Vol. 77 Monday, 

No. 227 November 26, 2012 

Part V 

Department of Health and Human Services 

45 CFR Parts 147, 155, and 156 

Patient Protection and Affordable Care Act; Standards Related to Essential 

Health Benefits, Actuarial Value, and Accreditation; Proposed Rule 

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70644 Federal Register / Vol. 77, No. 227 / Monday, November 26, 2012 / Proposed Rules 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Parts 147, 155, and 156 

[CMS–9980–P] 

RIN 0938–AR03 

Patient Protection and Affordable Care 

Act; Standards Related to Essential 

Health Benefits, Actuarial Value, and 

Accreditation 

AGENCY: Department of Health and 

Human Services. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule details 

standards for health insurance issuers 

consistent with title I of the Patient 

Protection and Affordable Care Act, as 

amended by the Health Care and 

Education Reconciliation Act of 2010, 

referred to collectively as the Affordable 

Care Act. Specifically, this proposed 

rule outlines Exchange and issuer 

standards related to coverage of 

essential health benefits and actuarial 

value. This proposed rule also proposes 

a timeline for qualified health plans to 

be accredited in Federally-facilitated 

Exchanges and an amendment which 

provides an application process for the 

recognition of additional accrediting 

entities for purposes of certification of 

qualified health plans. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. Eastern Standard Time 

(EST) on December 26, 2012. 

ADDRESSES: In commenting, please refer 

to file code CMS–9980–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

to http://www.regulations.gov. Follow 

the ‘‘Submit a comment’’ instructions. 

2. By regular mail. You may mail 

written comments to the following 

address only: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–9980–P, P.O. Box 8010, Baltimore, 

MD 21244–8010. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address only: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–9980–P, Mail 

Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. Alternatively, 

you may deliver (by hand or courier) 

your written comments only to the 

following addresses prior to the close of 

the comment period: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, call 

telephone number (410) 786–9994 in 

advance to schedule your arrival with 

one of our staff members. 

Comments erroneously mailed to the 

addresses indicated as appropriate for 

hand or courier delivery may be delayed 

and received after the comment period. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Leigha Basini at (301) 492–4307 for 

general information. 

Adam Block at (410) 786–1698 for 

matters related to essential health 

benefits, actuarial value, and minimum 

value. 

Tara Oakman at (301) 492–4253 for 

matters related to accreditation. 

SUPPLEMENTARY INFORMATION: 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http:// 

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

Electronic Access 

This Federal Register document is 

also available from the Federal Register 

online database through Federal Digital 

System (FDsys), a service of the U.S. 

Government Printing Office. This 

database can be accessed via the 

internet at http://www.gpo.gov/fdsys/. 

Table of Contents 

I. Background 

A. Legislative Overview 

B. Stakeholder Consultation and Input 

C. Structure of the Proposed Rule 

II. Provisions of the Proposed Regulation 

A. Part 147—Health Insurance Reform 

Requirements for the Group and 

Individual Health Insurance Markets 

1. Subpart B—Requirements Relating to 

Health Care Access 

B. Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

C. Part 156—Health Insurance Issuer 

Standards Under the Affordable Care 

Act, Including Standards Related to 

Exchanges 

1. Subpart A—General Provisions 

2. Subpart B—EHB Package 

3. Subpart C—Accreditation 

III. Collection of Information Requirements 

IV. Regulatory Impact Analysis 

V. Regulatory Flexibility Act 

VI. Unfunded Mandates 

VII. Federalism 

VIII. Appendix A—List of Proposed EHB 

Benchmarks [List of Received 

Benchmarks: Partial] 

IX. Appendix B—Largest FEDVIP Dental and 

Vision Plan Options, as of March 31, 

2012 

Acronym List 

Because of the many organizations 

and terms to which we refer by acronym 

in this proposed rule, we are listing 

these acronyms and their corresponding 

terms in alphabetical order below: 

AV Actuarial Value 

CHIP Children’s Health Insurance Program 

CMS Centers for Medicare & Medicaid 

Services 

DOL U.S. Department of Labor 

EHB Essential Health Benefits 

ERISA Employee Retirement Income 

Security Act (29 U.S.C. section 1001, et 

seq.) 

FDA U.S. Food and Drug Administration 

FEDVIP Federal Employee Dental and 

Vision Insurance Program 

FEHBP Federal Employees Health Benefits 

Program 

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Federal Register / Vol. 77, No. 227 / Monday, November 26, 2012 / Proposed Rules 70645 

1For more information on status as a 

grandfathered health plans under the Affordable 

Care Act, please see Interim Final Rule, ‘‘Group 

Health Plans and Health Insurance Coverage 

Relating to Status as a Grandfathered Health Plan 

Under the Patient Protection and Affordable Care 

Act.’’ Available at: http://cciio.cms.gov/resources/

regulations/index.html#gp. 

2Available at: http://cciio.cms.gov/resources/

files/Files2/12162011/essential_health_benefits_

bulletin.pdf. 

3 ‘‘Essential Health Benefits: Balancing Coverage 

and Cost.’’ October 6, 2011. Available at: http://

www.iom.edu/Reports/2011/Essential-HealthBenefits-Balancing-Coverage-and-Cost.aspx. 

4Available at: http://cciio.cms.gov/resources/

files/largest-smgroup-products-7-2-2012.pdf.PDF. 

5 77 FR 42658 (July 20, 2012). 

6Available at: http://cciio.cms.gov/resources/

files/Files2/02242012/Av-csr-bulletin.pdf. 

HEDIS Healthcare Effectiveness Data and 

Information Set 

HHS U.S. Department of Health and Human 

Services 

HIOS Health Insurance Oversight System 

HMO Health Maintenance Organization 

HSA Health Savings Account 

HRA Health Reimbursement Account 

IOM Institute of Medicine 

IRS Internal Revenue Service 

MV Minimum Value 

NAIC National Association of Insurance 

Commissioners 

OMB Office of Management and Budget 

OPM U.S. Office of Personnel Management 

PHS Act Public Health Service Act 

PRA Paperwork Reduction Act 

QHP Qualified Health Plan 

SSA Social Security Administration 

SHOP Small Business Health Options 

Program 

The Act Social Security Act 

The Code Internal Revenue Code of 1986 

USP United States Pharmacopeia 

Executive Summary: Beginning in 

2014, all non-grandfathered health 

insurance coverage 1 in the individual 

and small group markets, Medicaid 

benchmark and benchmark-equivalent 

plans, and Basic Health Programs (if 

applicable) will be required to cover 

essential health benefits (EHB), which 

include items and services in 10 

statutory benefit categories, such as 

hospitalization, prescription drugs, and 

maternity and newborn care, and are 

equal in scope to a typical employer 

health plan. In addition to offering EHB, 

these health plans will meet specific 

actuarial values (AVs): 60 percent for a 

bronze plan, 70 percent for a silver plan, 

80 percent for a gold plan, and 90 

percent for a platinum plan. These AVs, 

called ‘‘metal levels,’’ will assist 

consumers in comparing and selecting 

health plans by allowing a potential 

enrollee to compare the relative 

payment generosity of available plans. 

Taken together, EHB and AV will 

significantly increase consumers’ ability 

to compare and make an informed 

choice about health plans. 

The Department of Health and Human 

Services (HHS) has provided 

information on EHB and AV standards 

in several phases. On December 16, 

2011, HHS released a bulletin 2 (the 

‘‘EHB Bulletin’’), following a report 

from the U.S. Department of Labor 

(DOL) describing the scope of benefits 

typically covered under employersponsored coverage and an HHScommissioned study from the Institute 

of Medicine (IOM) 3 recommending the 

criteria and methods for determining 

and updating the EHB. The EHB 

Bulletin outlined an intended regulatory 

approach for defining EHB, including a 

benchmark-based framework. Shortly 

thereafter, on January 25, 2012, HHS 

released an illustrative list of the largest 

three small group market products by 

state, which were updated on July 2, 

2012.4 HHS further clarified the 

approach described in the EHB Bulletin 

through a series of Frequently Asked 

Questions (FAQs), released on February 

17, 2012. On July 20, 2012, HHS 

published a final rule 5 authorizing the 

collection of data to be used under the 

intended process for states to select 

from among several benchmark options 

to define EHB. 

HHS also published a bulletin 6

outlining an intended regulatory 

approach to calculations of AV and 

implementation of cost-sharing 

reductions on February 24, 2012 (the 

‘‘AV/CSR Bulletin’’). Specifically, HHS 

outlined an intended regulatory 

approach for the calculation of AV, de 

minimis variation standards, and silver 

plan variations for individuals eligible 

for cost-sharing reductions among other 

topics. As described in section IB of this 

preamble, ‘‘Stakeholder Consultation 

and Input,’’ HHS reviewed and 

considered comments on both the EHB 

and AV/CSR Bulletins in developing 

this proposed rule. 

In addition, this rule proposes to 

amend 45 CFR 156.275, as published on 

July 20, 2012 (77 FR 42658), which 

established the first phase of an 

intended two-phase approach to 

recognizing accrediting entities. As 

directed under law, recognized entities 

will implement the standards 

established under the Affordable Care 

Act for qualified health plans (QHPs) to 

be accredited on the basis of local 

performance on a timeline established 

by the Exchange. The amendment to 

phase one included herein would not 

alter recognition of the National 

Committee for Quality Assurance 

(NCQA) and URAC on the terms 

outlined in the final rule (and as 

provided in the Federal Register Notice 

being released concurrently with this 

proposed rule) and would provide an 

opportunity for additional accrediting 

entities meeting the conditions in 

§ 156.275 to be recognized by the 

Secretary, until phase two is in effect. 

This opportunity would include an 

application and review process. This 

rule also proposes a timeline for the 

accreditation standard for the purposes 

of QHP certification in Federallyfacilitated Exchanges. 

I. Background 

A. Legislative Overview 

Section 1302 of the Affordable Care 

Act provides for the establishment of an 

EHB package that includes coverage of 

EHB (as defined by the Secretary of the 

Department of Health and Human 

Services (the Secretary)) and AV 

requirements. The law directs that EHB 

be equal in scope to the benefits covered 

by a typical employer plan and cover at 

least the following 10 general categories: 

Ambulatory patient services; emergency 

services; hospitalization; maternity and 

newborn care; mental health and 

substance use disorder services, 

including behavioral health treatment; 

prescription drugs; rehabilitative and 

habilitative services and devices; 

laboratory services; preventive and 

wellness services and chronic disease 

management; and pediatric services, 

including oral and vision care. Sections 

1302(b)(4)(A) through (D) establish that 

the Secretary must define EHB in a 

manner that (1) Reflects appropriate 

balance among the 10 categories; (2) is 

not designed in such a way as to 

discriminate based on age, disability, or 

expected length of life; (3) takes into 

account the health care needs of diverse 

segments of the population; and (4) does 

not allow denials of EHB based on age, 

life expectancy, or disability. Sections 

1302(b)(4)(E) and (F) further direct the 

Secretary to consider the provision of 

emergency services and dental benefits 

when determining whether a particular 

health plan covers EHB. Finally, 

sections 1302(b)(4)(G) and (H) specify 

that the Secretary periodically review 

the EHB, report the findings of such 

review to the Congress and to the 

public, and update the EHB as needed 

to address any gaps in access to care or 

advances in the relevant evidence base. 

Section 1311(d)(3)(B) establishes that 

states may require a QHP to cover 

additional benefits beyond those in the 

EHB, provided that the state defrays the 

costs of such required benefits. 

Section 1301(a)(1)(B) of the 

Affordable Care Act directs all issuers of 

QHPs to cover the EHB package 

described in section 1302(a) of the 

Affordable Care Act, including coverage 

of the services described in section 

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70646 Federal Register / Vol. 77, No. 227 / Monday, November 26, 2012 / Proposed Rules 

7 ‘‘Selected Medical Benefits: A Report from the 

Department of Labor to the Department of Health 

and Human Services.’’ April 15, 2011. Available at: 

http://www.bls.gov/ncs/ebs/sp/selmedbens

report.pdf. 

1302(b), adhering to the cost-sharing 

limits described in section 1302(c), and 

subject to 1302(e), meeting the AV 

levels established in section 1302(d). 

Section 2707(a) of the Public Health 

Service (PHS) Act extends the coverage 

of the EHB package to issuers of nongrandfathered individual and small 

group policies beginning with plan 

years starting on or after January 1, 

2014, irrespective of whether such 

issuers offer coverage through an 

Exchange. In addition, section 2707(b) 

of the PHS Act directs nongrandfathered group health plans to 

ensure that cost-sharing under the plan 

does not exceed the limitations 

described in sections 1302(c)(1) and (2) 

of the Affordable Care Act. 

Section 1302(d)(2) of the Affordable 

Care Act describes the levels of coverage 

that section 1302(a)(3) includes in the 

EHB package: 60 percent for a bronze 

plan, 70 percent for a silver plan, 80 

percent for a gold plan, and 90 percent 

for a platinum plan. Section 1302(d)(3) 

directs the Secretary to develop 

guidelines that allow for de minimis 

variation in AV calculations. 

Section 1311(c)(1)(D)(i) of the 

Affordable Care Act directs a health 

plan to ‘‘be accredited with respect to 

local performance on clinical quality 

measures * * * by any entity 

recognized by the Secretary for the 

accreditation of health insurance issuers 

or plans (so long as any such entity has 

transparent and rigorous methodological 

and scoring criteria).’’ Section 

1311(c)(1)(D)(ii) requires that QHPs 

‘‘receive such accreditation within a 

period established by an Exchange 

* * *.’’ In a final rule published on July 

20, 2012 (77 FR 42658), because the 

NCQA and URAC already met the 

statutory requirements, they were 

recognized as accrediting entities on an 

interim basis, subject to the submission 

of documentation required in 45 CFR 

156.275(c)(4). This recognition is now 

effective as indicated in a Federal 

Register notice being published 

concurrently with this proposed rule. In 

this proposed rule, HHS introduces a 

new process by which accrediting 

entities that are not already recognized 

can submit an application to be 

recognized and establishes a proposed 

notice and final notice process for 

recognizing any new accrediting 

entities. HHS intends, through future 

rulemaking, to establish a phase two 

recognition process which may establish 

additional criteria for the recognition of 

accrediting entities. This rule also 

proposes a timeline for the accreditation 

requirement in a Federally-facilitated 

Exchange. 

B. Stakeholder Consultation and Input 

HHS has consulted with interested 

stakeholders on several policies related 

to EHB, AV, and Exchange functions. 

HHS held a number of listening sessions 

with consumers, providers, employers, 

health plans, and state representatives 

to gather public input, and released 

several documents for public review 

and comment. As described previously, 

HHS released two Bulletins that 

outlined our intended regulatory 

approach to defining EHB and 

calculating AV and sought public 

comment on the specific approaches. 

In addition to the listening sessions, 

HHS considered the findings of an IOM 

study, as well as a report conducted by 

the DOL 7 on typical benefits offered by 

employer-sponsored coverage before 

releasing the Bulletins. 

Finally, HHS consulted with 

stakeholders through regular meetings 

with the National Association of 

Insurance Commissioners (NAIC), 

regular contact with states through the 

Exchange grant process, Medicaid 

consultation, and meetings with tribal 

leaders and representatives, health 

insurance issuers, trade groups, 

consumer advocates, employers, and 

other interested parties. 

HHS received approximately 11,000 

comments in response to the EHB 

Bulletin. Commenters represented a 

wide variety of stakeholders, including 

health insurance issuers, consumers, 

health providers, states, employers, 

employees, and Members of Congress. 

We considered all of these comments 

as we developed the policies in this 

proposed rule. Though we do not 

address each comment received, we 

discuss many of the comments 

throughout the proposed rule. In 

addition, HHS will be consulting with 

federally recognized tribes on the 

provisions of this proposed rule that 

impact tribes. 

C. Structure of the Proposed Rule 

The regulations outlined in this 

proposed rule would be codified in 45 

CFR parts 147, 155, and 156. Part 147 

outlines proposed standards for health 

insurance issuers in the small group and 

individual markets related to health 

insurance reforms. Part 155 outlines the 

proposed standards for states relative to 

the establishment of Exchanges and 

outlines the proposed standards for 

Exchanges related to minimum 

Exchange functions. Part 156 outlines 

the proposed standards for issuers of 

QHPs, including with respect to 

participation in an Exchange. The 

standards proposed to be codified in 

Part 156 as laid out in this NPRM apply 

only in the individual and small group 

markets, and not to Medicaid 

benchmark or benchmark-equivalent 

plans. EHB applicability to Medicaid 

will be defined in a separate regulation. 

II. Provisions of the Proposed 

Regulation 

A. Part 147—Health Insurance Reform 

Requirements for the Group and 

Individual Health Insurance Markets 

1. Subpart B—Requirements Relating to 

Health Care Access 

a. Coverage of EHB (§ 147.150) 

Section 2707(a) of the Public Health 

Service Act (PHS Act), as added by the 

Affordable Care Act, directs health 

insurance issuers that offer nongrandfathered health insurance coverage 

in the individual or small group market 

to ensure that such coverage includes 

the EHB package defined under section 

1302(a) of the Affordable Care Act that 

includes the coverage of EHB, 

application of cost-sharing limitations, 

and AV requirements (plans must be a 

bronze, silver, gold, or platinum plan or 

a catastrophic plan). 

Section 1255 of the Affordable Care 

Act provides that this EHB package 

standard applies starting the first plan 

year for the small group market or 

policy year for the individual market 

beginning on or after January 1, 2014. In 

§ 147.150(a), we propose that a health 

insurance issuer that offers health 

insurance coverage in the individual or 

small group market—inside or outside 

of the Exchange—ensure that such 

coverage offers the EHB package. 

PHS Act section 2707(b) provides that 

a group health plan shall ensure that 

any annual cost-sharing imposed under 

the plan does not exceed the limitations 

provided for under section 1302(c)(1) 

and (c)(2) of the Affordable Care Act. 

Section 715(a)(1) of the Employee 

Retirement Income Security Act (ERISA) 

and section 9815(a)(1) of the Internal 

Revenue Code (Code) incorporates 

section 2707(b) of the Public Health 

Service Act into ERISA and the Code. 

HHS, DOL, and the Department of the 

Treasury read the limitations on the 

scope of section 1302(c) of the 

Affordable Care Act to apply also to the 

scope of PHS Act section 2707(b). 

Therefore, these deductible limitations 

apply only to plans and issuers in the 

small group market and do not apply to 

self-insured plans or health insurance 

issuers offering health insurance 

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Federal Register / Vol. 77, No. 227 / Monday, November 26, 2012 / Proposed Rules 70647 

8For example, a state statute requiring issuers to 

pay the same for a physician consultation in the 

office and via telemedicine would not be a staterequired benefit. The physician consultation is the 

service; the requirement to pay for telemedicine 

relates to payment for the service delivery method. 

Since the requirement addresses a specific delivery 

method, not the underlying care, treatment, or 

service being delivered, there is no requirement to 

defray the cost. 

9Section 36B1401(b)(3)(D) of the Code specifies 

that the portion of the premium allocable to 

required additional benefits shall not be taken into 

account in determining a premium tax credit. 

Likewise, section 1402(c) of the Affordable Care Act 

specifies that cost-sharing reductions do not apply 

to required additional benefits. 

coverage in the large group market. 

Section 147.150(b) is reserved at this 

time. 

In addition, section 2707(c) of the 

PHS Act provides that an issuer offering 

any level of coverage specified under 

section 1302(d) of the Affordable Care 

Act offer coverage in that level to 

individuals who have not attained the 

age of 21. We propose to codify this 

standard in § 147.150(c). An issuer 

could satisfy this standard by offering 

the same product to applicants seeking 

child-only coverage that it offers to 

applicants seeking coverage solely for 

adults or for families including both 

adults and children, as long as the 

child-only coverage is priced in 

accordance with the applicable rating 

rules. 

B. Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

State Required Benefits 

Section 1311(d)(3)(B) of the 

Affordable Care Act explicitly permits a 

state to require QHPs to offer benefits in 

addition to EHB, but requires the state 

to make payments, either to the 

individual enrollee or to the issuer on 

behalf of the enrollee, to defray the cost 

of these additional benefits. We propose 

that state-required benefits enacted on 

or before December 31, 2011 (even if not 

effective until a later date) may be 

considered EHB, which would obviate 

the requirement for the state to pay for 

these state-required benefits. We also 

propose that state-required benefits that 

are not included in the benchmark 

would apply to QHP markets in the 

same way they apply in the current 

market. For example, a benefit that is 

only required in the individual market 

by a state law enacted prior to December 

31, 2011 would only be considered EHB 

(and exempt from the requirement that 

the state pay the cost of the benefit) with 

respect to the individual QHP market in 

2014. This policy regarding staterequired benefits is intended to apply 

for at least plan years 2014 and 2015. 

HHS received many comments in 

response to the EHB Bulletin about how 

state-required benefits beyond EHB 

could be identified and how states 

would defray the cost of those benefits. 

In this proposed rule, we interpret staterequired benefits to be specific to the 

care, treatment, and services that a state 

requires issuers to offer to its enrollees. 

Therefore, state rules related to provider 

types, cost-sharing, or reimbursement 

methods would not fall under our 

interpretation of state-required benefits. 

Even though plans must comply with 

those state requirements, there would be 

no federal obligation for states to defray 

the costs associated with those 

requirements.8

Under the Affordable Care Act, state 

payment for state-required benefits only 

applies to QHPs. Since the Exchange is 

responsible for certifying QHPs, we 

propose that the Exchange identify 

which additional state-required benefits, 

if any, are in excess of the EHB. HHS 

intends to publish a list of state-required 

benefits for Exchanges to use as a 

reference tool. 

After consideration of four possible 

entities to conduct the cost calculation 

for additional coverage (QHP issuers, 

the state, the Exchange, or HHS), we 

believe that the QHP issuer should 

conduct the calculation for the cost of 

additional benefits, because the QHP 

generates the necessary data regarding 

claims, utilization, trend, and other 

issuer-specific data typically used to 

calculate the cost of a benefit. Because 

QHP issuers will offer state-required 

benefits to every enrollee, the cost of the 

benefit will be built into the overall 

premium and spread across all 

enrollees. We believe that the best 

method to calculate the state’s cost, if 

applicable, is to have the QHP issuer 

quantify the amount of premium 

attributable to each additional benefit. 

We additionally propose that the 

calculations of the cost of additional 

benefits be made by a member of the 

American Academy of Actuaries, based 

on an analysis performed in accordance 

with generally accepted actuarial 

principles and methodologies. We also 

propose the calculation be done 

prospectively to allow for the offset of 

an enrollee’s share of premium and for 

purposes of calculating the premium tax 

credit and reduced cost sharing.9 We 

request comment on whether the state 

should make payments based on the 

statewide average cost or make 

payments based on each QHP issuer’s 

actual cost if different issuers report that 

a particular additional required benefit 

costs a different amount. We note that 

we expect there will be few, if any, 

payments made for state-required 

benefits since required benefits enacted 

prior to December 31, 2011 will be part 

of EHB, and therefore will not require 

the state to incur any costs. 

Accreditation Timeline (§ 155.1045) 

HHS proposes to amend § 155.1045 to 

redesignate the existing paragraph as 

paragraph (a) and add a new paragraph 

(b) to set forth the timeline for QHP 

accreditation in Federally-facilitated 

Exchanges (including State Partnership 

Exchanges). HHS proposes a phased 

approach to the requirement that QHP 

issuers be accredited in Federallyfacilitated Exchanges. This approach is 

in part modeled after the one used by 

some states that require accreditation as 

part of issuer licensing. Further, this 

approach will accommodate new 

issuers—including Consumer Operated 

and Oriented Plans—and those that 

have not previously been accredited, 

while ensuring that all QHP issuers 

make a commitment to ensure the 

delivery of high quality care to 

consumers. 

The proposed accreditation timeline 

to be used in Federally-facilitated 

Exchanges is as follows: 

• During certification for an issuer’s 

initial year of QHP certification (for 

example, in 2013 for the 2014 coverage 

year), a QHP issuer without existing 

commercial, Medicaid, or Exchange 

health plan accreditation granted by a 

recognized accrediting entity for the 

same state in which the issuer is 

applying to offer coverage must have 

scheduled or plan to schedule a review 

of QHP policies and procedures of the 

applying QHP issuer with a recognized 

accrediting entity. 

• Prior to a QHP issuer’s second year 

and third year of QHP certification (for 

example, in 2014 for the 2015 coverage 

year and 2015 for the 2016 coverage 

year), a QHP issuer must be accredited 

by a recognized accrediting entity on the 

policies and procedures that are 

applicable to their Exchange products 

or, a QHP issuer must have commercial 

or Medicaid health plan accreditation 

granted by a recognized accrediting 

entity for the same state in which the 

issuer is offering Exchange coverage and 

the administrative policies and 

procedures underlying that 

accreditation must be the same or 

similar to the administrative policies 

and procedures used in connection with 

the QHP. 

• Prior to a QHP issuer’s fourth year 

of QHP certification and in every 

subsequent year of certification (for 

example, in 2016 for the 2017 coverage 

year and forward), a QHP issuer must be 

accredited in accordance with 45 CFR 

156.275. 

