DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services [CMS-9980-NC] Request for Information Regarding State Flexib ility to Establish a Basic Health Program

Under the Affordable Care Act AGENCY: Centers for Medicare & Me dicaid Services (CMS), HHS. ACTION: Request for Information. SUMMARY: This notice is a request for informati on regarding section 1331 of the Affordable Care Act, which provides States with the opti on to establish a Basic Health Program. This option permits States to enter into contracts to offer one or more “standard health plans” providing at least the essential he alth benefits described in se ction 1302(b) of the Affordable Care Act to eligible individua ls in lieu of offering such individuals coverage through the Affordable Insurance Exchange (Exchange). DATES: Comment Date : To be assured consideration, respon ses must be received at one of the addresses provided below, no later than 5 p.m. on [ OFR--insert date 45 da ys after date of publication in the Federal Register]

. ADDRESSES: In responding, please refer to file c ode CMS-9980-NC. Because of staff and resource limitations, we ca nnot accept comments by facsimile (FAX) transmission. You may submit responses 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 instructions under the "More Search Options" tab. 2. By regular mail . You may mail written comments to the following address ONLY:CMS-9980-NC 2

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-9980-NC, P.O. Box 8016, Baltimore, MD 21244-8016.

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-NC, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850. 4. By hand or courier . If you prefer, you may deliver ( by hand or courier) your written comments before the close of the comment peri od to either of the following addresses: 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, S.W., Washington, DC 20201.CMS-9980-NC 3

(Because access to the interior of the Hube rt 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 stampin clock is available for persons wishing to reta in a proof of filing by st amping 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, please call telephone number (410) 786-9994 in advance to schedule your arrival with one of our staff members.

Comments 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: Shaina Rood, (301) 492-4422. SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, includi ng any personally identif iable 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 si te as soon as possible after they have beenCMS-9980-NC 4

received: http://www.regulations.gov . Follow the search instructions on that Web site to view public comments. Comments received timely will also be av ailable for public inspection as they are received, generally beginning approximately 3 w eeks 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. I. Background Section 1331(a) of the Patient Protection and Affordable Care Act (Pub. L. 111-148), as amended by the Health Care and Educati on Reconciliation Act of 2010 (Pub. L. 111-152), referred to collectively as the Affordable Care Act, directs the Secretary of Health and Human Services (the Secretary) to es tablish a Basic Health Program unde r which States may enter into contracts with one or more standard health pl ans that provide health coverage to eligible individuals in lieu of offering such individuals coverage thro ugh the Exchange. For States choosing this option, section 1331(a)(2) of the Affo rdable Care Act provides that the Secretary certify that the amount of the monthly premium char ged to eligible individu als enrolled in a plan under contract under this program, called a standard health plan does not exceed the amount of the monthly premium that an eligib le individual would have paid if he or she were to receive coverage from the applicable benchmark plans (as defined in section 36B(b)(3)(B) of the Internal Revenue Code of 1986) through the Exchange. This section also directs the Secretary to certify that cost-sharing does not exceed the standards specified in section 1331 (a)(2)(A)(ii) of the

Affordable Care Act.CMS-9980-NC 5

Section 1331(b) of the Affordable Care Act de fines a standard health plan as one selected by the State that: (1) only enrolls applicants wh o are determined eligible using the eligibility standards specified in se ction 1331(e) of the Afford able Care Act; (2) covers at least the essential health benefits described in section 1302(b) of the Affordable Care Act; and (3) in the case of a plan that provides health insurance coverage o ffered by a health insurance issuer, has a medical loss ratio of at least 85 percent. Section 1331(c) of the Affordable Care Act specifies that a Basic Health Program will establish a competitive process for entering into contracts with standard health plans, including negotiation of premiums, cost-shari ng, and benefits in addition to the essential health benefits. The statute provides that the State include in its competitive process the inclusion of innovative

features such as care coordinati on and care management for enroll ees, incentives for the use of preventive services, and the establishment of re lationships between providers and patients that maximize patient involvement in health care decision-making. The contracting process shall also take into consideration, and make suitable a llowances for, the differences in the health care

needs of enrollees and the differences in lo cal availability of, and access to, health care providers. Section 1331(c)(2) of the Affordable Care Act provides that the competitive process shall also include contracting with ma naged care systems, or with syst ems that offer as many of the attributes of managed care as are feasible in the local health care market. The competitive contracting process shall also include the esta blishment of specific performance measures and standards for issuers that focus on quality of care and improved health outcomes. Section 1331(c)(3) provides that a State shall, to the ma ximum extent feasible, seek to make multiple standard health plans available to ensure individual have a choice of such plans. It also providesCMS-9980-NC 6

that a State may negotiate a regional compact with other States to include coverage of eligible individuals in all such States in agreements with issuers of sta ndard health plans. Section 1331(c)(4) of the Affo rdable Care Act directs a St ate choosing to establish a Basic Health Program to coordinate the administ ration of a Basic Health Program with Medicaid, the Children’s Health Insurance Program (CHIP), and other State-administered health programs. Section 1331(d)(1) of the Affordable Care Ac t allows the Secretary to transfer Federal

