82510 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

DEPARTMENT OF THE TREASURY 

31 CFR Part 33 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 435 and 600 

Office of the Secretary 

45 CFR Parts 153, 155, and 156 

[CMS–9895–P] 

RIN 0938–AV22 

Patient Protection and Affordable Care 

Act, HHS Notice of Benefit and 

Payment Parameters for 2025; 

Updating Section 1332 Waiver Public 

Notice Procedures; Medicaid; 

Consumer Operated and Oriented Plan 

(CO–OP) Program; and Basic Health 

Program 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), Department 

of Health and Human Services (HHS); 

Department of the Treasury. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule includes 

payment parameters and provisions 

related to the HHS-operated risk 

adjustment program, as well as 2025 

user fee rates for issuers offering 

qualified health plans (QHPs) through 

Federally-facilitated Exchanges (FFEs) 

and State-based Exchanges on the 

Federal platform (SBE–FPs). This 

proposed rule also includes proposed 

requirements related to the auto reenrollment hierarchy; essential health 

benefits; failure to file and reconcile; 

non-standardized plan option limits and 

an exceptions process; standardized 

plan options; special enrollment periods 

(SEPs); direct enrollment (DE) entities; 

Insurance Affordability Program 

enrollment eligibility verification 

process; requirements for agents, 

brokers, web-brokers, and DE entities 

assisting Exchange consumers; network 

adequacy; public notice procedures for 

section 1332 waivers; prescription drug 

benefits; updates to the Consumer 

Operated and Oriented Plan (CO–OP) 

Program; State flexibility on the 

financial methodology used for 

Medicaid eligibility determinations for 

non-modified adjusted gross income 

(MAGI) populations; and State 

flexibility on the effective date of 

coverage in the Basic Health Program 

(BHP). A summary of this proposed rule 

may be found at https://

www.regulations.gov/. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, by 

January 8, 2024. 

ADDRESSES: In commenting, please refer 

to file code CMS–9895–P. 

Comments, including mass comment 

submissions, must be submitted in one 

of the following three 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–9895–P, 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–9895–P, Mail 

Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Jeff Wu, (301) 492–4305, Rogelyn 

McLean, (301) 492–4229, Grace Bristol, 

(410) 786–8437, for general information. 

Joshua Paul, (301) 492–4347, Jackie 

Wilson, (301) 492–4286, or John 

Barfield, (301) 492–4433, for matters 

related to HHS-operated risk 

adjustment. 

John Barfield, (301) 492–4433, or 

Leanne Scott, (410) 786–1045, for 

matters related to user fees. 

Brian Gubin, (410) 786–1659, for 

matters related to agent, broker, and 

web-broker guidelines. 

Marisa Beatley, (301) 492–4307, for 

matters related to the verification 

process related to eligibility for 

insurance affordability programs and 

current sources of income. 

Carolyn Kraemer, (301) 492–4197, for 

matters related to auto re-enrollment in 

the Exchanges. 

Nicholas Eckart, (301) 492–4452, for 

matters related to enrollment of 

qualified individuals into QHPs and 

termination of Exchange enrollment or 

coverage for qualified individuals. 

Hollynd Boyden, (667) 414–0105, for 

matters related to the monthly 150 

percent Federal poverty level special 

enrollment period. 

Alexandra Gribbin, (667) 290–9977, 

for matters related to dental coverage. 

Nikolas Berkobien, (667) 290–9903, 

for matters related to standardized plan 

options and non-standardized plan 

option limits. 

LeAnn Brodhead, (667) 290–8805, for 

matters related to the essential health 

benefits prescription drug benefit. 

Carolyn Sabini, (667) 290–9750, for 

matters related to the essential health 

benefits benchmark plan policy. 

Agata Pelka, (667) 290–9979, for 

matters related to mandates in addition 

to the essential health benefits. 

Emily Martin, (301) 492–4423, or 

Deborah Hunter, (443) 386–3651, for 

matters related to network adequacy and 

ECPs. 

Shilpa Gogna, (301) 492–4257, or 

Jenny Chen, (301) 492–5156, for matters 

related to approval of a State Exchange 

and State Exchange Blueprint 

requirements. 

Lina Rashid, (443) 902–2823, or 

Kimberly Koch (202) 381–6934, for 

matters related to section 1332 waivers. 

Jacquelyn Rudich, (301) 492–5211, for 

matters related to netting of payments. 

Kevin Kendrick, (301) 509–6612, for 

matters related to the CO–OP program. 

Carrie Grubert, (410) 786–8319, for 

matters related to the Basic Health 

Program (BHP) provision. 

Gene Coffey, (410) 786–2234, for 

matters related to Medicaid eligibility. 

Arshdeep Dhanoa, (301) 492–4400, for 

matters related to incarceration 

verification for QHP eligibility and 

periodic data matching for dual and 

deceased enrollees. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Executive Summary 

II. Background 

A. Legislative and Regulatory Overview 

B. Summary of Major Provisions 

III. Provisions of the Proposed Regulations 

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

Section 1332 Waivers 

B. 42 CFR Parts 435 and 600—Medicaid 

Eligibility for the States, District of 

Columbia, the Northern Mariana Islands 

and American Samoa, and 

Administrative Practice and Procedure, 

Health Care, Health insurance, 

Intergovernmental Relations, Penalties, 

Reporting and Recordkeeping 

Requirements. 

C. 45 CFR Part 153—Standards Related to 

Reinsurance, Risk Corridors, and HHS 

Risk Adjustment 

D. 45 CFR Part 155—Exchange 

Establishment Standards and Other 

Related Standards Under the Affordable 

Care Act 

E. 45 CFR Part 156—Health Insurance 

Issuer Standards Under the Affordable 

Care Act, Including Standards Related to 

Exchanges 


ddrumheller on DSK120RN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82511 

1The Patient Protection and Affordable Care Act 

(Pub. L. 111–148) was enacted on March 23, 2010. 

The Health Care and Education Reconciliation Act 

of 2010 (Pub. L. 111–152), which amended and 

revised several provisions of the Patient Protection 

and Affordable Care Act, was enacted on March 30, 

2010. In this rulemaking, the two statutes are 

referred to collectively as the ‘‘Patient Protection 

and Affordable Care Act,’’ ‘‘Affordable Care Act,’’ 

or ‘‘ACA.’’ 

2See sections 1311, 1312, 1313, 1321, 1332, and 

1343 of the ACA and section 2792 of the PHS Act. 

IV. Collection of Information Requirements 

A. Wage Estimates 

B. ICRs Regarding Proposed Amendments 

to Normal Public Notice Requirements 

(31 CFR 33.112, 31 CFR 33.120 and 45 

CFR Part 155.1312, and 45 CFR 

155.1320) 

C. ICRs Regarding Basic Health Program 

Regulations (42 CFR 600.320) 

D. ICRs Regarding Election To Operate an 

Exchange After 2014 (45 CFR 155.106) 

E. ICRs Regarding Adding and Amending 

Language To Ensure Web-Brokers 

Operating in State Exchanges Meet 

Certain Requirements Applicable in the 

FFEs and SBE–FPs (45 CFR 155.220) 

F. ICRs Regarding Establishing 

Requirements for DE Entities Mandating 

HealthCare.gov Changes To Be Reflected 

on DE Entity Non-Exchange Websites 

Within a Notice Period Set by HHS (45 

CFR 155.221(b)(6)) 

G. ICRs Regarding Adding and Amending 

Language To Ensure DE Entities 

Operating in State Exchanges Meet 

Certain Standards Applicable in the 

FFEs and SBE–FPs (45 CFR 155.221) 

H. ICRs Regarding Failure To File and 

Reconcile Process (45 CFR 155.305(f)(4)) 

I. ICRs Regarding Verification Process 

Related to Eligibility for Enrollment in a 

QHP Through the Exchange (45 CFR 

155.315(e)) 

K. ICRs Regarding Eligibility 

Redetermination During a Benefit Year 

(45 CFR 155.330(d)) 

L. ICRs Regarding Establishment of 

Exchange Network Adequacy Standards 

(45 CFR 155.1050) 

M. ICRs Regarding the State Selection of 

EHB-Benchmark Plans for Plan Years 

Beginning on or After January 1, 2027 

(45 CFR 156.111) 

N. ICRs Regarding Non-Standardized Plan 

Option Limits (45 CFR 156.202) 

O. Summary of Annual Burden Estimates 

for Proposed Requirements 

P. Submission of PRA-Related Comments 

V. Response to Comments 

VI. Regulatory Impact Analysis 

A. Statement of Need 

B. Overall Impact 

C. Impact Estimates of the Payment Notice 

Provisions and Accounting Table 

D. Regulatory Alternatives Considered 

E. Regulatory Flexibility Act (RFA) 

F. Unfunded Mandates Reform Act 

(UMRA) 

G. Federalism 

I. Executive Summary 

We propose changes to the provisions 

and parameters implemented through 

prior rulemaking to implement the 

Patient Protection and Affordable Care 

Act (ACA).1 These proposals are 

published under the authority granted 

to the Secretary by the ACA and the 

Public Health Service (PHS) Act.2 In 

this proposed rule, we propose changes 

related to some of the ACA provisions 

and parameters we previously 

implemented and propose to implement 

new provisions. We also propose a 

change to Medicaid financial eligibility 

provisions to provide States with greater 

flexibility to extend Medicaid eligibility 

to specific populations based on the 

State’s circumstances. Our goal with 

these proposals is providing quality, 

affordable coverage to consumers while 

minimizing administrative burden and 

ensuring program integrity. The changes 

proposed in this rule are also intended 

to help advance health equity and 

mitigate health disparities. 

II. Background 

A. Legislative and Regulatory Overview 

Title I of the Health Insurance 

Portability and Accountability Act of 

1996 (HIPAA) added a new title XXVII 

to the Public Health Service Act (PHS 

Act) to establish various reforms to the 

group and individual health insurance 

markets. 

These provisions of the PHS Act were 

later augmented by other laws, 

including the ACA. 

Subtitles A and C of title I of the ACA 

reorganized, amended, and added to the 

provisions of part A of title XXVII of the 

PHS Act relating to group health plans 

and health insurance issuers in the 

group and individual markets. The term 

‘‘group health plan’’ includes both 

insured and self-insured group health 

plans. 

Section 2702 of the PHS Act, as added 

by the ACA, establishes requirements 

for guaranteed availability of coverage 

in the group and individual markets. 

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

directs all issuers of qualified health 

plans (QHPs) to cover the essential 

health benefit (EHB) package described 

in section 1302(a) of the ACA, including 

coverage of the services described in 

section 1302(b) of the ACA, adherence 

to the cost-sharing limits described in 

section 1302(c) of the ACA, and meeting 

the Actuarial Value (AV) levels 

established in section 1302(d) of the 

ACA. Section 2707(a) of the PHS Act, 

which is effective for plan or policy 

years beginning on or after January 1, 

2014, extends the requirement to cover 

the EHB package to non-grandfathered 

individual and small group health 

insurance coverage, irrespective of 

whether such coverage is offered 

through an Exchange. In addition, 

section 2707(b) of the PHS Act directs 

non-grandfathered group health plans to 

ensure that cost sharing under the plan 

does not exceed the limitations 

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

ACA. 

Section 1302 of the ACA provides for 

the establishment of an EHB package 

that includes coverage of EHBs (as 

defined by the Secretary of HHS), costsharing limits, and AV requirements. 

The law directs that EHBs be equal in 

scope to the benefits provided under a 

typical employer plan, and that they 

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. Section 1302(d) of the ACA 

describes the various levels of coverage 

based on AV. Consistent with section 

1302(d)(2)(A) of the ACA, AV is 

calculated based on the provision of 

EHB to a standard population. Section 

1302(d)(3) of the ACA directs the 

Secretary of HHS to develop guidelines 

that allow for de minimis variation in 

AV calculations. Sections 1302(b)(4)(A) 

through (D) of the ACA 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 EHBs based on age, 

life expectancy, disability, degree of 

medical dependency, or quality of life. 

Section 1311(c) of the ACA provides 

the Secretary the authority to issue 

regulations to establish criteria for the 

certification of QHPs. Section 

1311(c)(1)(B) of the ACA requires, 

among the criteria for certification that 

the Secretary must establish by 

regulation, that QHPs ensure a sufficient 

choice of providers. Section 1311(e)(1) 

of the ACA grants the Exchange the 

authority to certify a health plan as a 

QHP if the health plan meets the 

Secretary’s requirements for 

certification issued under section 

1311(c) of the ACA, and the Exchange 

determines that making the plan 

available through the Exchange is in the 

interests of qualified individuals and 

qualified employers in the State. Section 

1311(c)(6)(C) of the ACA directs the 

Secretary of HHS to require an Exchange 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82512 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

3 In the 2014 through 2016 benefit years, HHS 

operated the risk adjustment program in every State 

and the District of Columbia, except Massachusetts. 

Beginning with the 2017 benefit year, HHS has 

operated the risk adjustment program in all 50 

States and the District of Columbia. 

to provide for special enrollment 

periods and section 1311(c)(6)(D) of the 

ACA directs the Secretary of HHS to 

require an Exchange to provide for a 

monthly enrollment period for Indians, 

as defined by section 4 of the Indian 

Health Care Improvement Act. 

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

permits a State, at its option, to require 

QHPs to cover benefits in addition to 

EHB. This section also requires a 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 State-required 

benefits. 

Section 1312(c) of the ACA generally 

requires a health insurance issuer to 

consider all enrollees in all health plans 

(except grandfathered health plans) 

offered by such issuer to be members of 

a single risk pool for each of its 

individual and small group markets. 

States have the option to merge the 

individual and small group market risk 

pools under section 1312(c)(3) of the 

ACA. 

Section 1312(e) of the ACA provides 

the Secretary with the authority to 

establish procedures under which a 

State may allow agents or brokers to (1) 

enroll qualified individuals and 

qualified employers in QHPs offered 

through Exchanges and (2) assist 

individuals in applying for advance 

payments of the premium tax credit 

(APTC) and cost-sharing reductions 

(CSRs) for QHPs sold through an 

Exchange. 

Section 1312(f)(1)(B) of the ACA 

provides that an individual shall not be 

treated as a qualified individual for 

enrollment in a QHP if, at the time of 

enrollment, the individual is 

incarcerated, other than incarceration 

pending the disposition of charges. 

Sections 1313 and 1321 of the ACA 

provide the Secretary with the authority 

to oversee the financial integrity of State 

Exchanges, their compliance with HHS 

standards, and the efficient and nondiscriminatory administration of State 

Exchange activities. Section 

1313(a)(5)(A) of the ACA provides the 

Secretary with the authority to 

implement any measure or procedure 

that the Secretary determines is 

appropriate to reduce fraud and abuse 

in the administration of the Exchanges. 

Section 1321 of the ACA provides for 

State flexibility in the operation and 

enforcement of Exchanges and related 

requirements. 

Section 1321(a) of the ACA provides 

broad authority for the Secretary to 

establish standards and regulations to 

implement the statutory requirements 

related to Exchanges, QHPs and other 

components of title I of the ACA, 

including such other requirements as 

the Secretary determines appropriate. 

When operating an FFE under section 

1321(c)(1) of the ACA, HHS has the 

authority under sections 1321(c)(1) and 

1311(d)(5)(A) of the ACA to collect and 

spend user fees. Office of Management 

and Budget (OMB) Circular A–25 

Revised establishes Federal policy 

regarding user fees and specifies that a 

user charge will be assessed against 

each identifiable recipient for special 

benefits derived from Federal activities 

beyond those received by the public. 

Section 1321(d) of the ACA provides 

that nothing in title I of the ACA must 

be construed to preempt any State law 

that does not prevent the application of 

title I of the ACA. Section 1311(k) of the 

ACA specifies that Exchanges may not 

establish rules that conflict with or 

prevent the application of regulations 

issued by the Secretary. 

Section 1322 of the ACA establishes 

the Consumer Operated and Oriented 

Plan (CO–OP) program, which is a loan 

program that funds the establishment of 

private, non-profit, consumer-operated, 

consumer-oriented health plan issuers 

of QHPs. The ACA requires, among 

other requirements, that substantially all 

of a CO–OP’s activities consist of 

issuing QHPs in the individual and 

small group markets, and that a CO–OP 

be governed by a board of directors 

where a majority is elected by members 

covered by policies issued by the CO– 

OP. 

Section 1331 of the ACA provides 

States with the option to operate a Basic 

Health Program (BHP). 

Section 1332 of the ACA provides the 

Secretary of HHS and the Secretary of 

the Treasury (collectively, the 

Secretaries) with the discretion to 

approve a State’s proposal to waive 

specific provisions of the ACA, 

provided the State’s section 1332 waiver 

plan meets certain requirements. 

Section 1332(a)(4)(B) of the ACA 

requires the Secretaries to issue 

regulations regarding procedures for the 

application and approval of section 

1332 waivers. 

Section 1343 of the ACA establishes 

a permanent risk adjustment program to 

provide payments to health insurance 

issuers that attract higher-than-average 

risk populations, such as those with 

chronic conditions, funded by charges 

collected from those issuers that attract 

lower-than-average risk populations, 

thereby reducing incentives for issuers 

to avoid higher-risk enrollees. Section 

1343(b) of the ACA provides that the 

Secretary, in consultation with States, 

shall establish criteria and methods to 

be used in carrying out the risk 

adjustment activities under this section. 

Consistent with section 1321(c) of the 

ACA, the Secretary is responsible for 

operating the HHS risk adjustment 

program in any State that fails to do so.3

Section 1401(a) of the ACA added 

section 36B to the Internal Revenue 

Code (the Code), which, among other 

things, requires that a taxpayer reconcile 

APTC for a year of coverage with the 

amount of the premium tax credit (PTC) 

the taxpayer is allowed for the year. 

Section 1402 of the ACA provides for, 

among other things, reductions in cost 

sharing for EHB for qualified low- and 

moderate-income enrollees in silver 

level QHPs offered through the 

individual market Exchanges. This 

section also provides for reductions in 

cost sharing for Indians enrolled in 

QHPs at any metal level. 

Section 1411(c) of the ACA requires 

the Secretary to submit certain 

information provided by applicants 

under section 1411(b) of the ACA to 

other Federal officials for verification, 

including income and family size 

information to the Secretary of the 

Treasury. Section 1411(d) of the ACA 

provides that the Secretary must verify 

the accuracy of information provided by 

applicants under section 1411(b) of the 

ACA, for which section 1411(c) of the 

ACA does not prescribe a specific 

verification procedure, in such manner 

as the Secretary determines appropriate. 

Section 1411(f) of the ACA requires 

the Secretary, in consultation with the 

Treasury and Homeland Security 

Department Secretaries and the 

Commissioner of Social Security, to 

establish procedures for hearing and 

making decisions governing appeals of 

Exchange eligibility determinations. 

Section 1411(f)(1)(B) of the ACA 

requires the Secretary to establish 

procedures to redetermine eligibility on 

a periodic basis, in appropriate 

circumstances, including eligibility to 

purchase a QHP through the Exchange 

and for APTC and CSRs. 

Section 1411(g) of the ACA allows the 

use of applicant information only for the 

limited purpose of, and to the extent 

necessary for ensuring the efficient 

operation of the Exchange, including by 

verifying eligibility to enroll through the 

Exchange and for APTC and CSRs, and 

limits the disclosure of such 

information. 

Section 1413 of the ACA directs the 

Secretary to establish, subject to 

minimum requirements, a streamlined 

enrollment process for enrollment in 


ddrumheller on DSK120RN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82513 

4See ACA section 1341 (transitional reinsurance 

program), ACA section 1342 (risk corridors 

program), and ACA section 1343 (HHS risk 

adjustment program). 

5CMS. (2018, July 27). Updated 2019 Benefit 

Year Final HHS Risk Adjustment Model 

Coefficients. https://www.cms.gov/CCIIO/ 

Resources/Regulations-and-Guidance/Downloads/ 

2019-Updtd-Final-HHS-RA-Model-Coefficients.pdf. 

6CMS. (2020, May 12). Final 2021 Benefit Year 

Final HHS Risk Adjustment Model 

Coefficients.https://www.cms.gov/CCIIO/Resources/ 

Regulations-and-Guidance/Downloads/Final-2021- 

Benefit-Year-Final-HHS-Risk-Adjustment-ModelCoefficients.pdf. 

QHPs and all insurance affordability 

programs. 

Section 5000A of the Code, as added 

by section 1501(b) of the ACA, requires 

individuals to have minimum essential 

coverage (MEC) for each month, qualify 

for an exemption, or make an individual 

shared responsibility payment. Under 

the Tax Cuts and Jobs Act, which was 

enacted on December 22, 2017, the 

individual shared responsibility 

payment is reduced to $0, effective for 

months beginning after December 31, 

2018. Notwithstanding that reduction, 

certain exemptions are still relevant to 

determine whether individuals aged 30 

and above qualify to enroll in 

catastrophic coverage under 

§§ 155.305(h) and 156.155(a)(5). 

Section 1902(r)(2)(A) of the Social 

Security Act (the Act), which permits 

States to apply less restrictive 

methodologies than cash assistance 

program methodologies in determining 

eligibility for certain eligibility groups. 

1. Premium Stabilization Programs 

The premium stabilization programs 

refer to the HHS risk adjustment, risk 

corridors, and reinsurance programs 

established by the ACA.4 For past 

rulemaking, we refer readers to the 

following rules: 

• In the March 23, 2012 Federal 

Register (77 FR 17219) (Premium 

Stabilization Rule), we implemented the 

premium stabilization programs. 

• In the March 11, 2013 Federal 

Register (78 FR 15409) (2014 Payment 

Notice), we finalized the benefit and 

payment parameters for the 2014 benefit 

year to expand the provisions related to 

the premium stabilization programs and 

set forth payment parameters in those 

programs. 

• In the October 30, 2013 Federal 

Register (78 FR 65046), we finalized the 

modification to the HHS risk adjustment 

methodology related to community 

rating States. 

• In the November 6, 2013 Federal 

Register (78 FR 66653), we published a 

correcting amendment to the 2014 

Payment Notice to address how an 

enrollee’s age for the risk score 

calculation would be determined under 

the HHS risk adjustment methodology. 

• In the March 11, 2014 Federal 

Register (79 FR 13743) (2015 Payment 

Notice), we finalized the benefit and 

payment parameters for the 2015 benefit 

year to expand the provisions related to 

the premium stabilization programs, set 

forth certain oversight provisions, and 

establish payment parameters in those 

programs. 

• In the May 27, 2014 Federal 

Register (79 FR 30240), we announced 

the 2015 fiscal year sequestration rate 

for the HHS-operated risk adjustment 

program. 

• In the February 27, 2015 Federal 

Register (80 FR 10749) (2016 Payment 

Notice), we finalized the benefit and 

payment parameters for the 2016 benefit 

year to expand the provisions related to 

the premium stabilization programs, set 

forth certain oversight provisions, and 

establish the payment parameters in 

those programs. 

• In the March 8, 2016 Federal 

Register (81 FR 12203) (2017 Payment 

Notice), we finalized the benefit and 

payment parameters for the 2017 benefit 

year to expand the provisions related to 

the premium stabilization programs, set 

forth certain oversight provisions, and 

establish the payment parameters in 

those programs. 

• In the December 22, 2016 Federal 

Register (81 FR 94058) (2018 Payment 

Notice), we finalized the benefit and 

payment parameters for the 2018 benefit 

year, added the high-cost risk pool 

parameters to the HHS risk adjustment 

methodology, incorporated prescription 

drug factors in the adult models, 

established enrollment duration factors 

for the adult models, and finalized 

policies related to the collection and use 

of enrollee-level External Data Gathering 

Environment (EDGE) data. 

• In the April 17, 2018 Federal 

Register (83 FR 16930) (2019 Payment 

Notice), we finalized the benefit and 

payment parameters for the 2019 benefit 

year, created the State flexibility 

framework permitting States to request 

a reduction in risk adjustment State 

transfers calculated by HHS, and 

adopted a new error rate methodology 

for HHS–RADV adjustments to transfers. 

• In the May 11, 2018 Federal 

Register (83 FR 21925), we published a 

correction to the 2019 HHS risk 

adjustment coefficients in the 2019 

Payment Notice. 

• On July 27, 2018, consistent with 45 

CFR 153.320(b)(1)(i), we updated the 

2019 benefit year final HHS risk 

adjustment model coefficients to reflect 

an additional recalibration related to an 

update to the 2016 enrollee-level EDGE 

data set.5

• In the July 30, 2018 Federal 

Register (83 FR 36456), we adopted the 

2017 benefit year HHS risk adjustment 

methodology as established in the final 

rules published in the March 23, 2012 

(77 FR 17220 through 17252) and March 

8, 2016 (81 FR 12204 through 12352) 

editions of the Federal Register. The 

final rule set forth an additional 

explanation of the rationale supporting 

the use of Statewide average premium 

in the State payment transfer formula 

for the 2017 benefit year, including the 

reasons why the program is operated by 

HHS in a budget-neutral manner. The 

final rule also permitted HHS to resume 

2017 benefit year HHS risk adjustment 

payments and charges. HHS also 

provided guidance as to the operation of 

the HHS-operated risk adjustment 

program for the 2017 benefit year in 

light of the publication of the final rule. 

• In the December 10, 2018 Federal 

Register (83 FR 63419), we adopted the 

2018 benefit year HHS risk adjustment 

methodology as established in the final 

rules published in the March 23, 2012 

(77 FR 17219) and the December 22, 

2016 (81 FR 94058) editions of the 

Federal Register. In the rule, we set 

forth an additional explanation of the 

rationale supporting the use of 

Statewide average premium in the State 

payment transfer formula for the 2018 

benefit year, including the reasons why 

the program is operated by HHS in a 

budget-neutral manner. 

• In the April 25, 2019 Federal 

Register (84 FR 17454) (2020 Payment 

Notice), we finalized the benefit and 

payment parameters for the 2020 benefit 

year, as well as the policies related to 

making the enrollee-level EDGE data 

available as a limited data set for 

research purposes and expanding the 

HHS uses of the enrollee-level EDGE 

data, approval of the request from 

Alabama to reduce HHS risk adjustment 

transfers by 50 percent in the small 

group market for the 2020 benefit year, 

and updates to HHS–RADV program 

requirements. 

• On May 12, 2020, consistent with 

§ 153.320(b)(1)(i), we published the 

2021 Benefit Year Final HHS Risk 

Adjustment Model Coefficients on the 

CCIIO website.6

• In the May 14, 2020 Federal 

Register (85 FR 29164) (2021 Payment 

Notice), we finalized the benefit and 

payment parameters for the 2021 benefit 

year, as well as adopted updates to the 

HHS risk adjustment models’ 

hierarchical condition categories (HCCs) 

to transition to ICD–10 codes, approved 

the request from Alabama to reduce 

HHS risk adjustment transfers by 50 


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7See CMS. (2021, July 19). 2022 Benefit Year 

Final HHS Risk Adjustment Model Coefficients. 

https://www.cms.gov/files/document/updated2022-benefit-year-final-hhs-risk-adjustment-modelcoefficients-clean-version-508.pdf. 

8On May 6, 2022, we also published the 2023 

Benefit Year Final HHS Risk Adjustment Model 

Coefficients at https://www.cms.gov/files/ 

document/2023-benefit-year-final-hhs-riskadjustment-model-coefficients.pdf. 

percent in the small group market for 

the 2021 benefit year, and modified the 

outlier identification process under the 

HHS–RADV program. 

• In the December 1, 2020 Federal 

Register (85 FR 76979) (Amendments to 

the HHS-Operated Risk Adjustment 

Data Validation Under the Patient 

Protection and Affordable Care Act’s 

HHS-Operated Risk Adjustment 

Program (2020 HHS–RADV 

Amendments Rule)), we adopted the 

creation and application of Super HCCs 

in the sorting step that assigns HCCs to 

failure rate groups, finalized a sliding 

scale adjustment in HHS–RADV error 

rate calculation, and added a constraint 

for negative error rate outliers with a 

negative error rate. We also established 

a transition from the prospective 

application of HHS–RADV adjustments 

to apply HHS–RADV results to risk 

scores from the same benefit year as that 

being audited. 

• In the September 2, 2020 Federal 

Register (85 FR 54820), we issued an 

interim final rule containing certain 

policy and regulatory revisions in 

response to the COVID–19 public health 

emergency (PHE), wherein we set forth 

HHS risk adjustment reporting 

requirements for issuers offering 

temporary premium credits in the 2020 

benefit year. 

• In the May 5, 2021 Federal Register 

(86 FR 24140) (part 2 of the 2022 

Payment Notice), we finalized a subset 

of proposals from the 2022 Payment 

Notice proposed rule, including policy 

and regulatory revisions related to the 

HHS-operated risk adjustment program, 

finalization of the benefit and payment 

parameters for the 2022 benefit year, 

and approval of the request from 

Alabama to reduce HHS risk adjustment 

transfers by 50 percent in the individual 

and small group markets for the 2022 

benefit year. In addition, this final rule 

established a revised schedule of 

collections for HHS–RADV and updated 

the provisions regulating second 

validation audit (SVA) and initial 

validation audit (IVA) entities. 

• On July 19, 2021, consistent with 

§ 153.320(b)(1)(i), we released Updated 

2022 Benefit Year Final HHS Risk 

Adjustment Model Coefficients on the 

CCIIO website, announcing some minor 

revisions to the 2022 benefit year final 

HHS risk adjustment adult model 

coefficients.7

• In the May 6, 2022 Federal Register 

(87 FR 27208) (2023 Payment Notice), 

we finalized revisions related to the 

HHS-operated risk adjustment program, 

including the benefit and payment 

parameters for the 2023 benefit year, 

HHS risk adjustment model 

recalibration, and policies related to the 

collection and extraction of enrolleelevel EDGE data. We also finalized the 

adoption of the interacted HCC count 

specification for the adult and child 

models, along with modified enrollment 

duration factors for the adult model 

models, beginning with the 2023 benefit 

year.8 We also repealed the ability for 

States, other than prior participants, to 

request a reduction in HHS risk 

adjustment State transfers starting with 

the 2024 benefit year. In addition, we 

approved a 25 percent reduction to 2023 

benefit year HHS risk adjustment 

transfers in Alabama’s individual 

market and a 10 percent reduction to 

2023 benefit year HHS risk adjustment 

transfers in Alabama’s small group 

market. We also finalized further 

refinements to the HHS–RADV error 

rate calculation methodology beginning 

with the 2021 benefit year. 

• In the April 27, 2023 Federal 

Register (88 FR 25740) (2024 Payment 

Notice), we finalized the benefit and 

payment parameters for the 2024 benefit 

year, amended the EDGE discrepancy 

materiality threshold and data 

collection requirements, and reduced 

the risk adjustment user fee. For the 

2024 benefit year, we repealed the State 

flexibility policy, including for prior 

participant States, and approved 50 

percent reductions to HHS risk 

adjustment transfers for Alabama’s 

individual and small group markets. In 

addition, we finalized several 

refinements to HHS–RADV program 

requirements, such as shortening the 

window to confirm SVA findings or file 

a discrepancy report, changing the 

HHS–RADV materiality threshold for 

random and targeted sampling, and no 

longer exempting exiting issuers from 

adjustments to risk scores and HHS risk 

adjustment transfers when they are 

negative error rate outliers. We also 

announced the discontinuance of the 

Lifelong Permanent Condition List 

(LLPC) and Non-EDGE Claims (NEC) in 

HHS–RADV beginning with the 2022 

benefit year. 

2. Program Integrity 

We have finalized program integrity 

standards related to the Exchanges and 

premium stabilization programs in two 

rules: the ‘‘first Program Integrity Rule’’ 

published in the August 30, 2013 

Federal Register (78 FR 54069), and the 

‘‘second Program Integrity Rule’’ 

published in the October 30, 2013 

Federal Register (78 FR 65045). We also 

refer readers to the 2019 Patient 

Protection and Affordable Care Act; 

Exchange Program Integrity final rule 

(2019 Program Integrity Rule) published 

in the December 27, 2019 Federal 

Register (84 FR 71674). 

In the April 27, 2023 Federal Register 

(88 FR 25740) (2024 Payment Notice), 

we finalized a policy to implement 

improper payment pre-testing and 

assessment (IPPTA) requirements for 

State Exchanges to ensure adherence to 

the Payment Integrity Information Act of 

2019. In addition, we finalized allowing 

additional time for HHS to review 

evidence submitted by agents and 

brokers to rebut allegations pertaining to 

Exchange agreement suspensions or 

terminations. We also introduced 

consent and eligibility documentation 

requirements for agents and brokers. 

3. Market Rules 

For past rulemaking related to the 

market rules, we refer readers to the 

following rules: 

• In the April 8, 1997 Federal 

Register (62 FR 16894), HHS, with the 

Department of Labor and Department of 

the Treasury, published an interim final 

rule relating to the HIPAA health 

insurance reforms. In the February 27, 

2013 Federal Register (78 FR 13406) 

(2014 Market Rules), we published the 

health insurance market rules. 

• In the May 27, 2014 Federal 

Register (79 FR 30240) (2015 Market 

Standards Rule), we published the 

exchange and insurance market 

standards for 2015 and beyond. 

• In the December 22, 2016 Federal 

Register (81 FR 94058), we provided 

additional guidance on guaranteed 

availability and guaranteed 

renewability. 

• In the April 18, 2017 Federal 

Register (82 FR 18346) (Market 

Stabilization final rule), we further 

interpreted the guaranteed availability 

provision. 

• In the April 17, 2018 Federal 

Register (83 FR 17058) (2019 Payment 

Notice), we clarified that certain 

exceptions to the special enrollment 

periods only apply to coverage offered 

outside of the Exchange in the 

individual market. 

• In the June 19, 2020 Federal 

Register (85 FR 37160) (2020 section 

1557 final rule), in which HHS 

discussed section 1557 of the ACA, HHS 

removed nondiscrimination protections 

based on gender identity and sexual 

orientation from the guaranteed 

availability regulation. 


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• In part 2 of the 2022 Payment 

Notice, in the May 5, 2021 Federal 

Register (86 FR 24140), we made 

additional amendments to the 

guaranteed availability regulation 

regarding special enrollment periods 

and finalized new special enrollment 

periods related to untimely notice of 

triggering events, cessation of employer 

contributions or government subsidies 

to COBRA continuation coverage, and 

loss of APTC eligibility. 

• In the September 27, 2021 Federal 

Register (86 FR 53412) (part 3 of the 

2022 Payment Notice), which was 

published by HHS and the Department 

of the Treasury, we finalized additional 

amendments to the guaranteed 

availability regulations regarding special 

enrollment periods. 

• In the May 6, 2022 Federal Register 

(87 FR 27208), we finalized a revision 

to our interpretation of the guaranteed 

availability requirement to prohibit 

issuers from applying a premium 

payment to an individual’s or 

employer’s past debt owed for coverage 

and refusing to effectuate enrollment in 

new coverage. 

4. Exchanges 

We published a request for comment 

relating to Exchanges in the August 3, 

2010 Federal Register (75 FR 45584). 

We issued initial guidance to States on 

Exchanges on November 18, 2010. In the 

March 27, 2012 Federal Register (77 FR 

18310) (Exchange Establishment Rule), 

we implemented the Affordable 

Insurance Exchanges (Exchanges), 

consistent with title I of the ACA, to 

provide competitive marketplaces for 

individuals and small employers to 

directly compare available private 

health insurance options on the basis of 

price, quality, and other factors. This 

included implementation of 

components of the Exchanges and 

standards for eligibility for Exchanges, 

as well as network adequacy and 

essential community provider (ECP) 

certification standards. 

In the August 17, 2011, Federal 

Register (76 FR 51201) we published a 

proposed rule regarding eligibility 

determinations, including the regulatory 

requirement to verify incarceration 

status. In the March 27, 2012, Federal 

Register (77 FR 18309) we finalized the 

regulatory requirement to verify 

incarceration attestation using an 

approved electronic data source that is 

current and accurate, and when 

attestations are not reasonably 

compatible with information in an 

approved data source, to resolve the 

inconsistency. 

In the 2014 Payment Notice and the 

Amendments to the HHS Notice of 

Benefit and Payment Parameters for 

2014 interim final rule, published in the 

March 11, 2013 Federal Register (78 FR 

15541), we set forth standards related to 

Exchange user fees. We established an 

adjustment to the FFE user fee in the 

Coverage of Certain Preventive Services 

under the Affordable Care Act final rule, 

published in the July 2, 2013 Federal 

Register (78 FR 39869) (Preventive 

Services Rule). 

In the 2016 Payment Notice, we also 

set forth the ECP certification standard 

at § 156.235, with revisions in the 2017 

Payment Notice in the March 8, 2016 

Federal Register (81 FR 12203) and the 

2018 Payment Notice in the December 

22, 2016 Federal Register (81 FR 

94058). 

In an interim final rule, published in 

the May 11, 2016 Federal Register (81 

FR 29146), we made amendments to the 

parameters of certain special enrollment 

periods (2016 Interim Final Rule). We 

finalized these in the 2018 Payment 

Notice, published in the December 22, 

2016 Federal Register (81 FR 94058). 

In the Market Stabilization final rule, 

published in the April 18, 2017 Federal 

Register (82 FR 18346), we amended 

standards relating to special enrollment 

periods and QHP certification. In the 

2019 Payment Notice, published in the 

April 17, 2018 Federal Register (83 FR 

16930), we modified parameters around 

certain special enrollment periods. In 

the April 25, 2019 Federal Register (84 

FR 17454), the 2020 Payment Notice 

established a new special enrollment 

period. 

We published the final rule in the 

May 14, 2020 Federal Register (85 FR 

29164) (2021 Payment Notice). 

In the January 19, 2021 Federal 

Register (86 FR 6138) (part 1 of the 2022 

Payment Notice), we finalized only a 

subset of the proposals in the 2022 

Payment Notice proposed rule. In the 

May 5, 2021 Federal Register (86 FR 

24140), we published part 2 of the 2022 

Payment Notice. In the September 27, 

2021 Federal Register (86 FR 53412) 

(part 3 of the 2022 Payment Notice), in 

conjunction with the Department of the 

Treasury, we finalized amendments to 

certain policies in part 1 of the 2022 

Payment Notice. 

In the May 6, 2022 Federal Register 

(87 FR 27208), we finalized changes to 

maintain the user fee rate for issuers 

offering plans through the FFEs and 

maintain the user fee rate for issuers 

offering plans through the SBE–FPs for 

the 2023 benefit year. We also finalized 

various policies to address certain agent, 

broker, and web-broker practices and 

conduct. We also finalized updates to 

the requirement that all Exchanges 

conduct special enrollment period 

verifications. 

In the April 27, 2023 Federal Register 

(88 FR 25740) (2024 Payment Notice), 

we revised Exchange Blueprint approval 

timelines, lowered the user rate fee for 

QHPs, and amended re-enrollment 

hierarchies for enrollees. We also 

finalized policies to update 

standardized plan options, reduce the 

risk of plan choice overload by limiting 

the number of non-standardized plan 

options that issuers can offer, and 

ensure correct QHP information. In 

addition, to prevent gaps in coverage, 

we amended coverage effective date 

rules, lengthened the special enrollment 

period from 60 to 90 days to those who 

lose Medicaid coverage, and prohibited 

QHPs on the Federal platform from midyear coverage terminations for 

dependent children who reach the 

applicable maximum age. We also 

finalized policies on verifying consumer 

income and permitting door-to-door 

assisters to solicit consumers. To ensure 

provider network adequacy, we 

finalized provider network and ECP 

policies for QHPs. 

5. Essential Health Benefits 

We established requirements relating 

to EHBs in the Standards Related to 

Essential Health Benefits, Actuarial 

Value, and Accreditation Final Rule, 

which was published in the February 

25, 2013 Federal Register (78 FR 12833) 

(EHB Rule). In the 2019 Payment Notice, 

published in the April 17, 2018 Federal 

Register (83 FR 16930), we added 

§ 156.111 to provide States with 

additional options from which to select 

an EHB-benchmark plan for plan year 

(PY) 2020 and subsequent plan years. In 

the 2023 Payment Notice, published in 

the May 6, 2022 Federal Register (87 FR 

27208), we revised § 156.111 to require 

States to notify HHS of the selection of 

a new EHB-benchmark plan by the first 

Wednesday in May of the year that is 2 

years before the effective date of the 

new EHB-benchmark plan, otherwise 

the State’s EHB-benchmark plan for the 

applicable plan year will be that State’s 

EHB-benchmark plan applicable for the 

prior year. We displayed the Request for 

Information; Essential Health Benefits 

(EHB RFI), published in the December 2, 

2022 Federal Register (87 FR 74097) to 

solicit public comment on a variety of 

topics related to the coverage of benefits 

in health plans subject to the EHB 

requirements of the ACA. 

6. State Innovation Waivers 

In the March 14, 2011 Federal 

Register (76 FR 13553), HHS and the 

Department of the Treasury 

(collectively, the Departments) 


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published the ‘‘Application, Review, 

and Reporting Process for Waivers for 

State Innovation’’ proposed rule to 

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

ACA. 

In the February 27, 2012 Federal 

Register (77 FR 11700), the Departments 

published the ‘‘Application, Review, 

and Reporting Process for Waivers for 

State Innovation’’ final rule (2012 Final 

Rule). 

In the October 24, 2018 Federal 

Register (83 FR 53575), the Departments 

issued the 2018 Guidance, which 

superseded the previous guidance 

published in the December 16, 2015 

Federal Register (80 FR 78131) (2015 

Guidance) and set forth requirements 

that States must meet for waivers, 

application review procedures, passthrough funding determinations, certain 

analytical requirements, and operational 

considerations. 

In the November 6, 2020 Federal 

Register (85 FR 71142), the Departments 

issued an interim final rule (November 

2020 IFC), which set forth flexibilities 

for waivers under section 1332 during 

the COVID–19 Public Health 

Emergency. 

In the December 4, 2020 Federal 

Register (85 FR 78572), the Departments 

published the ‘‘Patient Protection and 

Affordable Care Act; HHS Notice of 

Benefit and Payment Parameters for 

2022 and Pharmacy Benefit Manager 

Standards; Updates to State Innovation 

Waiver (Section 1332 Waiver) 

Implementing Regulations’’ proposed 

rule (2022 Payment Notice proposed 

rule) which proposed to codify certain 

policies and interpretations of the 2018 

Guidance. 

In the January 19, 2021 Federal 

Register (86 FR 6138), the Departments 

published the ‘‘Patient Protection and 

Affordable Care Act; HHS Notice of 

Benefit and Payment Parameters for 

2022; Updates to State Innovation 

Waiver (Section 1332 Waiver) 

Implementing Regulations’’ final rule 

(part 1 of the 2022 Payment Notice) 

which codified many of the policies and 

interpretations of the 2018 Guidance. 

In the September 27, 2021 Federal 

Register (86 FR 53412), part 3 of the 

2022 Payment Notice, the Departments 

published the ‘‘Patient Protection and 

Affordable Care Act; Updating Payment 

Parameters, Section 1332 Waiver 

Implementing Regulations, and 

Improving Health Insurance Markets for 

2022 and Beyond’’ final rule, which 

superseded and rescinded the policies 

and interpretations outlined in the 2018 

Guidance and repealed the previous 

codification of the interpretations of 

statutory guidelines in part 1 of the 2022 

Payment Notice. The Departments also 

finalized flexibilities in the public 

notice requirements and post-award 

public participation requirements for 

section 1332 waivers under certain 

emergent situations and processes and 

procedures for amendments and 

extensions for approved waiver plans. 

7. Consumer Operated and Oriented 

Plans (CO–OPs) 

In the December 13, 2011 Federal 

Register (76 FR 77392), we published 

the ‘‘Patient Protection and Affordable 

Care Act; Establishment of Consumer 

Operated and Oriented Plan (CO–OP) 

Program’’ final rule (2011 CO–OP Rule), 

which established the rules governing 

the CO–OP program to make loans to 

capitalize eligible prospective CO–OPs. 

In the May 11, 2016 Federal Register 

(81 FR 29146), we amended several CO– 

OP standards related to governance 

requirements to provide greater 

flexibility, and to facilitate private 

market transactions that would assist 

efforts of CO–OPs to arrange access to 

new sources of needed capital. 

8. Basic Health Program (BHP) 

In the March 12, 2014, Federal 

Register (79 FR 14111), we published a 

final rule entitled ‘‘Basic Health 

Program: State Administration of Basic 

Health Programs; Eligibility and 

Enrollment in Standard Health Plans; 

Essential Health Benefits in Standard 

Health Plans; Performance Standards for 

Basic Health Programs; Premium and 

Cost Sharing for Basic Health Programs; 

Federal Funding Process; Trust Fund 

and Financial Integrity,’’ implementing 

section 1331 of the ACA, which governs 

the establishment of BHPs. 

9. State Flexibility in the Use of Income 

and Resource Disregards in Medicaid 

Eligibility 

In the January 19, 1993 Federal 

Register (58 FR 4929), we published a 

final rule with comment period entitled 

‘‘Medicaid Program; Eligibility and 

Coverage Requirements,’’ in which we 

prescribed, at 42 CFR 435.601, the 

financial methodologies State Medicaid 

agencies must apply in determining 

eligibility for Medicaid, with options to 

apply less restrictive income and 

resource methodologies for the 

eligibility groups specified in section 

1902(r)(2) of the Act. 

In the August 22, 1994 Federal 

Register (59 FR 43052), we published a 

final rule entitled ‘‘Medicaid Program; 

Eligibility and Coverage Requirements,’’ 

in which we amended 42 CFR 

435.601(f)(1) to delete cross-references 

to other regulatory provisions that had 

been removed from the CFR. 

In the November 30, 2016 Federal 

Register (81 FR 86456), we published a 

final rule entitled ‘‘Medicaid and 

Children’s Health Insurance Programs: 

Eligibility Notices, Fair Hearing and 

Appeal Processes for Medicaid and 

Other Provisions Related to Eligibility 

and Enrollment for Medicaid and 

CHIP,’’ in which we amended 42 CFR 

435.601(b) to confirm that its provisions 

govern only individuals who are 

excepted from application of modified 

adjusted gross income financial 

methodologies (MAGI) in accordance 

with 42 CFR 435.603(j) (relating to 

‘‘Eligibility Groups for which MAGIbased methods do not apply’’). We also 

established in 42 CFR 435.601(d)(1) the 

authority for States to apply less 

restrictive methodologies for medically 

needy individuals whose income 

eligibility is determined under 42 CFR 

435.831(b)(1) (including medically 

needy individuals whose eligibility is 

determined under MAGI-based 

methodologies that comply with certain 

rules relating to the financial 

responsibility of relatives and other 

individuals described in 42 CFR 

435.602). 

B. Summary of Major Provisions 

The regulations outlined in this 

proposed rule would be codified in 31 

CFR part 33, 42 CFR parts 435 and 600, 

and 45 CFR parts 153, 155, and 156. 

1. 31 CFR Part 33 and 45 CFR Part 155 

This proposed rule would amend 

section 1332 Waivers for State 

Innovation (referred to throughout this 

proposed rule as section 1332 waivers) 

implementing regulations regarding 

State public notice and comment 

procedures. The Departments propose 

changes in 31 CFR part 33 and 45 CFR 

part 155 that would allow States the 

flexibility to hold a State public hearing 

or post-award forum in a virtual format 

(that is, one that uses telephonic, digital, 

and/or web-based platforms), or hybrid 

format (that is, one that provides for 

both in-person and virtual attendance), 

which would be considered as the 

equivalent of holding an in-person 

meeting. Specifically, the Departments 

propose changes to 31 CFR 33.112(c) 

and 45 CFR 155.1312(c) and 31 CFR 

33.120(c) and 45 CFR 155.1320(c). The 

Departments propose that these changes 

go into effect upon finalization of this 

rule. Because these changes would 

relieve a regulatory restriction, the 

Departments anticipate that they would 

be made effective immediately upon 

publication of a final rule. 


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9OMB. (2023, March 13). OMB Report to the 

Congress on the BBEDCA 251A Sequestration for 

Fiscal Year 2024. https://www.whitehouse.gov/wpcontent/uploads/2023/03/BBEDCA_Sequestration_

Report_and_Letter_3-13-2024.pdf. 

2. 42 CFR Part 435 

We propose to amend 42 CFR 

435.601(d) to remove paragraph (d)(4), 

which would provide States with 

greater flexibility to adopt income and/ 

or resource disregards in determining 

Medicaid financial eligibility for 

individuals excepted from application 

of financial methodologies based on 

MAGI (‘‘non-MAGI’’ methodologies). 

States are permitted to expand 

eligibility for individuals who are 

subject to non-MAGI methodologies by 

disregarding income and/or resources 

that would otherwise be required to be 

considered in the individual’s eligibility 

determination. However, under current 

rules, States must apply such income 

and/or resource disregards to all 

individuals within each Medicaid 

eligibility group. Removing paragraph 

(d)(4) would allow States, when 

considering expanding eligibility for 

non-MAGI individuals, to target 

disregards at discrete members of 

individuals within an eligibility group. 

3. 42 CFR Part 600 

We propose to amend 42 CFR 

600.320(c) to allow States a third option 

when choosing the effective date of 

eligibility for BHP applicants. Under 

current rules, States have the option to 

choose between following: either the 

Medicaid rules at 42 CFR 435.915 or the 

Exchange rules at 45 CFR 155.420(b)(1). 

We propose to add an option to the 

effective date of coverage rules that 

would allow States to start coverage on 

the first day of the month following the 

date of application. 

4. 45 CFR Part 153 

In accordance with the OMB Report to 

Congress on the Joint Committee 

Reductions for Fiscal Year 2024, the 

HHS-operated risk adjustment program 

is subject to the fiscal year 2024 

sequestration.9 Therefore, the HHSoperated risk adjustment program will 

be sequestered at a rate of 5.7 percent 

for payments made from fiscal year 2024 

resources (that is, funds collected 

during the 2024 fiscal year). 

We propose to recalibrate the 2025 

benefit year HHS risk adjustment 

models using the 2019, 2020, and 2021 

benefit year enrollee-level EDGE data. 

For the 2025 benefit year, we propose to 

continue applying a market pricing 

adjustment to the plan liability 

associated with Hepatitis C drugs in the 

HHS risk adjustment models (see, for 

example, 84 FR 17463 through 17466). 

We propose a modification to the 

adjustment for the receipt of CSRs in the 

HHS risk adjustment models to improve 

predictive accuracy for the American 

Indian and Alaska Native (AI/AN) 

subpopulation who are enrolled in zero 

and limited cost-sharing plans and to 

retain the other CSR adjustment factors 

in the HHS risk adjustment models. We 

also propose a risk adjustment user fee 

for the 2025 benefit year of $0.20 per 

member per month (PMPM). 

Additionally, we propose that in certain 

cases we may require a corrective action 

plan to address an observation 

identified in an HHS risk adjustment 

audit. 

5. 45 CFR Part 155 

In part 155, we propose to amend 

§ 155.105(b) to require that a State 

seeking to operate a State Exchange 

must first operate an SBE–FP for at least 

one plan year, including its open 

enrollment period. We believe this 

requirement would give States sufficient 

time to create, staff, and structure a 

State Exchange that could transition to 

operating its own platform and establish 

relationships with interested parties 

critical to a State Exchange’s success in 

operating a Navigator and consumer 

outreach program, assuming plan 

management responsibilities, and 

communicating effectively with 

consumers to support enrollment and 

avoid health care coverage gaps. 

We propose to revise § 155.106(a)(2) 

as it pertains to Exchange Blueprint 

requirements for States transitioning to 

a State Exchange. Specifically, we 

propose to add that we may require that 

a State submitting a Blueprint 

Application seeking to operate a State 

Exchange provide upon request, 

supplemental documentation to HHS 

detailing the State’s implementation of 

its State Exchange functionality as laid 

out in the State Exchange Blueprint. 

This could include a State submitting 

detailed plans regarding its State 

Exchange consumer assistance programs 

and activities, such as information on its 

direct outreach plans. Further, we 

propose to require that a State applying 

to transition to a State Exchange must 

provide the public with a notice and 

copy of its State Exchange Blueprint 

Application, as well as conduct periodic 

public engagements whereby interested 

parties can learn about the status of a 

State’s transition to a State Exchange 

and provide input on that transition. 

We propose to amend § 155.170(a)(2) 

to codify that benefits covered in a 

State’s EHB benchmark plan would not 

be considered in addition to EHB, even 

if they had been required by State action 

taking place after December 31, 2011, 

other than for purposes of compliance 

with Federal requirements. Under this 

proposal, there would be no obligation 

for the State to defray the cost of a State 

mandate enacted after December 31, 

2011 that requires coverage of a benefit 

if that benefit is included in the State’s 

EHB-benchmark plan. Benefits that are 

covered in a State’s EHB-benchmark 

plan would not be considered in 

addition to EHB and would remain 

subject to the various rules applicable to 

the EHB, including the prohibition on 

discrimination in accordance with 

§ 156.125, limitations on cost sharing in 

accordance with § 156.130, and 

restrictions on annual or lifetime dollar 

limits in accordance with § 147.126. We 

believe that this change would promote 

consumer protections and facilitate 

compliance with the defrayal 

requirement by making the 

identification of benefits in addition to 

EHB more intuitive. 

At § 155.205(a), we propose to 

establish additional minimum standards 

for Exchange call center operations. 

Specifically, we propose to require that 

all Exchange call centers, other than 

those of SBE–FPs and Small Business 

Health Options Program (SHOP) 

Exchanges that do not provide for 

enrollment in SHOP coverage through 

an online SHOP enrollment platform, 

provide consumer access to a live call 

center representative during an 

Exchange’s published hours of 

operation to assist with submitting their 

QHP application. We believe speaking 

to a live representative would help 

troubleshoot consumer QHP application 

issues, provide in real time an 

opportunity for a live representative to 

explain QHP application terminology to 

a consumer, provide a live 

representative to ensure the consumer 

provides the most correct information to 

the QHP application—alleviating 

unnecessary follow-up, and provide 

greater overall consumer satisfaction. 

We propose to amend § 155.205(b)(4) 

to require that an Exchange operate a 

centralized eligibility and enrollment 

platform on the Exchange’s website (or, 

for an SBE–FP, the Federal eligibility 

and enrollment platform) such that the 

Exchange allows for the submission of 

the single, streamlined application for 

enrollment in a QHP and insurance 

affordability programs through the 

Exchange’s website and performs 

eligibility determinations for all 

consumers based on submissions of the 

single, streamlined application. Further, 

we propose to amend § 155.302(a)(1) to 

clarify that the Exchange, through the 

centralized eligibility and enrollment 

platform operated on the Exchange’s 


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82518 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

website (or, for an SBE–FP, the Federal 

eligibility and enrollment platform), is 

the entity that is responsible for making 

all determinations regarding the 

eligibility for QHP coverage and 

insurance affordability programs 

regardless of whether an individual files 

an application for enrollment in a QHP 

on the Exchange’s website (or, for SBE– 

FPs, on the Federal eligibility and 

enrollment platform), or on a website 

operated by a non-Exchange website 

allowed for under § 155.220 or 

§ 155.221. We also clarify that only 

entities that an Exchange elects to 

contract with to operate its centralized 

eligibility and enrollment platform can 

perform this function on behalf of an 

Exchange, such that Exchanges would 

not be able to solely rely on nonExchange entities, including a webbroker (defined at § 155.20) or other 

entities under § 155.220 or § 155.221, 

from making such eligibility 

determinations on behalf on the 

Exchanges. 

We also propose to amend 

§ 155.205(b)(5) to require that an 

Exchange operate a centralized 

eligibility and enrollment platform on 

the Exchange’s website (or, for an SBE– 

FP, the Federal eligibility and 

enrollment platform) so that the 

Exchange (or, for an SBE–FP, the 

Federal eligibility and enrollment 

platform) meets the requirement under 

§ 155.400(c) to maintain record of all 

effectuated enrollments in QHPs, 

including changes in effectuated QHP 

enrollments. 

We propose to amend § 155.220(h) to 

specify that the HHS reconsideration 

entity is the CMS Administrator, who is 

a principal officer. This proposal would 

ensure agents, brokers, and web-brokers 

utilizing the FFEs and SBE–FPs can 

submit a request to the CMS 

Administrator to reconsider HHS’ 

decision to terminate their Exchange 

agreement(s) for cause. 

We propose changes to §§ 155.220 

and 155.221 to apply certain standards 

to web-brokers and Direct Enrollment 

(DE) entities assisting consumers and 

applicants across all Exchanges, 

including in States with State 

Exchanges. We seek to ensure that 

certain current minimum Federal 

standards applicable in the FFEs and 

SBE–FPs, related to web-broker website 

display of standardized QHP 

comparative information, disclaimer 

language, information on eligibility for 

APTC/CSRs, operational readiness, and 

access by downstream agents and 

brokers, also apply to web-brokers in 

States with State Exchanges. We 

similarly propose to extend certain DE 

entity requirements applicable in the 

FFEs and SBE–FPs related to marketing 

and display of QHPs, providing 

consumers with correct information and 

refraining from certain conduct, 

marketing of non-QHPs, website 

disclaimer language, and operational 

readiness to DE entities across all 

Exchanges, to newly apply to DE 

entities in States with State Exchanges. 

These proposals would help establish 

greater general uniformity with respect 

to these requirements for web-brokers 

and DE entities operating in the 

Exchanges and establish minimum 

Federal consumer protections in all 

States, regardless of the Exchange 

model. 

We propose to update regulations in 

§ 155.221(b) to mandate HealthCare.gov 

changes be reflected on DE entity nonExchange websites within a notice 

period set by HHS. We also propose 

requiring that DE entities make these 

display changes in a manner consistent 

with what is adopted by HHS for 

display on HealthCare.gov by meeting 

standards defined by HHS, unless HHS 

approves a deviation from those 

standards. This proposal would codify 

our existing practice of communicating 

important changes to the 

HealthCare.gov display to EDE entities, 

expand our existing change request 

processes to permit entities to request 

deviations from the required display 

changes, and require DE entities that do 

not participate in EDE to comply with 

these practices. Additionally, this 

proposal would also require that all 

display changes which affect the visual 

aspects of the website that users see and 

interact with must be prominently 

displayed on the non-Exchange website 

such that the changes are clear, 

noticeable, and understandable to 

consumers. Finally, this proposal would 

also require State Exchanges to require 

their DE entities to implement and 

prominently display changes adopted 

for display on the State Exchanges’ 

websites on their non-Exchange 

websites for purposes of assisting 

consumers with DE in QHPs offered 

through the Exchange. 

We propose in connection with the 

failure to file and reconcile process at 

§ 155.305(f)(4) that Exchanges be 

required to send notices to tax filers for 

the first year in which they have been 

determined to have failed to reconcile 

APTC as an initial warning to inform 

and educate tax filers that they need to 

file and reconcile, or risk being 

determined ineligible for APTC if they 

fail to file and reconcile for a second 

consecutive year. Currently, the 

regulation does not describe notification 

procedures for tax filers who have failed 

to reconcile for 1 year. We propose to 

require that all Exchanges be required to 

send informative notices at least 

annually to tax filers who have failed to 

reconcile. 

We propose to amend § 155.315(e) to 

provide that all Exchanges can accept 

applicant incarceration status 

attestations without further verification, 

and Exchanges may verify applicant 

incarceration status using an HHSapproved verification data source. HHS 

would approve an alternative electronic 

data source for State Exchanges to use 

for incarceration verification if it 

provides data that are current and 

accurate, and if its use minimizes 

administrative costs and burdens. 

We propose to reinterpret State 

Exchange and State Medicaid and 

Children’s Health Insurance Program 

(CHIP) agency use of the Federal Data 

Services Hub to access and use the 

income data provided by the Verify 

Current Income (VCI) Hub service as a 

State Exchange or a State Medicaid and 

CHIP agency function because these 

State entities use this optional service to 

implement eligibility verification 

requirements applicable to them. More 

specifically, State Exchanges and State 

Medicaid and CHIP agencies have the 

option to use this information to verify 

a tax household’s annual income 

attestation for Exchange QHP eligibility 

and the Medicaid applicant’s current 

household income as required to make 

insurance affordability program 

eligibility determinations. We propose 

to amend § 155.320(c) to reflect this 

reinterpretation for the Exchanges but 

are not proposing to amend the 

Medicaid regulations as the Medicaid 

regulations already address Medicaid 

agency verification requirements and 

are not typically used to delineate 

Medicaid agency operations in this 

manner. 

We propose to revise § 155.330(d) to 

require Exchanges to conduct periodic 

checks for deceased enrollees twice 

yearly and subsequently end deceased 

enrollees’ QHP coverage. Additionally, 

we propose to revise § 155.330(d)(3) to 

grant the Secretary the authority to 

temporarily suspend the periodic data 

matching (PDM) requirement during 

certain situations (for example, a 

declared national public health 

emergency). These proposals would 

align § 155.330(d) with current Federal 

Exchange policy and operations, 

prevent overpayment of QHP premiums, 

and accurately capture household QHP 

eligibility based on household size. 

We propose to amend § 155.335(j)(1) 

and (2) to require Exchanges to re-enroll 

individuals who are enrolled in 

catastrophic coverage, as defined in 

section 1302(e) of the ACA, into a new 


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QHP for the coming plan year. 

Incorporating these individuals enrolled 

in catastrophic coverage into the auto 

re-enrollment hierarchy rules at 

§ 155.335(j) would help ensure 

continuity of coverage in cases where 

the issuer does not continue to offer a 

catastrophic plan for the new plan year, 

or these individuals are no longer 

eligible for enrollment in a catastrophic 

plan for the new year, and these 

individuals do not actively select a 

different QHP. We also propose to add 

a new paragraph (j)(5) to § 155.335 to 

establish that an Exchange may not 

newly auto re-enroll into catastrophic 

coverage an enrollee who is currently 

enrolled in coverage of a metal level as 

defined in section 1302(d) of the ACA. 

This change reflects our current practice 

for Exchanges on the Federal platform. 

We propose to amend § 155.400(e)(2) 

to codify that the flexibility for issuers 

experiencing billing or enrollment 

problems due to high volume or 

technical errors is not limited to 

extensions of the binder payment. 

We propose to amend 

§ 155.410(e)(4)(ii) to revise parameters 

around the adoption of an alternative 

open enrollment period by a State 

Exchange. Specifically, we propose for 

benefit years beginning on or after 

January 1, 2025, State Exchanges must 

adopt an open enrollment period that 

begins on November 1 of the calendar 

year preceding the benefit year and ends 

no earlier than January 15 of the 

applicable benefit year, with the option 

to extend the open enrollment period 

beyond January 15 of the applicable 

benefit year. We believe this proposal 

would ensure consumers are not 

subjected to plan cost increases that 

they may not be notified about until 

after open enrollment ends, give 

Navigators, certified application 

counselors, and agents and brokers 

ample time to assist all interested 

applicants, provide State Exchanges 

with additional flexibility, reduce 

consumer confusion, and improve 

access to health coverage. 

At § 155.420(b), we propose to align 

the effective dates of coverage after 

selecting a plan during certain special 

enrollment periods across all 

Exchanges, including State Exchanges. 

We would require all State Exchanges to 

provide coverage that is effective on the 

first day of the month following plan 

selection, if a consumer enrolls in a 

QHP during certain special enrollment 

periods. This proposal would prevent 

coverage gaps, particularly for 

consumers transitioning between 

different Exchanges or from other 

insurance coverage. 

We propose to amend paragraph 

§ 155.420(d)(16) to revise the parameters 

around the availability of a special 

enrollment period for APTC-eligible 

qualified individuals with a projected 

household income no greater than 150 

percent of the Federal Poverty Level 

(FPL). Specifically, we are proposing to 

remove the limitation that this special 

enrollment period is only available 

during periods of time when APTC 

benefits are available such that the 

applicable taxpayers’ applicable 

percentage is set to zero and that 

Exchanges have the option to 

permanently provide this special 

enrollment period. We believe this 

proposal would provide affordable 

coverage available to more uninsured 

people and additional enrollment 

opportunities to low-income consumers. 

We propose to add 

§ 155.430(b)(1)(iv)(D) to permit an 

enrollee to retroactively terminate the 

enrollee’s enrollment in a QHP through 

an Exchange on the Federal platform 

when the enrollee enrolls in Medicare 

Parts A or B, and the termination date 

would be retroactively effective to the 

day before Medicare coverage begins. 