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10 Institute of Medicine, ‘‘Essential Health 

Benefits: Balancing Coverage and Cost’’ (2011). 

11http://cciio.cms.gov/resources/files/largestsmgroup-products-7-2-2012.pdf.PDF 

12 Institute of Medicine, ‘‘Essential Health 

Benefits: Balancing Coverage and Cost’’ (2011). 

C. Part 156—Health Insurance Issuer 

Standards Under the Affordable Care 

Act, Including Standards Related to 

Exchanges 

1. Subpart A—General Provisions 

In § 156.20, we propose to add 

definitions as follows: 

Actuarial Value and Percentage of the 

Total Allowed Costs of Benefits 

We propose to define ‘‘AV’’ as the 

percentage paid by a health plan of the 

total allowed costs of benefits (using the 

term ‘‘percentage of the total allowed 

costs of benefits’’ that we also propose 

to define here). 

In general, AV can be considered a 

general summary measure of health plan 

generosity. We propose to define the 

‘‘percentage of the total allowed costs of 

benefits’’ as the anticipated covered 

medical spending for EHB coverage (as 

defined in § 156.110 (a)) paid by a 

health plan for a standard population, 

computed in accordance with the health 

plan’s cost sharing, divided by the total 

anticipated allowed charges for EHB 

coverage provided to the standard 

population, and expressed as a 

percentage. 

Because section 1302(d)(2) of the 

Affordable Care Act refers to AV relative 

to coverage of the EHB for a standard 

population, we propose these 

definitions together in order to provide 

that AV is the percentage that represents 

the total allowed costs of benefits paid 

by the health plan, based on the 

provision of EHB as defined for that 

plan according to § 156.115. 

Benchmark Plans 

Under the benchmark selection and 

standards proposed in § 156.100 and 

§ 156.110, we believe it is important to 

differentiate between the plan selected 

by a state (or through the default process 

in § 156.100(c)), which we are proposing 

to call the ‘‘base-benchmark plan,’’ and 

the benchmark standard that EHB plans 

will need to meet, which we are 

proposing to call the ‘‘EHB-benchmark 

plan.’’ 

We propose that ‘‘base-benchmark 

plan’’ means the plan that is selected by 

a state from the options described in 

§ 156.100(a), or a default benchmark 

plan, as described in § 156.100(c), prior 

to any adjustments made to meet the 

benchmark standards described in 

§ 156.110. 

We propose that ‘‘EHB-benchmark 

plan’’ means the standardized set of 

EHB that must be met by a QHP or other 

issuer as required by § 147.150. 

We propose that ‘‘EHB package’’ 

means the scope of covered benefits and 

associated limits of a health plan offered 

by an issuer, as set forth in section 

1302(a) of the Affordable Care Act. The 

EHB package provides at least the ten 

statutory categories of benefits, as 

described in § 156.110(a); provides 

benefits in the manner described in 

§ 156.115; limits cost-sharing for such 

coverage as described in § 156.130; and 

subject to offering catastrophic plans as 

described in section 1302(e) of the 

Affordable Care Act, provides distinct 

levels of coverage as described in 

§ 156.140. 

2. Subpart B—EHB Package 

a. State Selection of Benchmark 

(§ 156.100) 

In § 156.100, we propose criteria for 

the selection process if a state chooses 

to select a benchmark plan. As we note 

in § 156.20, the plan selected by a state 

is known as the base-benchmark plan. 

After the application of any adjustments 

described in § 156.110, the plan will be 

known as the EHB-benchmark plan. The 

EHB-benchmark plan would apply to 

non-grandfathered health insurance 

coverage offered in the individual or 

small group markets. The EHBbenchmark plan would serve as a 

reference plan, reflecting both the scope 

of services and limits offered by a 

typical employer plan in that state. This 

approach and benchmark selection, 

which would apply for at least the 2014 

and 2015 benefit years, would allow 

states to build on coverage that is 

already widely available, minimize 

market disruption, and provide 

consumers with familiar products. This 

approach is intended to balance 

consumers’ needs for 

comprehensiveness and affordability, as 

recommended by IOM in its report on 

the EHB.10 In developing these 

proposed guidelines, we considered the 

comments on the EHB Bulletin, which 

urged an open and transparent 

benchmark selection process with an 

opportunity for public input. 

Consistent with the approach outlined 

in the EHB Bulletin, we propose in 

§ 156.100(a) that the state may select its 

base-benchmark plan from among four 

types of health plans. These are (1) The 

largest plan by enrollment in any of the 

three largest small group insurance 

products in the state’s small group 

market as defined in § 155.20; (2) any of 

the largest three state employee health 

benefit plans by enrollment; (3) any of 

the largest three national Federal 

Employees Health Benefits Program 

(FEHBP) plan options by enrollment 

that are open to Federal employees; or 

(4) the largest insured commercial nonMedicaid Health Maintenance 

Organization (HMO) operating in the 

state. As we discussed in the EHB 

Bulletin, we use enrollment data from 

the first quarter two years prior to the 

coverage year to determine plan 

enrollment. To help states make their 

benchmark selections, HHS has 

provided states with benefit data on the 

largest plans by enrollment in the three 

largest small group insurance products 

in each state’s small group market as of 

the first quarter of calendar year 2012.11

States can use that information, which 

we collected from issuers through 

HealthCare.gov, to inform their EHB 

benchmark selections. In addition to the 

data available on HealthCare.gov for 

insurance products in the states’ small 

group markets, in Appendix B, HHS is 

also making available benefit data for 

the single largest Federal Employees 

Dental and Vision Insurance Program 

(FEDVIP) dental and vision plans 

respectively, based on enrollment. 

Proposed paragraph (a)(1) of § 156.100 

would reflect a typical plan in the 

state’s small group market and provide 

state flexibility as recommended by the 

IOM in its report.12 The remaining 

proposed benchmark plan options, in 

paragraphs (a)(2) through (a)(4), reflect 

the benchmark approach in Medicaid 

defined in 42 CFR 440.330 and in the 

Children’s Health Insurance Program 

(CHIP) in 42 CFR 457.410 and 457.420. 

We believe these options reflect both the 

scope of services and any limits offered 

by a ‘‘typical employer plan’’ as 

specified by section 1302(b)(2)(A) of the 

Affordable Care Act. Based on 

commenters’ requests for an open and 

transparent selection process, we 

encourage states to solicit public input 

prior to their selection and confirmation 

of a state benchmark plan. 

We believe that our proposed 

approach and the benchmark options 

available to states for defining EHB best 

reflect the balance between 

comprehensiveness, affordability, and 

state flexibility as recommended by the 

IOM. 

Because the PHS Act defines ‘‘state’’ 

to include the U.S. territories (Puerto 

Rico, Guam, the Virgin Islands, 

American Samoa, and the Northern 

Mariana Islands), the EHB requirements 

established by section 1302 of the 

Affordable Care Act apply to the 

territories. Given the smaller size and 

unique nature of the territories’ health 

insurance markets, we seek comment as 

to whether the benchmark default 

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process described in proposed 

§ 156.100(c) is appropriate for the 

territories. In particular, we seek 

comment as to whether the default basebenchmark plan that will apply to the 

states—the largest plan by enrollment in 

the largest product in the state’s small 

group market—is an appropriate default 

base-benchmark plan for the territories; 

or whether one of the other four types 

of health plans outlined in the EHB 

Bulletin, such as the largest FEHBP 

plan, would provide a more appropriate 

default base-benchmark. We note that 

the territories have the same 

opportunity as states to select a 

benchmark plan and we encourage them 

to do so. 

In Appendix A: List of Proposed EHB 

Benchmarks, we provide a list of 

proposed benchmarks either selected by 

states or, for states that have not 

selected, we propose what the default 

benchmark plan would look like if the 

benchmark was determined by the 

Secretary in accordance with 

§ 156.100(c). States were encouraged to 

submit their selections by October 1, 

2012 to serve as the benchmarks for 

2014 and 2015. If a state wishes to make 

a selection or change its previous 

selection it must do so by the end of the 

comment period of this proposed rule. 

Pending publication of a final rule, we 

are proposing that the default 

benchmark option will apply in cases 

where a state does not voluntarily select 

a benchmark. Issuers have commented 

that early selection is important to 

provide them with sufficient time to 

develop and receive certification for 

QHPs in advance of the QHP 

application review scheduled for early 

2013. 

At § 156.100(b), we propose the 

standard for approval of a state-selected 

EHB-benchmark plan. Section 

156.100(b) specifies that to become an 

EHB-benchmark plan, a base-benchmark 

plan must meet the specifications in 

§ 156.110, which include, coverage of at 

least the 10 categories of benefits 

outlined in the Affordable Care Act. 

Sections 1302(b)(4)(G) and (H) of the 

Affordable Care Act direct the Secretary 

to periodically review the definition of 

EHB, report the findings of such review 

to the Congress and the public, and 

update the EHB definition as needed to 

address gaps in access to care or 

advances in the relevant evidence base. 

In response to the EHB Bulletin, we 

received different comments from 

stakeholders on the frequency with 

which updates to the EHB should occur. 

Some commenters favored annual 

updates, while others recommended 

less frequent updates, including initially 

waiting until 2016 or 2017. We propose 

that the state’s benchmark plan 

selection in 2012 would be applicable 

for the 2014 and 2015 benefit years, and 

be based on plan benefits offered by the 

selected benchmark at the time of 

selection, including any applicable 

state-required benefits enacted prior to 

December 31, 2011. We intend to revisit 

this policy for subsequent years. We 

chose this approach for establishing a 

consistent set of benefits for two years 

in order to directly reflect current 

market offerings and limit market 

disruption in the first years of the 

Exchanges. We invite comment on the 

process that HHS should use to update 

EHB over time. 

We intend to use the enforcement 

processes and standards established in 

45 CFR part 150 to ensure that plans 

adhere to the EHB standards 

incorporated under the PHS Act. Part 

150 sets forth HHS’s enforcement 

processes under sections 2723 and 2761 

of the PHS Act, with respect to the 

requirements of title XXVII of the PHS 

Act. Section 2723 generally provides 

that states have primary enforcement 

authority over health insurance issuers, 

but allows HHS to take enforcement 

actions against issuers in a state if a 

state has notified HHS that it has not 

enacted legislation to enforce or that it 

is not otherwise enforcing, or when 

HHS has determined that a state is not 

substantially enforcing one or more 

provisions of part A of title XXVII of the 

PHS Act. HHS may also take direct 

enforcement action against issuers in a 

state if HHS determines, pursuant to the 

process set forth in45 CFR part 150, that 

a state is not substantially enforcing a 

provision of part A of title XXVII of the 

PHS Act. This enforcement authority is 

extended through section 1321(c)(2) of 

the Affordable Care Act to apply to 

enforcement of the requirements under 

title I of the Affordable Care Act, 

including section 1302. 

In § 156.100(c), we propose that if a 

state does not make a selection using the 

process defined in this section, the 

default base-benchmark plan will be the 

largest plan by enrollment in the largest 

product in the state’s small group 

market. 

b. Determination of EHB for Multi-State 

Plans (§ 156.105) 

In § 156.105, we propose an 

alternative way of complying with the 

EHB requirement for multi-state plans 

offered under contract with U.S. Office 

of Personnel Management (OPM) 

pursuant to section 1334 of the 

Affordable Care Act. We propose that 

multi-state plans must meet benchmark 

standards set by OPM, which will 

promulgate forthcoming regulations and 

guidance related to its Multi-State Plan 

Program (MSPP). 

c. EHB Benchmark Plan Standards 

(§ 156.110) 

Many commenters urged HHS to 

establish standards or a process to 

ensure that an EHB-benchmark plan 

contains all 10 statutory EHB categories, 

reflects an appropriate balance among 

the categories, and is nondiscriminatory. In addition, a number of 

commenters suggested factors for 

consideration in selecting an EHBbenchmark plan, including plan 

comprehensiveness, affordability, 

administrative simplicity, evidencebased practice, ethics, population 

health, inclusion of value-based 

insurance design, and continuity of 

coverage. 

To clarify the relationship between 

the 10 statutory categories and the EHBbenchmark plan, in paragraph (a) we 

propose that the EHB-benchmark plan 

must provide coverage of at least the 

following categories of benefits 

described in section 1302(b)(1) of the 

Affordable Care Act: (1) Ambulatory 

patient services; (2) emergency services; 

(3) hospitalization; (4) maternity and 

newborn care; (5) mental health and 

substance use disorder services, 

including behavioral health treatment; 

(6) prescription drugs; (7) rehabilitative 

and habilitative services and devices; (8) 

laboratory services; (9) preventive and 

wellness services and chronic disease 

management; and (10) pediatric 

services, including oral and vision care. 

With respect to the tenth category, we 

interpret ‘‘pediatric services’’ to mean 

services for individuals under the age of 

19 years. Several states have asked HHS 

to define the age for coverage of 

‘‘pediatric services’’ to ensure 

comprehensive and consistent treatment 

in every state. This interpretation is 

consistent with the age stated in the 

Affordable Care Act’s prohibition on 

preexisting conditions for children, and 

the age limit for eligibility to enroll in 

the CHIP. While we recommend 

coverage of pediatric services up to age 

19, states have the flexibility to extend 

pediatric coverage beyond the proposed 

19 year age limit. 

Since some base-benchmark plan 

options may not cover all 10 of the 

statutorily required EHB categories, in 

paragraph (b), we propose standards for 

supplementing a base-benchmark plan 

that does not provide coverage of one or 

more of the categories described in 

paragraph (a). In paragraph (b)(1), we 

propose that if a base-benchmark plan 

option does not cover any items and 

services within an EHB category, the 

base-benchmark plan must be 

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70650 Federal Register / Vol. 77, No. 227 / Monday, November 26, 2012 / Proposed Rules 

13ASPE Research Brief, ‘‘Essential Health 

Benefits: Comparing Benefits in Small Group 

Products and State and Federal Employee Plans.’’ 

December 16, 2011. Available at: http://aspe.hhs.

gov/health/reports/2011/MarketComparison/ 

rb.shtml. 

supplemented by adding that particular 

category in its entirety from another 

base-benchmark plan option. The 

resulting plan, which would reflect a 

base-benchmark that covers all 10 EHB 

categories, would be required to meet 

standards for non-discrimination and 

balance defined in paragraphs (d) and 

(e) of this section. After meeting all of 

these requirements, it would be 

considered the EHB-benchmark plan. 

In paragraphs (b)(2) and (b)(3), we 

discuss two categories of benefits that 

may not currently be included in some 

major medical benefit plans, but which 

will be included in the EHB defined in 

§ 156.110(a), based on section 1302(b)(1) 

of the Affordable Care Act. In our 

review of research on employersponsored plan benefits, including 

small employer products, HHS found 

that a number of potential benchmarks 

do not include coverage for pediatric 

oral and vision services, as they are 

often covered under stand-alone 

policies. To address these gaps, we 

propose targeted policy options for each 

of these benefit categories. 

In paragraph (b)(2), we provide states 

with two options for supplementing 

base-benchmark plans that do not 

include benefits for pediatric oral care 

coverage. The first option, described in 

paragraph (b)(2)(i), is to supplement 

with pediatric coverage included in the 

FEDVIP dental plan with the largest 

enrollment. The second option, 

described in paragraph (b)(2)(ii), is to 

supplement with the benefits available 

under that state’s separate CHIP 

program, if applicable. 

Similarly, in paragraph (b)(3), we 

propose that if the base-benchmark plan 

does not include pediatric vision 

services, then these benefits may be 

supplemented from one of two options. 

The first option, described in (b)(3)(i), is 

to supplement pediatric vision coverage 

included in the FEDVIP vision plan 

with the largest national enrollment 

offered to Federal employees under 5 

U.S.C. 8982. The second option, 

described in (b)(3)(ii), is to supplement 

pediatric vision coverage with the 

state’s separate CHIP plan, if applicable. 

We believe that this additional option— 

an expansion of the policy presented in 

the EHB Bulletin—will provide states 

with valuable flexibility as they select 

their EHB benchmark plans. HHS will 

make benefit data available to facilitate 

any supplementation by states of their 

base-benchmark plans with benefits 

from FEDVIP dental and vision plans 

prior to the publication of this final rule. 

In paragraph (c), we propose the 

process by which HHS would 

supplement a default base-benchmark 

plan, if necessary. We clarify that to the 

extent that the default base-benchmark 

plan option does not cover any items 

and services within an EHB category, 

the category must be added by 

supplementing the base-benchmark plan 

with that particular category in its 

entirety from another base-benchmark 

plan option. Specifically, we propose 

that HHS would supplement the 

category of benefits in the default basebenchmark plan with the first of the 

following options that offer benefits in 

that particular EHB category: (1) The 

largest plan by enrollment in the second 

largest product in the state’s small group 

market as defined in § 155.20; (2) the 

largest plan by enrollment in the third 

largest product in the state’s small group 

market as defined in § 155.20; (3) the 

largest national FEHBP plan by 

enrollment across states that is 

described in and offered to Federal 

employees under 5 U.S.C. 8903; (4) the 

plan described in paragraph (b)(2)(i) to 

cover pediatric oral care benefits; (5) the 

plan described in (b)(3)(i) to cover 

pediatric vision care benefits; and (6) 

habilitative services as described in 

§ 156.110 (f) or § 156.115(a)(4). 

In paragraph (d), we propose that the 

EHB-benchmark plan must not include 

discriminatory benefit designs. As set 

forth in § 156.125, those standards 

would prohibit benefit and network 

designs that discriminate on the basis of 

an individual’s medical condition, or 

against specific populations as 

described in the statute. This proposed 

standard would apply both to benefit 

designs that limit enrollment, and those 

that prohibit access to care for enrollees. 

While we believe that it is unlikely that 

an EHB-benchmark plan will include 

discriminatory benefit offerings, this 

section proposes that any EHBbenchmark plan that does include 

discriminatory benefit designs must be 

adjusted to eliminate such 

discrimination in benefit design. 

In paragraph (e), we propose 

implementing section 1302(b)(4) of the 

Affordable Care Act by proposing that 

the EHB-benchmark plan be required to 

ensure an appropriate balance among 

the categories of EHB so that benefits are 

not unduly weighted toward any 

category. We solicit comments on 

potential approaches to ensuring that 

the EHB-benchmark plans do not 

include discriminatory benefit designs 

and reflect an appropriate balance 

among the categories of EHB. In 

conducting research on employersponsored plan benefits and staterequired benefits, HHS found that many 

health insurance plans do not identify 

habilitative services as a distinct group 

of services.13 Accordingly, we are 

proposing a transitional policy for 

coverage of habilitative services that 

would provide states with the 

opportunity to define these benefits if 

not included in the base-benchmark 

plan. Specifically, in paragraph (f), we 

propose that in order to define EHB, if 

the base-benchmark plan does not 

include coverage of habilitative services 

the state may determine the services 

included in the habilitative services 

category. We believe that this 

transitional policy—which provides 

states with additional flexibility beyond 

what was initially outlined in the EHB 

Bulletin will provide a valuable 

opportunity for states to lead the 

development of policy in this area and 

welcome comments on this proposed 

approach to providing habilitative 

services. If states choose not to define 

the habilitative services category, plans 

must provide these benefits as defined 

in § 156.115. 

Because states may propose 

benchmarks in formal comments on this 

proposed rule other than those 

tentatively proposed, HHS is requesting 

public comment on all possible EHBbenchmark plans, not just those 

included in Appendix A as proposed 

benchmarks. This would also include 

each potential base-benchmark plan 

available to a state for selection and all 

potential combinations of benefits used 

to supplement the base-benchmark 

plans to ensure coverage of at least the 

10 statutory benefit categories as set 

forth in § 156.110. As an example, a 

state may select its largest small group 

product and, if the product is missing 

maternity coverage and pediatric dental 

coverage, supplement for missing 

maternity coverage with the second 

largest small group market product and 

for pediatric dental coverage with the 

state’s CHIP dental plan. However, 

according to the process described in 

proposed § 156.110, the state may 

choose to supplement using the 

maternity benefit from any of the basebenchmark plan options in the state that 

offer maternity coverage, and the 

pediatric dental benefit from either 

FEDVIP or CHIP dental. In this example, 

commenters should consider: the stateselected EHB-benchmark plan as 

supplemented, the state-selected plan 

with other permissible supplementing 

options, and all other base-benchmark 

plans the state has the opportunity to 

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14For more information on excepted benefits, see 

26 CFR 54.9831–1, 29 CFR 2590.732, 45 CFR 

146.145, and 45 CFR 148.220. 

select, as supplemented by any of the 

options available to that state. 

d. Provision of EHB (§ 156.115) 

In paragraph (a)(1), we propose that 

plans may have limitations on coverage 

that differ from the EHB-benchmark 

plan, but covered benefits must remain 

substantially equal to those covered by 

the EHB-benchmark plan. This standard 

applies to the covered benefits, 

limitations on coverage (including 

limits on the amount, duration, and 

scope of covered benefits), and 

prescription drug benefits that meet the 

requirements of § 156.120. 

As previously noted, the Affordable 

Care Act identifies coverage of mental 

health and substance use disorder 

benefits as one of the 10 statutory 

benefit categories, and therefore as an 

EHB for non-grandfathered health 

insurance coverage in both the 

individual and small group markets. In 

paragraph (a)(2), under our authority to 

define EHB, we propose that in order to 

satisfy the requirement to offer EHB, 

mental health and substance use 

disorder services, including behavioral 

health treatment services required under 

§ 156.110(a)(5), must be provided in a 

manner that complies with the parity 

standards set forth in § 146.136 of this 

chapter, implementing the requirements 

under the Mental Health Parity and 

Addiction Equity Act of 2008. 

In paragraph (a)(3), we further 

propose that a plan does not provide 

EHB unless it provides all preventive 

services described in section 2713 of the 

PHS Act, as added by section 1001 of 

the Affordable Care Act. As codified in 

§ 147.130, PHS Act section 2713 

requires all non-grandfathered group 

health plans and non-grandfathered 

individual and group market plans that 

are not exempt from the coverage 

requirement to offer certain preventive 

services without cost-sharing. We 

believe it is appropriate to include a 

requirement for coverage of these 

services under the definition of EHB. 

Setting forth this explicit application of 

PHS Act section 2713 in regulation is 

necessary because EHB-benchmark plan 

benefits are based on 2012 plan designs 

and therefore could be based on a 

grandfathered plan not subject to PHS 

Act section 2713. 

As an alternative to the transitional 

approach outlined in § 156.110(f), some 

states may prefer to provide issuers with 

the opportunity to define the specific 

benefits included in the habilitative 

services category if it is missing from 

the base-benchmark plan. Accordingly, 

we are proposing that a state may allow 

issuers time and experience to define 

these benefits. Specifically, in paragraph 

(a)(4), we propose that if the EHBbenchmark plan does not include 

coverage for habilitative services and 

the state does not determine habilitative 

benefits, a health insurance issuer must 

either: (1) Provide parity by covering 

habilitative services benefits that are 

similar in scope, amount, and duration 

to benefits covered for rehabilitative 

services; or (2) Decide which 

habilitative services to cover and report 

on that coverage to HHS. With regard to 

option (2), HHS intends to evaluate the 

habilitative services reported and 

further define habilitative services in 

the future. The issuer only has to 

supplement habilitative services when 

there are no habilitative services at all 

offered in the base benchmark plan and 

the state has not exercised its option to 

define habilitative services under 

§ 156.110(f). We believe that this 

alternative approach would provide a 

valuable window of opportunity for 

review and development of policy in 

this area and welcome comments on 

this proposed approach. 

We first introduced the concept of 

benefit substitution in the EHB Bulletin, 

which suggested that a plan offering the 

EHB could substitute a benefit or set of 

benefits for another benefit or set of 

similar benefits subject to certain 

constraints—for example, that the two 

sets of benefits be actuarially equivalent. 

In this proposed rule, we propose this 

policy for the substitution of benefits 

relative to the benefits defined by the 

EHB benchmark plan consistent with 

what HHS outlined in the EHB Bulletin. 

As outlined in paragraph (b)(1)(i), we 

propose that issuers may substitute 

benefits, or sets of benefits, that are 

actuarially equivalent to the benefits 

being replaced. We further propose in 

paragraph (b)(1)(ii) that substitution of 

benefits would be allowed in each of the 

10 statutorily required benefit 

categories, meaning that substitution 

could only occur within benefit 

categories, not between different benefit 

categories. In paragraph (b)(1)(iii), we 

clarify that our proposed benefit 

substitution policy does not apply to 

prescription drug benefits. In paragraph 

(b)(2), we outline standards for an 

actuarial certification that must be 

submitted by an issuer to a state, which 

demonstrates that any substituted 

benefit, or group thereof, is actuarially 

equivalent to the original benefit or 

benefits contained in the EHBbenchmark for that state. Specifically, 

we propose that the report must: (i) Be 

conducted by a member of the American 

Academy of Actuaries; (ii) based on an 

analysis performed in accordance with 

generally accepted actuarial principles 

and methodologies; and (iii) use a 

standardized plan population. Lastly, in 

paragraph (b)(3), we propose that 

actuarial equivalence of benefits be 

determined based on the value of the 

service without regard to cost-sharing, 

as cost sharing will be considered in the 

actuarial value calculation described in 

§ 156.135. We note that the resulting 

plan benefits would be subject to 

requirements of non-discrimination 

described in § 156.125. In addition, we 

clarify that under this approach, states 

have the option to enforce a stricter 

standard on benefit substitution or 

prohibit it completely. With the 

exception of the EHB category of 

coverage for pediatric services, a plan 

may not exclude an enrollee from 

coverage in an entire EHB category 

covered by the plan. For example, a 

plan may not exclude dependent 

children from the category of maternity 

and newborn coverage. 