funds to a State that establishe s a Basic Health Program in accord ance with the standards of the program under section 1331(a). Section 1331(d)(2) of the Affordable Care Act directs that a State establish a trust fund for the deposit of the Federal funds it receives for its Basic Health Program, and specifies that the amounts in the trust may only be used to reduce the premiums and cost-sharing of, or to provide additional benefits for, eligible individuals enrolled in standard health plans within a Basic Health Program. Section 1331(d)(3) of the Affordable Care Act specifies that a State that operates a Basic Health Program will receive 95 percent of the amount of premium tax credits, and the costsharing reductions, that would have been provided to (or on behalf of) eligible individuals enrolled in standard health plan s through a Basic Health Program, if the eligible individuals were instead enrolled in qualified health plans ( QHP) through the Exchange and receiving premium tax credits and cost-sharing reductions. To determ ine the amount of payment, the Secretary shall

take into account all relevant f actors necessary to determine the amount that would have been provided to eligible individuals as specified in 1331(d)(3), in cluding, but not limited to, whether any reconciliation of the credit or cost-sharing reductions woul d have occurred if the enrollee

had been so enrolled.CMS-9980-NC 7

Section 1331(d)(3) also provide s that the determination shall also take into consideration the experience of other States with respect to participation in an Exchange and such credits and reductions provided to residents of the other St ates, with a special focus on enrollees with income below 200 percent of poverty. Additionall y, the Secretary shall adjust the amount of payment for any fiscal year to reflect any erro r in the determinations for any preceding fiscal

year. Section 1331(e) of the Affordable Care Act specifies eligibility standards for a Basic Health Program. To be determined eligible fo r a Basic Health Program, an individual must: (1) be a resident of a State particip ating in a Basic Health Program; (2) be eligible for en rollment in a QHP through the Exch ange but for the existence of a Basic Health Program; (3) not be eligible to enroll in the State’s Me dicaid program under title XIX of the Social Security Act (the Act), for benef its that at a minimum consist of the essential health benefits described in section 1302(b) of the Act; (4) have a household income that exceeds 133 percent but does not exceed 200 percent of the Federal poverty level (FPL), or, for a non-citi zen lawfully present wh o is not eligible for Medicaid based on immigration status, a household in come that is not greate r than 133 percent of the FPL; (5) not be eligible for minimum essential coverage or is eligible for an employersponsored plan that is not affordable coverage; and (6) not have attained age 65 as of the beginning of the plan year. Section 1331(f) of the Affordable Care Ac t directs the Secretary to conduct an annual review of each State Basic Health Program to ensure that it complies with the standards ofCMS-9980-NC 8

section 1331. Through this annual re view, the State will provide information to demonstrate that its Basic Health Program meets: (1) eligibilit y verification standards fo r participation in the program; (2) standards for the use of Federal fund s received by the program; and (3) quality and performance standards. As specified in section 1331(g) of the Affordable Care Act, a standard health plan offeror may be a licensed health mainte nance organization, a licensed hea lth insurance insurer, or a network of health care providers established to offer services under the program; the statute provides authority for the State to determine eligibility to o ffer a standard health plan. II. Request for Information Section 1321(a)(2) of the Affo rdable Care Act directs the Secretary to consult with stakeholders to ensure balanced representation am ong interested parties in issuing regulations to implement programs pursuant to title I. The De partment of Health and Human Services has

consulted with stakeholders thr ough regular meetings with the Na tional Association of Insurance Commissioners, regular contact w ith States through the Exchange grant process, and meetings with tribal representatives, health insurance issuers, tr ade groups, consumer advocates, employers, and other interested parties. Th is consultation will continue throughout the development of guidance and regulations re lated to the Basic Health Program. As such, we are requesting information to ai d in the development of standards for the establishment and operation of a Ba sic Health Program. To assist in responding, this request for information describes the specific areas where input is part icularly requested. Specifically, we ask for responses to the quest ions below to provide the Secretary with relevant information for the development of guida nce and regulations regarding the Basic Health Program. However, it is not necessary for re spondents to address every question below andCMS-9980-NC 9

respondents may also address additi onal issues about the Basic Hea lth Program that are not listed here. Individuals, groups, and orga nizations interested in providi ng responses may do so at their discretion by following the above mentioned instructions.

A. General Provisions 1. What are some of the major factors that St ates are likely to consider in determining

whether to establish a Basic H ealth Program? Are there additi onal flexibilities, advantages, costs, savings or challenges for the State and/or consumer that would make this option more or less attractive to States? If so, what are they? 2. What are key considerations for States in placing responsibility for a Basic Health Program within the State organizational structure? 3. What are the challenges and costs associat ed with managing a Basic Health Program? 4. Are States that are expl oring the Basic Health Program considering implementation for 2014, or for later years? What are the key tasks that need to be accomplished, and within what timeframes, to implement the Basic Health Program in a timely fashion? What kinds of business functions will need to be operationa l before implementation, and how soon will they need to be operational? Are there opportuni ties to leverage existing systems and increase efficiency within the State stru cture? To what extent have States begun developing business plans or budgets relating to Basic Health Program implementation?