This proposal would allow consumers 

to avoid overlapping coverage and 

paying unnecessary premiums. State 

Exchanges would have the option of 

implementing this proposal, and we 

seek comment on whether this proposal 

should instead be mandatory for State 

Exchanges. 

We propose to revise § 155.1050 to 

require that State Exchanges and SBE– 

FPs establish and impose quantitative 

time and distance network adequacy 

standards for QHPs that are at least as 

stringent as the FFEs’ network adequacy 

standards established for QHPs under 

§ 156.230. We also propose that State 

Exchanges and SBE–FPs be required to 

conduct quantitative network adequacy 

reviews prior to certifying any plan as 

a QHP, consistent with the reviews 

conducted by the FFEs under § 156.230. 

We further propose to require State 

Exchanges and SBE–FPs to permit 

issuers that are unable to meet the 

specified network adequacy standards 

to participate in a justification process 

after submitting their initial network 

adequacy data to account for variances 

and potentially earn QHP certification. 

Finally, we propose to mandate that 

State Exchanges and SBE–FPs require 

all issuers seeking QHP certification to 

submit information to the State 

Exchange or SBE–FP about whether 

network providers offer telehealth 

services. These proposals would be 

effective for plan years beginning on or 

after January 1, 2025. 

6. 45 CFR part 156 

In part 156, we propose user fee rates 

for the 2025 benefit year for all issuers 

participating on the Exchanges using the 

Federal platform. For the 2025 benefit 

year, we propose an FFE user fee rate of 

2.2 percent of total monthly premiums 

and an SBE–FP user fee rate of 1.8 

percent of total monthly premiums. We 

will issue the 2025 benefit year 

premium adjustment percentage index 

and related payment parameters in 

guidance, consistent with the policy 

finalized in part 2 of the 2022 Payment 

Notice. 

For benefit years beginning on or after 

January 1, 2027, we propose three 

revisions to the standards for State 

selection of EHB-benchmark plans at 

§ 156.111. First, we propose to 

consolidate the options for States to 

change EHB-benchmark plans at 

§ 156.111(a) to reduce the burden on 

States to decide between three 

functionally identical choices. Second, 

we propose to revise the typicality 

standard at § 156.111(b)(2) so that, in 

demonstrating that a State’s new EHBbenchmark plan provides a scope of 

benefits that is equal to the scope of 

benefits of a typical employer plan in 

the State, the scope of benefits of a 

typical employer plan in the State 

would be defined as any scope of 

benefits that is as or more generous than 

the scope of benefits in the State’s least 

generous typical employer plan 

(supplemented by the State as necessary 

to provide coverage within each EHB 

category at § 156.110(a)), and as or less 

generous than the scope of benefits in 

the State’s most generous typical 

employer plan (supplemented by the 

State as necessary to provide coverage 

within each EHB category at 

§ 156.110(a)), among the typical 

employer plans currently defined at 

§ 156.111(b)(2)(i)(A) and (B). We also 

propose to remove the generosity 

standard at § 156.111(b)(2)(ii) and to 

make a technical revision to the 

language regarding supplementation at 

§ 156.111(b)(2)(i). Third, we propose to 

revise § 156.111(e)(3) to require States to 

submit a formulary drug list as part of 

their application to change EHBbenchmark plans only if the State is 

seeking to change their prescription 

drug EHB. 

We propose to remove the regulatory 

prohibition at § 156.115(d) on issuers 

from including routine non-pediatric 

dental services as an EHB, which would 

provide States the option to add routine 

adult dental services as an EHB by 

updating their EHB-benchmark plans 

pursuant to § 156.111. 


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10This includes continuation of the differential 

display of standardized plan options on 

HealthCare.gov and enforcement of the 

standardized plan options display requirements for 

approved web-brokers and QHP issuers using a 

direct enrollment pathway to facilitate enrollment 

through an FFE or SBE–FP— including both the 

Classic Direct Enrollment (Classic DE) and 

Enhanced Direct Enrollment (EDE) Pathways. 11See ACA section 1332(a)(4)(B)(iv). 

We propose to amend § 156.122 to 

codify that prescription drugs in excess 

of those covered by a State’s EHBbenchmark plan are considered EHB. As 

a result, they would be subject to 

requirements including the annual 

limitation on cost sharing and the 

restriction on annual and lifetime dollar 

limits, consistent with § 156.130, unless 

the coverage of the drug is mandated by 

State action and is in addition to EHB 

pursuant to § 155.170, in which case the 

drug would not be considered EHB. In 

addition, for plan years beginning on or 

after January 1, 2026, we propose to 

amend § 156.122 to provide that the 

Pharmacy & Therapeutics (P&T) 

committee must include a consumer 

representative. We also seek comment 

on a possible future policy proposal to 

replace the United States Pharmacopeia 

(USP) Medicare Model Guidelines 

(MMG) with the USP Drug Classification 

system (DC) to classify the prescription 

drugs required to be covered as EHB 

under § 156.122(a)(1). In particular, we 

seek public comment to confirm or 

further expand our understanding of the 

risks and benefits associated with 

replacing the USP MMG with the USP 

DC in this context. 

For PY 2025, we propose to follow the 

approach finalized in the 2024 Payment 

Notice concerning standardized plan 

option metal levels, and to otherwise 

maintain continuity with our approach 

to standardized plan options finalized 

in the 2023 and 2024 Payment 

Notices.10 We propose to make only 

minor updates to the plan designs for 

PY 2025 to ensure these plans have AVs 

within the permissible de minimis range 

for each metal level. Our proposed 

updates to plan designs for PY 2025 are 

detailed in § 156.201 of the preamble of 

this proposed rule, specifically in 

Tables 12 and 13. 

In the 2024 Payment Notice (88 FR 

25858), we announced our intent to 

propose an exceptions process that 

would allow issuers to offer nonstandardized plan options in excess of 

the limit of two per product network 

type, metal level, inclusion of dental 

and vision benefit coverage, and service 

area for PY 2025 and subsequent years. 

We propose an exceptions process at 

§ 156.202 that would allow issuers to 

offer more than two non-standardized 

plan options per product network type, 

metal level, inclusion of dental and 

vision benefit coverage, and service area 

for PY 2025 and subsequent plan years, 

if the issuer can demonstrate that these 

additional non-standardized plans have 

specific design features that would 

substantially benefit consumers with 

chronic and high-cost conditions. 

We propose a new regulatory 

provision that would permit us to allow 

a CO–OP loan recipient to voluntarily 

terminate its loan agreement with us 

and cease to constitute a qualified nonprofit health insurance issuer (QNHII), 

for the purpose of pursuing innovative 

business plans that are not otherwise 

consistent with the governance 

requirements and business standards 

applicable to a CO–OP borrower. Under 

the proposed new regulatory provision, 

we would be able to consider a request 

by a CO–OP to voluntarily terminate its 

loan agreement for reasons other than 

financial viability, provided all 

outstanding CO–OP loans issued to the 

loan recipient are repaid in full prior to 

termination, and we believe granting the 

request would meaningfully enhance 

consumer access to quality, affordable, 

member-focused, non-profit health care 

options in affected markets. 

We propose conforming amendments 

to the payment and collections process 

set forth at § 156.1215 to align with the 

policies and regulations proposed in the 

Federal Independent Dispute Resolution 

Operations proposed rule (88 FR 75744). 

This proposal would provide that 

administrative fees for utilizing the No 

Surprises Act Federal independent 

dispute resolution (IDR) process for 

health insurance issuers that participate 

in financial programs under the ACA 

would be subject to netting as part of 

HHS’ integrated monthly payment and 

collections cycle. Additionally, we 

propose to amend § 156.1215 to provide 

that any amount owed to the Federal 

government by an issuer and its 

affiliates for unpaid administrative fees 

due to the Federal government from 

these issuers and their affiliates for 

utilizing the Federal IDR process in 

accordance with § 149.510(d)(2), after 

HHS nets amounts owed by the Federal 

government under these programs, 

would be the basis for calculating a debt 

owed to the Federal government. 

III. Provisions of the Proposed 

Regulations 

A. 31 CFR part 33 and 45 CFR Part 

155—Section 1332 Waivers 

1. Background 

Section 1332 of the ACA permits 

States to apply for a section 1332 waiver 

to pursue innovative strategies for 

providing their residents with access to 

higher value, more affordable health 

insurance coverage. To allow for greater 

flexibility in communicating with the 

public, we are proposing updates to the 

public hearing process requirements for 

section 1332 waivers. 

Under section 1332(b) of the ACA, the 

Secretary of HHS and the Secretary of 

the Treasury (collectively, the 

Secretaries) may exercise their 

discretion to approve a request for a 

section 1332 waiver only if the 

Secretaries determine that the proposal 

for the section 1332 waiver meets the 

following four requirements, referred to 

as the statutory guardrails: (1) the 

proposal will provide coverage that is at 

least as comprehensive as coverage 

defined in section 1302(b) of the ACA 

and offered through Exchanges 

established under title I of the ACA, as 

certified by the Office of the Actuary of 

CMS, based on sufficient data from the 

State and from comparable States about 

their experience with programs created 

by the ACA and the provisions of the 

ACA that would be waived; (2) the 

proposal will provide coverage and costsharing protections against excessive 

out-of-pocket spending that are at least 

as affordable for the State’s residents as 

would be provided under title I of the 

ACA; (3) the proposal will provide 

coverage to at least a comparable 

number of the State’s residents as would 

be provided under title I of the ACA; 

and (4) the proposal will not increase 

the Federal deficit. The Secretaries 

retain their discretionary authority to 

deny requested section 1332 waivers 

when appropriate given consideration of 

the application, as a whole, even if a 

proposal for a section 1332 waiver 

meets the four statutory guardrails. 

The Departments are responsible for 

monitoring an approved section 1332 

waiver’s compliance with the statutory 

guardrails and for conducting 

evaluations to determine the impact of 

the section 1332 waiver. Specifically, 

section 1332(a)(4)(B)(v) of the ACA 

requires the Secretaries to promulgate 

regulations that provide for a process for 

the periodic evaluation of approved 

section 1332 waivers. The Secretaries 

must also promulgate regulations that 

provide for a process under which 

States with approved section 1332 

waivers submit to the Secretaries 

periodic reports concerning the 

implementation of the State’s waiver 

program.11


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12The Federal COVID–19 PHE ended on May 11, 

2023. https://www.hhs.gov/about/news/2023/05/09/ 

fact-sheet-end-of-the-covid-19-public-healthemergency.html#:∼:text=

That%20means%20with%20the%20COVID,

the%20expiration%20of%20the%20PHE. 

13For example, in Alaska the State’s PHE ended 

on July 1, 2022 (https://health.alaska.gov/PHE/ 

Pages/default.aspx); in Colorado the Disaster 

Recovery Order ended on April 27, 2023 (https:// 

hcpf.colorado.gov/covid-19-phe-planning); in 

Georgia the State of Emergency ended on May 11, 

2023 (https://dph.georgia.gov/press-releases/2023- 

05-11/dph-news-release-end-public-healthemergency-declaration); and in Rhode Island the 

State’s COVID–19 Disaster Emergency ended on 

May 11, 2023 (https://governor.ri.gov/executiveorders/executive-order-23-05). 

14Note that this post-award hearing was also a 

hearing for the State’s waiver extension application, 

which likely increased attendance. 

15Note that attendance was relatively higher in 

2020 likely due to the forum following the State’s 

first full year of implementing its reinsurance 

program. 

2. Proposed Amendments to Normal 

Public Notice Requirements (31 CFR 

33.112, 31 CFR 33.120, 45 CFR 

155.1312, and 45 CFR 155.1320) 

Sections 1332(a)(4)(B)(i) and (iii) of 

the ACA provide that the Secretaries 

shall promulgate regulations that 

provide for a process for public notice 

and comment at the State level, 

including public hearings, and a process 

for providing public notice and 

comment at the Federal level after the 

section 1332 waiver application is 

received by the Secretaries, respectively, 

that are both sufficient to ensure a 

meaningful level of public input. 

Current regulations at 31 CFR 33.112 

and 45 CFR 155.1312 specify State 

public notice and comment period and 

participation requirements for proposed 

section 1332 waiver requests, and 31 

CFR 33.116(b) and 45 CFR 155.1316(b) 

specify the public notice and comment 

period and approval requirements under 

the accompanying Federal process. 

In the November 2020 interim final 

rule (85 FR 71142), the Departments 

revised regulations to set forth 

flexibilities in the public notice 

requirements and post-award public 

participation requirements for section 

1332 waivers during the COVID–19 

PHE. In the September 2021 final rule 

(86 FR 53502), the Departments 

extended those changes beyond the 

COVID–19 PHE to allow similar 

flexibilities in the event of future 

natural disasters; PHEs; or other 

emergent situations that threaten 

consumers’ access to health insurance 

coverage, consumers’ access to health 

care, or human life. Currently, in such 

an event, States may submit a request to 

the Departments to modify, in part, the 

State public notice requirements 

specified in 31 CFR 33.112(a)(1), (b), (c), 

and (d) and 45 CFR 155.1312(a)(1), (b), 

(c), and (d), and the Federal public 

notice requirement specified in 31 CFR 

33.116(b) and 45 CFR 155.1316(b), 

pursuant to 31 CFR 33.118(a) and 45 

CFR 155.1318(a). 

The criteria to request a modification 

from the normal public notice 

requirements during an emergent 

situation are set forth in 31 CFR 

33.118(b)(1) through (5) and 45 CFR 

155.1318(b)(1) through (5). Pursuant to 

31 CFR 33.118(b)(3) and 45 CFR 

155.1318(b)(3), the State’s request to 

modify normal public notice procedures 

is required to include: the justification 

for the requested modification from the 

State public notice procedures as it 

relates to the emergent situation and the 

alternative public notice procedures, 

including public hearings, that it 

proposes to implement at the State level 

and that are designed to provide the 

greatest opportunity for and level of 

meaningful public input from impacted 

interested parties that is practicable 

given the emergent circumstances 

motivating the State’s request for a 

modification. 

Since the finalization of the 

flexibilities in 31 CFR 33.118(b)(1) 

through (5) and 45 CFR 155.1318(b)(1) 

through (5), almost all States with 

approved section 1332 waivers (‘‘section 

1332 waiver States’’) submitted requests 

that were granted by the Departments to 

conduct their annual post-award forums 

virtually instead of in-person during the 

COVID–19 PHE to reduce the risk of 

transmission of COVID–19. Similarly, 

during the COVID–19 PHE, States 

submitting new section 1332 waiver 

applications, waiver extension requests, 

or waiver amendment requests also 

requested to host their State public 

hearings virtually and these requests 

were also granted by the Departments. 

However, with the recent expiration of 

the Federal COVID–19 PHE 12 (and 

many State COVID–19 PHEs) 13 and in 

line with the requirements of 31 CFR 

33.120(c) and 45 CFR 155.1320(c) and 

31 CFR 33.112(c) and 45 CFR 

155.1312(c), the Departments have 

ceased granting States’ requests to hold 

public hearings or post-award forums 

virtually instead of in-person on the 

basis of the Federal COVID–19 PHE. 

Upon review and consideration of the 

lessons learned during the COVID–19 

PHE, the Departments have determined 

that some current provisions regarding 

normal State public notice procedures 

are outdated given the increased 

accessibility that technology has 

provided for virtual and telephonic 

meetings. States have shared that their 

residents benefitted from the States’ 

opportunity to host public hearings and 

post-award forums virtually, and that 

they would like to continue doing so to 

facilitate attendance. States have also 

reported to the Departments that hosting 

meetings virtually during the COVID–19 

PHE did not decrease the amount or 

quality of meaningful input received. 

States’ experience during this time 

demonstrated that interested parties 

were able to virtually attend meetings 

and submit public comments verbally or 

in-writing, and States did not report any 

significant issues relating to virtual 

platforms that impeded public 

attendance or participation. States 

continued to share with the 

Departments summaries of their postaward forums, as well as all public 

comments received and actions taken in 

response to concerns or comments, in 

accordance with section 1332 waiver 

annual reporting requirements. In 

States’ new waiver applications, waiver 

extension requests, and waiver 

amendment requests, States also shared 

with the Departments summaries of 

virtually conducted hearings from their 

State public comment periods and 

addressed public comments or concerns 

received. 

Beyond mitigating the spread of 

COVID–19, information shared by 

section 1332 waiver States has 

demonstrated that the opportunity to 

host post-award forums and public 

hearings on virtual platforms facilitated 

comparable or higher levels of public 

attendance when compared to 

previously held in-person meetings. For 

example, at Maryland’s annual postaward forums held in 2019 (in-person) 

and 2020–2022 (virtual), the State saw 

comparable participation across the 

years from interested parties. Minnesota 

also reported comparable attendance at 

its post-award forums across the years: 

4 attendees in 2018 (in-person), 1 in 

2019 (in-person), 4 in 2020 (virtual), 9 

in 2021 (virtual),14 and 2 in 2022 

(virtual). Likewise, Wisconsin had 6 

attendees at its post-award forum in 

2019 (in-person), 24 in 2020 (virtual),15

11 in 2021 (virtual), and 7 in 2022 

(virtual). Wisconsin noted that using a 

virtual format has allowed individuals 

who would otherwise not be able to 

attend in-person to view the State’s 

presentation and that this has proven to 

be a convenient means for individuals 

to attend the forum. 

States that began waiver 

implementation after the start of the 

COVID–19 PHE have also reported 

successfully hosting virtual post-award 

forums. For example, Colorado 

conducted its first post-award forum 

entirely virtually in 2020 and reported 


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82522 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

16Note that this post-award forum was also a 

hearing for the State’s waiver extension application, 

which likely increased attendance. 

17 Internal Revenue Service, Public Hearings on 

Proposed Regulations to Be Conducted in Person 

with Telephone Options Available, Announcement 

2023–16. Accessed at https://www.irs.gov/pub/irsdrop/a-23-16.pdf. 

18 88 FR 21879. https://www.govinfo.gov/content/ 

pkg/FR-2023-04-11/pdf/2023-07760.pdf. 

79 attendees.16 Pennsylvania had 2 

attendees at its first post-award forum in 

2021 (virtual) and 4 in 2022 (virtual). 

Pennsylvania noted that due to the 

expansiveness of the State’s geography, 

there has historically been low inperson attendance, as observed at its inperson public hearings in 2019 for its 

waiver application, where no members 

of the public attended the first meeting, 

and two members of the public attended 

the second meeting. 

States submitting new waiver 

applications, waiver extension requests, 

or waiver amendment requests during 

the COVID–19 PHE also reported 

successfully conducting their public 

hearings on virtual platforms. For 

example, in January 2022, Alaska held 

a combined post-award forum and State 

public hearing for its waiver extension 

application both in-person and with a 

telephonic option, which 3 members of 

the public attended either in-person or 

virtually. In April 2022, Washington 

held two State public hearings virtually, 

in which 9 representatives from 

organizations attended and shared 

public comments. 

There are other Federal programs and 

agencies that permitted a virtual option 

in place of in-person public hearings 

prior to the COVID–19 PHE or that have 

more recently amended their policies 

for public input to continue virtual and 

telephonic options that were first 

implemented during the COVID–19 

PHE. For example, States that are 

applying for Medicaid section 1115 

demonstrations are permitted to use 

telephonic and web-based conference 

capabilities for public meetings. In fact, 

per 42 CFR 431.408(a)(3), a State must 

use telephonic and/or web conference 

capabilities for at least one of the two 

required public hearings to ensure 

statewide accessibility to the public 

hearing, unless it can document it has 

afforded the public throughout the State 

the opportunity to provide comment, 

such as holding the two public hearings 

in geographically distinct areas of the 

State. 

As another example, during the 

COVID–19 PHE, the Internal Revenue 

Service (IRS) began holding public 

hearings on notices of proposed 

rulemaking telephonically instead of inperson. Following the end of the Federal 

COVID–19 PHE, the IRS recently 

announced that, for proposed 

regulations published in the Federal 

Register after May 11, 2023,17 public 

hearings would be conducted in-person 

but that a telephonic option would 

remain available for those who prefer to 

attend or testify by telephone. 

The Departments considered whether 

to propose requiring States to hold at 

least one of the required public hearings 

for waiver applications in-person. 

However, as explained above, States 

have successfully hosted post-award 

forums and public hearings for section 

1332 waiver applications virtually to 

allow for meaningful public input over 

the last several years. Furthermore, by 

allowing States the ability to hold all of 

their meetings virtually, States may 

better allow for input across different 

geographies, communities, and 

populations. We also considered 

proposing the standard under section 

1115 demonstrations where one hearing 

is required to be done virtually. 

However, given the successful hosting 

of virtual meetings with public 

participation by States for section 1332 

waivers, it does not seem necessary to 

continue to require in-person meetings 

to solicit public input on section 1332 

waivers. 

The Departments believe that by 

allowing States the opportunity to hold 

post-award forums and public hearings 

virtually and through digital platforms, 

States would be able to continue 

facilitating attendance and participation 

from interested parties and the public to 

provide meaningful input. As such, the 

Departments are of the view that 

updating the State public notice 

procedures would enhance public 

participation in the section 1332 waiver 

review and monitoring process. This 

approach would help remove barriers to 

participation and increase opportunities 

for engagement in policymaking for 

communities and local partners who 

may face barriers to in-person 

participation (for example, those in 

rural areas). This approach is also 

consistent with Executive Order 14094, 

Executive Order on Modernizing 

Regulatory Review, as it would 

proactively engage interested or affected 

parties, including members of 

underserved communities, and promote 

best practices for information 

accessibility and engagement with 

interested or affected parties through the 

use of alternative platforms and media 

for engaging the public.18 Further, this 

approach may improve States’ ability to 

understand and eliminate barriers 

experienced by underserved or underrepresented communities, and identify 

opportunities to advance health equity, 

while diminishing administrative 

burden related to the integration of inperson and virtual formats. 

Therefore, we propose that a virtual 

(that is, one that uses telephonic, digital, 

and/or web-based platforms) or hybrid 

(that is, one that provides for both inperson and virtual attendance) public 

hearing or forum be considered as the 

equivalent of holding an in-person 

meeting. In the 2012 final rule (77 FR 

11700), the Departments noted that as 

set forth in 31 CFR 33.112(c)(1) and 45 

CFR 155.1312(c)(1), a State must hold at 

least two public hearings in distinct 

locations. Under the proposal in this 

rule to modify the normal public notice 

procedures, States would still need to 

hold at least two public hearings in 

distinct locations. For example, the 

Departments clarify that under this 

rule’s proposal to allow flexibility to 

host these meetings virtually, a State 

would not be permitted to count a 

public hearing in which there is 

simultaneously an in-person location 

and virtual platform as two hearings (or 

two locations). Instead, one virtual or 

hybrid meeting would still count as one 

public hearing, and two virtual or 

hybrid meetings would count as two 

public hearings. 

To codify these new proposed 

policies, we propose to amend 31 CFR 

33.112(c) and 45 CFR 155.1312(c) and 

31 CFR 33.120(c) and 45 CFR 

155.1320(c). More specifically, the 

Departments propose to amend 31 CFR 

33.112(c) and 45 CFR 155.1312(c) to 

permit States to conduct public hearings 

in a virtual (that is, one that uses 

telephonic, digital, and/or web-based 

platforms) or hybrid (that is, one that 

provides for both in-person and virtual 

attendance) format in lieu of conducting 

an in-person meeting. The Departments 

also propose to amend 31 CFR 33.120(c) 

and 45 CFR 155.1320(c) to provide that 

for a State’s annual post-award forum, 

the public forum shall be conducted in 

an in-person, virtual (that is, one that 

uses telephonic, digital, and/or webbased platforms), or hybrid (that is, one 

that provides for both in-person and 

virtual attendance) format. The 

Departments propose that these changes 

go into effect upon finalization of this 

rule. Because these changes would 

relieve a regulatory restriction, the 

Departments anticipate that they would 

be made effective immediately upon 

publication of a final rule. 

This proposal is limited to allowing 

flexibility to host required meetings 

virtually. States would be required to 

continue to abide all other public notice 

requirements, including public notice 


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19See 31 CFR 33.112(a)(2) and 45 CFR 

155.1312(a)(2). 

20See Title VI of the Civil Rights Act of 1964 (42 

U.S.C. 2000d, 45 CFR part 80), Section 1557 of the 

ACA (42 U.S.C. 18116), Section 504 of the 

Rehabilitation Act of 1973 (29 U.S.C 794, 45 CFR 

part 84), and Title II of the Americans with 

Disabilities Act (42 U.S.C. 1213 et seq., 28 CFR part 

35). The HHS Office for Civil Rights enforces 

applicable Federal civil rights laws that prohibit 

discrimination on the basis of race, color, national 

origin, sex, age, or disability, as well as laws 

protecting the exercise of conscience and religious 

freedom, including the Religious Freedom 

Restoration Act (Pub. L 103–141) (42 U.S.C. 2000bb 

through 2000bb–4). 

21MAGI-based methodologies are the rules 

described in section 36B(d)(2)(B) of the U.S. 

Internal Revenue Code. 

22Because the AFDC program no longer exists, we 

have permitted States, where AFDC methodologies 

otherwise apply, to use MAGI-like methodologies 

instead of AFDC methodologies in determining 

eligibility for the medically needy. 42 CFR 

435.831(b)(1)(ii). Disregards under section 

1902(r)(2)(A) of the Act may be applied to 

individuals whose eligibility is determined using 

these ‘‘MAGI-like’’ methodologies. For a discussion 

of MAGI-like methodologies, see 81 FR 86382, 

86415–86418 (November 30, 2016). We have 

proposed that States have the option to apply 

MAGI-like methodologies in all circumstances in 

which AFDC methodologies otherwise apply. 87 FR 

54842. 

23Section 1902(r)(2) of the Act does not limit the 

amount of an income or a resource disregard. States 

could, for example, disregard all countable income 

and/or resources for an eligibility under the 

authority of section 1902(r)(2) of the Act. Under 42 

CFR 435.1007(e), the Federal financial participation 

(FFP)-related income limits are applied after 

application of cash assistance income deductions 

and any disregards in the State plan authorized 

under section 1902(r)(2) of the Act. 

procedural requirements for waiver 

applications, waiver extension and 

waiver amendment requests, and postaward forums. For example, States 

would still be required to have a process 

to consult and collaborate with 

Federally-recognized tribes,19 as 

applicable, as well as take reasonable 

steps to provide meaningful access for 

individuals with limited English 

proficiency and appropriate steps to 

ensure effective access for and 

communication with individuals with 

disabilities, including accessibility of 

information and communication 

technology.20 States should recognize 

that virtual meetings may present 

additional accessibility challenges for 

people with communications and 

mobility disabilities, as well as to those 

who lack broadband access. Complying 

with the requirement to ensure effective 

communication may entail providing 

American Sign Language interpretation 

and real-time captioning and ensuring 

that the virtual platform is interoperable 

with assistive technology for those with 

mobility difficulties. 

Finally, the Departments clarify that 

under this proposal, States should have 

a process by which members of the 

public can request in-person meetings 

for the annual post-award forum or State 

public hearings on waiver applications, 

waiver extension requests, or waiver 

amendments requests, and that States 

should accommodate those requests 

whenever possible. In addition, States 

with approved section 1332 waivers and 

States seeking approval for proposed 

waivers would continue to have 

flexibility to submit requests to the 

Departments during emergent situations 

to modify certain public participation 

requirements as set forth in 31 CFR 

33.118(b)(1) through (5) and 45 CFR 

155.1318(b)(1) through (5). 

The Departments seek comment on 

these proposals. 

B. 42 CFR Parts 435 and 600 

1. Increase State Flexibility in the Use 

of Income and Resource Disregards for 

Non-MAGI Populations (42 CFR 

435.601) 

We propose to provide States with 

greater flexibility to adopt income and/ 

or resource disregards in determining 

financial eligibility under section 

1902(r)(2) of the Act for individuals 

excepted from application of financial 

methodologies based on modified 

adjusted gross income (‘‘MAGI-based 

methodologies’’). 

Section 1902(r)(2) of the Act requires 

that States, in determining Medicaid 

financial eligibility, apply a 

methodology that may be less 

restrictive, but which may not be more 

restrictive, than in the case of 

individuals seeking eligibility on the 

basis of being 65 years old or older, 

having blindness or a disability, under 

the supplemental security income (SSI) 

program. In the case for other 

individuals, the methodology may be 

less restrictive, but may not be more 

restrictive than the methodology 

applied to determine eligibility ‘‘under 

the State plan most closely categorically 

related.’’ For the latter populations, 

prior to the enactment of the ACA, the 

aid to families with dependent child 

AFDC program methodologies were 

generally used (42 CFR 435.601(a), (b), 

and (d)(2)(ii)). However, section 2002(a) 

of the ACA amended section 1902(e) of 

the Act which, at paragraph (14)(A), 

requires that, notwithstanding section 

1902(r)(2) of the Act (or any other 

provision of title XIX of the Act), States 

use MAGI-based methodologies in 

determining individuals’ Medicaid 

eligibility unless the individual is 

excepted from such methodologies 

under section 1902(e)(14)(D) of the 

Act.21 Implemented in our regulations at 

42 CFR 435.603(j), these exceptions 

include, but are not limited to, 

individuals who are age 65 years old or 

older; have blindness or a disability; are 

being evaluated for coverage as 

medically needy; or request need for 

coverage of long-term services and 

supports (LTSS). This means, for 

example, that in determining financial 

eligibility for an optional eligibility 

group in which being at least 65 years 

old is a requirement, SSI-based 

methodologies (as the most closely 

related cash assistance program) and not 

MAGI-based methodologies apply, and 

States must apply a methodology no 

more restrictive than the methodology 

of the SSI program. Similarly, in 

determining eligibility for a medically 

needy group of parents and caretaker 

relatives, States must apply a 

methodology no more restrictive than 

the methodology of the former AFDC 

program.22

Importantly, for any group to which 

SSI, AFDC, or MAGI-like methodologies 

apply, States may utilize the authority 

under section 1902(r)(2)(A) of the Act to 

apply a ‘‘less restrictive’’ methodology; 

that is, they may elect to disregard 

income and/or resources that would 

otherwise be countable under the 

relevant methodology. For example, 

under SSI methodologies, $20 of an 

individual’s otherwise countable 

monthly income is disregarded in 

determining income eligibility. A State 

Medicaid agency, using the authority 

under section 1902(r)(2)(A) of the Act, 

could adopt an additional monthly 

income disregard of $100 for an 

eligibility group to which SSI 

methodologies apply.23

In 1993, we implemented the lessrestrictive methodology authority in 

section 1902(r)(2)(A) of the Act at 42 

CFR 435.601(d)(4) (58 FR 4908–01, 

4929–4930 (January 19, 1993)). We 

confirmed in the regulation the 

eligibility groups to which States may 

apply less restrictive methodologies, 

which include: optional categorically 

needy groups described in section 

1902(a)(10)(A)(ii) of the Act; medically 

needy groups described in section 

1902(a)(10)(C) of the Act; the mandatory 

group serving individuals 65 years old 

or older; who have blindness or 

disabilities in States that have exercised 

the option in section 1902(f) of the Act 

to apply more restrictive criteria to these 

populations than SSI (so-called ‘‘section 

209(b) States’’); and Qualified Medicare 

Beneficiaries described in sections 


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24As also explained in the May 2001 guidance, 

medically needy groups are created in the same 

manner; for example, a State that has adopted the 

medically needy category in section 1902(a)(10)(C) 

of the Act (that is, the medically needy) and elects 

to include the population described in section 

1905(a)(ii) of the Act (parents and caretaker 

relatives) forms a singular medically needy group. 

Section 1902(a)(10)(C) of the Act requires that 

States that select the medically needy category must 

adopt a medically needy group for children under 

18 and a medically needy group for pregnant 

individuals. 

25For further information, see CMS State 

Medicaid Director Letter 21–004, ‘‘State 

Flexibilities to Determine Financial Eligibility for 

Individuals in Need of Home and CommunityBased Services.’’ https://www.medicaid.gov/sites/ 

default/files/2021-12/smd21004_0.pdf. 

1902(a)(10)(E) and 1905(p) of the Act. 

Additionally, the current regulation 

requires that any less restrictive 

methodologies elected by a State must 

be ‘‘comparable for all persons within 

each category of assistance within an 

eligibility group.’’ As further explained 

in 42 CFR 435.601(d)(4): ‘‘For example, 

if the agency chooses to apply less 

restrictive income or resource 

methodology to an eligibility group of 

aged individuals, it must apply that 

methodology to all aged individuals 

within the selected group.’’ 

In 2001, we issued guidance on the 

use of less restrictive methodologies by 

States (‘‘Medicaid Eligibility Groups and 

Less Restrictive Methods of Determining 

Countable Income and Resources 

Questions and Answers,’’ May 11, 2001 

(May 2001 guidance)). As explained in 

the May 2001 guidance, an ‘‘eligibility 

group’’ under section 1902(a)(10)(A)(ii) 

of the Act for purposes of less restrictive 

methodologies is created by applying 

the eligibility requirements described in 

any of the clauses of section 

1902(a)(10)(A)(ii) of the Act (for 

example, section 1902(a)(10)(A)(ii)(I) of 

the Act) to one of the categorical 

populations described in section 1905(a) 

of the Act (for example, individuals 

under the age of 21, or at the option of 

a State, under the age of 20, 19, or 18, 

as described in section 1905(a)(i) of the 

Act). 

For example, a State could elect to 

apply the eligibility criteria described in 

section 1902(a)(10)(A)(ii)(V) of the Act 

(relating to individuals in medical 

institutions for at least 30 consecutive 

days whose incomes do not exceed 300 

percent of the SSI Federal benefit rate) 

to individuals 65 years old or older (the 

population described in section 

1905(a)(iii) of the Act). A State similarly 

could apply the eligibility criteria 

described in section 

1902(a)(10)(A)(ii)(V) of the Act to other 

categorical populations described in 

section 1905(a) of the Act, such as 

individuals who have blindness or 

disabilities (section 1905(a)(vii) of the 

Act) or individuals under age 21 

(section 1905(a)(i) of the Act). As 

explained in the May 2001 guidance, 

the election of the optional eligibility 

category at section 1902(a)(10)(A)(ii)(V) 

of the Act and a population in section 

1905(a) of the Act (for example, 

individuals 65 years old or older) forms 

a singular eligibility group.24

Thus, consistent with 42 CFR 

435.601(d)(4), if a State that covers an 

eligibility group of individuals 65 years 

old and older who have been in a 

medical institution for at least 30 

consecutive days wants to adopt a 

resource disregard of $5,000 of 

otherwise countable resources, the State 

must apply the disregard to all 65 and 

older individuals who are seeking 

coverage under the group; the State 

could not target the disregard at only 

certain 65 and older individuals seeking 

eligibility in the group, for example 

individuals age 65 and older with a 

diagnosed cognitive impairment. 

Section 1902(r)(2)(A) of the Act does 

not expressly impose, and we did not 

identify a specific legal rationale in the 

proposed or final rule requiring, the 

‘‘comparability’’ mandate that we 

incorporated into 42 CFR 435.601(d)(4). 

54 FR 39421, 39433 (September 26, 

1989); 58 FR 4908, 4919 (January 19, 

1993). Section 1902 of the Act contains 

two separate provisions which are 

commonly referred to as 

‘‘comparability’’ rules: section 

1902(a)(10)(B) of the Act, which 

requires that the amount, duration, and 

scope of the medical assistance 

available to any categorically needy 

individuals must not be less than the 

medical assistance available to any 

other categorically needy individuals 

(subject to express exceptions in the 

statute); and section 1902(a)(17) of the 

Act, which requires that eligibility 

standards, subject to certain exceptions, 

must be ‘‘comparable for all groups.’’ 

Upon further analysis, we conclude 

that neither section 1902(a)(10)(B) of the 

Act nor section 1902(a)(17) of the Act 

requires that a State adopting a less 

restrictive methodology for a given 

eligibility group apply such 

methodology to all individuals seeking 

coverage under the group. First, a State’s 

use of a less restrictive methodology for 

an eligibility group would never alter 

the amount, duration, and scope of 

medical assistance available within the 

group, which means the comparability 

mandate in section 1902(a)(10)(B) of the 

Act would never be implicated by a less 

restrictive methodology. Second, the 

comparability mandate in section 

1902(a)(17) of the Act refers to 

standards, not methodologies, which are 

different terms and which we have in 

the past expressly defined differently. 

‘‘Standard’’ refers to the dollar level that 

a person’s income or resources cannot 

exceed to qualify for Medicaid; 

‘‘methodology’’ refers to the rules for 

determining what sources and amounts 

of income and resources will be counted 

in determining whether a person’s 

income exceeds the income and 

resource standard. 54 FR 39421–01, 

39430 (September 26, 1989). Thus, we 

conclude that the incorporation of a 

comparability mandate into 42 CFR 

435.601(d)(4) was a policy choice that 

was not mandated by Federal law. 

In addition, section 3(b) of the 

Sustaining Excellence in Medicaid Act 

(Pub. L. 116–39, enacted in 2019) 

directed that nothing in section 

1902(a)(17) of the Act should be 

construed as prohibiting a State from 

adopting income or resource disregards 

under section 1902(r)(2) of the Act 

exclusively for people who need home 

and community-based services (HCBS) 

authorized under various authorities. In 

other words, section 3(b) of the 

Sustaining Excellence in Medicaid Act 

confirmed that, at least with regard to 

the use of section 1902(r)(2)-related 

authority to target income and/or 

resource disregards at people who need 

HCBS, the comparability mandate in 

section 1902(a)(17) of the Act does not 

impose a bar. We believe that this 

provides further support for the view 

that the comparability mandate in 

section 1902(a)(17) of the Act should 

not be considered to require 

comparability in the use of less 

restrictive methodologies under section 

1902(r)(2)(A) of the Act.25

Over the years, a number of States 

also have sought to target income and/ 

or resource disregards to other 

populations within an eligibility group 

without applying the disregard to all, 

including, for example, individuals with 

disabilities who have accumulated 

resources through saving their earned 

income. Under this example, the 

eligibility group serving individuals 

with disabilities who have earned 

income has comparatively higher 

resource standard than other eligibility 

groups with a resource standard to 

allow these individuals to save their 

earned income. When these individuals 

stop working and must qualify in a 

separate eligibility group to maintain 

their Medicaid, most typically one with 

a much lower resource standard, they 

may be faced with the choice of forgoing 

Medicaid coverage or exhausting the 

savings they were effectively 

incentivized to accumulate in their 


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original eligibility group in order to 

retain their Medicaid eligibility. States 

cannot address this predicament 

without effectively increasing the 

resource standard for everyone in the 

new group because States currently 

cannot, consistent with the 

comparability mandate in 42 CFR 

435.601(d)(4), target a resource 

disregard at applicants for a particular 

eligibility group based on their previous 

eligibility in a separate group. 

For these reasons, we are proposing to 

eliminate paragraph (d)(4) from 42 CFR 

435.601, which would allow States to 

target income and/or resource 

disregards at discrete subpopulations in 

the same eligibility group, provided the 

subpopulation is reasonable and does 

not violate other Federal statutes (for 

example, it does not discriminate based 

on race, gender, sexual orientation or 

disability). We believe this would 

increase State flexibility and provide 

States more options to extend eligibility 

to specific populations based on the 

State’s circumstances. As noted above, 

this proposed regulatory change would 

not be applicable to eligibility groups to 

which MAGI-based financial 

methodologies apply but could be 

applied to most non-MAGI eligibility 

groups. In enacting the Sustaining 

Excellence in Medicaid Act, Congress 

recognized that the ability to target 

income and resource disregards at 

people who need HCBS provides States 

a critical tool in their efforts to 

‘‘rebalance’’ their LTSS programs and 

move institutionalized individuals to 

community-based care. We similarly 

believe that more broadly eliminating 

the comparability rule in the use of 

income and/or resource disregards 

would enable States to achieve targeted 

expansions of coverage that best meet 

their needs, in contrast to the all-ornothing approach that is effectively 

required by the current regulation. 

It is possible that, in eliminating the 

comparability rule from 42 CFR 

435.601(d), a State might narrow an 

existing disregard that is broadly 

available to an eligibility group to 

discrete members of the group. 

However, CMS has not received 

inquiries from States on the feasibility 

of such an approach to the same extent 

that we have received questions from 

States on whether they may use income 

and/or resource disregards to expand 

eligibility in a targeted manner. CMS 

believes that, in the absence of a 

comparability rule in 42 CFR 

435.601(d), States would on the whole 

utilize disregard-related authority to 

expand eligibility instead of contracting 

it. 

Consistent with 42 CFR 435.601(f)(2), 

under the proposed revisions to 42 CFR 

435.601(d), States would continue to be 

required to submit a State plan 

amendment describing any new less 

restrictive methodologies the State seeks 

to apply and the groups to which it 

seeks to apply such methodologies. We 

also confirm that eliminating paragraph 

(d)(4) from 42 CFR 435.601 would not 

mean that States would be required to 

target any new income or resource 

disregards or modify any existing ones. 

The proposed change simply provides 

States with additional flexibility to do 

so. 

We propose to amend 42 CFR 435.601 

to: eliminate the current language of 

paragraph (d)(4); and redesignate the 

current paragraph (d)(5) as paragraph 

(d)(4). We seek comment on our 

proposal. 

2. Changes to the Basic Health Program 

Regulations (42 CFR 600.320) 

Section 1331 of the Patient Protection 

and Affordable Care Act, as amended by 

the Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111– 

152, enacted March 30, 2010), provides 

States with the option to operate a Basic 

Health Program (BHP). In the States that 

elect to operate a BHP, the State’s BHP 

makes affordable health benefits 

coverage available for lawfully present 

individuals under age 65 with 

household incomes between 133 and 

200 percent of the Federal poverty level 

(FPL) (or in the case of a lawfully 

present non-citizen, ineligible for 

Medicaid or the Children’s Health 

Insurance Program (CHIP) due to 

immigration status, with household 

incomes between zero and 200 percent 

of the FPL) who are not eligible for 

Medicaid, CHIP, or other minimum 

essential coverage. As of the date of this 

proposed rule, only New York and 

Minnesota have implemented a BHP. 

Under current 42 CFR 600.320(c), 

States must establish a uniform method 

of determining the effective date of 

eligibility for enrollment in a standard 

health plan following either the 

Medicaid process at 42 CFR 435.915 

exclusive of § 435.915(a) or the 

Exchange standards at 45 CFR 

155.420(b)(1). 

Under the Medicaid rules at 

§ 435.915, the effective date of an 

individual’s eligibility is also the 

effective date of coverage. Under the 

Exchange rules at 45 CFR 155.420(b)(1), 

an individual must first be determined 

to be a qualified individual (that is, 

eligible to enroll in a QHP through an 

Exchange). After that determination is 

made, the individual can make a plan 

selection. The Exchange coverage 

effective date is then determined based 

on when the qualified individual selects 

their plan. If the plan selection is made 

between the first and fifteenth day of the 

month, coverage will be effective the 

first day of the month following the plan 

selection month. If the plan selection is 

made between the sixteenth and the last 

day of the month, coverage will be 

effective the first day of the second 

month following the plan selection 

month. 

In States selecting the Medicaid 

process at 42 CFR 435.915 exclusive of 

§ 435.915(a), eligibility for enrollment in 

a standard health plan in the BHP can 

be effective on either the date the 

application was submitted or the first 

day of the month of such month. In 

States selecting the Exchange standards 

at 45 CFR 155.420(b)(1), an individual is 

eligible to enroll in a standard health 

plan in the BHP on the first day of the 

month following the month of 

application if that individual is found 

eligible to enroll in a standard health 

plan between the first and the fifteenth 

of such month. Furthermore, under the 

Exchange standards if an individual is 

found eligible to enroll in a standard 

health plan between the sixteenth and 

the last day of any month, the 

individual will have an eligibility 

effective date of the first day of the 

second following month. A State 

operating a BHP may require an eligible 

individual to select a plan and/or pay a 

premium prior to the coverage. 

Although the current BHP regulation 

provides States with some flexibility in 

establishing an effective eligibility date, 

it does not permit a State to select a 

standard in which all applicants who 

meet all requirements are eligible to 

enroll in a standard health plan in the 

BHP effective the first day of the month 

following the month of application or 

eligibility determination regardless of 

when they apply or are found eligible to 

enroll in a standard health plan in the 

BHP. As an example, to help to 

illustrate this point, if an individual 

applied on July 7, Medicaid rules would 

allow a BHP to determine an individual 

eligible for enrollment in a standard 

health plan on July 1 or July 7. If an 

individual applied on July 7 and was 

determined BHP-eligible on July 15, in 

a State that follows Exchange rules, the 

individual would be eligible for 

enrollment in a standard health plan on 

August 1. If the individual was 

determined BHP-eligible on July 23 in a 

State that follows Exchange rules, the 

individual would be eligible for 

enrollment in a standard health plan on 

September 1; the State could not choose 

to have coverage start on August 1, 

regardless of the date of application. 


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82526 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

26See also 42 U.S.C. 18041(c)(1). 

27OMB. (2023, March 13). OMB Report to the 

Congress on the BBEDCA 251A Sequestration for 

Fiscal Year 2024. https://www.whitehouse.gov/wpcontent/uploads/2023/03/BBEDCA_Sequestration_

Report_and_Letter_3-13-2024.pdf. 

28Public Law 99–177 (1985). 

29Public Law 117–58, 135 Stat. 429 (2021). 

30 2 U.S.C. 901a. 

31The Infrastructure Investment and Jobs Act 

(Pub. L. 117–58) extended sequestration for the 

HHS-operated risk adjustment program through 

2031 at a rate of 5.7 percent per fiscal year. 

Even in a State with real-time eligibility 

determinations, if the State follows 

Exchange rules and the application is on 

July 23, the individual would be eligible 

for enrollment in a standard health plan 

on September 1. 

We believe eligible individuals 

should have access to coverage as soon 

as is feasible. Since the BHP and 

Exchange standards were first 

established, HHS has taken steps to 

provide further flexibility for States to 

reduce barriers to enrollment and 

eliminate coverage gaps. Additionally, 

system improvements have provided 

faster and more accurate eligibility 

determinations. For example, in 

practice, all special enrollment periods 

on the FFEs now allow coverage to start 

at the beginning of the month after the 

qualifying individual’s triggering event 

regardless of the plan selection date. 

While the Medicaid process at 42 CFR 

435.915, exclusive of § 435.915(a), 

allows for a State operating a BHP to 

have the earliest possible effective date 

for its enrollees, we understand that 

some States may have operational or 

regulatory constraints that do not allow 

them to follow the Medicaid process, 

but may be able to implement an 

effective date for all eligible applicants 

the first day of the month after the 

month in which the eligibility 

determination is made, regardless of 

which day of the month such 

determination occurs. 

Therefore, we propose to revise 

§ 600.320(c) to add a third option at 

paragraph (c)(iii) that would allow a 

State operating a BHP to follow an 

effective date of eligibility for all 

enrollees on the first day of the month 

following the month in which BHP 

eligibility is determined. Because States 

can require individuals to pay their first 

month’s premium prior to enrolling in 

a standard health plan, § 600.320(c)(iii) 

also reflects this State option. Under 

§ 600.320(c)(i), States will continue to 

have the option to follow the Exchange 

standards at 45 CFR 155.420(b)(1) and 

under § 600.320(c)(ii), a State may 

follow Medicaid standards at 42 CFR 

435.915 exclusive of § 435.915(a). 

We considered an alternative option 

of whether to instead allow a State to 

establish its own uniform effective date 

policy, outside of following the three 

options in this proposed rule, subject to 

CMS approval and as long as it is no 

later than the first day of the second 

month following the date that an 

individual has been determined BHPeligible. This alternative option, 

however, may cause delays in coverage 

even further. We seek comment on the 

proposed additional option for 

determining the effective date of 

eligibility for enrollment in a standard 

health plan as well as the alternative 

option. 

C. 45 CFR Part 153—Standards Related 

to Reinsurance, Risk Corridors, and 

HHS Risk Adjustment 

In subparts A, D, G, and H of part 153, 

we established standards for the 

administration of the risk adjustment 

program. The risk adjustment program 

is a permanent program created by 

section 1343 of the ACA that transfers 

funds from lower-than-average risk, risk 

adjustment covered plans to higherthan-average risk, risk adjustment 

covered plans in the individual, small 

group markets, or merged markets, 

inside and outside the Exchanges. In 

accordance with § 153.310(a), a State 

that is approved or conditionally 

approved by the Secretary to operate an 

Exchange may establish a risk 

adjustment program or have HHS do so 

on its behalf.26 We did not receive any 

requests from States to establish and 

operate a risk adjustment program for 

the 2025 benefit year. Therefore, HHS 

will operate risk adjustment in every 

State and the District of Columbia for 

the 2025 benefit year. 

1. Sequestration 

In accordance with the OMB Report to 

Congress on the Joint Committee 

Reductions for Fiscal Year 2024, the 

HHS-operated risk adjustment program 

is subject to the fiscal year 2024 

sequestration.27 The Federal 

Government’s 2024 fiscal year began on 

October 1, 2023. Therefore, the HHSoperated risk adjustment program will 

be sequestered at a rate of 5.7 percent 

for payments made from fiscal year 2024 

resources (that is, funds collected 

during the 2024 fiscal year). 

HHS, in coordination with OMB, has 

determined that, under section 256(k)(6) 

of the Balanced Budget and Emergency 

Deficit Control Act of 1985,28 as 

amended, and the underlying authority 

for the HHS-operated risk adjustment 

program, the funds that are sequestered 

in fiscal year 2024 from the HHSoperated risk adjustment program will 

become available for payment to issuers 

in fiscal year 2025 without further 

Congressional action. If Congress does 

not enact deficit reduction provisions 

that replace the Joint Committee 

reductions, the program would be 

sequestered in future fiscal years, and 

any sequestered funding would become 

available in the fiscal year following 

that in which it was sequestered. 

Additionally, we note that the 

Infrastructure Investment and Jobs 

Act 29 amended section 251A(6) of the 

Balanced Budget and Emergency Deficit 

Control Act of 1985 and extended 

sequestration for the HHS-operated risk 

adjustment program through fiscal year 

2031 at a rate of 5.7 percent per fiscal 

year.30 31

2. HHS Risk Adjustment (§ 153.320) 

The HHS risk adjustment models 

predict plan liability for an average 

enrollee based on that person’s age, sex, 

and diagnoses (also referred to as 

hierarchical condition categories 

(HCCs)), producing a risk score. The 

HHS risk adjustment methodology 

utilizes separate models for adults, 

children, and infants to account for 

clinical and cost differences in each age 

group. In the adult and child models, 

the relative risk assigned to an 

individual’s age, sex, and diagnoses are 

added together to produce an individual 

risk score. Additionally, to calculate 

enrollee risk scores in the adult models, 

we added enrollment duration factors 


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Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82527 

32For the 2017 through 2022 benefit years, there 

is a set of 11 binary enrollment duration factors in 

the adult models that decrease monotonically from 

one to 11 months, reflecting the increased 

annualized costs associated with fewer months of 

enrollments. See, for example, 81 FR 94071 through 

94074. These enrollment duration factors were 

replaced beginning with the 2023 benefit year with 

HCC-contingent enrollment duration factors for up 

to 6 months in the adult models. See, for example, 

87 FR 27228 through 27230. 

33For the 2018 benefit year, there were 12 RXCs, 

but starting with the 2019 benefit year, the two 

severity-only RXCs were removed from the adult 

models. See, for example, 83 FR 16941. 

34See Table 1 for a list of factors in the adult 

models, and Table 2 for a list of factors in the child 

models. 

35See 87 FR 27224 through 27228. 

36The State payment transfer formula refers to the 

part of the Federally certified risk adjustment 

methodology that applies in States where HHS is 

responsible for operating the program. The formula 

calculates payments and charges at the State market 

risk pool level (prior to the calculation of the highcost risk pool payment and charge terms that apply 

beginning with the 2018 benefit year). See, for 

example, 81 FR 94080. 

37 84 FR 17463 through 17466. 

38Although we do receive the next year of 

enrollee-level EDGE data prior to the proposed rule, 

that data must go through several quality and 

analysis checks before it is useable for HHS risk 

adjustment model recalibration. 

39 87 FR 78215 through 78216. 

40 88 FR 25749 through 25753. 

41See, for example, the Renewal of Determination 

that a Public Health Emergency Exists dated 

February 9, 2023. https://aspr.hhs.gov/legal/PHE/ 

Pages/COVID19-9Feb2023.aspx. 42As described in the 2016 Risk Adjustment 

White Paper (https://www.cms.gov/cciio/resources/ 

forms-reports-and-other-resources/downloads/ramarch-31-white-paper-032416.pdf) and the 2017 

Payment Notice (81 FR at 12218), we subdivide 

expenditures into traditional drugs, specialty drugs, 

medical services, and preventive services and 

determine trend factors separately for each category 

of expenditure. In determining these trend factors, 

we consult our actuarial experts, review relevant 

Unified Rate Review Template (URRT) submission 

data, analyze multiple years of enrollee-level EDGE 

data, and consult National Health Expenditure 

Accounts (NHEA) data as well as external reports 

and documents published by third parties. In this 

process, we aim to determine trends that reflect 

changes in cost of care rather than gross growth in 

expenditures. As such, we believe the trend factors 

we used for each expenditure category for the 2025 

benefit year are appropriate for the most recent 

changes in cost of care that we have seen in the 

market. 

beginning with the 2017 benefit year,32

and prescription drug categories (RXCs) 

beginning with the 2018 benefit year.33

Starting with the 2023 benefit year, we 

removed the severity illness factors in 

the adult models and added interacted 

HCC count factors (that is, additional 

factors that express the presence of a 

severity or transplant HCC in 

combination with a specified number of 

total payment HCCs or HCC groups on 

the enrollee’s record) to the adult and 

child models 34 applicable to certain 

severity and transplant HCCs.35

Infant risk scores are determined by 

inclusion in one of 25 mutually 

exclusive groups, based on the infant’s 

maturity and the severity of diagnoses. 

If applicable, the risk score for adults, 

children, or infants is multiplied by a 

cost sharing reduction (CSR) adjustment 

factor. The enrollment-weighted average 

risk score of all enrollees in a particular 

risk adjustment covered plan (also 

referred to as the plan liability risk score 

(PLRS)) within a geographic rating area 

is one of the inputs into the State 

payment transfer formula,36 which 

determines the State transfer payment or 

charge that an issuer will receive or be 

required to pay for that plan for the 

applicable State market risk pool for a 

given benefit year. Thus, the HHS risk 

adjustment models predict average 

group costs to account for risk across 

plans, in keeping with the Actuarial 

Standards Board’s Actuarial Standards 

of Practice for risk classification. 

a. Data for HHS Risk Adjustment Model 

Recalibration for the 2025 Benefit Year 

We are proposing to recalibrate the 

2025 benefit year HHS risk adjustment 

models with the 2019, 2020, and 2021 

enrollee-level EDGE data. Consistent 

with the approach outlined in the 2020 

Payment Notice to no longer use 

MarketScan® data for recalibrating the 

HHS risk adjustment models, we 

propose to recalibrate the HHS risk 

adjustment models for the 2025 benefit 

year using only enrollee-level EDGE 

data, and we would continue to use 

blended, or averaged, coefficients from 

the 3 years of separately solved models 

for the 2025 benefit year model 

recalibration.37 Additionally, as 

outlined in the 2022 Payment Notice (86 

FR 24140, 24152), we propose to use the 

3 most recent consecutive years of 

enrollee-level EDGE data that are 

available at the time we incorporate the 

data in the draft recalibrated coefficients 

published in the proposed rule for the 

applicable benefit year,38 and would not 

update the coefficients between the 

proposed and final rules if an additional 

year of enrollee-level EDGE data 

becomes available for incorporation. We 

believe this promotes stability, better 

meets the goal of the HHS-operated risk 

adjustment program and allows issuers 

more time to incorporate this 

information when pricing their plans for 

the upcoming benefit year. 

In the 2024 Payment Notice (88 FR 

25740 through 25749), we finalized the 

use of 2018, 2019 and 2020 benefit year 

enrollee-level EDGE data for 

recalibration of the 2024 benefit year 

HHS risk adjustment models for all 

model coefficients, with no exceptions. 

As explained in the 2024 Payment 

Notice proposed rule 39 and final rule,40

we analyzed the 2020 benefit year data 

to identify possible impacts of the 

COVID–19 PHE and our analysis 

generally found that the 2020 enrolleelevel EDGE data were anomalous 

primarily in the volume and frequencies 

of certain types of claims, but that the 

relative costs of specific services, at 

least those associated with payment 

HCCs in the HHS risk adjustment 

models, were largely unaffected. 

Because the HHS risk adjustment 

models predict relative costs of care for 

specific conditions on an enrollee-level 

basis and tend not to rely on overall 

patterns of utilization, the minimal 

impacts to relative costs of care for 

payment HCCs likewise resulted in 

minimal impacts on the coefficients 

fitted by the 2020 enrollee-level EDGE 

recalibration data. 

Considering that the COVID–19 PHE 

was still in effect throughout the 2021 

benefit year,41 we recognize that some 

interested parties may continue to be 

concerned about the use of either the 

2020 or 2021 enrollee-level EDGE data 

for the purposes of HHS risk adjustment 

model recalibration. In this regard, we 

conducted additional analyses to 

determine whether any anomalies in the 

2021 benefit year enrollee-level EDGE 

data were present beyond expected 

year-to-year variation and whether the 

use of two years of PHE-impacted data 

presented any additional concerns. We 

did not identify any such anomalies and 

note that all draft coefficients for the 

2025 benefit year HHS risk adjustment 

models in this proposed rule vary from 

their values in the 2024 HHS risk 

adjustment models within the range of 

previous year-to-year coefficient 

changes. 

As such, we propose to determine 

coefficients for the 2025 benefit year 

based on a blend of separately solved 

coefficients from the 2019, 2020, and 

2021 benefit years’ enrollee-level EDGE 

data, with the costs of services 

identified from the data trended 

between the relevant year of data and 

the 2025 benefit year.42 The draft 

coefficients listed in Tables 1 through 6 

reflect the use of trended 2019, 2020, 

and 2021 benefit year enrollee-level 

EDGE data, as well as other HHS risk 

adjustment model updates proposed in 

this proposed rule (including, for 

example, the proposed pricing 

adjustment for Hepatitis C drugs). 

However, we note that the draft 

coefficients could change between the 

proposed and final rules if we identify 

an error after publication of this 

proposed rule or if any proposed model 

parameters are modified in response to 

comments. In addition, consistent with 


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82528 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

43See for example, 84 FR 17463 through 17466. 

44The Hepatitis C drugs market pricing 

adjustment to plan liability is applied for all 

enrollees taking Hepatitis C drugs in the data used 

for recalibration. 

45Silseth, S., & Shaw, H. (2021). Analysis of 

prescription drugs for the treatment of hepatitis C 

in the United States. Milliman White Paper. https:// 

www.milliman.com/-/media/milliman/pdfs/2021- 

articles/6-11-21-analysis-prescription-drugstreatment-hepatitis-c-us.ashx. 

46See Miligan, J, (2018). A perspective from our 

CEO: Gilead Subsidiary to Launch Authorized 

Generics to Treat HCV. Gilead. https://

www.gilead.com/news-and-press/companystatements/authorized-generics-for-hcv. See also 

AbbVie. (2017). AbbVie Receives U.S. FDA 

Approval of MAVYRETTM (glecaprevir/ 

pibrentasvir) for the Treatment of Chronic Hepatitis 

C in All Major Genotypes (GT 1–6) in as Short as 

8 Weeks. Abbvie. https://news.abbvie.com/news/ 

abbvie-receives-us-fda-approval-mavyret-gleca

previrpibrentasvir-for-treatment-chronic-hepatitis-cin-all-major-genotypes-gt-1-6-in-as-short-as-8- 

weeks.htm. 

47We are not proposing changes to the high-cost 

risk pool parameters for the 2025 benefit year. 

Therefore, we would maintain the $1 million 

threshold and 60 percent coinsurance rate. 

§ 153.320(b)(1)(i), if we are unable to 

finalize the final coefficients in time for 

publication in the final rule, we would 

publish the final coefficients for the 

2025 benefit year in guidance soon after 

the publication of the final rule. 

We seek comment on the proposal to 

determine 2025 benefit year coefficients 

for the HHS risk adjustment models 

based on a blend of separately solved 

coefficients from the 2019, 2020, and 

2021 enrollee-level EDGE data. 

b. Pricing Adjustment for the Hepatitis 

C Drugs 

For the 2025 benefit year, we propose 

to continue applying a market pricing 

adjustment to the plan liability 

associated with Hepatitis C drugs in the 

HHS risk adjustment models.43 Since 

the 2020 benefit year HHS risk 

adjustment models, we have been 

making a market pricing adjustment to 

the plan liability associated with 

Hepatitis C drugs to reflect future 

market pricing prior to solving for 

coefficients for the models.44 The 

purpose of this market pricing 

adjustment is to account for significant 

pricing changes between the data years 

used for recalibrating the models and 

the applicable benefit year of HHS risk 

adjustment as a result of the 

introduction of new and generic 

Hepatitis C drugs.45

We have committed to reassessing 

this pricing adjustment with additional 

years of enrollee-level EDGE data, as 

data becomes available. As part of the 

2025 benefit year model recalibration 

analysis, we reassessed the cost trend 

for Hepatitis C drugs using available 

enrollee-level EDGE data (including 

2021 benefit year data) to consider 

whether the adjustment was still needed 

and if it is still needed, whether it 

should be modified. We found that the 

data for the Hepatitis C RXC that would 

be used for the 2025 benefit year 

recalibration still do not account for the 

significant pricing changes due to the 

introduction of new and generic 

Hepatitis C drugs, and therefore, do not 

precisely reflect the average cost of 

Hepatitis C treatments applicable to the 

benefit year in question. 

Specifically, although generic 

Hepatitis C drugs became available on 

the market in 2019,46 and therefore were 

available for all 3 years of data proposed 

to be used for the 2025 benefit year 

model recalibration, our analysis of the 

data continued to observe that costs for 

Hepatitis C drugs are not increasing at 

the same rate as other drug costs 

between the data years and the 

applicable benefit year of HHS risk 

adjustment, likely due to continued 

increases in the proportion of Hepatitis 

C drug prescriptions for generic versions 

of the drugs. As such, we do not believe 

that the trends used to reflect growth in 

the cost of prescription drugs due to 

inflation and related factors for 

recalibrating the models will 

appropriately reflect the average cost of 

Hepatitis C treatments expected in the 

2025 benefit year. Therefore, we 

continue to believe a market pricing 

adjustment specific to Hepatitis C drugs 

in the HHS risk adjustment models for 

the 2025 benefit year is necessary to 

account for the lack of growth in 

Hepatitis C drug prices relative to other 

prescription drugs in the market 

between the data years used for 

recalibrating the models and the 

applicable benefit year of HHS risk 

adjustment due to the introduction of 

new and generic Hepatitis C drugs in 

recent years. We intend to continue to 

assess this pricing adjustment as part of 

future benefit year model recalibrations 

using available additional years of 

enrollee-level EDGE data. 

We seek comment on our proposal to 

continue applying a market pricing 

adjustment to the plan liability 

associated with Hepatitis C drugs for the 

2025 benefit year. 

c. Proposed List of Factors To Be 

Employed in the HHS Risk Adjustment 

Models (§ 153.320) 

The proposed 2025 benefit year HHS 

risk adjustment model factors resulting 

from the equally weighted (averaged) 

blended factors from separately solved 

models using the 2019, 2020, and 2021 

enrollee-level EDGE data are shown in 

Tables 1 through 6. The adult, child, 

and infant models have been truncated 

to account for the high-cost risk pool 

payment parameters by removing 60 

percent of costs above the $1 million 

threshold.47 Table 1 contains proposed 

factors for each adult model, including 

the age-sex, HCCs, RXCs, RXC–HCC 

interactions, interacted HCC counts, and 

enrollment duration coefficients. Table 

2 contains the proposed factors for each 

child model, including the age-sex, 

HCCs, and interacted HCC counts 

coefficients. Table 3 lists the proposed 

HCCs selected for the interacted HCC 

counts factors that would apply to the 

adult and child models. Table 4 

contains the proposed factors for each 

infant model. Tables 5 and 6 contain the 

HCCs included in the infant models’ 

maturity and severity categories, 

respectively. 