In response to our proposed approach 

to benefit substitution, we seek 

additional comment on the tradeoff 

between comparability of benefits and 

opportunities for plan innovation and 

benefit choice. 

In paragraph (c), we propose to clarify 

that a plan does not fail to provide the 

EHB solely because it does not offer the 

services described in § 156.280(d). Here 

we extend the statutory provision in 

section 1303(b)(1)(A), that allows a QHP 

to meet the standards for EHB even if it 

does not offer the services described in 

§ 156.280(d), to health insurance issuers 

that offer non-grandfathered coverage in 

the individual or small group market. 

We note that this provision applies to 

all section 1303 services, including 

pharmacological services. 

In paragraph (d), we propose that an 

issuer of a plan offering EHB may not 

include routine non-pediatric dental 

services, routine non-pediatric eye exam 

services, and long-term/custodial 

nursing home care benefits as EHB. As 

previously noted, section 1302 of the 

Affordable Care Act requires that the 

EHB package include at least the 10 

statutorily required categories of EHB, 

and be equal to the scope of benefits 

provided under a typical employer plan. 

In contrast with the benefits covered by 

a typical employer health plan, nonpediatric dental services, non-pediatric 

eye exam services, cosmetic 

orthodontia, and long-term/custodial 

nursing home care benefits often qualify 

as excepted benefits.14 Pursuant to the 

direction provided in section 1302 to 

define benefits equal in scope to a 

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15CMS has identified certain ‘‘protected 

categories and classes.’’ In those protected 

categories and classes, Plan D formularies must 

include substantially all drugs that are FDAapproved. 

16Available at: http://www.avalerehealth.net/

pdfs/Avalere_EHB_Formulary_Analysis.pdf. 

17The requirement to use USP classification 

applies only to submission of formulary for review/ 

certification. Plans may continue to use any 

classification system they choose in marketing and 

other plan materials. 

18The concept of chemically distinct is also 

described in the Medicare Part D Manual, Chapter 

6, Section 30.2.1. More information is available at: 

https://www.cms.gov/Medicare/Prescription-DrugCoverage/PrescriptionDrugCovContra/downloads//

Chapter6.pdf. 

typical employer plan, we propose that 

issuers of plans offering EHB may not 

include these benefits as EHB. We 

solicit comment on the exclusion of 

these specific benefits from EHB 

coverage. 

e. Prescription Drug Benefits (§ 156.120) 

In the EHB Bulletin, we indicated that 

we were considering an option under 

which, in order to be considered 

substantially equal to the EHBbenchmark plan, issuers would be 

required to cover at least one drug in 

each category and class in which the 

EHB-benchmark plan covered at least 

one drug. The specific drugs on each 

plan’s drug list could vary under this 

approach, as long as a drug in each 

category and class was covered. 

In response to the EHB Bulletin, a 

large number of commenters raised 

concerns about the comprehensiveness 

of prescription drug benefits under this 

potential approach. Specifically, many 

commenters indicated that a 

requirement to offer one drug per 

category and class could result in 

insufficient access to medications for 

individuals with certain conditions. 

Several commenters additionally 

recommended that the definition of EHB 

adopt the standards used in Medicare 

Part D, including the protected class 

policy under which all drugs in certain 

classes must be covered.15 Conversely, 

other commenters emphasized the 

importance of flexibility for issuers to 

design a drug benefit that maximizes 

value for consumers. Based on these 

comments and the need to balance 

access with affordability, we propose 

the following approach, on which we 

solicit comment. 

In paragraph (a)(1) we propose that in 

order to comply with the requirement to 

cover EHB, a plan would cover at least 

the greater of: (1) One drug in every 

category and class; or (2) the same 

number of drugs in each category and 

class as the EHB-benchmark plan. As 

such, if the EHB-benchmark drug list 

offers more than one drug in a category 

or class, then plans covering EHB would 

offer at least the number of drugs in the 

EHB-benchmark plan for that class. 

Research suggests that this is consistent 

with coverage in the small group market 

today: one study found that most 

existing small group plans cover more 

than one drug in each class.16 In 

paragraph (a)(2) we propose that a QHP 

must report its drug list to the Exchange, 

an EHB plan operating outside of the 

Exchange must report its drug list to the 

state, and a multi-state plan must report 

its drug list to OPM. In paragraph (b) we 

clarify that a health plan does not fail 

to provide EHB prescription drug 

benefits solely because it does not offer 

drugs that are § 156.280(d) services. 

We are considering using the most 

recent version of the United States 

Pharmacopeia’s (USP) classification 

system as a common organizational tool 

for plans to report drug coverage 

because it is publically available, widely 

used, and comprehensive. A 

classification system functions as an 

organizational tool, similar to an outline 

or taxonomy. Directing plans to submit 

their drug list using the same 

classification system would facilitate 

review, analysis, and comparison of the 

number of drugs on the QHP’s list to the 

number of drugs on the EHB Benchmark 

Plan’s list. If adopted in the final rule, 

we will continue to assess the need for 

and value of such a tool and intend to 

work with states and the NAIC to 

facilitate state use of the USP 

classification system as a comparison 

tool.17

In general, each EHB plan would be 

able to cover different drugs than are 

covered by the EHB-benchmark plan, 

but those drugs must be presented using 

the USP classification system. This 

approach permits plan flexibility in the 

drug benefit design and the use of 

medical management tools, while 

ensuring that plans offer drug coverage 

consistent with that of the typical 

employer plan. An EHB plan would be 

able to cover any drugs subject to 

meeting the minimum number per 

category and class. 

We also propose that drugs listed 

must be chemically distinct.18 For 

example, offering two dosage forms or 

strengths of the same drug would not be 

offering drugs that are chemically 

distinct. Offering a brand name drug 

and its generic equivalent is another 

example of drugs that are not 

chemically distinct. 

In paragraph (c), we propose that a 

plan offering EHB have procedures in 

place to ensure that enrollees have 

access to clinically appropriate drugs 

that are prescribed by a provider but are 

not included on the plan’s drug list, 

which is consistent with private plan 

practice today. We solicit comments on 

this proposed requirement. 

As discussed below, § 156.125 

implements section 1302(b)(4)(B) of the 

Affordable Care Act, which directs the 

Secretary to ensure that EHBs are not 

designed in a discriminatory manner. In 

implementing § 156.125 in the context 

of prescription drug benefits, we 

encourage states to monitor and identify 

discriminatory benefit designs, or the 

implementation thereof and to test for 

such discriminatory prescription drug 

benefit designs. We will use information 

on complaints and appeals and data on 

drug lists to refine our prescription drug 

benefit review policy for future years. 

f. Prohibition on Discrimination 

(§ 156.125) 

Section 1302(b)(4) of the Affordable 

Care Act directs the Secretary to address 

certain standards in defining EHB, 

including elements related to balance, 

discrimination, the needs of diverse 

sections of the population, and denial of 

benefits. Section 1302(b)(4)(B) of the 

Affordable Care Act provides that the 

Secretary ensure that in terms of the 

benefits covered, payment rates 

provided, or incentives built into the 

definition of EHB, there is no 

discrimination based on age, disability, 

or expected length of life. Similarly, 

section 1302(b)(4)(C) of the Affordable 

Care Act provides that the Secretary 

take into account the health care needs 

of diverse segments of the population, 

including women, children, persons 

with disabilities, and other groups. In 

addition, section 1302(b)(4)(D) of the 

Affordable Care Act provides that the 

Secretary ensure that the EHB not be 

subject to denial to individuals against 

their wishes on the basis of the 

individuals’ age or expected length of 

life, or of the individuals’ present or 

predicted disability, degree of medical 

dependency, or quality of life. Taken 

collectively, we interpret these 

provisions as a prohibition on 

discrimination by issuers. To inform the 

development of the policy on 

discrimination in the EHB, we sought 

stakeholder feedback, and considered 

guidance provided by the IOM. Many 

commenters expressed concern about 

the potential for benefit designs that 

might discriminate against certain 

populations or consumers with 

significant health needs. Commenters 

also recommended that HHS establish 

an explicit non-discrimination policy 

for benefit design. Based on this 

information, in § 156.125, we propose 

an approach to addressing 

discrimination that would allow states 

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19http://www.irs.gov/pub/irs-drop/rp-12-26.pdf. 

to monitor and identify discriminatory 

benefit designs, or the implementation 

thereof. Under this approach, consistent 

with section 1563(d) of the Affordable 

Care Act, we would not prohibit issuers 

implementing the EHB standards from 

applying utilization management 

techniques. However, issuers could not 

use such techniques to discriminate 

against certain groups of people. For 

example, an issuer could use prior 

authorization, but could not implement 

prior authorization in a manner that 

discriminates on the basis of factors 

including age, disability, or length of 

life (for example, in terms of whether 

prior authorization is required, or when 

authorization is granted). 

To address potentially discriminatory 

practices, based on the authority in 

section 1302(b)(4) of the Affordable Care 

Act, we propose in paragraph (a) that an 

issuer does not provide EHB if its 

benefit design, or the implementation of 

its benefit design, discriminates based 

on an individual’s age, expected length 

of life, or present or predicted disability, 

degree of medical dependency, quality 

of life, or other health conditions. In 

paragraph (b), we reiterate that 

§ 156.200 and § 156.225 also apply to 

plans providing EHB. Section 156.200 

prohibits discrimination based on 

factors including but not limited to race, 

disability, and age. Section 156.225 

prohibits marketing practices and 

benefit designs that result in 

discrimination against individuals with 

significant or high cost health care 

needs. 

This proposal is intended to develop 

the framework for analysis tools to 

facilitate testing for discriminatory plan 

benefits. The IOM, in its report on the 

EHB, suggests that states have an 

important role in monitoring to ensure 

that issuers’ plans do not contain outlier 

practices that would undermine EHB 

coverage. We believe that 

discrimination analyses could include 

evaluations to identify significant 

deviation from typical plan offerings 

including unusual cost sharing and 

limitations for benefits with specific 

characteristics. We also note that 

Medicare Advantage Program costsharing designs are subjected to this 

type of analysis for potential 

discriminatory effects. We welcome 

comments on our proposed approach to 

prohibiting discriminatory benefit 

design. 

g. Cost-Sharing Requirements 

(§ 156.130) 

Section 1302(c)(1) of the Affordable 

Care Act identifies an annual limitation 

on enrollee cost sharing. Section 

1301(a)(1)(B) of the Affordable Care Act 

requires all qualified health plans to 

comply with these limits, and section 

2707(a) of the Public Health Service Act 

requires compliance by issuers offering 

non-grandfathered health insurance 

coverage in the individual and small 

group markets. Standards proposed 

here, at § 156.130, would be applicable 

to QHPs pursuant to 45 CFR 

156.200(b)(3), which requires QHPs to 

offer the essential health benefits 

package described at section 1302(a) of 

the Affordable Care Act. Similarly, these 

standards would be applicable to health 

insurance coverage offered by health 

insurance issuers in the individual and 

small group markets pursuant to 

§ 147.150 of these regulations, as 

discussed earlier. 

Cost sharing is defined in § 156.20 as 

any expenditure required by or on 

behalf of an enrollee with respect to 

essential health benefits. The term 

includes deductibles, coinsurance, 

copayments, or similar charges, but 

excludes premiums, balance billing 

amounts for non-network providers, and 

spending for non-covered services. We 

discuss here the implications and 

rationale of setting these standards in 

the context of their application to QHPs 

and issuers of health plans in the 

individual and small group markets. 

In § 156.130(a), we codify the 

Affordable Care Act’s annual limitation 

on cost sharing for 2014 and in 

subsequent years. Section 1302(c)(1)(A) 

of the Affordable Care Act identifies the 

limit on total enrollee cost-sharing that 

can be incurred. The annual limitation 

on cost sharing ensures that health 

plans pay for significant health 

expenses associated with EHB and the 

risk of medical debt or bankruptcy for 

individuals insured by such plans is 

limited. Once the limitation on cost 

sharing is reached for the year, the 

enrollee is not responsible for additional 

cost sharing for EHBs for the remainder 

of the plan year. 

Section 156.130(a)(1) ties the annual 

limitation on cost sharing for plan years 

beginning on or after January 1, 2014, to 

the enrollee out-of-pocket limit for highdeductible health plans (HDHP), as 

calculated pursuant to section 

223(c)(2)(A)(ii) of Internal Revenue 

Code of 1986 (the Code) based on 

section 1302(c)(1)(A) of the Affordable 

Care Act. Paragraph (a)(1)(i) addresses 

the limitation for self-only coverage and 

paragraph (a)(1)(ii) addresses the 

limitation for coverage other than selfonly coverage; the practical effect for 

coverage other than self-only coverage is 

that the annual limitation will be double 

the limitation applicable to self-only 

coverage. For illustrative purposes only, 

for the year 2013 these amounts will be 

$6,250 in 2013 for self-only and $12,500 

for non-self only coverage.19 In 

§ 156.130(a)(2)(i), we propose that the 

annual limitation on cost sharing is 

increased by the premium adjustment 

percentage, which is set by HHS as 

described in § 156.130(e), in years after 

2014 for self-only coverage. In 

§ 156.130(a)(2)(ii), we propose that the 

annual limitation on cost sharing in 

years after 2014 for non-self only 

coverage is double the annual limitation 

on cost sharing for self-only coverage for 

that year. These proposed rules 

basically codify the statute. 

Sections 1302(c)(2)(A)(i) and 

1302(c)(2)(A)(ii) of the Affordable Care 

Act define and § 156.130(b) codifies the 

annual limitation on deductibles for 

health plans offered in the small group 

market. This limitation on cost-sharing 

is imposed on QHPs by section 

1301(a)(1)(B) of the Affordable Care Act 

and 45 CFR 156.200(b)(3). The 

limitation is also imposed on nongrandfathered coverage in the small 

group market by section 2707(b) of the 

PHS Act, which we propose here to 

implement in proposed 45 CFR 

147.150(a). In § 156.130(b)(1)(i), we 

propose that the annual limitation on 

deductibles for the year 2014 are $2,000 

for self-only coverage and in 

§ 156.160(b)(1)(ii), $4,000 for non selfonly coverage. In § 156.130(b)(2) we 

propose that in years beyond 2014, the 

annual deductible limits for self-only 

plans are increased by the premium 

adjustment percentage described in 

paragraph (e) based on section 

1302(c)(2)(B) of the Affordable Care Act. 

In § 156.130(b)(2)(i), we specify this for 

self-only coverage and in 

§ 156.130(b)(2)(ii), we specify this is 

doubled for family coverage or coverage 

of any type other than self-only. 

Section 1302(c)(2)(C) of the 

Affordable Care Act directs that the 

limit on deductibles described in 

section 1302(c)(2)(A) for a health plan 

offered in the small group market be 

applied so as to not affect the actuarial 

value of any health plan. We interpret 

and implement this provision through 

our proposal at § 156.130(b)(3) by 

authorizing a health insurance issuer to 

make adjustments to its deductible to 

maintain the specified actuarial value 

for the applicable level of coverage 

required under proposed § 156.140 and 

annual limitation on cost sharing. In 

§ 156.130(b)(3), we propose that a plan 

may exceed the annual deductible limit 

if it cannot reasonably reach a given 

level of coverage (metal tier) without 

doing so. 

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20The annual HHS notice of benefit and payment 

parameters will first be published this year, as 

discussed in the Standards Related to Reinsurance, 

Risk Corridors and Risk Adjustment, final rule (77 

FR 17220 (March 23, 2012)). 21For consistency, we are using the term ‘‘out-ofnetwork’’ here to refer to services where the 

‘‘provider of services does not have a contractual 

relationship with the plan,’’ as this phrase is used 

in section 1302(b)(4)(E). 

We propose to use a ‘‘reasonableness’’ 

standard and request comment on what 

evidence or factors should be required 

from an issuer and considered in 

determining whether this standard is 

met with respect to health insurance 

coverage subject to 2707(b) of the PHS 

Act. While it may be possible to develop 

plan designs to meet all of these 

constraints, we believe it could be 

difficult to develop plans with 

reasonable coinsurance or equivalent 

cost sharing rates in the future, for 

example in bronze plans. An alternative 

would be to use the actuarial value 

calculator described in § 156.135 to 

determine a reasonable increase to the 

amounts described in paragraph (b) that 

can be used by all plans in the small 

group market. We solicit comment on 

this approach on whether a specific 

variation threshold should be identified, 

and if so, how any such threshold 

should be established. 

Section 1302(c)(2)(A) of the 

Affordable Care Act provides that in 

certain circumstances, the deductible 

maximums described in § 156.130(b)(1) 

may be increased by the maximum 

amount of reimbursement ‘‘reasonably 

available’’ to an employee under a 

flexible spending arrangement (FSA) 

described in section 106(c)(2) of the 

Code. We considered permitting the 

maximum deductible to increase by the 

amount available to each employee 

under the FSA. Permitting such 

variability in the maximum deductible 

by employee would require different 

deductible plans to be available to 

different employees based on an FSA 

decision made during the open 

enrollment process. Because we 

interpret section 1302(c)(2)(A) of the 

Affordable Care Act as permitting but 

not requiring FSAs to be taken into 

account when determining the 

deductible maximum, we propose to 

standardize the maximum deductible 

for all health plans in the small group 

market at $2,000 for self-only coverage 

and $4,000 for non-self-only coverage, 

as described in § 156.130(b)(1) and 

potentially adjusted in § 156.130(b)(3), 

and not increase the deductible levels 

by the amount available under the FSA. 

However, we welcome comments on 

permitting such an adjustment, 

including permitting an employer to 

attest to the amount available to 

employees in an FSA as the basis for 

increasing the maximum permissible 

deductible for employees. 

In § 156.130(c), we propose a special 

rule for network plans. Under our 

proposal, cost- sharing requirements for 

benefits from a provider outside of a 

plan’s network do not count towards the 

annual limitation on cost sharing, as 

defined in paragraph (a) of this section, 

or the annual limitation on deductibles, 

as defined in paragraph (b) of this 

section. We consider an out-of-network 

provider to be a provider with whom 

the issuer does not have a contractual 

arrangement with respect to the 

applicable plan. For example, if an 

issuer offers a three-tiered network plan, 

with the third tier considered to be 

‘‘out-of-network’’ (that is, providers 

without contractual relationships for 

providing services), only the cost 

sharing that an enrollee pays for benefits 

provided under the first and second 

tiers would count towards the annual 

limitation on cost sharing (and, if the 

plan is one offered in the small group 

market, the annual limitation on 

deductibles). Therefore, an enrollee who 

utilizes many services could reach the 

annual limitation on cost sharing, but 

still be required to pay cost sharing if 

the enrollee chooses to purchase 

services outside of the plan’s network 

that year. This policy aligns with the 

definition of the enrollee out-of-pocket 

limit for high deductible health plans, 

articulated in section 223(c)(2)(D) of the 

Code. We believe this policy would 

allow issuers greater flexibility to design 

innovative plan benefit structures. We 

note that nothing in this proposal 

explicitly prohibits an issuer from 

voluntarily establishing a maximum 

out-of-pocket limit applicable to out-ofnetwork services, or a state from 

requiring that issuers do so. We 

welcome comment on this approach. 

In § 156.130(d), we codify sections 

1302(c)(1)(B) and 1302(c)(2)(B) of the 

Affordable Care Act by requiring that 

the annual limitation on cost sharing 

and the annual limitation on 

deductibles for a plan year beginning 

after calendar year 2014 only increase 

by multiples of $50 and must be 

rounded to the next lowest multiple of 

$50. 

In paragraph (e), we codify section 

1302(c)(4) of the Affordable Care Act, 

which specifies that the premium 

adjustment percentage is calculated as 

the percentage (if any) by which the 

average per capita premium for health 

insurance coverage for the preceding 

calendar year exceeds such average per 

capita premium for health insurance for 

2013. This ensures that the annual 

limitation on cost sharing and the 

annual limitation on deductibles change 

with health insurance market premiums 

over time. HHS will publish the 

methodology and annual premium 

adjustment percentage in the annual 

HHS notice of benefit and payment 

parameters.20

In paragraph (f), we codify section 

1302(c)(2)(D) of the Affordable Care Act, 

which states that the annual deductibles 

do not apply to preventive care 

described in § 147.130. In paragraph (g), 

under our authority in section 

1302(b)(4)(B) of the Affordable Care Act 

prohibiting EHBs from discriminating 

against individuals based on age, 

disability, or expected length of life, and 

our general authority under section 

1321(a)(1)(D) of the Affordable Care Act 

to establish appropriate requirements by 

regulation, we propose to require that 

cost-sharing requirements conform with 

the anti-discrimination provisions of 

§ 156.125. 

Paragraph (h) would implement the 

requirements in section 1302(b)(4)(E) of 

the Affordable Care Act that (1) 

emergency department services will be 

provided out-of-network 21 without 

imposing any requirement under the 

plan for prior authorization of services, 

or any limitation on coverage for the 

provision of services, that is more 

restrictive than the requirements or 

limitations that apply to emergency 

department services received from 

network providers, and (2) cost sharing 

in the form of a copayment or 

coinsurance for emergency department 

services amount for an out-of-network 

provider is the same as would apply to 

an in-network provider. Because we 

have already promulgated regulations at 

§ 147.138(b)(3) implementing identical 

statutory language in section 

2719A(b)(1)(C)(ii)(II) of the Public 

Health Service Act regarding limitations 

on cost-sharing in the emergency room 

context, we are proposing to require in 

paragraph (h) that an issuer comply 

with the cost-sharing requirements at 45 

CFR147.138(b)(3). This treatment of outof-network emergency services extends 

the in-network treatment of cost-sharing 

payments and limitations to out-ofnetwork emergency services as a part of 

the annual limit on cost sharing defined 

in paragraph (a). 

h. AV Calculation for Determining Level 

of Coverage (§ 156.135) 

As we stated previously in connection 

with § 156.20, AV is a measure of the 

percentage of expected health care costs 

a health plan will cover for a standard 

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22Available at http://cciio.cms.gov/resources/ 

files/Files2/02242012/Av-csr-bulletin.pdf. 

population and can be considered a 

general summary measure of health plan 

generosity. The Affordable Care Act 

directs issuers offering nongrandfathered health insurance coverage 

in the individual and small group 

markets to ensure that plans meet a 

level of coverage specified in section 

1302(a)(3) of the Affordable Care Act 

and defined in § 156.140(b). Under the 

statute, each level of coverage 

corresponds to an AV calculated based 

on the cost-sharing features of the plan 

as described above. In this section, we 

propose an approach for issuer 

calculation of AV as discussed in the 

AV/CSR Bulletin.22 In paragraph (a), we 

propose that an issuer would use the AV 

calculator developed by HHS to 

determine its level of coverage as 

proposed in § 156.140(b), subject to the 

exception in paragraph (b). 

The AV calculator, as proposed here, 

has been developed using a set of claims 

data weighted to reflect the standard 

population projected to enroll in the 

individual and small group markets for 

the identified year of enrollment. Plans 

would input information on costsharing parameters. A methodology 

document including both the logic 

behind the calculator and a description 

of the development of the standard 

population, represented in the 

calculator as tables of aggregated data 

called continuance tables, is available 

and proposed at http://cciio.cms.gov/ 

resources/regulations/index.html#pm to 

promote transparency. The document is 

part of the proposal for the use of the 

AV calculator in determining actuarial 

value of an applicable plan. 

We solicit comment on the 

methodology for the development of the 

AV calculator and the continuance 

tables, which were developed based on 

the standard population. The consistent 

methodology in AV calculation ensures 

a consistent set of assumptions and 

methods in AV calculation for all health 

plans using the calculator, resulting in 

comparability for consumers since plans 

with the same cost-sharing design 

would have the same AV. Because 

empirically only a small percentage of 

total costs come from out-of-network 

utilization, the difference in a plan’s AV 

resulting from the inclusion of out-ofnetwork utilization in the AV 

calculation is small. Therefore, the 

proposal for determining AV and, thus, 

the calculator only considers in-network 

utilization. Comments from the 

American Academy of Actuaries to the 

AV Bulletin confirmed that, for the 

majority of plans, estimations only 

including in-network cost sharing are 

appropriate even if some plans offer innetwork services only, while other plans 

offer out-of-network services with 

higher cost-sharing, because in general, 

out-of-network costs are a very small 

percentage of total medical spending. 

The calculator and accompanying 

continuance tables are available at 

http://cciio.cms.gov/resources/ 

regulations/index.html#pm and are 

subject to comment. 