5. To what extent have Stat es already begun to assess whethe r to establish a Basic Health Program? What internal and/or external entities are involved, or will likely be involved in this planning process? 6. What guidance or information would be helpful to States, plans, and other stakeholders as they begin the planning process? What other terms or provisions need additionalCMS-9980-NC 10

clarification to facilitate implementation and comp liance? What specific clarifications would be helpful? 7. How can the Administration provide technical assistance? What form(s) of technical assistance would be most helpful to States?

B. Standard Health Plan Standard s and Standard Health Plan Offerors 1. What additional standards, if any, should standard health plan s participating in a State’s Basic Health Program meet? What c onsumer protections shoul d be included? How should quality and performance be measured? 2. What plan design issues s hould be considered? How likely is it for a State to consider an expanded benefit package beyond the essential health benefits for standard health plans participating in a State’s Basic Health Program? What are the advantages and disadvantages of an expanded benefit package for standard health plans compared to qualified health plans? 3. What is the expected impact of sta ndard health plans on provider payments and

consumer access? C. Contracting Process

1. What innovative features should States consider when negotiating through the contracting process with standard health plans to participate in a Basic Health Program? 2. What considerations exist in determining whether to utilize the regional compact authority in Section 1331(c)(3)(B) of the Affordable Care Act? Are States interested in pursuing this approach? D. Coordination with Other State ProgramsCMS-9980-NC 11

1. What is the expected impact of a Basic Health Program on the Exchange’s purchasing power and viability? How might States organi ze a Basic Health Program with respect to purchasing structure? 2. What is the expected impact of a Basic Health Program on plans participating in the Exchange in terms of risk profile, enrollment, and premium stability? What is the expected impact on overall coverage? 3. What are some of the major factors that St ates are likely to consider in determining how to structure their Basic Health Program? Ar e States likely to structure the Basic Health Program as one component of its other public prog rams? Are States likely to consider a CHIPlike approach or other options? What are th e pros and cons of these various options? 4. How can eligibility and enrollment be effectively coordinated between the Basic Health Program and other State programs to reduce churning between programs and promote continuity of care? 5. How could establishing a Basic Health Program affect the ability of an entire family to be covered by the same plan? 6. Are standard health plans likely to also pa rticipate in other coverage programs, such as the Exchanges, Medicaid, or CHIP? Should this be encouraged, and if so, how could CMS and States encourage it? E. Amount of Payment 1. The statute specifies that amounts in th e trust fund may only be used to reduce the premiums and cost-sharing of, or to provide additional benefits for, eligible individuals enrolled in standard health plans within a Basic Health Program. What opt ions are States considering forCMS-9980-NC 12

reducing premiums and cost-shari ng, or providing additi onal benefits? What, if any, guidance is needed on this provision? 2. What are the likely administrative costs for a Basic Health Program? What factors, especially in terms of resources, are likely to affect a State’s ability to establish a Basic Health Program? How are States likely to fund the costs associated with establishing and administering a Basic Health Program? 3. The statute specifies that in developing the financial methodology for the Basic Health Program, the determination of the value of the premium tax credits and cost-sharing reductions

should take into consideration th e experience of other States. What information would be most helpful to inform this methodology? Should im plementation of the Basic Health Program be postponed until other States’ experiences are available? 4. Other than those listed in the statute, what factors should be considered when establishing the methodology for determining the amount of Basic Health Program funding to States? How should the Federal government implement this calculation? 5. The statute specifies that the funding cal culation is on a per-enrollee basis. How should the Federal government acquire the detail ed information necessary to perform this

calculation? 6. What are the best State-specific data sources to use in estimating the availability of affordable employer-sponsored insurance?

7. What methods should be considered to measure and monitor compliance with the 95 percent cap on funding? How should CMS implem ent the provisions in Section 1331(d)(3)(B) of the Affordable Care Act regarding corre ctions to overpayments made in any year? F. EligibilityCMS-9980-NC 13

1. What education and outreach will be n ecessary to facilitate a helpful consumer experience? G. Secretarial Oversight 1. What process should the Secretary use to ce rtify or recertify Basic Health Programs? How should this process be similar to or different from Exchange certification? 2. What should be considered when developi ng an oversight process for the Basic Health Program?CMS-9980-NC

Authority: (Catalog of Federal Domestic Assistan ce Program No. 93.773, Medicare--Hospital Insurance; and Program No. 93.774, Medicare--S upplementary Medical Insurance Program)

Dated: July 27, 2011

_______________________________ Donald M. Berwick, M.D. Administrator,

Centers for Medicare & Medicaid Services.

BILLING CODE 4120-01-P

[FR Doc. 2011-23388 Filed 09/09/2011 at 11: 15 am; Publication Date: 09/14/2011]