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TABLE 1: Proposed Adult HHS Risk Adjustment Model Factors for the 2025 Benefit Year 

Factor 

A e 21-24, Male 0.189 0.128 0.086 0.057 0.056 

A e 25-29, Male 0.197 0.133 0.088 0.056 0.055 

A e 30-34, Male 0.230 0.160 0.110 0.073 0.072 

A e 35-39, Male 0.249 0.174 0.119 0.077 0.076 

A e 40-44, Male 0.282 0.203 0.143 0.095 0.094 

A e 45-49, Male 0.312 0.228 0.164 0.112 0.111 

A e 50-54, Male 0.381 0.290 0.218 0.161 0.160 

A e 55-59, Male 0.428 0.330 0.254 0.191 0.189 

A e 60-64, Male 0.472 0.365 0.282 0.212 0.210 

A e 21-24, Female 0.285 0.196 0.127 0.078 0.076 

A e 25-29, Female 0.308 0.212 0.137 0.082 0.081 

A e 30-34, Female 0.370 0.268 0.188 0.126 0.125 

A e 35-39, Female 0.428 0.323 0.239 0.174 0.172 

A e 40-44, Female 0.482 0.372 0.284 0.211 0.209 

A e 45-49, Female 0.481 0.369 0.277 0.200 0.198 

A e 50-54, Female 0.519 0.404 0.307 0.226 0.224 

A e 55-59, Female 0.482 0.368 0.271 0.191 0.189 

A e 60-64 Female 

HCC00l HIV/AIDS 0.342 0.265 0.234 0.197 0.196 

Septicemia, Sepsis, Systemic 9.075 8.875 8.830 8.740 8.739 

Inflammatory Response 

HCC002 S ndrome/Shock 

Central Nervous System Infections, 8.379 8.276 8.229 8.151 8.149 

HCC003 Ex .. 

HCC004 8.328 8.217 8.161 8.071 8.068 

HCC006 8.532 8.478 8.419 8.333 8.330 

HCC008 Metastatic Cancer 23.002 22.629 22.616 22.506 22.506 

Lung, Brain, and Other Severe Cancers, 12.575 12.312 12.271 12.156 12.155 

Including Pediatric Acute Lymphoid 

HCC009 Leukemia 

Non-Hodgkin Lymphomas and Other 5.705 5.535 5.473 5.362 5.360 

HCC0lO Cancers and Tumors 

Colorectal, Breast (Age< 50), Kidney, 3.651 3.476 3.405 3.283 3.280 

HCC0ll and Other Cancers 

Breast (Age 50+) and Prostate Cancer, 2.424 2.295 2.230 2.129 2.127 

Benign/Uncertain Brain Tumors, and 

HCC012 Other Cancers and Tumors 

Thyroid Cancer, Melanoma, 0.967 0.875 0.785 0.677 0.674 

Neurofibromatosis, and Other Cancers 

HCC013 and Tumors 

HCC018 Pancreas Trans lant Status 6.320 6.253 6.239 6.228 6.219 

HCC019 0.259 0.214 0.172 0.130 0.128 

HCC020 0.259 0.214 0.172 0.130 0.128 

HCC021 0.259 0.214 0.172 0.130 0.128 
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HCC or Factor 

RXC No. 

Type 1 Diabetes Mellitus, add-on to 0.311 0.282 0.244 0.180 0.178 

HCC022 Diabetes HCCs 19-21 

HCC023 Protein-Calorie Malnutrition 11.342 11.221 11.179 11.105 11.104 

HCC026 Mucopolysaccharidosis 23.821 23.642 23.619 23.556 23.556 

HCC027 Lipidoses and Glvcogenosis 23.821 23.642 23.619 23.556 23.556 

Amyloidosis, Porphyria, and Other 6.512 6.413 6.373 6.305 6.303 

HCC029 Metabolic Disorders 

Adrenal, Pituitary, and Other 1.314 1.237 1.184 1.108 1.104 

HCC030 Si!!1lificant Endocrine Disorders 

HCC034 Liver Transplant Status/Complications 6.014 6.070 6.119 6.189 6.189 

Acute Liver Failure/Disease, Including 7.464 7.288 7.254 7.181 7.184 

HCC035 la Neonatal Hepatitis 

Chronic Liver Failure/End-Stage Liver 2.319 2.160 2.125 2.042 2.041 

HCC035_2 Disorders 

HCC036 Cirrhosis of Liver 0.613 0.534 0.490 0.417 0.416 

HCC037_1 Chronic Viral Hepatitis C 0.514 0.454 0.403 0.348 0.347 

Chronic Hepatitis, Except Chronic 0.514 0.454 0.403 0.348 0.347 

HCC037 2 Viral Hepatitis C 

Intestine Transplant 6.014 6.070 6.119 6.189 6.189 

HCC041 Status/Complications 

Peritonitis/Gastrointestinal 11.053 10.907 10.903 10.857 10.857 

HCC042 Perforation/Necrotizing Enterocolitis 

HCC045 Intestinal Obstruction 5.038 4.837 4.783 4.669 4.668 

HCC046 Chronic Pancreatitis 2.467 2.298 2.253 2.167 2.166 

HCC047 Acute Pancreatitis 2.467 2.298 2.251 2.147 2.146 

HCC048 Inflammatory Bowel Disease 1.108 1.023 0.944 0.820 0.816 

HCC054 Necrotizing Fasciitis 8.617 8.468 8.446 8.388 8.388 

HCC055 Bone/Joint/Muscle Infections/Necrosis 4.567 4.401 4.381 4.321 4.322 

Rheumatoid Arthritis and Specified 1.082 0.993 0.930 0.845 0.843 

HCC056 Autoimmune Disorders 

Systemic Lupus Erythematosus and 0.399 0.329 0.249 0.146 0.142 

HCC057 Other Autoimmune Disorders 

Osteogenesis Imperfecta and Other 1.924 1.801 1.740 1.639 1.637 

HCC061 Osteodvstroohies 

Congenital/Developmental Skeletal and 1.924 1.801 1.740 1.639 1.637 

HCC062 Connective Tissue Disorders 

HCC063 Cleft Lio/Cleft Palate 0.922 0.819 0.759 0.678 0.676 

HCC066 Hemophilia 72.761 72.491 72.466 72.379 72.380 

Myelodysplastic Syndromes and 11.237 11.118 11.090 11.024 11.020 

HCC067 Mvelofibrosis 

HCC068 Aplastic Anemia 11.237 11.118 11.090 11.024 11.020 

Acquired Hemolytic Anemia, Including 11.237 11.118 11.090 11.024 11.020 

HCC069 Hemolvtic Disease of Newborn 

Sickle Cell Anemia (Hb-SS) and 1.690 1.607 1.553 1.479 1.477 

HCC070b Thalassemia Beta Zero 

Sickle-Cell Disorders, Except Sickle- 1.690 1.607 1.553 1.479 1.477 

HCC07lb 

Cell Anemia (Hb-SS) and Thalassemia 

Beta Zero; Beta Thalassemia Maior 

Combined and Other Severe 4.065 3.975 3.947 3.887 3.885 

HCC073 Immunodeficiencies 

HCC074 Disorders of the Immune Mechanism 4.065 3.975 3.947 3.887 3.885 
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82531 


ddrumheller on DSK120RN23PROD with PROPOSALS2EP24NO23.002</GPH>

Catastrophic 

Coagulation Defects and Other 2.148 2.068 2.020 1.947 1.946 

HCC075 S ecified Hematolo • cal Disorders 

Drug Use with Psychotic 1.602 1.472 1.377 1.233 1.229 

HCC081 Com lications 

Drug Use Disorder, Moderate/Severe, 1.602 1.472 1.377 1.233 1.229 

or Drug Use with Non-Psychotic 

HCC082 Com lications 

Alcohol Use with Psychotic 0.902 0.788 0.716 0.612 0.610 

HCC083 Com lications 

Alcohol Use Disorder, 0.902 0.788 0.716 0.612 0.610 

Moderate/Severe, or Alcohol Use with 

Specified Non-Psychotic 

HCC084 Com lications 

HCC087 1 Schizo hrenia 2.227 2.063 1.986 1.864 1.862 

Delusional and Other Specified 2.190 2.030 1.951 1.820 1.818 

Psychotic Disorders, Unspecified 

HCC087 2 p chosis 

Major Depressive Disorder, Severe, 0.969 0.871 0.786 0.672 0.669 

HCC088 and Bi lar Disorders 

HCC090 Personali Disorders 0.663 0.586 0.492 0.379 0.376 

HCC094 Anorexia/Bulimia Nervosa 2.000 1.894 1.827 1.722 1.719 

Prader-Willi, Patau, Edwards, and 8.590 8.557 8.527 8.484 8.481 

HCC096 Autosomal Deletion S ndromes 

Down Syndrome, Fragile X, Other 0.938 0.875 0.826 0.764 0.763 

Chromosomal Anomalies, and 

HCC097 Co enital Malformation S ndromes 

HCC102 Autistic Disorder 0.718 0.641 0.553 0.455 0.452 

Pervasive Developmental Disorders, 0.663 0.586 0.492 0.379 0.376 

HCC103 Exce t Autistic Disorder 

Traumatic Complete Lesion Cervical 9.112 8.957 8.905 8.806 8.805 

HCC106 S inal Cord 

HCC107 9.112 8.957 8.905 8.806 8.805 

Traumatic Complete Lesion Dorsal 6.380 6.241 6.187 6.089 6.087 

HCC108 S inal Cord 

HCC109 6.380 6.241 6.187 6.089 6.087 

HCCll0 s rd Disorders/ln"uries 5.153 4.975 4.928 4.826 4.824 

Amyotrophic Lateral Sclerosis and 5.090 4.946 4.876 4.755 4.753 

HCClll Other Anterior Horn Cell Disease 

HCC112 0.730 0.629 0.565 0.467 0.465 

HCC113 Cerebral Pal , Exce t C 0.424 0.355 0.299 0.219 0.217 

Spina Bifida and Other 1.205 1.120 1.063 0.972 0.969 

Brain/Spinal/Nervous System 

HCC114 Co enital Anomalies 

Myasthenia Gravis/Myoneural 5.216 5.134 5.117 5.076 5.076 

Disorders and Guillain-Barre 

Syndrome/Inflammatory and Toxic 

HCC115 Neuro ath 

HCC117 Muscular 1.393 1.304 1.236 1.136 1.134 

HCC118 2.218 2.101 2.042 1.944 1.941 

Paikinson's, Huntington's, and 1.393 1.304 1.236 1.136 1.134 

Spinocerebellar Disease, and Other 

HCC119 Neurode enerative Disorders 

HCC120 Seizure Disorders and Convulsions 1.040 0.948 0.884 0.792 0.789 
82532 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 


ddrumheller on DSK120RN23PROD with PROPOSALS2EP24NO23.003</GPH>

HCC or Factor ; I 

RXC No. 

HCC121 Hvdrocephalus 9.585 9.491 9.440 9.362 9.360 

Nontraumatic Coma, Except Diabetic, 10.181 10.044 9.986 9.886 9.884 

Hepatic, or Hypoglycemic; 

Nontraumatic Brain 

HCC122c Compression/ Anoxic Damage 

HCC123 Narcolepsv and Cataplexv 4.533 4.405 4.340 4.237 4.235 

Respirator Dependence/fracheostomy 21.869 21.665 21.623 21.532 21.534 

HCC125 Status 

HCC126 Respiratory Arrest 8.558 8.341 8.300 8.210 8.209 

Cardio-Respiratory Failure and Shock, 8.558 8.341 8.300 8.210 8.209 

Including Respiratory Distress 

HCC127 Syndromes 

HCC128 Heart Assistive Device/ Artificial Heart 17.404 17.301 17.262 17.214 17.224 

HCC129 Heart Transplant Status/Complications 17.404 17.301 17.262 17.214 17.224 

HCC130 Heart Failure 1.896 1.809 1.773 1.707 1.705 

HCC131 Acute Myocardial Infarction 4.955 4.737 4.720 4.652 4.653 

Unstable Angina and Other Acute 3.690 3.489 3.452 3.355 3.355 

HCC132 Ischemic Heart Disease 

Heart Infection/Inflammation, Except 8.848 8.756 8.695 8.602 8.599 

HCC135 Rheumatic 

Hypoplastic Left Heart Syndrome and 2.122 2.033 1.975 1.895 1.893 

Other Severe Congenital Heart 

HCC137 Disorders 

Major Congenital Heart/Circulatory 2.122 2.033 1.975 1.895 1.893 

HCC138 Disorders 

Atrial and Ventricular Septal Defects, 2.122 2.033 1.975 1.895 1.893 

Patent Ductus Arteriosus, and Other 

HCC139 Congenital Heart/Circulatory Disorders 

HCC142 Specified Heart Arrhythmias 1.921 1.819 1.752 1.645 1.645 

HCC145 Intracranial Hemorrhage 10.648 10.490 10.444 10.356 10.355 

HCC146 Ischemic or Unspecified Stroke 1.428 1.314 1.282 1.212 1.212 

Cerebral Aneurysm and Arteriovenous 2.218 2.102 2.044 1.944 1.941 

HCC149 Malformation 

HCC150 Hemiplegia/Hemiparesis 3.309 3.190 3.178 3.134 3.134 

Monoplegia, Other Paralytic 2.494 2.386 2.342 2.264 2.262 

HCC151 Syndromes 

Atherosclerosis of the Extremities with 7.988 7.837 7.849 7.827 7.828 

HCC153 Ulceration or Gangrene 

HCC154 Vascular Disease with Complications 5.128 4.989 4.949 4.869 4.868 

Pulmonary Embolism and Deep Vein 7.621 7.535 7.461 7.345 7.341 

HCC156 Thrombosis 

HCC158 Lung Transplant Status/Complications 11.099 10.994 10.963 10.924 10.930 

HCC159 Cvstic Fibrosis 4.156 4.021 3.969 3.883 3.881 

Chronic Obstructive Pulmonary 0.643 0.567 0.491 0.395 0.392 

HCC160 Disease, Including Bronchiectasis 

HCC161 1 Severe Asthma 0.643 0.567 0.491 0.395 0.392 

HCC161 2 Asthma, Except Severe 0.643 0.567 0.491 0.395 0.392 

Fibrosis of Lung and Other Lung 1.615 1.529 1.476 1.391 1.388 

HCC162 Disorders 

Aspiration and Specified Bacterial 7.187 7.124 7.105 7.067 7.067 

Pneumonias and Other Severe Lung 

HCC163 Infections 
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82533 


ddrumheller on DSK120RN23PROD with PROPOSALS2EP24NO23.004</GPH>

HCC or Factor Catastrophic 

RXC No. 

HCC174 Exudative Macular Degeneration 1.224 1.097 1.010 0.878 0.874 

Kidney Transplant 6.320 6.253 6.239 6.228 6.219 

HCC183 Status/Complications 

HCC184 End Stage Renal Disease 20.669 20.237 20.330 20.158 20.046 

HCC187 Chronic Kidney Disease Stage 5 0.773 0.689 0.685 0.645 0.633 

Chronic Kidney Disease, Severe (Stage 0.773 0.689 0.685 0.645 0.633 

HCC188 4) 

HCC203 Ectopic and Molar Pregnancy 1.850 1.673 1.534 1.319 1.314 

HCC204 Miscarriage with Complications 0.646 0.565 0.439 0.260 0.254 

Miscarriage with No or Minor 0.646 0.565 0.439 0.260 0.254 

HCC205 Complications 

Pregnancy with Delivery with Major 3.756 3.470 3.289 2.991 2.985 

HCC207 Complications 

Pregnancy with Delivery with 3.756 3.470 3.289 2.991 2.985 

HCC208 Complications 

Pregnancy with Delivery with No or 2.769 2.554 2.335 1.972 1.962 

HCC209 Minor Complications 

(Ongoing) Pregnancy without Delivery 0.815 0.714 0.561 0.370 0.363 

HCC210 with Major Complications 

(Ongoing) Pregnancy without Delivery 0.530 0.454 0.318 0.170 0.166 

HCC211 with Complications 

(Ongoing) Pregnancy without Delivery 0.018 0.005 0.000 0.000 0.000 

HCC212 with No or Minor Complications 

HCC217 Chronic Ulcer of Skin. Except Pressure 1.557 1.464 1.433 1.375 1.374 

HCC218 Extensive Third-Degree Bums 23.714 23.524 23.474 23.384 23.383 

HCC219 Major Skin Bum or Condition 2.604 2.484 2.428 2.345 2.344 

HCC223 Severe Head Injury 18.201 18.057 17.990 17.882 17.879 

HCC226 Hip and Pelvic Fractures 8.018 7.783 7.765 7.688 7.688 

Vertebral Fractures without Spinal 4.277 4.116 4.047 3.925 3.922 

HCC228 Cord Injury 

Traumatic Amputations and 4.861 4.706 4.682 4.619 4.618 

HCC234 Amputation Complications 

Stem Cell, Including Bone Marrow, 18.571 18.584 18.547 18.531 18.535 

HCC251 Transplant Status/Complications 

Artificial Openings for Feeding or 5.697 5.584 5.563 5.511 5.511 

HCC253 Elimination 

Amputation Status, Upper Limb or 0.936 0.835 0.799 0.738 0.736 

HCC254 Lower Limb 

Severe 

Severe 

illness 

illness 2 

1 pavment 

payment 

HCC 

HCCs 

-6.014 

-5.733 

-

-6.070 

-5.806 

-

-6.119 

-5.833 

-

-6.189 -6.189 

-5.886 

-

-5.886 

Severe illness 3 pavment HCCs -4.904 -4.952 -4.891 -4.846 -4.844 

Severe illness 4 payment HCCs -4.190 -4.178 -4.033 -3.871 -3.865 

Severe illness, 5 payment HCCs -3.522 -3.432 -3.216 -2.954 -2.945 

Severe illness, 6 payment HCCs -3.024 -2.835 -2.557 -2.202 -2.192 

Severe illness, 7 payment HCCs -2.432 -2.116 -1.780 -1.330 -1.318 

Severe illness, 8 payment HCCs -2.179 -1.784 -1.416 -0.910 -0.896 

Severe illness, 9 payment HCCs -0.287 0.253 0.676 1.279 1.294 

Severe illness, 10 or more payment 7.398 8.299 8.836 9.657 9.679 

HCCs 

Transplant severe illness, 4 payment 3.792 3.704 3.651 3.531 3.516 

HCCs 
82534 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 


ddrumheller on DSK120RN23PROD with PROPOSALS2EP24NO23.005</GPH>

HCC or Factor Platinum Gold Sih er Bronze Catastrophic 

RXC No. 

Transplant severe illness, 5 payment 7.054 6.949 6.906 6.792 6.775 

HCCs 

Transplant severe illness, 6 payment 12.584 12.463 12.431 12.324 12.304 

HCCs 

Transplant severe illness, 7 payment 15.636 15.506 15.473 15.364 15.346 

HCCs 

Transplant severe illness, 8 or more 31.955 31.916 31.908 31.845 31.825 

a mentHCCs 

entHCC 

led for 2 months, at least one 5.197 4.458 3.958 3.479 3.466 

entHCC 

led for 3 months, at least one 3.378 2.898 2.549 2.224 2.216 

entHCC 

led for 4 months, at least one 2.129 1.799 1.545 1.313 1.307 

entHCC 

led for 5 months, at least one 1.586 1.340 1.143 0.959 0.955 

entHCC 

ed for 6 months, at least one 1.039 0.857 0.705 0.560 0.556 

Anti-HIV A ents 

Anti-Hepatitis C (HCV) Agents, Direct 

Actin A ents 

RXC03d Antiarrhythmics 0.080 0.072 0.064 0.051 0.036 

RXC04 0.901 1.115 1.007 1.206 1.390 

RXC05 Inflammato Bowel Disease A ents 1.324 1.227 1.105 0.941 0.936 

RXC06 Insulin 1.366 1.193 1.018 0.844 0.838 

RXC07 Anti-Diabetic Agents, Exceptlnsulin 0.800 0.702 0.582 0.409 0.403 

and Metformin Onl 

RXC08 Multi le Sclerosis A ents 15.175 14.409 14.206 13.774 13.767 

RXC09e Immune Suppressants and 12.005 11.495 11.478 11.335 11.337 

Immunomodulators 

RXClO stic Fibrosis A ents 17.441 17.041 17.022 16.903 16.902 

RXC0lx Additional effect for enrollees with 2.467 2.521 2.790 3.101 3.115 

HCC00l RXC 01 and HCC 001 

RXC02x -0.514 -0.454 -0.403 -0.348 -0.347 

HCC037_1, Additional effect for enrollees with 

036, 035_2, RXC 02 and (HCC 037_1 or036 or 

035 1,034 035 2 or 035 1 or 034 

RXC03 x Additional effect for enrollees with 0.000 0.000 0.000 0.000 0.000 

HCC142 RXC 03 and HCC 142 

RXC04x 0.000 0.000 0.000 0.000 0.000 

HCC184, Additional effect for enrollees with 

183, 187, RXC 04 and (HCC 184 or 183 or 187 

188 or 188 

RXC05x -0.688 -0.631 -0.570 -0.471 -0.468 

HCC048, Additional effect for enrollees with 

041 RXC05 and CC 048 or041 
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82535 


ddrumheller on DSK120RN23PROD with PROPOSALS2EP24NO23.006</GPH>

HCC or Factor Platinum Gold Siher Bronze Catastrophic 

RXC No. 

RXC06x 0.402 0.444 0.532 0.544 0.546 

HCC018, Additional effect for enrollees with 

019, 020, RXC 06 and (HCC 018 or 019 or 020 

021 or021) 

RXC07x -0.258 -0.213 -0.172 -0.130 -0.128 

HCC018, Additional effect for enrollees with 

019, 020, RXC 07 and (HCC 018 or 019 or 020 

021 or021) 

RXC08x Additional effect for enrollees with -0.132 0.227 0.497 0.902 0.914 

HCC118 RXC 08 and HCC 118 

RXC09x 0.343 0.396 0.433 0.492 0.494 

HCC056or Additional effect for enrollees with 

057 and048 RXC 09 and (HCC 048 or 041) and 

or041 (HCC 056 or 057) 

RXC09x Additional effect for enrollees with -1.082 -0.993 -0.930 -0.845 -0.843 

HCC056 RXC 09 and HCC 056 

RXC09x Additional effect for enrollees with -0.399 -0.329 -0.249 -0.146 -0.142 

HCC057 RXC 09 and HCC 057 

RXC09x 1.315 1.406 1.499 1.634 1.638 

HCC048, Additional effect for enrollees with 

041 RXC 09 and <HCC 048 or 041) 

RXC lOx 42.562 42.609 42.695 42.807 42.812 

HCC159, Additional effect for enrollees with 

158 RXC 10 and <HCC 159 or 158) 

a/ HCC numbers that appear with an underscore m this document will appear without the underscore m the DIY software. For 

example, HCC 35 _ l in this table will appear as HCC 351 in the DIY software. 

b/ For the proposed 2025 benefit year HHS risk adjustment models, we made the following changes to improve the prediction of 

sickle cell disease costs: we updated mappings for sickle cell disease so that additional diagnosis codes are included in the model 

(within HCC 71 ), ungrouped HCCs 70 and 71 in the adult and child models, and reassigned HCC 70 and 71 to a higher severity 

in the infant models. To reflect these changes, we also relabeled HCC 70 and HCC 71. These updated mapping and HCC label 

changes parallel the reclassified Medicare Part C V28 CMS-HCCs. See, for example, the Advance Notice of Methodological 

Changes for Calendar Year (CY) 2024 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies 

(February 1, 2023 ). https:/ lwww.cms.gov/files/document/20 2 4-advance-notice-pdf pdf 

cl Consistent with fiscal year 2024 updates to ICD-10 codes (effective October l, 2023; see 

https:/lwww.cms.gov/medicare/coding-billing/icd-10-codes/2024-icd-10-cm), we updated the label for HCC 122 from "Coma, 

Brain Compression/Anoxic Damage" to "Nontraumatic Coma, Except Diabetic, Hepatic, or Hypoglycemic; Nontraumatic Brain 

Compression/ Anoxic Damage." The specific ICD-10 code update that prompted this label change was the addition of code 

R402A "Nontraumatic coma due to underlying condition", which we have mapped to HCC 122. HCC 122 is only assigned to 

enrollees who do not also have a head injury code, because HCC 223 (Severe Head Injury) captures codes for head injury with 

loss of consciousness and supersedes HCC 122 in a hierarchy. As such, the scope of HCC 122 is better reflected by the updated 

label. Because this ICD-10 update is effective October l, 2023, future releases of benefit year 2023 and benefit year 2024 DIY 

software will also reflect the updated label and diagnosis-to-HCC mapping. 

d/ We constrain RXC 03 to be equal to average plan liability for RXC 03 drugs, RXC 04 to be equal to the average plan liability 

forRXC 04 drugs, and we constrainRXC 03 xHCC142 andRXC 04 xHCC184, 183, 187, 188 to be equal to 0. See CMS. 

(2016, March 24). March 2016 Risk Adjustment Methodology Discussion Paper. https://www.cms.gov/cciio/resources/formsreports-and-other-resources/downloads/ra-march-31-white-paper-032416.pdf(where we previously discussed the use of 

constraints in the HHS risk adjustment models). 

e/ Similar to recalibration of the 2023 and 2024 benefit year HHS risk adjustment adult models and consistent with the policies 

adopted in the 2023 and 2024 Payment Notices, the proposed 2025 benefit year factors in this rule reflect the removal of the 

mapping ofhydroxychloroquine sulfate to RXC 09 (Immune Suppressants and Immunomodulators) and the related RXC 09 

interactions (RXC 09 x HCC056 or 057 and 048 or 041; RXC 09 x HCC056; RXC 09 x HCC 057; RXC 09x HCC048, 041) from 

the 2019 benefit year enrollee-level EDGE data sets for purposes of recalibrating the 2025 benefit year adult models. See 87 FR 

27232 through 27235. Additionally, the proposed factors for the adult models reflect the use of the final, fourth quarter (Q4) 

RXC mapping document that was applicable for each benefit year of data included in the current year's model recalibration 

( except under extenuating circumstances that can result in targeted changes to RXC mappings). See 87 FR 27231 through 27232. 
82536 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 


ddrumheller on DSK120RN23PROD with PROPOSALS2EP24NO23.007</GPH>

TABLE 2: Proposed Child HHS Risk Adjustment Model Factors for the 2025 Benefit Year 

A e2-4 Male 0.270 0.191 0.141 0.105 0.104 

A e 5-9 Male 0.204 0.135 0.096 0.071 0.071 

A e 10-14 Male 0.224 0.156 0.115 0.090 0.089 

A e 15-20 Male 0.260 0.187 0.137 0.102 0.101 

-4 Female 0.223 0.153 0.113 0.089 0.088 

-9 Female 0.149 0.086 0.053 0.034 0.034 

emale 0.222 0.153 0.113 0.089 0.088 

0.300 0.212 0.145 0.097 0.095 

HIV/AIDS 4.355 3.942 3.856 3.659 3.657 

Septicemia, Sepsis, Systemic Inflammatory 14.567 14.370 14.294 14.176 14.174 

Res onse S ndrome/Shock 

Central Nervous System Infections, Except 13.944 13.811 13.745 13.658 13.656 

Viral Menin • tis 

12.972 12.833 12.741 12.617 12.614 

18.957 18.895 18.813 18.719 18.716 

Metastatic Cancer 30.530 30.304 30.243 30.137 30.136 

Lung, Brain, and Other Severe Cancers, 8.962 8.738 8.640 8.486 8.484 

Including Pediatric Acute Lymphoid 

Leukemia 

Non-Hodgkin Lymphomas and Other Cancers 7.708 7.523 7.421 7.266 7.263 

and Tumors 

Colorectal, Breast (Age< 50), Kidney, and 4.194 4.057 3.972 3.844 3.841 

Other Cancers 

Breast (Age 50+) and Prostate Cancer, 4.194 4.057 3.972 3.844 3.841 

Benign/Uncertain Brain Tumors, and Other 

Cancers and Tumors 

Thyroid Cancer, Melanoma, 1.265 1.155 1.058 0.937 0.933 

Neurofibromatosis, and Other Cancers and 

Tumors 

Pancreas Trans lant Status 11.660 11.580 11.544 11.505 11.503 

2.364 2.121 1.914 1.622 1.615 

2.364 2.121 1.914 1.622 1.615 
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82537 


ddrumheller on DSK120RN23PROD with PROPOSALS2EP24NO23.008</GPH>

Factor ; I 

Diabetes without Complication 2.364 2.121 1.914 1.622 1.615 

Protein-Calorie Malnutrition 19.614 19.505 19.457 19.397 19.396 

Mucooolvsaccharidosis 34.440 34.213 34.169 34.070 34.070 

Lipidoses and Glycogenosis 34.440 34.213 34.169 34.070 34.070 

Congenital Metabolic Disorders, Not 4.690 4.583 4.523 4.442 4.439 

Elsewhere Classified 

Amyloidosis, Porphyria, and Other Metabolic 4.690 4.583 4.523 4.442 4.439 

Disorders 

Adrenal, Pituitary, and Other Significant 5.289 5.072 5.007 4.902 4.901 

Endocrine Disorders 

Liver Transplant Status/Complications 11.660 11.580 11.544 11.505 11.503 

Acute Liver Failure/Disease, Including 7.742 7.607 7.570 7.488 7.487 

Neonatal Hepatitis 

Chronic Liver Failure/End-Stage Liver 7.742 7.607 7.570 7.488 7.487 

Disorders 

Cirrhosis of Liver 3.999 3.881 3.835 3.764 3.763 

Chronic Viral Hepatitis C 1.257 1.152 1.093 1.027 1.025 

Chronic Hepatitis, Except Chronic Viral 0.294 0.249 0.198 0.140 0.138 

Hepatitis C 

Intestine Transplant Status/Complications 13.387 13.303 13.228 13.137 13.135 

Peritonitis/Gastrointestinal 19.019 18.756 18.703 18.597 18.597 

Perforation/Necrotizing Enterocolitis 

Intestinal Obstruction 4.601 4.431 4.343 4.208 4.205 

Chronic Pancreatitis 10.235 10.115 10.085 10.007 10.007 

Acute Pancreatitis 4.988 4.771 4.687 4.541 4.538 

Inflammatory Bowel Disease 9.947 9.582 9.498 9.313 9.311 

Necrotizing Fasciitis 4.144 3.957 3.872 3.746 3.745 

Bone/Joint/Muscle Infections/Necrosis 4.144 3.957 3.872 3.746 3.745 

Rheumatoid Arthritis and Specified 4.632 4.397 4.315 4.181 4.179 

Autoimmune Disorders 

Systemic Lupus Erythematosus and Other 0.878 0.777 0.679 0.559 0.555 

Autoimmune Disorders 

Osteogenesis Imperfecta and Other 1.241 1.140 1.069 0.981 0.979 

Osteodystrophies 

Congenital/Developmental Skeletal and 1.241 1.140 1.069 0.981 0.979 

Connective Tissue Disorders 

Cleft Lio/Cleft Palate 0.972 0.841 0.742 0.616 0.613 

Hemophilia 64.093 63.672 63.604 63.429 63.427 

Myelodysplastic Syndromes and 12.305 12.163 12.117 12.039 12.038 

Mvelofibrosis 

Aplastic Anemia 12.305 12.163 12.117 12.039 12.038 

Acquired Hemolytic Anemia, Including 12.305 12.163 12.117 12.039 12.038 

Hemolvtic Disease of Newborn 

Sickle Cell Anemia (Hb-SS) and Thalassemia 3.564 3.400 3.303 3.173 3.170 

BetaZeroa 

Sickle-Cell Disorders, Except Sickle-Cell 3.369 3.233 3.160 3.055 3.053 

Anemia (Hb-SS) and Thalassemia Beta Zero; 

Beta Thalassemia Maio~ 

Combined and Other Severe 5.105 4.975 4.918 4.826 4.824 

Immunodeficiencies 

Disorders of the Immune Mechanism 5.105 4.975 4.918 4.826 4.824 
82538 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 


ddrumheller on DSK120RN23PROD with PROPOSALS2EP24NO23.009</GPH>

Platinum Gold Sihcr Bronze Catastrophic 

Coagulation Defects and Other Specified 4.043 3.938 3.869 3.779 3.777 

Hematological Disorders 

Drug Use with Psychotic Complications 2.350 2.204 2.111 1.972 1.969 

Drug Use Disorder, Moderate/Severe, or Drug 2.350 2.204 2.111 1.972 1.969 

Use with Non-Psvchotic Comolications 

Alcohol Use with Psychotic Complications 0.899 0.765 0.658 0.502 0.499 

Alcohol Use Disorder, Moderate/Severe, or 0.899 0.765 0.658 0.502 0.499 

Alcohol Use with Specified Non-Psychotic 

Comolications 

Schizophrenia 3.545 3.304 3.188 3.007 3.004 

Delusional and Other Specified Psychotic 3.289 3.067 2.940 2.745 2.741 

Disorders. Unsoecified Psvchosis 

Major Depressive Disorder, Severe, and 2.506 2.319 2.191 2.017 2.013 

Bioolar Disorders 

Personalitv Disorders 0.348 0.263 0.159 0.043 0.040 

Anorexia/Bulimia Nervosa 2.207 2.070 1.977 1.846 1.843 

Prader-Willi, Patau, Edwards, and Autosomal 12.082 12.007 11.947 11.870 11.868 

Deletion Syndromes 

Down Syndrome, Fragile X, Other 0.867 0.758 0.686 0.583 0.581 

Chromosomal Anomalies, and Congenital 

Malformation Syndromes 

Autistic Disorder 2.506 2.319 2.191 2.017 2.013 

Pervasive Developmental Disorders, Except 0.374 0.303 0.222 0.140 0.139 

Autistic Disorder 

Traumatic Complete Lesion Cervical Spinal 10.147 9.959 9.908 9.810 9.809 

Cord 

Ouadriplecia 10.147 9.959 9.908 9.810 9.809 

Traumatic Complete Lesion Dorsal Spinal 9.868 9.664 9.615 9.515 9.514 

Cord 

Paraplegia 9.868 9.664 9.615 9.515 9.514 

Soinal Cord Disorders/lniuries 4.750 4.568 4.457 4.285 4.280 

Amyotrophic Lateral Sclerosis and Other 49.556 49.316 49.259 49.139 49.137 

Anterior Hom Cell Disease 

Ouadriolecic Cerebral Palsv 0.638 0.454 0.383 0.266 0.265 

Cerebral Palsy, Except Quadriplegic 0.254 0.134 0.073 0.029 0.028 

Spina Bifida and Other Brain/Spinal/Nervous 1.624 1.514 1.448 1.345 1.342 

System Congenital Anomalies 

Myasthenia Gravis/Myoneural Disorders and 10.278 10.133 10.111 10.053 10.053 

Guillain-Barre Syndrome/lnflammatory and 

Toxic Neuropathy 

Muscular Dvstrophy 5.546 5.399 5.326 5.206 5.203 

Multiple Sclerosis 9.135 8.789 8.736 8.602 8.604 

Parkinson's, Huntington's, and 5.546 5.399 5.326 5.206 5.203 

Spinocerebellar Disease, and Other 

Neurodegenerative Disorders 

Seizure Disorders and Convulsions 1.556 1.429 1.316 1.169 1.165 

Hydrocephalus 11.666 11.630 11.604 11.580 11.579 

Nontraumatic Coma, Except Diabetic, 11.216 11.250 11.261 11.287 11.287 

Hepatic, or Hypoglycemic; Nontraumatic 

Brain Compression/Anoxic Damageb 

Narcoleosv and Cataolexv 4.058 3.911 3.807 3.664 3.659 

Respirator Dependence/Tracheostomy Status 24.720 24.506 24.442 24.337 24.336 
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82539 


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Platinum Gold Sihcr Bronze Catastrophic 

Respiratory Arrest 15.720 15.472 15.398 15.267 15.266 

Cardio-Respiratory Failure and Shock, 15.720 15.472 15.398 15.267 15.266 

Including Resoiratory Distress Syndromes 

Heart Assistive Device/ Artificial Heart 13.387 13.303 13.228 13.137 13.135 

Heart Transolant Status/Comolications 13.387 13.303 13.228 13.137 13.135 

Heart Failure 4.067 3.968 3.914 3.830 3.828 

Acute Myocardial Infarction 1.060 1.025 1.005 0.979 0.979 

Unstable Angina and Other Acute Ischemic 1.060 1.025 1.005 0.979 0.979 

Heart Disease 

Heart Infection/Inflammation, Except 17.077 16.964 16.888 16.786 16.783 

Rheumatic 

Hypoplastic Left Heart Syndrome and Other 3.938 3.796 3.682 3.540 3.536 

Severe Congenital Heart Disorders 

Maior Congenital Heart/Circulatory Disorders 0.986 0.896 0.790 0.685 0.682 

Atrial and Ventricular Septa! Defects, Patent 0.590 0.506 0.425 0.347 0.345 

Ductus Arteriosus, and Other Congenital 

Heart/Circulatory Disorders 

Specified Heart Arrhythmias 3.118 2.980 2.899 2.785 2.783 

Intracranial Hemorrhage 12.686 12.611 12.565 12.497 12.495 

Ischemic or Unspecified Stroke 1.470 1.362 1.304 1.210 1.208 

Cerebral Aneurysm and Arteriovenous 1.049 0.952 0.899 0.807 0.804 

Malformation 

Hemiplegia/Hemiparesis 5.471 5.353 5.295 5.207 5.205 

Monoplecia, Other Paralytic Syndromes 1.374 1.253 1.183 1.072 1.070 

Atherosclerosis of the Extremities with 11.860 11.625 11.557 11.424 11.422 

Ulceration or Gan!!rene 

Vascular Disease with Complications 8.127 7.988 7.947 7.872 7.871 

Pulmonary Embolism and Deep Vein 19.738 19.604 19.533 19.426 19.425 

Thrombosis 

Lung Transplant Status/Complications 13.387 13.303 13.228 13.137 13.135 

Cvstic Fibrosis 48.718 48.241 48.201 48.054 48.055 

Chronic Obstructive Pulmonary Disease, 1.658 1.507 1.403 1.267 1.264 

Including Bronchiectasis 

Severe Asthma 1.323 1.171 1.045 0.889 0.885 

Asthma, Except Severe 0.320 0.250 0.170 0.102 0.100 

Fibrosis of Lung and Other Lung Disorders 1.490 1.361 1.249 1.115 1.111 

Aspiration and Specified Bacterial 11.216 11.250 11.261 11.287 11.287 

Pneumonias and Other Severe Lun!!" Infections 

Kidney Transplant Status/Complications 11.660 11.580 11.544 11.505 11.503 

End Stage Renal Disease 29.641 29.391 29.371 29.278 29.278 

Chronic Kidney Disease Stage 5 0.787 0.749 0.722 0.685 0.683 

Chronic Kidney Disease Severe (Stage 4) 0.787 0.749 0.722 0.685 0.683 

Ectopic and Molar Pre!!"Ilancv 0.864 0.731 0.565 0.411 0.406 

Miscarriage with Comolications 0.474 0.369 0.227 0.089 0.086 

Miscarriage with No or Minor Complications 0.474 0.369 0.227 0.089 0.086 

Pregnancy with Delivery with Major 3.166 2.876 2.634 2.231 2.219 

Comolications 

Pre!!"Ilancv with Delivery with Complications 3.166 2.876 2.634 2.231 2.219 

Pregnancy with Delivery with No or Minor 2.399 2.179 1.914 1.475 1.460 

Comolications 

(Ongoing) Pregnancy without Delivery with 0.420 0.308 0.152 0.039 0.036 

Maior Complications 
82540 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 


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(Ongoing) Pregnancy without Delivery with 

Com lications 

(Ongoing) Pregnancy without Delivery with 

No or Minor Com lications 

Ma· or Skin Burn or Condition 

Vertebral Fractures without Spinal Cord 

In· 

Traumatic Amputations and Amputation 

Com lications 

Stem Cell, Including Bone Marrow, 

Trans lications 

Amputation Status, Upper Limb or Lower 

Limb 

Severe illness, 1 

Severe illness, 2 

Severe illness, 3 

Severe illness, 4 

Transplant severe illness, 4 or more payment 

HCCs 

0.420 0.308 

0.276 0.187 

1.877 1.782 

22.876 22.657 

2.441 2.286 

22.876 22.657 

4.636 4.428 

4.483 4.293 

3.818 3.627 

13.387 13.303 

5.711 5.551 

3.818 3.627 

-11.216 -11.250 

-11.137 -11.200 

-9.692 -9.760 

-8.984 -8.987 

-6.593 -6.543 

-2.061 -1.828 

17.868 18.550 

14.488 14.558 

I I Catastrophic 

0.152 0.039 0.036 

0.079 0.037 0.036 

1.712 1.634 1.632 

22.576 22.440 22.437 

2.187 2.056 2.053 

22.576 22.440 22.437 

4.327 4.191 4.188 

4.176 3.999 3.994 

3.528 3.362 3.357 

13.228 13.137 13.135 

5.525 5.451 5.450 

3.528 3.362 3.357 

-11.261 -11.287 -11.287 

-11.218 -11.265 -11.266 

-9.689 -9.658 -9.655 

-8.809 -8.652 -8.645 

-6.303 -6.068 -6.059 

-1.468 -1.064 -1.051 

19.132 19.858 19.877 

14.580 14.612 14.613 

a/ For the proposed 2025 benefit year HHS risk adjustment models, we made the following changes to improve the prediction of 

sickle cell disease costs: we updated mappings for sickle cell disease so that additional diagnosis codes are included in the model 

(within HCC 71 ), ungrouped HCCs 70 and 71 in the adult and child models, and reassigned HCC 70 and 71 to a higher severity 

in the infant models. To reflect these changes, we also relabeled HCC 70 and HCC 71. These updated mapping and HCC label 

changes parallel the reclassified Medicare Part C V28 CMS-HCCs. See, for example, the Advance Notice of Methodological 

Changes for Calendar Year (CY) 2024 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies 

(February 1, 2023 ). https://www.cms.gov/jiles/document/2024-advance-notice-pdf pdf 

b/ Consistent with fiscal year 2024 updates to ICD-10 codes ( effective October 1, 2023; see 

https://www.cms.gov/medicare/coding-billing/icd-10-codes/2024-icd-10-cm), we updated the label for HCC 122 from "Coma, 

Brain Compression/Anoxic Damage" to "Nontraumatic Coma, Except Diabetic, Hepatic, or Hypoglycemic; Nontraumatic Brain 

Compression/Anoxic Damage." The specific ICD-10 code update that prompted this label change was the addition of code 

R402A "Nontraumatic coma due to underlying condition", which we have mapped to HCC 122. HCC 122 is only assigned to 

emollees who do not also have a head injury code, because HCC 223 (Severe Head Injury) captures codes for head injury with 

loss of consciousness and supersedes HCC 122 in a hierarchy. As such, the scope of HCC 122 is better reflected by the updated 

label. Because this ICD-10 update is effective October 1, 2023, future releases of the benefit year 2023 and benefit year 2024 

DIY software will also reflect the updated label and diagnosis-to-HCC mapping. 
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82541 


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TABLE 3: Proposed HCCs Selected for the HCC Interacted Counts Variables for the 

Adult and Child Models for the 2025 Benefit Year 

Pa~mcnt HCC Sc, crit~ Ill ncss Transplant Indicator 

Indicator 

HCC 2 Septicemia, Sepsis, Systemic Inflammatory X Response Svndrome/Shock 

HCC 3 Central Nervous System Infections, Except Viral X 

Meningitis 

HCC 4 Viral or Unspecified Meningitis X 

HCC 6 Oooortunistic Infections X 

HCC 23 Protein-Calorie Malnutrition X 

HCC 34 Liver Transplant Status/Complications X X 

HCC 41 Intestine Transplant Status/Complications X X 

HCC 42 Peritonitis/Gastrointestinal Perforation/Necrotizing X Enterocolitis 

HCC 96 Prader-Willi, Patau, Edwards, and Autosomal X 

Deletion Svndromes 

HCC 121 Hydrocephalus X 

HCC 122 Nontraumatic Coma, Except Diabetic, Hepatic, or 

Hypoglycemic; Nontraumatic Brain Compression/Anoxic X 

Damage 

HCC 125 Respirator Dependence/Tracheostomv Status X 

HCC 135 Heart Infection/Inflammation Except Rheumatic X 

HCC 145 Intracranial Hemorrhage X 

HCC 156 Pulmonaiv Embolism and Deep Vein Thrombosis X 

HCC 158 Lung Transplant Status/Complications X X 

HCC 163 Aspiration and Specified Bacterial Pneumonias X 

and Other Severe Lung Infections 

HCC 218 Extensive Third-Deeree Burns X 

HCC 223 Severe Head Iniurv X 

HCC 251 Stem Cell, Including Bone Marrow, Transplant X X Status/Complications 

G 13 (Includes HCC 126 Respiratory Arrest and HCC 127 

Cardio-Respiratory Failure and Shock, Including Respiratory X 

Distress Svndromes) 

Gl4 (Includes HCC 128 Heart Assistive Device/Artificial X X Heart and HCC 129 Heart Transplant Status/Complications) 

G24 (Includes HCC 18 Pancreas Transplant Status and HCC X X 183 Kidney Transplant Status/Complications) 
82542 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 


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TABLE 4: Proposed Infant HHS Risk Adjustment Model Factors for the 2025 Benefit 

Year 

Level 4 149.999 148.437 148.051 147.377 147.372 

Level 3 32.887 31.619 31.251 30.693 30.687 

Extremel Immature * Severi Level 2 32.887 31.619 31.251 30.693 30.687 

Extremely Immature * Severity Level 1 32.887 31.619 31.251 30.693 30.687 

owest 

Immature * Severi 121.913 120.553 120.309 119.828 119.827 

Immature * Severi 71.026 69.564 69.264 68.692 68.689 

Immature * Severi 32.887 31.619 31.251 30.693 30.687 

Immature * Severi 30.558 29.332 28.960 28.403 28.398 

Immature * Severi est 25.110 23.887 23.485 22.871 22.863 

Premature/Multiples * Severity Level 5 108.585 107.335 107.096 106.631 106.628 

Level 4 29.666 28.404 28.060 27.490 27.486 

Level 3 13.527 12.617 12.148 11.482 11.467 

Level 2 8.071 7.368 6.849 6.149 6.131 

Premature/Multiples * Severity Level 1 5.765 5.167 4.644 4.023 4.005 

81.884 80.752 80.438 79.915 79.909 

16.190 15.254 14.803 14.170 14.158 

5.770 5.207 4.688 4.061 4.041 

3.712 3.231 2.707 2.109 2.092 

1.968 1.597 1.135 0.784 0.776 

69.391 68.741 68.568 68.287 68.284 

12.653 12.170 11.942 11.641 11.635 

2.829 2.569 2.374 2.179 2.174 

1.855 1.628 1.423 1.216 1.210 

A el* Severi 0.581 0.487 0.431 0.394 0.393 

A e0Male 0.604 0.566 0.539 0.475 0.473 

A e 1 Male 0.090 0.076 0.060 0.042 0.041 

TABLE 5: HHS HCCs Included in Infant Model Maturity Categories 

l\laturit~ Catl'gor~ I HCC/D<.'scription 

Extremely Immature Extremely Immature Newborns, Birth weight < 500 Grams 

Extremely Immature Extremely Immature Newborns, Including Birth weight 500-7 49 Grams 

Extremely Immature Extremely Immature Newborns, Including Birth weight 750-999 Grams 

Immature Premature Newborns, Including Birth weight 1000-1499 Grams 

Immature Premature Newborns, Including Birth weight 1500-1999 Grams 

Premature/Multiples Premature Newborns, Including Birth weight 2000-2499 Grams 

Premature/Multiples Other Premature, Low Birth weight, Malnourished, or Multiple Birth Newborns 

Term Term or Post-Term Singleton Newbom Normal or High Birth weight 

Age 1 All age 1 infants 
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82543 


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TABLE 6: HHS HCCs Included in Infant Model Severity Categories 

Severity Level 4 

Severity Level 4 

Metastatic Cancer 

Peritonitis/Gastrointestinal Perforation/Necrotizin Enterocolitis 

Heart Assistive Device/ Artificial Heart 

Heart Trans lant Status/Com lications 

Heart Failure 

ateral Sclerosis and Other Anterior Hom Cell Disease 

Cerebral Pal 

Myasthenia Gravis/Myoneural Disorders and Guillain-Barre Syndrome/Inflammatory 

and Toxic Neuro ath 

Nontraumatic Coma, Except Diabetic, Hepatic, or Hypoglycemic; Nontraumatic Brain 

Compression/ Anoxic Damagea 
82544 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 


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Se, erit~ Categor~ I HCC/Description 

Severity Level 4 Heart Infection/Inflammation, Except Rheumatic 

Severity Level 4 Major Congenital Heart/Circulatory Disorders 

Severity Level 4 Intracranial Hemorrhage 

Severity Level 4 Ischemic or U nsoecified Stroke 

Severity Level 4 Vascular Disease with Complications 

Severity Level 4 Pulmonarv Embolism and Deep Vein Thrombosis 

Severity Level 4 Aspiration and Specified Bacterial Pneumonias and Other Severe Lung Infections 

Severity Level 4 Chronic Kidney Disease, Stage 5 

Severity Level 4 Artificial Onenings for Feeding or Elimination 

Severity Level 3 HIV/AIDS 

Severity Level 3 Central Nervous System Infections, Except Viral Meningitis 

Severity Level 3 Opportunistic Infections 

Severity Level 3 Non-Hod!!kin Lymphomas and Other Cancers and Tumors 

Severity Level 3 Colorectal, Breast (Age < 50), Kidney and Other Cancers 

Severity Level 3 Breast (Age 50+) and Prostate Cancer, Benign/Uncertain Brain Tumors, and Other 

Cancers and Tumors 

Severity Level 3 Lipidoses and Glycogenosis 

Severity Level 3 Intestinal Obstruction 

Severity Level 3 Necrotizing Fasciitis 

Severity Level 3 Bone/Joint/Muscle Infections/Necrosis 

Severity Level 3 Osteogenesis Imperfecta and Other Osteodystrophies 

Severity Level 3 Cleft Lip/Cleft Palate 

Severity Level 3 Hemophilia 

Severity Level 3 Sickle Cell Anemia (Hb-SS) and Thalassemia Beta Zerob 

Severity Level 3 Disorders of the Immune Mechanism 

Severity Level 3 Coagulation Defects and Other Specified Hematological Disorders 

Severity Level 3 Drug Use with Psychotic Complications 

Severity Level 3 Drug Use Disorder, Moderate/Severe, or Drug Use with Non-Psychotic Complications 

Severity Level 3 Alcohol Use with Psychotic Complications 

Severity Level 3 Alcohol Use Disorder, Moderate/Severe, or Alcohol Use with Specified Non-Psychotic 

Complications 

Severity Level 3 Prader-Willi, Patau, Edwards, and Autosomal Deletion Syndromes 

Severity Level 3 Traumatic Complete Lesion Dorsal Spinal Cord 

Severity Level 3 Paraplegia 

Severity Level 3 Spinal Cord Disorders/Injuries 

Severity Level 3 Cerebral Palsy, Except Quadriplegic 

Severity Level 3 Spina Bifida and Other Brain/Spinal/Nervous System Congenital Anomalies 

Severity Level 3 Muscular Dystrophy 

Severity Level 3 Paikinson's, Huntington's, and Spinocerebellar Disease, and Other Neurodegenerative 

Disorders 

Severity Level 3 Hydrocephalus 

Severity Level 3 Unstable Angina and Other Acute Ischemic Heart Disease 

Severity Level 3 Atrial and Ventricular Septal Defects, Patent Ductus Arteriosus, and Other Congenital 

Heart/Circulatorv Disorders 

Severity Level 3 Specified Heart Arrhythmias 

Severity Level 3 Cerebral Aneurvsm and Arteriovenous Malformation 

Severity Level 3 Hemiplegia/Hemiparesis 

Severity Level 3 Cvstic Fibrosis 

Severity Level 3 Extensive Third-Deirree Burns 

Severity Level 3 Severe Head Iniurv 

Severity Level 3 Hip and Pelvic Fractures 

Severity Level 3 Vertebral Fractures without Spinal Cord Injury 
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82545 

d. Cost-Sharing Reduction Adjustments 

We propose to recalibrate the CSR 

adjustment factors for AI/AN zero cost 

sharing and limited cost sharing CSR 

plan variant enrollees for the 2025 

benefit year, and to retain these 

proposed AI/AN CSR adjustment 

factors, if finalized, for all future benefit 

years unless changed through noticeVerDate Sep<11>2014 22:04 Nov 22, 2023 Jkt 262001 PO 00000 Frm 00037 Fmt 4701 Sfmt 4702 E:\FR\FM\24NOP2.SGM 24NOP2

ddrumheller on DSK120RN23PROD with PROPOSALS2EP24NO23.018</GPH>

Se, erit~ Categor~ I HCC/Description 

Severitv Level 2 Viral or Unsoecified Menimritis 

Severitv Level 2 Thyroid Cancer, Melanoma, Neurofibromatosis, and Other Cancers and Tumors 

Severitv Level 2 Diabetes with Acute Comolications 

Severitv Level 2 Diabetes with Chronic Comolications 

Severitv Level 2 Diabetes without Comolication 

Severitv Level 2 Protein-Calorie Malnutrition 

Severitv Level 2 Conl!enital Metabolic Disorders Not Elsewhere Classified 

Severitv Level 2 Amyloidosis, Porohyria, and Other Metabolic Disorders 

Severitv Level 2 Cirrhosis of Liver 

Severitv Level 2 Chronic Pancreatitis 

Severitv Level 2 Acute Pancreatitis 

Severitv Level 2 InflammatoIV Bowel Disease 

Severitv Level 2 Rheumatoid Arthritis and Soecified Autoimmune Disorders 

Severitv Level 2 Systemic Luous EIVthematosus and Other Autoimmune Disorders 

Severitv Level 2 Conl!enital/Develoomental Skeletal and Connective Tissue Disorders 

Severitv Level 2 AcQuired Hemolytic Anemia, Including Hemolytic Disease of Newborn 

Severity Level 2 

Sickle-Cell Disorders, Except Sickle-Cell Anemia (Hb-SS) and Thalassemia Beta Zero; 

Beta Thalassemia Majora 

Severity Level 2 Down Syndrome, Fragile X, Other Chromosomal Anomalies, and Congenital 

Malformation Syndromes 

Severity Level 2 Seizure Disorders and Convulsions 

Severitv Level 2 Monoolegia, Other Paralytic Syndromes 

Severity Level 2 Atherosclerosis of the Extremities with Ulceration or Ganerene 

Severitv Level 2 Chronic Obstructive Pulmonarv Disease, Including Bronchiectasis 

Severity Level 2 Severe Asthma 

Severitv Level 2 Fibrosis of Lung and Other Lung Disorders 

Severity Level 2 Chronic Kidney Disease, Severe (Stage 4) 

Severitv Level 2 Chronic Ulcer of Skin, Exceot Pressure 

Severity Level 2 Major Skin Bum or Condition 

Severitv Level 1 ([ owest) Chronic Viral Heoatitis C 

Severity Level 1 Chronic Hepatitis, Except Chronic Viral Hepatitis C 

Severitv Level 1 Autistic Disorder 

Severity Level 1 Pervasive Developmental Disorders, Except Autistic Disorder 

Severitv Level 1 Multiole Sclerosis 

Severity Level 1 Asthma, Except Severe 

Severitv Level 1 Traumatic Amoutations and Amoutation Comolications 

Severity Level 1 Amputation Status, Uooer Limb or Lower Limb 

a/ Consistent with fiscal year 2024 updates to ICD-10 codes (effective October 1, 2023; see https:/lwww.cms.gov/medicarelcodingbillinglicd-10-codes/2024-icd-10-cm), we updated the label for HCC 122 from "Coma, Brain Compression/Anoxic Damage" to 

"Nontraumatic Coma, Except Diabetic, Hepatic, or Hypoglycemic; Nontraumatic Brain Compression/Anoxic Damage." The 

specific ICD-10 code update that prompted this label change was the addition of code R402A ''Nontraumatic coma due to 

underlying condition", which we have mapped to HCC 122. HCC 122 is only assigned to enrollees who do not also have a head 

injury code, because HCC 223 (Severe Head Injury) captures codes for head injury with loss of consciousness and supersedes HCC 

122 in a hierarchy. As such, the scope of HCC 122 is better reflected by the updated label. Because this ICD-10 update is effective 

October 1, 2023, future releases of the benefit year 2023 and benefit year 2024 DIY software will also reflect the updated label and 

diagnosis-to-HCC mapping. 

bl For the proposed 2025 benefit year HHS risk adjustlnent models, we made the following changes to improve the prediction of 

sickle cell disease costs: we updated mappings for sickle cell disease so that additional diagnosis codes are included in the model 

(within HCC 71 ), ungrouped HCCs 70 and 71 in the adult and child models, and reassigned HCC 70 and 71 to a higher severity in 

the infant models. To reflect these changes, we also relabeled HCC 70 and HCC 71. These updated mapping and HCC label 

changes parallel the reclassified Medicare Part C V28 CMS-HCCs. See, for exaniple, the Advance Notice of Methodological 

Changes for Calendar Year (CY) 2024 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies 

(February 1, 2023). https://www.cms.gov/files/ document/2024-advance-notice-pdf pdf 
82546 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

48See 83 FR 16930 at 16953; 84 FR 17478 through 

17479; 85 FR 29190; 86 FR 24181; 87 FR 27235 

through 27236; and 88 FR 25772 through 25774. 

49 78 FR 15410 at 15421 through 15422. 

50See 77 FR 73117 at 73127 and 78 FR 15410 at 

15419 through 15420. See also HHS-Operated Risk 

Adjustment Technical Paper on Possible Model 

Changes. (2021, October 26). CMS. https://

www.cms.gov/files/document/2021-ra-technicalpaper.pdf. Section A.3.1. 

51See 83 FR 16930 at 16953; 84 FR 17478 through 

17479; 85 FR 29190; 86 FR 24181; 87 FR 27235 

through 27236; and 88 FR 25772 through 25774. 

52See, for example, the 2024 Payment Notice, 88 

FR 25772–25774. Also see Appendix A, HHSOperated Risk Adjustment Technical Paper on 

Possible Model Changes. (2021, October 26). CMS. 

https://www.cms.gov/files/document/2021-ratechnical-paper.pdf. 

53 Id. 

54The 2021 Risk Adjustment Technical Paper 

provided initial analysis on the CSR adjustment 

factors and their performance with the geographical 

indicators. See Appendix A, HHS-Operated Risk 

Adjustment Technical Paper on Possible Model 

Changes. (2021, October 26). CMS. https://

www.cms.gov/files/document/2021-ra-technicalpaper.pdf. 

55 In the 2021 Risk Adjustment Technical Paper, 

we concluded that, in aggregate, most of the current 

CSR adjustment factors contribute to a reasonable 

prediction of what plans are paying for CSR 

enrollees, with the exception of CSR adjustment 

factors for AI/AN enrollees. Our continued study of 

these issues, including the more recent analysis of 

2021 benefit year data, affirmed these initial 

conclusions. Therefore, we propose in this 

rulemaking to update the CSR adjustment factors 

for AI/AN zero-cost sharing and limited cost 

sharing plan variants and propose to maintain the 

existing CSR adjustment factors for other enrollees. 

See Appendix A, HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. 

56HHS-Operated Risk Adjustment Technical 

Paper on Possible Model Changes. (2021, October 

26). CMS. https://www.cms.gov/files/document/ 

2021-ra-technical-paper.pdf. 

57Almost 90 percent of total billable member 

months in AI/AN zero-cost sharing and limited cost 

sharing CSR plan variants are in bronze plans. 

58HHS-Operated Risk Adjustment Technical 

Paper on Possible Model Changes. (2021, October 

26). CMS. https://www.cms.gov/files/document/ 

2021-ra-technical-paper.pdf. 

and-comment rulemaking. We also 

propose to maintain the current CSR 

adjustment factors for silver plan variant 

enrollees (70 percent, 73 percent, 87 

percent, and 94 percent AV plan 

variants) 48 for the 2025 benefit year and 

beyond, unless changed through noticeand-comment rulemaking. 

Since the beginning of the HHSoperated risk adjustment program in the 

2014 benefit year, we included CSR 

adjustment factors in the calculations 

under the State payment transfer 

formula to account for anticipated 

increased demand for health care 

services due to lower cost sharing for 

CSR enrollees.49 At that time, we did 

not have data available on the 

individual and small group (including 

merged) markets’ use of services, and 

therefore, we based the CSR adjustment 

factors on the available large group 

market MarketScan® data.50 We have 

proposed and finalized the same CSR 

adjustment factors since they were first 

established to maintain stability and 

certainty for issuers.51 At the same time, 

we have continued to study these issues 

and have explored a range of options to 

update the CSR adjustments to improve 

prediction.52 Interested parties have 

also repeatedly requested that HHS reanalyze the CSR adjustment factors and 

consider making updates.53

Because our prior analysis of the 

current CSR adjustment factors was 

based on the extraction and use of 

national enrollee-level EDGE data 

without issuer or geographic markers,54

we did not previously have the ability 

to analyze the distribution of the CSR 

populations at a more granular level (for 

example, at the issuer, State or rating 

area level). However, with policies 

finalized in the 2023 Payment Notice 

(87 FR 27241 through 27243) and the 

2024 Payment Notice (88 FR 25784 

through 25787), we can now extract and 

use multiple years of enrollee-level 

EDGE data with plan ID and rating area 

markers. This allowed for further study 

of the CSR populations at a more 

granular level to inform potential 

proposed changes to these factors, 

including, for example, whether certain 

issuers, States, or rating areas have a 

high percentage of AI/AN enrollment. 

We have now reconsidered the current 

CSR adjustment factors using several 

years of EDGE data available to HHS, 

including 2021 benefit year enrolleelevel EDGE data with plan ID and rating 

area markers, and analyzed potential 

changes to the CSR adjustment factors at 

the State market risk pool level. 

Based on further analysis of all CSR 

adjustment factors, HHS is not 

proposing changes to the CSR 

adjustment factors, with the exception 

of the AI/AN CSR plan variant factors.55

Our continued study of these issues 

found that adjustments to the CSR 

adjustment factors for AI/AN CSR plan 

variant enrollees were needed and 

would be appropriate. As described in 

the 2021 Risk Adjustment Technical 

Paper,56 AI/AN CSR plan variant 

enrollees experienced higher 

expenditures than non-CSR silver 

enrollees, which may reflect increased 

demand associated with enrollee receipt 

of the AI/AN zero cost sharing or 

limited cost sharing CSR plan variants 

or risk characteristics specific to the AI/ 

AN population which are not 

specifically captured by HCCs or other 

model factors. Given these findings, we 

conducted additional analysis using 

additional benefit years of available 

enrollee-level EDGE data, including the 

2021 benefit year data with the plan ID 

and rating area markers, and found that 

AI/AN CSR plan variant enrollees were 

meaningfully underpredicted in the 

HHS risk adjustment models. 

Specifically, we evaluated the 

predictive accuracy of the current AI/ 

AN CSR plan variant adjustment factors 

using the risk term PRs in Table 7 to 

measure the accuracy of the entire risk 

term (including PLRS, metal IDFs, CSR 

adjustment factors, and geographic cost 

factors) in predicting plan liability for 

this cohort, as measured by actual paid 

PMPM claims. Table 7 shows that in 

2021 EDGE data, the risk term PRs 

demonstrate underprediction for AI/AN 

zero cost sharing and limited cost 

sharing bronze plan variants under the 

CSR adjustment factors for the 2024 

benefit year relative to the proposed 

CSR adjustment factors for the 2025 

benefit year and beyond.57 The risk term 

PRs demonstrate similar 

underprediction for AI/AN zero cost 

sharing and limited cost sharing bronze 

plan variants in other EDGE data 

years.58


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59A subpopulation that is predicted perfectly 

would have a PR of 1.0. 