Under this proposal, the AV 

calculator will be available for both 

formal and informal calculations and 

could be used as a tool to assist in the 

design of health plans. The calculator 

will allow health plan issuers to devise 

a compliant plan without the burden of 

making the assumptions needed or 

paying for the analysis for an AV 

calculation. Thus, the calculator would 

reduce issuer burden in calculating AV. 

We solicit comment on this proposal to 

direct the use of the AV calculator and 

on the parameters described here for 

development of the AV calculator. 

Consistent with section 1302(d)(2)(A) 

of the Affordable Care Act, that AV be 

calculated based on the provision of the 

EHB to a standard population, we 

propose that the AV calculator will use 

one or more sets of national claims data 

reflecting plans of various levels of 

generosity as the underlying standard 

population. We considered distributing 

a standard set of de-identified 

individual-level claims data to issuers 

as the standard population and allowing 

them to estimate the AV of their plans 

by comparing that standard set of claims 

against their plan designs. However, we 

are not aware at this time of a 

sufficiently robust person-level data set 

that could be made publicly available. 

As another alternative, we considered 

distributing only the continuance tables, 

representing the standard population 

and its utilization, to issuers to perform 

AV calculations. Under this method, the 

set of assumptions would be more 

uniform, but there would still be 

inconsistency and variation among 

issuers depending on the specific 

calculation method and logic used by 

each issuer. Comments on the AV/CSR 

Bulletin were generally supportive of 

the approach we propose here to 

develop a publicly available and 

transparent AV calculator based on a 

standard population represented 

through continuance tables. 

In paragraph (b), we propose options 

for an issuer whose plan designs do not 

permit the calculator to provide an 

accurate summary of plan generosity. 

Although HHS anticipates that the vast 

majority of plans will be able to use the 

calculator in 2014 and beyond, no 

uniform calculator can accommodate 

the entire potential universe of plan 

designs. Therefore, there may be a small 

subset of plans whose design would not 

be compatible with the calculator. We 

intend to interpret this standard as 

dependent on whether the calculator 

takes into account or accommodates all 

material aspects of a plan’s cost sharing 

structure. For example, we expect that 

the calculator will not be able to 

accommodate plan designs with 

multiple coinsurance rates as different 

levels of out-of-pocket spending are met 

or a multi-tier network with substantial 

amounts of utilization expected in tiers 

other than the lowest-priced tier. As 

proposed in paragraph (b)(1), these 

plans would need to submit to the 

appropriate entity (the state, HHS, the 

Exchange, or OPM) documentation in 

the form of actuarial certification that 

they have complied with one of the 

methods described below. 

Paragraph (b)(2) proposes two options 

to accommodate plans with benefit 

designs that cannot be accommodated 

by the AV calculator. In paragraph 

(b)(2)(i), we propose that a health plan 

issuer be permitted to decide how to 

adjust the plan benefit design (for 

calculation purposes only) to fit the 

parameters of the calculator and then, 

pursuant to paragraph (b)(2)(ii), have an 

actuary who is a member of the 

American Academy of Actuaries certify 

that the methodology is in accordance 

with generally accepted actuarial 

principles and methodologies. In 

paragraph (b)(3), we propose a second 

option, that the plan may use the 

calculator for the plan design provisions 

that correspond to the parameters of the 

calculator and then have a member of 

the American Academy of Actuaries 

calculate appropriate adjustments to the 

AV as determined by the AV calculator 

for plan design features that deviate 

substantially, in accordance with 

generally accepted actuarial principles 

and methodologies. We propose in 

paragraph (b)(4) that, to align with the 

AV calculator and the rules proposed 

here for how AV is determined, plans 

using one of these methods would 

exclude out-of-network costs when 

using additional calculation methods. 

We also note, however, that a multitiered plan should consider all network 

tiers in its AV calculation and exclude 

only costs that are truly out-of-network 

(providers with which the plan has no 

contractual relationship). 

In paragraph (c), we propose a 

standard for the treatment of small 

group market HDHPs offered with a 

health savings account (HSA) or a 

health plan in the small group market 

integrated with a health reimbursement 

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23Available at http://www.actuary.org/pdf/

health/Actuarial_Value_Issue_Brief_072211.pdf. 

24http://cciio.cms.gov/resources/files/Files2/

02242012/Av-csr-bulletin.pdf. 

arrangement (HRA), so that HDHP and 

HSAs/HRAs are integrated. Recognizing 

that simply calculating the AV of the 

HDHP based on the insurance plan 

alone could understate the value of 

coverage if the values of the employer 

contribution to such accounts are not 

included, and that employer-provided 

HSAs and HRAs are generally the 

equivalent of first dollar coverage for 

any cost-sharing requirements 

encountered by the enrollee, in 

paragraph (c)(1), we propose that the 

annual employer contributions to HSAs 

and amounts newly made available 

under HRAs for the current year should 

count within the plan design. This 

treatment of HSA and HRA 

contributions is similar to how other 

employer contributions toward costsharing are treated within the plan 

design, such that a plan with a $0 

deductible has the same AV as a plan 

with a $1,000 deductible plus a $1,000 

HSA or HRA. 

Section 1302(d)(2)(B) of the 

Affordable Care Act directs the 

Secretary to issue regulations under 

which employer contributions to an 

HSA (within the meaning of section 223 

of the Internal Revenue Code of 1986) 

may be taken into account in 

determining the level of coverage for a 

plan of the employer. HHS is 

interpreting the statute to allow for a 

similar treatment of HRAs because 

amounts newly made available under an 

HRA integrated with a small group 

market plan have a similar impact on 

AV calculation as employer 

contributions to an HSA when adjusted 

as described below in the discussion of 

paragraphs (c)(2)(i) and (c)(2)(ii). In 

paragraph (c)(2), we propose that these 

contributions be applied to the plan 

design to account for the fact that HSA 

and HRA contributions are the 

equivalent of first dollar coverage for 

any cost-sharing requirements 

encountered by the enrollee and similar 

to other employer cost-sharing 

contributions to plan design. 

In paragraphs (c)(2)(i) and (c)(2)(ii), 

we propose that the AV calculator 

would include any current year HSA 

contributions or amounts newly made 

available under an HRA for the current 

year as an input into the calculator that 

can be used to determine the AV of an 

employer health benefit plan. We note 

that employee HSA contributions will 

not count towards AV, nor do these 

provisions apply to the coverage offered 

by issuers in the individual market 

because HSAs in the individual market 

are funded directly by the enrollee. 

Paragraph (d) proposes that in years 

2015 and after, a state-specific data set 

may be used as the standard population 

(i.e. in place of the HHS-issued 

continuance tables) for AV calculations 

if approved by HHS. Issuers in such a 

state would still use the AV calculator 

logic, but the underlying data used for 

generating the AV would be specific to 

the state. Paragraphs (d)(1) through (5) 

propose criteria for acceptable state 

claims data and their use. The proposed 

criteria are based on our review of a 

July, 2011 American Academy of 

Actuaries issue brief.23 Paragraph (d)(1) 

proposes that the data support the 

calculation of AVs for the full range of 

health plans available in the market, 

meaning that the structure and 

definitions for the data set must be 

standardized and clearly documented. 

Paragraph (d)(2) proposes that the 

underlying population must be derived 

from the non-elderly population likely 

to be covered by private plans in the 

2014 market and beyond. For example, 

the underlying population cannot be 

based primarily on Medicaid or 

Medicare enrollees. This criterion is 

also intended to ensure that the data set 

represents members in the then current 

small group and individual markets for 

the state. Paragraph (d)(3) proposes that 

the data set must be large enough so that 

(i) demographic patterns and spending 

patterns are stable over time to 

accommodate periodic updates and (ii) 

a substantial majority of the state’s 

insured population is included, subject 

to the requirement in paragraph (2) to 

cover the expected insured population 

in 2014. Paragraph (d)(4) proposes that, 

if a state intends to reflect geographic 

differences within the state, the data set 

must be sufficiently large and 

geographically diverse for area-specific 

calculations. Paragraph (d)(5) proposes 

that the data set must capture a wide 

range of health care services typically 

offered, including those that fall within 

EHB and are at the time of submission 

offered in a typical employer plan. For 

example the data set must include 

claims for maternity, prescription drugs, 

and mental health benefits. Comments 

on the AV/CSR Bulletin 24 generally 

supported the proposal to allow states 

the flexibility to provide their own data 

sets. Some groups commented that the 

state data would need to be at least as 

robust as the national data set. HHS 

believes that the parameters outlined 

above, and adopted from the American 

Academy of Actuaries’ 

recommendations, will ensure that state 

specific data are sufficiently robust. We 

solicit comment on this proposal and 

our adoption of criteria identified by the 

American Academy of Actuaries. 

In paragraph (e), HHS proposes that 

the default standard population 

provided by HHS, which is described in 

paragraph (f) and represented in the 

continuance tables incorporated into 

this regulatory proposal by reference, 

would be used unless the state submits 

its own standard population consistent 

with paragraphs (d) and (e). In 

paragraph (e), HHS proposes that the 

state data set be submitted in a format 

that can support the AV calculator 

described in paragraph (a). Because 

HHS will use continuance tables to 

support the development of the AV 

calculator, we anticipate that states will 

also submit any state-specific data sets 

in the form of continuance tables. HHS 

intends to provide a template and 

instructions for these submissions. 

Several comments on the AV/CSR 

Bulletin requested additional guidance 

on the process and timeline for state 

submission of data. We remain open to 

comments on the use of state data for 

2014, but given timing constraints, we 

propose that the option for states to 

submit a state-specific standard 

population will begin for plan years 

starting in 2015. We expect that 

submissions will be due in the second 

quarter of the year prior to the benefit 

year. 

Paragraph (f) proposes that HHS will 

develop the standard population to be 

used to calculate AV in accordance with 

section 1302(d)(2)(A) of the Affordable 

Care Act, which requires that AV be 

calculated using a standard population. 

This standard population will be used 

for AV calculation under § 156.135. 

Comments on the AV/CSR Bulletin were 

generally supportive of the proposal to 

use a standard data set developed by 

HHS, with the option of state flexibility 

to provide a state-specific data set for 

AV calculations. We solicit comment on 

whether the AV calculator should allow 

for this variation between states. We 

also solicit comment on whether we 

should consider including up to three 

regional adjustments for geographic 

price differences as described in the 

AV/CSR Bulletin. 

i. Levels of Coverage (§ 156.140) 

This section describes standards for 

meeting the Affordable Care Act 

provisions that issuers offering QHPs or 

non-grandfathered health plans in the 

individual and small group markets 

offer plans that meet distinct levels of 

coverage; we note that an applicable 

issuer may offer a catastrophic plan, as 

described in section 1302(e) of the 

Affordable Care Act, in lieu of a health 

plan that meets one of these levels of 

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coverage. Section 1302(d)(2) of the 

Affordable Care Act directs the 

Secretary to issue regulations on the 

calculation of AV and its application to 

the levels of coverage. 

Paragraph (a) proposes the general 

requirement that the AV of a plan must 

be calculated according to § 156.135, 

within de minimis variation, in order to 

determine a plan’s level of coverage. 

Paragraph (b) proposes to codify 

section 1302(d)(1) of the Affordable Care 

Act, which requires that a bronze plan 

has an AV of 60 percent; a silver plan, 

70 percent; a gold plan, 80 percent; and 

a platinum plan, 90 percent. 

Paragraph (c) proposes standards for 

de minimis variation. Section 1302(d)(3) 

of the Affordable Care Act authorizes 

the Secretary to determine a reasonable 

de minimis variation in the AVs used to 

determine levels of coverage. In 

paragraph (c), we propose a de minimis 

variation of +/- 2 percentage points for 

all non-grandfathered plans. For 

example, a silver plan could have an AV 

between 68 and 72 percent. We believe 

that a de minimis amount of +/- 2 

percentage points strikes the right 

balance between ensuring comparability 

of plans within each metal level and 

allowing plans the flexibility to use 

convenient cost-sharing metrics. 

Comments on this proposal in the AV/ 

CSR Bulletin were generally supportive 

of this approach. 

j. Determination of Minimum Value 

(§ 156.145) 

Section 1302(d)(2)(C) of the 

Affordable Care Act sets forth the rules 

for calculating the percentage of the 

total allowed costs of benefits provided 

under a group health plan or health 

insurance coverage. Section 

36B(c)(2)(C)(ii) of the Code provides that 

an employer-sponsored plan provides 

minimum value (MV) if this percentage 

is no less than 60 percent. For the 

purpose of determining that a given 

plan provides MV, we propose in 

paragraph (a) that the percentage of the 

total allowed cost of benefits will be 

determined using one of the main 

methodologies as described in Treasury 

Notice 2012–31, released on May 14, 

2012 (‘‘MV Notice’’). We also propose, 

in paragraph (c), that MV for employersponsored self-insured group health 

plans and insured large group health 

plans will be determined using a 

standard population that is based upon 

large self-insured group health plans. 

We also propose that employer 

contributions to an HSA and amounts 

newly made available under an HRA 

will be taken into account in 

determining MV in accordance with the 

principles applied in taking such 

amounts into account in determining 

AV. 

In applying this approach to 

determining MV, in paragraph (a)(1), we 

propose that employer-sponsored selfinsured and insured large group plans 

will be able to use the MV calculator, 

which will be made available by HHS 

and the Internal Revenue Service. Under 

this proposal, the MV calculator will be 

similar in design to the AV calculator 

but based on continuance tables and a 

standard population reflecting claims 

data of typical self-insured employer 

plans. This will be a better reflection of 

the typical employer plan that will use 

the MV calculator, resulting in a similar 

or higher actuarial value than the AV 

calculator for the same benefit designs. 

This approach would permit an 

employer-sponsored plan to enter 

information about the plan’s cost 

sharing to determine whether the plan 

provides MV. 

As an alternative to using the MV 

calculator, we propose in paragraph 

(a)(2) that an employer-sponsored plan 

would be able to use an array of designbased safe harbors published by HHS 

and the Internal Revenue Service in the 

form of checklists to determine whether 

the plan provides MV. Each safe harbor 

checklist would describe the cost 

sharing attributes of a plan that apply to 

the following four core categories of 

benefits and services which comprise 

the vast majority of group health plan 

spending as described in the MV Notice: 

physician and mid-level practitioner 

care, hospital and emergency room 

services, pharmacy benefits, and 

laboratory and imaging services. 

Finally, if an employer-sponsored 

plan contains non-standard features that 

are not suitable for the use of the 

calculator and do not fit the safe harbor 

checklists, we propose in paragraph 

(a)(3) to permit MV to be determined 

through certification by an actuary 

without the use of the MV calculator. 

The actuary would make this 

determination based on the plan’s 

benefits and coverage data and the 

standard population, utilization, and 

pricing tables available for purposes of 

the valuation of employer-sponsored 

plans. This final option would be 

available only when one of the other 

methodologies is not applicable to the 

employer-sponsored plan. We propose 

that the determination of MV must be 

made by a member of the American 

Academy of Actuaries, based on an 

analysis performed in accordance with 

generally accepted actuarial principles 

and methodologies. We intend to issue 

applicable guidance concerning the 

actuarial analysis. 

In the event that a plan uses the MV 

calculator and offers an EHB outside of 

the parameters of the MV calculator, we 

propose in paragraph (b)(1) that an 

actuary who is a member of the 

American Academy of Actuaries will be 

permitted to determine the value of that 

benefit and add it to the result derived 

from the MV calculator in accordance 

with the generally accepted actuarial 

principles and methodologies. This 

aims to consider the value of benefits 

that are among the EHB options, but not 

necessarily in a state benchmark 

because there is no EHB standard for 

employer-sponsored self-insured group 

health plans or insured large group 

health plans. There is no requirement 

that employer-sponsored self-insured 

and insured large group health plans 

offer all categories of EHB or conform to 

any of the EHB benchmarks. For clarity, 

alignment, and administrative ease, we 

propose in paragraph (b)(2), for 

purposes of determining that a group 

health plan provides MV, that such 

plans will be permitted to take into 

account all benefits provided by the 

plan that are included in any of the EHB 

benchmarks. 

We also propose, in paragraph (c), 

that MV determinations under 

§ 156.145(a) will be based on a standard 

population based on data from selfinsured group health plans. 

k. Application to Stand-alone Dental 

Plans inside the Exchange (§ 156.150) 

Section 1302 of the Affordable Care 

Act outlines the standards for health 

plans to cover the ten categories of the 

EHB. Section 1311(d)(2)(B)(ii) of the 

Affordable Care Act, as codified in 

§ 155.1065 of this subchapter, allows the 

pediatric dental component of the EHB 

to be offered through a stand-alone 

dental plan in an Exchange. If standalone dental plans are available in an 

Exchange, section 1302(b)(4)(F) of the 

Affordable Care Act permits QHPs 

offered in that Exchange to exclude 

coverage of the pediatric dental 

component of the EHB. This is the only 

exception to EHB coverage permitted 

under section 1302. Section 1311 also 

outlines how cost-sharing limits and AV 

would apply to such stand-alone dental 

plans. 

In paragraph (a), we propose that 

stand-alone dental plans would have a 

separate annual limitation on cost 

sharing from QHPs covering the 

remaining EHBs. While the annual 

limitation on cost-sharing for a QHP 

must be consistent with § 156.130, the 

annual limitation on cost sharing for a 

stand-alone dental plan would be 

considered separately. We propose that 

the plan must demonstrate the annual 

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70658 Federal Register / Vol. 77, No. 227 / Monday, November 26, 2012 / Proposed Rules 

25Patient Protection and Affordable Care Act; 

Data Collection to Support Standards Related to 

Essential Health Benefits; Recognition of Entities for 

the Accreditation of Qualified Health Plans (CMS– 

9965–F), 77 FR 42,658 (July 20, 2012). 

limitation on cost sharing for the standalone dental plan is reasonable for 

coverage of the pediatric dental EHB. 

We request comment on this proposal 

and what parameters should be 

considered a ‘‘reasonable’’ annual 

limitation on cost sharing. We note that 

the annual limitation on cost sharing 

would be applicable to in-network 

services only, consistent with 

§ 156.130(c). 

We considered applying the full 

annual limitation on cost sharing 

described in section 1302(c) of the 

Affordable Care Act separately to standalone dental plans. However, if a person 

purchased pediatric dental benefits 

through a stand-alone plan, it would 

effectively double the potential out-ofpocket costs, putting individuals with 

similar coverage, but purchasing 

pediatric dental through a stand-alone 

plan, at much greater financial risk. 

Another alternative would be to 

exclude the pediatric dental benefit 

entirely from the annual limitation on 

cost sharing, whether it is offered 

through a health plan or through a 

stand-alone dental plan. However, we 

were concerned that not applying any 

annual limitation on cost sharing to 

stand-alone dental plans would treat 

such benefits differently than plans 

offering an embedded pediatric dental 

benefit, which could create a price 

advantage over medical plans. 

We also considered requiring that the 

combination of the annual limitations 

on cost-sharing in the QHP and the 

stand-alone dental plan must not exceed 

the limitations identified in § 156.130, 

regardless of whether the person 

received coverage through a health plan 

that covers all of the 10 EHB categories 

including dental, or received coverage 

through a combination of a QHP and a 

stand-alone dental policy. However, this 

approach would entail a high level of 

coordination between an Exchange, 

QHP issuers, and issuers of stand-alone 

dental plans to track an enrollee’s cost 

sharing and notify the issuers if the 

limit was reached, which we are 

concerned may be difficult to 

administer. 

We request comment generally on 

whether this approach to applying the 

annual limitations on cost-sharing 

standard is appropriate for stand-alone 

dental plans. 

In paragraph (b), we propose actuarial 

value standards for stand-alone dental 

plans. The calculator developed by HHS 

under § 156.135 would be inappropriate 

for stand-alone dental plans because the 

standard population that underlies the 

HHS-developed calculator cannot be 

reasonably adapted to reflect a 

pediatric-only population that utilizes 

dental services. Accordingly, in 

paragraph (b)(1), we propose that standalone dental plans may not use the 

HHS-developed AV calculator. Instead, 

given the unique and narrow focus of 

the stand-alone dental plan market, we 

propose in paragraph (b)(2) that any 

stand-alone dental plan certified to meet 

an 75 percent AV, with a de minimis 

range of +/- 2 percentage points, be 

considered a ‘‘low’’ plan and anything 

with an AV of 85 percent, with a de 

minimis range of +/- 2 percentage 

points, be considered a ‘‘high’’ plan. We 

request comment on whether a de 

minimis variation of +/- 2 percentage 

points is feasible for stand-alone dental 

plans. The ‘‘high/low’’ actuarial value 

standard would apply to the pediatric 

dental EHB only in a stand-alone dental 

plan. We note that when the pediatric 

dental EHB is included in a health plan, 

the AV calculator would apply to the 

pediatric dental EHB. In order to meet 

this standard we propose in paragraph 

(b)(3) that the issuer of a stand-alone 

plan demonstrate that the plan meets 

the ‘‘high’’ or ‘‘low’’ level of coverage as 

certified by a member of the American 

Academy of Actuaries using generally 

accepted actuarial principles. This 

proposal would provide a means of 

comparison for consumers as well as 

providing a comparable method of 

fulfilling the offering requirements laid 

out in § 156.200(c)(1). We request 

comment on this proposal and whether 

the actuarial value standards for a 

‘‘high’’ and ‘‘low’’ plan are appropriate. 

As an alternative, we considered 

requiring that a stand-alone dental plan 

meet at least a silver or gold level of 

coverage as certified by a member of the 

American Academy of Actuaries using 

generally accepted actuarial principles. 

However, some commenters noted that 

because pediatric dental coverage is 

comprised largely of preventive services 

with 100 percent cost-sharing covered 

by the plan, in order to meet a 70 

percent AV, issuers of stand-alone 

dental plans would need to add a 

deductible that is not currently included 

in plans. In contrast, our proposal 

would be more in line with current 

industry practices and would result in 

fewer out-of-pocket costs for consumers. 

3. Subpart C—Accreditation 

Accreditation of QHP Issuers (§ 156.275) 

Recognition of Accrediting Entity by 

HHS (§ 156.275(c)(1) and 

§ 156.275(c)(4)) 

This proposed rule would amend the 

current (‘‘phase one’’) recognition 

process and provide additional 

accrediting entities the opportunity to 

apply and demonstrate how they meet 

the conditions for recognition 

articulated in section 1311(c)(1)(D) of 

the Affordable Care Act and 45 CFR 

156.275(c)(2) through (c)(5).25 HHS 

intends, through future rulemaking, to 

establish a phase two recognition 

process which may establish additional 

criteria for recognized accrediting 

entities. 

HHS’s initial survey of the market 

showed that two entities, NCQA and 

URAC, met the statutory requirements 

for accreditation. During the public 

comment period for 45 CFR 156.275, 

additional accrediting entities indicated 

that they may soon meet the 

accreditation conditions specified in 45 

CFR 156.275 (c)(2) and (c)(3). HHS 

believes that opening up the phase one 

recognition process to provide other 

entities an opportunity to apply would 

provide expanded choices regarding 

QHP accreditation for Exchanges, states 

and issuers. 

Therefore, HHS proposes to amend 

§ 156.275(c)(1) to provide an application 

and review process for phase one 

recognition of accrediting entities. 

Under this proposal, accrediting entities 

could apply and demonstrate how they 

meet the requirements for recognition as 

established in 45 CFR 156.275 (c)(2) and 

(c)(3). Such applications must include 

the documentation described in 45 CFR 

156.275(c)(4), including current 

accreditation standards and 

requirements, processes, and measure 

specifications for performance 

measures, and a document that 

illustrates how (via a crosswalk) the 

accrediting entity meets the standards 

established in § 156.275(c)(2) and (c)(3). 

This proposal would require HHS, 

within 60 days of receiving the 

complete application, to publish a 

notice in the Federal Register 

identifying the accrediting entity 

making the request for phase one 

recognition, summarizing HHS’s 

analysis of whether the applicant meets 

the criteria for recognition, and 

providing no less than a 30-day public 

comment period on this applicant 

accrediting entity. HHS will compare 

the applicant accrediting entity’s 

standards and processes to the 

requirements for recognition established 

in 45 CFR 156.275(c)(2) and (3). This 

assessment will be the same as that 

underlying the recognition of NCQA 

and URAC. After the close of the 

comment period, HHS will notify the 

public in the Federal Register of the 

names of the accrediting entities 

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recognized and not recognized to 

provide accreditation of QHPs for the 

purposes of QHP certification. If an 

accrediting entities is not recognized, 

then it may re-apply for recognition 

following the same application 

procedure as proposed in 

§ 156.275(c)(1). 

HHS is also amending 

§ 156.275(c)(4)(i) to delete the timeframe 

of submitting the documentation within 

60 days of publication of this final rule. 

Under the amended application and 

review process proposed in 

§ 156.275(c)(1), accrediting entities must 

provide the documentation described in 

§ 156.275(c)(4)(i) with their application 

for review. 

