

this subchapter) or qualified small 

employer health reimbursement 

arrangement (as described in section 

9831(d)(2) of the Internal Revenue Code 

of 1986, as amended) in which the 

enrollee is enrolled. 

* * * * * 

Dated: January 8, 2021. 

Seema Verma, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Dated: January 12, 2021. 

Alex M. Azar II, 

Secretary, Department of Health and Human 

Services. 

Dated: January 13, 2021. 

David J. Kautter, 

Assistant Secretary (Tax Policy), Department 

of the Treasury. 

[FR Doc. 2021–01175 Filed 1–14–21; 4:15 pm] 

BILLING CODE 4120–01–P 


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