60 86 FR 7009. 

To address concerns about the 

observed underprediction among AI/AN 

CSR plan variant enrollees, we propose 

to update the CSR adjustment factors for 

AI/AN zero-cost sharing and limited 

cost sharing plan variants and use the 

proposed factors for these enrollees as 

shown in Table 8. We recalibrated these 

factors such that the risk term PRs for 

each CSR plan variant category equals 

1.00 (accurate prediction 59) but 

constrained each CSR adjustment factor 

so that no CSR adjustment factor would 

be less than 1.00 to avoid creating 

incentives for issuers to avoid enrolling 

AI/AN CSR recipients. As shown in 

Table 7, the risk term PRs were 

demonstrated through simulation to 

improve under the proposed AI/AN CSR 

adjustment factors for the zero-cost 

sharing and limited cost sharing plans. 

We believe that these proposed 

changes to AI/AN CSR adjustment 

factors are important to our efforts to 

continuously improve the HHS risk 

adjustment models with incremental 

changes to improve model prediction by 

updating the AI/AN adjustment factors 

to more accurately predict plan liability 

for this subpopulation. We also believe 

that these proposed changes would 

increase the incentives for issuers to 

engage the AI/AN population, whose 

communities have been historically 

underserved and who face significant 

health disparities. We also believe this 

proposed change would help advance 

the agency’s health equity goals and 

align with the policy objectives in the 

January 20, 2021 Executive Order on 

Advancing Racial Equity and Support 

for Underserved Communities Through 

the Federal Government.60


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TABLE 7: Risk Term Predictive Ratios, Simulated for the 2021 Risk Adjustment Models 

Usin 2021 EDGE Data 

Bronze, American 537,986 0.78 0.98 

Indian/Alaska Native, Zero 

Cost Sharin 

Bronze, American 73,265 0.93 0.95 

Indian/Alaska Native, 

Limited Cost Sharin 

TABLE 8: Proposed CSR Adjustment Factors for the 2025 Benefit Year and Beyond 

Plan Variation 94% 

Plan Variation 87% 

Plan Variation 73% 

Standard Plan 70% 

Current Adjustment Factors for the 

2024 Benefit Year 

1.12 

1.12 

1.00 

1.00 

Proposed Adjustment Factors for the 

2025 Benefit Year and Be ond 

1.12 

1.12 

1.00 

1.00 
82548 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

61This includes the CSR adjustment factors in 

Table 8. 

62As outlined previously in this rule, the 

proposed changes to the CSR adjustment factors 

focus on the AI/AN CSR plan variants because our 

analysis found the CSR adjustment factors for other 

enrollees to be adequate. 

63See, for example, 81 FR 12203 at 12228, 85 FR 

29164 at 29190 and 29191, and 88 FR 25740 at 

25772 through 25774. 

64Massachusetts Cost Sharing Subsidies in 

ConnectorCare: Design, Administration, and Impact 

(2021 Aug.). https://www.mahealthconnector.org/ 

wp-content/uploads/MA-Cost-Sharing-Subsidies-inConnectorCare-Brief-083021.pdf. 

65The structure of wrap-around plans in some 

States, such as Massachusetts, differs from the 

coverage in States who offer Medicaid expansion 

plans on the Exchange. For example, in 

Massachusetts, the higher cost sharing wrap-around 

plans are variations of lower cost sharing plans. As 

such, the Massachusetts wrap-around plans do not 

have the same AVs as their comparable plans. That 

is why we use a CSR adjustment factor of 1.12 for 

all Massachusetts wrap-around plans with AVs 

above 94 percent. In contrast, in Arkansas, its 

Medicaid expansion plans are identical to other 94 

percent and 100 percent AV CSR plan variants 

offered on the Exchange and are distinguished from 

these identical plans only in their sources of 

funding and eligibility criteria. As such, we 

presently direct issuers in Arkansas who provide 

Medicaid expansion plans with AVs of 94 percent 

and 100 percent to use specified plan variant codes 

for their Medicaid expansion plans only to 

differentiate the sources of funding and to 

differentiate between populations eligible for the 

Medicaid expansion plans from those who are 

eligible for standard 94 percent and 100 percent AV 

CSR plan variants. Because the Arkansas Medicaid 

expansion plans are identical to other 94 percent 

and 100 percent AV CSR plan variants available in 

Arkansas and therefore have the same AVs, we 

would use the proposed CSR adjustment factor of 

1.12 for Arkansas 94 percent AV Medicaidexpansion plans and the proposed CSR adjustment 

factor that corresponds to the silver metal level zero 

cost sharing variants (that is, the proposed 1.46 CSR 

adjustment factor for zero cost sharing variants) for 

Arkansas 100 percent AV Medicaid-expansion 

plans in the plan liability risk score calculation. See 

CMS approval of Arkansas’s section 1115(a) 

demonstration, ‘‘Arkansas Health and Opportunity 

for Me.’’ https://www.medicaid.gov/sites/default/ 

files/2021-12/ar-arhome-ca.pdf. 

66For a list of the unique State-specific CSR 

levels that have higher plan liability than the 

standard plan variants, for which we utilize the 

corresponding CSR adjustment factor that maps to 

the plan’s AV, refer to the applicable benefit year’s 

DIY Software on the CMS website. See, for example, 

the Draft 2023 Benefit Year DIY Software on the 

CMS website (August 22, 2023). https://

www.cms.gov/files/document/cy2023-diyinstructions-08222023.pdf. 

67Hileman, G., & Steele, S. (2016). Accuracy of 

Claims-Based Risk Scoring Models. Society of 

Actuaries. https://www.soa.org/4937b5/ 

globalassets/assets/files/research/research-2016- 

accuracy-claims-based-risk-scoring-models.pdf. 

We also propose to retain the 

proposed 2025 benefit year CSR 

adjustment factors, if finalized, for 

future benefit years (that is, the 2026 

benefit year and beyond) 61 unless 

changed through notice-and-comment 

rulemaking. Although we could analyze 

and consider potential updates to the 

CSR adjustment factors every year as 

part of the annual recalibration of the 

HHS risk adjustment models, we have 

found that the implied CSR adjustment 

factors calculated from 2018 through 

2022 plan data were stable across each 

year of data. We also want to balance 

our approach to making changes as part 

of the annual recalibration of the HHS 

risk adjustment models in future benefit 

years with the desire to maintain 

stability and predictability for issuers. 

With the proposed changes to the AI/ 

AN CSR adjustment factors, we believe 

the models would better predict risk for 

AI/AN CSR plan variant enrollees such 

that we do not expect to update the CSR 

factors on an annual basis.62 However, 

if we were to pursue changes to any of 

the CSR adjustment factors in future 

benefit years, we would propose those 

updates through notice-and-comment 

rulemaking. 

Lastly, separate from the proposal 

pertaining to AI/AN CSR adjustment 

factors, we note that for all plan liability 

risk score calculations under the State 

payment transfer formula, we use the 

CSR adjustment factors that align with 

the AV of the applicable plan for the 

enrollee. Thus, for unique State-specific 

plans, we apply the CSR adjustment 

factors that correspond to each plan’s 

AV. Specifically, when we identify 

unique State-specific plans that have 

higher plan liability than the standard 

plan variants, we utilize the 

corresponding CSR adjustment factor in 

the plan liability risk score calculation 

that maps to the plan’s AV. For 

example, we use a CSR adjustment 

factor of 1.12 for all Massachusetts 

wrap-around plans with AVs above 94 

percent in the plan liability risk score 

calculation.63 64 This approach does not 

apply in the case of States whose Statespecific plans take the form of Medicaid 

expansion plans offered on the 

Exchange (for example, Arkansas), 

because these plans are identical in all 

their parameters, including AV and 

degree of plan liability, to other plans 

offered on the Exchange in those States 

and are differentiated from their 

comparable plans only in eligibility 

criteria and sources of funding.65 As we 

identify unique State-specific plans that 

have higher plan liability than the 

standard plan variants, such as those in 

Massachusetts, we work with the 

relevant State Department of Insurance 

and other relevant State institutions to 

identify the applicable CSR adjustment 

factor that corresponds to the unique 

State-specific plan’s AV.66 We would 

continue to follow this approach, 

working with the State to identify the 

applicable CSR adjustment factor that 

corresponds to that State’s unique Statespecific plan’s AV, unless changed 

through notice-and-comment 

rulemaking. 

We seek comment on these proposals. 

e. Model Performance Statistics 

Each benefit year, to evaluate the HHS 

risk adjustment model performance, we 

examine each model’s R-squared 

statistic and predictive ratios (PRs). The 

R-squared statistic, which calculates the 

percentage of individual variation 

explained by a model, measures the 

predictive accuracy of the model 

overall. The PR for each of the HHS risk 

adjustment models is the ratio of the 

weighted mean predicted plan liability 

for the model sample population to the 

weighted mean actual plan liability for 

the model sample population. The PR 

represents how well the model does on 

average at predicting plan liability for 

that subpopulation. 

A subpopulation that is predicted 

perfectly would have a PR of 1.0. For 

each of the current and proposed HHS 

risk adjustment models, the R-squared 

statistic and the PRs are in the range of 

published estimates for concurrent HHS 

risk adjustment models.67 Because we 

propose to blend the coefficients from 

separately solved models based on the 

2019, 2020, and 2021 benefit years’ 

enrollee-level EDGE data, we are 

publishing the R-squared statistic for 

each model separately to verify their 

statistical validity. The R-squared 

statistics for the proposed 2025 benefit 

models are shown in Table 9. 


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68 Discussion provided an illustration and further 

details on the State payment transfer formula. 

69See 81 FR 94081. See also 84 FR 17467. 

70See Circular No. A–25 Revised. https://

www.whitehouse.gov/wp-content/uploads/2017/11/ 

Circular-025.pdf. 

71 Id. 

3. Overview of the HHS Risk 

Adjustment Methodology (§ 153.320) 

In part 2 of the 2022 Payment Notice 

(86 FR 24183 through 24186), we 

finalized the proposal to continue to use 

the State payment transfer formula 

finalized in the 2021 Payment Notice for 

the 2022 benefit year and beyond, 

unless changed through notice-andcomment rulemaking. We explained 

that under this approach, we will no 

longer republish these formulas in 

future annual HHS notice of benefit and 

payment parameter rules unless changes 

are being proposed. We are not 

proposing any changes to the formula in 

this rule, and therefore, are not 

republishing the formulas in this rule. 

We therefore would continue to apply 

the formula as finalized in the 2021 

Payment Notice (86 FR 24183 through 

24186) 68 in the States where HHS 

operates the risk adjustment program in 

the 2025 benefit year. Additionally, as 

finalized in the 2020 Payment Notice 

(84 FR 17466 through 17468), we will 

maintain the high-cost risk pool 

parameters for the 2020 benefit year and 

beyond, unless amended through 

notice-and-comment rulemaking. We 

are not proposing any changes to the 

high-cost risk pool parameters for the 

2025 benefit year; therefore, we would 

maintain the $1 million threshold and 

60 percent coinsurance rate.69

4. HHS Risk Adjustment User Fee for 

the 2025 Benefit Year (§ 153.610(f)) 

We propose an HHS risk adjustment 

user fee for the 2025 benefit year of 

$0.20 PMPM. Under § 153.310, if a State 

is not approved to operate, or chooses 

to forgo operating, its own risk 

adjustment program, HHS will operate 

risk adjustment on its behalf. For the 

2025 benefit year, HHS will operate risk 

adjustment in every State and the 

District of Columbia. As described in 

the 2014 Payment Notice (78 FR 15416 

through 15417), HHS’ operation of risk 

adjustment on behalf of States is funded 

through a risk adjustment user fee. 45 

CFR 153.610(f)(2) provides that, where 

HHS operates a risk adjustment program 

on behalf of a State, an issuer of a risk 

adjustment covered plan must remit a 

user fee to HHS equal to the product of 

its monthly billable member enrollment 

in the plan and the PMPM risk 

adjustment user fee specified in the 

annual HHS notice of benefit and 

payment parameters for the applicable 

benefit year. 

OMB Circular No. A–25 established 

Federal policy regarding user fees, and 

specifies that a user charge will be 

assessed against each identifiable 

recipient for special benefits derived 

from Federal activities beyond those 

received by the general public.70 The 

HHS-operated risk adjustment program 

provides special benefits as defined in 

section 6(a)(1)(B) of OMB Circular No. 

A–25 to issuers of risk adjustment 

covered plans because it mitigates the 

financial instability associate with 

potential adverse risk selection.71 The 

HHS-operated risk adjustment program 

also contributes to consumer confidence 

in the health insurance industry by 

helping to stabilize premiums across the 

individual, merged, and small group 

markets. 

In the 2024 Payment Notice (88 FR 

25740), we calculated the Federal 

administrative expenses of operating the 

HHS risk adjustment program for the 

2024 benefit year to result in a risk 

adjustment user fee rate of $0.21 PMPM 

based on our estimated costs for HHS 

risk adjustment operations and 

estimated Billable Member Months 

(BMM) for individuals enrolled in risk 

adjustment covered plans. For the 2025 

benefit year, HHS proposes to use the 

same methodology to estimate our 

administrative expenses to operate the 

HHS risk adjustment program. These 

costs cover development of the models 

and methodology, collections, 

payments, account management, data 

collection, data validation, program 

integrity and audit functions, 

operational and fraud analytics, 

interested parties training, operational 

support, and administrative and 

personnel costs dedicated to HHSoperated risk adjustment program 

activities. To calculate the HHS risk 

adjustment user fee, we divided HHS’ 

projected total costs for administering 

the HHS risk adjustment program on 

behalf of States by the expected number 

of BMM in risk adjustment covered 

plans in States where the HHS-operated 

risk adjustment program will apply in 

the 2025 benefit year. 

We estimate that the total cost for 

HHS to operate the risk adjustment 

program on behalf of States for the 2025 

benefit year will be approximately $65 

million, which is more than the 

approximately $60 million estimated for 

the 2024 benefit year. We are projecting 

increased costs due to increased 


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TABLE 9 RS . 

. - ,quare d St a f IS f IC t or th e P ro pose d 2025 HHS R' IS kAd' JUS t men t Models 

Models 2019 Enrollee- 2020 Enrollee- 2021 EnrolleeLevel EDGE Data Level EDGE Data Level EDGE Data 

Platinum Adult 0.4448 0.4360 0.4174 

Gold Adult 0.4394 0.4302 0.4118 

Silver Adult 0.4371 0.4278 0.4094 

Bronze Adult 0.4330 0.4236 0.4051 

Catastrophic Adult 0.4329 0.4236 0.4051 

Platinum Child 0.3569 0.3436 0.3539 

Gold Child 0.3541 0.3404 0.3511 

Silver Child 0.3522 0.3383 0.3491 

Bronze Child 0.3491 0.3351 0.3459 

Catastrophic Child 0.3490 0.3350 0.3458 

Platinum Infant 0.3165 0.2913 0.3059 

Gold Infant 0.3133 0.2878 0.3025 

Silver Infant 0.3122 0.2865 0.3012 

Bronze Infant 0.3101 0.2842 0.2989 

Catastrophic Infant 0.3101 0.2842 0.2989 
82550 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

72ARP. Public Law 117–2 (2021). 

73CMS. (2023, June 30). Summary Report on 

Permanent Risk Adjustment Transfers for the 2022 

Benefit Year. (p. 8). https://www.cms.gov/files/ 

document/summary-report-permanent-riskadjustment-transfers-2022-benefit-year.pdf. 

74 Inflation Reduction Act. Public Law 1217–169 

(2022). 

75 In the context of high-cost risk pool audits, a 

‘‘finding’’ results from cases of confirmed noncompliance or discovery of evidence suggesting 

noncompliance with applicable Federal 

requirements related to high-cost risk pool 

payments, which require a recoupment of these 

payments. Centers for Medicare & Medicaid 

Services, Center for Consumer Information and 

Insurance Oversight (CCIIO). (Dec. 2022). Best 

Practices Overview: Benefit Year (BY) 2018 HCRP 

Payment Audits and General EDGE Server 

Requirements. https://regtap.cms.gov/reg_library_

openfile.php?id=4234&type=l (Login Required). 

76 In the context of high-cost risk pool audits, an 

‘‘observation’’ results from the identification of 

areas for improvement when there is no evidence 

of actual non-compliance with applicable Federal 

requirements or when there may be evidence of 

non-compliance with applicable Federal 

requirements that does not require recoupment of 

these payments. Centers for Medicare & Medicaid 

Services, Center for Consumer Information and 

Insurance Oversight (CCIIO). (Dec. 2022). Best 

Practices Overview: Benefit Year (BY) 2018 HCRP 

Payment Audits and General EDGE Server 

Requirements. https://regtap.cms.gov/reg_library_

openfile.php?id=4234&type=l (Login Required). 

This proposal is limited to observations where there 

may be evidence of non-compliance with applicable 

Federal requirements. 

77Centers for Medicare & Medicaid Services, 

Center for Consumer Information and Insurance 

Oversight (CCIIO). (Nov. 2022). EDGE Server 

Business Rules (ESBR) Version 22.0. https://regtap.

cms.gov/reg_library_openfile.php?id=3765&type=l 

(Login Required). 

78See, for example, 84 FR at 17488 and 87 FR at 

27243. 

contracting costs combined with 

increased labor costs. 

We also project higher enrollment 

than our prior estimates in the 2024 and 

2025 benefit years based on the 

increased enrollment, as measured by 

BMM, between the 2021 and 2022 

benefit years in the individual noncatastrophic market risk pool in most 

States, likely due to the increased PTC 

subsidies provided for in the American 

Rescue Plan Act of 2021 (ARP).72 73 In 

light of the passage of the Inflation 

Reduction Act of 2022 (IRA), in which 

section 12001 extended the enhanced 

PTC subsidies in section 9661 of the 

ARP through the 2025 benefit year, we 

project there will continue to be 

increased enrollment levels through the 

2025 benefit year.74 Because we project 

an increased budget to operate the HHSoperated risk adjustment program and 

estimated higher enrollment through the 

end of the 2025 benefit year, we propose 

a HHS risk adjustment user fee of $0.20 

PMPM for the 2025 benefit year. 

We seek comment on the proposed 

HHS risk adjustment user fee for the 

2025 benefit year. 

5. Audits and Compliance Reviews of 

Risk Adjustment Covered Plans 

(§ 153.620(c)) 

We propose amending § 153.620(c)(4) 

to require issuers of risk adjustment 

covered plans to complete, implement, 

and provide to HHS written 

documentation of any corrective action 

plans when required by HHS if a highcost risk pool audit results in the 

inclusion of a finding 75 or certain 

observations 76 in the final audit report. 

Currently, under § 153.620(c)(4), the 

completion, implementation, and 

submission of documentation of a 

corrective action plan to HHS is only 

required if the audit results in the 

inclusion of a finding in the final audit 

report. Upon completion of the first 

benefit year of high-cost risk pool audits 

(2018 benefit year audits), HHS found 

that some issuers of risk adjustment 

covered plans made data submission 

errors to their EDGE servers that 

constituted instances of noncompliance 

but did not result in a financial impact 

and were therefore only recorded as 

observations in the final audit report. 

For example, many issuers failed to 

provide adequate documentation of 

their policies and procedures that 

demonstrate that they are in compliance 

with the data submission requirements 

for the HHS-operated risk adjustment 

program, such as the applicable benefit 

year’s EDGE Server Business Rules.77

While such instances of noncompliance 

did not cause a financial impact, and 

therefore were not identified as audit 

findings, fully compliant policies and 

procedures, and documentation thereof, 

are critical to ensuring issuer adherence 

to HHS requirements and the 

submission of accurate data to an 

issuer’s EDGE server. 

Furthermore, in these situations, 

noncompliance may result from 

unintentional negligence where issuers 

lack proper documentation or the ability 

to locate data due to improper record 

maintenance and retention procedures. 

In these cases, the accuracy of the 

issuer’s EDGE data may still be 

impacted, as EDGE claims data 

submission is incremental. For example, 

if an issuer identified an error in one file 

that does not have a financial impact 

and subsequently corrects the error in 

that file only during the submission 

period, but does not perform an impact 

analysis to review the accuracy of all 

claims file submissions and correct all 

claims file submissions that included 

the same error, the issuer’s EDGE data 

will be incorrect even though there may 

be no financial impact with respect to 

the calculation of HHS risk adjustment 

State transfers or high-cost risk pool 

amounts. However, since enrollee-level 

data that HHS extracts from issuers’ 

EDGE servers is also used for HHS risk 

adjustment model recalibration, updates 

to the AV methodology and calculator, 

and other analyses for the commercial 

individual and small group market HHS 

programs and other Federal HHS related 

programs (for example, Medicaid 

expansion QHP population and nonFederal governmental plans),78 it is 

important that issuers of risk adjustment 

covered plans also take corrective action 

to address instances of noncompliance, 

including those that result from audit 

findings and audit observations, to 

ensure that all instances of 

noncompliance identified through 

audits do not result in unaddressed 

material impact to the enrollee-level 

data that HHS extracts from issuers’ 

EDGE servers and are not repeated in 

future benefit year data submissions. As 

§ 155.620(c)(4) currently only requires 

corrective action plans for findings, 

instances of noncompliance that result 

in audit observations may be 

unaddressed by issuers. We are 

concerned that allowing these instances 

of noncompliance to be unaddressed 

may impact EDGE data integrity in 

future benefit years, and by requiring 

these corrective action plans, we also 

intend to help prevent EDGE data 

discrepancies in the future. 

For these reasons, HHS is proposing 

to require corrective action plans for 

observations identified through HHS 

risk adjustment (including high-cost risk 

pool) audits when there is evidence of 

non-compliance with applicable Federal 

requirements if required by HHS to 

improve program and data integrity for 

accurate data submissions to issuer 

EDGE servers. HHS would communicate 

to the issuer, as part of the final audit 

report, which findings and observations 

require corrective action. Under this 

proposal, consistent with the existing 

framework in § 155.620(c)(4), HHS 

would require an issuer of a risk 

adjustment covered plan to provide, 

within 45 calendar days of the issuance 

of the final audit report, a written 

corrective action plan for any audit 

findings, as well as audit observations 

when there is evidence of noncompliance with applicable Federal 

requirements, to HHS for approval, 

implement that plan, and provide to 

HHS written documentation of the 

corrective actions taken to resolve the 

root cause of the noncompliance 

identified. This is the same timeline and 

framework that currently applies to 

corrective action plans that are required 

as a result of findings included in the 


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79See 45 CFR 153.620(c)(4). Also see 86 FR at 

24192 through 24194. 

80 If 2020 benefit year audits begin in early 2024, 

we anticipate the final audit reports would be 

completed, with findings and observations 

identified, in late 2024. 

final audit report.79 We propose that 

this change would be applicable 

beginning with 2020 benefit year audits, 

which we anticipate beginning in early 

2024.80

We seek comment on this proposal. 

D. 45 CFR Part 155—Exchange 

Establishment Standards and Other 

Related Standards 

1. Approval of a State Exchange 

(§ 155.105) 

We propose to amend § 155.105(b) to 

require that, in addition to meeting all 

other approval standards under 

§ 155.105(b), a State seeking to operate 

a State Exchange must first operate a 

State-based Exchange using the Federal 

platform (SBE–FP), meeting all 

requirements under § 155.200(f), for at 

least one plan year, including its open 

enrollment period. This proposal is 

intended to give States sufficient time to 

create, staff, and structure a State 

Exchange that could transition to 

operating its own platform and establish 

relationships with interested parties 

critical to a State Exchange’s success in 

operating a Navigator and consumer 

outreach program, assuming plan 

management responsibilities, and 

communicating effectively with 

consumers to support enrollment and 

avoid health care coverage gaps. 

Sections 1311(b) and 1321(b) of the 

Affordable Care Act (ACA) allow States 

to elect to operate their own health 

insurance Exchanges to provide 

individuals and employers with health 

insurance coverage. Section 

1321(a)(1)(A) of the ACA directs the 

Secretary to issue regulations setting 

standards with respect to the 

establishment and operation of those 

Exchanges. Section 155.106 describes 

different Exchange models that States 

may utilize. A State’s choice of model 

may depend on the State’s specific 

needs. State Exchanges offer States the 

ability to maintain more authority over 

policy and operational decisions, 

including health insurance issuer 

relationships, plan certification, and 

consumer assistance. However, building 

and maintaining a consumer-oriented, 

technology-driven marketplace platform 

requires extensive start-up resources, as 

well as investment of time and 

resources in the establishment of 

relationships with consumers, consumer 

assisters, partners in the coordination of 

eligibility functions, issuers, and other 

interested parties. 

To encourage more State authority 

over Exchange functions, we provided 

States with the flexibility to operate a 

State Exchange while relying on the 

Federally-facilitated Exchange (FFE) 

eligibility enrollment technology and 

infrastructure (known as the ‘‘Federal 

platform’’) to perform certain Exchange 

functions. Specifically, as finalized in 

the 2017 Payment Notice (81 FR 12244 

through 12246), the SBE–FP model 

allows States to maintain their 

Exchange’s legal status as a State 

Exchange while relying on the Federal 

platform to perform eligibility and 

enrollment functions and associated 

consumer call center and casework 

functions. Under the SBE–FP model, 

States retain authority and primary 

responsibility for plan management 

functions, including QHP certification, 

and consumer support functions, such 

as operating an informational website 

and toll-free telephone hotline. Under 

this model, States are also primarily 

responsible for operating a Navigator 

program. We charge issuers on the SBE– 

FPs a user fee calculated as a percentage 

of the user fee charged to issuers on the 

FFEs. HHS’ Payment Notice final rules 

set forth the user fee for issuers 

participating in SBE–FPs every year. 

SBE–FPs may assess an additional Statelevel user fee on issuers for the purposes 

of operating the Exchanges. For Plan 

Year 2023, three States operated 

Exchanges under the SBE–FP model. 

Over the past several years, we have 

observed the benefits of States first 

operating an SBE–FP for at least one 

plan year prior to transitioning fully 

from an FFE to a State Exchange. 

Operating an SBE–FP for at least one 

plan year, including its open enrollment 

period, prior to transitioning to a State 

Exchange gives States an opportunity to 

focus on investing time and resources 

needed to implement key Exchange 

functions that involve the establishment 

of critical and necessary relationships 

with consumers, consumer assisters, 

partners in the coordination of 

eligibility functions, issuers, and other 

interested parties. Operating an SBE–FP 

for at least one plan year prior to 

transitioning to a State Exchange also 

affords States time to implement 

eligibility and enrollment functions 

which require information technology 

platforms, call centers, and coordination 

with partners, such as State Medicaid 

agencies. In addition, operating an SBE– 

FP for at least one plan year prior to 

transitioning to a State Exchange gives 

States more time to engage with partners 

and interested parties to develop 

various consumer-facing content and 

consumer outreach strategies, all while 

establishing and gaining experience 

operating a consumer assistance 

program. Further, when States operate 

an SBE–FP for at least one plan year 

before operating a State Exchange, they 

are more likely to have the time and 

resources needed to coordinate with the 

State Department of Insurance to 

establish policies and procedures 

associated with carrying out plan 

management functions, engage with the 

issuer community, and develop QHP 

certification requirements and 

processes. Finally, operating an SBE–FP 

for at least one plan year before 

transitioning to a State Exchange allows 

States time to familiarize consumers, 

consumer assisters, partners in the 

coordination of eligibility functions, 

issuers, and other interested parties 

with operations of the new State 

Exchange organization ahead of 

engaging with that Exchange, and it 

mitigates the risks and disruption 

associated with a transition to a State 

Exchange and simultaneous 

replacement of HealthCare.gov as the 

eligibility and enrollment pathway for 

those parties. 

We propose to amend § 155.105(b)(4) 

to require that a State seeking to operate 

a State Exchange must first operate an 

SBE–FP for at least one plan year, 

including its first open enrollment 

period, for the reasons explained 

previously in this section. 

We seek comment on this proposal, 

including the duration of time that a 

State must operate an SBE–FP prior to 

transitioning to a State Exchange. 

2. Election To Operate an Exchange 

After 2014 (§ 155.106) 

We propose changes to the Exchange 

Blueprint (OMB control number: 0938– 

1172) requirements for States seeking to 

operate a State Exchange. At 

§ 155.106(a)(2), we propose to add that, 

as part of a State’s activities for its 

establishment of a State Exchange, we 

would require that the State provide 

supporting documentation 

demonstrating progress toward meeting 

State Exchange Blueprint requirements, 

or documentation that details a State’s 

plans for how it intends to implement 

and meet the Exchange functional 

requirements as laid out in the State 

Exchange Blueprint. This could include 

a State submitting detailed plans 

regarding its State Exchange consumer 

assistance programs and activities, such 

as information on its direct-to-consumer 

outreach plans, for HHS to assess 

comparability to the FFEs’ consumer 

assistance programs and activities while 

allowing for State flexibility in its 

approach to best serve the State’s 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82552 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

81CMS. (2021, November 30). Blueprint For 

Approval of State-Based Health Insurance 

Exchanges, Coverage Years Beginning on or After 

2019. CMS. Section I, p. iii. https://www.cms.gov/ 

CCIIO/Resources/Fact-Sheets-and-FAQs/ 

Downloads/CMS-Blueprint-Application.pdf. 

consumers. Over the past few years, 

several States have transitioned off the 

Federal platform to establish and 

operate State Exchanges. In our 

experience providing technical 

assistance and oversight to States that 

are establishing State Exchanges, we 

have observed that requesting additional 

detail from States on various aspects of 

their State Exchange implementation 

plans is imperative to a successful 

establishment of a State Exchange. 

Ultimately, we seek to support the 

establishment of a successful State 

Exchange, and the ability to request 

additional detail on a State’s State 

Exchange implementation plans is 

crucial to identifying areas the State 

may need to reconsider or further 

develop. 

The current State Exchange Blueprint 

Application provides that we may 

require live demonstrations of Exchange 

functionality on the State Exchange’s 

platform, and/or supporting 

documentation from a State, as evidence 

of its progress toward meeting State 

Exchange Blueprint Application 

requirements.81 We propose to codify in 

our regulations in order to set a clear 

expectation for a State establishing a 

State Exchange that, as part of the 

State’s submission of a State Exchange 

Blueprint Application, we have the 

authority to request any evidence we 

determine necessary for the State to 

detail its implementation of the required 

State Exchange functionality. This could 

include HHS requiring a State to submit 

detailed plans regarding its State 

Exchange consumer assistance programs 

and activities, such as information on its 

direct outreach plans. We would 

provide guidance and direction to each 

State regarding requests for evidence, so 

that each State understands the purpose 

of our requests as they relate directly to 

how the State meets the functional 

requirements for operating a State 

Exchange. We would request supporting 

documentation from States with the goal 

of imposing minimal burden on States’ 

ability to meet its State Exchange 

Blueprint requirements, while 

maintaining the objective that our 

requests would provide us with the 

ability to sufficiently assess a State’s 

readiness to operate a State Exchange 

and ensure that a State is sufficiently 

implementing and scaling policies, 

procedures, operations, technology, and 

administrative capacities to meet the 

needs of the State’s consumers. We 

would use the information in a State’s 

Exchange Blueprint Application, as well 

as any supporting documentation and 

evidence, to make a determination of 

whether to grant approval for a State’s 

establishment and operation of a State 

Exchange for its intended first open 

enrollment period. 

We also propose to add new 

§ 155.106(a)(2)(i) and (ii) to require that 

when a State submits its State Exchange 

Blueprint application to HHS for 

approval, the State must provide the 

public with notice and a copy of its 

State Exchange Blueprint application. 

To facilitate such public notice, HHS 

would post a State Exchange Blueprint 

application submitted by a State to its 

public-facing website within 90 

calendar days of receipt. Further, we 

propose to require that at some point 

following a State’s submission of its 

State Exchange Blueprint application to 

HHS, a State must conduct at least one 

public engagement (such as a townhall 

meeting or public hearing) in a timeline 

and manner (for instance, considering 

whether to conduct in-person and/or 

virtually) considered effective by the 

State, with concurrence from HHS, at 

which interested parties can learn about 

the State’s intent to establish a State 

Exchange and the State’s progress 

toward executing that transition. We 

also propose to require that while a 

State is in the process of establishing a 

State Exchange and until HHS has 

approved or conditionally approved the 

State Exchange Blueprint application, a 

State must conduct periodic public 

engagements at which interested parties 

would continue to learn about the 

State’s progress towards establishing a 

State Exchange, in a timeline and 

manner considered effective by the State 

with concurrence from HHS. 

As we explained previously, sections 

1311(b) and 1321(b) of the ACA allow 

States to elect to operate their own 

health insurance Exchanges to provide 

individuals and employers with health 

insurance coverage, and section 

1321(a)(1)(A) of the ACA directs the 

Secretary to issue regulations setting 

standards with respect to the 

establishment and operation of those 

Exchanges. The Exchange Blueprint 

serves as a vehicle for a State to 

document its progress toward 

implementing its intended Exchange 

operational model. Section 155.106(a)(2) 

requires States to submit an Exchange 

Blueprint application for HHS approval 

at least 15 months prior to the date on 

which the Exchange proposes to begin 

open enrollment with a State Exchange. 

The submission and approval of 

Exchange Blueprints is an iterative 

process that generally takes place over 

the course of 15 months prior to a 

State’s first open enrollment as a State 

Exchange. HHS’ review and approval of 

the Exchange Blueprint involves 

providing substantial technical 

assistance to States as they design, 

finalize, and implement their Exchange 

operations. Further, the establishment of 

a State Exchange involves significant 

collaboration between HHS and States 

to develop plans and document 

readiness for the State to transition from 

an Exchange that uses the Federal 

platform to one that operates its own 

eligibility and enrollment platform. 

State activities as part of this transition 

process include completing key 

milestones, meeting established 

deadlines, and implementing 

contingency measures. 

Certain parties, such as consumers or 

advocate groups, who may be interested 

in a State’s establishment of a State 

Exchange may not know if a State 

applied to HHS to establish a State 

Exchange or is in the process of 

establishing a State Exchange. A 

mandatory process whereby States 

notify the public of their plans to 

establish State Exchanges and provide 

an opportunity to meet with interested 

parties to provide updates would help 

ensure that interested parties are aware 

these activities are occurring and can 

provide input on how States can 

successfully establish State Exchanges. 

Based on our experience supporting and 

providing oversight to States in their 

establishment of State Exchanges, we 

believe that States would benefit from 

having a more transparent process to 

facilitate input from interested parties, 

especially given the impacts of a State 

Exchange transition on interested 

parties, including consumers and 

issuers. We believe that for a State to 

maximize consumer gains following its 

establishment of a State Exchange, its 

interested parties, including consumers, 

must have trust in its State Exchange. 

Providing opportunities for consumers 

to learn more about a State’s planned 

State Exchange establishment process 

and plans can build that trust and help 

support a State’s enrollment goals. We 

believe that all States that have 

established a State Exchange since PY 

2020 conducted public events, such as 

town halls or hearings, where State 

Exchange establishment activities were 

discussed. States planning to establish 

State Exchanges could use such public 

events as opportunities to meet the 

requirements for public engagements 

being proposed. Our goal of the 

proposed changes at § 155.106(a)(2)(ii) 

is to clearly state, for States who are 

seeking to establish State Exchanges, 


ddrumheller on DSK120RN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82553 

82EHB Rule (78 FR 12838). A State action can be 

by statute, regulation, guidance, or other State 

action. 2017 Payment Notice (81 FR 12242). 

83Requirements related to provider types, cost 

sharing, benefit delivery methods, or 

reimbursement methods are not specific to care, 

treatment, and services. EHB Rule (78 FR 12838). 

84 If a State action applies to the individual and 

small group markets, it applies to QHPs; if a State 

allows for the sale of large group plans as QHPs, 

a State-mandated benefit for the large group market 

applies to QHPs. EHB Proposed Rule (77 FR 70647 

through 70648) (finalized without modification in 

the EHB Rule (78 FR 12838)). 

our expectations of the States engaging 

with the public regarding their 

transition to State Exchanges, thus 

strengthening the transparency 

requirements of the State Exchange 

Blueprint review and approval process. 

Finally, we believe this proposal would 

help States that establish State 

Exchanges meet the consultation 

requirements with interested parties in 

§ 155.130 during the period when the 

States are establishing State Exchanges, 

by formalizing a process whereby States 

and interested parties communicate 

about the States’ establishment of State 

Exchanges throughout the transition 

process. 

We seek comment on this proposal, 

including comments related to 

additional ways States seeking to 

establish State Exchanges could provide 

greater transparency to interested 

parties, including consumers, regarding 

the process for establishing State 

Exchanges. 

3. Additional Required Benefits 

(§ 155.170) 

We propose to amend § 155.170(a)(2) 

to provide that benefits covered in a 

State’s EHB-benchmark plan would not 

be considered in addition to EHB and 

thus would not be subject to defrayal by 

the State beginning with PY 2025. 

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

permits a State to require QHPs offered 

in the State to cover 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 State-required benefits. 

In the EHB final rule (78 FR 12838), 

we finalized a standard at 

§ 155.170(a)(2) that specifies that Staterequired benefits enacted on or before 

December 31, 2011, even if not effective 

until a later date, are considered EHB 

and therefore the costs of these benefits 

are not required to be defrayed by the 

State. In the 2017 Payment Notice (81 

FR 12242 through 12244), we revised 

§ 155.170(a)(2) to make clear that 

benefits required by State action taking 

place on or before December 31, 2011, 

are considered EHB to reflect that this 

section applies not only when benefits 

are mandated through State legislative 

action but also through regulation, 

guidance, or other State action. We also 

amended § 155.170(a)(2) to provide that 

benefits required after December 31, 

2011, are in addition to EHB unless 

enactment is directly attributable to 

State compliance with Federal 

requirements. 

Under our current policy, benefits 

mandated after December 31, 2011, 

other than for compliance with Federal 

requirements, are considered in 

addition to EHB (and thus not EHB) 

without regard as to whether the 

mandated benefits are embedded in the 

State’s EHB-benchmark plan. 

Specifically, under § 155.170, a State 

mandate is considered ‘‘in addition to 

EHB’’ if it: is a State action taken after 

December 31, 2011; 82 requires coverage 

of benefits specific to care, treatment, 

and services; 83 requires QHPs to cover 

the benefits; 84 and was not enacted to 

comply with Federal requirements. As a 

result, States must defray the associated 

costs of QHP coverage of such benefits, 

and those costs may not be included in 

the percentage of premium attributable 

to coverage of EHB for purpose of 

calculating APTC. In addition, because 

the benefits are not EHB, they are not 

subject to EHB nondiscrimination rules 

at § 156.125, the annual limitation on 

cost sharing at § 156.130, and 

restrictions on annual or lifetime dollar 

limits at § 147.126. 

In the years since we finalized 

§ 155.170, we have received feedback 

from States and other interested parties 

that we should reconsider this 

provision, including in comments 

submitted to the EHB RFI that we issued 

in 2022. This feedback indicates that 

States struggle to understand and 

operationalize § 155.170, and that States 

that seek to mandate coverage of 

benefits are unintentionally removing 

EHB protections from benefits already 

included in the State’s EHB-benchmark 

plan. 

Therefore, we propose to amend 

§ 155.170(a)(2) to codify that ‘‘a covered 

benefit in the State’s EHB-benchmark 

plan’’ is considered an EHB. Under this 

proposal, there would be no obligation 

for the State to defray the cost of a State 

mandate enacted after December 31, 

2011, that requires coverage of a benefit 

covered in the State’s EHB-benchmark 

plan. Benefits that are covered in a 

State’s EHB-benchmark plan would not 

be considered in addition to EHB and 

would remain subject to the various 

rules applicable to the EHB, including 

the prohibition on discrimination in 

accordance with § 156.125, limitations 

on cost sharing in accordance with 

§ 156.130, and restrictions on annual or 

lifetime dollar limits in accordance with 

§ 147.126. We believe that this change 

would promote consumer protections 

and facilitate compliance with the 

defrayal requirement by making the 

identification of benefits in addition to 

EHB more intuitive. 

Under the proposal, if a State 

mandates coverage of a benefit that is in 

its EHB-benchmark plan at the time the 

mandate is enacted, the benefit would 

continue to be considered EHB and the 

State would not have to defray the costs 

of that mandate. However, if at a future 

date the State updates its EHBbenchmark plan under § 156.111 and 

removes the mandated benefit from its 

EHB-benchmark plan, the State may 

have to defray the costs of the benefit 

under the factors set forth at § 155.170 

as it would no longer be an EHB after 

its removal from the EHB-benchmark 

plan. In addition, starting in PY 2025, a 

State that is defraying the costs of a 

benefit required by a mandate that is in 

addition to EHB under § 155.170 would 

be permitted to cease defraying the costs 

of that benefit if the benefit is included 

in its EHB-benchmark plan or upon 

updating its EHB-benchmark plan in the 

future to include such benefit coverage. 

We acknowledge that there are States 

that may have been defraying the costs 

of benefits under the current policy that 

would be able to stop defraying those 

costs if this proposal is finalized. We 

propose this change to be effective 

starting in PY 2025 to allow for issuers 

to make necessary modifications to their 

plan designs and plan filings to reflect 

any possible changes in designation of 

benefits as EHB as a result of this 

proposal, if finalized. For example, if we 

finalize this proposal and a State ceases 

defraying the costs of a State-mandated 

benefit to issuers because it is covered 

in its EHB-benchmark plan, issuers 

should update their plan filings 

accordingly beginning in PY 2025 to 

reflect that the benefit is covered as an 

EHB and should be included in the 

percentage of premium attributable to 

coverage of EHB for the purpose of 

calculating APTC. We also note that 

those States would not be able to recoup 

the cost of benefits they have already 

defrayed. In addition, we acknowledge 

that the start and end dates of State 

legislative sessions vary greatly by State, 

and that this change, if finalized, may 

occur during State legislative sessions 

that are considering State actions that 

would be impacted by the change. 

We note that this proposal may 

impact health plans that are not directly 

subject to the EHB requirements, such 

as self-insured group health plans and 

fully-insured group health plans in the 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82554 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

85See parallel requirements to § 147.126 at 26 

CFR 54.9815–2711, and 29 CFR 2590.715–2711. 

Additionally, section 2707(b) of the PHS Act, as 

added by the ACA, was incorporated by reference 

into section 9815 of the Code and section 715 of the 

Employee Retirement Income Security Act (ERISA). 

86OMB Control Number: 0938–1119. 

large group market that are required to 

comply with the annual limitation on 

cost sharing and restrictions on annual 

or lifetime dollar limits in accordance 

with applicable regulations with respect 

to such EHBs.85 Sponsors of such plans 

would be affected by this proposal, if 

finalized, only to the extent a State 

changes benefits in its EHB-benchmark 

plan and such plan selects that State’s 

EHB-benchmark plan for purposes of 

complying with sections 2707 and 2711 

of the PHS Act. It may also impact State 

Basic Health Programs (BHPs) 

established under section 1331 of the 

ACA and Medicaid Alternative Benefit 

Plans (ABPs) implemented pursuant to 

section 1937 of the Act. 

We solicit comment on the proposal. 

4. Consumer Assistance Tools and 

Programs of an Exchange (§ 155.205) 

At § 155.205(a), we propose to 

establish additional minimum standards 

for Exchange call center operations. 

Currently, § 155.205(a) requires that 

Exchanges provide for operation of a 

consumer-accessible, toll-free call center 

that addresses the needs of consumers 

requesting assistance. For a State 

requesting to establish a State Exchange, 

we review its plans to implement and 

meet call center requirements under 

§ 155.205(a) as described in the State 

Exchange Blueprint Application. 

Through the Blueprint process, we 

review and assess a State’s call center 

operational plan for consistency with 

standards governing its hours of 

operation, staffing levels, and service 

level goals (including wait times and 

abandonment rates), as well as for 

consistency with best practices utilized 

by existing Exchanges, including the 

FFEs’ call center. Once a State Exchange 

has been established and is operating, 

HHS monitors Exchange call center 

operations through the annual 

collection of performance monitoring 

data, as specified at § 155.1200(b)(3). 

The data collected includes call center 

volume, wait times, calls abandoned, 

and average call center handle time.86

We recognize the value in each 

Exchange being able to tailor customer 

service level expectations based on their 

experience in the areas they serve, 

including setting hours of operation that 

meet the needs of their consumers. As 

such, we are not proposing to establish 

minimum standards for customer 

service staffing levels. We will continue 

to assess and monitor Exchanges’ 

compliance with § 155.205(a) through 

the Blueprint process and annual 

collection of compliance reports, as 

specified at § 155.1200(b)(2). We also 

intend to utilize, if finalized, the 

proposed requirement that transitioning 

States submit documentation through 

their Blueprint application, which 

would strengthen our review of 

Exchange call center plans. 

In this proposed rule, we are 

proposing to require that all Exchanges, 

other than SBE–FPs and SHOP 

Exchanges that do not provide for 

enrollment in SHOP coverage through 

an online SHOP enrollment platform, 

meet the following additional 

requirements: their call center must 

provide consumers with access to a live 

call center representative during the 

Exchanges’ published hours of 

operation; and their live call center 

representatives must be able to assist 

consumers with their QHP application, 

which includes providing consumers 

information on their APTC and CSR 

eligibility, helping consumers 

understand their QHP options, helping 

consumers select a QHP, and helping 

consumers submit QHP enrollment 

applications to the Exchange. 

Sections 1311(d)(4)(B) and 1321 of the 

ACA require that Exchanges provide for 

the operation of a toll-free telephone 

hotline to respond to requests for 

assistance, and section 1413(b)(1)(A)(ii) 

of the ACA requires that a consumer’s 

application for QHP coverage can be 

filed by telephone. We believe that our 

proposal would support the intent of 

these statutory requirements by 

codifying the requirement that 

consumers have access to live 

representatives with Exchange call 

centers who can assist consumers with 

their QHP applications, including 

helping them submit QHP enrollment 

applications to the Exchange. Similarly, 

requiring that Exchange call centers 

provide consumers with a reliable 

window for live representative support 

would support compliance with 

sections 1311(d)(4)(B) and 

1413(b)(1)(A)(ii) of the ACA. 

We believe that all State Exchange 

call centers already meet the minimum 

standards being proposed, and we know 

that the call center for the Exchanges on 

the Federal platform is meeting them. 

As such, this proposal seeks to 

standardize and strengthen Exchange 

consumer assistance capabilities 

without imposing additional burden on 

current Exchanges or hindering 

Exchanges’ ability to be innovative in 

their call center functions. The changes 

being proposed here would ensure that 

regardless of where a consumer is in the 

United States, the consumer would be 

able to speak to a live representative 

who can assist the consumer with the 

QHP application process during the 

hours of operation for that State’s call 

center. We also want to ensure that a 

State does not solely rely on an 

automated telephone system for QHP 

application assistance because we 

believe speaking to a live representative 

would help troubleshoot consumer QHP 

application issues, provide in real time 

an opportunity for a live representative 

to explain QHP application terminology 

to a consumer, provide a live 

representative to ensure the consumer 

provides the most correct information in 

the QHP application to alleviate 

unnecessary follow-up, and provide 

greater overall consumer satisfaction. 

We believe that call centers should have 

a basic level of customer service 

especially as they relate to hours and 

operations and staffing levels to limit 

wait times for QHP application 

assistance. We also know based on our 

work with State Exchanges and the 

Exchanges on the Federal platform that 

the Exchanges have created and 

continue to maintain robust call centers. 

We seek comment on this proposal. 

5. Requirement for Exchanges To 

Operate a Centralized Eligibility and 

Enrollment Platform on the Exchange’s 

Website (§§ 155.205(b); 155.302(a)(1)) 

We propose to amend § 155.205(b)(4) 

to require that an Exchange operate a 

centralized eligibility and enrollment 

platform on the Exchange’s website (or, 

for an SBE–FP, the Federal eligibility 

and enrollment platform), such that the 

Exchange allows for the submission of 

the single, streamlined application for 

enrollment in a QHP and insurance 

affordability programs by consumers, in 

accordance with § 155.405, through the 

Exchange’s website and the Exchange 

performs eligibility determinations for 

all consumers based on submissions of 

the single, streamlined application. 

Further, we propose to amend 

§ 155.302(a)(1) to clarify that the 

Exchange, through the centralized 

eligibility and enrollment platform 

operated on the Exchange’s website (or, 

for an SBE–FP, the Federal eligibility 

and enrollment platform), is the entity 

responsible for making all 

determinations regarding the eligibility 

for QHP coverage and insurance 

affordability programs regardless of 

whether an individual files an 

application for enrollment in a QHP on 

the Exchange’s website or on a nonExchange website operated by an entity 

described under § 155.220, such as a 

web-broker defined at § 155.20, or a DE 

entity or QHP issuer described under 


ddrumheller on DSK120RN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82555 

§ 155.221. As we believe the eligibility 

determination function is inherently a 

function that should only be performed 

by the Exchange, the proposed 

amendment to § 155.302(a)(1) would 

also clarify that only the private vendors 

or State entities that an Exchange 

contracts with to operate its centralized 

eligibility and enrollment platform can 

perform this function on behalf of an 

Exchange, and would prohibit an 

Exchange from solely relying on nonExchange entities, including a webbroker (defined at § 155.20) or other 

entities under §§ 155.220 or 155.221, to 

make such eligibility determinations on 

behalf on an Exchange. 

We also propose to amend 

§ 155.205(b)(5) to require that an 

Exchange operate a centralized 

eligibility and enrollment platform on 

the Exchange’s website (or, for an SBE– 

FP, by relying on the Federal eligibility 

and enrollment platform) so that the 

Exchange (or, for an SBE–FP, the 

Federal eligibility and enrollment 

platform) meets the requirement under 

§ 155.400(c) to maintain records of all 

effectuated enrollments in QHPs, 

including changes in effectuated QHP 

enrollments. 

As background for these proposed 

amendments, § 155.205(b) states that an 

Exchange must maintain an up-to-date 

website that allows consumers to 

receive eligibility determinations for 

QHPs and insurance affordability 

programs and provides standardized 

comparative information on each 

available QHP and a calculator to 

facilitate the comparison of available 

QHPs after the application of any APTC 

and any CSRs. Section 1413(c)(1) of the 

ACA also requires that Exchanges 

develop a secure electronic interface 

that allows consumers to apply for 

health insurance coverage online and 

electronically receive an eligibility 

determination and that Exchanges 

conduct verifications of eligibility 

through electronic data interfaces. 

However, currently, there is no explicit 

regulatory or statutory requirement that 

Exchanges operate a centralized 

eligibility and enrollment platform on 

their website for performing all 

eligibility determinations for QHPs and 

insurance affordability programs. 

Nonetheless, all Exchanges currently 

provide access to a centralized 

eligibility and enrollment platform and 

process for consumers that they serve, 

and all Exchanges also currently 

perform all eligibility determinations 

through the operation of a centralized 

eligibility and enrollment platform on 

their websites. In order to codify 

existing policy and practices and help 

set clear expectations for existing 

Exchanges and States that may seek to 

operate State Exchanges in the future, 

we propose these amendments to 

require that Exchanges may not allow 

eligibility determinations to be made 

outside of the Exchanges’ own 

centralized eligibility and enrollment 

platform by another entity for 

applications for QHP coverage nor for 

selections for enrollment in a QHP. 

We also propose to amend 

§ 155.302(a) to codify the Exchange’s 

obligation and role as the sole entity 

responsible for conducting eligibility 

determinations. For example, if an 

Exchange permits an eligible web-broker 

to operate a non-Exchange website that 

interfaces with an Exchange to assist 

consumers with DE in QHPs offered 

through the Exchange as described in 

§§ 155.220(c)(3) and 155.221, the 

Exchange must ensure that the 

Exchange continues to maintain 

responsibility for conducting all 

eligibility determinations for 

applications submitted for QHP 

coverage and related insurance 

affordability programs. While HHS has 

not delegated these functions to DE 

entities in FFE and SBE–FP States, 

currently, Exchanges may allow entities 

described in § 155.220, among others 

that meet applicable requirements, to be 

able function as an eligible contracting 

entity under § 155.110(a) that can carry 

out determinations regarding QHP 

coverage eligibility and eligibility for 

related insurance affordability programs 

on behalf of the Exchange. This 

proposed amendment to § 155.302(a) 

would prohibit Exchanges from 

delegating the responsibility to conduct 

eligibility determinations to any nonExchange entities, besides entities that 

the Exchanges have elected to contract 

with to operate the centralized 

eligibility and enrollment platform. 

Consistent with these amendments, we 

propose to maintain the current 

requirement under § 155.302(a) that 

SBE–FPs rely on HHS, through the 

operation of the centralized 

HealthCare.gov eligibility and 

enrollment platform, to carry out all 

eligibility determinations for their 

Exchanges. 

This proposal would tie together the 

disparate, but related, requirements that 

exist across 45 CFR part 155 that speak 

to the real-time and tightly integrated 

nature of the online eligibility functions 

that Exchanges are required to perform 

(specifically the tight integration needed 

between the Exchange-operated website, 

single streamlined application, and 

back-end automated eligibility 

verifications based on information 

provided by applicants to arrive at an 

eligibility determination), by clearly 

stating the principle that Exchanges are 

solely responsible for conducting 

eligibility determinations, and that 

Exchanges would need to meet the 

required eligibility functions that exist 

across 45 CFR part 155 through 

operating a centralized eligibility and 

enrollment platform on their website, 

regardless of whether an application is 

submitted through the Exchanges’ 

website or through eligible nonExchange entities that are assisting an 

individual in enrolling in a QHP. 

We believe the lack of a clear 

statement in the regulations at 45 CFR 

part 155 affirming the requirement that 

the Exchange must make all 

determinations regarding eligibility for 

QHP coverage and related insurance 

affordability programs through a 

centralized eligibility and enrollment 

platform on the Exchange’s website are 

oversights, as other sections of the 

regulations implementing the ACA in 

title 45 of the CFR allude to a 

requirement or expectation that an 

Exchange operates in this way already, 

or the regulations are written in a way 

such that it would be difficult to fulfill 

their requirements if an Exchange did 

not operate as proposed in these 

amendments. 

As an example of an implementing 

regulation of the ACA that would 

require an Exchange to operate in this 

manner, § 155.220 permits qualified 

individuals to be enrolled in a QHP 

through the Exchange with the 

assistance of a web-broker, while 

§ 155.220(c)(3)(ii)(A), and by reference 

§ 155.220(c)(3)(i)(F), require that if the 

non-Exchange website of a web-broker 

is used to complete an Exchange 

eligibility application, that web-broker’s 

website must also provide consumers 

with the ability to withdraw from the 

process and use the Exchange’s website 

described in § 155.205(b) instead at any 

time. If an Exchange did not provide an 

ability on its website for a consumer to 

complete an eligibility application, then 

it would not be possible to fulfill the 

requirements of §§ 155.220(c)(3)(ii)(A) 

and (c)(3)(i)(F). 

To ensure that the requirements of 

§§ 155.220(c)(3)(ii)(A) and (c)(3)(i)(F), 

and 155.205(b) are fulfilled, we believe 

it is important that Exchanges allow a 

consumer to continue the application 

process through the centralized 

eligibility and enrollment platform 

operated on the Exchange’s own website 

should the consumer chose to withdraw 

from the application process that was 

begun on a web-broker’s non-Exchange 

website; or, if the Exchange is an SBE– 

FP, allow the consumer to continue the 

application process through the website 

of the Federal platform. 


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87A principal officer is an individual nominated 

by the President and confirmed by the Senate. 

88Section 155.220(f) establishes the framework 

for an agent, broker, or web-broker to terminate an 

agent’s, broker’s, or web-broker’s Exchange 

agreement(s) with HHS. We are not proposing any 

changes with respect to the terminations under 

§ 155.220(f). These terminations are not eligible for 

reconsideration under § 155.220(h) because they are 

agent, broker, or web-broker initiated actions. 

89 45 CFR 155.220(h)(2). 

90 45 CFR 155.220(h)(3). 

As another example, QHP issuers that 

assist consumers with enrollment in 

QHPs are currently required under 

§ 156.265(b)(2) to either direct the 

consumer to the Exchange’s website to 

file an eligibility application or ensure 

that the consumer’s eligibility 

application is completed through the 

Exchange website or submitted through 

Exchange-approved web services in 

order for the Exchange to conduct an 

eligibility determination. To align with 

these requirements, we believe that it is 

important to amend § 155.302(a)(1) to 

provide that an Exchange must perform 

all eligibility determinations through 

operating a centralized eligibility and 

enrollment platform on the Exchange’s 

website, and that only those entities that 

an Exchange chooses to enter into an 

agreement with to operate its 

centralized eligibility and enrollment 

platform, as allowed for under 

§ 155.110(a), can carry out this function 

on behalf of the Exchange. 

In addition to these examples of how 

current regulations may require an 

Exchange to operate according to the 

proposed amendments to §§ 155.205 

and 155.302, we believe that consumers 

may be harmed if these proposals are 

not adopted. If an entity other than the 

Exchange conducted eligibility 

determinations, consumers might 

receive incorrect or inconsistent 

eligibility determinations, as entities 

other than the Exchange may not update 

their systems with the same eligibility 

determination rules or logic as the 

Exchange itself when Federal or State 

policies or regulations impacting 

eligibility for QHP coverage and 

insurance affordability programs come 

into effect or are updated, including the 

implementation and maintenance of 

State-specific eligibility rules and logic 

for Medicaid and CHIP programs. As a 

result, a non-centralized eligibility 

system model would introduce 

increased program integrity risk as to 

the accuracy of eligibility 

determinations, which would introduce 

increased risk of inaccurate APTC 

payments to QHP issuers and increased 

risk to consumers of potential tax 

liability when filing taxes and 

reconciling their PTC. 

In addition, the websites and 

eligibility platforms provided by nonExchange entities may not include the 

same informational content for 

consumers that an Exchange provides to 

consumers through the Exchange’s 

website, such as information related to 

Medicaid and CHIP programs or the 

availability of special enrollment 

periods before or after the open 

enrollment period. As a result, some 

consumers might not provide 

information in their application in such 

a manner as to receive a correct 

eligibility determination and thus, 

enroll in the wrong coverage or not 

enroll in any coverage. Lastly, 

consumers may prefer to enroll directly 

through the eligibility and enrollment 

platform hosted and operated on an 

Exchange’s website because they are 

more comfortable with sharing their 

personal information through a platform 

hosted by the Exchange. 

In light of these considerations, we 

propose to amend §§ 155.205(b)(4) and 

(5) and 155.302(a)(1) to address these 

gaps. Since all Exchanges currently 

provide access to a centralized 

eligibility and enrollment platform and 

process for consumers that they serve, 

and all Exchanges also currently 

perform all eligibility determinations 

through the operation of a centralized 

eligibility and enrollment platform on 

their websites, we believe the impact of 

these proposals would be minimal. 

We seek comment on these proposals. 

6. Ability of States To Permit Agents 

and Brokers and Web-Brokers To Assist 

Qualified Individuals, Qualified 

Employers, or Qualified Employees 

Enrolling in QHPs (§ 155.220(h)) 

We propose to amend §§ 155.220(h)(2) 

and (3) by deleting the current 

references to ‘‘the HHS reconsideration 

entity’’ and replacing them with ‘‘the 

CMS Administrator’’ and by specifying 

that, instead of the HHS reconsideration 

entity, the CMS Administrator, who is a 

principal officer,87 would be the entity 

responsible for handling these 

reconsideration decisions. Agents, 

brokers, and web-brokers whose 

Exchange agreement(s) to participate in 

the FFEs or SBE–FPs have been 

terminated for cause would continue to 

have the ability to request a 

reconsideration of such action in the 

manner and form established by HHS by 

requesting a reconsideration within 30 

calendar days of the date of the written 

termination notice from HHS. We 

propose that the request for 

reconsideration would be made to the 

CMS Administrator. This proposal 

would improve transparency by 

specifying who would review 

reconsideration requests under 

§ 155.220(h). 

Exchange agreement suspensions and 

terminations play a critical role in 

stopping potentially fraudulent 

enrollments or other fraudulent 

behavior in the FFEs and SBE–FPs. 

Currently, § 155.220(g) establishes the 

framework for suspension and 

termination of an agent’s, broker’s, or 

web-broker’s Exchange agreement(s) for 

cause in four instances.88 First, 

§ 155.220(g)(1) allows HHS to terminate 

an agent’s, broker’s, or web-broker’s 

Exchange agreement(s) when there is a 

specific finding of noncompliance or 

pattern of noncompliance that is 

sufficiently severe. Second, 

§ 155.220(g)(3)(ii) enables HHS to 

terminate an agent’s or broker’s 

Exchange agreement(s) when an agent or 

broker fails to maintain the appropriate 

license in every State in which the agent 

or broker actively assists consumers 

with applying for APTC and CSRs or 

with enrolling in QHPs through the 

FFEs and SBE–FPs. Third, HHS will 

terminate an agent’s, broker’s, or webbroker’s Exchange agreement(s) under 

§ 155.220(g)(5)(ii) when there is a 

finding or determination by a Federal or 

State entity that an agent, broker, or 

web-broker engaged in fraud or abusive 

conduct that may result in imminent or 

ongoing consumer harm using 

personally identifiable information (PII) 

of Exchange enrollees or applicants or 

in connection with an Exchange 

enrollment or application. Fourth, 

under § 155.220(g)(5)(i)(B), HHS may 

terminate an agent’s, broker’s, or webbroker’s Exchange agreement(s) 

following a suspension of the 

agreement(s) under § 155.220(g)(5)(i)(A) 

if the agent, broker, or web-broker 

submitted rebuttal evidence that does 

not persuade HHS to lift the suspension, 

or if the agent, broker, or web-broker 

fails to submit rebuttal evidence during 

the suspension period. 

If an agent’s, broker’s, or web-broker’s 

Exchange agreement(s) has been 

terminated for cause, under 

§ 155.220(h)(1), the agent, broker, or 

web-broker can request reconsideration 

of such action in the manner and form 

established by HHS. The agent, broker, 

or web-broker must submit the 

reconsideration request to the HHS 

reconsideration entity within 30 

calendar days of the date of the written 

termination notice from HHS.89 Current 

regulations also require the HHS 

reconsideration entity to notify the 

agent, broker, or web-broker of its 

decision, in writing, within 60 calendar 

days of the date it receives the request 

for reconsideration.90 Currently, 


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91Web-broker is defined at 45 CFR 155.20 as ‘‘an 

individual agent or broker, group of agents or 

brokers, or business entity registered with an 

Exchange under § 155.220(d)(1) that develops and 

hosts a non-Exchange website that interfaces with 

an Exchange to assist consumers with direct 

enrollment in QHPs offered through the Exchange 

as described in § 155.220(c)(3) or § 155.221. The 

term also includes an agent or broker direct 

enrollment technology provider.’’ 

92See § 155.220(l). 

93The amendments to § 155.220 we are proposing 

would not impact how agents, brokers, or webbrokers may assist consumers and applicants in 

SBE–FP States. Section 155.220(l) currently 

provides that an agent, broker or web-broker who 

enrolls qualified individuals, qualified employers, 

or qualified employees in coverage in a manner that 

constitutes enrollment through an SBE–FP or assists 

individual market consumers with submission of 

applications for APTC and CSRs through an SBE– 

FP, must comply with all applicable FFE standards 

in § 155.220. We are not proposing any changes to 

this existing framework for agents, brokers, or webbrokers who provide assistance in SBE–FP States. 

94See 77 FR 18334 through 18336. 

95 DE entities permitted to participate in the FFEs 

and SBE–FPs include, to the extent permitted by 

applicable State law: (1) QHP issuers that meet the 

applicable requirements in §§ 155.221 and 

156.1230, and (2) web-brokers that meet the 

applicable requirements in §§ 155.220 and 155.221. 

45 CFR 155.221(a). 

96Section 1321(a)(1)(A), (B), and (D) of the ACA. 