In a Federal Register notice being 

published concurrently with this 

proposed rule, we are notifying the 

public that NCQA and URAC are 

recognized as accrediting entities for the 

purposes of QHP certification consistent 

with the final rule published on July 20, 

2012. NCQA and URAC do not need to 

reapply under this proposal but remain 

subject to the requirements of 45 CFR 

156.275(c), including (c)(4)(ii), which 

requires recognized accrediting entities 

to provide to HHS any proposed 

changes or updates to the accreditation 

standards and requirements, processes, 

and measure specifications for 

performance measures with 60 days’ 

notice prior to public notification. This 

proposed amendment of § 156.275(c) 

only renumbers the applicable portion 

of the regulation recognizing NCQA and 

URAC. As discussed in the preamble to 

the final rule published on July 20, 

2012, the recognition of accrediting 

entities in phase one is effective until it 

is rescinded or this interim phase one 

process is replaced by the phase two 

process. 

III. Collection of Information 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60- 

day notice in the Federal Register and 

solicit public comment before an 

information collection request is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

3506(c)(2)(A) of the Paperwork 

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

Below is a summary of the proposed 

information collection requirements 

outlined in this regulation. Throughout 

this section we assume that each data 

collection will occur on an annual basis 

unless otherwise noted. We used the 

Bureau of Labor Statistics (BLS) Web 

site to identify salary data, unless 

otherwise indicated. Fringe benefit 

estimates were taken from the BLS 

March 2011 Employer Costs for 

Employee Compensation report. These 

compensation estimates were selected to 

align with the burden estimates for the 

data collections described in the 

‘‘Establishment of Exchanges and 

Qualified Health Plans Final Rule’’ (77 

FR 18310 (March 27, 2012)). For 

purposes of presenting an estimate of 

paperwork burden, we reflect the 

operation of an Exchange in fifty states 

and the District of Columbia. Similarly, 

we estimate the burden for issuers 

participating in all 51 Exchanges. 

Therefore, these estimates should be 

considered an upper bound of burden 

estimates. These estimates may be 

adjusted in future Paperwork Reduction 

Act (PRA) packages. We are soliciting 

public comment on each of these issues 

for the following sections of this 

document that contain information 

collection requirements (ICRs): 

A. ICRs Regarding Additional Required 

Benefits (§ 155.170(c)) 

In § 155.170(c), we direct issuers to 

quantify and report to the Exchange the 

cost attributable to required benefits in 

addition to EHB. This is a third-party 

disclosure requirement. Issuers will use 

a uniform rate template in a revision to 

the Rate Increase Disclosure and Review 

Reporting Requirements PRA package 

(CMS–10379) (Rate Review PRA 

package) to report this information. The 

burden associated with meeting this 

data collection is included in the Rate 

Review PRA package. A Federal 

Register notice seeking comments on 

this PRA package is being published 

concurrently with this proposed rule. 

As noted in the Rate Review PRA 

package, we estimate that a total of 

2,010 issuers in the individual market 

and 1,050 issuers in the small group 

market will offer products and that each 

issuer will have an average of 2.5 

submissions per year. We anticipate that 

it will take an actuary a total of 11 hours 

to complete the uniform rate template, 

at $225 per hour for an actuary. The 

total annual burden is estimated to be 

$18,933,750. Of this total amount, only 

a fraction can be attributable to the 

portion of the uniform rate template that 

pertains to benefits in addition to EHB. 

We estimate that of the total 11 hours it 

will take an actuary to complete the 

uniform rate template, it will take an 

actuary 1 hour to complete the portion 

pertaining to benefits in addition to 

EHB. Therefore, we estimate the burden 

attributable to the collection of 

information regarding benefits in 

addition to EHB to be $1,721,250. Given 

the policies included in this proposed 

rule regarding state required benefits, 

we seek comment on this estimated time 

for additional benefits. 

B. ICRs Regarding State Selection of 

Benchmark (§ 156.100) and EHB 

Benchmark Plan Standards (§ 156.110) 

In § 156.100, we propose that a state 

may select a base-benchmark plan to 

serve as a reference plan to define EHB 

in that state. We also propose that if a 

state does not select a benchmark plan, 

its base-benchmark will be the largest 

plan by enrollment in the largest 

product in the state’s small group 

market. In § 156.110, we propose that a 

state-selected or default benchmark plan 

must offer coverage in each EHB 

category, as required by the Affordable 

Care Act. We propose that if a basebenchmark plan does not offer coverage 

in a category, it must be supplemented 

to include those missing benefit 

categories. 

We do not believe that this is a change 

to the information collection associated 

with state selection and submission of a 

benchmark plan and associated benefits 

and the data collection to establish 

default benchmark plans, including any 

required supplementing, which is 

already captured in the collection 

approved under OMB Control Number 

0938–1174. 

C. ICRs Regarding AV Calculation for 

Determining Level of Coverage 

(§ 156.135) 

In § 156.135(b), we propose to create 

an exception to using the AV calculator 

for issuers with health plans that are not 

designed in a way that is compatible 

with the AV calculator. To take 

advantage of this exception, issuers 

must submit an actuarial certification on 

their alternative method to the state, 

HHS, the Exchange, or OPM. This is a 

third-party disclosure requirement 

when the issuers submit to the state or 

the Exchange, and this is a reporting 

requirement when the issuers submit to 

HHS, OPM, or a Federally-facilitated 

Exchange. We account for this 

collection in the Initial Plan Data 

Collection to Support Qualified Health 

Plan Certification and Other Financial 

Management and Exchange Operations 

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70660 Federal Register / Vol. 77, No. 227 / Monday, November 26, 2012 / Proposed Rules 

26 ‘‘Patient Protection and Affordable Care Act; 

Establishment of Exchanges and Qualified Health 

Plans, Exchange Standards for Employers (CMS– 

9989–FWP) and Standards Related to Reinsurance, 

Risk Corridors and Risk Adjustment (CMS–9975–F): 

Regulatory Impact Analysis.’’ Centers for Medicare 

& Medicaid Services. Available at: http:// 

cciio.cms.gov/resources/files/Files2/03162012/ 

hie3r-ria-032012.pdf. 

PRA package (CMS–10433) (QHP 

Certification PRA package). A Federal 

Register notice regarding this PRA 

package is being published concurrently 

with this proposed rule. 

In the QHP Certification PRA package, 

we estimate that 1,200 issuers will each 

offer 15 potential QHPs, for a total of 

18,000 potential QHPs, and that the perissuer burden will be 175 hours. We 

estimate the cost per issuer in the first 

year of operations to be $13,475, which 

represents an aggregation of several 

staff, including actuarial staff. This PRA 

package includes data collections for 

QHP certification, risk adjustment, and 

reinsurance. We believe that only 5 

percent of issuers will be unable to use 

the AV calculator, thus use the process 

proposed in § 156.135(b) and that it will 

take each issuer 8 of the total 175 hours 

to provide the requested information. 

We further assume that the 8 hours of 

work would be performed by an actuary, 

at $225 per hour. Therefore, we estimate 

the total cost attributable to § 156.135(b) 

to be $1,800 per QHP and $1,620,000 in 

total. 

In § 156.135(d), we propose that 

beginning in 2015, a state may submit 

a state-specific standard population, to 

be used for AV calculation, so long as 

the criteria described in § 156.135(d)(1) 

through (6) are met. This will require 

the state to submit to HHS summary 

evidence that the requirements 

described in the proposed rule are met 

and the dataset in a format that will 

support the use of the AV calculator. We 

expect that for each state choosing this 

option, the data submission will require 

15 hours from a database administrator 

at $47.70 an hour, 4 hours of actuarial 

work at $56.89 an hour, and 1 hour of 

management review at $75.15 an hour. 

Therefore, the total burden associated 

with the reporting requirement for each 

state choosing this option will be 

$1,018. We assume that states opting to 

develop a state-specific standard 

population will provide new data every 

three to five years. 

D. ICRs Regarding Stand-Alone Dental 

Plans Inside the Exchange (§ 156.150(a)) 

In § 156.150(a), we propose that 

stand-alone dental plans covering the 

pediatric dental EHB under § 155.1065 

must demonstrate to the Exchange that 

they have a reasonable annual limitation 

on cost sharing. This is a third-party 

disclosure requirement. 

We account for this collection in the 

QHP Certification PRA package, where 

we estimate that 40 issuers will each 

offer a stand-alone dental plan, and that 

the burden for certification will be 6 

hours per issuer, at a total hourly billing 

rate of $77, for a total cost of $462 per 

issuer. We estimate that of those 8 

hours, 1 will be attributable to 

demonstrating that the annual limitation 

on cost sharing is reasonable, at a cost 

of $77 per plan. Therefore, across 40 

plans, we estimate the total annual cost 

to be $3,080. 

E. ICRs Regarding Accreditation 

(§ 156.275) 

In § 156.275, HHS proposes an 

amendment to the phase one process by 

which accrediting entities can submit an 

application to be recognized by HHS for 

purposes of accrediting QHPs. HHS 

previously sought OMB approval for 

recognition of two specific entities 

under § 156.275(c)(1); this was approved 

under OMB Control Number 0938–1176. 

Under this proposed rule, this same 

process will be open to additional 

applicants; therefore, we propose to 

revise our estimate of the number of 

applicants to four. We will revise the 

information collection request approved 

under OMB Control Number 0938–1176 

to account for the adjustment in the 

number of respondents and the 

corresponding adjustment to the 

burden. If you comment on these 

information collection requirements, 

please do either of the following: 

1. Submit your comments 

electronically as specified in the 

ADDRESSES section of this proposed rule; 

or 

2. Submit your comments to the 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Attention: CMS Desk Officer, 

[insert filecode], Fax: (202) 395–6974; or 

Email: OIRA_submission@omb.eop.gov. 

IV. Regulatory Impact Analysis 

HHS has examined the impacts of this 

proposed regulation under Executive 

Order 12866 on Regulatory Planning 

and Review (September 30, 1993) and 

Executive Order 13563 on Improving 

Regulation and Regulatory Review 

(February 2, 2011). 

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 is 

supplemental to and reaffirms the 

principles, structures, and definitions 

governing regulatory review as 

established in Executive Order 12866— 

emphasizing the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. 

A regulatory impact analysis (RIA) 

must be prepared for rules with 

economically significant effects ($100 

million or more in any 1 year), and a 

‘‘significant’’ regulatory action is subject 

to review by the Office of Management 

and Budget (OMB). Section 3(f) of 

Executive Order 12866 defines a 

‘‘significant regulatory action.’’ In 

accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget as an 

economically significant regulatory 

action. 

A. Summary 

As stated earlier in this preamble, this 

proposed regulation would implement 

the requirements related to EHB and AV 

levels of coverage, and establish the 

timeline according to which QHP 

issuers participating in FFEs must be 

accredited. We note that the Exchange 

regulation (45 CFR 156.200) established 

that QHPs will cover essential health 

benefits, as defined by the Secretary, 

and that QHPs be accredited on the 

basis of local performance. The cost to 

health plans of obtaining QHP 

certification and participating in 

Exchanges are already accounted for in 

the regulatory impact analysis that 

accompanies that regulation.26

Therefore, this analysis describes the 

incremental costs, benefits, and 

transfers associated with provisions in 

this proposed rule, for example that 

health plans cover the essential health 

benefits as specifically defined herein, 

and that health plans use the HHSdeveloped AV calculator. 

This proposed rule also contains 

details relating to the establishment of a 

timeline by which QHPs seeking 

certification by FFEs must be 

accredited. We do not believe that this 

results in incremental benefits, costs, or 

transfers. 

HHS has proposed this regulation to 

implement the protections intended by 

the Congress in the most economically 

efficient manner possible. In accordance 

with OMB Circular A–4, HHS has 

quantified the benefits, costs and 

transfers where possible, and has also 

provided a qualitative discussion of 

some of the benefits, costs and transfers 

that may stem from this proposed 

regulation. 

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27Consumers Union. (2012). ‘‘What’s Behind the 

Door: Consumers’ Difficulties Selecting Health 

Plans.’’ Available at: http:// 

www.consumersunion.org/pub/pdf/ 

Consumer%20Difficulties%20Selecting%20Health

%20Plans%20Jan%202012.pdf. 

B. Overview of Key Provisions in the 

Proposed Rule 

As described earlier in this proposed 

rule, the Affordable Care Act directs the 

Secretary of the Department of Health 

and Human Services (the Secretary) to 

define EHB such that EHB includes at 

least and reflects an appropriate balance 

among 10 benefit categories, and is 

equal in scope to benefits offered by a 

typical employer plan. Nongrandfathered plans in the individual 

and small group markets both inside 

and outside of the Exchanges, including 

multi-state plans, Medicaid benchmark 

and benchmark-equivalent, and Basic 

Health Programs, if applicable, must 

cover EHB beginning in 2014. This 

proposed rule establishes how the 

Secretary will define EHB based on a 

state-specific benchmark plan and lays 

out standards for the EHB-benchmark 

plan and for issuers that cover EHB. 

In addition, the Affordable Care Act 

directs issuers offering nongrandfathered health in the individual 

and small group markets to ensure that 

any offered plan meets specific AVs. 

The proposed rule outlines a process for 

computing plan AV using an HHSdeveloped AV calculator, as well as 

standards and flexibility for issuers in 

meeting the metal tiers. 

C. Need for Regulatory Action 

This rule proposes standards related 

to EHB and AV consistent with the 

Affordable Care Act. HHS believes that 

the provisions that are included in this 

proposed rule are necessary to fulfill the 

Secretary’s obligations under sections 

1302 and 1311 of the Affordable Care 

Act. Establishing specific approaches for 

defining EHB and calculating AV will 

bring needed clarity for states, issuers, 

and other stakeholders. Absent the 

provisions outlined in this proposed 

rule, states, issuers, and consumers 

would face significant uncertainty about 

how coverage of EHB should be defined 

and evaluated. Similarly, failing to 

specify a method for calculating AV 

could result in significant inconsistency 

across states and issuers. Finally, 

establishing a clear timeline for 

potential QHPs to become accredited is 

essential to successful issuer 

participation in FFEs. 

D. Summary of Impacts and Accounting 

Table 

In accordance with OMB Circular A– 

4, Table IV.1 below depicts an 

accounting statement summarizing 

HHS’s assessment of the benefits, costs, 

and transfers associated with this 

regulatory action. 

HHS anticipates that the provisions of 

this proposed rule will assure 

consumers that they will have health 

insurance coverage for essential health 

benefits, and significantly increase 

consumers’ ability to compare health 

plans, make an informed selection by 

promoting consistency across covered 

benefits and levels of coverage, and 

more efficiently purchase coverage. This 

proposed rule ensures that consumers 

can shop on the basis of issues that are 

important to them such as price, 

network physicians, and quality, and be 

confident that the plan they choose does 

not include unexpected coverage gaps, 

like hidden benefit exclusions. It also 

allows for some flexibility for plans to 

promote innovation in benefit design. 

Insurance contracts are extremely 

complicated documents; therefore, 

many consumers may not understand 

the content of the contracts they 

purchase.27 This complexity has two 

undesirable results. First, consumers 

may unknowingly purchase a product 

that does not meet their basic needs— 

the product may not cover benefits that 

the consumer needs to restore or 

maintain good health, or may result in 

more financial exposure than the 

consumer anticipated. Second, the 

complexity reduces competitive 

pressure on insurers, and blunts insurer 

incentives to improve the quality and 

value of the products they offer. As a 

result of complexity and information 

gaps, some consumers cannot purchase 

health insurance efficiently. This 

inefficiency may reduce incentives for 

insurers to improve the value of their 

products. 

The specific approach to defining 

EHB in this proposed rule realizes the 

benefits of simplicity and transparency 

by allowing each state to choose a 

benchmark from a set of plans that are 

typical of the benefits offered by 

employers in that state. The proposed 

rule allows that EHB in each state reflect 

the choices made by employers and 

employees in that state today, and 

minimizes disruption in existing 

coverage in the small group market. In 

addition, the proposed provisions 

addressing specific benefit categories, 

such as habilitative services and 

pediatric dental and vision services, 

will improve access to care for 

consumers who require these benefits. 

The approach to defining AV in this 

proposed rule uses standard 

assumptions about utilization and 

prices, and, for most products, directs 

issuers to use an AV calculator created 

by the Department to compute AV. This 

approach will ensure that two plans 

with the same cost-sharing parameters 

(that is, deductibles, copayments, and 

coinsurance features) will have the same 

AVs. This approach is intended to lower 

consumer information costs and drive 

competition in the market by enabling 

consumers to easily compare the 

relative generosity of plans, knowing 

that the AV of each plan has been 

calculated in the same manner. 

In accordance with Executive Order 

12866, HHS believes that the benefits of 

this regulatory action justify the costs. 

TABLE IV.1—ACCOUNTING TABLE

Category Estimates 

Units 

Year dollar Discount rate 

(percent) 

Period 

covered 

Benefits: 

Annualized Monetized ($millions/year) ............................ Not Estimated ......................... 2012 7 2012–2016 

Not Estimated ......................... 2012 3 2012–2016 

Qualitative: ....................................................................... (1) Improved coverage in benefit categories less typically available. Expanded access to coverage of benefits, particularly in the individual market, including maternity and prescription drug coverage. 

(2) Alignment with current consumer and employer choices. Flexibility for states; 

limited market disruption; allowance for health plan innovation (e.g., substitution 

within benefit categories; de minimis variation for AV). 

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70662 Federal Register / Vol. 77, No. 227 / Monday, November 26, 2012 / Proposed Rules 

28The most complete source of data on the 

number of entities offering fully insured, private 

comprehensive major medical coverage in the 

individual and group markets is the National 

Association of Insurance Commissioners (NAIC) 

Annual Financial Statements and Policy Experience 

Exhibits database. These data contain information 

that issuers submit to the NAIC through State 

insurance regulators on four different financial 

exhibits (the Health, Life, Property & Casualty, and 

Fraternal ‘‘Blanks’’). The 2011 SHCE captures data 

on individual, small group and large group 

comprehensive major medical coverage at the State 

level in a consistent manner across all Blanks, 

providing more extensive information about this 

market than was previously available. We note that 

issuers electing not to offer non-grandfathered 

individual or small group market policies would 

not be affected by the proposed rule. 

TABLE IV.1—ACCOUNTING TABLE—Continued 

Category Estimates 

Units 

Year dollar Discount rate 

(percent) 

Period 

covered 

(3) Efficiency due to greater transparency. Increased transparency and consumer 

ability to compare coverage. 

Costs: 

Annualized Monetized ($millions/year) ............................ $1.7 * ...................................... 2012 7 2012–2016 

$1.5 * ...................................... 2012 3 2012–2016 

Qualitative ........................................................................ (1) Administrative costs. Insurers will incur administrative costs associated with altering benefit packages to ensure compliance with the definition of EHB established in this proposed rule. Issuers may also incur minor administrative costs 

related to computing AV. 

(2) Costs due to higher service utilization. As consumers gain additional coverage 

for benefits that previously did not meet the standards outlined in this proposed 

rule (for example, pediatric dental or vision coverage), utilization, and thus 

costs, may increase. A portion of this increased utilization and costs will be economically inefficient, as insurance coverage creates a tendency to overuse 

health care. Further, there may be incremental costs to consumers associated 

with greater service utilization. 

Transfers: 

Federal Annualized Monetized ($millions/year) ............... Not Estimated ......................... 2012 7 2012–2016 

Not Estimated ......................... 2012 3 2012–2016 

* Note: Administrative costs include costs associated with Information Collection Requirements as described in section III of this proposed rule. 

E. Methods and Limitations of Analysis 

There are many provisions of the 

Affordable Care Act that are integral to 

the goal of expanding access to 

affordable insurance coverage, including 

the provisions of this proposed rule 

relating to EHB and AV. Because it is 

often difficult to isolate the effects 

associated with each particular 

provision of the Affordable Care Act, we 

discuss the evidence relating to the 

provisions of this proposed rule, as well 

as related provisions of the Affordable 

Care Act, in this regulatory impact 

analysis. We present quantitative 

evidence where it is possible and 

supplement with qualitative discussion. 

F. Estimated Number of Affected 

Entities 

As discussed elsewhere in the 

preamble, standards relating to EHB and 

AV will apply to all health insurance 

issuers offering non-grandfathered 

coverage in the individual and small 

group markets—both inside and outside 

of the Exchanges. The following 

sections summarize HHS’s estimates of 

the number of entities that will be 

affected by this proposed regulation. 

a. Issuers 

For purposes of the regulatory impact 

analysis, we have estimated the total 

number of health insurance issuers that 

will be affected by this proposed 

regulation at the company level because 

this is the level at which issuers 

currently submit their annual financial 

reports to the National Association of 

Insurance Commissioners (NAIC). Table 

IV.2 shows the estimated distribution of 

issuers offering comprehensive major 

medical coverage in the individual and 

small group markets based on data 

submitted on the National Association 

of Insurance Commissioners’ 2011 

Supplemental Health Care Exhibit 

(SHCE).28 Additionally, because many 

issuers are licensed in more than one 

state, we have also included data by 

‘‘licensed entity’’ (company/state 

combination) for each market. 

TABLE IV.2—ESTIMATED NUMBER OF ISSUERS AND LICENSED ENTITIES AFFECTED BY THE EHB AND AV REQUIREMENTS

BY MARKET, 2011 

Description 

Issuers (1) offering 

comprehensive major medical 

coverage 

Licensed entities (2) offering 

comprehensive major medical 

coverage 

Number Percent of 

total Number Percent of total 

Total Issuers Offering Comprehensive Major Medical Coverage (3) ............... 446 100.0 2,107 100.0 

By Market: (4)

Individual Market ...................................................................................... 355 79.6 1,663 78.9 

Small Group Market (5) ............................................................................. 366 82.1 1,039 49.3 

Large Group Market ................................................................................. 375 84.1 922 43.8 

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29As discussed earlier, the provisions in this 

proposed regulation could also potentially affect 

some enrollees with non-grandfathered large group 

market coverage in States that choose to give larger 

employers the option of purchasing coverage 

through the Exchange starting in 2017. However, 

the Congressional Budget Office (CBO) and Joint 

Committee on Taxation (JCT) ‘‘expect that few large 

firms would take [advantage of] that option if 

offered because their administrative costs would 

generally be lower than those of nongroup policies 

that would be available in the exchanges.’’ (For 

more information, see Congressional Budget Office, 

‘‘Letter to the Honorable Evan Bayh: An Analysis 

of Health Insurance Premiums under the Patient 

Protection and Affordable Care Act,’’ Washington, 

DC, 2009). 

30 ‘‘Estimates for the Insurance Coverage 

Provisions of the Affordable Care Act Updated for 

the Recent Supreme Court Decision,’’ Congressional 

Budget Office, July 2012. 

31Congressional Budget Office, ‘‘Letter to the 

Honorable Evan Bayh: An Analysis of Health 

Insurance Premiums under the Patient Protection 

and Affordable Care Act,’’ Washington, DC, 2009. 

32Available at: http://cciio.cms.gov/resources/ 

files/Files2/03162012/hie3r-ria-032012.pdf. 

33 Institute of Medicine (2001). Coverage Matters: 

Insurance and Health Care. National Academies 

Press: Washington, DC. Burstin HR, Swartz K, 

O’Neil AC, Orav EJ, Brennan TA. 1999. The effect 

of change of health insurance on access to care. 

Inquiry; 35: 389–97. Finkelstein A et al. 2011. The 

Oregon health insurance experiment: Evidence from 

the first year. NBER Working Paper No. 17190 

34 Institute of Medicine (2002). Care without 

coverage: too little, too late. National Academies 

Press. Ayanian J, et al. ‘‘Unmet Health Needs of 

Uninsured Adults in the United States.’’ JAMA. 

284(16). 2000:2061–9. 27; Roetzheim R, et al. 

‘‘Effects of Health Insurance and Race on Colorectal 

Cancer Treatments and Outcomes.’’ American 

Journal of Public Health 90(11). 2000: 1746–54; 

Wilper, et al. ‘‘Health Insurance and Mortality in 

US Adults.’’ American Journal of Public Health. 

99(12). 2009: 2289–2295. 

35 Garnick, D.W. et al. (1993). ‘‘How well do 

Americans understand their health coverage?’’ 

Health Affairs, 12(3); 204–212. 

36Consumers Union. (2012). ‘‘What’s Behind the 

Door: Consumers’ Difficulties Selecting Health 

Plans.’’ Available at: http:// 

www.consumersunion.org/pub/pdf/ 

Consumer%20Difficulties%20Selecting%20Health

%20Plans%20Jan%202012.pdf. 

37 Isaacs, S.L. (2006). Consumer’s information 

needs: results of a national survey. Health Affairs, 

15(4): 31–41. 

TABLE IV.2—ESTIMATED NUMBER OF ISSUERS AND LICENSED ENTITIES AFFECTED BY THE EHB AND AV REQUIREMENTS

BY MARKET, 2011—Continued 

Description 

Issuers (1) offering 

comprehensive major medical 

coverage 

Licensed entities (2) offering 

comprehensive major medical 

coverage 

Number Percent of 

total Number Percent of total 

Individual and/or Small Group Markets (6) ................................................ 427 95.7 1,993 94.6 

Individual Market Only .............................................................................. 82 18.4 904 42.9 

Small Group Market Only ......................................................................... 39 8.7 117 5.6 

Individual & Small Group Markets Only ................................................... 29 6.5 164 7.8 

All Three Markets ..................................................................................... 279 62.6 545 25.9 

Notes: (1) Issuers represents companies (for example, NAIC company codes). (2) Licensed Entities represents company/state combinations. 

(3) Total issuers excludes data for companies that are regulated by the California Department of Managed Health Care. (4) To be counted as offering coverage in a particular comprehensive major medical market, the issuer must have reported non-zero premiums and claims and had at 

least $1,000 in total premiums per life year for at least one state. (5) Small group is defined based on the current definition in the PHS Act. (6) 

Subcategories do not add to the total because other categories are not shown separately such as those entities in the large group and small 

group markets, but not in the individual market. 

Source: ASPE analysis of 2011 NAIC Supplemental Health Care Exhibit data. 

b. Individuals 

Persons enrolled in non-grandfathered 

individual or small group market 

coverage inside or outside of the 

Exchanges beginning in 2014 will be 

affected by the provisions of this 

proposed rule.29

In July 2012, CBO estimated that there 

will be approximately 23 million 

enrollees in Exchange coverage by 

2016.30 Participation rates among 

potential enrollees are expected to be 

lower in the first few years of Exchange 

availability as employers and 

individuals adjust to the features of the 

Exchanges.31 Additionally, the EHB and 

AV provisions of this proposed rule will 

also affect enrollees in nongrandfathered individual and small 

group coverage outside of the 

Exchanges. 

G. Anticipated Benefits 

The Affordable Care Act ensures nongrandfathered health plans offered in 

the individual and small group markets 

offer a basic package of items and 

services. The benefits of health 

insurance coverage are well 

documented and discussed at length in 

previous RIAs,32 including 

improvement in clinical outcomes, 

financial security, and decreased 

uncompensated care.33, 34 This proposed 

rule applies a definition to EHB and 

proposes other standards that are 

required of health plans, as directed 

under the statute. 

In the market today, it is difficult for 

consumers to make well-informed 

choices when choosing among 

competing health plans. The benefits 

offered are complicated and can vary 

widely across plans, making it difficult 

for consumers to understand which 

benefits are covered.35 Further, wide 

variation in deductibles, coinsurance, 

and other cost sharing features make it 

difficult for consumers to understand 

the relative levels of financial protection 

they will receive under competing 

plans.36, 37

Under the provisions in this proposed 

rule, the EHB-benchmark plan will 

reflect both the scope of services and 

any limits offered by a ‘‘typical 

employer plan’’ in that state. This 

approach, applying for the 2014 and 

2015 benefit years, will allow states to 

build on coverage that is already widely 

available, minimize market disruption, 

and provide consumers with familiar 

products. This should heighten 

consumer understanding of plan options 

and may facilitate consumers’ abilities 

to make choices that better suit their 

needs. In addition, by ensuring that all 

plans cover a core set of benefits and 

services that will be compared against 

other plans that offer the same financial 

protection to the consumer, this 

proposed rule is expected to improve 

the quality and value of the coverage 

that is available for EHB. 

Information on AV is expected to be 

used by consumers to compare nongrandfathered individual and small 

group market plans, and provides a 

method for consumers to understand 

relative plan value. Proposing standard 

pricing and utilization assumptions for 

AV calculations for QHPs and nongrandfathered health plans in the 

individual and small group markets will 

promote transparency and simplicity in 

the consumer shopping experience, as 

well as offer issuers the flexibility to set 

cost-sharing rates that are simple and 

competitive. Without this approach, 

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70664 Federal Register / Vol. 77, No. 227 / Monday, November 26, 2012 / Proposed Rules 

38A study conducted by the Assistant Secretary 

for Planning and Evaluation (ASPE) found that 

commonly purchased products in the small group 

market, state employee plans, and federal employee 

plans do not differ significantly in the range of 

services they cover. Because one of these plans will 

be chosen as the reference plan for EHB, most small 

group plans will provide benefits that are similar 

to EHB. (ASPE Issue Brief (2011). ‘‘EHB: Comparing 

Benefits in Small Group Products and State and 

Federal Employee Plans,’’ U.S. Department of 

Health & Human Services.) In contrast, another 

ASPE study found that many current subscribers in 

the individual market lack coverage for some EHB 

benefits and services, such as maternity care and 

prescription drugs. (ASPE Research Brief (2011). 

‘‘EHB: Individual Market Coverage’’ U.S. 

Department of Health & Human Services.) 

39ASPE Research Brief (2011). ‘‘AV and Employer 

Sponsored Insurance,’’ available at: http:// 

aspe.hhs.gov/health/reports/2011/AV-ESI/rb.pdf. 

Similar results were found in a recent study by 

Gabel and colleagues. Jon R. Gabel, Ryan Lore, 

Roland D. McDevitt, Jeremy D. Pickreign, Heidi 

Whitmore, Michael Slover and Ethan LevyForsythe, ‘‘More Than Half Of Individual Health 

Plans Offer Coverage That Falls Short Of What Can 

Be Sold Through Exchanges As Of 2014,’’ Health 

Affairs, (2012), available at: http:// 

content.healthaffairs.org/content/early/2012/05/22/ 

hlthaff.2011.1082.full.pdf+html. 

40ASPE Issue Brief (2011). ‘‘EHB: Comparing 

Benefits in Small Group Products and State and 

Federal Employee Plans,’’ U.S. Department of 

Health & Human Services. 

41Finkelstein A, McKnight R: ‘‘What Did 

Medicare Do (And Was It Worth It)?’’ Journal of 

Public Economics 2008, 92:1644–1669; and 

Finkelstein, A, ‘‘The Aggregate Effects of Health 

Insurance: Evidence from the Introduction of 

Medicare,’’ National Bureau of Economic Research. 

Working Paper No. 11619, Sept, 2005. 

42 Kaiser State Health Facts. State mandated 

benefits in small group private health insurance: 

Mandated coverage in mental health, as of January 

2010. Available at: http://www.statehealthfacts.org/ 

comparereport.jsp?rep=2&cat=7. 

43Health Insurance Mandates in the States 2010, 

Council for Affordable Health Insurance, available 

at: http://www.cahi.org/cahi_contents/resources/ 

pdf/MandatesintheStates2010ExecSummary.pdf. 

44Health Insurance Mandates in the States 2010, 

Council for Affordable Health Insurance, available 

at: http://www.cahi.org/cahi_contents/resources/ 

pdf/MandatesintheStates2010ExecSummary.pdf. 

45ASPE Issue Brief, ‘‘EHB: Comparing Benefits in 

Small Group Products and State and Federal 

Employee Plans, U.S. Department of Health & 

Human Services (2011). 

46 Goldman HH, et al. 2006. Behavioral health 

insurance parity for federal employees. New Engl J 

Med; 354 1378–86. 

47Barry CL, Busch SH. 2007. Effects of state 

parity laws on the family financial burden of 

children with mental health care needs. Health Serv 

Res; 42: 1061–84. Ma CA, McGuire TG. 1998. Cost 

and incentives in a behavioral health carve-out. 

Health Affairs;17: 56–67, 

48ASPE Research Brief (2011). ‘‘EHB: Comparing 

Benefits in Small Group Products and State and 

Federal Employee Plans.’’ Available at: http:// 

aspe.hhs.gov/health/reports/2011/ 

MarketComparison/rb.shtml. 

plans with the same cost-sharing 

provisions could have different AVs 

making it difficult for consumers to 

compare and choose among health 

plans. It also fosters plan competition 

based on price, quality, and service— 

rather than variations in benefit design. 

H. Anticipated Costs and Transfers 

In addition to the administrative costs 

described in the Information Collection 

Requirements section of this proposed 

rule, HHS anticipates that the 

provisions of this proposed regulation 

will likely result in increased costs 

related to increased utilization of health 

care services by people receiving 

coverage for previously uncovered 

benefits. 

States have primary enforcement 

authority over health insurance issuers 

and this proposed rule extends this 

primary enforcement authority for 

compliance with EHB and AV 

requirements defined in this rule. In 

addition, states must defray the cost of 

any state-required benefits in excess of 

the EHB that apply to QHPs and multistate plans offered through Exchanges. 

As stated earlier, we expect that this 

will rarely occur, if at all, in 2014 and 

2015, the period coverage by the 

benchmark policy. 

The anticipated effects on enrollees in 

the individual market are expected to be 

larger than the effects on enrollees in 

the small group market. Coverage in the 

small group market is much more likely 

to include EHB and, in fact, is included 

in the choice of benchmark plans.38

Second, almost all products in the group 

market have AV above 60 percent,39

while there are likely to be changes to 

products in the individual market due 

to the provisions of this proposed rule. 

Impact on Issuers 

Commonly purchased products in the 

small group market, state employee 

plans, and the FEHBP Blue Cross Blue 

Shield (BCBS) Standard and Basic 

Options and Government Employees 

Health Association (GEHA) plans do not 

differ significantly in the range of 

services they cover.40 Because one of 

these plans will be chosen as the 

reference plan for EHB, most small 

group plans will provide benefits that 

are similar to EHB, and changes in 

benefits offered to comply with EHB 

provisions will be relatively minor. 

Notwithstanding this general 

conclusion, there are four types of 

benefits where changes are expected in 

the small group market: Mental health 

and substance use disorder, habilitative 

services, pediatric dental care, and 

pediatric vision services. In addition, 

individual health plans are less likely 

than small group health plans to cover 

all of the 10 categories of EHB. Below 

we discuss two categories of benefits 

and services that are less likely to be 

covered in the market today: Mental 

health and substance use disorder 

services, and habilitative services. 

The coverage of additional benefits 

results in a transfer from out-of-pocket 

payments to premium payments. 

Increased access to insurance coverage 

for previously excluded benefits will 

make medical care for those benefit 

categories more affordable for 

consumers by covering a portion of the 

costs of those services. While out of 

pocket costs would decline, consumers 

could purchase benefits and services 

inefficiently—that is, purchase more 

than the efficient amount of the 

previously excluded benefits and 

services. However, studies of the 

Medicare program suggest that the costs 

of this inefficiency are likely more than 

offset by the benefits of risk reduction.41

Because the standards outlined in this 

proposed rule will likely result in 

incremental gains in access, rather than 

changes in status from uninsured to 

insured, any costs associated with any 

inefficiency, should be further reduced. 

As discussed previously, many other 

provisions of the Affordable Care Act, 

including healthier risk pools, greater 

administrative efficiencies, premium tax 

credits, and the transitional reinsurance 

program will lower premiums in the 

individual market and Exchanges. 

The statute requires that all plans 

covering EHB must offer mental health 

and substance use disorder service 

benefits, including behavioral health 

treatment and services. The preamble of 

this rule proposes that coverage must 

provide parity in treatment limitations 

between medical and surgical benefits 

and the mental health and substance use 

disorder benefits required to be covered 

as EHB in both the individual and small 

group markets. Many states 42 43 have 

already added some form of mental 

health parity in some or all insured 

markets.44 About 95 percent of those 

with coverage through the three largest 

small group products in each state had 

substance use disorder and mental 

health benefits.45 Additionally, a study 

of implementation of parity in the 

FEHBP plans 46 as well as research into 

state-passed mental health parity laws 47

have shown little or no increase in 

utilization of mental health services, but 

found that parity reduced out-of-pocket 

spending among those who used mental 

health and substance abuse services. 

As indicated in the preamble, many 

health insurance plans do not identify 

habilitative services as a distinct group 

of services.48 By proposing a 

transitional policy for coverage of 

habilitative services, this rule allows 

issuers time for review and 

development of policy in this area, and 

to gain experience to define these 

benefits. To the extent that states 

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49ASPE Research Brief (2011). ‘‘AV and Employer 

Sponsored Insurance,’’ available at: http:// 

aspe.hhs.gov/health/reports/2011/AV-ESI/rb.pdf. 

Similar results were found in a recent study by 

Gabel and colleagues. Jon R. Gabel, Ryan Lore, 

Roland D. McDevitt, Jeremy D. Pickreign, Heidi 

Whitmore, Michael Slover and Ethan LevyForsythe, ‘‘More Than Half Of Individual Health 

Plans Offer Coverage That Falls Short Of What Can 

Be Sold Through Exchanges As Of 2014,’’ Health 

Affairs, (2012), available at: http:// 

content.healthaffairs.org/content/early/2012/05/ 

22hlthaff.2011.1082.full.pdf+html. 

50Aaron McKethan, Mark Zezza, Lawrence Kocot, 

Mark Shepard, and Don Cohn, ‘‘Minimum 

Creditable Coverage,’’ Bipartisan Policy Center, 

January 2010. 

exercise the option to define habilitative 

services, small group market issuers 

may incur administrative and 

contracting costs associated with 

bringing their products into compliance 

with a state’s definition. However, 

because it is not yet clear which states 

will exercise this option or how any 

such states will define habilitative 

services, HHS cannot estimate these 

costs at this time. 

With respect to AV, research indicates 

that the overwhelming majority of 

employer-sponsored health plans meets 

and exceeds an AV of 60 percent.49

Combining both small group and large 

group, an estimated 1.6 percent to 2.0 

percent of people covered by employersponsored insurance are enrolled in 

plans with an AV of less than 60 

percent. 

In the individual health insurance 

market, McKethan et al. estimated the 

percentage of individual market plans 

falling below 60 percent (the AV of a 

bronze plan), meaning that the health 

insurance coverage paid for less than 60 

percent of benefit costs for the average 

enrollee, at between 9 percent and 11 

percent.50 To keep premium costs low, 

the Affordable Care Act allows certain 

individuals (adults under age 30 and 

people who otherwise have 

unaffordable coverage) to purchase 

catastrophic coverage, which still 

guarantees first dollar coverage of 

preventive services and primary care 

check-ups but has higher deductibles 

and lower AVs. 

Costs to States 

State governments are generally 

responsible for health insurance 

enforcement in the individual and small 

group markets, with the federal 

government assuming that role in 

connection with federal law 

requirements if a state does not do so. 

While HHS expects that states may need 

additional resources to enforce the 

requirements that non-grandfathered 

plans in the individual and small group 

market provide EHB, and that these 

plans offer coverage with an AV equal 

to one of the four metal levels, these 

costs will be relatively minor. We 

request comment on the burden states 

will incur in enforcing these 

requirements. 

If a state requires issuers to cover 

benefits in excess of EHB, the 

Affordable Care Act directs the state to 

defray the costs of these benefits in 

QHPs. States may include as part of 

their benchmark plan state benefit 

requirements that were enacted before 

December 31, 2011, avoiding costs 

associated with these provisions. 

Costs to Health Insurance Issuers 

Issuers will incur administrative costs 

to modify existing offerings to meet EHB 

and AV standards as defined in this 

proposed rule. For example, issuers that 

do not currently meet the standards for 

prescription drug coverage will incur 

contracting and one-time administrative 

costs to bring their pharmacy benefits 

into compliance. Issuers may also incur 

minor administrative costs related to AV 

standards and computing AV. However, 

because EHB will be based on a 

benchmark plan that is typical of what 

is offered in the market in each state 

currently, the modifications in benefits 

are expected to be relatively minor for 

most issuers. Further, issuers have 

extensive experience in offering 

products with various levels of cost 

sharing, and HHS expects that following 

the process for computing AV outlined 

in this proposed rule will not demand 

many additional resources. 

I. Regulatory Alternatives 

In addition to the regulatory approach 

outlined in the Essential Health Bulletin 

issued on December 16, 2011, HHS 

considered several alternatives when 

developing policy around defining 

EHBs and calculating AV. 

Definition of EHBs 

At the request of some commenters, 

HHS considered one national definition 

of EHB that would have applicable 

issuers offer a uniform list of benefits. 

However, this approach would not 

allow for state flexibility and issuer 

innovation in benefit design, would 

require a burdensome overhaul for 

issuers, and would disrupt the market. 

HHS also considered codifying the 10 

statutorily required categories without 

additional definition and allowing 

issuers to adjust their benefit packages 

accordingly. However, this approach 

would have allowed wide variation 

across plans in the benefits offered, 

would not have assured consumers that 

they would have coverage for basic 

benefits, and would not have improved 

the ability of consumers to make 

comparisons among plans. 

HHS believes the benchmark 

approach best strikes the balance 

between comprehensiveness, 

affordability, and state flexibility. 

Additionally, HHS believes that the 

benchmark approach, supplemented 

when necessary, best addresses the 

statutory requirements that EHBs reflect 

a typical employer plan and encompass 

at least the 10 categories of items and 

services outlined in the statute. 

Calculation of AV 

In the calculation of AV, the statute 

specifies the use of a standard 

population. As described in the AV/CSR 

Bulletin, HHS considered allowing 

issuers to use their own utilization and 

pricing data in connection with an HHSdefined standard population (that is, 

HHS-set demographics for the standard 

population) to calculate a standard 

population. However, this would not 

have allowed for consumer transparency 

and would not have increased 

competition. The approach in this 

proposed rule instead reduces issuer 

burden while allowing consumers to 

compare more easily among plans. 

VI. Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

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

agencies to analyze options for 

regulatory relief of small businesses if a 

proposed rule has a significant impact 

on a substantial number of small 

entities. The Act generally defines a 

‘‘small entity’’ as (1) A proprietary firm 

meeting the size standards of the Small 

Business Administration (SBA), (2) a 

not-for-profit organization that is not 

dominant in its field, or (3) a small 

government jurisdiction with a 

population of less than 50,000. (States 

and individuals are not included in the 

definition of ‘‘small entity.’’) HHS uses 

as its measure of significant economic 

impact on a substantial number of small 

entities a change in revenues of more 

than 3 to 5 percent. 

As discussed above, this proposed 

rule is necessary to implement 

standards related to the EHB, AV, costsharing limitations, and quality, as 

authorized by the Affordable Care Act. 

For purposes of the Regulatory 

Flexibility Analysis, we expect the 

following types of entities to be affected 

by this proposed rule: (1) Issuers; (2) 

employers; and (3) providers. 

We believe that health insurers would 

be classified under the North American 

Industry Classification System (NAICS) 

Code 524114 (Direct Health and Medical 

Insurance Carriers). According to SBA 

size standards, entities with average 

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51 ‘Table of Size Standards Matched to North 

American Industry Classification System Codes,’’ 

effective November 5, 2010, U.S. Small Business 

Administration, available at http://www.sba.gov. 

annual receipts of $7 million or less 

would be considered small entities for 

this NAICS code. Health issuers could 

possibly also be classified in NAICS 

Code 621491 (HMO Medical Centers) 

and, if this is the case, the SBA size 

standard would be $10 million or less. 

As discussed in the Web Portal 

interim final rule (75 FR 24481), HHS 

examined the health insurance industry 

in depth in the Regulatory Impact 

Analysis we prepared for the proposed 

rule on establishment of the Medicare 

Advantage program (69 FR 46866, 

August 3, 2004). In that analysis we 

determined that there were few, if any, 

insurance firms underwriting 

comprehensive health insurance 

policies (in contrast, for example, to 

travel insurance policies or dental 

discount policies) that fell below the 

size thresholds for ‘‘small’’ business 

established by the SBA (currently $7 

million in annual receipts for health 

insurers, based on North American 

Industry Classification System Code 

524114).51

For purposes of this proposed rule, 

HHS used 2011 National Association of 

Insurance Commissioners (NAIC) 

Supplemental Health Care Exhibit data 

to develop an updated estimate of the 

number of small entities that offer 

comprehensive major medical coverage 

in the individual and small group 

markets. HHS used total Accident and 

Health (A&H) earned premiums as a 

proxy for annual receipts. Table IV.3 

shows that HHS estimates that there 

were 35 small entities with less than $7 

million in accident and health earned 

premiums offering individual or small 

group comprehensive major medical 

(CMM) coverage; however, this estimate 

may overstate the actual number of 

small health insurance issuers offering 

such coverage, since it does not include 

receipts from these companies’ other 

lines of business. 

HHS estimates that 83 percent of 

these small issuers are subsidiaries of 

larger carriers, and 71 percent also offer 

large group or other types of A&H 

coverage. On average, HHS estimates 

that individual and small group CMM 

coverage accounts for approximately 45 

percent of total A&H earned premiums 

for these small issuers. HHS estimates 

that 75 percent of these small issuers 

only offer individual and small group 

CMM coverage in a single state. 

Additionally, HHS estimates that 

approximately a third (11) of these small 

issuers only offer individual market 

CMM coverage. 

TABLE IV.3—DESCRIPTION OF ISSUERS OFFERING INDIVIDUAL OR SMALL GROUP COMPREHENSIVE MAJOR MEDICAL

(CMM) COVERAGE BY SIZE, 2011 

Total earned premiums 

for accident and health 

coverage 

Total issuers 

offering 

individual or 

small group 

market CMM 

coverage 

Percent of 

issuers that 

are part of 

larger carriers 

Average 

number of 

states in which 

individual or 

small group 

CMM 

coverage is 

offered 

Percent of 

issuers only 

offering 

individual or 

small group 

CMM 

coverage in a 

single state 

Individual & 

small group 

CMM 

premiums as a 

percent of total 

A&H 

premiums 

Percent of 

issuers also 

offering large 

group CMM or 

other A&H 

coverage 

Number of 

issuers only 

offering 

individual 

market CMM 

coverage 

Less Than $7 Million .... 35 82.9 2.3 74.3 45.0 71.4 11 

$7 million to $99 million 93 68.8 4.5 62.4 37.2 66.7 6 

$100 million to $999 billion ............................ 184 87.0 5.2 65.8 27.0 84.8 11 

$1 billion or more ......... 115 87.8 4.8 69.6 24.0 93.9 1 

Total ...................... 427 82.9 4.7 66.7 24.5 82.2 29 

Notes: (1) Issuers represents companies (for example, NAIC company codes). (2) Licensed Entities represents company/state combinations. 

(3) Total issuers excludes data for companies that are regulated by the California Department of Managed Health Care. (4) To be counted as offering coverage in a particular comprehensive major medical market, the issuer must have reported positive premiums, non-zero claims and had 

at least $1,000 in total premiums per life year for at least one state. (5) Small group is defined based on the current definition in the PHS Act. 

Sources: ASPE analysis of 2011 NAIC Supplemental Health Care Exhibit data. 

This rule proposes standards related 

to EHBs, AV, and accreditation. These 

standards may impose some additional 

costs on issuers offering coverage that is 

affected by these provisions. For 

example, as discussed earlier, issuers 

are likely to experience some 

administrative costs associated with 

reconfiguring existing nongrandfathered plans to meet EHB and 

AV metal level standards as defined in 

this proposed rule. However, these costs 

will vary depending on a number of 

factors, including the extent to which an 

issuer offers coverage in multiple states 

or is a subsidiary of a larger carrier, and 

the variation between these standards 

and current practice. Further, some of 

the changes that standardize coverage 

may reduce administrative costs. 

Accordingly, we cannot estimate an 

effect on premiums with precision prior 

to final state selection of benchmarks. 

As discussed in the regulatory impact 

analysis for the Establishment of 

Exchanges and Qualified Health Plans; 

Exchange Standards for Employers final 

rule (77 FR 18310 (Mar. 27, 2012)), the 

cost of participating in an Exchange is 

an investment for QHP issuers, with 

benefits expected to accrue to QHP 

issuers because of access to new markets 

where consumers may receive generous 

tax credits to purchase insurance. 

This proposed rule also establishes 

standards that will affect employers 

participating in the small group market, 

including those that choose to 

participate in a SHOP. As discussed in 

the Summary of Regulatory Impact 

Analysis for the Establishment of 

Exchanges and Qualified Health Plans; 

Exchange Standards for Employers final 

rule, the SHOP is limited by statute to 

employers with at least one but not 

more than 100 employees. For this 

reason, we expect that many affected 

employers would meet the SBA 

standard for small entities. However, the 

standards outlined in this proposed rule 

apply to issuers of small group market 

health insurance coverage, and not to 

any small employers that elect to 

purchase such coverage on behalf of 

their employees (that is, the proposed 

rule impacts what coverage is available 

to be purchased).We anticipate that the 

essential health benefits, coupled with 

the ability to compare plans based on 

metal level, will lead to greater 

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transparency and reduce transaction 

costs for small employers. 

HHS anticipates that the provisions in 

this proposed rule will have a positive 

effect on providers—particularly those 

offering services in areas where many 

individual market enrollees previously 

did not have coverage for these services, 

and those who serve a substantial share 

of the low-income population. HHS 

anticipates that small providers will 

also experience positive effects relating 

to the provisions of this proposed rule. 

Therefore, the Secretary certifies that 

this proposed rule will not have a 

significant impact on a substantial 

number of small entities. We welcome 

comment on the analysis described in 

this section and on HHS’s conclusion. 

VII. Unfunded Mandates 

Section 202 of the Unfunded 

Mandates Reform Act (UMRA) of 1995 

requires that agencies assess anticipated 

costs and benefits before issuing any 

proposed rule that includes a federal 

mandate that could result in 

expenditure in any one year by state, 

local or tribal governments, in the 

aggregate, or by the private sector, of 

$100 million in 1995 dollars, updated 

annually for inflation. In 2012, that 

threshold level is approximately $139 

million. 