97See 77 FR 18444, as amended at 78 FR 15533; 

78 FR 54134; 79 FR 13837; 81 FR 12338; 81 FR 

94176; 84 FR 17563; 85 FR 37248; 86 FR 24288; 87 

FR 27388; and 88 FR 25917. 98With some limited exceptions, QDPs are 

considered a type of QHP. See 77 FR at 18315. Webbrokers participating in the FFEs and SBE–FPs are 

expected to follow the same requirements for QDPs 

as for QHPs, including display of all applicable 

QDPs offered through the Exchange and all 

available information specific to each QDP on their 

websites. However, because it is not possible to 

enroll in QDPs through DE unless also enrolling in 

medical QHPs, web-brokers are permitted to modify 

their QDP displays accordingly (for example, 

display QDPs after medical QHPs to ensure a 

consumer has first selected a medical QHP). See 

CMS. (2023, July 12). Federally-facilitated Exchange 

(FFE) Enrollment Manual. CMS. Section 4.3, p.47 

and Section 4.4.2, p. 52. https://www.cms.gov/files/ 

document/ffe-enrollment-manual-2023-5cr071323.pdf. Under this proposal, these same 

standards governing QDPs would also apply to webbrokers in State Exchanges. 

99See CMS. (2023, July 12). Federally-facilitated 

Exchange (FFE) Enrollment Manual. CMS. Section 

4.4.2, p. 52. https://www.cms.gov/files/document/ 

ffe-enrollment-manual-2023-5cr-071323.pdf. 

100See CMS. (2023, May 2). Quality Rating 

Information Bulletin. CMS. Section III, p. 3. https:// 

Continued 

§ 155.220(h)(3) further provides that this 

decision constitutes HHS’ final 

determination. 

The current framework in 

§ 155.220(h) does not define or identify 

‘‘the HHS reconsideration entity’’ 

responsible for making these decisions. 

As noted earlier in this rule, we propose 

revising §§ 155.220(h)(2) and (3) by 

deleting the existing references to ‘‘the 

HHS reconsideration entity’’ and 

replacing them with ‘‘the CMS 

Administrator.’’ This proposal would 

ensure that authority to review requests 

for reconsideration of decisions to 

terminate an agent’s, broker’s, or webbroker’s Exchange agreement(s) for 

cause are vested in a principal officer. 

We seek comments on this proposal. 

7. Adding and Amending Language To 

Ensure Web-Brokers Operating in State 

Exchanges Meet Certain HHS Standards 

Applicable in the FFEs and SBE–FPs 

(§ 155.220) 

We propose to amend § 155.220 to 

apply certain existing HHS standards for 

Exchanges that use the Federal platform 

that apply to web-brokers 91 assisting the 

FFEs’ and SBE–FPs’ 92 consumers and/ 

or applicants with enrolling in QHPs 

and assisting consumers with applying 

for APTC/CSRs in State Exchanges, for 

both the State Exchange’s Individual 

Exchange and SHOP. Specifically, our 

proposals would ensure that minimum 

HHS standards governing web-broker 

non-Exchange website display of 

standardized QHP comparative 

information, disclaimer language, 

information on eligibility for APTC/ 

CSRs, operational readiness, standards 

of conduct, and access by web-broker 

downstream agents and brokers apply to 

web-brokers across all Exchanges.93 We 

believe that extending these standards 

across all Exchanges, to newly apply to 

State Exchanges, is important given the 

increased interest from State Exchanges 

in using web-brokers to assist 

consumers with enrollment, as to 

maximize enrollment opportunities. The 

ability of consumers and applicants to 

have consistent, reliable information 

from web-brokers who, to the extent 

permitted by the State and the 

applicable Exchange, assist consumers 

with enrolling and applying for QHPs 

offered on the Exchange, with or 

without APTC and CSRs, in a manner 

that constitutes enrollment through the 

Exchange 94 is an important consumer 

safeguard, particularly given that webbrokers may operate across Exchange 

models. These proposals are intended to 

ensure that certain HHS standards are 

extended to protect State Exchange 

consumers as minimum requirements 

while also providing State Exchanges 

with continued flexibility and 

discretion to decide whether and how to 

utilize web-brokers to assist State 

Exchange consumers and applicants 

with enrolling in QHPs and applying for 

APTC/CSRs. Finally, these proposals 

align with our other proposals as 

described later in this proposed rule to 

extend certain existing HHS standards 

at § 155.221 that currently apply to DE 

entities 95 assisting the FFEs’ and SBE– 

FPs’ consumers and applicants with 

direct enrollment in QHPs and applying 

for APTC/CSRs to also apply in State 

Exchanges. These proposals, if finalized, 

would be effective on the date of 

publication of the final rule. 

Section 1312(e) of the ACA provides 

that the HHS Secretary shall establish 

procedures under which a State may 

allow agents, brokers, and web-brokers 

to enroll individuals and small 

employers in QHPs offered through an 

Exchange and to assist individuals in 

applying for APTC/CSRs for QHPs sold 

through an Exchange. The Secretary also 

has authority under section 1321(a) of 

the ACA to promulgate regulations with 

respect to the establishment and 

operation of Exchanges, the offering of 

QHPs through such Exchanges, and 

such other requirements as the Secretary 

determines appropriate.96 HHS 

previously leveraged these authorities to 

establish the existing agent, broker, and 

web-broker standards applicable in FFE 

and SBE–FP States codified in 

§ 155.220.97

In new proposed paragraph (n), we 

propose to apply the web-broker 

standardized QHP comparative 

information and the accompanying 

Enrollment Support disclaimer 

requirements in § 155.220(c)(3)(i)(A) to 

web-brokers operating in State 

Exchanges, and consequently to these 

State Exchanges. Consistent with 

§ 155.220(c)(3)(i)(A)(1) through (6), webbroker non-Exchange websites used to 

complete the QHP selection must 

disclose and display the standardized 

comparative QHP information provided 

by the Exchange or directly by QHP 

issuers, consistent with the 

requirements of § 155.205(c) for all 

QHPs, including Qualified Dental Plans 

(QDPs),98 offered through the Exchange. 

The standardized comparative 

information on each available QHP that 

must be displayed by the web-broker on 

its non-Exchange website is the 

following information provided by the 

Exchange or directly by QHP issuers: (1) 

premium and cost-sharing information 

(total and net premium based on APTC 

and CSR, if applicable); 99 (2) the 

summary of benefits and coverage; (3) 

identification of whether the QHP is a 

bronze, silver, gold or platinum level 

plan, or a catastrophic plan; (4) the 

results of the enrollee satisfaction 

survey; (5) quality ratings assigned by 

HHS; and (6) the provider directory 

made available to the Exchange. The 

results of the enrollee satisfaction 

survey should be displayed in 

accordance with instructions in the 

CMS Quality Rating Information 

Bulletin.100 As described in the CMS 


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82558 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

www.cms.gov/files/document/py2024-qrs-displaybulletin.pdf. See Exchange and Insurance Market 

Standards for 2015 and Beyond; Final Rule, 79 FR 

30240 at 30310–30311 (May 27, 2014). 

101 §§ 155.1400 and 155.1405. Also see 85 FR at 

29214 through 29216. 

102See CMS. (2023, May 2). Quality Rating 

Information Bulletin. CMS. Section III, p. 3. https:// 

www.cms.gov/files/document/py2024-qrs-displaybulletin.pdf. 

103See CMS. (2023, May 2). Quality Rating 

Information Bulletin. CMS. Section III, p. 3. https:// 

www.cms.gov/files/document/py2024-qrs-displaybulletin.pdf. 

104See §§ 155.1400 and 155.1405. Also see 

§ 155.205(b)(1)(iv) and (v). Exchanges can satisfy 

the requirement to display the enrollee satisfaction 

survey results by displaying the quality ratings 

assigned by HHS (which incorporate member 

experience data from the survey). See 79 FR at 

30310 through 30311. 

105See CMS. (2023, May 2). Quality Rating 

Information Bulletin. CMS. Section III, p. 3. https:// 

www.cms.gov/files/document/py2024-qrs-displaybulletin.pdf. 

106Consistent with the approach for Exchanges, 

for purposes of compliance with the Federal 

minimum standards, web-brokers would be able to 

satisfy the requirement to display the enrollee 

satisfaction survey results by displaying the quality 

ratings assigned by HHS (which incorporate 

member experience data from the survey). 

107See § 155.205(b)(1). Also see 87 FR at 642 

(explaining that ‘‘(i)ncluding this [list of] 

information within § 155.220, instead of through a 

cross-reference to § 155.205(b)(1), would provide 

better clarity and ease of reference . . .’’). 

108A web-broker’s non-Exchange website may not 

support enrollment in a QHP if a web-broker does 

not have an appointment with a QHP issuer and 

therefore is not permitted under State law to enroll 

consumers in coverage offered by that issuer. 

109CMS. (2023, July 12). Federally-facilitated 

Exchange (FFE) Enrollment Manual. CMS. Section 

4.4.2, p. 52. https://www.cms.gov/files/document/ 

ffe-enrollment-manual-2023-5cr-071323.pdf. 

110See 78 FR at 27260. Also see CMS. (2023, July 

12). Federally-facilitated Exchange (FFE) 

Enrollment Manual. CMS. Section 4.4.1, p. 49–50 

and Section 4.4.2, p. 54–55. https://www.cms.gov/ 

files/document/ffe-enrollment-manual-2023-5cr071323.pdf. 

111See 78 FR at 27260. Also see CMS. (2023, July 

12). Federally-facilitated Exchange (FFE) 

Enrollment Manual. CMS. Section 4.4.2, p. 52. 

https://www.cms.gov/files/document/ffeenrollment-manual-2023-5cr-071323.pdf. 

112 Id. 

Quality Rating Information Bulletin, 

State Exchanges already have some 

flexibility to customize the display of 

quality ratings assigned by HHS for their 

respective QHPs.101 For example, State 

Exchanges can make some State-specific 

customizations, such as to incorporate 

additional State or local quality 

information or to modify the display 

names of the quality ratings assigned by 

HHS. Under this proposal, web-brokers 

in State Exchanges should use the same 

consumer-facing labels for the quality 

ratings that HHS displays on 

HealthCare.gov (that is, ‘‘Overall 

Rating,’’ ‘‘Medical Care,’’ ‘‘Member 

Experience,’’ and ‘‘Plan 

Administration’’) unless the State 

Exchange modified the display names 

for these labels. If the State Exchange 

has modified the display names, webbrokers operating in State Exchanges 

should use the display names used on 

the State Exchange website. Webbrokers operating in State Exchanges 

should also align their display of the 

quality ratings to reflect any permitted 

State-specific customizations, such as 

the addition of State or local quality 

information. Additionally, consistent 

with the approach for display of quality 

ratings by web-brokers in the FFEs and 

SBE–FPs and by State Exchanges, if a 

QHP was not eligible to receive a rating 

or did not receive a rating for other 

reasons, web-brokers participating in 

State Exchanges would need to display 

‘‘New plan—Not Rated’’ or ‘‘Not Rated’’ 

in place of the quality ratings.102 When 

displaying the quality rating assigned by 

HHS on their non-Exchange websites, 

web-brokers operating in State 

Exchanges would be required to 

prominently display the disclaimer 

language specified in the CMS Quality 

Rating Information Bulletin, which 

mirrors the language that web-brokers in 

the FFEs and SBE–FPs must display on 

their non-Exchange websites.103

State Exchanges are also currently 

required to display the quality ratings 

assigned by HHS and the results of the 

enrollee satisfaction survey, in the form 

and manner specified by the 

Secretary.104 This includes prominently 

displaying the same disclaimer language 

on the State Exchange website or a static 

website when displaying the quality 

ratings assigned by HHS and the results 

of the enrollee satisfaction survey.105

Web-brokers would be able to access 

QHP quality rating information for a 

State Exchange they are operating in, 

including the quality ratings assigned by 

HHS and enrollee satisfaction survey 

results,106 from the State Exchange. 

This list of standardized QHP 

comparative information that webbrokers must disclose and display on 

their non-Exchange websites used to 

complete QHP selection in FFE and 

SBE–FP States mirrors the information 

that Exchanges are required to disclose 

and display on their respective 

websites.107 This approach ensures 

consumers have access to the same QHP 

comparative information whether they 

elect to enroll through the Exchange’s 

website or through a web-broker’s nonExchange website. We propose to 

extend these same standardized 

comparative information requirements, 

as minimum Federal standards, that 

would need to be met by web-brokers 

participating in State Exchanges and 

consequently to these State Exchanges. 

We similarly propose to extend the 

Enrollment Support disclaimer 

referenced in § 155.220(c)(3)(i)(A) 

beyond FFE and SBE–FP States to also 

extend to web-brokers participating in 

State Exchanges and consequently to 

these State Exchanges. The goal of this 

disclaimer is to ensure consumers are 

clearly informed about any enrollment 

limitations on a web-broker’s nonExchange website and similarly have 

clear instructions for accessing the 

Exchange website if they wish to enroll 

in those QHPs. In particular, when a 

website of a web-broker is used in FFE 

or SBE–FP States to complete the QHP 

selection, but it does not support 

enrollment for a QHP,108 the webbroker’s website must prominently 

display the standardized Enrollment 

Support disclaimer 109 provided by 

HHS, as follows: 

‘‘(Name of Company) does not 

support enrollment in this Qualified 

Health Plan at this time. To enroll in 

this Qualified Health Plan, visit the 

Health Insurance Marketplace® website 

at HealthCare.gov.’’ 

We propose to require web-brokers 

assisting consumers in State Exchanges 

to comply with these same 

requirements, while also providing 

these State Exchanges some flexibility 

regarding the disclaimer language 

required to be displayed by their webbrokers. First, to prominently display 

the disclaimer, it must be written in a 

font size no smaller than the majority of 

text on the website page and must be 

noticeable in the context of the website 

by (for example) using a font color that 

contrasts with the background of the 

website page.110 In addition, the 

Enrollment Support disclaimer must 

appear on the web-broker’s nonExchange website in close proximity to 

where the QHP information is displayed 

if the web-broker does not support 

enrollment in any such QHP, so it is 

noticeable to the consumer.111 Webbrokers can also meet this prominent 

display requirement if a visual cue is 

displayed where the enrollment button 

(or another similar mechanism) would 

otherwise appear for a particular QHP 

that clearly directs the consumer to the 

required disclaimer on the same website 

page or otherwise displays the required 

disclaimer (for example, in a pop-up 

bubble that appears while hovering over 

the visual cue).112

With respect to State flexibility, under 

this proposal, the HHS-provided 

disclaimer language must be used as a 

minimum starting point, but State 

Exchanges may add State-specific 

language to the Enrollment Support 


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113CMS. (2023, July 12). Federally-facilitated 

Exchange (FFE) Enrollment Manual. CMS. Section 

4.4.2, p. 54. https://www.cms.gov/files/document/ 

ffe-enrollment-manual-2023-5cr-071323.pdf. 

114 45 CFR 155.220(l). 115 78 FR 37046. 

116See 78 FR at 27260. Also see CMS. (2023, July 

12). Federally-facilitated Exchange (FFE) 

Enrollment Manual. CMS. Section 4.4.1, p. 49–50 

and Section 4.4.2, p. 54–55. https://www.cms.gov/ 

files/document/ffe-enrollment-manual-2023-5cr071323.pdf. 

117See 45 CFR 155.205(c)(2)(iv)(C). 

disclaimer, provided the additional 

language does not conflict with the 

HHS-provided standardized disclaimer. 

This would permit a State Exchange to 

replace references and links to the 

Health Insurance Marketplace® and 

HealthCare.gov in the HHS-provided 

disclaimer language with the 

appropriate reference or links to the 

State Exchange’s website for the 

Enrollment Support disclaimer that 

web-brokers assisting consumers in the 

State Exchange would be required to 

prominently display on their nonExchange websites. Additionally, State 

Exchanges may require web-brokers 

operating in their State to translate the 

disclaimer text into languages 

appropriate for the State as this type of 

additional requirement would not 

conflict with the HHS-provided 

disclaimer language or minimum 

standards. As with all informational 

materials, standard plain language 

practice is to write at or near a fourth 

grade reading level and not to exceed an 

eighth grade reading level. We expect 

that any additional State-specific 

customizations to this disclaimer would 

be written accordingly. We would be 

available to provide technical assistance 

to State Exchanges that want to add 

State-specific language. We propose to 

codify this State flexibility in new 

proposed paragraph (n)(1). 

In addition, consistent with 

§ 155.220(c)(3)(i)(G), when used to assist 

FFE consumers, the web-broker’s nonExchange website must also 

prominently display a standardized 

disclaimer 113 provided by HHS, 

referred to as the General non-FFE 

disclaimer, that informs consumers and 

applicants that the web-broker’s website 

is not the Exchange website, notes that 

the web-broker’s non-Exchange website 

may not support enrollment in all 

QHPs, and provides a web link to the 

Exchange’s website. This same 

requirement extends beyond the FFEs 

and also applies to SBE–FPs today.114 In 

new paragraph (n), we propose to 

extend this disclaimer requirement to 

also apply to web-brokers operating in 

State Exchanges, and consequently to 

these State Exchanges, while providing 

these State Exchanges some flexibility to 

add State-specific language to this 

disclaimer, provided the additional 

language does not conflict with the 

HHS-provided disclaimer language. We 

propose to codify this State flexibility in 

new proposed paragraph (n)(1). Similar 

to the adoption of this disclaimer for 

consumers in an FFE or an SBE–FP,115

we continue to believe this additional 

standard is in the best interest of 

consumers, as it would help them 

distinguish between the Exchange 

website and web-broker non-Exchange 

websites. We therefore also identified it 

as an important baseline consumer 

protection that should extend to 

consumers across all Exchanges. 

The General non-FFE disclaimer 

provided by HHS that must be 

prominently displayed by web-brokers 

participating in the FFEs and SBE–FPs 

reads: 

‘‘Attention: This website is operated 

by (Name of Company) and is not the 

Health Insurance Marketplace® website. 

In offering this website, (Name of 

Company) is required to comply with all 

applicable Federal law, including the 

standards established under 45 CFR 

155.220(c) and (d) and standards 

established under 45 CFR 155.260 to 

protect the privacy and security of 

personally identifiable information. 

This website may not support 

enrollment in all Qualified Health Plans 

(QHPs) being offered in your State 

through the Health Insurance 

Marketplace® website. For enrollment 

support in all available QHP options in 

your State, go to the Health Insurance 

Marketplace® website at 

HealthCare.gov. 

Also, you should visit the Health 

Insurance Marketplace® website at 

HealthCare.gov if: 

• You want to select a catastrophic 

health plan. (This only needs to be 

included if the web-broker does not 

offer catastrophic plans.) 

• You want to enroll members of your 

household in separate QHPs. (This only 

needs to be included if the web-broker 

does not allow multiple enrollment 

groups for its Classic DE pathway; note 

that EDE Entities are required to support 

multiple enrollment groups.) 

• You want to enroll members of your 

household in dental coverage. The plans 

offered here do not offer pediatric dental 

coverage and you want to choose a QHP 

offered by a different issuer that covers 

pediatric dental services or a separate 

dental plan with pediatric coverage. 

(This only needs to be included if the 

web-broker does not offer assistance 

with enrollment in adult coverage or 

pediatric dental coverage.) 

(Name of web-broker’s website) offers 

the opportunity to enroll in either QHPs 

or off-Marketplace coverage. Please visit 

HealthCare.gov for information on the 

benefits of enrolling in a QHP. OffMarketplace coverage is not eligible for 

the cost savings offered for coverage 

through the Marketplaces. (This final 

paragraph must be displayed if the webbroker offers consumers assistance with 

off-Marketplace coverage options.)’’ 

To prominently display this 

disclaimer, it must be written in a font 

size no smaller than the majority of text 

on the website page and must be 

noticeable in the context of the website 

by (for example) using a font color that 

contrasts with the background of the 

website page.116 In addition, the 

disclaimer must be prominently 

displayed on both the initial user 

landing page and on the landing page 

displaying QHP options that appear 

before the applicant makes a decision to 

purchase coverage (QHP selection page). 

In FFE and SBE–FP States, the 

disclaimer must use the exact language 

provided by HHS, must include a 

functioning web link to HealthCare.gov, 

and must be viewable without requiring 

the user to select or click on an 

additional link. The disclaimer must 

also be displayed in the same nonEnglish language as any language(s) the 

web-broker maintains screens for on its 

website.117 The web-broker may change 

the font color, size, or graphic context 

of the information to ensure that it is 

noticeable to the user in the context of 

its website or the other written material. 

Consistent with the proposed 

approach for the extension of the 

Enrollment Support disclaimer to State 

Exchanges and their web-brokers, under 

this proposal, the HHS-provided 

disclaimer language must be used as a 

minimum starting point, but State 

Exchanges may add State-specific 

language, provided the additional 

language does not conflict with the 

HHS-provided standardized disclaimer. 

This would permit State Exchanges to 

replace references and links to the 

Health Insurance Marketplace® and 

HealthCare.gov in the HHS-provided 

disclaimer language with the 

appropriate reference or links to the 

State Exchange’s website for the 

disclaimer under § 155.220(c)(3)(i)(G) 

that web-brokers assisting consumers in 

State Exchanges would be required to 

prominently display on their nonExchange websites. Additionally, while 

web-brokers assisting consumers in 

State Exchanges must specify in their 

disclaimer that they are subject to 

applicable Federal requirements, under 

this proposal, we anticipate State 


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82560 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

118 81 FR 61499. 

119See 78 FR 27260. Also see CMS. (2023, July 

12). Federally-facilitated Exchange (FFE) 

Enrollment Manual. CMS. Section 4.4.1, p. 49–50 

and Section 4.4.2, p. 54–55. https://www.cms.gov/ 

files/document/ffe-enrollment-manual-2023-5cr071323.pdf. 

Exchanges would leverage this 

flexibility to direct their web-brokers to 

omit citations to Federal requirements 

included in the HHS-provided language 

to the extent those provisions do not 

apply, such as § 155.220(d). State 

Exchanges would also be permitted 

under this proposal to modify the 

disclaimer required under 

§ 155.220(c)(3)(i)(G) to specify 

applicable provisions of State law. 

Further, to the extent that web-brokers 

in State Exchanges may offer offExchange coverage options, we would 

require them to include the HHSprovided disclaimer language that 

distinguishes between such coverage 

options and QHPs sold through the 

Exchange, noting in particular that such 

off-Exchange coverage options are not 

eligible for cost savings offered with a 

QHP sold through the Exchange, and 

providing a link to the State Exchange 

website for more information. Similar to 

the approach adopted for web-brokers 

participating in FFE and SBE–FP States, 

bracketed language included in the 

HHS-provided disclaimer language 

would not be required for web-brokers 

assisting consumers in State Exchanges 

to comply with the Federal minimum 

standards unless applicable or 

otherwise required by the State 

Exchange. State Exchanges may also 

require web-brokers operating in their 

State to translate the disclaimer text 

required under § 155.220(c)(3)(i)(G) into 

languages appropriate for the State as 

this type of additional requirement 

would not conflict with the HHSprovided disclaimer language or 

minimum standards. As with all 

informational materials, standard plain 

language practice is to write at or near 

a fourth grade reading level and not to 

exceed an eighth grade reading level. 

HHS expects that any State-specific 

additions or customizations to this 

disclaimer would be written 

accordingly. We would be available to 

provide technical assistance to State 

Exchanges that want to add Statespecific language to this disclaimer that 

a web-broker in a State Exchange would 

be required to prominently display on 

its non-Exchange website to distinguish 

it from the State Exchange website. 

In new proposed paragraph (n), we 

also propose to extend the requirement 

in § 155.220(c)(3)(i)(I), which requires 

the prominent display by web-brokers of 

the information provided by HHS 

pertaining to a consumer’s eligibility for 

APTC or CSRs on the web-broker’s nonExchange website, to web-brokers 

operating in State Exchanges and 

consequently to these State Exchanges. 

We established this requirement for 

web-brokers in FFE and SBE–FP States 

to increase the likelihood that 

consumers understand their potential 

eligibility for APTC and CSRs and 

potential liability for excess APTC 

repayment and can factor those 

determinations into their QHP selection 

and the amount of APTC they elect to 

take.118 We identified this as another 

important consumer protection that 

should be part of the Federal minimum 

web-broker standards in § 155.220 that 

also extends to web-brokers in State 

Exchanges. Consistent with the 

proposals described above to extend the 

requirements at § 155.220(c)(3)(i)(A) and 

(G), we propose to also extend the 

display obligations in 

§ 155.220(c)(3)(i)(I) to apply to webbrokers in State Exchanges. As such, to 

prominently display this information, it 

must appear in a font size no smaller 

than the majority of text on the website 

page and must be noticeable in the 

context of the website by (for example) 

using a font color that contrasts with the 

background of the website page.119 We 

similarly propose to require web-brokers 

in State Exchanges to display 

information provided by, and as 

specified by, the State Exchange 

regarding a consumer’s eligibility for 

APTC or CSRs. Additionally, we 

propose flexibility in how consumer 

eligibility information for APTC or CSRs 

is displayed on websites by web-brokers 

in State Exchanges, at the direction of 

the State Exchange on the display of 

that information. This flexibility is 

intended to provide State Exchanges the 

ability to define how consumer 

education information about the State 

Exchanges, including the consumer 

eligibility information for APTC or 

CSRs, is customized and presented on 

their web-brokers’ websites. For 

example, we recognize that State 

Exchanges may wish to require their 

web-brokers include additional 

consumer educational information or 

State-specific content to meet the 

particular needs of their consumers and 

applicants. We believe allowing the 

flexibility for State Exchanges and their 

web-brokers to customize consumerfacing educational information with the 

HHS minimum standard requiring the 

prominent display of the consumer 

eligibility information for APTC or CSRs 

as provided by the applicable Exchange 

that must be adopted by web-brokers 

across all Exchanges would provide a 

necessary baseline. Meeting these 

standards would also provide 

consistency for all Exchange consumers 

receiving assistance from web-brokers 

through their non-Exchange websites 

and would ensure that all Exchange 

consumers are provided accurate and 

sufficient information on potential 

eligibility for APTC and CSRs and the 

potential liability for excess APTC 

repayment. We propose to codify this 

State flexibility in new proposed 

paragraph (n)(1). 

We also propose to add new 

§ 155.220(c)(4)(iii) to extend certain 

downstream agent and broker 

requirements at § 155.220(c)(4)(i) that 

currently apply to web-brokers in FFE 

and SBE–FP States and govern the use 

of the web-broker’s non-Exchange 

website by other agents or brokers 

assisting Exchange consumers to also 

apply to web-brokers, and their 

downstream agents and brokers in 

States with State Exchanges, and 

consequently to these State Exchanges. 

Under the proposed new provision, 

web-brokers that permit other agents or 

brokers, through a contract or other 

arrangement, to use the web-broker’s 

non-Exchange website to help an 

applicant or enrollee complete a QHP 

selection or complete the Exchange 

eligibility application would be required 

to meet the standards at 

§ 155.220(c)(4)(i)(A), (B), (D), and (F) 

when assisting consumers in States with 

a State Exchange. As noted in proposed 

new § 155.220(c)(4)(iii) and described 

further below, to extend this framework 

to also apply in State Exchanges, we 

propose that all references to ‘‘HHS’’ 

and ‘‘Federally-facilitated Exchange’’ in 

§ 155.220(c)(4)(i)(A), (B), (D), and (F) 

would be understood to mean and be 

replaced with a reference to the 

applicable State Exchange. 

The goal of the downstream agent and 

broker framework codified in 

§ 155.220(c)(4)(i) is to ensure that agents 

or brokers who utilize a web-broker’s 

non-Exchange website to help 

applicants complete a QHP selection or 

complete the Exchange eligibility 

application comply with necessary 

safeguards related to transparency, 

oversight, and consumer support. It 

ensures appropriate oversight by the 

web-broker and allows for closer 

monitoring by the applicable Exchange. 

For example, the proposed extension of 

§ 155.220(c)(4)(i)(A) to web-brokers 

operating in State Exchanges would 

require these web-brokers to provide the 

State Exchanges in which it they are 

operating a list of all agents or brokers 

utilizing the web-broker website to 

facilitate enrollment of a consumer. The 

proposed extension of 


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Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82561 

120QHP issuers are also eligible to become 

approved DE entities and participate in HHS’ DE 

program. See 45 CFR 155.221(a)(1). 

121QHP issuers are also eligible to become 

approved EDE entities. See 45 CFR 155.221(a)(1). 

122 81 FR 94120. 

123 84 FR 17522 through 17525. 

124 86 FR 24208 through 24209. 

125For additional information, including 

technical specifications on, the HHS web-broker 

operational readiness reviews, see CMS. (2023, 

March 1). Third-party Auditor Operational 

Readiness Reviews for the Enhanced Direct 

Enrollment Pathway and Related Oversight 

Requirements. CMS. https://www.cms.gov/files/ 

document/guidelines-enhanced-direct-enrollmentaudits-year-6-final.pdf. 

§ 155.220(c)(4)(i)(B) would also offer a 

basic consumer protection that all 

agents or brokers utilizing a web-broker 

website to facilitate enrollment of a 

consumer in a manner that constitutes 

enrollment through the State Exchange 

are licensed in the State in which the 

consumer is selecting the QHP, have 

completed training and registration, and 

have signed all required agreements 

with the State Exchange. Finally, the 

proposed extension of 

§ 155.220(c)(4)(i)(F) to also apply to 

web-brokers operating in State 

Exchanges that make their nonExchange website available to other 

agents and brokers would require the 

web-brokers to obtain approval from the 

State Exchanges verifying that all 

applicable requirements are met. 

The proposed extension of the 

§ 155.220(c)(4)(i)(A), (B), (D), and (F) 

framework to State Exchanges and their 

web-brokers would equip the State 

Exchanges with information needed to 

oversee their web-brokers and the use of 

web-broker non-Exchange websites by 

other web-brokers. Ultimately, the 

application of § 155.220(c)(4)(i)(A), (B), 

(D), and (F) would extend these 

safeguards to the State Exchange and 

their consumers when web-brokers 

participating in the State Exchanges 

permit downstream agents and brokers 

to utilize their non-Exchange websites 

to help applicants or enrollees complete 

their QHP selection or complete their 

Exchange eligibility applications in a 

manner that constitutes enrollment 

through the State Exchanges. In 

particular, requiring compliance with 

the HHS minimum standards at 

§ 155.220(c)(4)(i)(A), (B), (D), and (F) for 

web-brokers participating in State 

Exchanges that contract with or enter 

into arrangements with downstream 

agents and brokers to provide applicants 

or enrollees with assistance when 

selecting QHPs or completing Exchange 

eligibility applications through their 

non-Exchange websites would 

maximize transparency and provide 

necessary safeguards to applicants or 

enrollees who rely on those downstream 

agents and brokers to enroll in coverage. 

We believe the extension of these HHS 

minimum standards is especially 

important since some agents, brokers, 

and web-brokers operate in multiple 

States and would benefit from a 

standardized framework and set of 

requirements. As part of the State 

Exchanges’ oversight of the use of webbroker non-Exchange websites, we also 

encourage State Exchanges adopt a 

temporary suspension framework 

similar to § 155.220(c)(4)(ii) that applies 

in FFE and SBE–FP States. This 

provision permits HHS to temporarily 

suspend the ability of a web-broker to 

make its non-Exchange website 

available to its downstream agents and 

brokers to transact information with 

HHS if HHS discovers a security or 

privacy incident or breach. The 

suspension extends for the period in 

which HHS begins to conduct an 

investigation and until the incident or 

breach is remedied to HHS’ satisfaction. 

It is another important feature of HHS’ 

oversight of the use of web-broker nonExchange websites in FFE and SBE–FP 

States that protects consumers data and 

safeguards Exchange operations and 

systems. State Exchanges that choose to 

permit web-brokers to host nonExchange websites to assist consumers 

with QHP selections and submission of 

Exchange eligibility applications should 

consider adoption of similar measures. 

In addition, in new paragraph (n)(2), 

we propose to extend web-broker 

operational readiness requirements to 

State Exchanges and their web-brokers. 

Under this proposal, web-brokers 

operating in State Exchanges would be 

required to demonstrate operational 

readiness to the applicable State 

Exchange prior to the web-broker’s 

website being used to complete an 

Exchange eligibility application or a 

QHP selection. The standards under 

§ 155.220(c)(6) applicable to operational 

readiness reviews performed by HHS of 

web-brokers’ non-Exchange websites 

used to assist the FFEs’ and SBE–FPs’ 

consumers to apply and enroll in QHP 

coverage through the Exchange, with or 

without APTC and CSRs, is a critical 

part of the oversight framework for 

HHS’ Direct Enrollment (DE) program 

(including both Classic DE and 

Enhanced Direct Enrollment (EDE)). DE 

is a service that allows approved webbrokers to enroll consumers in Exchange 

coverage, with or without the assistance 

of an agent/broker, directly from their 

non-Exchange websites.120 In Classic 

DE, consumers start on a web-broker’s 

website by indicating they are interested 

in Exchange coverage. The web-broker 

redirects users to HealthCare.gov to 

complete the eligibility application 

portion of the process. After completing 

their eligibility application, 

HealthCare.gov redirects users back to 

the web-broker website to shop for a 

plan and enroll in Exchange coverage. 

EDE is a service that allows approved 

EDE web-brokers to provide a 

comprehensive consumer experience 

including the eligibility application, 

Exchange enrollment, and postenrollment year-round customer service 

capabilities for consumers and agents/ 

brokers working on behalf of consumers, 

directly on web-broker websites. 

Through EDE, approved web-broker 

EDE entities 121 build and host a version 

of the HealthCare.gov eligibility 

application directly on their nonExchange websites that securely 

integrates with a back-end suite of FFE 

application programing interfaces (APIs) 

to support application, enrollment and 

more. 

In the 2018 Payment Notice final rule, 

we adopted rules to capture operational 

readiness requirements applicable to 

web-brokers that host non-Exchange 

websites to complete QHP selection.122

In the 2020 Payment Notice final rule, 

we finalized amendments that moved 

the parallel operational readiness 

requirements for web-brokers and QHP 

issuers to § 155.221(b)(4), accounting for 

the fact that DE entities participating in 

EDE in the FFEs and SBE–FPs host the 

Eligibility application in addition to 

QHP selection.123 In the 2022 Payment 

Notice final rule, we finalized 

amendments to codify more detail 

describing the operational readiness 

reviews applicable to web-brokers 

participating in FFE and SBE–FP States 

by adding a new § 155.220(c)(6).124 This 

included codifying requirements for a 

web-broker to demonstrate operational 

readiness and compliance with 

applicable requirements prior to the 

web-broker’s non-Exchange website 

being used to complete an Exchange 

eligibility application or a QHP 

selection, which may include 

submission or completion, in a form and 

manner specified by HHS,125 of certain 

information, data, or testing results. As 

part of these reviews, HHS may request 

a web-broker submit a number of 

artifacts or documents or complete 

certain testing processes to demonstrate 

the operational readiness of its nonExchange website. The required 

documentation may include operational 

data including licensure information, 

points of contact, and third-party 

relationships; security and privacy 

assessment documentation, including 

penetration testing results, security and 


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126See 45 CFR 155.220(c)(6)(i),(iv), and (v). 

127See 45 CFR 155.220(c)(6)(ii) and (iii). 

128See 42 CFR 435.4 for the definition of 

insurance affordability programs. 

129See 45 CFR 155.220(l). A parallel requirement 

also applies to QHP issuer DE entities in FFE and 

SBE–FP States. See 45 CFR 155.221(a)(1) and (i), 

and 156.1230(b)(2). As discussed below, in this 

rulemaking, we propose to extend the parallel QHP 

issuer DE entity requirement to State Exchanges and 

their QHP issuer DE entities. 

130See 42 CFR 435.4 for the definition of 

insurance affordability programs. 

privacy assessment reports, 

vulnerability scan results, plan of action 

and milestones, and system security and 

privacy plans; and an agreement 

between the web-broker and HHS 

documenting the requirements for 

participating in the applicable DE 

pathway.126 The required testing may 

include enrollment testing, prior to 

approval or at the time of renewal, and 

website reviews performed by HHS to 

evaluate prospective web-brokers’ 

compliance with applicable website 

display requirements prior to 

approval.127 We identified these 

operational readiness requirements as 

necessary safeguards to protect 

consumer data and the efficient and 

effective operation of the Exchange 

while also supporting innovation and 

the creation of additional approved 

pathways for FFE and SBE–FP 

consumers to enroll in QHP coverage in 

a manner that constitutes enrollment 

through the Exchange. 

As part of the proposal to extend an 

operational readiness review 

requirement to State Exchanges and 

their web-brokers, we propose in new 

paragraph (n)(2) to require these State 

Exchanges to establish the form and 

manner for their web-brokers to 

demonstrate operational readiness, 

which may include submission or 

completion of the same items addressed 

in § 155.220(c)(6)(i)–(v) to the State 

Exchanges, in the form and manner 

specified by the applicable State 

Exchanges. These standards, which 

apply in FFE and SBE–FP States, ensure 

operational readiness and compliance 

with all applicable requirements prior to 

the web-broker’s non-Exchange website 

being used to complete Exchange 

eligibility application or a QHP 

selection. They make sure consumers 

and applicants are not able to enroll in 

Exchange coverage nor submit an 

Exchange application via a web-broker’s 

non-Exchange website that is not 

operationally ready. Websites that have 

not been tested to see if they are 

operationally ready may not provide 

consumers and applicants with proper 

eligibility determinations or may have 

security flaws that could make a breach 

involving consumer PII more likely. 

Mandating that web-brokers 

participating in State Exchanges meet 

standards set by the applicable State 

Exchange to demonstrate operational 

readiness would help reduce this risk in 

all Exchanges. We encourage State 

Exchanges to adopt operational 

readiness review standards consistent 

with the requirements captured in 

§ 155.220(c)(6)(i)–(v) and also consider 

leveraging the audits that web-brokers 

use to demonstrate compliance with the 

operational readiness review 

requirements applicable in FFE and 

SBE–FP States. Such an approach 

would promote standardization across 

Exchanges in terms of operational 

readiness requirements applicable for 

web-brokers while building in flexibility 

for State Exchanges. We recognize it is 

important to provide State Exchanges 

flexibility to tailor the operational 

readiness review process to best serve 

their operational and business needs. 

For example, State Exchanges may have 

the need to structure their operational 

readiness reviews to emphasize or 

prioritize different web-broker 

functionalities that meet State-specific 

needs. Therefore, we are proposing to 

establish a general requirement that 

State Exchanges must establish 

operational readiness requirements for 

their web-brokers to demonstrate 

compliance with applicable 

requirements and technological 

readiness prior to the web-broker’s 

website being used to complete an 

Exchange eligibility application or a 

QHP selection, while providing these 

State Exchanges with flexibility to 

define the contours of those 

requirements. We propose to capture at 

the end of the new paragraph (n) the 

accompanying proposed requirement 

that web-brokers in States with State 

Exchanges comply with the applicable 

State Exchanges’ operational readiness 

standards under paragraph (n)(2). 

Finally, we propose in new paragraph 

(n)(1) to extend the current web-broker 

FFE standard of conduct established at 

§ 155.220(j)(2)(i) to also apply to webbrokers assisting consumers in State 

Exchanges, and consequently to these 

State Exchanges. Section 155.220(j)(2)(i) 

requires agents, brokers, or web-brokers 

that assist with or facilitate enrollment 

of qualified individuals, qualified 

employers, or qualified employees, in 

coverage in a manner that constitutes 

enrollment through an FFE, or assist 

individuals in applying for APTCs and 

CSRs for QHPs sold through an FFE, 

must provide consumers with correct 

information, without omission of 

material fact, regarding the FFEs, QHPs 

offered through the FFEs, and insurance 

affordability programs,128 and refrain 

from marketing or conduct that is 

misleading (including by having a DE 

website that HHS determines could 

mislead a consumer into believing they 

are visiting HealthCare.gov), coercive, or 

discriminates based on race, color, 

national origin, disability, age, or sex. 

This FFE standard already extends to 

web-brokers SBE–FP States.129 As 

proposed to be applied in State 

Exchanges, web-brokers would be 

required to provide consumers with 

correct information, without omission of 

material fact, regarding the applicable 

State Exchange, QHPs offered through 

the applicable State Exchange, and 

insurance affordability programs.130 In 

addition, web-brokers who assist with 

or facilitate enrollment of qualified 

individuals, qualified employers, or 

qualified employees, in coverage in a 

manner that constitutes enrollment 

through a State Exchange, or assist 

individuals in applying for APTCs and 

CSRs for QHPs sold through a State 

Exchange, would also be required to 

refrain from marketing or conduct that 

is misleading (including by having a 

website that the State Exchange 

determines could mislead a consumer 

into believing they are visiting the State 

Exchange’s website), coercive, or 

discriminates based on race, color, 

national origin, disability, age, or sex. 

As noted in the last sentence of 

proposed new paragraph (n), to extend 

this FFE standard of conduct to State 

Exchanges, we propose that all 

references to ‘‘HHS’’ and ‘‘the Federallyfacilitated Exchanges’’ in 

§ 155.220(j)(2)(i) would be understood 

to mean and be replaced with a 

reference to ‘‘the applicable State 

Exchange, applied to web-brokers,’’ and 

the reference to ‘‘HealthCare.gov’’ in 

§ 155.220(j)(2)(i) would be understood 

to mean and be replaced with a 

reference to ‘‘the State Exchange 

website, applied to web-brokers.’’ 

We seek comment on these proposals, 

especially from States operating, or 

seeking to operate, State Exchanges. We 

also seek comment on which of the 

other current provisions at § 155.220 

should or should not apply to State 

Exchanges and web-brokers that assist 

consumers in State Exchanges. 

8. Establishing Requirements for DE 

Entities Mandating HealthCare.gov 

Changes Be Reflected on DE Entity NonExchange Websites Within a Notice 

Period Set by HHS (§ 155.221(b)) 

We propose to revise § 155.221(b) to 

require that HealthCare.gov changes be 

reflected and prominently displayed on 


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131 ‘‘Notice period’’ refers to the time period that 

DE entities have to reflect and prominently display 

HealthCare.gov changes communicated to them by 

HHS pursuant to this proposal. 

132 84 FR 17523 through 17524, 86 FR 6176 and 

6177. 

133 In this rulemaking, we propose to extend 

certain Federal minimum standards under 

§ 155.221(b) to State Exchanges and their DE 

entities. 

134 In this rulemaking, we propose to extend 

certain Federal minimum standards under 

§§ 155.220 and 156.1265 to State Exchanges, their 

web-brokers, and their QHP issuer DE entities. 

135CMS. (2023, March 1). Third-party Auditor 

Operational Readiness Reviews for the Enhanced 

Direct Enrollment Pathway and Related Oversight 

Requirements. CMS. Section IX.B., pp. 72–74. 

https://www.cms.gov/files/document/guidelinesenhanced-direct-enrollment-audits-year-6-final.pdf. 

DE entity non-Exchange websites within 

a specific notice period 131 set by HHS. 

We conduct various DE entity 

monitoring programs, including website 

display reviews, and routinely identify 

areas where DE entity non-Exchange 

websites can improve the user 

experience and more closely align with 

HealthCare.gov. The changes that we 

propose to require DE Entities to make 

to their non-Exchange websites include 

changes that enhance the consumer 

experience, simplify the plan selection 

process, and increase consumer 

understanding of plan benefits, costsharing responsibilities, and eligibility 

for financial assistance. This proposal 

would codify our existing practice of 

communicating important changes to 

the HealthCare.gov display to EDE 

entities to ensure their EDE websites 

conform to those changes and provide 

the same vital information to 

consumers, expand our existing change 

requests processes to permit entities to 

request deviations from required display 

changes, require DE entities that do not 

participate in EDE to comply with this 

practice, and require State Exchanges 

that choose to implement a DE program 

to require their DE entities to implement 

and prominently display changes 

adopted for display on the State 

Exchanges’ websites on their nonExchange websites for purposes of 

assisting consumers with DE in QHPs 

offered through the Exchange in a 

manner that constitutes enrollment 

through the Exchange. 

Section 1312(e) of the ACA directs the 

Secretary to establish procedures under 

which a State may permit agents and 

brokers to enroll qualified individuals 

and qualified employers in QHPs 

through an Exchange and to assist 

individuals in applying for financial 

assistance for QHPs sold through an 

Exchange. In addition, section 1413 of 

the ACA directs the Secretary to 

establish, subject to minimum 

requirements, a streamlined enrollment 

process for enrollment in QHPs and all 

insurance affordability programs. At 

§ 155.221(a) and (i), we established that 

the FFEs and SBE–FPs will permit QHP 

issuers, which meet the applicable 

requirements of § 155.221 and 

§ 156.1230, and web-brokers, which 

meet the applicable requirements of 

§ 155.220 and § 155.221, to assist 

consumers with DE in QHPs offered 

through the Exchange in a manner that 

is considered to be through the 

Exchange and to the extent permitted by 

applicable State law.132 Collectively, 

QHP issuers and web-brokers that meet 

the applicable requirements to assist 

Exchange consumers with DE in QHPs 

are referred to as ‘‘DE entities.’’ DE 

entities may assist consumers with DE 

in QHPs offered through an Exchange by 

redirecting consumers from the nonExchange website to HealthCare.gov to 

complete the eligibility application and 

obtain an eligibility determination, 

referred to as ‘‘Classic DE.’’ DE entities 

may also assist consumers with DE in 

QHPs offered through an Exchange by 

hosting an eligibility application on 

their non-Exchange website and 

allowing consumers to complete the 

eligibility application and obtain an 

eligibility determination from the 

Exchange without being redirected to 

HealthCare.gov, referred to as 

‘‘Enhanced Direct Enrollment (EDE).’’ 

Section 155.221(b) establishes 

requirements that DE entities must meet 

to assist consumers in FFE and SBE–FP 

States.133 Additional requirements that 

apply to web-brokers and QHP issuers 

that assist consumers with enrollment 

in coverage offered through the FFEs 

and SBE–FPs are captured in 

§§ 155.220, 156.265, and 156.1230.134

The display requirements for DE 

entity non-Exchange websites are 

captured in §§ 155.220, 155.221, 

156.265, and 156.1230. The website 

display requirements are often technical 

in nature and can require subsequent 

release of guidance to provide technical 

and operational details to support their 

implementation. When HHS makes 

changes to the HealthCare.gov display, 

we notify EDE entities participating in 

the FFEs and SBE–FPs of these changes 

and require that they make them to their 

non-Exchange websites via the HHSinitiated change request process 

outlined in the Third Party Auditor 

Operational Readiness Reviews for the 

Enhanced Direct Enrollment Pathway 

and Related Oversight Requirements 

guidance document referred to as the 

‘‘Third Party Auditor Guidelines.’’ 135

This process helps ensure consumers 

receive vital information they need in a 

timely fashion. 

This proposal would codify and 

expand this existing, HHS-initiated 

change request practice for EDE entities’ 

non-Exchange websites and support 

consistency as to the timing of display 

changes across enrollment platforms, 

which would help ensure all Exchange 

consumers have timely access to 

accurate, clear information as they 

navigate the QHP selection and 

enrollment processes. Most DE partners 

in FFE and SBE–FP States participate in 

EDE and therefore are already familiar 

with and complying with this proposal 

because it is part of the existing 

requirements, as outlined in the Third 

Party Auditor Guidelines. However, the 

requirements of this proposal would be 

new for some DE partners, such as those 

that only participate in Classic DE, 

because they are not currently subject to 

these requirements, which currently 

only apply to DE entities that participate 

in EDE. It is especially important that 

changes to the HealthCare.gov display 

are reflected on non-Exchange websites, 

including websites used for both Classic 

DE and EDE, as a steadily increasing 

number of the FFEs’ and SBE–FPs’ 

consumers enroll in Exchange plans via 

these DE pathways. This proposal 

would help ensure consumers using 

these DE pathways benefit from the 

policies we introduce to improve the 

HealthCare.gov website display by 

enhancing the consumer experience, 

increasing consumer understanding, 

and simplifying the plan selection 

process. 

We recognize that the technical 

details necessary to implement website 

display changes must be communicated 

to DE entities with sufficient notice for 

development prior to implementation. 

As such, this proposal provides that 

HHS would provide DE entities with 

advance notice to give them time to 

implement the changes on their nonExchange websites. We intend for the 

duration of the advance notice period to 

correspond to the complexity of the 

change and the urgency with which the 

change must be reflected on the DE 

entity’s non-Exchange website (that is, 

we intend to provide a longer advance 

notice period for implementation of 

changes requiring more complex 

website-development work, or for 

lower-urgency changes). We would 

categorize display changes as simpler 

versus more complex based on a 

combination of factors, including, but 

not limited to, consideration of the 

following: number of website pages 

affected; number of data fields affected; 

nature of the change (that is, text-based 

versus data-based); whether the change 


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136We provide DE entities with the QHP 

comparative information that must be displayed in 

accordance with § 155.220(c)(3)(i)(A) and 

§ 156.1230(a)(1)(ii). We provide this data via the 

Public Use Files (PUF) (https://www.cms.gov/cciio/ 

resources/data-resources/marketplace-puf) and 

through non-Exchange website integration with the 

Marketplace Application Program Interface (MAPI) 

(https://developer.cms.gov/marketplace-api/). In 

this context, website integration refers to 

connecting the non-Exchange website with 

Exchange data by using the MAPI. 137 45 CFR 155.205(c)(2)(iv). 

138CMS. (2023, March 1). Third-party Auditor 

Operational Readiness Reviews for the Enhanced 

Direct Enrollment Pathway and Related Oversight 

Requirements. CMS. Section X.F., p. 69. https://

www.cms.gov/files/document/guidelines-enhanceddirect-enrollment-audits-year-6-final.pdf. 

is static or dynamic based on user input; 

whether the change updates QHP data 

provided by us 136 or involves the 

display of new data not previously 

provided by us (that is, new data types 

would be considered a more complex 

change due to the web-development 

work required to integrate a new PUF 

data field or MAPI data variable); and 

whether the change may affect backend 

algorithms for plan sorting, filtering, or 

recommendations. The complexity of 

the change would be the primary factor 

determining the length of the advance 

notice period. Generally, we would 

expect to provide approximately 30 

calendar days’ advance notice of 

simpler display changes and up to 90 or 

more calendar days’ advance notice for 

more complex changes. However, in 

situations where we have determined 

that it is urgent that HealthCare.gov 

display changes are similarly made to 

DE entities’ non-Exchange websites to 

communicate necessary information to 

consumers regarding their plan 

selection or enrollment, we may provide 

fewer than 30 days’ advance notice, but 

not less than 5 business days’ advance 

notice. When considering the urgency of 

a display change, we would consider a 

number of factors, including, but not 

limited to, the following: potential to 

impact the consumers’ understanding of 

plan benefits and cost-sharing 

responsibilities; potential for consumers 

to receive an incorrect eligibility 

determination; potential impact to the 

consumer’s understanding of their 

eligibility for financial assistance (that 

is, APTC or CSR); proximity to the Open 

Enrollment period (with changes 

becoming more urgent as Open 

Enrollment nears, as implementing 

changes prior to Open Enrollment is 

critical for ensuring the greatest number 

of consumers are able to benefit from 

the changes); and whether failure to 

implement the change may result in a 

display that is misleading or confusing 

to consumers. 

We propose to amend § 155.221 to 

add new paragraph (b)(6), which would 

require DE entities to implement and 

prominently display website changes in 

a manner consistent with what is 

adopted by HHS for display on 

HealthCare.gov by meeting standards 

communicated and defined by HHS 

within a time period set by HHS, unless 

HHS approves a deviation from those 

standards. Consistent with § 155.221(i), 

this new proposed DE entity nonExchange website display requirement 

would also apply to DE entities that 

enroll qualified individuals in coverage 

in a manner that constitutes enrollment 

through an SBE–FP or assist individual 

market consumers with submission of 

applications for APTC and CSRs 

through an SBE–FP. 

We are cognizant of, and support, DE 

entity non-Exchange websites’ use of 

innovative decision-support tools and 

user interface design for consumers to 

help them shop for and select QHPs that 

best fit their needs. This proposal is not 

intended to prohibit or otherwise stand 

in the way of DE entities’ development 

of such tools and consumer interfaces. 

Consistent with the existing approach 

for implementation of HHS-initiated 

changes described in the Third Party 

Auditor Guidelines, we would 

implement this requirement with a 

focus on requiring DE entities in FFE 

and SBE–FP States to mirror any display 

changes made to HealthCare.gov that 

impact a consumer’s understanding of 

plan benefits, cost-sharing 

responsibilities, and eligibility for 

financial assistance. For each required 

change, DE entities in FFE and SBE–FP 

States would need to implement on 

their non-Exchange websites 

conforming changes that meet standards 

defined by HHS for display in a manner 

consistent with that adopted by HHS for 

display on HealthCare.gov. We would 

provide DE entities flexibility in their 

user interface graphic design, provided 

that their design complies with the 

standards defined by HHS in the 

notification of required change(s). As 

part of this proposal, we would require 

that all front-end website changes (that 

is, website changes that would affect the 

visual aspects of the website that users 

see and interact with) be prominently 

displayed on DE entity non-Exchange 

websites. ‘‘Prominently displayed’’ 

means that text must be written in a font 

size no smaller than the majority of the 

text on the web page, text must be 

displayed in the same non-English 

language as any language(s) the DE 

entity maintains translations for on its 

website,137 and any display changes 

must be noticeable in the context of the 

website (that is, DE entity non-Exchange 

websites must use a font or graphic 

color that contrasts with the background 

of the web page and ensure any graphics 

and iconography that they are required 

to display are readable without 

requiring the user to increase their 

magnification percentage greater than 

100 percent). The DE entity may change 

the font color, size, or graphic context 

of the information to ensure that it is 

noticeable to the user in the context of 

its website or other written material. 

For example, in a scenario where 

HealthCare.gov is updated to display 

new help text communicating 

educational content to consumers that is 

designed to help a consumer better 

understand plan benefits, cost-sharing 

responsibility, or eligibility for financial 

assistance, we would require the DE 

entity’s non-Exchange website to 

display that help text or similar text. 

When notifying DE entities about the 

required change, we would establish 

and communicate the standards that 

must be met for display of the required 

change, such as the new help text that 

must be prominently displayed on their 

websites. If the standards allow the DE 

entity to display similar text to the 

language used on HealthCare.gov (for 

example, when information must be 

communicated but there is a low risk of 

misinterpretation of the information 

such that we would not require DE 

entities to display the exact language 

used on HealthCare.gov), we would 

provide DE entities with information on 

how the help text is displayed on 

HealthCare.gov, along with the 

standards that must be met, while also 

outlining the flexibility for DE entities 

to adapt the language to reflect their 

own entity branding if it generally 

conveys the same information and 

meaning as the help text displayed on 

HealthCare.gov. In this example, we 

would also allow flexibility as to the 

location of the help text if it adheres to 

the prominent display requirements 

discussed earlier in this proposal. In 

this scenario, DE entities would be able 

to adjust the language and decide on the 

location of the help text on the QHP 

selection page(s) without seeking prior 

approval from us. However, we would 

monitor implementation through 

existing periodic website review 

monitoring per § 155.220(c)(5) and, as 

described in the Third Party Auditor 

Guidelines,138 may notify the DE entity 

if we find that their language does not 

convey the same meaning as the help 

text displayed on HealthCare.gov or if 

we find the help text is not prominently 

displayed. Such notification would 

occur via a letter that would provide the 

DE entity with feedback explaining the 


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139 45 CFR 155.221(e). 

noncompliance and required corrective 

actions (such letter is referred to as 

‘‘Technical Assistance’’). If Technical 

Assistance fails, we may potentially take 

enforcement action to address the 

identified instances of non-compliance, 

which could include temporarily 

suspending the DE entity’s ability to 

transact information with the Exchange 

if we discover circumstances that pose 

unacceptable risk to eligibility 

determination, Exchange operations, or 

Exchange systems, if warranted.139

Additionally, we recognize that some 

DE entities may have system constraints 

that prevent them from precisely 

mirroring the HealthCare.gov display 

approach, and so we propose that if a 

DE entity is unable to implement the 

standards defined by HHS, or the DE 

entity has an idea for implementation 

that does not meet the standards but 

would effectively communicate the 

same information to consumers, we may 

permit a deviation. We propose that DE 

entities that are interested in pursuing a 

deviation must submit deviation 

requests to HHS and propose that such 

requests would be subject to review by 

HHS in advance of implementation of 

any alternative display approaches. 

Deviation requests must include a 

proposed alternative display and 

accompanying rationale. The rationale 

must explain why the DE entity is 

unable to implement the standards or 

the DE entity’s idea for implementation 

that does not meet the standards but 

would effectively communicate the 

same information to consumers. 

Therefore, similar to the differential 

website display requirements for 

standardized plans applicable to webbroker and QHP issuer DE entities at 

§§ 155.220(c)(3)(i)(H) and 

156.265(b)(3)(iv) and the HHS-initiated 

change request process, we propose to 

allow DE entities to request a deviation 

from the standards communicated by 

HHS for required display changes to 

align with HealthCare.gov by submitting 

a proposed alternative display and 

accompanying rationale or explanation 

for why a deviation is necessary. In 

reviewing deviations, HHS would 

consider whether the same level of 

differentiation and clarity is being 

provided under the deviation requested 

by the DE entity as is provided on 

HealthCare.gov. Other factors and 

criteria HHS would consider include, 

but are not limited to, whether the 

proposed alternative website display 

adheres to the standards for prominent 

display described in this proposal and 

whether the display provides correct 

information, without omission of 

material fact, that does not have the 

potential to be misleading to consumers. 

Under this proposed approach, the 

deviation request would have to be 

submitted and approved by HHS before 

DE entities would be permitted to 

implement any alternative website 

displays. Deviation requests would not 

toll the advance notice period. This 

deviation request process described in 

this paragraph is separate and distinct 

from the flexibilities in user interface 

graphic design that we would allow 

without preapproval as long as the 

design and display otherwise meets the 

applicable standards defined and 

communicated by HHS for the display 

change. DE entities would only need to 

request a deviation from the 

requirements of the standards 

communicated by HHS if the DE entity 

seeks to deviate from those standards or 

specifications when it implements a 

display change to its Non-Exchange 

website that is required by HHS 

pursuant to this proposal. 

Pursuant to proposed new 

§ 155.221(j)(3), we also propose to 

extend this new proposed DE entity 

non-Exchange website display 

requirement to require State Exchanges 

that choose to implement a DE program 

to require their DE entities to implement 

and prominently display changes 

adopted for display on the State 

Exchanges’ websites on their nonExchange websites for purposes of 

assisting consumers with DE in QHPs 

offered through the Exchange in a 

manner that constitutes enrollment 

through the Exchange. We believe it is 

necessary for consumers utilizing DE 

entities in State Exchanges to have 

access to the same vital information 

pertaining to their plan selection and 

enrollment process as they would have 

if they were enrolling via the State 

Exchanges’ websites. Under this 

proposal, we would require State 

Exchanges to establish and 

communicate standards for required 

display changes and to set the time 

period within which display changes 

must be implemented on DE entities’ 

non-Exchange websites. State Exchanges 

would also be required to review 

deviation requests submitted by DE 

entities and establish their own 

deviation request process if the State 

Exchange wants to permit deviations. 

We would provide flexibility for State 

Exchanges to develop their own process 

for communicating those standards, 

setting advance notice periods, and 

establishing a deviation request process 

as needed to meet the business needs of 

the State Exchange. We would 

encourage State Exchanges to consider 

the same factors described above (that 

is, urgency and complexity of the 

change) when determining the advance 

notice period. Similarly, we would 

encourage State Exchanges to provide 

their DE entities with examples of the 

State Exchange website display change 

and technical assistance, including 

technical implementation guidance, to 

ease the burden of implementing and 

prominently displaying required 

changes. We would require State 

Exchanges to apply HHS’s standard for 

‘‘prominently display,’’ explained 

earlier in this section of this proposed 

rule, to help ensure that important 

enrollment, eligibility, and other 

information is as noticeable and clear to 

consumers using DE entities’ websites 

in State Exchanges as it is to consumers 

using State Exchange websites or 

HealthCare.gov, which we believe 

would enhance the user experience, 

increase understanding, and simplify 

the plan selection process for all 

consumers. 

As part of this proposal to extend the 

requirement for DE entities to reflect 

Exchange website changes on their nonExchange websites to State Exchanges 

and their DE entities, we would rely on 

State Exchanges that choose to 

implement a DE program to enforce 

compliance with these requirements 

and take enforcement action when their 

DE entities fail to comply and update 

their non-Exchange websites to mirror 

changes made to the State Exchange 

website. We would be available to 

provide technical assistance to support 

the State Exchanges’ efforts to take 

appropriate enforcement action as 

needed to ensure compliance with 

applicable requirements. There may 

exist scenarios where the website 

display requirements may differ 

between the FFEs or SBE–FPs versus the 

State Exchanges (for example, in 

scenarios where a State Exchange uses 

the HealthCare.gov disclaimer language 

and adds State-specific information 

such as replacing a HealthCare.gov 

hyperlink with the State Exchange 

hyperlink). In such scenarios, DE 

entities must tailor their non-Exchange 

website display to the requirements of 

the State the consumer is seeking 

assistance in. Based on our experience 

providing oversight of DE entity website 

displays, we understand that many DE 

entities are familiar with and have the 

capability to tailor website displays 

based on different scenarios and, as 

such, we anticipate DE entities would 

have the capability to tailor website 

displays to mirror the Exchange website 

of the State the consumer is shopping 

for coverage in. 

With an increasing number of 

consumers utilizing the DE pathways to 


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140 45 CFR 155.221(i). 

141See 78 FR at 37065 through 37066 and 78 FR 

at 54124 through 54126. 

142The amendments to § 155.221 we are 

proposing would not impact how DE entities may 

assist consumers and applicants in SBE–FP States. 

Section 155.221(i) provides that a DE entity that 

enrolls qualified individuals in coverage in a 

manner that constitutes enrollment through an 

SBE–FP or assists individual market consumers 

with submission of applications for APTC and CSRs 

through an SBE–FP, must comply with all 

applicable FFE standards in § 155.221. We are not 

proposing any changes to this existing framework 

for DE entities who assist consumers and applicants 

in SBE–FP States. 

143Section 1321(a)(1)(A), (B) and (D) of the ACA. 

144See 77 FR 18334–18336; 78 FR 15533; 78 FR 

54134; 79 FR 13837; 81 FR 12338; 81 FR 94176; 83 

FR 16981–16982; 84 FR 17563; 85 FR 37248; 86 FR 

24288; 87 FR 27388; and 88 FR 25917. 

145See 77 FR 18425–18246; 78 FR 54124–54126; 

81 FR 12309–12310; 81 FR 94152; 81 FR 94184; 83 

FR 16981–16982, 17030; 84 FR 17521–17525, 

17546–17547; and 86 FR 24209–24214. 

enroll in coverage through the 

Exchanges, we believe it is important to 

codify a requirement to mandate 

changes adopted by HealthCare.gov (or 

for State Exchanges, the State 

Exchanges’ websites) be implemented 

on DE entity non-Exchange websites 

within a timeframe specified by HHS 

(or, for DE entities participating in State 

Exchanges, within a timeframe specified 

by the State Exchange). These proposals 

would ensure consumers using DE 

entity non-Exchange websites have a 

similar user experience, with access to 

the same information in a similar 

manner as provided on HealthCare.gov 

and State Exchange websites. 

We seek comment on all aspects of 

this proposal. 

9. Adding and Amending Language To 

Ensure DE Entities Operating in State 

Exchanges Meet Certain Standards 

Applicable in the FFEs and SBE–FPs 

(§ 155.221) 

We propose to amend § 155.221 to 

extend certain existing HHS standards 

for Exchanges that use the Federal 

platform that apply to DE entities 

assisting the FFEs’ and SBE–FPs’ 140

consumers and applicants with direct 

enrollment in QHPs and applying for 

APTC/CSRs to DE entities operating in 

State Exchanges, for both the State 

Exchanges’ Individual Exchange and 

SHOP. These proposals would extend 

certain Federal DE program standards to 

DE entities operating in State 

Exchanges, and consequently to those 

State Exchanges that, to the extent 

permitted by applicable State law, 

permit DE entities to assist their 

consumers and applicants with direct 

enrollment in QHPs and applying for 

APTC/CSRs in a manner that constitutes 

enrollment through an Exchange.141

These proposals would also ensure that 

certain minimum Federal standards— 

those governing DE entity marketing 

and display of QHPs and non-QHPs, 

providing consumer with correct 

information and refraining from certain 

conduct, marketing of non-QHPs, 

website disclaimer language, and 

operational readiness—would apply to 

DE entities across all Exchanges. These 

proposals, if finalized, would be 

effective on the date of publication of 

the final rule. 