UMRA does not address the total cost 

of a proposed rule. Rather, it focuses on 

certain categories of cost, mainly those 

‘‘Federal mandate’’ costs resulting from: 

(1) Imposing enforceable duties on state, 

local, or tribal governments, or on the 

private sector; or (2) increasing the 

stringency of conditions in, or 

decreasing the funding of, state, local, or 

tribal governments under entitlement 

programs. 

Because states are not required to set 

up an Exchange, and because grants are 

available for funding of the 

establishment of an Exchange by a state, 

we anticipate that this final rule would 

not impose costs above that threshold 

on state, local, or Tribal governments. In 

addition, because states largely already 

collect information on plan rates and 

benefits to license them, we believe that 

the burden on states is limited. 

However, because these costs have not 

been estimated, HHS seeks comments 

on any additional burdens. 

Under the proposed rule, issuers will 

provide coverage of certain benefits. 

While some issuers may not currently 

offer benefit packages that meet the 

standards outlined in the proposed rule, 

we anticipate that the administrative 

costs associated with compliance will 

fall below the threshold. We anticipate 

that such administrative costs will be 

concentrated in the initial year, with 

costs significantly tapering off during 

subsequent years. 

The benchmark-based approach to 

defining EHB ensures that EHB will 

reflect the scope of services offered by 

a ‘‘typical employer plan.’’ Accordingly, 

we anticipate that many small group 

market plans meet or are close to 

meeting the coverage requirements for 

EHB and will not need to incur 

significant administrative costs to bring 

currently available plans into 

compliance. Individual market plans are 

somewhat less likely to cover all 

statutorily required benefits and 

services as described in this proposed 

rule; however, many such plans are 

offered by issuers with diverse 

portfolios that may include small and 

large group products or other individual 

market products that do include the 

required services. Accordingly, we do 

not anticipate that the provisions related 

to the EHB package outlined in the 

proposed rule impose costs greater than 

$139 million on the private sector. 

Consistent with policy embodied in 

UMRA, this notice for proposed 

rulemaking has been designed to be the 

least burdensome alternative for state, 

local and tribal governments, and the 

private sector while achieving the 

objectives of the Affordable Care Act. 

VIII. Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule that imposes substantial 

direct requirement costs on state and 

local governments, preempts state law, 

or otherwise has federalism 

implications. 

States regulate health insurance 

coverage. States would continue to 

apply state laws regarding health 

insurance coverage. However, if any 

state law or requirement prevents the 

application of a Federal standard, then 

that particular state law or requirement 

would be preempted. State requirements 

that are more stringent than the Federal 

requirements would not be preempted 

by this proposed rule unless such 

requirements prevent the application of 

Federal law. Accordingly, states have 

significant latitude to impose 

requirements with respect to health 

insurance coverage that are more 

consumer-protective than the Federal 

law. 

In the view of HHS, this proposed 

rule does not impose substantial direct 

costs on state and local governments. 

However, we believe that this proposed 

rule has Federalism implications due to 

direct effects on the distribution of 

power and responsibilities among the 

state and Federal governments relating 

to determining standards for health 

insurance coverage that is offered in the 

individual and small group markets. 

Each state would adhere to the federal 

standards outlined in the proposed rule 

for purposes of determining whether 

non-grandfathered individual and small 

group market health insurance coverage 

includes the EHB package, or have HHS 

enforce these policies. 

HHS expects that the federalism 

implications, if any, are substantially 

mitigated for a number of reasons. First, 

the proposed rule affords discretion to 

states to select an EHB-benchmark plan. 

States also can choose to be responsible 

for evaluating the selected benchmark 

and making adjustments as needed, and 

for determining whether nongrandfathered individual and small 

group market health insurance coverage 

meets the standards outlined in the 

proposed rule. While the proposed rule 

establishes new federal standards for 

certain health insurance coverage, states 

will retain their traditional regulatory 

roles. Further, if a state elects not to 

substantially enforce the standards 

outlined in the final rule, the Federal 

government will assume responsibility 

for these standards. 

In compliance with the requirement 

of Executive Order 13132 that agencies 

examine closely any policies that may 

have federalism implications or limit 

the policymaking discretion of the 

states, HHS has made efforts to consult 

with and work cooperatively with states 

as evidenced by continued 

communication through weekly calls 

and listening sessions. 

HHS initiated weekly calls with key 

stakeholders from states in April 2010 

as a way for HHS and states to have a 

regular means of communication about 

the Affordable Care Act. The audience 

for the call is ‘‘State Government 

Implementers of the Affordable Care 

Act’’ which often includes Governors’ 

office staff, state Medicaid Directors’ 

staff, Insurance Commissioners’ staff, 

state high risk pool staff, Exchange 

grantees, health reform coordinators, 

and other state staff. National 

intergovernmental organizations are also 

invited to participate. Regular 

participants also include representatives 

from the following intergovernmental 

organizations: 

• National Governors Association 

• National Conference of State 

Legislatures 

• National Association of Medicaid 

Directors 

• National Association of Insurance 

Commissioners 

• American Public Human Services 

Association 

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• The Council of State Governments 

• National Academy for State Health 

Policy 

• National Association of Counties 

These calls, in addition to listening 

sessions specifically related to EHB, 

have helped HHS understand states’ 

major concerns about implementation of 

the Affordable Care Act. Continuous 

communication with states allowed 

HHS to develop policy that addressed 

two central concerns: flexibility and 

state-required benefits. The benchmark 

approach allows states to select a 

benchmark option that offer benefit 

packages that reflect the needs of their 

populations and maintain state-required 

benefits that were enacted before 

December 31, 2011. This approach 

minimizes state burden while increasing 

access to quality health care. 

List of Subjects 

45 CFR Part 147 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements, state regulation of health 

insurance. 

45 CFR Part 155 

Administrative practice and 

procedure, Advertising, Brokers, 

Conflict of interest, Consumer 

protection, Grant programs-health, 

Grants administration, Health care, 

Health insurance, Health maintenance 

organization (HMO), Health records, 

Hospitals, Indians, Individuals with 

disabilities, Loan programs-health, 

Organization and functions 

(Government agencies), Medicaid, 

Public assistance programs, Reporting 

and recordkeeping requirements, Safety, 

state and local governments, Technical 

assistance, Women, and Youth. 

45 CFR Part 156 

Administrative practice and 

procedure, Advertising, Advisory 

Committees, Brokers, Conflict of 

interest, Consumer protection, Grant 

programs-health, Grants administration, 

Health care, Health insurance, Health 

maintenance organization (HMO), 

Health records, Hospitals, Indians, 

Individuals with disabilities, Loan 

programs-health, Organization and 

functions (Government agencies), 

Medicaid, Public assistance programs, 

Reporting and recordkeeping 

requirements, Safety, state and local 

governments, Sunshine Act, Technical 

assistance, Women, and Youth. 

For the reasons set forth in the 

preamble, the Department of Health and 

Human Services proposes to amend 45 

CFR parts 147, 155, and 156 as set forth 

below: 

Subchapter B—Requirements Relating to 

Health Care Access 

PART 147—HEALTH INSURANCE 

REFORM REQUIREMENTS FOR THE 

GROUP AND INDIVIDUAL HEALTH 

INSURANCE MARKETS 

1. The authority citation for part 147 

continues to read as follows: 

Authority: Secs 2701 through 2763, 2791, 

and 2792 of the Public Health Service Act (42 

U.S.C. 300gg through 300gg–63, 300gg–91, 

and 300gg–92), as amended. 

2. Section 147.150 is added to read as 

follows: 

§ 147.150 Coverage of essential health 

benefits. 

(a) Requirement to cover the essential 

health benefits package. A health 

insurance issuer offering health 

insurance coverage in the individual or 

small group market must ensure that 

such coverage includes the essential 

health benefits package as defined in 

section 1302(a) of the Affordable Care 

Act effective for plan or policy years 

beginning on or after January 1, 2014. 

(b) Cost-sharing under group health 

plans. [Reserved.] 

(c) Child-only plans. If a health 

insurance issuer in the individual 

market offers health insurance coverage 

in any level of coverage specified under 

section 1302(d)(1) of the Affordable Care 

Act, the issuer must offer coverage in 

that level to individuals who, as of the 

beginning of a plan year, have not 

attained the age of 21. 

PART 155—EXCHANGE 

ESTABLISHMENT STANDARDS AND 

OTHER RELATED STANDARDS 

UNDER THE AFFORDABLE CARE ACT 

3. The authority citation for part 155 

is revised to read as follows: 

Authority: Title I of the Affordable Care 

Act, sections 1301, 1302, 1303, 1304, 1311, 

1312, 1313, 1321, 1322, 1331, 1334, 1402, 

1411, 1412, 1413, Pub. L. 111–148, 124 Stat. 

119 (42 U.S.C. 18021–18024, 18031–18033, 

18041–18042, 18051, 18054, 18071, and 

18081–18083. 

4. Adding § 155.170 to subpart B to 

read as follows: 

§ 155.170 Additional required benefits. 

(a) Additional required benefits. (1) A 

state may require a QHP to offer benefits 

in addition to the essential health 

benefits. 

(2) A state-required benefit enacted on 

or before December 31, 2011 is not 

considered in addition to the essential 

health benefits. 

(3) The Exchange shall identify which 

state-required benefits are in excess of 

EHB. 

(b) Payments. The state must make 

payments to defray the cost of 

additional required benefits specified in 

paragraph (a) of this section to one of 

the following: 

(1) To an individual enrollee, as 

defined in § 155.20 of this subchapter; 

or 

(2) Directly to the QHP issuer on 

behalf of the individual described in 

paragraph (b)(1) of this section. 

(c) Cost of additional required 

benefits. (1) Each QHP issuer in the state 

shall quantify cost attributable to each 

additional required benefit specified in 

paragraph (a) of this section. 

(2) A QHP issuer’s calculation shall 

be: 

(i) Based on an analysis performed in 

accordance with generally accepted 

actuarial principles and methodologies; 

(ii) Conducted by a member of the 

American Academy of Actuaries; and 

(iii) Reported to the Exchange. 

5. Revise § 155.1045 to read as 

follows: 

§ 155.1045 Accreditation timeline. 

(a) Timeline. The Exchange must 

establish a uniform period following 

certification of a QHP within which a 

QHP issuer that is not already 

accredited must become accredited as 

required by § 156.275 of this subchapter, 

except for multi-state plans. The U.S. 

Office of Personnel Management will 

establish the accreditation period for 

multi-state plans. 

(b) Federally-facilitated Exchange. 

The accreditation timeline used in 

Federally-facilitated Exchanges follows: 

(1) During certification for an issuer’s 

initial year of QHP certification (for 

example, in 2013 for the 2014 coverage 

year), a QHP issuer without existing 

commercial, Medicaid, or Exchange 

health plan accreditation granted by a 

recognized accrediting entity for the 

same state in which the issuer is 

applying to offer coverage must have 

scheduled or plan to schedule a review 

of QHP policies and procedures of the 

applying QHP issuer with a recognized 

accrediting entity. 

(2) Prior to a QHP issuer’s second year 

and third year of QHP certification (for 

example, in 2014 for the 2015 coverage 

year and 2015 for the 2016 coverage 

year), a QHP issuer must be accredited 

by a recognized accrediting entity on the 

policies and procedures that are 

applicable to their Exchange products 

or, a QHP issuer must have commercial 

or Medicaid health plan accreditation 

granted by a recognized accrediting 

entity for the same State in which the 

issuer is offering Exchange coverage and 

the administrative policies and 

procedures underlying that 

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accreditation must be the same or 

similar to the administrative policies 

and procedures used in connection with 

the QHP. 

(3) Prior to the QHP issuer’s fourth 

year of QHP certification and in every 

subsequent year of certification (for 

example, in 2016 for the 2017 coverage 

year and forward), a QHP issuer must be 

accredited in accordance with § 156.275 

of this subchapter. 

PART 156—HEALTH INSURANCE 

ISSUER STANDARDS UNDER THE 

AFFORDABLE CARE ACT, INCLUDING 

STANDARDS RELATED TO 

EXCHANGES 

6. The authority citation for part 156 

is revised to read as follows: 

Authority: Title I of the Affordable Care 

Act, sections 1301–1304, 1311–1312, 1321– 

1322, 1324, 1334, 1342–1343, and 1401– 

1402, Pub. L. 111–148, 124 Stat. 119 (42 

U.S.C. 18021–18024, 18031–18032, 18041– 

18042, 18044, 18054, 18061, 18063, 18071, 

and 26 U.S.C. 36B). 

7. Amend § 156.20 by adding 

definitions for ‘‘Actuarial value (AV),’’ 

‘‘Base-benchmark plan,’’ ‘‘EHBbenchmark plan,’’ ‘‘EHB package,’’ and 

‘‘Percentage of the total allowed costs of 

benefits’’ in alphabetical order to read as 

follows: 

§ 156.20 Definitions. 

* * * * * 

Actuarial value (AV) means the 

percentage paid by a health plan of the 

percentage of the total allowed costs of 

benefits. 

* * * * * 

Base-benchmark plan means the plan 

that is selected by a state from the 

options described in § 156.100(a) of this 

subchapter, or a default benchmark 

plan, as described in § 156.100(c) of this 

subchapter, prior to any adjustments 

made pursuant to the benchmark 

standards described in § 156.110 of this 

subchapter. 

* * * * * 

EHB-benchmark plan means the 

standardized set of essential health 

benefits that must be met by a QHP, as 

defined in § 155.20 of this section, or 

other issuer as required by § 147.150 of 

this subchapter. 

EHB package means the scope of 

covered benefits and associated limits of 

a health plan offered by an issuer that 

provides at least the ten statutory 

categories of benefits, as described in 

§ 156.110(a) of this subchapter; provides 

the benefits in the manner described in 

§ 156.115 of this subchapter; limits cost 

sharing for such coverage as described 

in § 156.130 of this subchapter; and 

subject to offering catastrophic plans as 

described in section 1302(e) of the 

Affordable Care Act, provides distinct 

levels of coverage as described in 

§ 156.140 of this subchapter. 

* * * * * 

Percentage of the total allowed costs 

of benefits means the anticipated 

covered medical spending for EHB 

coverage (as defined in § 156.110(a) of 

this subchapter) paid by a health plan 

for a standard population, computed in 

accordance with the plan’s cost-sharing, 

divided by the total anticipated allowed 

charges for EHB coverage provided to a 

standard population, and expressed as a 

percentage. 

* * * * * 

8. Revise subpart B to read as follows: 

Subpart B—Essential Health Benefits 

package 

Sec. 

156.100 State selection of benchmark. 

156.105 Determination of EHB for multistate plans. 

156.110 EHB-benchmark plan standards. 

156.115 Provision of EHB. 

156.120 Prescription drug benefits. 

156.125 Prohibition on discrimination. 

156.130 Cost-sharing requirements. 

156.135 AV calculation for determining 

level of coverage. 

156.140 Levels of coverage. 

156.145 Determination of minimum value 

156.150 Application to stand-alone dental 

plans inside the Exchange. 

§ 156.100 State selection of benchmark. 

Each state may identify a single EHBbenchmark plan according to the 

selection criteria described below: 

(a) State-selection of base-benchmark 

plan. The options from which a basebenchmark plan may be selected by the 

state are the following: 

(1) Small group market health plan. 

The largest health plan by enrollment in 

any of the three largest small group 

insurance products, as defined in 

§ 159.110 of this subpart, in the state’s 

small group market as defined in 

§ 155.20 of this subchapter. 

(2) State employee health benefit 

plan. Any of the largest three employee 

health benefit plan options by 

enrollment offered and generally 

available to state employees in the state 

involved. 

(3) FEHBP plan. Any of the largest 

three national Federal Employees 

Health Benefits Program (FEHBP) plan 

options by aggregate enrollment that is 

offered to all health-benefits-eligible 

federal employees under 5 U.S.C. 8903. 

(4) HMO. The coverage plan with the 

largest insured commercial nonMedicaid enrollment offered by a health 

maintenance organization operating in 

the state. 

(b) EHB-benchmark selection 

standards. In order to become an EHBbenchmark plan as defined in § 156.20 

of this subchapter, a state-selected basebenchmark plan must meet the 

requirements for coverage of benefits 

and limits described in § 156.110 of this 

subpart; and 

(c) Default base-benchmark plan. If a 

state does not make a selection using the 

process defined in § 156.100 of this 

section, the default base-benchmark 

plan will be the largest plan by 

enrollment in the largest product in the 

state’s small group market. 

§ 156.105 Determination of EHB for multistate plans. 

A Multi-State Plan must meet 

benchmark standards set by the U.S. 

Office of Personnel Management. 

§ 156.110 EHB-benchmark plan standards. 

General requirements. An EHBbenchmark plan must meet the 

following standards: 

(a) EHB coverage. Provide coverage of 

at least the following categories of 

benefits: 

(1) Ambulatory patient services. 

(2) Emergency services. 

(3) Hospitalization. 

(4) Maternity and newborn care. 

(5) Mental health and substance use 

disorder services, including behavioral 

health treatment. 

(6) Prescription drugs. 

(7) Rehabilitative and habilitative 

services and devices. 

(8) Laboratory services. 

(9) Preventive and wellness services 

and chronic disease management. 

(10) Pediatric services, including oral 

and vision care. 

(b) Coverage in each benefit category. 

A base-benchmark plan not providing 

any coverage in one or more of the 

categories described in paragraph (a) of 

this section, must be supplemented as 

follows: 

(1) General supplementation 

methodology. A base-benchmark plan 

that does not include items or services 

within one or more of the categories 

described in paragraph (a) of this 

section must be supplemented by the 

addition of the entire category of such 

benefits offered under any other 

benchmark plan option described in 

§ 156.100(a) of this subpart unless 

otherwise described in this subsection. 

(2) Supplementing pediatric oral 

services. A base-benchmark plan lacking 

the category of pediatric oral services 

must be supplemented by the addition 

of the entire category of benefits from 

one of the following: 

(i) The FEDVIP dental plan with the 

largest national enrollment that is 

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described in and offered to federal 

employees under 5 U.S.C. 8952; or 

(ii) The benefits available under that 

state’s separate CHIP plan, if a separate 

CHIP plan exists, to the eligibility group 

with the highest enrollment. 

(3) Supplementing pediatric vision 

services. A base-benchmark plan lacking 

the category of pediatric vision services 

must be supplemented by the addition 

of the entire category of such benefits 

from one of the following: 

(i) The FEDVIP vision plan with the 

largest national enrollment that is 

offered to Federal employees under 5 

U.S.C. 8982; or 

(ii) The benefits available under the 

state’s separate CHIP plan, if a separate 

CHIP plan exists, to the eligibility group 

with the highest enrollment. 

(c) Supplementing the default basebenchmark plan. A default basebenchmark plan as defined in 

§ 156.100(c) of this subpart that lacks 

any categories of essential health 

benefits will be supplemented by HHS 

in the following order, to the extent that 

any of the plans offer benefits in the 

missing EHB category: 

(1) The largest plan by enrollment in 

the second largest product in the state’s 

small group market, as defined in 

§ 155.20 of this subchapter (except for 

pediatric oral and vision benefits); 

(2) The largest plan by enrollment in 

the third largest product in the state’s 

small group market, as defined in 

§ 155.20 of this subchapter (except for 

pediatric oral and vision benefits); 

(3) The largest national FEHBP plan 

by enrollment across states that is 

offered to federal employees under 5 

U.S.C. 8903 (except for pediatric oral 

and vision benefits); 

(4) The plan described in paragraph 

(b)(2)(i) of this section with respect to 

pediatric oral care benefits; 

(5) The plan described in paragraph 

(b)(3)(i) of this section with respect to 

pediatric vision care benefits; and 

(6) A habilitative benefit determined 

by the plan as described in 

§ 156.115(a)(4) of this subpart or by the 

state as described in paragraph (f) of this 

section. 

(d) Non-discrimination. Not include 

discriminatory benefit designs that 

contravene the non-discrimination 

standards defined in § 156.125 of this 

subpart. 

(e) Balance. Ensure an appropriate 

balance among the EHB categories to 

ensure that benefits are not unduly 

weighted toward any category. 

(f) Determining habilitative services. If 

the base-benchmark plan does not 

include coverage for habilitative 

services, the state may determine which 

services are included in that category. 

§ 156.115 Provision of EHB. 

(a) Provision of EHB means that a 

health plan provides benefits that— 

(1) Are substantially equal to the EHBbenchmark plan including: 

(i) Covered benefits; 

(ii) Limitations on coverage including 

coverage of benefit amount, duration, 

and scope; and 

(iii) Prescription drug benefits that 

meet the requirements of § 156.120 of 

this subpart; 

(2) With respect to the mental health 

and substance use disorder services, 

including behavioral health treatment 

services, required under § 156.110(a)(5) 

of this subpart, comply with the 

requirements of § 146.136 of this 

subchapter. 

(3) Include preventive health services 

described in § 147.130 of this 

subchapter. 

(4) If the EHB-benchmark plan does 

not include coverage for habilitative 

services, as described in § 156.110(f) of 

this subpart, a plan must include 

habilitative services that meet one of the 

following— 

(i) Provide parity by covering 

habilitative services benefits that are 

similar in scope, amount, and duration 

to benefits covered for rehabilitative 

services; or 

(ii) Are determined by the issuer and 

reported to HHS. 

(b) Benefit substitution is allowed if 

the issuer of a plan offering EHB meets 

the following conditions— 

(1) Substitutes a benefit that meets the 

following conditions: 

(i) Is actuarially equivalent to the 

benefit that is being replaced as 

determined in paragraph (b)(3) of this 

section; 

(ii) Is made only within the same 

essential health benefit category; and 

(iii) Is not a prescription drug benefit. 

(2) Submits evidence of actuarial 

equivalence of substituted benefits to 

the state. The certification must: 

(i) Be conducted by a member of the 

American Academy of Actuaries; 

(ii) Be based on an analysis performed 

in accordance with generally accepted 

actuarial principles and methodologies; 

and 

(iii) Use a standardized plan 

population; 

(3) Actuarial equivalence of benefits is 

determined regardless of cost-sharing. 

(c) A health plan does not fail to 

provide EHB solely because it does not 

offer the services described in 

§ 156.280(d) of this subchapter. 

(d) An issuer of a plan offering EHB 

may not include routine non-pediatric 

dental services, routine non-pediatric 

eye exam services, or long-term/ 

custodial nursing home care benefits, or 

cosmetic orthodontia as EHB. 

§ 156.120 Prescription drug benefits. 

(a) A health plan does not provide 

essential health benefits unless it: 

(1) Subject to the exception in 

paragraph (b) of this section, covers at 

least the greater of: 

(i) One drug in every United States 

Pharmacopeia (USP) category and class; 

or 

(ii) The same number of prescription 

drugs in each category and class as the 

EHB-benchmark plan; and 

(2) Submits its drug list to the 

Exchange, the state, or OPM. 

(b) A health plan does not fail to 

provide EHB prescription drug benefits 

solely because it does not offer drugs for 

services described in § 156.280(d) of this 

subchapter. 

(c) A health plan providing essential 

health benefits must have procedures in 

place that allow an enrollee to request 

clinically appropriate drugs not covered 

by the health plan. 

§ 156.125 Prohibition on discrimination. 

(a) An issuer does not provide EHB if 

its benefit design, or the implementation 

of its benefit design, discriminates based 

on an individual’s age, expected length 

of life, present or predicted disability, 

degree of medical dependency, quality 

of life, or other health conditions; and 

(b) An issuer providing EHB must 

comply with the requirements of 

§ 156.200(e) and § 156.225 of this 

subchapter. 

§ 156.130 Cost-sharing requirements. 

(a) Annual limitation on cost sharing. 

(1) For a plan year beginning in the 

calendar year 2014, cost sharing may 

not exceed the following: 

(i) For self-only coverage—the annual 

dollar limit as described in section 

223(c)(2)(A)(ii)(I) of the Internal 

Revenue Code of 1986 as amended, for 

self-only coverage that is in effect for 

2014; or 

(ii) For other than self-only 

coverage—the annual dollar limit in 

section 223(c)(2)(A)(ii)(II) of the Internal 

Revenue Code of 1986 as amended, for 

non-self-only coverage that is in effect 

for 2014. 

(2) For a plan year beginning in a 

calendar year after 2014, cost sharing 

may not exceed the following: 

(i) For self-only coverage—the dollar 

limit for calendar year 2014 increased 

by an amount equal to the product of 

that amount and the premium 

adjustment percentage, as defined in 

paragraph (e) of this section. 

(ii) For other than self-only 

coverage—twice the dollar limit for selfonly coverage described in paragraph 

(a)(2)(i) of this section. 

(b) Annual limitation on deductibles 

for plans in the small group market. (1) 

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For a plan year beginning in calendar 

year 2014, the annual deductible for a 

health plan in the small group market 

may not exceed the following: 

(i) For self-only coverage—$2,000; or 

(ii) For coverage other than selfonly—$4,000. 

(2) For a plan year beginning in a 

calendar year after 2014, the annual 

deductible for a health plan in the small 

group market may not exceed the 

following: 

(i) For self-only coverage—the annual 

limitation on deductibles for calendar 

year 2014 increased by an amount equal 

to the product of that amount and the 

premium adjustment percentage as 

defined in paragraph (e) of this section; 

and 

(ii) For other than self-only 

coverage—twice the annual deductible 

limit for self-only coverage described in 

paragraph (b)(2)(i) of this section. 

(3) A health plan’s annual deductible 

may exceed the annual deductible limit 

if that plan may not reasonably reach 

the actuarial value of a given level of 

coverage as defined in § 156.140 of this 

subpart without exceeding the annual 

deductible limit. 

(c) Special rule for network plans. In 

the case of a plan using a network of 

providers, cost-sharing paid by, or on 

behalf of, an enrollee for benefits 

provided outside of such network shall 

not count towards the annual limitation 

on cost sharing (as defined in paragraph 

(a) of this section), or the annual 

limitation on deductibles (as defined in 

paragraph (b) of this section). 

(d) Increase annual dollar limits in 

multiples of 50. For a plan year 

beginning in a calendar year after 2014, 

any increase in the annual dollar limits 

described in paragraphs (a) and (b) of 

this section that do not result in a 

multiple of 50 dollars must be rounded 

to the next lowest multiple of 50 dollars. 

(e) Premium adjustment percentage. 

The premium adjustment percentage is 

the percentage (if any) by which the 

average per capita premium for health 

insurance coverage for the preceding 

calendar year exceeds such average per 

capita premium for health insurance for 

2013. HHS will publish the annual 

premium adjustment percentage in the 

annual HHS notice of benefits and 

payment parameters. 

(f) Coordination with preventive 

limits. Nothing in this subpart is in 

derogation of the requirements of 

§ 147.130 of this subchapter. 

(g) Prohibition of discriminatory cost 

sharing. The structure of cost sharing 

required under a plan must conform to 

the nondiscrimination requirements 

applicable to benefits set forth in 

§ 156.125 of this subpart. 

(h) Coverage of emergency 

department services. Emergency 

department services must be provided 

as follows: 

(1) Without imposing any requirement 

under the plan for prior authorization of 

services or any limitation on coverage 

where the provider of services is out of 

network that is more restrictive than the 

requirements or limitations that apply to 

emergency department services received 

in network; and 

(2) If such services are provided outof-network, cost-sharing must be limited 

as provided in § 147.138(b)(3) of this 

subchapter. 

§ 156.135 AV calculation for determining 

level of coverage. 

(a) Calculation of AV. Subject to 

paragraph (b) of this section, to calculate 

the AV of a health plan, the issuer must 

use the AV calculator developed and 

made available by HHS. 

(b) Exception to the use of the AV 

calculator. If a health plan’s design is 

not compatible with the AV calculator, 

the issuer must meet the following: 

(1) Submit the actuarial certification 

on the chosen methodology identified in 

paragraphs (b)(2) and (3) of this section: 

(2) Calculate the plan’s AV by: 

(i) Estimating a fit of its plan design 

into the parameters of the AV calculator; 

and 

(ii) Having an actuary, who is a 

member of the American Academy of 

Actuaries, certify that the plan design 

was fit appropriately in accordance with 

generally accepted actuarial principles 

and methodologies; or 

(3) Use the AV calculator to determine 

the AV for the plan provisions that fit 

within the calculator parameters and 

have an actuary, who is a member of the 

American Academy of Actuaries 

calculate, in accordance with generally 

accepted actuarial principles and 

methodologies, appropriate 

adjustments, to the AV identified by the 

calculator, for plan design features that 

deviate substantially from the 

parameters of the AV calculator. 

(4) The calculation methods described 

in (b)(2) or (3) of this section may 

include only in-network cost-sharing, 

including multi-tier networks. 

(c) Employer contributions to health 

savings accounts and amounts made 

available under health reimbursement 

arrangements. In plans other than those 

in the individual market that are offered 

with an HSA or HRA, annual employer 

contributions to HSAs and amounts 

newly made available under HRAs for 

the current year in the small group 

market are: 

(1) Counted towards the total 

anticipated medical spending of the 

standard population that is paid by the 

health plan; and 

(2) Adjusted to reflect the expected 

spending for health care costs in a 

benefit year so that: 

(i) Any current year HSA 

contributions are accounted for; and 

(ii) The amounts newly made 

available under an HRA for the current 

year are accounted for. 

(d) Use of state-specific standard 

population for the calculation of AV. 

Beginning in 2015, if submitted by the 

state and approved by HHS, a statespecific data set will be used as the 

standard population to calculate AV in 

accordance with paragraph (a) of this 

section. The data set may be approved 

by HHS if it is submitted in accordance 

with paragraph (e) of this section and: 

(1) Supports the calculation of AVs 

for the full range of health plans 

available in the market; 

(2) Is derived from a non-elderly 

population and estimates those likely to 

be covered by private health plans on or 

after January 1, 2014; 

(3) Is large enough that: 

(i) The demographic and spending 

patterns are stable over time; and 

(ii) Includes a substantial majority of 

the state’s insured population, subject to 

the requirement in paragraph (d)(2) of 

this section; 

(4) Is a statistically reliable and stable 

basis for area-specific calculations; and 

(5) Contains claims data on health 

care services typically offered in the 

then-current market. 

(e) Submission of state-specific data. 

AV will be calculated using the default 

standard population described in 

paragraph (f) of this section, unless a 

data set in a format specified by HHS 

that can support the use of the AV 

calculator as described in paragraph (a) 

of this section is submitted by a state 

and approved by HHS consistent with 

paragraph (d) of this section by a date 

specified by HHS. 

(f) Default standard population. The 

default standard population for AV 

calculation will be developed and 

summary statistics, such as in 

continuance tables, will be provided by 

HHS in a format that supports the 

calculation of AV as described in 

paragraph (a) of this section. 

§ 156.140 Levels of coverage. 

(a) General requirement for levels of 

coverage. AV, calculated as described in 

§ 156.135 of this subpart, and within a 

de minimis variation as defined in 

paragraph (c) of this section, determines 

whether a health plan offers a bronze, 

silver, gold, or platinum level of 

coverage. 

(b) Levels of coverage. The levels of 

coverage are: 

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52Non-grandfathered plans in the individual and 

small group markets both inside and outside of the 

Exchanges along with certain other types of plans 

must cover EHBs beginning in 2014. Self-insured 

group health plans, health insurance coverage 

offered in the large group market, and grandfathered 

health plans are not required to cover the essential 

health benefits. 

(1) A bronze health plan is a health 

plan that has an AV of 60 percent. 

(2) A silver health plan is a health 

plan that has an AV of 70 percent. 

(3) A gold health plan is a health plan 

that has an AV of 80 percent. 

(4) A platinum health plan is a health 

plan that has as an AV of 90 percent. 

(c) De minimis variation. The 

allowable variation in the AV of a health 

plan that does not result in a material 

difference in the true dollar value of the 

health plan is +/¥2 percentage points. 

§ 156.145 Determination of minimum 

value. 

(a) Acceptable methods for 

determining MV. For the purposes of 

determining that an employersponsored plan provides MV, a group 

health plan may use the following 

methods to calculate the percentage of 

the total allowed costs of benefits 

provided under the plan or coverage: 

(1) The MV calculator to be made 

available by HHS and the Internal 

Revenue Service. The result derived 

from the calculator may be modified 

under the rules in paragraph (b) of this 

section. 

(2) Any safe harbor established by 

HHS and the Internal Revenue Service. 

(3) A group health plan may seek an 

appropriate certification by an actuary 

to determine MV if neither of the 

methods described in paragraphs (a)(1) 

or (2) of this section is appropriate. The 

determination of MV must be made by 

a member of the American Academy of 

Actuaries, based on an analysis 

performed in accordance with generally 

accepted actuarial principles and 

methodologies. 

(b) Benefits that may be counted 

towards the determination of MV. (1) In 

the event that a group health plan uses 

the MV calculator and offers an EHB 

outside of the parameters of the MV 

calculator, the plan may seek an 

actuary, who is a member of the 

American Academy of Actuaries, to 

determine the value of that benefit and 

adjust the result derived from the MV 

calculator to reflect that value. 

(2) For this purpose of the options 

described in this subsection in 

determining MV, a group health plan 

will be permitted to take into account 

all benefits provided by the plan that are 

included in any of the EHB benchmarks. 

(c) Standard population. The standard 

population for MV determinations 

described in paragraph (a) of this 

section is the standard population 

developed by HHS for such use and 

described through summary statistics 

issued by HHS. The standard 

population for MV shall reflect the 

population covered by self-insured 

group health plans. 

§ 156.150 Application to stand-alone 

dental plans inside the Exchange. 

(a) Annual limitation on cost-sharing. 

A stand-alone dental plan covering the 

pediatric dental EHB under § 155.1065 

of this subchapter must demonstrate to 

the Exchange that it has a reasonable 

annual limitation on cost-sharing. Such 

annual limit is calculated without 

regard to EHBs provided by the QHP 

and without regard to out-of-network 

services. 

(b) Calculation of AV. A stand-alone 

dental plan: 

(1) May not use the AV calculator in 

§ 156.135 of this subpart; 

(2) Must demonstrate that the standalone dental plan offers the pediatric 

dental essential health benefit at either: 

(i) A low level of coverage with an AV 

of 75 percent; or 

(ii) A high level of coverage with an 

AV of 85 percent; and 

(iii) Within a de minimis variation of 

+/¥ 2 percentage points of the level of 

coverage in paragraphs (b)(2)(i) or (ii) of 

this section. 

(3) The level of coverage as defined in 

paragraph (b)(2) of this section must be 

certified by a member of the American 

Academy of Actuaries using generally 

accepted actuarial principles. 

9. In § 156.275, revise paragraphs 

(c)(1), (c)(4) introductory text, and 

(c)(4)(i) to read as follows: 

§ 156.275 Accreditation of QHP Issuers. 

* * * * * 

(c) * * * 

(1) Recognition of accrediting entity 

by HHS—(i) Application. An accrediting 

entity may apply to HHS for 

recognition. An application must 

include the documentation described in 

paragraph (c)(4) of this section and 

demonstrate, in a concise and organized 

fashion how the accrediting entity meets 

the requirements of paragraphs (c)(2) 

and (3) of this section. 

(ii) Proposed notice. Within 60 days 

of receiving a complete application as 

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

section, HHS will publish a notice in 

the Federal Register identifying the 

accrediting entity making the request, 

summarizing HHS’s analysis of whether 

the accrediting entity meets the criteria 

described in paragraphs (c)(2) and (3) of 

this section, and providing no less than 

a 30-day public comment period about 

whether HHS should recognize the 

accrediting entity. 

(iii) Final notice. After the close of the 

comment period described in paragraph 

(c)(1)(ii) of this section, HHS will notify 

the public in the Federal Register of the 

names of the accrediting entities 

recognized and those not recognized as 

accrediting entities by the Secretary of 

HHS to provide accreditation of QHPs. 

(iv) Other recognition. Effective upon 

completion of conditions listed in 

paragraphs (c)(2), (3), and (4) of this 

section, HHS will notify the public in 

the Federal Register, that the National 

Committee for Quality Assurance 

(NCQA) and URAC are recognized as 

accrediting entities by the Secretary of 

HHS to provide accreditation of QHPs 

meeting the requirements of this 

section. 

* * * * * 

(4) Documentation. An accrediting 

entity applying to be recognized under 

the process described in (c)(1) of this 

section must provide the following 

documentation: 

(i) To be recognized, an accrediting 

entity must provide current 

accreditation standards and 

requirements, processes and measure 

specifications for performance measures 

to demonstrate that it meets the 

conditions described in paragraphs 

(c)(2) and (3) of this section to HHS. 

* * * * * 

Dated: August 1, 2012. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: November 14, 2012. 

Kathleen Sebelius, 

Secretary. 

Note: The following appendices will not 

appear in the Code of Federal Regulations: 

Appendix A: List of Proposed Essential 

Health Benefits Benchmarks 

The purpose of this appendix is to list the 

proposed EHB benchmark plans for the 50 

states and the District of Columbia for public 

review and comment. As described in the 

EHB Bulletin published December 16, 2011, 

and proposed in § 156.100 of this regulation, 

each state may select a benchmark plan to 

serve as the standard for plans required to 

offer EHB in the state.52 HHS has also 

proposed that the default benchmark plan for 

states that do not exercise the option to select 

a benchmark health plan would be the largest 

plan by enrollment in the largest product in 

the state’s small group market. As described 

in proposed § 156.110, an EHB-benchmark 

plan must offer coverage in each of the 10 

statutory benefit categories. In the summary 

table that follows, we list the proposed EHB 

benchmark plans. Additional information on 

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Federal Register / Vol. 77, No. 227 / Monday, November 26, 2012 / Proposed Rules 70673 

the specific benefits, limits, and prescription 

drug categories and classes covered by the 

EHB-benchmark plans, and state-required 

benefits, is provided on the Center for 

Consumer Information and Insurance 

Oversight (CCIIO) Web site (http:// 

cciio.cms.gov/resources/data/ehb.html). 

State Plan type Issuer and plan name Supplemented 

categories 

Supplementary 

plan type 

Habilitative 

services 

Alabama ................. Largest small group 

product.

Blue Cross Blue Shield of Alabama 

PPO 320 Plan.

Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

Alaska .................... Largest small group 

product.

Premera Blue Cross Blue Shield of 

Alaska Heritage Select Envoy PPO.

Mental health and 

substance use 

disorder, including behavioral 

health treatment.

Largest FEHBP ..... Yes. 

Pediatric oral ......... FEDVIP.

Pediatric vision ...... FEDVIP.

Arizona ................... Largest state employee plan.Arizona Benefit Options EPO Plan, administered by United HealthCare.Pediatric oral ......... FEDVCP. 

Pediatric vision ...... FEDVIP ................. No. 

Arkansas ................ Plan from 3rd largest small group 

product.

HMO Partners, Inc. Open Access POS, 

13262AR001.

Mental health and 

substance use 

disorder, including behavioral 

health treatment.

2nd largest FEHBP No. 

Pediatric oral ......... CHIP.

Pediatric vision ...... FEDVIP.

California ................ Plan from largest 

small group product.

Kaiser Foundation Health Plan, Inc. 

Small Group HMO 30 ID 

40513CA035.

Pediatric oral ......... CHIP ...................... Yes. 

Colorado ................ Plan from largest 

small group product.

Kaiser Foundation Health Plan of Colorado Ded HMO 1200D.Pediatric oral ......... CHIP ...................... No. 

Connecticut ............ Largest state nonMedicaid HMO.ConnectiCare HMO ............................... Pediatric oral ......... CHIP ...................... No. 

Pediatric vision ...... FEDVIP.

Delaware ................ Plan from second 

largest small 

group product.

Highmark Blue Cross Blue Shield Delaware Simply Blue EPO 100 500.Pediatric oral ......... FEDVIP ................. No. 

Pediatric vision ...... FEDVIP.

District of Columbia Plan from largest 

small group product.

Group Hospitalization and Medical 

Services, Inc. BluePreferred PPO.

Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

Florida .................... Plan from largest 

small group product.

Blue Cross Blue Shield of Florida, Inc. 

BlueOptions PPO.

Pediatric oral ......... FEDVIP ................. No. 

Pediatric vision ...... FEDVIP.

Georgia .................. Plan from largest 

small group product.

Blue Cross Blue Shield of Georgia 

HMO Urgent Care 60 Copay.

Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

Hawaii .................... Plan from largest 

small group product.

Hawaii Medical Service Association 

Preferred Provider Plan 2010.

Pediatric oral ......... CHIP ...................... No. 

Pediatric vision ...... FEDVIP.

Idaho ...................... Plan from largest 

small group product.

Blue Cross of Idaho Health Service, 

Inc. Preferred Blue PPO.

Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

Illinois ..................... Plan from largest 

small group product.

Blue Cross and Blue Shield of Illinois 

BlueAdvantage PPO.

Pediatric oral ......... CHIP ...................... No. 

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70674 Federal Register / Vol. 77, No. 227 / Monday, November 26, 2012 / Proposed Rules 

State Plan type Issuer and plan name Supplemented 

categories 

Supplementary 

plan type 

Habilitative 

services 

Pediatric vision ...... FEDVIP.

Indiana ................... Plan from largest 

small group product.

Anthem Blue Cross and Blue Shield of 

Indiana Blue 5 Blue Access PPO 

Medical Option 6 Rx Option G.

Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

Iowa ....................... Plan from largest 

small group product.

Wellmark Inc. Alliance Select Copayment Plus PPO.Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

Kansas ................... Plan from largest 

small group product.

Blue Cross and Blue Shield of Kansas 

Comprehensive Major Medical Blue 

Choice PPO GF 500 deductible with 

Blue Rx card.

Pediatric oral ......... FEDVIP ................. No. 

Pediatric vision ...... FEDVIP.

Kentucky ................ Plan from largest 

small group product.

Anthem Health Plans of Kentucky, Inc. 

PPO.

Pediatric oral ......... CHIP ...................... Yes. 

Louisiana ................ Plan from largest 

small group product.

Blue Cross and Blue Shield of Louisiana GroupCare PPO.Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

Maine ..................... Plan from largest 

small group product.

Anthem Health Plans of Maine Blue 

Choice 20 PPO with RX 10 30 50 50.

Pediatric oral ......... FEDVIP ................. Yes. 

Maryland ................ Largest state employee plan.CareFirst of Maryland, Inc. State of 

Maryland PPO.

Pediatric oral ......... CHIP ...................... Yes. 

Pediatric vision ...... FEDVIP.

Massachusetts ....... Plan from largest 

small group product.

Blue Cross Blue Shield of Massachusetts, Inc. HMO Blue 2000 Deductible.Pediatric oral ......... CHIP ...................... Yes. 

Michigan ................. Largest state nonMedicaid HMO.Priority Health PriorityHMO 100 Percent Hospital Services Plan.Pediatric oral ......... CHIP ...................... No. 

Pediatric vision ...... FEDVIP.

Minnesota .............. Plan from largest 

small group product.

HealthPartners 500 25 Open Access 

PPO.

Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

Mississippi .............. Plan from largest 

small group product.

Blue Cross and Blue Shield of Mississippi Network Blue PPO.Pediatric oral ......... CHIP ...................... Yes. 

Pediatric vision ...... FEDVIP.

Missouri .................. Plan from largest 

small group product.

Healthy Alliance Life Insurance Co. 

(Anthem BCBS) Blue 5 Blue Access 

PPO Medical Option 4 Rx Option D.

Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

Montana ................. Plan from largest 

small group product.

Blue Cross and Blue Shield of Montana 

Blue Dimensions PPO.

Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

Nebraska ................ Plan from largest 

small group product.

Blue Cross and Blue Shield of Nebraska BluePride PPO.Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

Nevada ................... Plan from largest 

small group product.

Rocky Mountain Hospital & Medical 

Service, Inc. (Anthem BCBS) GenRx 

PPO 45 Copay.

Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

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State Plan type Issuer and plan name Supplemented 

categories 

Supplementary 

plan type 

Habilitative 

services 

New Hampshire ..... Plan from largest 

small group product.

Matthew Thornton Health Plan (Anthem 

BCBS) HMO Blue New England 25 

50 WITH Rx 10 35 30 OOP 2500.

Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

New Jersey ............ Plan from largest 

small group product.

Horizon HMO Access HSA Compatible Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

New Mexico ........... Plan from largest 

small group product.

Lovelace Insurance Company Classic 

PPO.

Pediatric oral ......... CHIP ...................... Yes. 

New York ............... Plan from largest 

small group product.

Oxford Health Insurance, Inc. Oxford 

EPO.

Pediatric oral ......... CHIP ...................... Yes. 

North Carolina ........ Plan from largest 

small group product.

Blue Cross and Blue Shield of North 

Carolina Blue Options PPO.

Pediatric oral ......... FEDVIP ................. No. 

Pediatric vision ...... FEDVIP.

North Dakota .......... Largest state nonMedicaid HMO.Sanford Health Plan HMO .................... Pediatric oral ......... CHIP ...................... No. 

Pediatric vision ...... CHIP.

Ohio ....................... Plan from largest 

small group product.

Community Insurance Company (Anthem BCBS) Blue 6 Blue Access 

PPO Medical Option D4 Rx Option G.

Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

Oklahoma ............... Plan from largest 

small group product.

Blue Cross and Blue Shield of Oklahoma BlueOptions PPO RYB05.Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

Oregon ................... Plan from 3rd largest small group 

product.

PacificSource Health Plans PPO Preferred CoDeduct Value 3000 35 70.Pediatric oral ......... CHIP ...................... No. 

Pediatric vision ...... FEDVIP.

Pennsylvania .......... Plan from largest 

small group product.

Aetna Health, Inc. PA POS Cost Sharing 34 1500 Ded.Pediatric oral ......... FEDVIP ................. No. 

Rhode Island .......... Plan from largest 

small group product.

Blue Cross and Blue Shield of Rhode 

Island Vantage Blue PPO.

Pediatric oral ......... FEDVIP ................. No. 

Pediatric vision ...... FEDVIP.

South Carolina ....... Plan from largest 

small group product.

Blue Cross Blue Shield of South Carolina Business Blue Complete PPO.Pediatric oral ......... FEDVIP ................. No. 

Pediatric vision ...... FEDVIP.

South Dakota ......... Plan from largest 

small group product.

Wellmark of South Dakota Blue Select 

PPO.

Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

Tennessee ............. Plan from largest 

small group product.

Blue Cross Blue Shield of Tennessee 

PPO.

Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

Texas ..................... Plan from largest 

small group product.

Blue Cross Blue Shield of Texas 

BestChoice PPO RS26.

Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

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State Plan type Issuer and plan name Supplemented 

categories 

Supplementary 

plan type 

Habilitative 

services 

Utah ....................... Plan from 3rd largest state employee plan.Public Employee’s Health Program 

Utah Basic Plus.

None ...................... None ...................... Yes. 

Vermont ................. Plan from largest 

small group product.

The Vermont Health Plan, LLC, 

CDHP–HMO.

Pediatric oral ......... CHIP ...................... No. 

Pediatric vision ...... FEDVIP.

Virginia ................... Plan from largest 

small group product.

Anthem Health Plans of VA PPO 

KeyCare 30 with KC30 Rx plan 10 

30 50 OR 20.

Pediatric oral ......... FEDVIP ................. Yes. 

Pediatric vision ...... FEDVIP.

Washington ............ Plan from largest 

small group product.

Regence BlueShield non-grandfathered 

small group product.

Pediatric oral ......... CHIP ...................... Yes. 

Pediatric vision ...... FEDVIP.

West Virginia .......... Plan from largest 

small group product.

Highmark Blue Cross Blue Shield West 

Virginia Super Blue PPO Plus 2000 

1000 Ded.

Pediatric oral ......... FEDVIP ................. No. 

Pediatric vision ...... FEDVIP.

Wisconsin ............... Plan from largest 

small group product.

UnitedHealthcare Insurance Company 

Choice Plus Definity HSA Plan 

A92NS.

Pediatric oral ......... FEDVIP ................. No. 

Pediatric vision ...... FEDVIP.

Wyoming ................ Plan from largest 

small group product.

Blue Cross Blue Shield of Wyoming 

Blue Choice Business 1000 80 20.

Pediatric oral ......... FEDVIP ................. No. 

Pediatric vision ...... FEDVIP.

Note: If the base-benchmark plan does not include habilitative services, then states have the opportunity to define those benefits. 

Appendix B: Largest FEDVIP Dental 

and Vision Plan Options, as of March 

31, 2012 

Section 156.110(b)(2)–(3) directs States to 

supplement base-benchmark plans that lack 

pediatric oral or vision services with benefits 

drawn from either the Federal Employees 

Dental and Vision Program (FEDVIP) or a 

state’s separate CHIP program. Specifically, 

states may select benefits from either: (1) The 

FEDVIP dental or vision plans with the 

largest national enrollments, or (2) the state’s 

separate CHIP program’s dental or vision 

benefits, where they exist, which offer 

benefits to the eligibility group with the 

highest enrollment. To assist states with this 

process, we collected information about the 

benefits provided in the FEDVIP dental and 

vision plans with the highest national 

enrollments, as issued by MetLife and FED 

Blue, respectively. Below, we provide a chart 

with a summary of the benefits offered by 

these plans. 

LARGEST FEDVIP DENTAL AND VISION PLAN OPTIONS, AS OF MARCH 31, 2012 * 

Issuer name Plan name Additional information 

MetLife (dental) MetLife Federal Dental Plan—High 2012 Plan Benefit Brochure: http://www.opm.gov/insure/health/

planinfo/2012/brochures/MetLife.pdf. 

BCBS Association (vision) FEP BlueVision—High ................... 2012 Plan Benefit Brochure: http://www.opm.gov/insure/health/

planinfo/2012/brochures/FEPBlueVi.pdf. 

Source: U.S. Office of Personnel Management. 

* Please note that this information will be updated with the latest data when released. 

[FR Doc. 2012–28362 Filed 11–20–12; 11:15 am] 

BILLING CODE 4120–01–P 

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