Notably, our regulations do not 

currently address whether and how DE 

entities may assist consumers and 

applicants with DE in QHPs and 

submission of applications for APTC/ 

CSRs in a manner that constitutes 

enrollment in State Exchanges. We 

believe that current and future State 

Exchanges may seek to implement DE 

programs similar to the FFEs and SBE– 

FPs. As such, we believe that DE entities 

seeking to assist State Exchange 

consumers with DE in QHPs and 

submission of applications for APTC/ 

CSRs in a manner that constitutes 

enrollment through an Exchange should 

meet the same or, at a minimum, similar 

standards as are required in the FFEs 

and SBE–FPs to protect consumers. 

These safeguards focus on mitigating the 

potential for confusion between QHPs 

and non-QHPs (including the eligibility 

for APTC and/or CSR as it relates to 

QHPs versus non-QHPs) and as to 

which products are available through 

the Exchange and what products are 

not, ensuring proper eligibility 

determinations, protecting against 

security breaches or incidents through 

implementation of operational readiness 

reviews (as websites that have not been 

tested to see if they are operationally 

ready may provide improper eligibility 

determinations or may have security 

flaws that could make a breach 

involving consumer PII more likely) and 

through the other minimum Federal 

standards in § 155.221 that we propose 

to extend to State Exchanges and their 

DE entities.142 We recognize that to 

date, no State Exchanges have 

implemented DE programs; however, as 

stated, we anticipate that there may be 

growing interest in doing so. As such, 

we recognize a potential burden on 

State Exchanges that would newly be 

subject to the standards being proposed, 

if they choose to implement DE 

programs. This would include drafting 

new policies, updating standards, and 

potentially hiring additional staff to 

perform functions not currently being 

performed by the State Exchanges, 

including providing technical assistance 

during development and 

implementation of DE programs in the 

State Exchanges, creating the framework 

for and conducting operational 

readiness reviews, including developing 

and maintaining documentation needed 

to complete the operational readiness 

reviews, as well as conducting ongoing 

oversight and taking appropriate 

enforcement action for DE entity noncompliance with applicable 

requirements. It would also include 

requiring and overseeing webdevelopment and the hosting of nonExchange websites by DE entities 

participating in these State Exchanges to 

ensure compliance with the proposed 

minimum standards outlined in this 

rulemaking. 

Section 1312(e) of the ACA provides 

that the HHS Secretary shall establish 

procedures under which a State may 

allow agents, brokers, and web-brokers 

to enroll individuals in QHPs. The 

Secretary also has authority under 

section 1321(a) of the ACA to 

promulgate regulations with respect to 

the establishment and operation of 

Exchanges, the offering of QHPs through 

such Exchanges, and such other 

requirements as the Secretary 

determines appropriate.143 As explained 

earlier, HHS previously leveraged these 

authorities to establish the existing 

agent, broker, and web-broker standards 

applicable in FFE and SBE–FP States, 

which are currently codified in 

§§ 155.220 and 155.221.144 In addition, 

section 1413 of the ACA directs the 

Secretary to establish, subject to 

minimum requirements, a streamlined 

enrollment process for enrollment in 

QHPs and all insurance affordability 

programs. This authority, along with the 

Secretary’s rulemaking authority under 

section 1321(a) of the ACA, was 

previously leveraged to establish the 

existing QHP issuer DE Entity 

requirements applicable in FFE and 

SBE–FP States, which are currently 

codified in §§ 155.221, 156.265, and 

156.1230.145

Similar to the agent, broker and webbroker requirements in § 155.220, 

currently § 155.221 only applies to DE 

entities assisting consumers and 

applicants in the FFEs and SBE–FPs. 

Section 155.221(a) provides that the 

FFEs will permit the following entities 

to assist consumers with DE in QHPs 

offered through the Exchange in a 

manner that is considered to be through 

the Exchange, to the extent permitted by 

applicable State law: (1) QHP issuers 

that meet the applicable requirements in 

§§ 155.221 and 156.1230, and (2) webbrokers that meet the applicable 

requirements in §§ 155.220 and 155.221. 

These same entities are permitted to 


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146 45 CFR 155.221(i). 

147As previously noted, the FFE requirements for 

web-brokers in §§ 155.220 and 155.221 also 

currently extend to web-brokers participating in 

SBE–FPs. See 45 CFR 155.220(l) and 155.221(i). 

assist consumers with DE in QHPs 

offered through the Exchange in a 

manner that is considered to be through 

the Exchange, to the extent permitted by 

applicable State law, in SBE–FP 

States.146 As explained above, DE 

allows approved entities to enroll 

consumers in Exchange coverage, with 

or without the assistance of an agent/ 

broker, directly from their nonExchange websites. The HHS DE 

Program includes two DE pathways: 

Classic DE and EDE. In Classic DE, 

consumers start on a DE entity’s website 

by indicating they are interested in 

Exchange coverage. The DE entity’s 

website redirects users to 

HealthCare.gov to complete the 

eligibility application portion of the 

process. After completing their 

eligibility application, HealthCare.gov 

redirects the users back to the DE 

entity’s non-Exchange website to shop 

for a plan and enroll in Exchange 

coverage. EDE allows approved EDE 

entities to provide a comprehensive 

consumer experience including the 

eligibility application, Exchange 

enrollment, and post-enrollment yearround customer service capabilities for 

consumers and agents/brokers working 

on behalf of consumers, directly on the 

DE entities’ non-Exchange websites. 

Through EDE, approved EDE entities 

build and host a version of the 

HealthCare.gov eligibility application 

directly on their websites that securely 

integrates with a back-end suite of FFE 

application programing interfaces (APIs) 

to support application, enrollment, and 

more. References to ‘‘Direct Enrollment’’ 

or ‘‘DE’’ within § 155.221 include both 

the Classic DE and EDE pathways. 

Similarly, the proposal to extend certain 

existing HHS standards applicable to DE 

entities participating in FFE and SBE– 

FP States to State Exchanges and their 

DE entities would also apply to the 

operation of Classic DE and/or EDE 

within these State Exchanges. That is, 

under this proposal, State Exchanges 

that choose to implement DE programs 

in their States would be permitted to 

adopt the same pathways or tailor their 

configuration in a manner best suited to 

their operational and business needs, so 

long as their DE programs meet the 

proposed Federal minimum standards 

in § 155.221 that we propose in this 

rulemaking to extend to State Exchanges 

and their DE entities. We would be 

available to provide extensive technical 

assistance to State Exchanges that 

choose to implement DE programs. 

As detailed further below, we propose 

to add a new paragraph (j) to § 155.221 

to extend certain Federal minimum DE 

entity standards in § 155.221 to DE 

entities operating in State Exchanges, 

and consequently, to these State 

Exchanges that choose to implement DE 

programs in their States. We seek to 

ensure that DE entities assisting these 

State Exchanges’ consumers with DE in 

QHPs and applying for APTC/CSRs in a 

manner that constitutes enrollment 

through the Exchange meet Federal 

minimum standards governing DE entity 

marketing and display of QHPs, 

providing consumers with correct 

information and refraining from certain 

conduct, marketing of non-QHPs, 

website disclaimer language, and 

operational readiness. We also 

encourage State Exchanges to require DE 

entities to engage a third-party auditor 

to perform the operational readiness 

review audits of their DE entities, 

consistent with the operational 

readiness framework adopted by HHS 

for the FFEs and SBE–FPs. As stated 

earlier, we recognize that there may be 

a growing interest from State Exchanges 

to operate DE programs, and we seek to 

establish a set of Federal minimum 

standards to ensure appropriate 

safeguards are in place, regardless of the 

Exchange model. Further, the proposed 

approach to establish a minimum set of 

Federal standards that would apply to 

DE entities across all Exchanges would 

support efficiency in DE entity 

operations across all Exchanges, 

including State Exchanges, while also 

providing flexibility for State Exchanges 

to tailor their DE program and establish 

their own standards with respect to 

operational readiness demonstrations by 

their DE entities, including whether to 

require third-party audits of DE entities 

and to impose additional requirements 

beyond the proposed Federal minimum 

standards as they determine may be 

appropriate based on their operational 

or business needs. As described above, 

if they choose to implement DE 

programs, the State Exchanges would be 

required to draft policies, update 

standards, and potentially hire 

additional staff to perform functions and 

activities not currently being performed 

by the State Exchanges in order to 

comply with these proposals. 

We propose to update § 155.221(a), 

which identifies the entities permitted 

to be DE entities in FFE and SBE–FP 

States, to apply across all Exchanges, 

including State Exchanges. Under this 

proposal, State Exchanges that choose to 

implement a DE program may permit 

QHP issuers and web-brokers that meet 

applicable requirements to assist 

consumers with submitting applications 

for APTC/CSRs and DE in QHPs offered 

through the Exchange in a manner that 

is considered to be through the 

Exchange. Under the framework 

proposed in this rulemaking, the 

applicable requirements that would 

extend to web-brokers DE entities in 

States with State Exchanges would 

include certain subparagraphs of 

§§ 155.220(c) and (j) and 155.221(a), (b), 

(c), (d), and (j). We describe above the 

proposed extension of certain FFE webbroker standards in § 155.220(c) and (j) 

to State Exchanges and their webbrokers and detail below the FFE webbroker DE entity standards in 

§ 155.221(a), (b), (c), (d), and (j) we 

propose extending to web-broker DE 

entities in State Exchanges. As 

described further below, we propose the 

applicable requirements that would 

apply to QHP issuer DE entities in State 

Exchanges would be certain FFE QHP 

issuer DE entity standards in 

§§ 155.221(a), (b), (c), (d), and (j) and 

156.1230(b). The proposals to extend 

certain FFE requirements in § 155.221 to 

these State Exchanges’ web-broker DE 

entities are intended to align with the 

proposals described above to extend 

certain FFE standards and consumer 

protections in § 155.220 to these State 

Exchanges’ web-brokers.147 The 

proposals to extend certain FFE 

requirements to QHP issuer DE entities 

are similarly intended to establish a 

minimum set of standards and 

consumer protections, with the HHS 

requirements generally serving as a 

floor, for State Exchanges that choose to 

implement DE programs. As detailed 

further below, as part of these proposals 

to extend certain FFE requirements to 

DE entities, we would rely on State 

Exchanges to enforce compliance with 

these requirements and take 

enforcement action as needed when a 

DE entity fails to comply with 

applicable requirements. However, we 

would provide technical assistance to 

support State Exchange efforts to take 

appropriate enforcement action as 

needed to ensure compliance with 

applicable requirements. 

First, consistent with the crossreference in § 155.221(a)(1), we propose 

to extend the FFE requirements of 

§ 156.1230(b) governing QHP issuer DE 

entities to also apply to QHP issuer DE 

entities assisting consumers with 

submitting applications for APTC/CSRs 

and DE in QHPs offered through the 

Exchange in States with State 

Exchanges. As reflected in new section 

§ 155.221(a)(1)(i), for purposes of 

extending the FFE requirements of 


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148See 42 CFR 435.4 for the definition of 

insurance affordability programs. 

149See 45 CFR 155.221(a)(1) and (i). 

150 Id. 

151 If § 156.1230 is amended to affirm its 

applicability to these State Exchanges and their 

QHP issuer DE entities, parallel revisions may be 

made to § 156.1230 in the final rule to also capture 

and affirm its applicability to SBE–FPs and their 

QHP issuer DE entities. 152 45 CFR 155.221(b)(1) and (i). 

§ 156.1230(b) to these States Exchanges 

and their QHP issuer DE entities, 

references in § 156.1230(b) to 

‘‘Federally-facilitated Exchange’’, 

‘‘HHS’’, and ‘‘HealthCare.gov’’ would be 

understood to mean ‘‘the applicable 

State Exchange’’, ‘‘the applicable State 

Exchange’’, and ‘‘the applicable State 

Exchange website’’, respectively. 

Consistent with §§ 156.1230(b)(1) and 

(2), to directly enroll consumers in a 

manner that is considered to be through 

the Exchange, QHP issuer DE entities 

are required to comply with the 

applicable requirements in § 155.221 

and provide consumers with correct 

information, without omission of 

material fact, regarding the Exchanges, 

QHPs offered through the Exchanges, 

and insurance affordability programs,148

and refrain from marketing or conduct 

that is misleading (including by having 

a DE website that HHS determines could 

mislead a consumer into believing they 

are visiting HealthCare.gov), coercive, or 

discriminates based on race, color, 

national origin, disability, age, or sex. 

This FFE standard already extends to 

QHP issuer DE entities in SBE–FP 

States.149 In this rulemaking, we 

propose to extend these FFE 

requirements to also apply them to QHP 

issuer DE entities in State Exchanges. As 

proposed to be applied in these State 

Exchanges, QHP issuer DE entities 

would similarly be required to provide 

consumers with correct information, 

without omission of material fact, 

regarding the Exchanges, QHPs offered 

through the Exchanges, and insurance 

affordability programs.150 In addition, 

QHP issuer DE entities in State 

Exchanges would also be required to 

refrain from marketing or conduct that 

is misleading (including by having a DE 

website that the State Exchange 

determines could mislead a consumer 

into believing they are visiting the 

Exchange’s website), coercive, or 

discriminates based on race, color, 

national origin, disability, age, or sex. 

We solicit comments on whether 

§ 156.1230 should also be amended to 

affirm its applicability to these State 

Exchanges and their QHP issuer DE 

entities.151

In addition, we propose that all 

Exchanges, including State Exchanges 

that choose to implement DE programs 

must require their DE entities, both webbroker and QHP issuer DE entities, to 

meet the Federal standards under 

§ 155.221(b)(1) governing plan display 

and marketing for QHPs and any other 

products offered on the Exchange. These 

Federal standards governing plan 

display and marketing for QHPs and any 

other products offered on the Exchange 

currently apply today to approved webbroker and QHP issuer DE entities in 

FFE and SBE–FP States.152 As such, in 

new paragraph (j), we propose to extend 

§ 155.221(b)(1), including the 

exceptions in § 155.221(c), to DE entities 

participating in State Exchanges, and 

consequently to these State Exchanges. 

Under this proposal, DE entities 

participating in State Exchanges would 

be required to display and market QHPs 

offered through the Exchange, 

individual health insurance coverage as 

defined in § 144.103 offered outside the 

Exchange (including QHPs and nonQHPs other than excepted benefits) and 

any other products, such as excepted 

benefits, on at least three separate 

website pages on its non-Exchange 

website, except as permitted under 

§ 155.221(c). Pursuant to the exception 

under § 155.221(c)(1), a DE entity 

operating in a State Exchange would be 

permitted to display and market 

individual health coverage offered 

outside the Exchange (including QHPs 

and non-QHPs other than excepted 

benefits) on the same website pages 

when assisting individuals who have 

communicated receipt of an offer of an 

individual coverage health 

reimbursement arrangement as 

described in § 146.123(c), as a 

standalone benefit, or in addition to an 

offer of an arrangement under which the 

individual may pay the portion of the 

premium for individual health 

insurance coverage that is not covered 

by an individual coverage health 

reimbursement arrangement using a 

salary arrangement pursuant to a 

cafeteria plan under section 125 of the 

Code, but would be required to clearly 

distinguish between the QHPs offered 

through the Exchange and individual 

health insurance coverage offered 

outside the Exchange (including QHPs 

and non-QHPs other than excepted 

benefits), and prominently 

communicate that APTCs and CSRs are 

available only for QHPs purchased 

through the Exchange, that APTCs are 

not available to individuals who accept 

an offer of an individual coverage health 

reimbursement arrangement or who opt 

out of an individual coverage health 

reimbursement arrangement that is 

considered affordable, and that a salary 

reduction arrangement under a cafeteria 

plan may only be used toward the cost 

of premiums for plans purchased 

outside the Exchange. Pursuant to the 

exception in § 155.221(c)(2), DE entities 

operating in States with State Exchanges 

would be permitted to display and 

market Exchange-certified stand-alone 

dental plans offered outside the 

Exchange and non-certified stand-alone 

dental plans on the same website pages. 

In new proposed paragraph (j), we 

also propose to extend the Federal 

marketing standard at § 155.221(b)(3) to 

DE entities participating in State 

Exchanges and consequently to State 

Exchanges that choose to implement a 

DE program, such that these DE entities 

would also be required to limit 

marketing of non-QHPs during the 

Exchange eligibility application and 

QHP selection process in a manner that 

minimizes the likelihood that 

consumers would be confused as to 

which products and plans are available 

through the Exchange and which 

products and plans are not, except as 

permitted under § 155.221(c)(1). Refer to 

the discussion above regarding the 

exception in § 155.221(c)(1) pertaining 

to DE entities assisting individuals who 

have communicated receipt of an offer 

of an individual coverage health 

reimbursement arrangement as 

described in § 146.123(c), as a 

standalone benefit, or in addition to an 

offer of an arrangement under which the 

individual may pay the portion of the 

premium for individual health 

insurance coverage that is not covered 

by an individual coverage health 

reimbursement arrangement using a 

salary arrangement pursuant to a 

cafeteria plan under section 125 of the 

Code. 

We believe requiring DE entities 

participating in all Exchanges to meet 

the plan display and marketing 

requirements in § 155.221(b)(1) and (3) 

adopted by HHS for FFE and SBE–FP 

States would provide necessary 

safeguards for consumers who may 

participate in DE programs across all 

Exchange models, including in State 

Exchanges. Requiring DE entities across 

all Exchanges to meet these Federal plan 

display and marketing requirements 

would protect consumers by minimizing 

their confusion regarding which 

products and plans are available 

through the Exchange, which products 

and plans are not, and which products 

and plans are eligible for APTC and 

CSRs. Further, the adoption of uniform 

requirements across Exchanges in this 

regard can also alleviate burden on DE 

entities from having to build different 

programs and comply with disparate 

requirements for each State Exchange 


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153See 84 FR 17523. 

154As detailed above, we propose to extend the 

Enrollment Support and General non-FFE 

standardized disclaimers to State Exchanges and 

web-brokers participating in those State Exchanges. 

that chooses to implement a DE 

program, as well as burden on a State 

Exchange from having to develop 

different requirements than what HHS 

has already found to be beneficial and 

effective for FFE and SBE–FP States. We 

recognize that elsewhere in this 

rulemaking, we have built in more 

operational flexibility for State 

Exchanges to tailor certain aspects of 

their programs or oversight processes to 

best suit their operational and business 

needs (for instance, the operational 

readiness review requirements for webbrokers and DE entities in States with 

State Exchanges). In this case, however, 

we believe that the benefits to 

consumers of uniformly applying the 

plan display and marketing 

requirements in § 155.221(b)(1) and (3) 

to ensure they apply to all Exchanges as 

minimum standards outweigh the 

potential drawbacks of reducing 

discretion and flexibility to State 

Exchanges with respect to modifying 

these baseline requirements. We solicit 

comments on whether State Exchanges 

should instead be provided with 

broader discretion and flexibility to 

establish their own plan display and 

marketing requirements tailored to their 

consumers or local needs. 

In new proposed paragraph (j), we 

also propose to extend the existing 

standardized disclaimer requirement in 

§ 155.221(b)(2) to apply to DE entities 

participating in States with State 

Exchanges and consequently to these 

State Exchanges. Pursuant to 

§ 155.221(b)(2) and (i), DE entities in 

FFE and SBE–FP States are required to 

prominently display a standardized 

disclaimer in the form and manner 

provided by HHS.153 This disclaimer is 

separate from the Enrollment Support 

and General non-FFE standardized 

disclaimers under § 155.220(c)(3)(i)(A) 

and (G), respectively, that web-brokers 

are required to display when their nonExchange websites are used to complete 

a QHP selection or complete the 

Exchange eligibility application.154 The 

standardized disclaimer required under 

§ 155.221(b)(2) instead is intended to 

help consumers understand the 

difference between QHPs and nonQHPs, and that financial assistance is 

only available for QHPs. Under this 

proposal, DE entities in State 

Exchanges, and DE entities in FFEs and 

SBE–FPs under existing § 155.221(b)(2), 

would also be required to prominently 

display a standardized disclaimer that 

similarly informs consumers about the 

differences between QHPs and nonQHPs, and that financial assistance is 

only available for QHPs. Its purpose is 

to assist consumers in distinguishing 

between DE entity website pages that 

display QHPs and those that display 

non-QHPs, and for which products 

APTC and CSRs are available. 

Consistent with the current practice for 

the other standardized disclaimers 

provided by HHS under §§ 155.220 and 

156.1230, we will provide further 

details on the text and other display 

details for the standardized disclaimer 

in technical guidance. 

This proposal requires that the 

disclaimer must be displayed 

prominently on a DE entity’s website in 

State Exchanges, and in FFEs and SBE– 

FPs under existing § 155.221(b)(2), 

when a consumer navigates away from 

any website page that markets or 

displays QHPs offered through the 

Exchange (that is, on-Exchange QHPs) to 

any website page that markets or 

displays QHPs offered outside the 

Exchange (that is, off-Exchange QHPs) 

or non-QHPs. DE entities would be 

required to display this disclaimer on its 

own interstitial website page or on a 

pop-up window. 

We propose in paragraph (j)(1) to 

provide State Exchanges with flexibility 

regarding the standardized disclaimer 

language that would be required to be 

displayed by their DE entities, provided 

that the additional language does not 

conflict with the HHS-provided 

standardized disclaimer. This proposed 

flexibility is similar to the proposed 

flexibility for State Exchanges to modify 

the web-broker Enrollment Support and 

General non-FFE standardized 

disclaimers under § 155.220(c)(3)(i)(A) 

and (G) described above, such that the 

HHS-provided language for the 

standardized disclaimer under 

§ 155.221(b)(2) must be used as a 

minimum starting point, but State 

Exchanges may add State-specific 

information to the disclaimers, provided 

the additional language does not 

conflict with the HHS-provided 

standardized disclaimer. This would 

permit State Exchanges to replace 

references to the Exchange or 

Marketplace with the appropriate 

reference to the State-specific Exchange 

name. State Exchanges may also require 

web-brokers and QHP issuers operating 

as DE entities in their States to translate 

the disclaimer text into languages 

appropriate for the States as this type of 

additional requirement would not 

conflict with the HHS-provided 

disclaimer language or minimum 

standards. As with all informational 

materials, standard plain language 

practice is to write at or near a fourth 

grade reading level and not to exceed an 

eighth grade reading level. We expect 

that any State-specific additions or 

customizations to this disclaimer would 

be written accordingly. We would be 

available to provide technical assistance 

to State Exchanges that want to add 

State-specific language to the 

standardized disclaimer under 

§ 155.221(b)(2). In using HHS-provided 

disclaimer language as a minimum 

starting point, DE entities in State 

Exchanges would be required to display 

a disclaimer that provides information 

to assist consumers in distinguishing 

between DE entity website pages that 

display QHPs and those that display 

non-QHPs and for which products 

APTC and CSRs are available, all during 

a single shopping experience for 

consumers. 

We believe establishing the HHS 

language as a minimum standard for the 

standardized disclaimer under 

§ 155.221(b)(2) that DE entities must 

display across all Exchanges would 

provide a necessary baseline, and 

meeting these standards would ensure 

consumers and applicants are receiving 

sufficient information to help 

consumers distinguish between DE 

entity website pages displaying QHPs 

versus pages displaying non-QHPs and 

provide general uniformity among the 

different Exchange models when 

enrollment or enrollment information is 

provided outside of the Exchange 

through a DE entity’s non-Exchange 

website. 

Similar to the proposed requirement 

to extend operational readiness 

requirements to web-brokers in States 

with State Exchanges, we also propose 

to extend operational readiness 

requirements to DE entities in State 

Exchanges and consequently to these 

State Exchanges. DE entities that 

participate in FFE and SBE–FP States 

are required, pursuant to § 155.221(b)(4) 

and (i), to demonstrate to HHS 

operational readiness and compliance 

with applicable requirements prior to 

the DE entity’s non-Exchange website 

being used to complete an Exchange 

eligibility application or a QHP 

selection. In new paragraph (j)(2), we 

propose to extend DE entity operational 

readiness requirements to State 

Exchanges. Under this proposal, DE 

entities participating in State Exchanges 

would be required to demonstrate 

operational readiness and compliance 

with applicable requirements to the 

State Exchange prior to the DE entity’s 

website being used to complete an 

Exchange eligibility application or a 

QHP selection. We also propose in new 

paragraph (j)(2) to require these State 


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Exchanges to establish the form and 

manner for their DE entities to 

demonstrate operational readiness and 

compliance with applicable 

requirements, which may include 

submission or completion of the same 

items business audit documentation or 

security and privacy audit 

documentation in § 155.221(b)(4)(i) and 

(ii) to the State Exchange, in the form 

and manner specified by the applicable 

State Exchange. Pursuant to 

§ 155.221(b)(4)(i) and (ii), HHS may 

request a DE entity submit a number of 

documents to demonstrate compliance 

with applicable requirements, as well as 

the operational readiness of its nonExchange website. The required 

documentation may include privacy 

questionnaires, privacy policy 

statements, and terms of services, 

business audit reports, interconnection 

security agreements, security and 

privacy controls assessment and plans, 

security and privacy assessment reports, 

plans of action and milestones, privacy 

impact assessments, system security and 

privacy plans, incident response plans, 

and vulnerability scan results. We 

propose to codify these documentation 

standards in new paragraphs (j)(2)(i) and 

(ii) as illustrative examples of the type 

of requirements that we encourage State 

Exchanges that choose to implement a 

DE program to adopt as part of their 

operational readiness and compliance 

reviews of DE entities non-Exchange 

websites. 

This proposal would require DE 

entities participating in State Exchanges 

to meet operational readiness 

requirements established by the State 

Exchanges, and State Exchanges would 

have the flexibility to decide which 

particular operational readiness 

requirements to implement to support 

their respective DE programs, 

potentially leveraging the items in 

§ 155.220(b)(4)(i) and (ii) as the starting 

point for their operationally readiness 

reviews. Similar to the web-broker 

operational readiness reviews under 

§ 155.220(c)(6), the standards under 

§ 155.221(b)(4) governing the HHS 

operational readiness reviews of DE 

entity non-Exchange websites are also a 

critical part of the oversight framework 

for HHS’ DE program (including both 

Classic DE and EDE) available in the 

FFEs and SBE–FPs. These standards as 

they apply to DE entities participating 

in FFE and SBE–FP States help ensure 

operational readiness and compliance 

with applicable requirements prior to 

the DE entity’s non-Exchange website 

being used to complete Exchange 

eligibility application or a QHP 

selection and help ensure consumers 

would not be able to enroll via a DE 

entity’s website that is not operationally 

ready. Websites that have not been 

tested to see if they are operationally 

ready may not provide consumers with 

proper eligibility determinations or may 

have security flaws that could make a 

breach involving consumer PII more 

likely. Mandating DE entities that 

participate in State Exchanges meet 

minimum standards set by the State 

Exchanges for operational readiness 

would help reduce this risk in all 

Exchanges. 

We recognize that some State 

Exchanges that choose to implement a 

DE program may seek to utilize DE 

entities already participating in DE in 

the FFEs or SBE–FPs. We specifically 

encourage those State Exchanges to 

consider adopting the same operational 

readiness requirements established by 

HHS, including the third-party auditor 

framework adopted by HHS pursuant to 

§ 155.221(f) and (g), as well as accept 

HHS’ review of those third-party audits 

and determinations made as to the DE 

entities’ operational readiness without 

conducting additional review, unless 

there are other unique State specific 

requirements that warrant further 

targeted review. This approach would 

permit DE entities to also participate in 

State Exchanges when HHS determined 

that those DE entities demonstrated 

operational readiness and compliance 

with applicable requirements as they 

apply to FFE and SBE–FP States would 

minimize burden of the operational 

readiness reviews on the State 

Exchanges and on their DE entities. For 

example, if the DE entity is using the 

single streamlined application described 

in § 155.405 and has already been 

approved to participate in the FFEs or 

SBE–FPs, we encourage State Exchanges 

to accept HHS’ review of and 

determinations made as to the DE 

entity’s audit documentation without 

conducting further review to confirm 

compliance with the Federal minimum 

standards. However, we also recognize 

that it is important to provide these 

State Exchanges with flexibility to adopt 

their own operational readiness 

requirements in a manner that is 

tailored to best meet the operational and 

business needs of the State Exchanges 

since State Exchanges are best 

positioned to make that judgement. We 

therefore encourage, but do not propose 

to require, these State Exchanges to 

adopt the same operational readiness 

requirements and third-party auditor 

framework that HHS adopted under 

§ 155.221(b)(4), (f) and (g) for DE entities 

assisting FFE and SBE–FP consumers. 

We encourage State Exchanges that 

choose to implement a DE program to 

consider requiring their DE entities to 

engage a third-party auditor, consistent 

with standards adopted by HHS at 

§ 155.221(f) and (g) that apply in FFE 

and SBE–FP States, to perform the 

operational readiness reviews, for 

example, to provide an unbiased 

confirmation that the DE entities are 

able to appropriately conduct eligibility 

determinations. However, we do not 

propose to mandate these State 

Exchanges require their DE entities to 

perform such third-party audits as we 

recognize that State Exchanges may 

want to adopt their own mechanisms or 

impose State-specific requirements to 

confirm DE entity operational readiness 

and compliance with applicable 

requirements (which may include 

additional State-specific standards), and 

we want to ensure State Exchanges have 

the flexibility to establish operational 

readiness review requirements that are 

tailored to support their respective DE 

programs. For example, as noted above, 

if the State Exchange uses an alternative 

to the single streamlined application 

described in § 155.405, we would not 

recommend leveraging HHS’ eligibility 

application audit under 

§ 155.221(b)(4)(iii), as the HHS audit 

results may not be applicable to the 

State Exchange’s alternative eligibility 

applications. However, if the State 

Exchange requires the use of the single 

streamlined application described in 

§ 155.405, for DE entities that have 

already been approved to participate in 

the FFEs or SBE–FPs, we would 

encourage the State Exchange to use the 

same third-party auditor framework and 

requirements that HHS adopted for FFE 

and SBE–FP States, as well as accept 

HHS’ review of the third-party audits 

and determinations made as to the DE 

entity’s operational readiness and 

compliance with applicable 

requirements without conducting 

further review, unless there are other 

unique State specific requirements that 

warrant further targeted review. 

As State Exchanges establish DE 

programs, it may be in their interest to 

permit a DE entity to provide consumers 

with access to DE entity application 

assisters, as defined at § 155.20, to 

provide assistance with applying for a 

determination or redetermination of 

eligibility for individual market 

coverage through the Exchange and 

insurance affordability programs. As 

such, in new proposed paragraph (j), we 

propose to also extend § 155.221(d) to 

State Exchanges and their DE entities to 

allow DE entity application assisters, 

when permitted by the applicable State 

Exchange and only to the extent 

permitted by applicable State law, to 


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assist individuals in the individual 

market with applying for a 

determination or redetermination of 

eligibility for coverage through the 

Exchange and for insurance affordability 

programs, provided that such DE 

entities ensure that each of its DE entity 

application assisters meets the 

requirements in § 155.415(b). Section 

155.415(b) establishes minimum 

standards for QHP issuer and DE entity 

application assisters regarding required 

training on QHP options and insurance 

affordability programs, eligibility, and 

benefits rules and regulations at 

paragraph (b)(1), compliance with the 

Exchange’s privacy and security 

standards at paragraph (b)(2), and 

compliance with applicable State laws 

related to the sale, solicitation and 

negotiation of insurance products; 

licensure; confidentiality and conflict of 

interest at paragraph (b)(3). Although 

§ 155.415(b) is generally applicable to 

all Exchanges, paragraph (b)(1) 

establishes required training on QHP 

options and insurance affordability 

programs, eligibility, and benefits rules 

and regulations with respect to 

providing assistance in the FFEs or 

SBE–FPs. As proposed to be applied in 

State Exchanges, DE entities and their 

application assisters would be required 

at new paragraph (j) to complete 

appropriate State-required training and 

registration in a manner specified by the 

State Exchange consistent with 

§ 155.415(b)(1), which should similarly 

include training on QHP options and 

insurance affordability programs, 

eligibility, and benefits rules and 

regulations as training on this content is 

necessary to ensure consumers are 

provided with vital information about 

these topics if DE entities and their 

application assisters would be permitted 

to assist consumers with QHP shopping 

and DE in coverage offered through 

State Exchanges. 

In addition, under this proposal, to 

meet the requirements of § 155.415(b)(2) 

and (3), DE entities that participate in a 

State Exchange and want to use DE 

entity application assisters would be 

required to coordinate with the State 

Exchange and appropriate State 

agencies to ensure they are meeting the 

Exchange privacy and security 

standards at § 155.260 consistent with 

§ 155.415(b)(2), as well as complying 

with State law related to the sale, 

solicitation, and negotiations of health 

insurance products consistent with 

§ 155.415(b)(3). 

As part of their establishment of DE 

programs, we also encourage the State 

Exchange to adopt an immediate 

suspension framework, similar to 

§ 155.221(e) that applies in FFE and 

SBE–FP States, that provides for the 

immediate suspension of a DE entity’s 

ability to transact information with the 

State Exchange if the State Exchange 

discovers circumstances that pose 

unacceptable risk to the accuracy of the 

State Exchange’s eligibility 

determinations, operations, or 

information-technology systems until 

the incident or breach is remedied or 

sufficiently mitigated to the State 

Exchange’s satisfaction. This provision 

is an important feature of HHS’ 

oversight of the use of DE entity nonExchange websites in FFE and SBE–FP 

States that protects consumers data and 

safeguards Exchange operations and 

systems. State Exchanges that choose to 

establish a DE program and permit DE 

entities to use non-Exchange websites to 

assist consumers with QHP selections 

and submission of Exchange eligibility 

applications should consider adoption 

of similar measures. 

Finally, at new proposed 

§ 155.221(j)(3), we propose to extend the 

new proposed requirement that would 

be applicable in FFE and SBE–FP States 

to mandate HealthCare.gov changes be 

reflected on DE entity websites in a 

manner consistent with that adopted for 

display on HealthCare.gov within a 

notice period set by HHS by conforming 

with display changes defined and 

communicated as standards by HHS, at 

new proposed § 155.221(b)(6), to apply 

to DE entities operating in State 

Exchanges and consequently to these 

State Exchanges. As reflected in the last 

clause of new proposed § 155.221(j)(3), 

for the purposes of extending this 

requirement to DE entities operating in 

the State Exchanges, references to an 

FFE website would be understood to 

mean the State Exchange website and 

references to HHS would be understood 

to mean the State Exchange. Refer to the 

discussion in the proposal for new 

§ 155.221(b)(6) for additional details on 

how State Exchanges would implement 

the extension of this proposal to their 

DE entities. 

We seek comment on these proposals, 

especially from States operating, or 

seeking to operate, State Exchanges. We 

are particularly interested in comments 

regarding which of the other current 

Federal standards at § 155.221 should or 

should not apply to State Exchanges 

that choose to implement a DE program. 

10. Failure To Reconcile (FTR) Process 

(§ 155.305(f)(4)) 

We are proposing in connection with 

the FTR process described in 

§ 155.305(f)(4), to require all Exchanges, 

including State Exchanges, to send 

notices to tax filers for the first year in 

which they failed to reconcile APTC 

starting in PY 2025 as an initial warning 

to inform and educate tax filers that 

they need to file and reconcile or risk 

being determined ineligible for APTC if 

they fail to file and reconcile for a 

second consecutive year. As part of the 

2024 Payment Notice (88 FR 25814 

through 25816), we changed the FTR 

process such that an Exchange may only 

determine enrollees ineligible for APTC 

after a tax filer (or a tax filer’s spouse, 

if married) has failed to file a Federal 

income tax return and reconcile their 

past APTC for two consecutive years 

(specifically, years for which tax data 

will be utilized for verification of 

household income and family size). 

However, in that rule, we did not 

impose a requirement for Exchanges to 

notify enrollees during the first year that 

the applicable tax filer failed to file and 

reconcile. 

We are proposing to require that all 

Exchanges be required to send 

informative notices at least annually to 

tax filers who have failed to file and 

reconcile. Since Exchanges are 

prohibited from sending protected 

Federal tax information (FTI) to an 

individual who may not be the tax filer, 

only the FTR Open Enrollment notices 

sent directly to the tax filer may directly 

state that the IRS data indicates the tax 

filer failed to file and reconcile, 

consistent with standards applicable to 

the protection of FTI. An Exchange may 

not always be able to send FTR Open 

Enrollment notices directly to the tax 

filer because Exchange notices are sent 

to the household contact or subscriber 

on the household’s Exchange account or 

insurance policy, and this person is not 

necessarily the tax filer. Therefore, to 

comply with the prohibition on sending 

FTI (including information about failing 

to file and reconcile) in cases where the 

household contact is not the tax filer, 

the Exchange may send notices that 

contain broad, general language 

regarding FTR referred to as ‘‘combined 

notices.’’ For example, an Exchange can 

send the same Exchange Open 

Enrollment Notice to multiple groups of 

consumers at risk for APTC 

discontinuation in the upcoming 

coverage year such as those flagged as 

FTR, those for whom the Exchange has 

received updated income information 

that suggests the consumers may have 

income too high to qualify for APTC, 

and those who did not permit the 

Exchange to check IRS data. Because the 

combined notices apply and are sent to 

some consumers who are currently 

unaffected by FTR, and not exclusively 

to individuals who are affected by FTR, 

these notices are generally not 

considered FTI under IRS rules may be 


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82572 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

sent using the standard notice 

functionality. 

As background, Exchange enrollees 

whose tax filer fails to comply with 

current § 155.305(f)(4) are referred to as 

having failed to ‘‘file and reconcile.’’ 

These individuals are referred to as 

having FTR status, and the Exchanges 

conduct the FTR process to identify 

such individuals. In the 2024 Payment 

Notice (88 FR 25814 through 25816), we 

finalized a new process for Exchanges to 

conduct FTR to address concerns that 

the pre-existing FTR process requiring 

Exchanges to determine an enrollee 

ineligible for APTC after one year of 

having an FTR status could be overly 

punitive. Under the previous policy, 

enrollees occasionally had their APTC 

ended due to delayed data processing, 

in which case their only remedy was to 

appeal to get their APTC reinstated. 

Enrollees or their tax filers also may 

have been confused by or received 

inadequate education on the 

requirement to file and reconcile. HHS’ 

and the State Exchanges’ experiences 

with running FTR operations showed 

that Exchange enrollees often do not 

understand the requirement that their 

tax filer must file a Federal income tax 

return and reconcile their APTC or that 

they must also submit IRS Form 8962 to 

properly reconcile their APTC, even 

though both the single, streamlined 

application used by Exchanges on the 

Federal platform and the QHP 

enrollment process require a consumer 

to attest to understanding the 

requirement to file and reconcile. Note, 

the updated policy in the 2024 Payment 

Notice does not relieve tax filers from 

their requirement to reconcile each year 

nor any potential tax liability. By 

making these changes to the FTR 

processes in the 2024 Payment Notice 

and requiring Exchanges to determine 

an enrollee ineligible for APTC only 

after having an FTR status for two 

consecutive years (specifically, years for 

which tax data will be utilized for 

verification of household income and 

family size), Exchanges now have more 

opportunity to conduct outreach to tax 

filers for whom data indicate they have 

failed to file and reconcile and to 

prevent erroneous terminations of 

APTC, as well as to provide access to 

APTC for an additional year even when 

APTC would have been correctly 

terminated under the original FTR 

process. 

There are limitations to these notices; 

notices that are sent directly to the tax 

filers and explicitly describe their FTR 

status must be compliant with IRS 

requirements for disclosing FTI, which 

can be a complex process and untenable 

with some Exchanges’ infrastructure. 

Alternatively, combined notices, which 

do not contain FTI, have limitations in 

that they do not explicitly inform the 

recipients that they are at risk of losing 

APTC due to the household tax filer 

being found to have failed to file and 

reconcile. However, both types of 

notices will create an opportunity for 

State Exchanges to educate enrollees or 

their tax filers on the requirement to 

reconcile their PTC. This will address 

the consumer confusion and knowledge 

gaps that were identified by both HHS 

and State Exchanges, which were key 

considerations in making the changes to 

the FTR process described in the 2024 

Payment Notice, wherein tax filers now 

must be identified as FTR for two years 

prior to having their APTC removed. 

With this additional year for tax filers to 

correct their FTR status, consumers will 

be better able to take appropriate action 

prior to losing their APTC and file and 

reconcile in response to these notices. 

Under this proposal, Exchanges on 

the Federal platform would continue to 

send notices to tax filers for the year in 

which they have failed to reconcile 

APTC as an initial warning to inform 

and educate consumers that they need 

to file and reconcile, or risk being 

determined ineligible for APTC if they 

fail to file and reconcile for a second 

consecutive tax year. Our proposal to 

codify this practice and require it of all 

Exchanges, including the State 

Exchanges, would ensure that tax filers 

who have been determined to have FTR 

status for one year are adequately 

educated on the file and reconcile 

requirement, and have ample 

opportunity to address the issue and file 

and reconcile their APTC before they 

are determined to have FTR status for 

two consecutive years. This proposal 

would support compliance with the 

filing and reconciling requirement 

under section 36B(f) of the Code and its 

implementing regulations at 26 CFR 

1.36B–4(a)(1)(i) and (a)(1)(ii)(A), 

minimize the potential for APTC 

recipients to incur large tax liabilities 

over time, and support eligible 

enrollees’ continuous enrollment in 

Exchange coverage with APTC by 

avoiding situations where enrollees 

become uninsured when their APTC is 

terminated. Additionally, this proposal 

would better align State Exchanges’ 

Failure to Reconcile processes with that 

of the Exchanges on the Federal 

platform. 

We seek comment on this proposal. 

11. Verification Process Related to 

Eligibility for Enrollment in a QHP 

Through the Exchange (§ 155.315(e)) 

We are proposing to amend 

§ 155.315(e) by revising paragraph (e)(1) 

to permit all Exchanges to accept an 

applicant’s attestation of incarceration 

status and paragraph (e)(2) to allow 

Exchanges to electronically verify a 

consumer’s current incarceration status 

using an HHS-approved verification 

data source. We are also proposing to 

amend the reference in paragraph (e)(3) 

to reflect that if an Exchange verifies an 

applicant’s attestation of incarceration 

status using an approved data source 

and the attestation is not reasonably 

compatible with the information 

provided from the said data source or 

other information provided by the 

applicant or in the records of the 

Exchange, then the Exchange must 

follow the data matching issue (DMI) 

process set forth in § 155.315(f). If this 

proposed policy is finalized, Exchanges 

using the Federal eligibility and 

enrollment platform, including SBE– 

FPs, that currently use the incarceration 

verification data source offered through 

the Federal Data Services Hub (the 

‘‘Hub’’) would be able to accept 

consumer attestation of incarceration 

status without further verification of 

incarceration status. 

As background, section 1312(f)(1)(B) 

of the ACA states that an individual 

shall not be treated as a qualified 

individual for enrollment in a QHP if, 

at the time of enrollment, the individual 

is incarcerated, other than incarceration 

pending the disposition of charges. 

Sections 155.315(e) and (e)(1) currently 

state that Exchanges must verify 

incarceration status with a data source 

approved by HHS and deemed accurate, 

current, and offering less administrative 

complexity than paper verification. 

When an individual’s incarceration 

attestation conflicts with information 

from an approved data source or other 

information provided by the applicant 

or in the records of the Exchange, 

§ 155.315(e)(3) requires Exchanges to 

create a DMI as outlined in § 155.315(f). 

However, if an approved data source is 

unavailable, an Exchange may accept 

attestation of incarceration without 

further verification under 

§ 155.315(e)(2). 

Under proposed paragraphs (e)(1) and 

(2), an Exchange would be able to accept 

a consumer’s attestation of incarceration 

status or propose an electronic data 

source for incarceration verification to 

HHS for approval and use that approved 

source to verify incarceration status. 

Should a State Exchange choose to 

propose use of an alternative electronic 

data source for verifying incarceration 

status, HHS would review such 

proposals in accordance with the 

process under § 155.315(h), through 

which HHS would make a 

determination based on the proposed 


ddrumheller on DSK120RN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82573 

155This per-person per-year estimate was 

calculated by multiplying the monthly APTC 

benefit that each ineligible and effectuated 

applicant was estimated to receive in their FFE 

application by the maximum number of months the 

applicant could have been enrolled in a QHP while 

still incarcerated and pending DMI clearance. For 

open enrollment applications, an enrollment start 

date of January 1 was used (45 CFR 155.410). For 

special enrollment period applicants, the previous 

coverage effective date rules were used where if the 

applicant applied between the 1st and 15th of the 

month, an enrollment start date of the 1st of the 

following month was used. If the applicant applied 

after the 16th of the month, an enrollment start date 

of the 1st of the month 2 months following the 

application month was used. 45 CFR 155.420. 

156HealthCare.gov. (n.d.) How do I resolve a Data 

Matching Issue. Dept. of Health and Human 

Services. https://www.healthcare.gov/help/how-doi-resolve-an-inconsistency/#incarceration-status. 

157Apel, R., and Sweeten, G. (2010, Aug. 1). The 

Impact of Incarceration on Employment during the 

Transition to Adulthood. Social Problems, 57(3), 

448–479. https://doi.org/10.1525/sp.2010.57.3.448. 

158 Id. 

159 45 CFR 155.315(e). 

160Nellis, A. (2021). The Color of Justice: Racial 

and Ethnic Disparity in State Prisons. The 

Sentencing Project. https://www.sentencing

project.org/app/uploads/2022/08/The-Color-ofJustice-Racial-and-Ethnic-Disparity-in-StatePrisons.pdf; Sabol, W.J., and Johnson, T.L. (2022). 

Justice System Disparities: Black-White National 

Imprisonment Trends, 2000 to 2020. Council on 

Criminal Justice. https://secure.counciloncj.org/np/ 

viewDocument? 

161Sirios, C., and Western, B. (2017, Feb.). Racial 

Inequality in Employment and Earnings after 

Incarceration. Harvard University. https://scholar.

harvard.edu/files/brucewestern/files/racial_

inequality_in_employment_and_earnings_after_

incarceration.pdf. 

use of the alternative data source and 

whether it minimizes administrative 

costs and burdens on individuals while 

it maintains accuracy and minimizes 

delay. Proposed paragraph (e)(3) would 

provide that if an Exchange verifies an 

applicant’s attestation of incarceration 

status using an approved data source as 

provided under proposed paragraph 

(e)(2), to the extent that the applicant’s 

attestation is not reasonably compatible 

with information from the approved 

data source or other information 

provided by the applicant or in the 

records of the Exchange, the Exchange 

would be required to follow the DMI 

procedures at § 155.315(f). 

In the Exchange Establishment Rule 

(77 FR 18362), we recognized that there 

may be challenges in the availability of 

electronic incarceration verification data 

but believed that so long as an 

incarceration verification data source 

existed that has been approved by HHS, 

it should be used to verify incarceration 

status. We also recognized that 

requesting consumer attestation of 

incarceration status and accepting such 

attestation without further verification 

when an accurate data source was 

unavailable is necessary since 

incarceration status is a statutory 

standard for eligibility to enroll in a 

QHP. 

Exchanges using the Federal 

eligibility and enrollment platform, 

including SBE–FPs, currently verify 

whether an applicant is incarcerated 

through the Hub by using the Social 

Security Administration’s (SSA) 

Prisoner Update Processing System 

(PUPS). PUPS is currently maintained 

by SSA and is the only national 

database that reflects information from 

Federal, State, and local correctional 

records. Our experience administering 

the Federal eligibility and enrollment 

platform, along with the experience 

from the State Exchanges that have used 

the PUPS data, have demonstrated that 

verifying incarceration data using PUPS 

has resulted in a high number of DMIs, 

few of which identify QHP applicants 

who are incarcerated. For example, we 

conducted an internal study and found 

that out of 110,802 incarceration DMIs 

generated between PYs 2018 to 2019, 

96.5 percent of them were resolved in 

favor of the applicant. More importantly 

of those 3,878 applicants whose DMIs 

were not resolved in their favor (3.5 

percent of 110,802), we found that only 

a total of 2,469 applied for QHP 

coverage during PYs 2018 and 2019. Of 

these 2,469 ineligible applicants, 950 

applicants were released from either 

prison or jail within 90 days after the 

application submission date. Excluding 

these individuals leaves 1,519 QHPineligible individuals, of which 921 

applicants effectuated coverage (that is, 

made the binder payment), which is 

allowed while awaiting DMI clearance, 

thus resulting in an improper APTC 

payment. An average annual APTC per 

individual of $1,569 was estimated for 

the 921 QHP ineligible applicants with 

effectuated policies.155 This yields 

potential improper payments of 

approximately $361,262.25 over 3 

months. Because only a very small 

number of incarcerated individuals 

apply to enroll in QHPs, verifying 

incarceration status using PUPs and 

conducting the DMI process outlined at 

§ 155.315(f) results in Exchanges saving 

only a fraction of improper overpayment 

of APTC, and those savings are dwarfed 

by the administrative costs imposed by 

using PUPs and conducting the DMI 

process. 

We conducted a cost-benefit 

assessment and determined that the cost 

to verify incarceration status 

electronically far exceeds potential 

savings. Should the Exchange conduct 

an electronic incarceration verification 

check, such as a verification check of a 

consumer’s attestation using PUPS data, 

it would cost more than $4 million to 

operate yearly, along with a one-time 

implementation startup cost of 

approximately $200,000. Furthermore, 

connecting to an alternative 

incarceration data source, such as PUPS, 

and conducting the DMI process 

outlined at § 155.315(f) can be very 

costly to Exchanges. In PY 2019, nearly 

38,000 out of 78,000 applicants with an 

incarceration DMI submitted documents 

to attempt to resolve the incarceration 

DMI. To process DMIs, the Exchange 

incurs costs for the eligibilityverification contractor on a fixed-price 

basis totaling about $0.57 million per 

year for verification of incarceration. 

This figure does not include other costs 

related to sending notices to consumers, 

processing appeals, and handling call 

center transactions. Our 2019 study 

concluded that those who receive an 

incarceration DMI are statistically likely 

to be eligible to enroll in a QHP as the 

applicants were released from either 

prison or jail within 90 days after the 

application submission date. However, 

an unresolved incarcerated DMI can 

result in a complete loss of coverage. 

The processes of notifying consumers 

of their DMIs and resolving them have 

been burdensome and has negatively 

impacted the consumer experience. 

When an incarceration DMI is 

generated, applicants are required to 

provide documentation to show that 

they are no longer incarcerated.156 This 

creates a significant enrollment burden 

for formerly incarcerated individuals, a 

population comprised of a significant 

number of people with disabilities.157

Many documents that can prove 

incarceration status cannot be obtained 

without an unexpired proof of identity 

document, and most cannot be obtained 

without submitting non-refundable 

payments. Incarceration may inhibit 

one’s financial savings, and formerly 

incarcerated individuals are less likely 

to secure employment.158

These findings support our beliefs 

that incarcerated individuals apply for 

QHP coverage at very low rates, and that 

their applications are considered to be 

a very low program integrity risk for 

Exchanges, which do not warrant 

always conducting an extensive 

incarceration verification check. We 

also believe that previous guidance to 

conduct incarceration status 

verification 159 may have contributed to 

inequity in the Exchange population, as 

Black adults were imprisoned at five 

times the rate for White adults 160 and 

are more likely to face systemic 

obstacles hindering their ability to 

secure employment post 

incarceration.161

Given these concerns, we propose to 

amend § 155.315(e) by revising 


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162See 42 U.S.C. 18083 and 45 CFR 155.405(a). 

163Section 1902(e)(14)(A) of the Act requires that 

States determine financial eligibility for Medicaid 

based on MAGI except in the case of individuals 

identified in section 1902(e)(14)(D) of the Act. For 

example, States do not determine financial 

eligibility based on MAGI for individuals who are 

being evaluated for eligibility on the basis of living 

with a disability or blindness or being age 65 or 

older. 

164See section 1902(e)(14)(H) of the Act, as added 

by section 2002 of the ACA. 

paragraph (e)(1) to permit all Exchanges 

to accept consumer attestation of 

incarceration status without further 

electronic verification. We also propose 

to revise paragraph (e)(2) to permit 

Exchanges to verify consumer 

incarceration status using an HHSapproved verification data source that is 

current, accurate, and minimizes 

administrative costs and burdens. We 

believe these proposed changes would 

improve the Exchange enrollment 

process, reduce operational challenges 

for Exchanges, and reduce burdens on 

applicants, all while maintaining 

program integrity and ensuring that the 

alternative incarceration verification 

data source that may be used by 

Exchanges is not unduly burdensome or 

costly to administer. 

We also propose changes to paragraph 

(e)(3) to reflect that if an Exchange 

verifies an applicant’s attestation of 

incarceration status using an approved 

data source, and the attestation is not 

reasonably compatible with the 

information from the approved data 

source or other information provided by 

the applicant or in the records of the 

Exchange, the Exchange must then 

follow the DMI process set forth in 

§ 155.315(f). 

We seek comment on this proposal, 

particularly from State Exchanges and 

other users of PUPS data through the 

Hub. We are also particularly interested 

in comments about whether State 

Exchanges intend to continue using 

PUPS data to verify incarceration status. 

We are also seeking input from any 

State Medicaid agency that uses PUPS 

data available through the Hub. 

12. Verification Process Related to 

Eligibility for Insurance Affordability 

Programs (§ 155.320) 

We propose to reinterpret State 

Exchange and State Medicaid and 

Children’s Health Insurance Program 

(CHIP) agency use of the Federal Data 

Services Hub (Hub) to access and use 

the income data provided by the 

optional Verify Current Income (VCI) 

Hub service as a State Exchange or a 

State Medicaid and CHIP agency 

function, because these State entities 

use this optional service to implement 

eligibility verification requirements 

applicable to them. While we propose to 

redesignate use of the VCI Hub service 

by State Exchanges and State Medicaid 

and CHIP agencies as a State function, 

HHS would continue to maintain 

contracts that make this service 

available through the Hub for State 

Exchange and State Medicaid and CHIP 

agency use as part of its ongoing 

implementation of sections 1411 and 

1413 of the ACA. We propose to amend 

§ 155.320(c) to reflect this 

reinterpretation for the Exchanges. 

Under this proposal, States would pay 

annually in advance for the State 

Exchanges and Medicaid and CHIP 

agencies’ anticipated utilization of the 

optional VCI Hub service. State 

Exchanges and Medicaid and CHIP 

agencies would be required to reconcile 

with HHS on an annual basis the 

anticipated utilization of CSI data 

provided by the VCI Hub service with 

the actual utilization. In the alternative, 

HHS would invoice States on a monthly 

basis for their actual utilization of CSI 

data provided by the VCI Hub service 

after that utilization occurs. State 

Medicaid and CHIP agencies would be 

eligible for Federal matching for the cost 

of this service, as described in this 

section. 

To operationalize application and 

verification processes related to 

eligibility for health insurance 

affordability programs and to make 

eligibility determinations as accurate as 

possible, in accordance with sections 

1411 and 1413 of the ACA, we 

developed the Hub, which is a secure, 

electronic interface that facilitates the 

exchange of information used by 

Exchanges and State Medicaid and CHIP 

agencies and provides access to 

authoritative, trusted data sources for 

various types of information, including 

income. The Hub serves as the 

mechanism described in 45 CFR 

155.315 and 155.320 that Exchanges are 

required to use to perform eligibility 

verifications by transmitting applicant 

data to HHS, which then submits the 

data to specific trusted data sources for 

verification. For State Medicaid and 

CHIP agencies, the Hub serves as a 

mechanism for accessing both required 

and optional trusted data sources to 

verify eligibility at application or 

renewal as described at 42 CFR 435.949 

and 42 CFR 457.380(g). These trusted 

data sources include Federal agencies, 

such as the IRS for Federal income tax 

data and the SSA for Social Security 

benefits. 

For example, the ACA requires that 

Exchanges and State Medicaid and CHIP 

agencies use data from the SSA to verify 

applicants’ U.S. Citizenship, Social 

Security number (SSN), and Social 

Security Disability Insurance (SSDI) 

income, if any, and data from the 

Department of Homeland Security to 

verify applicants’ naturalized 

citizenship or immigration status, both 

available through the Hub. In addition 

to mandatory data to verify eligibility, 

Exchanges and State Medicaid and CHIP 

agencies may also use optional data 

available through the Hub, including 

Medicare enrollment data to verify an 

applicant’s eligibility for minimum 

essential coverage, and the VCI Hub 

service, which provides an access point 

for Exchanges and State Medicaid and 

CHIP agencies to request and receive an 

applicant’s current income data from a 

private company, referred to as Current 

Sources of Income (CSI) data. Consistent 

with the requirements at sections 1411 

and 1413 of the ACA (related to 

establishment and participation in a 

coordinated eligibility and enrollment 

system for all insurance affordability 

programs), in order to facilitate 

Exchange and State Medicaid and CHIP 

agency access to optional data, HHS will 

continue to provide free access to States 

for certain optional data, such as 

Medicare enrollment data, and will 

provide access to the CSI data to States 

that pay for their use of it in advance. 

However, we propose to re-reinterpret 

Exchange and State Medicaid and CHIP 

agency use of the Hub to access the 

optional data sources as an Exchange or 

a State Medicaid and CHIP agency 

function. We propose to amend 

§ 155.320(c) to reflect this 

reinterpretation. 

As additional background, the ACA 

requires the use of a single, streamlined 

application to determine Exchange 

eligibility and collect information.162

The application is used to determine 

eligibility for enrollment in a QHP, and, 

as applicable, for insurance affordability 

programs such as APTC, CSR, Medicaid, 

CHIP, and, if applicable, the BHP. 

Eligibility for these programs is 

determined using an income standard 

based on an applicant’s modified 

adjusted gross income (MAGI) and the 

process for verifying income depends on 

the insurance affordability program.163

The income verification process that an 

Exchange uses to verify income depends 

on whether an applicant is being 

evaluated for eligibility for APTC and 

CSRs for a QHP or eligibility for 

Medicaid, CHIP, or the BHP. For 

example, Medicaid eligibility is 

determined using ‘‘point-in-time’’ 

income, or current monthly income, 

while eligibility for APTC and CSRs is 

determined using projected annual 

income.164 An Exchange must follow a 

verification process for household 

income that includes requesting data 


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165See § 155.320(c). 

166See § 155.320(a)(1) and (c)(3)(ii)(B). Section 

155.320(c)(2) outlines the verification process that 

Exchanges are also required to follow when 

evaluating eligibility for Medicaid or CHIP. 

167See § 155.320(c)(i)(A). 

168See § 155.320(c)(3)(ii)(C). 

169See section 1412(b)(2) of the ACA. 

through the Hub to verify income 165

using IRS and SSA income data.166

For these applications, regulations 

require that for any individual in the 

applicant’s or enrollee’s tax household 

(and for whom the Exchange has a SSN), 

the Exchange must request Federal 

income tax return data regarding income 

and family size from the IRS as well as 

data from SSA regarding Social Security 

Benefits.167 When the Exchange 

requests tax return data from the IRS 

and the data indicates that attested 

projected annual household income 

represents an accurate projection of the 

tax filer’s household income for the 

benefit year for which coverage is 

requested, the Exchange must determine 

eligibility for APTC and CSRs based on 

the IRS income tax data.168 However, 

when the Exchange requests income tax 

return data from the IRS and the IRS 

returns data reflecting that the attested 

projected annual household income is 

not an accurate projection of the tax 

filer’s household income for the benefit 

year for which coverage is requested, 

the applicant or enrollee is considered 

to have experienced a change in 

circumstances. This change in 

circumstance allows HHS to establish 

procedures for determining eligibility 

for APTC and CSRs on information 

other than the IRS income tax return 

data as described in § 155.320(c)(3)(iii)– 

(vi).169

In these situations, where government 

sources of income are unavailable, or 

the applicant(s)’ attested income is 

significantly different from what the IRS 

returns, data on current income may be 

used for eligibility determinations and 

redeterminations for financial 

assistance, including the CSI data that 

HHS makes available to Exchanges and 

State Medicaid and CHIP agencies via 

the optional VCI Hub service. HHS 

holds a contract with a private, 

commercial company to provide the CSI 

data through the VCI Hub service. 

Exchanges and State Medicaid and CHIP 

agencies have been able to use the VCI 

Hub service as an optional secondary, 

trusted data source for income 

verification but are not required to do so 

and may use other data sources. The 

VCI Hub service provides current 

income data that is sourced from 

employer-reported income and job 

status data that is provided and updated 

for each employer payroll period (that 

is, weekly, bi-weekly, monthly, etc.). 

Under § 155.315(h), State Exchanges 

may seek HHS approval to use other 

sources of additional income data for 

verification of applicant-attested annual 

household income. 

For Medicaid and CHIP, section 2201 

of the ACA, codified at section 1943 of 

the Act, requires State Medicaid and 

CHIP agencies to participate in and 

comply with the eligibility and 

enrollment system requirements under 

section 1413 of the ACA. This requires 

State Medicaid and CHIP agencies to 

use a single streamlined application and 

rely primarily on electronic data to 

verify income and other eligibility 

criteria. The ACA and the Act specify 

several data sources that State Medicaid 

and CHIP agencies must use in verifying 

eligibility. These agencies may also elect 

to use other optional electronic data 

sources to improve the efficiency and 

accuracy of the eligibility determination 

process. They may use the VCI Hub 

service for initial applications, 

redeterminations, changes in 

circumstance, and periodic data 

matching for their Medicaid and CHIP 

populations. State Medicaid agencies 

are required by 42 CFR 435.948(a) to 

verify financial eligibility with certain 

financial data sources. If a State does 

not accept self-attestation of income in 

determining eligibility for a separate 

CHIP, it similarly must verify financial 

eligibility with certain data sources in 

accordance with 42 CFR 435.948(a), 

which is incorporated into the CHIP 

regulations by cross reference at 42 CFR 

457.380. CSI data is not among the data 

sources which State Medicaid agencies 

are required to access under this 

requirement. States also are given 

latitude to determine the usefulness of 

these data sources and must only access 

data sources determined to be useful to 

them. For initial applications and 

redeterminations for Medicaid or CHIP 

eligibility, income data accessed 

through the VCI Hub service provides 

real time, current income information 

for States to determine Medicaid or 

CHIP financial eligibility. Because other 

financial data sources, such as State 

quarterly wage data, provide data that is 

from a quarter to six months old, some 

States prefer to use the CSI income data 

available through the VCI Hub service, 

which is the only data source in the Hub 

used to verify and redetermine current 

and annual income outside of the IRS or 

SSA data, as their primary source of 

data to verify income prior to accessing 

other financial data sources. Some 

States also utilize the VCI Hub service 

to verify income information when a 

beneficiary reports a change in 

circumstance for financial eligibility. 

Under our proposal, Exchanges and 

State Medicaid and CHIP agencies may 

opt to continue to use the VCI Hub 

service to support their eligibility 

verification processes for Exchange QHP 

coverage or Medicaid and CHIP if they 

pay in advance for the cost of their use 

of the service. For instance, Exchanges 

would still be able to use this current 

income information to verify a tax 

household’s annual income attestation if 

they are unable to verify income using 

SSA, IRS income tax data, or a 

combination of both SSA and IRS data, 

in determining eligibility for APTC. 

Because Exchanges and State Medicaid 

and CHIP agencies are permitted, but 

not required to use the VCI Hub service 

to fulfill the mandatory eligibility 

determination requirements imposed on 

them, accessing the CSI data via the VCI 

Hub service would be properly 

characterized as an Exchange or State 

Medicaid and CHIP agency function. 

Consistent with section 1413 of the 

ACA, HHS would continue to provide 

access to optional data sources through 

the Hub to support the streamlined 

application processes. However, as 

these functions would be considered 

Exchange or State Medicaid and CHIP 

agency functions, and not HHS 

functions, HHS would no longer fund 

Exchange or State Medicaid and CHIP 

agency use of these sources and would 

only provide access to States who paid 

in advance for their use of the service. 

For all but one of the optional data 

sources available through the Hub, HHS 

does not bear a cost for Exchange or 

State Medicaid and CHIP agency use of 

the various Hub services that provide 

these data. However, HHS does bear a 

cost for Exchange and State Medicaid 

and CHIP agency use of the CSI data 

accessed through the VCI Hub service. 

If finalized as proposed, under this 

interpretation, State Exchanges and 

State Medicaid and CHIP agencies 

would be required to pay for their use 

of the VCI Hub service in advance of 

their usage of the service. However, 

where applicable, State costs for State 

Medicaid and CHIP agencies may be 

eligible for Federal matching funds, 

where HHS will match 75 percent of the 

cost of a State Medicaid agency’s 

utilization of the VCI Hub service and 

match CHIP costs at a State’s enhanced 

Federal Medical Assistance Percentage 

(FMAP). 

Since the VCI Hub service was 

established in 2013 for use by both 

Exchanges and State Medicaid and CHIP 

agencies, utilization of the VCI Hub 

service has grown significantly over 

time, both in the number of State 


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170The FFEs’ and SBE–FPs’ costs for accessing 

these services would be covered by the FFEs’ and 

SBE–FPs’ user fees. 

Exchanges and State Medicaid and CHIP 

agencies using the service, and the 

number of applicants and beneficiaries 

that require income verification as 

Exchange populations have increased 

over time. During the first Open 

Enrollment in 2013, only the Exchanges 

on the Federal platform, two State 

Exchanges, and eight State Medicaid 

agencies used data from the VCI Hub 

service for eligibility determinations. In 

that first year, the Exchanges on the 

Federal platform initiated about 88 

percent of all requests, or ‘‘pings’’ to the 

VCI Hub service for income verification. 

In the past decade, more State Medicaid 

agencies and State Exchanges have 

started using the VCI Hub service; as of 

June 2023, 34 States, including the 

District of Columbia and Puerto Rico, 

use the VCI Hub service for their State 

Medicaid and CHIP programs, and 10 of 

those States also use the service to 

verify QHP eligibility for their State 

Exchanges. Our analysis shows that as 

of March 2023, over 70 percent of 

monthly pings to the VCI Hub service 

were from State Medicaid applications, 

including renewals of eligibility for 

Medicaid or CHIP coverage, and the 

Exchanges on the Federal platform now 

account for less than 10 percent of the 

total volume. 

If new State Medicaid agencies or 

State Exchanges are permitted to request 

access to the VCI Hub service, we 

forecast that in the next 5 years, 

transaction volume to the VCI Hub 

service would increase by over 17 

percent. These trends in utilization have 

provided us with a clear picture of the 

primary uses and utilizers of the VCI 

Hub service. Specifically, we have 

learned that the queries submitted by 

States to the VCI Hub service have been 

for income verification by State 

Medicaid agencies to determine 

Medicaid and CHIP eligibility, and by 

State Exchanges to assess or determine 

Medicaid and CHIP eligibility and 

determine APTC eligibility. 

Accordingly, we now believe this 

activity that has been categorized as an 

HHS function would be better 

categorized as: (1) a State Medicaid and 

CHIP agency eligibility determination 

function under title XIX or title XXI of 

the Act when the determination is 

initiated by a State Medicaid or CHIP 

agency; and (2) as an Exchange function 

when the determination is initiated by 

an Exchange. 

While we believe the utilization of 

this optional data source is an Exchange 

or State Medicaid and CHIP agency 

function, making the optional data 

sources available through the Hub is 

consistent with the requirements at 

sections 1411 and 1413 of the ACA 

related to establishment and 

participation in a coordinated eligibility 

and enrollment system for all insurance 

affordability programs. As such, to 

facilitate Exchanges’ and States 

Medicaid and CHIP agencies’ access to 

this optional CSI data that is available 

through the VCI Hub service, HHS 

would continue to maintain contracts 

that make access to these resources 

available through the Hub for Exchange 

and State Medicaid and CHIP agency 

use. 

In making this proposal, we note that 

while use of the VCI Hub service is an 

integral part of the eligibility 

determination process in most States, 

Exchanges and State Medicaid and CHIP 

agencies may have access to other data 

sources to verify income. As noted 

previously, we are aware that many 

States have access to other 

comprehensive data sources, such as 

State quarterly wage data. Generally, as 

dictated by individual State law, 

employers are required to report 

employee information such as payroll 

and unemployment insurance 

contribution data to a State department, 

such as the State Department of Labor 

or a similar office. In place of the 

optional VCI Hub service, State 

Exchanges continue to have flexibility 

under 45 CFR 155.315(h) and 

155.320(c)(3)(iv) to use an alternative 

verification source, like State wage data, 

when income is not verified using IRS 

tax data or SSA title II data. We 

encourage State Exchanges, State 

Medicaid and CHIP agencies, and other 

interested parties, to submit comments 

regarding any operational burden, 

policy, or budget challenges regarding 

access to other State data sources of this 

proposal change. 

As part of our consideration of these 

proposals in this rulemaking, we 

considered requiring State Medicaid 

agencies and State Exchanges to obtain 

their own contracts to administer their 

CSI data usage; however, we had 

concerns that these services cannot be 

procured reasonably and expeditiously, 

which would undermine the system we 

have implemented under section 1413 

of the ACA. We also believe that there 

may be benefits to the State Medicaid 

agencies and State Exchanges that prefer 

to use the CSI data accessible through 

the VCI Hub service in their States. 

Therefore, we propose to retain optional 

access to the VCI Hub service on behalf 

of State Medicaid agencies and State 

Exchanges that prefer to continue to use 

this service and are willing to pay for 

their CSI data usage in advance. Under 

this proposal, State Medicaid agencies 

and State Exchanges can choose to 

discontinue their use of the CSI data 

accessible through the VCI Hub service. 

Given these considerations, we 

propose to amend 45 CFR 155.320(c)(1) 

to add new paragraph (c)(1)(iii) to 

require that beginning July 1, 2024, 

State Exchanges would be required to 

pay for 100 percent of their utilization 

of the CSI income data provided by the 

VCI Hub service.170 To implement this 

proposal, States would be required to 

pay for their usage of the CSI data in 

advance of their use of the service in a 

timeline and manner established by 

HHS. HHS would use the State’s prepayment to pay for the State’s access, 

with the amount of the pre-payment 

calculated as being equal to the product 

of the number of projected purchased 

transactions to be returned from the VCI 

Hub service, that is, the ‘‘number of 

pings,’’ and the price per transaction 

established under the contract 

maintained by HHS to provide the VCI 

Hub service. HHS is currently exploring 

the best mechanism to project States’ 

usage for their State Exchange’s use of 

the VCI Hub service. HHS anticipates 

leveraging lessons learned from its 

existing financial management 

processes. 

Similarly, we propose to require that 

beginning July 1, 2024, States pay for 

their Medicaid and CHIP utilization of 

the VCI Hub service prior to obtaining 

information from data sources which 

these State entities choose, but are not 

required, to use in fulfilling Medicaid or 

CHIP eligibility determination 

requirements. As noted above, 

consistent with the requirements at 

section 1413 of the ACA (related to 

establishment and participation in a 

coordinated eligibility and enrollment 

system for all insurance affordability 

programs), which is incorporated into 

the Medicaid and CHIP statutes at 

sections 1943(b)(3) and 2107(e)(1), 

respectively, of the Act, in order to 

facilitate States’ access to this optional 

CSI data that is available through the 

VCI Hub service, we would continue to 

maintain contracts that enable States to 

efficiently access CSI data through the 

VCI Hub service. However, under our 

proposal, States would be required to 

pay the advance cost incurred by HHS 

when the State requests CSI data 

through the VCI service offered by the 

Hub. 

In the alternative, HHS is also 

considering whether it could invoice 

States on a monthly basis for their 

actual utilization of CSI data provided 

by the VCI hub service after that 


ddrumheller on DSK120RN23PROD with PROPOSALS2
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171Utilization of CSI data through the VCI Hub 

will be assessed for each relevant State Exchange, 

State Medicaid Agency, or CHIP agency. 

utilization occurs. If appropriate, this 

alternative proposal could be adopted in 

the final rule. We are considering these 

mechanisms for implementing State 

Exchange and Medicaid and CHIP 

agency payments for use of the VCI Hub 

service and solicit comments on 

whether a different implementation 

approach would be more efficient or 

otherwise preferable. 

To implement this proposal for the 

States to pay in advance for CSI data 

services, we would anticipate working 

with States to develop an estimate of 

their annual usage of the CSI data 

service and collecting those amounts 

from the States. Under this approach, 

each State would notify HHS that the 

State wants to continue to use the CSI 

data through the VCI Hub service and 

will pay in advance for its usage of 

services. In particular, HHS would 

estimate, based on historical utilization 

trends taking into consideration other 

reasonable assumptions about the 

State’s usage, the anticipated annual 

number of each participating State’s 

purchased transactions to the VCI Hub 

service returning usable CSI data, that 

is, the number of pings to the VCI Hub 

service returning usable CSI data. The 

estimate for each participating State 

would be multiplied by the fixed price 

set by the CSI contract HHS holds with 

its vendor. HHS would collect that 

amount from the State, which would be 

required to reconcile with HHS on an 

annual basis the anticipated utilization 

of CSI data provided by the VCI Hub 

service with the actual utilization. 

Under this reconciliation process, 

HHS would offset payments for the next 

annual payment cycle for States 171

where actual utilization is less than the 

anticipated utilization for which they 

were invoiced. The offset amount would 

be equal to the difference in that State’s 

anticipated number of pings multiplied 

by the fixed price, and its actual number 

of pings multiplied by the fixed price. 

States in which actual utilization is 

greater than the anticipated utilization 

for which they were invoiced would be 

assessed a charge for the difference in 

that State’s actual number of pings 

multiplied by the fixed price, and the 

anticipated number of pings multiplied 

by the fixed price. We seek comment on 

how HHS should estimate States’ future 

anticipated utilization of CSI data 

provided by the VCI Hub service. We 

also seek comment on whether HHS 

should estimate, collect, and reconcile 

these payments from States more 

frequently, such as biannually, 

quarterly, or monthly, rather than 

annually, for their anticipated 

utilization. 

Alternatively, we seek comment on 

HHS invoicing on a monthly basis for 

their actual utilization of CSI data 

provided by the VCI Hub service after 

that utilization occurs. To implement 

this alternative approach, we anticipate 

that each month, States would receive 

an invoice of the amount that must be 

paid to HHS for its usage in the prior 

month. This amount would total each 

respective State Exchange’s and 

Medicaid and CHIP agencies’ utilization 

in that month, specifically the number 

of purchased transactions to the VCI 

Hub service that returned usable CSI 

data, multiplied by the fixed price set by 

the CSI contract HHS holds with its 

vendor. Therefore, we, on behalf of 

HHS, would collect funds to cover the 

costs of these services from Medicaid 

and CHIP agencies after the use of the 

service and on a regular basis. State 

Medicaid and CHIP agencies would be 

eligible for Federal matching for the cost 

of this service under this alternative 

proposal we have opted to propose a 

July 1, 2024 effective, as described in 

this section. We seek comment on this 

alternative approach, including whether 

HHS should invoice States annually, 

biannually, or quarterly, rather than 

monthly, if this alternative is adopted in 

the final rule. 

In accordance with section 

1903(a)(3)(B) of the Act and 42 CFR 

433.116, Federal Financial Participation 

(FFP) is available at 75 percent of State 

expenditures for operations of approved 

State Medicaid Enterprise Systems 

(MES) costs for data exchange between 

State systems and the VCI Hub service 

and including for State costs to access 

the VCI Hub service, as well as 

maintenance of associated State system 

functionality and automation. 

Additionally, per section 

1903(a)(3)(A)(i) of the Act and 42 CFR 

433.112, FFP is available at 90 percent 

of State expenditures for MES design, 

development, installation, or 

enhancement, including for such State 

costs as are necessary to use the VCI 

Hub service. In CHIP, administrative 

expenses, including those related to 

system operations, maintenance, design, 

development, installation, and 

enhancement, are matched at the regular 

CHIP enhanced FMAP. States that use a 

joint Medicaid and CHIP eligibility 

system should cost allocate VCI Hub 

service expenses between the programs. 

Prior to incurring MES development 

and operational costs for the VCI Hub 

service, the State must submit an 

Advance Planning Document requesting 

enhanced Federal match to us for 

review and approval, in accordance 

with regulation at 45 CFR part 95, 

subpart F. We intend to provide States 

with operational guidance with options 

for how to comply with any new 

requirement finalized. We note that the 

VCI Hub service use is considered to be 

a State Medicaid and CHIP agency 

function, and therefore a cost for these 

agencies only when the eligibility 

determination is initiated by the State 

agency. Costs should be allocated to the 

requesting entity that is making the 

request to the VCI Hub service, such 

that States are only liable for the cost of 

the VCI Hub service responses for pings 

that originated from the State Medicaid 

and CHIP agency. For example, if an 

applicant initiates an application at 

HealthCare.gov or a State Exchange, but 

is then transferred to a State Medicaid 

agency, those costs would be the 

responsibility of HHS or the State 

Exchange and not the State Medicaid 

agency. 

Finally, we propose that the 

interpretation characterizing use of the 

VCI Hub service as a function of State 

Exchanges and Medicaid and CHIP 

agencies and not an HHS function be 

effective on July 1, 2024. We recognize 

that this implementation date may be 

difficult for States, especially those with 

biennial budget cycles. However, given 

our determination that eligibility 

verifications using CSI data by State 

Exchanges and Medicaid and CHIP 

agencies is most appropriately 

characterized as a function of these 

agencies and not an HHS function, we 

believe it is appropriate to move 

forward with this change as 

expeditiously as possible, while giving 

States some time to plan for the change. 

For this reason, we have opted to 

propose a July 1, 2024 effective date for 

this provision. 

We seek comment on these proposed 

changes, including whether we should 

make this interpretation effective as of 

July 1, 2024, or a different date. We are 

also interested in learning how this 

change may impact States’ use of the 

VCI Hub service. Will State Exchanges 

and Medicaid and CHIP agencies seek to 

cease or restrict their use of the VCI Hub 

service, possibly using it as a last resort? 

What impact might these proposed 

changes have on the amount of time it 

takes applicants to verify their income 

or the time it takes for States to make 

an eligibility determination? We would 

also be interested in learning the extent 

to which States may be interested in 

potential avenues to reduce operational 

burdens or address budget challenges 

facing State Exchanges and Medicaid 

and CHIP agencies. Namely, we are 

interested in whether States would be 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82578 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

172McDerrmott, D., Cox, C., Rudowitz, R, and 

Garfield, R. (2020, Dec. 9). How Has the Pandemic 

Affected Health Coverage in the U.S.? KFF. https:// 

www.kff.org/policy-watch/how-has-the-pandemicaffected-health-coverage-in-the-u-s/. 

173Hirsch, M. (1994). Health Care of Vulnerable 

Populations Covered by Medicare and Medicaid. 

Health Care Finance Rev.,15(4):1–5. https://

www.ncbi.nlm.nih.gov/pmc/articles/PMC4193433/. 

interested in opportunities to pay an 

additional fee that would allow them to 

reuse VCI Hub service verification 

results across multiple Federally-funded 

and State-administered human service 

programs (with cost allocation across 

those programs); whether States have 

separate, direct access to the same or 

similar source of VCI Hub services, and 

the cost of such direct access; and 

whether States anticipate that reuse of 

verification data, coupled with cost 

allocation across program, would reduce 

operational burdens or address budget 

challenges facing State Exchanges and 

Medicaid and CHIP agencies. 

13. Eligibility Redetermination During a 

Benefit Year (§ 155.330(d)) 

At § 155.330, we propose to 

redesignate paragraph (d)(3) as 

paragraph (d)(3)(i) and add paragraph 

(d)(3)(ii) to require Exchanges to 

conduct periodic checks for deceased 

enrollees twice yearly and subsequently 

end deceased enrollees’ QHP coverage 

beginning with the 2025 calendar year. 

Additionally, we propose to add 

§ 155.330(d)(3)(iii) to grant the Secretary 

the authority to temporarily suspend the 

periodic data-matching (PDM) 

requirement during certain situations or 

circumstances that lead to the 

unavailability of data needed to conduct 

PDM. 

Under § 155.330(d), Exchanges are 

required to periodically examine 

available data sources, referred to as 

PDM, to identify whether enrollees 

become deceased, and to identify 

whether enrollees on whose behalf 

APTC or CSRs are being paid have been 

found eligible for or are enrolled in 

Medicare, Medicaid, CHIP, or the BHP, 

if a BHP is operating in the service area 

of the Exchange. 

Currently, § 155.330(d)(3) defines 

‘‘periodically’’ only for PDM activities 

that identify enrollment in Medicare, 

Medicaid, CHIP, and, if applicable, 

BHP, meaning that Exchanges must 

conduct Medicare PDM, Medicaid or 

CHIP PDM, and, if applicable, BHP 

PDM, twice a year. The current 

regulation does not specify the 

frequency by which PDM activities to 

identify deceased enrollees must occur, 

but the 2019 Program Integrity Rule 

requires that Death PDM be conducted 

once annually, and we noted that we 

intend to update the frequency for Death 

PDM in future rulemaking. As explained 

in the 2019 Program Integrity Rule, we 

did not require Exchanges to perform 

PDM for death at least twice in a 

calendar year so that Exchanges could 

prioritize the implementation of the 

new requirement to conduct PDM for 

Medicare, Medicaid, CHIP and, if 

applicable, BHP eligibility or enrollment 

at least twice yearly. In this proposed 

rule, we are now proposing to add 

§ 155.330(d)(3)(ii) to require Exchanges 

beginning with the 2025 calendar year 

to conduct periodic checks for deceased 

enrollees twice yearly and subsequently 

end deceased enrollees’ QHP coverage 

after following the procedure specified 

in § 155.330(e)(2)(i). 

Periodic checks for deceased enrollees 

help ensure Exchange program integrity. 

This proposal would not only align with 

current Federal Exchange policy and 

operations but would also prevent 

overpayment of QHP premiums and 

APTC/CSRs, and accurately capture 

household QHP eligibility based on 

household size. Additionally, by 

conducting Death PDMs twice a year, 

Exchanges can prevent future auto reenrollments or policy effectuation for 

deceased enrollees for the next plan 

year. 

Additionally, we propose to add 

§ 155.330(d)(3)(iii) to grant the Secretary 

the authority to temporarily suspend the 

PDM requirement during certain 

situations or circumstances that lead to 

an unavailability of data needed to 

conduct PDM. PDMs are conducted as a 

program integrity measure where the 

prerequisite for conducting a proper 

PDM is assurance of data quality. We 

recognize that during certain 

circumstances data quality may be 

incomplete or lagging. During the 

COVID–19 Public Health Emergency, 

State and local agencies had to strain 

their resources to address backlogs due 

to job losses and other administrative 

gaps further slowing down response 

times,172 thereby, increasing the risk of 

the Exchanges making inaccurate 

eligibility determinations due to 

potential data lags. In such cases, using 

such data could pose a risk of improper 

termination of coverage or APTC/CSRs 

for large numbers of enrollees. These 

improper terminations may be 

particularly harmful during situations 

such as a public health emergency. 

These potential harms can be even more 

likely to occur when the additional 

burdens of DMI resolution are imposed 

on Medicare and Medicaid 

beneficiaries, who can be vulnerable 

and underserved and more likely to 

encounter gaps in coverage or a 

complete lack of coverage as a result of 

failing to resolve the DMIs.173 Allowing 

the Secretary the flexibility to 

temporarily suspend the PDM 

requirement during certain situations 

may be able to prevent an inadvertent 

increase in the uninsured population, 

largely consisting of vulnerable 

consumers. We would notify Exchanges 

of such a suspension of PDM activities, 

and a resumption of PDM activities, 

through subregulatory guidance. 

We anticipate most State Exchanges 

would be able to meet the proposed 

requirements for Death PDM based on 

operations already reported through the 

State-based Marketplace Annual 

Reporting Tool (SMART) as well as 

discussions we have had with the State 

Exchanges on PDM. We also anticipate 

that changes, including a suspension of 

the PDM requirement, would be well 

received by the Exchanges and issuers, 

as it is important that consumer 

information, such as eligibility for APTC 

or QHP coverage, be accurate to avoid 

expending administrative resources on 

complex processes to correct errors. 

Eleven State Exchanges reported in their 

2022 SMART submissions that they 

curtailed PDM checks only due to the 

exigency resulting from the COVID–19 

Public Health Emergency, which 

expired in May of 2023. Furthermore, 

we do not anticipate the new periodicity 

requirement for the Death PDM to result 

in a significant administrative burden 

for State Exchanges because States 

previously conducted PDM checks for 

deceased enrollees. 

Under section 1313(a)(4) of the ACA, 

if HHS determines that an Exchange has 

engaged in serious misconduct with 

respect to compliance with Exchange 

requirements, it has the option to 

rescind up to 1 percent of payments due 

to a State under any program 

administered by HHS until such 

misconduct is resolved. These existing 

authorities would apply to the proposed 

PDM requirements in § 155.330(d). If 

HHS were to determine that it is 

necessary to apply this authority due to 

non-compliance by an Exchange with 

§ 155.330(d), HHS would also determine 

the HHS-administered program from 

which it would rescind payments that 

are due to that State. However, if State 

Exchanges do not comply with the 

proposed PDM requirements, we would 

generally first direct a State Exchange to 

take corrective action. We utilize 

specific oversight tools (for example, the 

SMART, independent external 

programmatic & financial audits) to 

ensure compliance and that State 

Exchanges take appropriate corrective 

action. HHS also provides technical 


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Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82579 

174For the 2023 plan year, see CMS. (2023, July 

12). Federally-facilitated Exchange (FFE) 

Enrollment Manual. CMS. Section 3.2.4, pp 29–30. 

https://www.cms.gov/files/document/ffeenrollment-manual-2023-5cr-071323.pdf. 

175This final rule also made a technical 

correction to catastrophic coverage regulation at 

§ 156.155 to incorporate language in section 1302(e) 

of the ACA indicating that a catastrophic plan 

provides ‘‘no benefits’’ for any plan year (except for 

providing coverage for at least three primary care 

visits and preventive health services in accordance 

with section 2713 of the PHS Act) until the 

individual has incurred cost-sharing expenses in an 

amount equal to the annual limitation on cost 

sharing in effect under section 1302(c)(1) of the 

ACA. 

176 ‘‘Product’’ means a discrete package of health 

insurance coverage benefits that are offered using a 

particular product network type (such as health 

maintenance organization, preferred provider 

organization, exclusive provider organization, point 

of service, or indemnity) within a service area. 45 

CFR 144.103. 

assistance and ongoing monitoring to 

track those actions until the State 

Exchange remediates the issue fully. 

We seek comment on this proposal. 

14. Incorporation of Catastrophic 

Coverage Into the Auto Re-Enrollment 

Hierarchy (§ 155.335(j)) 

We propose to amend § 155.335(j)(1) 

and (2) to require Exchanges to re-enroll 

individuals who are enrolled in 

catastrophic coverage as defined in 

section 1302(e) of the ACA into a new 

QHP for the coming plan year. We 

believe that some Exchanges already reenroll these enrollees, including 

Exchanges on the Federal platform 

when issuers include plan crosswalk 

information for catastrophic plans when 

they submit the information as part of 

the annual QHP certification process. 

However, explicitly incorporating 

catastrophic plan enrollees into the 

rules at § 155.335(j) would help ensure 

continuity of coverage in cases where 

the issuer does not offer the catastrophic 

plan for the subsequent plan year, and 

individuals enrolled in catastrophic 

coverage do not actively select a 

different QHP. We also propose to add 

new § 155.335(j)(5) to establish that an 

Exchange may not newly auto re-enroll 

into catastrophic coverage an enrollee 

who is currently enrolled in coverage of 

a metal level as defined in section 

1302(d) of the ACA. This is consistent 

with the practice of the Exchanges on 

the Federal platform, and we believe 

that State Exchanges likely also adhere 

to this practice, but that all interested 

parties would benefit from clear 

regulation on this aspect of the reenrollment process. 

If this proposal is finalized, we would 

also update the Federally-facilitated 

Exchange (FFE) Enrollment Manual to 

incorporate catastrophic coverage into 

the re-enrollment hierarchy for alternate 

enrollments, which we use to 

implement the regulation to crosswalk 

enrollees whose current issuer no longer 

offer plans available to them through the 

Exchanges on the Federal platform 

under § 155.335(j)(3).174

In the 2013 Patient Protection and 

Affordable Care Act; Standards Related 

to Essential Health Benefits, Actuarial 

Value, and Accreditation Final Rule (78 

FR 12833), we set forth Exchange and 

issuer standards related to coverage of 

essential health benefits and actuarial 

value to reflect section 1302 of the ACA, 

which specifies levels of coverage or 

‘‘actuarial values’’ that health plans in 

the individual and small group markets, 

both inside and outside of an Exchange, 

must meet as part of the requirement to 

cover an EHB package beginning in 

2014. Specifically, the final rule 

codified section 1302(d)(1) of the ACA, 

which specifies that actuarial values 

must be 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. 

In the 2013 Patient Protection and 

Affordable Care Act; Health Insurance 

Market Rules; Rate Review Final Rule 

(78 FR 13405), we established standards 

for catastrophic plans offered in the 

individual market, consistent with 

section 1302(e) of the ACA, and codified 

the statutory criteria identified in 

section 1302(e)(2) of the ACA listing the 

two categories of individuals eligible to 

enroll in a catastrophic plan. The first 

category includes individuals who are 

younger than age 30 before the 

beginning of the plan year. The second 

category includes individuals who have 

been certified as exempt from the 

individual responsibility payment 

because they cannot afford minimum 

essential coverage or because they are 

eligible for a hardship exemption. 

Section 1302(e) of the ACA does not 

specify an actuarial value requirement 

for a catastrophic plan, but states that a 

health plan not providing a bronze, 

silver, gold, or platinum level of 

coverage shall be treated as meeting the 

requirements of subsection (d) for any 

plan year if it meets the requirements at 

section 1302(e)(1) of the ACA, providing 

an option for basic protections for young 

adults and people who cannot otherwise 

afford health insurance or have a 

hardship. However, section 36B(c)(3)(A) 

of the Code provides that PTC is not 

allowed for individuals who enroll in 

catastrophic coverage described in 

section 1302(e) of the ACA. 

Consequently, those individuals are not 

eligible for APTC. 

In the 2014 Patient Protection and 

Affordable Care Act; Annual Eligibility 

Redeterminations for Exchange 

Participation and Insurance 

Affordability Programs; Health 

Insurance Issuer Standards Under the 

ACA, Including Standards Related to 

Exchanges (79 FR 52994, 52998 through 

53001), we established the Exchange reenrollment hierarchy at § 155.335(j) to 

help ensure continuous coverage for 

consumers who opt not to make an 

active plan selection for the upcoming 

year.175 This final rule provided 

standards that Exchanges must follow to 

place current enrollees whose current 

year plan is no longer available, and 

who do not terminate coverage or select 

a different QHP, into a new plan for the 

coming year based on their current 

product, and their current year plan’s 

metal level and plan network type. For 

example, an Exchange must place an 

enrollee whose current QHP is not 

available through the Exchange, in a 

QHP within the same product as their 

current year plan, and at the same metal 

level as the enrollee’s current QHP. The 

final rule also specified requirements at 

§ 155.335(j)(2) for cases in which an 

enrollee’s current product is no longer 

available. For example, an Exchange 

must place an enrollee whose current 

product is no longer available in a QHP 

at the same metal level as the enrollee’s 

current QHP, in the product offered by 

the same issuer that is the most similar 

to the enrollee’s current product.176

In the 2017 Payment Notice (81 FR 

12203), we amended § 155.335(j) to 

provide for automatic re-enrollment in a 

QHP offered by another issuer through 

the Exchange for enrollees whose 

current QHP issuer no longer offered a 

QHP through the Exchange in the 

enrollee’s service area. This policy 

helped ensure that enrollees could 

maintain coverage with APTC and 

income-based CSRs, as opposed to 

losing coverage or re-enrolling in a plan 

outside the Exchange in cases where 

their current issuer offered off-Exchange 

coverage. This rule at § 155.335(j)(3) 

provides that the Exchange may direct 

these re-enrollments, to the extent 

permitted by applicable State law, into 

a QHP from a different issuer as directed 

by the applicable State regulatory 

authority, or, if the applicable State 

regulatory authority declines to direct 

this activity, directed by the Exchange. 

In the 2023 Payment Notice (87 FR 

27273), we solicited comments on 

incorporating certain cost factors into 

the re-enrollment hierarchy, including 

net premium, maximum out-of-pocket 

amount (MOOP), deductible, and total 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82580 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

177MOOP refers to the limit on cost sharing an 

enrollee must pay for covered services in a plan 

year. After the enrollee spends this amount on cost 

sharing for in-network essential health benefits, the 

health plan pays 100 percent of the costs of covered 

essential health benefits. For purposes of this 

section of preamble, the term total out-of-pocket 

costs refers to net premium and out-of-pocket costs 

attributable to cost sharing and excludes any costs 

attributable to balance billing. 

178Additional conditions at § 155.335(j)(4) 

include that the silver plan must have the same 

provider network, and a lower or equivalent 

premium after the application of APTC, as the 

bronze level QHP into which the Exchange would 

otherwise re-enroll the enrollee under paragraph 

(j)(1) or (2) of this section. 

179See § 155.305(h). 

out-of-pocket cost.177 We also solicited 

comments on additional ways we could 

ensure that the Exchange hierarchy for 

re-enrollment aligns with plan 

generosity and consumer needs, such as 

re-enrolling a current bronze QHP 

enrollee into a silver QHP with a lower 

net premium and higher plan generosity 

offered by the same QHP issuer. 

In the 2024 Payment Notice (87 FR 

25740, 25821 through 25822), we added 

§ 155.335(j)(4) to allow Exchanges to 

modify their re-enrollment hierarchies 

such that enrollees who are eligible for 

CSRs in accordance with § 155.305(g) 

and who would otherwise be 

automatically re-enrolled in a bronzelevel QHP without CSRs, would instead 

be automatically re-enrolled in a silverlevel QHP (with income-based CSRs) in 

the same product provided that certain 

conditions are met.178 We also required 

Exchanges to ensure that enrollees 

whose QHPs are no longer available to 

them and enrollees who would be reenrolled into a silver-level QHP to 

receive income-based CSRs are reenrolled into plans with the most 

similar network to the plan they had in 

the previous year. 

We propose to amend the regulations 

at § 155.335(j)(1) and (2) to require 

Exchanges to re-enroll individuals 

enrolled in catastrophic coverage as 

defined in section 1302(e) of the ACA 

into QHP coverage for the coming plan 

year. Section 155.335(j) currently 

specifies re-enrollment requirements for 

enrollees in coverage of a specific metal 

level as defined by section 1302(d) of 

the ACA, but does not address auto reenrollment for catastrophic coverage 

enrollees nor does it address a scenario 

in which a catastrophic coverage 

enrollee would lose eligibility for 

catastrophic coverage in the coming 

plan year either because they exceed the 

30-year age limit or lose eligibility for 

the exemption that allowed them to 

enroll in a catastrophic plan in spite of 

exceeding the age limit.179

To make this change, we propose to 

add new § 155.335(j)(1)(v) and (j)(2)(iv). 

We propose paragraph (j)(1)(v) to 

specify that if the enrollee’s current 

QHP is a catastrophic plan as described 

in section 1302(e) of the ACA, and the 

enrollee would no longer meet the 

criteria for enrollment in a catastrophic 

plan as described in section 1302(e)(2) 

of the ACA, the Exchange would reenroll the enrollee into a bronze metal 

level QHP in the same product as the 

enrollee’s current QHP that has the most 

similar network compared to the 

enrollee’s current QHP; or if no bronze 

plan is available through this product, 

the Exchange would re-enroll the 

enrollee in the QHP with the lowest 

coverage level offered under the product 

in which the enrollee’s current QHP is 

offered in which the enrollee is eligible 

to enroll and that has the most similar 

network compared to the enrollee’s 

current QHP. 

We propose paragraph (j)(2)(iv) to 

specify that if the enrollee’s current 

QHP is a catastrophic plan as described 

in section 1302(e) of the ACA, and the 

enrollee would no longer meet the 

criteria for enrollment in a catastrophic 

plan as described in section 1302(e)(2) 

of the ACA, and if no bronze QHP is 

available in the same product as the 

enrollee’s current QHP, the Exchange 

would re-enroll the enrollee into a 

bronze plan offered by the same issuer 

through the Exchange that has the most 

similar network compared to the 

enrollee’s current QHP, in the product 

offered that is the most similar to the 

enrollee’s current product. 

We also propose to amend 

§ 155.335(j)(1)(ii) to (iv) and (j)(2)(i) to 

(iii) to use the term ‘‘coverage level’’ 

instead of ‘‘metal level’’ so that the rules 

in this section are inclusive of 

catastrophic coverage enrollees to whom 

proposed paragraphs (j)(1)(v) and 

(j)(2)(iv) would not apply. For example, 

this change would ensure that 

paragraph (j)(1)(ii) requires an 

Exchange, if possible, to re-enroll a 

catastrophic coverage enrollee who 

would remain eligible for catastrophic 

coverage in the coming plan year into 

another catastrophic plan within the 

same product as their current QHP that 

has the most similar network compared 

to their current QHP. 

In practice, we permit and encourage 

issuers as part of the annual QHP 

Certification process to submit a 

crosswalk option for enrollees in 

catastrophic coverage and for enrollees 

who would otherwise lose eligibility for 

their catastrophic plan. While most 

issuers submit this information, it is 

currently not required under the 

existing regulation. For PY 2023, one 

issuer on HealthCare.gov did not submit 

a crosswalk option for enrollees losing 

catastrophic coverage eligibility, which 

resulted in the Exchanges not auto reenrolling 37 people. By including 

catastrophic coverage and loss of 

eligibility for catastrophic coverage in 

regulation at § 155.335(j)(1) and (2), 

Exchanges would require issuers to 

submit crosswalk plans for the scenarios 

described in § 155.335(j) and ensure 

auto re-enrollment for all Exchange 

enrollees. It also improves transparency 

by incorporating the current practice of 

auto re-enrolling catastrophic enrollees 

in future year coverage to all issuers. 

Finally, we propose adding a new 

§ 155.335(j)(5) to establish that, for 

purposes of this section, catastrophic 

coverage is not a coverage level that is 

considered higher or lower than metal 

level coverage when moving an enrollee 

to a plan that is a metal level higher or 

lower than their current plan, and an 

Exchange may not re-enroll an enrollee 

that has coverage under section 1302(d) 

into catastrophic coverage. For example, 

when applying paragraphs (j)(1)(iii)(B), 

or (2)(ii), an Exchange may enroll 

bronze enrollees into silver level 

coverage but not catastrophic level 

coverage. When applying paragraphs 

(j)(1)(iv) or (2)(iii), an Exchange may 

enroll enrollees into a QHP other than 

catastrophic. This rule reflects our reenrollment process for Exchanges on the 

Federal platform, and we believe it 

appropriately reflects enrollees’ 

decision to enroll in coverage with 

benefits beyond those that catastrophic 

coverage provides, and the operational 

processes to determine catastrophic 

coverage eligibility for a coming plan 

year. 

We solicit comment on these 

proposals, including from State 

Exchanges regarding whether the 

proposals reflect their current auto reenrollment practices. If either or both of 

the policies proposed in paragraphs 

(j)(1)(v) and (j)(2)(iv) do not reflect 

current practices and would impose an 

implementation burden for State 

Exchanges or for other interested 

parties, we solicit comment on whether 

to provide flexibility on making this 

provision effective for plan years 

beginning on or after January 1, 2025. 

We solicit comment on strategies for 

helping enrollees who transition from 

catastrophic coverage into coverage 

through a metal level QHP on how to 

understand and apply APTC to their 

monthly premiums if they are eligible 

and wish to do so. 

We also solicit comment on whether 

we should consider proposing changes 

to the auto re-enrollment hierarchy to 

prioritize re-enrollment in catastrophic 

coverage for enrollees who remain 

eligible for catastrophic coverage in a 


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Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82581 

180We also stated that we do not anticipate 

extensions to be greater than 45 calendar days. 

181CMS. (2023, July 12). 2023 Federallyfacilitated Exchange (FFE) Enrollment Manual. 

CMS. Section 6.1.3, p. 89, and Section 6.10, p. 110. 

https://www.cms.gov/files/document/ffeenrollment-manual-2023-5cr-071323.pdf. 

182Pate, R. (2020, March 24). Payment and Grace 

Period Flexibilities Associated with the COVID–19 

National Emergency. CMS. https://www.cms.gov/ 

files/document/faqs-payment-and-grace-periodcovid-19.pdf. 

way that is similar to current 

prioritization of silver level coverage. 

That is, § 155.335(j)(1)(ii) specifies that 

if an enrollee’s current QHP is a silver 

plan that will not be available for the 

coming plan year, and the enrollee’s 

current product will no longer include 

a silver level QHP, then the Exchange 

will re-enroll the enrollee in a silver 

level QHP under a different product 

offered by the same QHP issuer that is 

most similar to the enrollee’s current 

product. We seek comment on whether 

it would be appropriate to prioritize 

continuity of catastrophic coverage in a 

similar way. Finally, we solicit 

comment on additional strategies to 

help ensure continuity of coverage for 

enrollees in catastrophic QHPs, 

including those who lose eligibility for 

catastrophic coverage. 

15. Premium Payment Deadline 

Extensions (§ 155.400(e)(2)) 

We propose to amend § 155.400(e)(2) 

to codify that the flexibility for issuers 

experiencing billing or enrollment 

problems due to high volume or 

technical errors, or issuers directed to 

do so by applicable State or Federal 

authorities, is not limited to extensions 

of the binder payment. 

Section 155.400(e) specifies that 

Exchanges may require, and the FFEs 

and SBE–FPs will require, enrollees to 

make a binder payment to effectuate 

enrollment, and paragraph (e)(1) 

specifies the range of dates within 

which an issuer may establish a 

deadline to pay binder, depending on 

whether coverage is being effectuated 

under regular, prospective, or 

retroactive effective dates. In the 2018 

Payment Notice (81 FR 94058), we 

added paragraph (e)(2) to address 

situations in which an issuer is unable 

to timely process binder payments 

submitted by enrollees, which may 

impact an enrollee’s ability to effectuate 

coverage. Specifically, we noted that 

based on our experience during several 

Open Enrollment Periods, issuers 

occasionally experience technical 

errors, or a processing backlog caused 

by an unusually high volume of 

enrollments. As a result, enrollees may 

be temporarily unable to submit 

premium payments, or the issuer may 

be unable to process payments in a 

timely manner. We thus established an 

option for issuers to implement a 

reasonable extension of binder payment 

deadlines,180 which ensures that 

enrollees do not have coverage 

cancelled due to non-payment when the 

enrollee did not have adequate time to 

pay the binder payment. 

Although we only addressed 

extensions to the binder payment 

deadlines in § 155.400(e)(1), we did not 

intend to exclude other premium 

payment scenarios in which Exchanges 

could, and the Exchanges on the Federal 

platform would, provide similar 

flexibility. In published guidance, such 

as the 2023 Federally-facilitated 

Exchange (FFE) Enrollment Manual,181

we stated that we will exercise 

enforcement discretion with regard to 

regulatory requirements such as the 

binder payment and the deadline for 

payment of premiums under grace 

periods if an issuer is complying with 

a State regulatory authority’s request to 

extend premium payment deadlines and 

delay termination of coverage due to a 

natural disaster or other emergency 

within the State. 

For example, in connection with the 

COVID–19 Public Health Emergency 

declared by the Secretary, HHS 

exercised enforcement discretion 182

regarding issuers extending premium 

payment deadlines and delaying 

cancellations or terminations of 

coverage with the permission of the 

applicable State regulatory authority. 

We propose to codify that Exchanges 

may, and Exchanges on the Federal 

platform would, provide flexibility in 

such circumstances, including 

circumstances in which an issuer is 

directed to do so by applicable State or 

Federal authorities. 

Because current paragraph (e)(2) may 

be read to limit the flexibility Exchanges 

could provide issuers regarding 

payments other than the binder 

payment, we also propose to add the 

phrase ‘‘and other premium payment 

deadlines.’’ Doing so would clarify for 

interested parties, particularly issuers, 

that Exchanges may, and Exchanges on 

the Federal platform would, provide 

flexibility regarding premium payment 

requirements other than the binder 

payment, such as the requirement to 

trigger a grace period to enrollees 

receiving APTC under § 156.270(d) if 

enrollees fail to pay premiums timely. 

We request comments on this 

proposal. 

16. Initial and Annual Open Enrollment 

Periods (§ 155.410) 

At § 155.410, we propose to amend 

paragraph (e)(4)(ii) to revise parameters 

around the adoption of an alternative 

open enrollment period by a State 

Exchange. We propose to require that 

for benefit years beginning on or after 

January 1, 2025, State Exchanges must 

adopt an open enrollment period that 

begins on November 1 of the calendar 

year preceding the benefit year and ends 

no earlier than January 15 of the 

applicable benefit year, with the option 

to extend the open enrollment period 

beyond January 15 of the applicable 

benefit year. 

In part 3 of the 2022 Payment Notice 

final rule (86 FR 53429 through 53432), 

where we extended the open enrollment 

period for the Exchanges on the Federal 

platform to January 15, we noted several 

observations regarding a 6-week open 

enrollment period ending on December 

15. However, we also noted that for an 

open enrollment period ending in 

December, certain consumers may be 

subjected to unexpected plan cost 

increases that they may not be notified 

about until January, after open 

enrollment concludes. We also observed 

that extending the open enrollment 

period for the Exchanges on the Federal 

platform to January 15 would ensure 

ample time for Navigators, assisters, 

certified application counselors, agents, 

and brokers to fully assist all interested 

consumers. We further noted that 

ending open enrollment on January 15 

would give consumers additional time 

to react to updated plan cost 

information and more time to seek 

enrollment assistance, which could 

improve access to health coverage, 

particularly for those in underserved 

communities who face additional 

barriers to accessing health coverage. 

We believe these observations hold 

true as to State Exchanges and warrant 

requiring that their open enrollment 

periods also end no earlier than January 

15. Since we extended the open 

enrollment period for Exchanges on the 

Federal platform in part 3 of the 2022 

Payment Notice final rule, four States 

have transitioned to the State Exchange 

model, and we anticipate that there will 

be additional State Exchanges in future 

benefit years, which increases the 

potential for differing open enrollment 

periods. While most of the State 

Exchanges already hold an open 

enrollment period that ends on or after 

January 15 of the benefit year, we 

believe that the risk of shorter open 

enrollment periods in the future 

requires ensuring a minimum open 

enrollment period across all Exchanges, 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82582 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

183Public Law 117–169. 

including State Exchanges. Notably, this 

proposal would impose a minimal 

burden on most of the State Exchanges. 

Additionally, we believe that ensuring 

State Exchanges’ open enrollment 

periods begin on November 1 of the 

calendar year and continue through at 

least January 15 of the benefit year— 

thereby ensuring substantial overlap 

between all Exchange open enrollment 

periods—would reduce consumer 

confusion in States with State 

Exchanges that currently hold open 

enrollment periods that are shorter than 

the open enrollment period for the 

Exchanges on the Federal platform, or 

that begin before November 1 and end 

earlier than January 15. Consumers in 

these States would benefit from a longer 

open enrollment period by having an 

increased opportunity to enroll in 

coverage or reducing missed 

opportunities to enroll due to confusion 

about when open enrollment begins and 

ends. The combined benefits of this 

proposal in terms of reducing consumer 

confusion, building in additional time 

for consumers to enroll, and aligning 

open enrollment periods with Medicare 

and most employer open enrollment 

periods, could further increase 

Exchange enrollment and potentially 

have downstream impacts like 

improving the uninsured rate in States. 

We seek comment on this proposal. 

17. Special Enrollment Periods 

a. Effective Dates of Coverage 

(§ 155.420(b)) 

We propose amending § 155.420(b)(1) 

and (b)(3)(i) to align the effective dates 

of coverage after selecting a plan during 

certain special enrollment periods 

across all Exchanges, including State 

Exchanges. In order to consolidate and 

integrate the requirements in 

§ 155.420(b)(3), without affecting any 

rights or obligations, we also propose to 

include the requirements currently in 

paragraph (b)(3)(ii) into proposed 

paragraph (b)(3)(i) and to delete 

paragraph (b)(3)(ii). For ease of 

consumer experience and to prevent 

coverage gaps, particularly for 

consumers transitioning between 

different Exchanges or from other 

insurance coverage, we propose 

amending § 155.420(b)(1) and(b)(3)(i) so 

that qualifying individuals or enrollees 

who select and enroll in a QHP during 

certain special enrollment periods 

receive coverage beginning the first day 

of the month after the consumer selects 

a QHP. 

In accordance with § 155.420(b)(3)(i), 

in the FFEs, SBE–FPs, as well as several 

State Exchanges, during a special 

enrollment period, consumers who 

select a QHP through the Exchange to 

which regular effective dates specified 

in § 155.420(b) apply have the plan’s 

coverage begin on the first day of the 

month after the consumer’s selection. 

For example, if a consumer selects a 

QHP on March 31, their QHP coverage 

would start April 1. 

However, in some State Exchanges, a 

consumer’s coverage is only made 

effective on the first day of the month 

after the consumer has selected a plan 

during a special enrollment period to 

which regular effective dates specified 

in § 155.420(b) apply if the consumer 

selects their plan between the 1st day 

and the 15th day of the previous month, 

per § 155.420(b)(1). In these State 

Exchanges, if a consumer selects a plan 

between the 16th day and the last day 

of the month, coverage will not become 

effective until the first day of the second 

month after plan selection. For example, 

for these State Exchanges, if a consumer 

selects a plan on March 1, Exchange 

QHP coverage would start April 1, but 

if that consumer selected a plan on 

March 16, their Exchange QHP coverage 

would start on May 1. This may result 

in a coverage gap of more than a month 

for these consumers. 

As consumers typically qualify for 

special enrollment periods due to a life 

event that may disrupt their previous 

coverage (such as a move to a new State, 

or a change in household size due to 

birth or divorce, or a loss of other health 

insurance, such as a loss of Medicaid), 

these consumers are less likely to have 

health insurance coverage while they 

wait for their selected QHP coverage to 

begin. 

In addition, when transitioning 

between Exchanges, such as from an 

Exchange in a State that operates on the 

Federal platform to a State Exchange 

that does not offer first-of-the-followingmonth coverage, consumers may expect 

that their coverage becomes effective on 

the first day of the month after selecting 

a QHP. These consumers might not be 

aware that the effective dates of 

coverage may differ between Exchanges, 

and they might not take appropriate 

steps to maintain or access alternate 

coverage while waiting for their QHP to 

become effective. As a result, these 

consumers may be at risk of coverage 

gaps due to the existing policies 

governing effective dates of coverage. 

To address this, we propose amending 

§ 155.420(b)(1) and (b)(3)(i) to align 

effective dates of coverage across all 

Exchanges under these special 

enrollment periods. The proposal would 

require all State Exchanges, beginning 

on January 1, 2025, or an earlier date at 

the option of the Exchange to provide 

coverage that is effective on the first day 

of the month following plan selection, if 

a consumer enrolls in a QHP during a 

Special Enrollment Period to which 

regular effective dates specified in 

§ 155.420(b) apply. 

We seek comment on this proposal. 

b. Monthly Special Enrollment Period 

for APTC-Eligible Qualified Individuals 

With a Household Income At or Below 

150 Percent of the Federal Poverty Level 

At § 155.420, we propose to amend 

paragraph (d)(16) to revise the 

parameters around the availability of a 

special enrollment period (SEP) for 

APTC-eligible qualified individuals 

with a projected household income at or 

below 150 percent of the Federal 

Poverty Level (FPL) hereinafter referred 

to as the ‘‘150 percent FPL SEP.’’ We are 

proposing to amend the current text 

from ‘‘no greater than’’ to ‘‘at or below’’ 

for improved readability and 

understanding. Specifically, we are 

proposing to remove the limitation that 

this SEP be only available during 

periods of time when APTC is available 

such that the applicable taxpayers’ 

applicable percentage is set to zero. 

As background, in part 3 of the 2022 

Notice of Benefit and Payment 

Parameters (86 FR 53429 through 

53432), we finalized, at the option of an 

Exchange, a monthly SEP for APTCeligible qualified individuals with a 

projected household income at or below 

150 percent of the FPL. We also 

finalized a provision stating that this 

SEP is available only during periods of 

time during which APTC is available 

such that the applicable taxpayers’ 

applicable percentage is set at zero, such 

as during tax years 2021 through 2025, 

as provided by section 9661 of the 

American Rescue Plan (ARP) and 

extended by the Inflation Reduction Act 

(IRA).183 We also amended 

§ 147.104(b)(2)(i) to specify that issuers 

are not required to provide the SEP in 

the individual market with respect to 

coverage offered outside of an Exchange. 

As a result of the enhanced financial 

assistance established by the ARP and 

extended by the IRA until December 31, 

2025, many consumers with lower 

household incomes with a projected 

household income at or below 150 

percent of the FPL, have the opportunity 

to enroll in a much wider range of 

affordable coverage. Specifically, as a 

result of the legislative changes passed 

by Congress in the ARP and IRA, more 

consumers have access to Exchange and 

QHP coverage with zero-dollar 

premiums after financial subsidies, 

including more opportunities to enroll 

in zero-dollar silver-level plans with 


ddrumheller on DSK120RN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82583 

184CMS. (2023, Jan. 27). Temporary Special 

Enrollment Period (SEP) for Consumers Losing 

Medicaid or the Children’s Health Insurance 

Program (CHIP) Coverage Due to Unwinding of the 

Medicaid Continuous Enrollment Condition— 

Frequently Asked Questions (FAQ). CMS. https://

www.cms.gov/technical-assistance-resources/tempsep-unwinding-faq.pdf. 

significant levels of CSRs. To provide 

these consumers—many of whom might 

have had difficulty enrolling during 

standard SEP timelines due to lack of 

awareness or other logistical 

difficulties—with the chance to access 

this generous Exchange coverage, we 

finalized the 150 percent FPL SEP. 

We remain committed to ensuring 

that affordable Exchange coverage is 

available for individuals with lower 

household incomes and who are 

uninsured, and we believe that the 

availability of the 150 percent FPL SEP 

has made significant strides in ensuring 

that this population has real 

opportunities to enroll in free or 

extremely low cost Exchange coverage. 

Executive Order (E.O.) 14070, signed 

on April 5, 2022 (which expanded upon 

E.O. 15009 signed on January 28, 2021), 

directs Federal agencies to identify ways 

to continue to expand the availability of 

affordable health coverage, to improve 

the quality of coverage, to strengthen 

benefits, and to help more Americans 

enroll in quality health coverage. To 

that end, this proposed change may 

further ensure continued improved 

access to affordable coverage for this 

population. 

Continuing to make this SEP available 

also may continue to help consumers 

who lose other MEC coverage, 

especially those disenrolling from 

Medicaid or CHIP coverage to regain 

health care coverage. We are aware of 

the challenges many consumers 

disenrolling from Medicaid or CHIP 

coverage have faced due to the end of 

the Medicaid continuous enrollment 

condition as of March 31, 2023. During 

this time period, we have observed, and 

expect to continue to observe, a higher 

than usual volume of individuals with 

lower household incomes transitioning 

from Medicaid or CHIP coverage to 

coverage through Exchanges due to the 

end of the Medicaid continuous 

enrollment condition. As discussed in 

our guidance released on January 27, 

2023, consumers disenrolling from 

Medicaid or CHIP because of the 

Medicaid continuous enrollment 

condition are especially vulnerable and 

may face challenges with transitioning 

from Medicaid or CHIP into other forms 

of coverage, such as Exchange 

coverage.184 These challenges may 

include consumers’ confusion as to why 

their Medicaid coverage is ending due 

to irregular or untimely 

communications from State Medicaid 

agencies about the termination of 

coverage or coverage options for 

individuals with lower household 

incomes. Due to these factors, 

consumers may be unable to make an 

informed decision about their coverage 

options within the 60-day window 

provided by the SEPs at § 155.420(c)(1) 

and (d)(1) or within the 90-day window 

provided at the option of the Exchange 

at § 155.420(c)(6) beginning on January 

1, 2024. Given our observations of these 

challenges, we believe that the existence 

of the 150 percent FPL SEP provides an 

additional safety-net, particularly for 

consumers impacted by the Medicaid 

continuous enrollment condition, but 

also generally for those who have 

historically faced challenges 

transitioning from Medicaid or CHIP 

into other coverage, like Exchange 

coverage. 

Finally, our experience with the 150 

percent FPL SEP strongly suggests that 

the policy has been successful. Based on 

our analysis, between October 2022 and 

August 2023, about 1.3 million 

consumers who reside in States with 

Exchanges on the Federal platform were 

APTC-eligible, and had projected 

household incomes at or below 150 

percent of the FPL, enrolled in 

Exchange coverage under the 150 

percent FPL SEP. In 2022, 41.8 percent 

of enrollees on Exchanges on the 

Federal platform had a projected 

household income of less than 150 

percent of the FPL, compared to 46.9 

percent of Exchange enrollees in 2023, 

after the implementation of the 150 

percent FPL SEP. We believe the current 

150 percent FPL SEP is one factor that 

significantly contributed to the increase 

in the enrollees on the Federal platform 

with a projected household income at or 

below 150 percent of the FPL. 

In previous rulemaking, we expressed 

concern about offering the 150 percent 

FPL SEP when APTC does not always 

reduce the applicable percentage of a 

taxpayer with projected annual 

household income at or below 150 

percent FPL to zero. We were also 

receptive to concerns raised by issuers 

that this SEP would impact the 

Exchange risk pool, lead to higher 

premiums, and impact the population 

with household incomes above 400 

percent FPL with higher premium 

contributions as the APTC phases out. 

The possible increasing premiums also 

present a risk of financial hardship for 

consumers who purchase insurance off 

Exchange including those who are not 

eligible for APTC due to immigration 

status, or any other consumers who 

would purchase unsubsidized plans, or 

only receive small subsidies. At the 

time, we believed that the risk for 

adverse selection was mitigated because 

consumers would not have an incentive 

to drop their Exchange plans when 

healthy and resume coverage when sick 

using the 150 FPL SEP since they would 

be enrolled in zero-dollar premium 

plans due to the enhanced financial 

subsidies provided by the ARP and IRA. 

Previously, we estimated that the 

adverse selection risk may result in 

issuers increasing premiums by 

approximately 0.5 to 2 percent, and a 

corresponding increase in APTC outlays 

and decrease in income tax revenues of 

approximately $250 million to $1 

billion annually, when the enhanced 

APTC provisions of the ARP (and later 

extended by the IRA) are in effect. 

While it is challenging to predict the 

future nature of the Exchanges in 2026, 

we estimate that some adverse selection, 

though unknowable at this time, may 

occur once enhanced subsidies sunset 

on December 31, 2025, and may result 

in issuers increasing premiums. We 

acknowledge that there is a wide range 

of predictions for an increase to 

premiums due to the adverse selection 

risk associated with this proposed 

change and discuss this further in the 

regulatory impact analysis section of 

this rule. 

However, an analysis of the plans 

available to consumers in 2020, just 

before implementation of the enhanced 

subsidies, suggests that the risk of 

adverse selection we acknowledged may 

be lower than expected, and therefore 

downstream impacts of that risk may be 

mitigated. When consumers with 

household incomes at or below 150 

percent of the FPL are no longer eligible 

for enhanced subsidies, these 

consumers may still be eligible for lowcost silver or bronze plans with zerodollar premiums after regular subsidies. 

In 2020, before the ARP provided 

enhanced financial assistance in the 

form of enhanced subsidies, about 

900,000 consumers were enrolled in 

bronze plans, which were fully 

subsidized by APTC and where the 

consumer portion of premium was zero 

dollars. Additionally, in 2020, 77 

percent of the consumer population at 

or below 150 percent FPL had access to 

a zero-dollar bronze plan with 16 

percent of the same population having 

access to a zero-dollar silver plan in 

addition to the zero-dollar bronze plan. 

We believe that if the majority of 

consumers with income at or below 150 

percent FPL would be eligible for a zerodollar premium plan absent the 

enhanced subsidies provided under the 

ARP and IRA, then such consumers 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82584 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

185When an enrollee retroactively terminates 

QHP coverage, State law generally requires that the 

premiums paid in the months for which coverage 

is retroactively terminated be refunded by the QHP 

issuer. 

186Providers are generally required to submit 

claims to Medicare no later than 12 months after the 

date of service. However, in situations where 

Medicare Part A or B entitlement did not exist at 

the time service was furnished, or the beneficiary 

receives notice of Medicare Part A or B entitlement 

after the date of service, the 12-month limit may be 

extended for 6 months following the month in 

which the beneficiary receives notice of Medicare 

Part A or Part B entitlement. CMS. (rev. 2023, Jan. 

19). Medicare Claims Processing Manual, 100–04, 

Chapter 1, Section 70.7.2 ‘‘Retroactive Medicare 

Entitlement.’’ https://www.cms.gov/regulationsand-guidance/guidance/manuals/downloads/ 

clm104c01.pdf. 

187Although this regulation permits QHP 

enrollees to request prospective terminations, 

limitations in operations in the Exchanges on the 

Federal platform prevent one enrollee in an 

enrollment group from ending coverage 

prospectively when the other enrollees in the group 

intend to remain enrolled. 

would be unlikely to use the proposed 

150 FPL SEP in a way that caused 

adverse selection. In other words, we 

believe that the availability of these 

zero-dollar bronze plans for consumers 

at or below 150 percent FPL mitigates 

the risk pool impact this proposed 

change might cause in addition to 

mitigating downstream hardships for 

consumers who purchase insurance 

without subsidies or with only small 

subsidies. Therefore, we are proposing 

to make the 150 percent FPL SEP, at the 

option of an Exchange, permanent by 

amending § 155.420(d)(16) to remove 

the requirement that the SEP only be 

available during periods of time when 

the applicable taxpayer’s applicable 

percentage for purposes of calculating 

the premium assistance amount, as 

defined in section 36B(b)(3)(A) of the 

Code, is set at zero. 

We seek comment on this proposal. 

18. Termination of Exchange Enrollment 

or Coverage (§ 155.430) 

We propose to add 

§ 155.430(b)(1)(iv)(D) to permit enrollees 

on Exchanges using the Federal 

platform to retroactively terminate their 

enrollment in a QHP through the 

Exchange 185 when the enrollee enrolls 

in Medicare Parts A or B retroactively 

effective to the day before the date 

Medicare coverage begins. We also 

propose making implementation of this 

proposal optional for State Exchanges 

and request comment on whether it 

should instead be mandatory. 

In the 2017 Payment Notice (81 FR 

12203), we implemented regulations at 

§ 155.430(b)(1)(iv) to permit Exchange 

enrollees to retroactively terminate 

coverage in the following 

circumstances: (1) the enrollee 

demonstrates to the Exchange that the 

enrollee attempted to terminate the 

enrollee’s coverage or enrollment in a 

QHP and experienced a technical error 

that did not allow the enrollee to 

terminate the enrollee’s coverage or 

enrollment through the Exchange; (2) 

the enrollee demonstrates to the 

Exchange that the enrollee’s enrollment 

in a QHP through the Exchange was 

unintentional, inadvertent, or erroneous 

and was the result of the error or 

misconduct of an officer, employee, or 

agent of the Exchange or HHS, its 

instrumentalities, or a non-Exchange 

entity providing enrollment assistance 

or conducting enrollment activities; and 

(3) the enrollee demonstrates to the 

Exchange that the enrollee was enrolled 

in a QHP without the enrollee’s 

knowledge or consent by any third 

party, including third parties who have 

no connection with the Exchange. 

Additionally, § 155.430(d)(2)(v) 

authorizes Exchanges to retroactively 

terminate QHP coverage effective the 

day before Medicaid, CHIP, or BHP 

eligibility begins, though the Exchanges 

on the Federal platform do not permit 

retroactive terminations in this scenario. 

While SBE–FPs generally are required to 

follow the Exchanges on the Federal 

platform in matters of enrollment and 

disenrollment policy and operations, 

because this regulation relates to 

Medicaid, CHIP, or BHP programs, with 

which States are more closely involved 

than we are, we have provided SBE–FPs 

the option to implement retroactive 

terminations in these circumstances, 

despite the Federal platform not doing 

so. 

Currently, we do not permit enrollees 

in Exchanges on the Federal platform to 

retroactively terminate QHP coverage 

due to retroactive enrollment in other 

coverage, including Medicare. When 

coverage is retroactively terminated, 

claims submitted during the period of 

terminated coverage will be reversed by 

the QHP issuer and become the 

responsibility of the enrollee, who must 

ensure claims are submitted by the 

provider to the new insurance provider, 

if coverage is effective retroactively.186

State law would generally require that 

QHP issuers refund the enrollee any 

premiums paid during the months in 

which coverage is retroactively 

terminated. 

In the 2017 Payment Notice (81 FR 

12203), we stated that retroactive 

terminations would be limited to 

situations in which an enrollee was 

prevented from terminating coverage 

due to error or misconduct, and was not 

intended for enrollees who did not 

understand the rules of their enrollment 

and wished to avoid tax liability for 

APTC for which they were ineligible, 

nor for enrollees who seek retroactive 

termination of coverage at the end of the 

plan year because they did not use the 

coverage. We continue to believe that it 

is important to limit the scenarios in 

which enrollees can seek retroactive 

termination of coverage, in part to 

address concerns raised by issuers of 

adverse selection if healthy enrollees are 

able to retroactively terminate coverage 

they did not use. However, we regularly 

receive requests from Exchange 

enrollees through the Marketplace Call 

Center to retroactively terminate QHP 

coverage because they enrolled 

retroactively in Medicare, and these 

requests are denied because they are not 

currently authorized by regulation. 

Unlike enrollees who enroll in Medicare 

prospectively when they turn 65, 

individuals who enroll in Medicare 

retroactively did not have the 

opportunity to prospectively terminate 

Exchange coverage, and thus, did not 

merely fail to understand the terms of 

their QHP enrollment. 

Generally, consumers who become 

eligible for Medicare once they turn 65 

can enroll prospectively, and those who 

are enrolled in Exchange coverage can 

normally terminate coverage 

prospectively so that there is no overlap 

between the two. In accordance with 

§ 155.430(d)(2)(iii), Exchange enrollees 

may request same-day or prospective 

termination of coverage,187 and 

Exchange communications instruct 

enrollees to terminate coverage once 

they learn they will be enrolled in other 

coverage to avoid an overlap. Exchange 

enrollees approaching their 65th 

birthday also receive communications 

from the Exchange advising them that 

they will be ineligible for APTC if they 

enroll in Medicare and instructing them 

to terminate Exchange coverage if they 

do not wish to have an overlap between 

the two. However, there are scenarios in 

which a consumer may retroactively 

enroll in Medicare Parts A or B 

coverage. For example, consumers can 

become eligible for retroactive Medicare 

Parts A and B due to retroactive 

eligibility for SSDI benefits, in which 

case the consumer is entitled to 

Medicare Parts A and B beginning with 

the 25th month of SSDI entitlement 

(that is, receipt of the SSDI benefit). If 

the SSA determines the consumer to be 

eligible more than 25 months back, the 

consumer will receive Medicare Part A 

automatically beginning with the 25th 

month of SSDI entitlement and will 

have the option of enrolling in Part B 

Medicare retroactive to the 25th month 

of SSDI entitlement (though they also 

have the choice to enroll in Part B 


ddrumheller on DSK120RN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82585 

prospectively). In addition, when a 

consumer has not been automatically 

enrolled in Medicare Part A and applies 

for Medicare Part A after their 65th 

birthday, their entitlement to Part A 

begins (that is, when coverage starts) up 

to six months prior to the date of the 

application but no sooner than the 

consumer’s 65th birthday. 

Because consumers who enroll 

retroactively in Medicare Parts A or B 

may not be able to avoid an overlap in 

coverage by prospectively terminating 

their Exchange coverage, we believe it is 

appropriate to allow them to 

retroactively terminate Exchange 

coverage back to the day before 

Medicare coverage begins. Allowing 

consumers to request retroactive 

terminations in these scenarios ensures 

they can avoid an overlap between 

Exchange and Medicare coverage and 

avoid paying premium unnecessarily (if 

the consumer owes premium after the 

application of APTC). However, we note 

that consumers would not be required to 

request a retroactive termination and 

could maintain both Exchange and 

Medicare coverage if they wish. 

Consumers who enroll in Medicare 

retroactively are not categorically 

excluded from PTC eligibility for the 

period of retroactive coverage, and thus 

may not be required to repay APTC for 

the months of overlap when they file 

their taxes, in accordance with 26 CFR 

1.36B–2(c)(2)(iv); however, a QHP 

enrollee receiving APTC who is 

voluntarily requesting and is granted a 

retroactive QHP termination relieves the 

government of subsidizing two forms of 

coverage, as the APTC is recouped for 

the terminated QHP coverage months. 

Although it is also possible for 

consumers to become retroactively 

eligible for Medicaid, and have an 

unavoidable overlap with Exchange 

coverage, we believe it is appropriate to 

limit the applicability of this provision 

in the Exchanges on the Federal 

platform to Medicare. We previously 

allowed retroactive terminations of 

Exchange coverage due to enrollment in 

Medicaid, CHIP, and the BHP, but 

removed this option for the FFEs in the 

2019 Payment Notice (83 FR 16930). 

This option was retained for State 

Exchanges and SBE–FPs, which as 

previously mentioned are more closely 

integrated into their State-administered 

Medicaid programs. In response to 

commenters who opposed this change, 

we noted that although consumers in 

these cases may wish to recoup 

premiums paid during the period of 

overlapping coverage, there is 

significant risk that providers who 

participate in the consumer’s Exchange 

coverage do not participate in Medicaid, 

CHIP, or BHP, which would leave the 

consumer with unexpected out-ofpocket costs. However, because 

Medicare is accepted by many, if not 

most, providers, it is less likely that a 

retroactive QHP disenrollment would 

leave consumers responsible for claims 

made during the period of retroactive 

Medicare enrollment. 

We note that in the FFEs and SBE– 

FPs, Marketplace Call Center workers 

and caseworkers have system-based 

evidence of both QHP and Medicare 

eligibility dates and would be able to 

verify that an enrollee requesting 

retroactive termination is enrolled in 

Medicare and approve retroactive 

requests. This would ensure that 

enrollees cannot retroactively terminate 

their QHP coverage for other, 

unauthorized reasons such as low 

utilization of coverage, which could 

create an adverse selection risk. We also 

note that, similar to retroactive 

Medicare enrollment, consumers who 

retroactively enroll in Medicaid 

coverage are not required to repay APTC 

for the months in which they 

retroactively enrolled when they file 

their taxes, consistent with 26 CFR 

1.36B–2(c)(2)(iv). 

Finally, in recognition of the 

challenges associated with retroactively 

adjusting coverage for preceding years, 

we propose to require that enrollees 

must request retroactive termination of 

coverage within 60 days of the date they 

retroactively enroll in Medicare (the 

date the enrollment occurs, not the 

Medicare coverage effective date). In the 

2017 Payment Notice (81 FR 12203), we 

requested comment on and finalized a 

similar requirement for the other 

retroactive enrollment scenarios 

permitted under § 155.430(b)(1)(iv). We 

believe implementing this requirement 

would be appropriate here as well. 

Permitting retroactive enrollments too 

far in the past can be operationally 

burdensome for Exchanges, and for 

issuers that must reverse claims and 

refund premiums for the months of 

terminated coverage. We believe that a 

window of 60 days provides an 

appropriate amount of time for an 

enrollee who retroactively enrolls in 

Medicare coverage to request retroactive 

termination of Exchange coverage and is 

consistent with the limitation placed on 

requests for the other permissible 

retroactive termination scenarios at 

§ 155.430(b)(1)(iv). 

We request comments on this 

proposal. Specifically, we request 

comment on whether the public benefits 

of this proposal to honor an enrollee’s 

choice, recoup APTC for duplicative 

coverage, and protect the individual 

market risk pool outweighs the risk that 

an enrollee would be left with 

uncovered claims for the overlapping 

period. We also request comment on the 

best way to ensure that enrollees have 

the necessary information to make an 

informed decision about whether to 

retroactively terminate coverage. If this 

proposal is finalized, we intend to 

monitor the impact to minimize harm to 

consumers. We also seek comment on 

whether this provision should be 

mandatory for State Exchanges, rather 

than optional, and if so, how State 

Exchanges would verify retroactive 

Medicare enrollment dates. 

19. Establishment of Exchange Network 

Adequacy Standards (§ 155.1050) 

We propose to require that State 

Exchanges and SBE–FPs establish and 

impose quantitative time and distance 

QHP network adequacy standards that 

are at least as stringent as the FFEs’ time 

and distance standards established for 

QHPs under § 156.230. We also propose 

that State Exchanges and SBE–FPs be 

required to conduct quantitative 

network adequacy reviews prior to 

certifying any plan as a QHP, consistent 

with the reviews conducted by the FFEs 

under § 156.230. We further propose to 

require State Exchanges and SBE–FPs to 

permit issuers that are unable to meet 

the specified network adequacy 

standards to participate in a justification 

process after submitting their initial 

network adequacy data to account for 

variances and potentially earn QHP 

certification. Finally, we propose to 

mandate that State Exchanges and SBE– 

FPs require all issuers seeking QHP 

certification to submit information to 

the State Exchange or SBE–FP about 

whether network providers offer 

telehealth services. 

Understanding that some State 

Exchanges or SBE–FPs may need to 

promulgate regulations to comply with 

the proposed provisions requiring State 

Exchanges and SBE–FPs to impose 

quantitative network adequacy 

standards and conduct quantitative 

network adequacy reviews, as well as 

the requirement related to QHP issuer 

submission of telehealth information, 

we propose that these provisions would 

be effective for plan years beginning on 

or after January 1, 2025, to 

accommodate the time it may take for a 

State Exchange or SBE–FP to come into 

compliance. We are of the view that 

strong network adequacy time and 

distance standards across all Exchanges 

would enhance consumer access to 

quality, affordable care through the 

Exchanges. 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82586 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

188 2023 Final Letter to Issuers in the Federallyfacilitated Exchanges. https://www.cms.gov/cciio/ 

resources/regulations-and-guidance/downloads/ 

final-2023-letter-to-issuers.pdf. 

189Essential Community Providers and Network 

Adequacy. https://www.qhpcertification.cms.gov/s/

ECP%20and%20Network%20Adequacy. 

190 Id. 

a. Federal Network Adequacy Policy 

Under the Affordable Care Act 

Section 1311(c)(1)(B) of the ACA 

directs the Secretary of HHS to establish 

by regulation certification criteria for 

QHPs, including criteria that require 

QHPs to ensure a sufficient choice of 

providers (in a manner consistent with 

applicable provisions under section 

2702(c) of the PHS Act) and provide 

information to current and prospective 

enrollees on the availability of innetwork and out-of-network providers. 

Federal network adequacy standards 

were first detailed in the Exchange 

Establishment Rule (77 FR 18418) and 

codified at § 156.230. 

In the Exchange Establishment Rule 

(77 FR 18418), we established the 

minimum network adequacy criteria 

that plans must meet to be certified as 

QHPs at § 156.230. The Exchange 

Establishment Rule (77 FR 18409 

through 18420) provided that an issuer 

of a QHP that uses a provider network 

must maintain a network that is 

sufficient in number and types of 

providers, including providers that 

specialize in mental health and 

substance use disorder services, to 

ensure that all services will be 

accessible to enrollees without 

unreasonable delay. In the 2016 

Payment Notice (80 FR 10830 through 

10833), we modified § 156.230(a) in part 

to specify that network adequacy 

requirements only apply to QHPs that 

use a provider network, and that a 

provider network includes only 

providers that are contracted as innetwork. For PYs 2015 through 2017, 

the FFEs conducted network adequacy 

reviews of time and distance standards 

for QHP issuers. 

The 2017 Market Stabilization final 

rule (82 FR 18371 through 18372) 

deferred reviews of network adequacy 

for QHPs to States that we determined 

to have a sufficient network adequacy 

review process, an approach that was 

expanded on in the 2019 Payment 

Notice (83 FR 17024 through 17026). In 

the 2019 Payment Notice (83 FR 17024 

through 17026), we deferred reviews of 

network adequacy for QHPs to States 

that possessed sufficient legal authority 

to enforce standards that were at least 

equal to the reasonable access standard 

defined in § 156.230 and that had the 

means to assess the adequacy of plans’ 

provider networks. In States without the 

legal authority or means to assess and 

ensure network adequacy, we relied on 

an issuer’s accreditation (commercial or 

Medicaid) from an HHS-recognized 

accreditation body to determine 

compliance with network adequacy 

requirements. For PYs 2018 through 

2022, we determined that all States had 

sufficient legal authority and means to 

assess the adequacy of QHP provider 

networks. 

In part 1 of the 2022 Payment Notice 

(86 FR 6154 through 6155), we provided 

a clarification to the network adequacy 

rules to reflect that § 156.230 does not 

apply to plans seeking QHP certification 

that do not differentiate benefits based 

on whether or not enrollees receive 

covered services from providers that are 

members of the plan’s provider network. 

The network adequacy review policy 

finalized in the 2019 Payment Notice 

was challenged in City of Columbus, et 

al. v. Cochran, 523 F. Supp. 3d 731 (D. 

Md. 2021). Specifically, on March 4, 

2021, the United States District Court 

for the District of Maryland vacated the 

2019 Payment Notice’s policy that 

deferred to States the Federal 

government’s reviews of the network 

adequacy of QHPs and plans seeking 

QHP certification to be offered through 

the FFEs. With the FFE QHP 

certification cycle for PY 2022 

beginning on April 22, 2021, we were 

not able to fully implement the aspects 

of the court’s decision regarding 

network adequacy in time for issuers to 

design plans and for us to be prepared 

to consider whether to certify such 

plans as QHPs for PY 2022. However, 

we noted in part 2 of the 2022 Payment 

Notice (86 FR 24264 through 24265) that 

we planned to propose specific steps to 

address implementation of this aspect of 

the court’s decision in future 

rulemaking. 

In the 2023 Payment Notice (87 FR 

27322), we finalized network adequacy 

standards for issuers in the FFEs that 

would apply for PYs 2023 and later. 

Specifically, in that rule (87 FR 27323 

through 27328), we finalized that we 

would evaluate plans seeking 

certification as QHPs in all States served 

by an FFE, including conducting 

network adequacy reviews based on 

time and distance standards. In PY 

2023,188 we assessed time and distance 

standards at the county level and 

classified counties into five county type 

designations: Large Metro, Metro, Micro, 

Rural, and Counties with Extreme 

Access Considerations (CEAC). We used 

a county type designation method that 

is based upon the population size and 

density parameters of individual 

counties. To assess whether QHPs 

complied with these standards, we 

reviewed provider data for in network 

providers that QHP issuers submitted to 

us via our ECP/NA template.189 For 

each specialty and time and distance 

standard, we reviewed the issuersubmitted data to ensure that the plan 

provided access within specified times 

and distances to at least one provider in 

each of the provider type categories for 

at least 90 percent of enrollees. If a QHP 

did not meet one or more of the time 

and distance standards, the issuer could 

(1) add more contracted providers to the 

network to come into alignment with 

the standards and re-submit their 

updated ECP/NA template to us, and/or 

(2) submit a completed Network 

Adequacy Justification Form.190 This 

justification process required issuers 

that did not yet meet the time and 

distance standards to detail: (1) the 

reasons that one or more time and 

distance standards were not met; (2) the 

mitigating measures the issuer is taking 

to ensure enrollee access to respective 

provider specialty types; (3) information 

regarding enrollee complaints regarding 

network adequacy; and (4) the issuer’s 

efforts to recruit additional providers. 

We used the provider’s data submitted 

on the ECP/NA template and the 

completed Network Adequacy 

Justification Form submitted as part of 

the certification process to assess 

whether the issuer met the regulatory 

requirement, prior to making the 

certification decision. 

In the 2023 Payment Notice (87 FR 

27328), we also finalized that, starting 

in PY 2025, we would also evaluate 

QHPs for compliance with appointment 

wait time standards.In the 2023 

Payment Notice (87 FR 27323), we 

finalized that CMS would not evaluate 

network adequacy in States performing 

plan management functions that elect to 

perform their own reviews of plans 

seeking QHP certification in their State, 

provided that the State applies and 

enforces quantitative network adequacy 

standards that are at least as stringent as 

the federal network adequacy standards 

established for QHPs under 45 CFR 

156.230, and that reviews are conducted 

prior to plan confirmation to support 

timely QHP certification. 

In response to the network adequacy 

proposals proposed in the 2023 

Payment Notice proposed rule, many 

commenters also requested that we 

extend Federal network adequacy 

standards to State Exchanges in future 

rulemaking (87 FR 27334). Several 

commenters suggested that State 

alignment with Federal standards would 

be ideal, and that Federal standards 


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191Health Benefit Plan Network Access and 

Adequacy Model Act. (2015, 4th Quarter). https:// 

www.nh.gov/insurance/legal/documents/naic_

model_act_network_adequacy.pdf. 

192Hall, Ginsburg. (2017, Sep.). A Better 

Approach to Regulating Provider Network 

Adequacy. https://www.brookings.edu/wp-content/ 

uploads/2017/09/regulatory-options-for-providernetwork-adequacy.pdf. 

193 Id. 

194 Id. 

195 Id. 

196 Id. 

should offer minimum standards, or a 

‘‘strong floor,’’ that all States must meet. 

In the 2024 Payment Notice (87 FR 

78285 through 78287), we finalized that 

all individual market QHPs, including 

individual market stand-alone dental 

plans (SADPs), and all SHOP QHPs 

across all Exchanges must use a network 

of providers that complies with the 

standards described in §§ 156.230 and 

156.235 (with a limited exception for 

certain SADP issuers as specified under 

§ 156.230(a)(4)). We also further 

deferred the imposition of appointment 

wait time standards to PY 2025. 

b. Network Adequacy Standards and 

Reviews Across Exchanges 

Network adequacy is a key factor 

affecting consumers’ access to care. 

While the FFEs impose uniform 

network adequacy standards across the 

States they serve that require QHP 

issuers to meet quantitative metrics, a 

similarly uniform network adequacy 

standard does not exist for States served 

by State Exchanges and SBE–FPs. 

Indeed, these circumstances prompted 

the National Association of Insurance 

Commissioners to develop the NAIC 

Health Benefit Plan Network Access and 

Adequacy Model Act (Model Act).191

The Model Act includes 

recommendations for qualitative 

network adequacy standards to which 

States could hold their issuers 

accountable and that require submission 

of access plans. The Model Act, 

however, does not specify what 

constitutes network adequacy, and, 

currently, only a few State Exchanges 

and SBE–FPs have adopted the full 

Model Act, resulting in the lack of a 

strong floor for network adequacy 

standards among State Exchanges and 

SBE–FPs. 

State Exchanges and SBE–FPs 

currently have a mix of network 

adequacy policies in place, and 

approximately 25 percent of those fail to 

impose any quantitative standard. 

Quantitative network adequacy 

standards can be monitored relatively 

easily and applied objectively and may 

include standards that measure 

provider-to-enrollee ratios, time and 

distance, or appointment wait times.192

On the other hand, a qualitative 

approach to network adequacy typically 

articulates a broad, general standard of 

adequacy and typically grants regulators 

or insurers discretion to determine how 

to measure compliance.193 State 

regulators using this approach may 

require issuers to simply articulate how 

they determine and measure adequacy 

in their networks.194 Once regulators 

approve an issuer’s network adequacy 

plan using this approach, they then 

typically let issuers self-monitor their 

own compliance.195 As opposed to 

conducting routine audits or requiring 

periodic reports of compliance, State 

regulators usually rely on consumer 

complaints to highlight situations that 

might require investigation.196

Based on our experience conducting 

network adequacy reviews and 

regulating QHPs, as well as feedback 

from interested parties, including the 

many commenters who requested in the 

2023 Payment Notice (87 FR 27334) that 

HHS extend Federal network adequacy 

standards to State Exchanges in future 

rulemaking, we are now of the view that 

no matter the State in which a QHP is 

offered, some quantitative analysis is 

necessary for an Exchange to objectively 

monitor network adequacy and 

determine whether a QHP provides 

enrollees in that State with access to an 

adequate network of providers. 

Moreover, the proliferation in recent 

years of QHP issuers with narrower 

provider networks raises several 

consumer protection concerns. QHPs 

with narrower networks may lack access 

to specific provider specialties innetwork, resulting in significant out-ofpocket expenses for consumers who 

must seek care out-of-network or 

resulting in consumers forgoing care to 

avoid these expenses. We have also 

been made aware, through 

communications with interested parties, 

of issues faced by consumers where innetwork emergency physicians and 

mental health providers are in limited 

supply or, in the case of in-network 

emergency physicians, not available at 

in-network hospitals. Additionally, the 

proliferation of narrower networks risks 

consumers being enrolled in plans 

whose networks do not have sufficient 

capacity to serve them or whose 

providers are too geographically 

dispersed to be reasonably accessible. 

Therefore, we propose to establish a 

national floor of quantitative network 

adequacy standards and network 

adequacy reviews. Although a number 

of State Exchanges and SBE–FPs have 

taken meaningful steps towards 

ensuring the adequacy of QHP 

networks, we are of the view that every 

Exchange should apply quantitative 

network adequacy standards and 

conduct a thorough review and analysis 

of issuer compliance with these 

standards to effectively evaluate the 

adequacy of QHP networks in order to 

ensure that all consumers, regardless of 

which State they live in, have timely 

access to providers to manage their 

health care needs. 

c. Proposals Related to State Exchange 

and SBE–FP Network Adequacy 

Standards and Reviews 

We propose that for PY 2025 and 

future plan years, State Exchanges and 

SBE–FPs must (1) establish and impose 

quantitative time and distance network 

adequacy standards for QHPs that are at 

least as stringent as standards for QHPs 

participating on the FFEs under 

§ 156.230; and (2) conduct reviews of a 

plan’s compliance with those 

quantitative network adequacy 

standards prior to certifying any plan as 

a QHP, consistent with the manner in 

which the FFEs review the network 

adequacy of plans under § 156.230. 

i. Quantitative Network Adequacy Time 

and Distance Standards 

For plans years beginning on or after 

January 1, 2025, we propose that State 

Exchanges and SBE–FPs establish and 

impose quantitative time and distance 

network adequacy standards that are at 

least as stringent as the FFEs’ time and 

distance standards established for QHPs 

under § 156.230. 

For purposes of this proposal, ‘‘at 

least as stringent as’’ means time and 

distance standards that use a specialty 

list that includes at least the same 

specialties as our provider specialty lists 

and time and distance parameters that 

are at least as short as our parameters. 

States would be permitted to implement 

network adequacy standards that are 

more stringent than those performed by 

the FFEs under § 156.230. In other 

words, States could use a specialty list 

that is broader than our specialty lists, 

but it must include all the provider 

specialties included in our lists. 

Similarly, the time and distance 

parameters could also be narrower than 

our parameters, meaning they could 

require shorter time and/or distances, 

but they cannot be less demanding than 

our time and distance parameters. 

Quantitative time and distance 

standards help strengthen QHP 

enrollees’ timely access to a variety of 

providers to meet their health care 

needs, which in turn helps ensure that 

enrollees can receive health care 

services without unreasonable delay. 

Additionally, quantitative time and 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82588 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

distance standards, when varied by 

county type, provide a useful 

assessment of whether QHPs provide 

reasonable access to care and a more 

comprehensive evaluation of the 

adequacy of QHPs’ networks. 

In the 2023 Payment Notice (87 FR 

27322), we adopted time and distance 

standards that the FFEs would use to 

assess whether plans to be certified as 

QHPs in the FFEs meet network 

adequacy standards. The proposed 

provider specialty lists for time and 

distance standards for PY 2023 were 

informed by prior HHS network 

adequacy requirements, consultation 

with interested parties, and other 

Federal and State health care programs, 

such as Medicare Advantage and 

Medicaid. The provider specialty lists 

that were finalized for PY 2023 covered 

more provider types than previously 

evaluated under FFE standards so that 

QHP networks would be robust, 

comprehensive, and responsive to QHP 

enrollees’ needs. We believe that these 

provider specialty lists promote access 

to a variety of provider types and as a 

result strengthen consumer access to 

health care services without 

unreasonable delay. To establish a 

national floor for quantitative network 

adequacy standards, we propose that the 

provider specialty list that State 

Exchanges and SBE–FPs use must 

include, at a minimum, the providers in 

the provider specialty lists for the FFEs 

that were applicable to PY 2023. Those 

lists are included in this preamble, as 

well. 

Consistent with the standards for the 

FFEs and to strengthen QHP enrollees’ 

timely access to a variety of providers to 

meet their health care needs, we 

propose that State Exchanges and SBE– 

FPs’ time and distance standards would 

be calculated at the county level and 

vary by county designation. State 

Exchanges and SBE–FPs would be 

required to use a county type 

designation method that is based on the 

population size and density parameters 

of individual counties. Under our 

proposal, the time and distance 

standards State Exchanges and SBE–FPs 

would establish and impose would 

apply to the provider specialty lists 

contained in Tables 10 and 11. To count 

towards meeting the time and distance 

standards, individual and facility 

providers listed on Tables 10 and 11 

would have to be appropriately 

licensed, accredited, or certified to 

provide services in their State, as 

applicable, and would need to have inperson services available. 

BILLING CODE 4120–01–P 


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BILLING CODE 4120–01–P 

The county-specific time and distance 

parameters that QHPs would be 

required to meet would be detailed in 

future guidance, in the annual CMS 

Letter to Issuers in the Federallyfacilitated Exchanges. We would 


ddrumheller on DSK120RN23PROD with PROPOSALS2EP24NO23.022</GPH> EP24NO23.023</GPH>

TABLE 10: Individual Provider Specialty List for Time and Distance Standards 

Individual Specialty Types 

Allergy and Immunology 

Cardiology 

Cardiothoracic Surgery 

Chiropractor 

Dental 

Dermatology 

Emergency Medicine 

Endocrinology 

ENT/Otolarvngology 

Gastroenterology 

General Surgery 

Gynecology, OB/GYN 

Infectious Diseases 

Nephrology 

Neurology 

Neurosurgery 

Occupational Therapy 

Oncology - Medical, Surgical 

Oncology - Radiation 

Ophthalmology 

Orthopedic Surgery 

Outpatient Clinical Behavioral Health (Licensed, accredited, or certified professionals) 

Physical Medicine and Rehabilitation 

Physical Therapy 

Plastic Surgery 

Podiatry 

Primarv Care - Adult 

Primarv Care - Pediatric 

Psychiatry 

Pulmonology 

Rheumatology 

Speech Therapy 

Urology 

Vascular Surgery 

TABLE 11: Facility Specialty List for Time and Distance Standards 

Facility Suecialtv Tvoes 

Acute Inpatient Hospitals (Must have Emergency services available 24/7) 

Cardiac Catheterization Services 

Cardiac Surgery Program 

Critical Care Services - Intensive Care Units (ICU) 

Diagnostic Radiology (Free-standing; hospital outpatient' ambulatory health facilities with Diagnostic Radiology) 

Inoatient or Residential Behavioral Health Facilitv Services 

Mammography 

Outoatient Infusion/Chemotheraov 

Skilled Nursing Facilities 

Surgical Services (Outoatient or ASC) 

Urgent Care 
82590 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

consider industry standards in 

developing these standards. 

ii. Quantitative Network Adequacy 

Reviews 

For plans years beginning on or after 

January 1, 2025, we propose that State 

Exchanges and SBE–FPs be required to 

conduct quantitative network adequacy 

reviews prior to QHP certification, and 

that they conduct them consistent with 

network adequacy reviews conducted 

by the FFEs under § 156.230. 

Specifically, when we refer to the 

review being consistent with the 

network adequacy reviews conducted 

by the FFEs under § 156.230, we 

propose that State Exchanges and SBE– 

FPs would be required to conduct, prior 

to QHP certification, quantitative 

network adequacy reviews to evaluate 

compliance with requirements under 

§ 156.230(a)(1)(ii) and (iii), and 

(a)(2)(i)(A), while providing QHP 

certification applicants the flexibilities 

described under § 156.230(a)(2)(ii) and 

(a)(3) and (4). Under this proposal, State 

Exchanges and SBE–FPs would be 

prohibited from accepting an issuer’s 

attestation as the only means for plan 

compliance with network adequacy 

standards. We further propose that State 

Exchanges and SBE–FPs would make 

available to SADP applicants the limited 

exception available to SADPs under 

§ 156.230(a)(4), pursuant to which 

SADPs may not be required to meet FFE 

network adequacy standards under 

§ 156.230(a)(4), for the same reasons we 

made this exception available in the 

FFEs in the 2024 Payment Notice (88 FR 

25878 through 25879). This exception is 

not available to medical QHP issuers. 

iii. Quantitative Network Adequacy 

Review Justification Process 

We acknowledge that State-specific 

challenges may necessitate exceptions, 

and so we propose to require State 

Exchanges and SBE–FPs to permit 

issuers that are unable to meet the 

specified standards to participate in a 

justification process after submitting 

their initial data to account for 

variances, consistent with the processes 

specified under § 156.230(a)(2)(ii) and 

(a)(3) and (4). State-specific challenges 

could include barriers beyond an 

issuer’s control, such as provider supply 

shortages or topographic barriers. 

The issuer would include this 

justification as part of its QHP 

application and describe how the plan’s 

provider network provides an adequate 

level of service for enrollees and how 

the plan’s provider network will be 

strengthened and brought closer to 

compliance with the network adequacy 

standards prior to the start of the plan 

year. The issuer would be required to 

provide information as requested by the 

State Exchange or SBE–FP to support 

this justification. State Exchanges and 

SBE–FPs would be required to review 

the issuer’s justification to determine 

whether making such health plan 

available through the Exchange is in the 

interests of qualified individuals in the 

State or States in which such Exchange 

operates as specified under 

§ 156.230(a)(3). In making this 

determination, the factors State 

Exchanges and SBE–FPs could consider 

include whether the exception is 

reasonable based on circumstances such 

as the local availability of providers and 

variables reflected in local patterns of 

care. If the State Exchange or SBE–FP 

determines that making such health 

plan available through its Exchange is in 

the interests of qualified individuals in 

the State or States in which such 

Exchange operates, it could then certify 

the plan as a QHP. 

iv. Exception Process for State 

Exchanges and SBE–FPs 

We are aware that some States 

Exchanges employ robust, quantitative 

network adequacy standards that differ 

from those used by the FFEs, but still 

ensure that QHPs provide consumers 

with reasonable, timely access to 

practitioners and facilities to manage 

their health care needs, consistent with 

the ultimate aim of these proposals. In 

light of this, we propose a framework for 

granting exceptions to the requirements 

that State Exchanges and SBE–FPs are 

required to establish and impose 

network adequacy time and distance 

standards for QHPs that are at least as 

stringent as the standards applicable to 

QHPs in FFEs and conduct quantitative 

network adequacy reviews that are 

consistent with those carried out by the 

FFEs under § 156.230. We propose that 

HHS could grant State Exchanges and 

SBE–FPs an exception if it determines 

that the Exchange applies and enforces 

quantitative network adequacy 

standards that are different from the 

FFEs’ but ensure reasonable access as 

defined under § 156.230. The exception 

would be available only to State 

Exchanges and SBE–FPs that conduct 

quantitative reviews of network 

adequacy prior to certifying plans as 

QHPs. Exchanges seeking to employ 

alternative network adequacy standards 

would be required to submit an 

exception request, in a form and manner 

specified by HHS, and to support their 

exception request with evidence-based 

data demonstrating that such standards 

ensure access as defined under 

§ 156.230. 

For example, if a State were to 

provide quantitative evidence that their 

network adequacy time and distance 

standards that measure access by service 

types provide consumers with equal 

access to providers as the Federal 

network adequacy standards under 

§ 156.230 that measure access by 

provider types, we may grant the 

respective State’s request for an 

exception from measuring access by 

provider types. Additionally, if a State 

were to use different county type 

designations than the five county type 

designations that we use to assess QHP 

time and distance standards at the 

county level (that is, Large Metro, 

Metro, Micro, Rural, CEAC), we would 

consider the respective State’s request 

for an exemption from using the same 

five county type designations only if the 

State were to provide evidence that their 

alternative county type designations 

provide consumers with equal access to 

providers as the Federal network 

adequacy standards under § 156.230. 

Alternative quantitative network 

adequacy standards that we would 

review for potentially qualifying for the 

exemption must be supported by 

evidence-based data, demonstrating that 

such standards provide enrollees with a 

level of access to providers that is equal 

to or greater than that ensured by the 

FFE network adequacy standards under 

§ 156.230. 

Although we propose to establish 

minimum standards related to network 

adequacy in this proposed rule, we 

solicit comment on how States may be 

able to develop a combination of datadriven quantitative and qualitative 

standards, developed with input from 

interested parties, to assess network 

adequacy. In the 2020 Medicaid 

Program; Medicaid and Children’s 

Health Insurance Program (CHIP) 

Managed Care final rule (85 FR 72754, 

72802), we provided States the 

flexibility to develop quantitative 

network adequacy standards for 

determining network adequacy. In that 

rule, we noted that in some situations, 

time and distance may not be the most 

effective type of standard for 

determining network adequacy and that 

some States have found that the time 

and distance analysis produces results 

that may not accurately reflect provider 

availability. For example, a State that 

has a heavy reliance on telehealth in 

certain areas of the State may find that 

a health care provider-to-enrollee ratio 

is more useful in measuring meaningful 

access to all services without 

unreasonable delay, as the time it would 

take the enrollee, and the distance the 

enrollee would have to travel, to access 


ddrumheller on DSK120RN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82591 

197See Circular No. A–25 Revised. https://

www.whitehouse.gov/wp-content/uploads/2017/11/ 

Circular-025.pdf. 

the provider in-person could be well 

beyond applicable time and distance 

standards, but the enrollee may still be 

able to easily and quickly access many 

different providers on a virtual basis. 

(85 FR 72802) We seek comment on 

how we should administer the process 

for Exchanges to apply for these 

exceptions, including the appropriate 

timelines, and the data that would be 

required to be submitted as part of this 

request. We also seek comment on how 

we should evaluate the provider access 

offered by QHP issuers in a State that 

requests an exception to establish and 

impose quantitative network adequacy 

standards that are different from the 

FFEs’, whether and how to measure the 

access provided by those different 

standards over time, and how long an 

approved exemption should last. 

To ensure compliance with these 

proposed quantitative time and distance 

QHP network adequacy standards and 

review requirements, we would 

coordinate with State Exchanges and 

SBE–FPs to provide technical assistance 

to support their compliance with the 

requirements of this proposal and work 

with them should it be necessary to 

remedy any gaps in compliance. 

However, if a State Exchange or SBE–FP 

fails to comply with these standards, 

HHS could seek to take remedial action 

under its authorities related to Exchange 

program integrity. 

d. Proposal Related to QHP Reporting 

on Telehealth Services 

We propose to require State 

Exchanges and SBE–FPs to require that 

all issuers seeking certification of plans 

to be offered as QHPs submit 

information to the respective State 

Exchanges or SBE–FPs about whether 

network providers offer telehealth 

services. We propose that this 

requirement would be applicable 

beginning with the QHP certification 

cycle for PY 2025. This data would be 

for informational purposes; it would be 

intended to help inform the future 

development of telehealth standards 

and would not be displayed to 

consumers. We believe this information 

could be relevant to State Exchange and 

SBE–FP analysis of whether a QHP 

meets network adequacy standards. We 

note that this proposal is not intended 

to suggest that telehealth services would 

be counted in place of in-person service 

access for the purpose of meeting 

network adequacy standards for PY 

2025. While we acknowledge the 

growing importance of telehealth, we 

want to ensure that telehealth services 

do not reduce the availability of inperson care. 

For this purpose, telehealth 

encompasses professional consultations, 

office visits, and office psychiatry 

services delivered through technologybased methods, including virtual checkins, remote evaluation of pre-recorded 

patient data, and inter-professional 

internet consultations. Currently, for 

issuers in FFEs to comply with 

telehealth reporting standards, issuers 

must indicate whether each provider 

offers telehealth with the options ‘‘Yes,’’ 

‘‘No,’’ or ‘‘Requested information from 

the provider, awaiting their response.’’ 

We are proposing that State Exchanges 

and SBE–FPs also impose this same 

standard. 

We seek comment on this proposal, 

including comments on how we might 

incorporate telehealth availability into 

network adequacy standards in future 

plan years. 

f. Additional Network Adequacy 

Standards 

To reduce burden on State Exchanges 

and SBE–FPs that are not yet 

conducting quantitative network 

adequacy reviews, we are not proposing 

at this time that State Exchanges and 

SBE–FPs enforce appointment wait time 

standards or that State Exchanges and 

SBE–FPs ensure that the provider 

network of each QHP meets applicable 

standards specified in § 156.230(b) 

through (e). However, we seek comment 

to inform any potential future 

enforcement of appointment wait time 

standards as well as the standards 

specified in § 156.230(b) through (e), 

and look forward to capturing a wide 

range of perspectives on these topics 

from various interested parties. We are 

especially interested in comments about 

how State Exchanges and SBE–FPs may 

enforce quantitative network adequacy 

standards for appointment wait times, 

as well as the impact enforcing these 

standards may have on issuers and 

consumers. 

We also seek comment on our 

proposal for State Exchanges and SBE– 

FPs to establish and impose quantitative 

time and distance QHP network 

adequacy standards that are at least as 

stringent as the FFEs’ time and distance 

standards established for QHPs under 

§ 156.230 and to conduct quantitative 

network adequacy reviews, prior to QHP 

certification, that are consistent with the 

reviews conducted by the FFEs under 

§ 156.230, including comment on 

whether we should amend § 156.230 in 

addition to § 155.1050 to directly apply 

the same standards applicable to issuers 

on FFEs to issuers in State Exchanges 

and SBE–FPs for plan years beginning 

on or after January 1, 2025. 

E. 45 CFR Part 156—Health Insurance 

Issuer Standards Under the Affordable 

Care Act, Including Standards Related 

to Exchanges 

1. FFE and SBE–FP User Fee Rates for 

the 2025 Benefit Year (§ 156.50) 

For the 2025 benefit year, we propose 

to retain the 2024 benefit year FFE user 

fee rate of 2.2 percent of total monthly 

premiums and an SBE–FP user fee rate 

of 1.8 percent of the total monthly 

premiums. 

Section 1311(d)(5)(A) of the ACA 

permits an Exchange to charge 

assessments or user fees on participating 

health insurance issuers as a means of 

generating funding to support its 

operations. If a State does not elect to 

operate an Exchange or does not have an 

approved Exchange, section 1321(c)(1) 

of the ACA directs HHS to operate an 

Exchange within the State. Accordingly, 

in § 156.50(c), we state that a 

participating issuer offering a plan 

through an FFE or SBE–FP must remit 

a user fee to HHS each month that is 

equal to the product of the annual user 

fee rate specified in the annual HHS 

notice of benefit and payment 

parameters for FFEs and SBE–FPs for 

the applicable benefit year and the 

monthly premium charged by the issuer 

for each policy where enrollment is 

through an FFE or SBE–FP. OMB 

Circular A–25 established Federal 

policy regarding user fees and what the 

fees can be used for.197 OMB Circular 

A–25 provides that a user fee charge 

will be assessed against each 

identifiable recipient of special benefits 

derived from Federal activities beyond 

those received by the general public. 

a. FFE User Fee Rates for the 2025 

Benefit Year 

Based on estimated costs, enrollment 

(including anticipated establishment of 

SBE–FPs or shifts to State Exchanges in 

certain States in which FFEs or SBE– 

FPs currently are operating), and 

premiums for the 2025 benefit year, we 

propose a 2025 user fee rate for all 

participating FFE issuers of 2.2 percent 

of total monthly premiums. 

Section 156.50(c)(1) provides that, to 

support the functions of FFEs, an issuer 

offering a plan through an FFE must 

remit a user fee to HHS, in the 

timeframe and manner established by 

HHS, equal to the product of the 

monthly user fee rate specified in the 

annual HHS notice of benefit and 

payment parameters for the applicable 

benefit year and the monthly premium 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82592 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

198We considered the most recent projections 

from the Congressional Budget Office (https://

www.cbo.gov/system/files/2023-05/51298-2023-05- 

healthinsurance.pdf) and, as we have in prior 

rulemakings, our own internal data. See, for 

example, 88 FR 25845. 

199 In 2023, South Dakota implemented the 

Medicaid expansion provision of the ACA, 

extending Medicaid eligibility to adults in that State 

under the age of 65 with incomes up to 138 percent 

of the Federal poverty level. North Carolina is 

expected to implement Medicaid expansion in 

2024. 

charged by the issuer for each policy 

where enrollment is through an FFE. As 

in benefit years 2014 through 2024, 

issuers seeking to participate in an FFE 

in the 2025 benefit year will receive two 

special benefits not available to issuers 

offering plans in State Exchanges: (1) 

the certification of their plans as QHPs; 

and (2) the ability to sell health 

insurance coverage through an FFE to 

individuals determined eligible for 

enrollment in a QHP. For the 2025 

benefit year, issuers participating in an 

FFE will receive special benefits from 

the following Federal activities: 

• Provision of consumer assistance 

tools; 

• Consumer outreach and education; 

• Management of a Navigator 

program; 

• Regulation of agents and brokers; 

• Eligibility determinations; 

• Enrollment processes; and 

• Certification processes for QHPs 

(including ongoing compliance 

verification, recertification, and 

decertification). 

Activities performed by the Federal 

government that do not provide issuers 

participating in an FFE with a special 

benefit are not covered by the FFE user 

fee. 

The proposed user fee rate reflects our 

estimates for the 2025 benefit year of 

costs for operating the FFEs, premiums, 

enrollment, and transitions in Exchange 

models from the FFE and SBE–FP 

models to either the SBE–FP or State 

Exchange models. The total enrollment 

in Exchanges in States anticipated to 

transition from operating an SBE–FP to 

a State Exchange model represents 

premiums for which we will no longer 

collect user fees, and the total 

enrollment in Exchanges in States 

anticipated to transition from an FFE to 

an SBE–FP model represents premiums 

for which we will assess user fees at the 

lower SBE–FP rate. Thus, these 

anticipated transitions impact our total 

projected collections and may affect the 

FFE and SBE–FP rates and are 

considered as part of our calculation of 

our proposed user fee amounts. 

To develop the proposed 2025 benefit 

year FFE user fee rates, we considered 

a range of costs, premiums, and 

enrollment projections.198 For the 

proposed 2025 benefit year user fee 

rates, we estimated a reduction in 

contract costs partially or fully funded 

out of FFE and SBE–FP user fees from 

the 2024 benefit year due to the HHS 

funding for Exchange outreach activities 

related to Medicaid unwinding ending 

in 2024. We took several factors into 

consideration in choosing which 

premium and enrollment projections 

would inform the proposed 2025 FFE 

user fee rates. The enhanced PTC 

subsidies in section 9661 of the ARP 

were extended in section 12001 of the 

IRA through the 2025 benefit year. The 

extension of enhanced PTC subsidies 

significantly influenced our 

development of the 2025 enrollment 

and premium projections. We expect 

this provision of the IRA to sustain the 

higher enrollment levels observed in the 

2021 and 2022 benefit years after the 

ARP was established and, as a result, we 

expect the projected total premiums 

where the user fee applies to increase, 

thereby increasing the amount of user 

fees that will be collected. Our 2025 

enrollment estimates also account for 

the projected transitions of States from 

FFEs or SBE–FPs to State Exchanges, 

the enrollment impacts of section 1332 

waivers, and transitioning Medicaid 

Expansion States.199 We project that 

2025 benefit year premiums will 

generally increase at the rate of medical 

inflation. After considering the range of 

costs, premiums, and enrollment 

projections, we propose a 2025 user fee 

rate that will ensure adequate funding 

for Federal Exchange operations. 

We note that if any events 

significantly change our estimates 

around costs, premiums, or enrollment 

projections between this proposed rule 

and the final rule, we may modify the 

FFE and SBE–FP user fee rates that are 

proposed in this rule. For example, if 

enrollment during the open enrollment 

period for the 2024 plan year is 

significantly larger or smaller than 

anticipated, we would revise our 

enrollment projections, which could 

result in a modification of the FFE and 

SBE–FP proposed rates. The proposed 

FFE user fee rate for 2025 is 2.2 percent 

of total monthly premiums and is the 

same user fee rate as for the 2024 benefit 

year. After accounting for the impact of 

the proposed user fee rate, we estimate 

that we would have sufficient funding 

available to fully fund user-fee-eligible 

FFE activities. 

We seek comment on the proposed 

2025 FFE user fee rate. 

b. SBE–FP User Fee Rates for the 2025 

Benefit Year 

We propose to charge issuers offering 

QHPs through an SBE–FP a user fee rate 

of 1.8 percent of the monthly premium 

charged by the issuer for each policy 

under plans offered through an SBE–FP 

for the 2025 benefit year. 

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

issuer offering a plan through an SBE– 

FP must remit a user fee to HHS, in the 

timeframe and manner established by 

HHS, equal to the product of the 

monthly user fee rate specified in the 

annual HHS notice of benefit and 

payment parameters for the applicable 

benefit year and the monthly premium 

charged by the issuer for each policy 

where enrollment is through an SBE– 

FP. SBE–FPs enter into a Federal 

platform agreement with HHS to 

leverage the systems established for the 

FFEs to perform certain Exchange 

functions and enhance efficiency and 

coordination between State and Federal 

programs. The benefits provided to 

issuers in SBE–FPs by the Federal 

government include use of the FFE 

information technology and call center 

infrastructure used in connection with 

eligibility determinations for enrollment 

in QHPs and other applicable State 

health subsidy programs, as defined at 

section 1413(e) of the ACA, and QHP 

enrollment functions under 45 CFR part 

155, subpart E. The user fee rate for 

SBE–FPs is calculated based on the 

proportion of total FFE costs associated 

with Federal activities that provide 

SBE–FP issuers with special benefits, 

including costs that are associated with 

the FFE information technology 

infrastructure, the consumer call center 

infrastructure, and eligibility and 

enrollment services. 

To calculate the proposed SBE–FP 

rates for the 2025 benefit year, we used 

the same assumptions related to 

contract costs, enrollment, and 

premiums as we used for the proposed 

FFE user fee rates. As we explained 

previously in this section, the user fee 

rate for SBE–FPs is calculated based on 

the proportion of the total FFE costs 

associated with Federal activities that 

provide SBE–FP issuers with special 

benefits, which we estimate to be 

approximately 80 percent of total FFE 

costs. These FFE costs associated with 

Federal activities that provide SBE–FP 

issuers with special benefits include the 

costs associated with the FFE 

information technology infrastructure, 

the consumer call center infrastructure, 

and eligibility and enrollment services. 

Based on this methodology, the 

proposed 2025 SBE–FP user fee rate is 

the same user fee rate of 1.8 percent of 


ddrumheller on DSK120RN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82593 

200The scope of benefits of the State’s new EHBbenchmark plan may exceed the scope of benefits 

of the typical employer-sponsored or other jobbased plans only to the extent any supplementation 

is required to provide coverage within each EHB 

category at § 156.110(a). 

201Provided that the product has at least 10 

percent of the total enrollment of the five largest 

large group health insurance products in the State; 

the plan provides minimum value, as defined under 

§ 156.145; the benefits are not excepted benefits, as 

established under § 146.145(b) and § 148.220; and 

the benefits in the plan are from a plan year 

beginning after December 31, 2013. 

202For more information on the changes States 

have made to their EHB-benchmark plans, see 

https://www.cms.gov/CCIIO/Resources/DataResources/ehb. 

203For example, see https://www.regulations.gov/ 

comment/CMS-2022-0186-0270; https://

www.regulations.gov/comment/CMS-2022-0186- 

0412; and https://www.regulations.gov/comment/ 

CMS-2022-0186-0559. 

premiums that we established for the 

2024 benefit year. The proposed user fee 

rate for SBE–FP issuers for the 2025 

benefit year also includes assumptions 

about States transitioning from either 

the FFE model to an SBE–FP, or from 

an SBE–FP to a State Exchange for the 

2025 benefit year, which impacts the 

SBE–FP enrollment projections. As 

mentioned above, we also note that if 

any events significantly change our 

estimates around costs, premiums, or 

enrollment projections between this 

proposed rule and the final rule, we 

may modify the FFE and SBE–FP rates 

that are proposed in this rule. 

We seek comment on the proposed 

2025 SBE–FP user fee rate. 

2. State Selection of EHB-Benchmark 

Plans for Plan Years Beginning on or 

After January 1, 2027 (§ 156.111) 

For benefit years beginning on or after 

January 1, 2027, we propose to revise 

the standards for the State selection of 

EHB-benchmark plans at § 156.111 to: 

consolidate the options for States to 

change EHB-benchmark plans at 

§ 156.111(a); revise the scope of benefit 

requirements at § 156.111(b)(2); and 

amend § 156.111(e)(3) to require States 

to submit a formulary drug list as part 

of its application to change EHBbenchmark plans only if the State is 

seeking to change its prescription drug 

EHB. 

Section 1302 of the ACA provides for 

the establishment of an EHB package 

that includes coverage of EHBs (as 

defined by the Secretary of HHS), costsharing limits, and AV requirements. 

Among other requirements, the law 

directs that the EHBs be equal in scope 

to the benefits provided under a typical 

employer plan, and that they include at 

least the following 10 general categories 

and the items and services covered 

within the 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. 

We established requirements relating 

to the coverage of EHBs in the EHB Rule 

(78 FR 12834). In the 2019 Payment 

Notice (83 FR 17009), we added 

§ 156.111 to provide States with 

additional options from which to select 

an EHB-benchmark plan for plan years 

beginning on or after January 1, 2020. In 

the 2023 Payment Notice (87 FR 27290), 

we revised § 156.111 to require States to 

notify HHS of the selection of a new 

EHB-benchmark plan by the first 

Wednesday in May of the year that is 2 

years before the effective date of the 

new EHB-benchmark plan, and stated 

that if a State did not provide such 

notification to HHS, the State’s EHBbenchmark plan for the applicable plan 

year would be that State’s EHBbenchmark plan applicable for the prior 

year. In the EHB RFI (87 FR 74097), we 

solicited public comment on a variety of 

topics related to the scope of benefits in 

health plans subject to the EHB 

requirements of the ACA, including the 

description of the EHB, the scope of 

benefits covered in typical employer 

plans, the review of EHB, coverage of 

prescription drugs, and substitution of 

EHB. 

Section 156.111(a) describes three 

options for States to change their EHBbenchmark plan. States may: (1) select 

the EHB-benchmark plan that another 

State used for the 2017 plan year under 

§§ 156.100 and 156.110; (2) replace one 

or more categories of EHBs established 

at § 156.110(a) in the State’s EHBbenchmark plan used for the 2017 plan 

year with the same category or 

categories of EHB from the EHBbenchmark plan that another State used 

for the 2017 plan year under §§ 156.100 

and 156.110; or (3) otherwise select a set 

of benefits that would become the 

State’s EHB-benchmark plan. 

Among other requirements, a State 

changing its EHB-benchmark plan must 

comply with two scope of benefit 

requirements at § 156.111(b)(2)(i) and 

(ii). The first scope of benefit 

requirement at § 156.111(b)(2)(i), also 

known as the typicality standard, 

requires the State’s proposed EHBbenchmark plan to provide a scope of 

benefits equal to the scope of benefits 

provided under a typical employer 

plan,200 in accordance with section 

1302(b)(2) of the ACA. As defined at 

§ 156.111(b)(2)(i)(A) and (B), a typical 

employer plan is either: one of the 

selecting State’s 10 base-benchmark 

plan options established at § 156.100 

and available for the selecting State’s 

selection for the 2017 plan year or the 

largest health insurance plan by 

enrollment within one of the five largest 

large group health insurance products 

by enrollment in the State.201 The 

second scope of benefit requirement at 

§ 156.111(b)(2)(ii), also known as the 

generosity standard, requires the State’s 

proposed EHB-benchmark plan to 

provide a scope of benefits that does not 

exceed the generosity of the most 

generous among a set of comparison 

plans, including: the State’s EHBbenchmark plan used for the 2017 plan 

year, and any of the State’s basebenchmark plan options for the 2017 

plan year described in § 156.100(a)(1), 

supplemented as necessary under 

§ 156.110. 

Under § 156.111(e)(3), if a State is 

selecting its EHB-benchmark plan by 

selecting a set of benefits that would 

become the State’s EHB-benchmark plan 

under § 156.111(a)(3), the State must 

submit a formulary drug list in a format 

and manner specified by HHS. 

Nine States have changed their EHBbenchmark plans since 2018 by 

complying with the requirements at 

§ 156.111.202 Based on interactions with 

these States and feedback received in 

response to the EHB RFI,203 we 

understand that certain aspects of the 

process to change EHB-benchmark plans 

may impose unanticipated difficulty on 

and create confusion for States. We 

understand there are concerns that the 

typicality standard, as implemented, is 

a burdensome way to ensure a State’s 

EHB-benchmark plan selection is equal 

in scope to a typical employer plan. In 

addition, in limiting EHB-benchmark 

plan selections, we understand that the 

generosity standard may also impede 

the ability of States to select an EHBbenchmark that is equal in scope to the 

benefits provided under a typical 

employer plan in the State, which we 

understand States often find have 

become more generous over time. We 

also understand that requiring States to 

submit a formulary drug list to HHS as 

part of the documentation required 

under § 156.111(e) can be particularly 

onerous when a State is not seeking to 

change its prescription drug EHBs. 

As a result of that feedback, we are 

now proposing changes to § 156.111 to 

reduce State burden to change EHBbenchmark plans. For benefit years 

beginning on or after January 1, 2027, 

we propose three revisions to the 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82594 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

standards for State selection of EHBbenchmark plans at § 156.111. First, we 

propose to consolidate the options for 

States to change EHB-benchmark plans 

at § 156.111(a) to reduce the burden on 

States to decide between three 

functionally identical choices. Second, 

we propose to revise the typicality 

standard at § 156.111(b)(2) so that, in 

demonstrating that a State’s new EHBbenchmark plan provides a scope of 

benefits that is equal to the scope 

benefits of a typical employer plan in 

the State, the scope of benefits of a 

typical employer plan in the State 

would be defined as any scope of 

benefits that is as or more generous than 

the scope of benefits in the State’s least 

generous typical employer plan 

(supplemented by the State as necessary 

to provide coverage within each EHB 

category at § 156.110(a)), and as or less 

generous than the scope of benefits in 

the State’s most generous typical 

employer plan (supplemented by the 

State as necessary to provide coverage 

within each EHB category at 

§ 156.110(a)), among the typical 

employer plans currently defined at 

§ 156.111(b)(2)(i)(A) and (B). We also 

propose to remove the generosity 

standard at § 156.111(b)(2)(ii) and to 

make a technical revision to the 

language regarding supplementation at 

§ 156.111(b)(2)(i). Third, we propose to 

revise § 156.111(e)(3) to require States to 

submit a formulary drug list as part of 

their documentation to change EHBbenchmark plans only if the State is 

seeking to change its prescription drug 

EHB. 

a. Consolidating the State EHBBenchmark Plan Options 

First, we propose to consolidate the 

choices for States to change their EHBbenchmark plan by revising § 156.111(a) 

to add a new paragraph (a)(2) which 

would simply state that, subject to 

paragraphs (b), (c), (d), and (e) of 

§ 156.111, for plan years beginning on or 

after January 1, 2027, a State may 

change its EHB-benchmark plan by 

selecting a set of benefits that would 

become the State’s EHB-benchmark 

plan. The language at current 

§ 156.111(a) would be redesignated as 

§ 156.111(a)(1) and would be revised to 

provide that this paragraph applies to 

plan years beginning on or after January 

1, 2020, through December 31, 2026. 

Further, the language currently at 

§ 156.111(a)(1) through (3) would be 

redesignated as § 156.111(a)(1)(i) 

through (iii). 

This proposal would not 

substantively change the options for 

States to change their EHB-benchmark 

plans, as current § 156.111(a)(3) already 

allows States to select a set of benefits 

that would become the State’s EHBbenchmark plan and this option 

functionally encompasses the options at 

current § 156.111(a)(1) and (a)(2), which 

allow States to select the EHBbenchmark plan that another State used 

for the 2017 plan year under §§ 156.100 

and 156.110, in whole or in part. Under 

this proposal, a State selecting a set of 

benefits to become the State’s EHBbenchmark plan that wants to use an 

EHB-benchmark plan from another 

State, either in whole or in part, could 

still do so. The flexibility that current 

§ 156.111(a)(3) offers is why all nine 

States that have changed their EHBbenchmark plans since 2018 relied on 

§ 156.111(a)(3) to do so, though they 

often made that decision after spending 

time and resources to deliberate on the 

differences between the three options. 

Therefore, we propose to revise 

§ 156.111(a) to reduce this burden on 

States without substantively changing 

their options to select an EHBbenchmark plan. 

Under 42 CFR 440.347, Medicaid 

ABPs authorized under section 1937 of 

the Act are required to meet EHB 

standards. Similarly, under 42 CFR 

600.405, in States that elect to operate 

a BHP, the standard health plans must 

meet EHB standards. The changes to 

State EHB-benchmark plan options 

would also be applicable to States when 

choosing a benchmark plan used to 

define EHBs in a Medicaid ABP or BHP 

standard health plan. 

We seek comment on the proposal to 

consolidate State EHB-benchmark plan 

options under § 156.111(a). 

b. Scope of Benefit Requirements 

Second, we propose to revise the 

scope of benefit requirements at 

§ 156.111(b)(2) for plan years beginning 

on or after January 1, 2027, with 

corresponding proposed revisions to the 

actuarial requirements at 

§ 156.111(e)(2). Specifically, we propose 

that a State’s new EHB-benchmark plan 

would be required to provide a scope of 

benefits that is equal to the scope of 

benefits of a typical employer plan in 

the State, and that the scope of benefits 

of a typical employer plan in the State 

would be defined as any scope of 

benefits that is as or more generous than 

the scope of benefits in the State’s least 

generous typical employer plan 

(supplemented by the State as necessary 

to provide coverage within each EHB 

category at § 156.110(a)), and as or less 

generous than the scope of benefits in 

the most generous typical employer 

plan in the State (supplemented by the 

State as necessary to provide coverage 

within each EHB category at 

§ 156.110(a)), among the typical 

employer plans currently defined at 

§ 156.111(b)(2)(i)(A) and (B). We also 

propose to remove the generosity 

standard at § 156.111(b)(2)(ii) and to 

make a technical revision to the 

language regarding supplementation at 

§ 156.111(b)(2)(i). 

Since the effective date of the 2019 

Payment Notice, States have been 

required to perform detailed actuarial 

analyses to demonstrate that their EHBbenchmark plans offer a scope of 

benefits equal to, or greater than, to the 

extent any supplementation is required 

to provide coverage within each EHB 

category at § 156.110(a), the scope of 

benefits provided under a typical 

employer plan from among the typical 

employer plans identified in the 

regulation. To demonstrate this, a State 

must first assess the value of the current 

EHB-benchmark plan. Next, the State 

must determine how that valuation 

increases or decreases depending on 

their proposed plan modifications. 

Finally, the State must assess the value 

of each typical employer plan option to 

identify an exact match for the expected 

value offered by the proposed plan. To 

find such a match, the State may need 

to assess the value of many typical 

employer plan options, and determine 

whether supplementation is necessary, 

which requires both additional time and 

potentially additional costs for actuarial 

services. Additionally, the typical 

employer plan options available to the 

State may not yield an exact match to 

the benefit changes the State wishes to 

make, requiring the State to then modify 

its proposed benefit changes to be 

exactly equal in value to one of the 

available typical employer plan options. 

In this way, the existing typicality 

standard can inhibit the ability of States 

to innovate benefits in the State’s EHBbenchmark plan by generally requiring 

an exact actuarial match. In contrast, 

under the proposed approach to 

typicality, each State would need to 

assess only two typical employer plan 

options (the most and least generous 

available) to establish a range of scopes 

of benefits that would be considered 

typical employer plans within which 

the State EHB-benchmark plan values 

could then match. We believe that 

requiring States to actuarially assess 

only two typical employer plan options 

would reduce both the time and cost to 

States of seeking to update their EHBbenchmark plans and support a wider 

range of possible benefit changes, 

thereby enabling States to more easily 

propose such updates if and when they 

deem it appropriate to do so. 

As an example, a State seeks to add 

benefits to an existing EHB-benchmark 


ddrumheller on DSK120RN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82595 

204 In addition, the product must have at least 10 

percent of the total enrollment of the five largest 

large group health insurance products in the State; 

the plan must provide minimum value, as defined 

under § 156.145; and the benefits must not be 

excepted benefits, as established under 

§§ 146.145(b) and 148.220. See 

§ 156.111(b)(2)(i)(B)(1) through (3). 

205 It is our expectation that the changes to the 

scope of benefits in these large group plans would 

only impact the upper bound of EHB-benchmark 

plans’ scope of benefits. We expect the small group 

typical employer-sponsored or other job-based 

plans at § 156.100(a)(1), which are only from PY 

2017, to consistently be among the least generous 

typical employer-sponsored or other job-based 

plans. 

206We emphasize that, under current § 156.111, 

States that change their EHB-benchmark plan are 

generally permitted to select a set of benefits as 

their EHB-benchmark plan without regard to the 

specific benefits that the State’s selected typical 

employer-sponsored or other job-based plan covers. 

As implemented under § 156.111(b)(2)(i) and 

(e)(2)(i), the State is only required to provide an 

actuarial certification and an associated actuarial 

report from an actuary, who is a member of the 

American Academy of Actuaries, in accordance 

with generally accepted actuarial principles and 

methodologies, that affirms that the State’s EHBbenchmark plan is actuarially equal to the scope of 

benefits under a typical employer-sponsored or 

other job-based plan. 

207See, for example, https://www.regulations.gov/ 

comment/CMS-2022-0186-0412. 

plan that currently provides a scope of 

benefits equivalent to the State’s least 

generous typical employer plan. The 

benefits that the State seeks to add to 

the existing EHB-benchmark plan would 

make it no longer equivalent to the 

State’s least generous typical employer 

plan. The additional benefits would also 

result in an EHB-benchmark plan that is 

still less generous than the State’s most 

generous typical employer plan. Under 

the current rules, the State could not 

add these benefits to their existing EHBbenchmark unless there is another 

typical employer plan listed in the 

regulation that provides an equivalent 

scope of benefits that accounts for the 

State’s proposed additions. This could 

mean that the State’s proposed EHBbenchmark plan would be out of 

compliance with the typicality standard 

simply because it does not provide a 

scope of benefits equivalent to one of 

the remaining State’s typical employer 

plans, even though the scope of benefits 

in the State’s proposed EHB-benchmark 

plan is more generous than the State’s 

least generous typical employer plan 

and less generous than the State’s most 

generous typical employer plan. States 

have expressed frustration that this 

approach to the typicality standard is 

unnecessarily restrictive. 

We agree with States that this 

approach to the typicality standard can 

lead to unnecessary burden for States to 

ensure compliance with section 

1302(b)(2) of the ACA. Accordingly, we 

propose to revise the scope of benefits 

requirements at § 156.111(b)(2) to 

redesignate § 156.111(b)(2)(i) and (ii) as 

§ 156.111(b)(2)(i)(A) and (B) and to 

specify at redesignated § 156.111(b)(2)(i) 

that these provisions would apply for 

plan years beginning on or after January 

1, 2020, through December 31, 2026. We 

further propose to add new 

§ 156.111(b)(2)(ii) to provide that, for 

plan years beginning on or after January 

1, 2027, States may select an EHBbenchmark plan that provides a scope of 

benefits equal to that of a typical 

employer plan in the State, where the 

scope of benefits of a typical employer 

plan is any scope of benefits within a 

continuous range of the scope of 

benefits that is as or more generous than 

that provided by State’s least generous 

typical employer plan (supplemented by 

the State as necessary to provide 

coverage within each EHB category at 

§ 156.110(a)) and as or less generous 

than that provided by the State’s most 

generous typical employer plan 

(supplemented by the State as necessary 

to provide coverage within each EHB 

category at § 156.110(a)), among the 

plans described at the proposed 

§ 156.111(b)(2)(ii)(A) and (B). Under this 

proposal, at proposed 

§ 156.111(b)(2)(ii)(A) and (B), a State 

would identify the least and most 

generous typical employer plans among 

the same typical employer plans 

currently defined at § 156.111(b)(2)(i)(A) 

and (B) to determine the permissible 

continuous range of the scope of 

benefits for a State’s EHB-benchmark 

plan selection. We believe that this 

approach would significantly reduce 

State burden in changing EHBbenchmark plans while still ensuring 

that they provide a scope of benefits in 

accordance with section 1302(b)(2) of 

the ACA. 

As noted above, we are not proposing 

to change the list of typical employer 

plans in this proposed rule. Under 

current § 156.111(b)(2)(i)(B) and 

proposed § 156.111(b)(2)(ii)(B), for 

purposes of complying with the 

proposed typicality standard, a State 

may use the largest health insurance 

plan by enrollment within one of the 

five largest large group health insurance 

products by enrollment in the State, 

provided that the benefits in the plan 

are from a plan year beginning after 

December 31, 2013.204 Nonetheless, if 

the scope of benefits in these large 

group employer plans changes over time 

and such plans are among a State’s most 

generous typical employer plans, the 

upper bound of that State’s available 

scope of benefits could change 

accordingly.205 We have received 

feedback from States that indicates that 

the scope of benefits in some of these 

large group plans has increased since 

2017, so we believe it is appropriate to 

allow States to select an EHBbenchmark plan with a scope of benefit 

requirement that tracks with such 

changes to employer plans in the States, 

to the extent they exist. 

We continue to believe that this list of 

plans appropriately represents the scope 

of benefits provided under typical 

employer plans. Based on our research 

on how the scope of benefits in 

employer-sponsored or other job-based 

coverage has changed since 2014, which 

includes our review of the comments 

submitted in response to the EHB RFI, 

we believe that the scope of benefits in 

employer-sponsored or other job-based 

coverage has either remained the same 

or increased incrementally overall since 

2014. To the extent it has increased in 

certain States or certain regions, we 

believe that the scope of benefits in 

employer-sponsored or other job-based 

coverage increasingly tends to provide 

coverage for telehealth services, genderaffirming care, bariatric surgery, hearing 

aids, infertility treatment, routine nonpediatric dental services, and travelrelated benefits for certain 

conditions.206

When we finalized the addition of 

§ 156.111 in the 2019 Payment Notice 

(83 FR 17009), we also included the 

generosity standard at § 156.111(b)(2)(ii) 

among the scope of benefit requirements 

for State EHB-benchmark plans. As 

described at § 156.111(b)(2)(ii), the 

generosity standard requires that the 

scope of benefits in a State’s proposed 

new EHB-benchmark plan not exceed 

the generosity of the most generous 

among a set of comparison plans, 

including: the State’s EHB-benchmark 

plan used for the 2017 plan year, and 

any of the State’s base-benchmark plan 

options for the 2017 plan year described 

in § 156.100(a)(1), supplemented as 

necessary under § 156.110. In the 2019 

Payment Notice (83 FR 17011), we 

supported the addition of the generosity 

standard by stating that it would 

appropriately limit the range of benefits 

that can be considered EHB. Ever since, 

we have received significant feedback 

from States and interested parties that 

the generosity standard ‘‘hinders the 

ability of States to add innovative 

benefits to their EHB-benchmark 

plans.’’ 207 States have also shared that 

the generosity standard is not necessary 

to ensure the State EHB-benchmark plan 

selections are not unbounded given that 

the typicality standard can function as 

both a ceiling and floor to limit a State’s 

EHB selections. Specifically, the 

typicality standard alone limits the 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82596 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

208 ‘‘Example of an Acceptable Methodology for 

Comparing Benefits of a State’s EHB-benchmark 

Plan Selection in Accordance with 45 CFR 

156.111(b)(2)(i) and (ii)’’. https://www.cms.gov/ 

cciio/resources/regulations-and-guidance/ 

downloads/final-example-acceptable-methodologyfor-comparing-benefits.pdf. 

potential generosity of a State’s EHBbenchmark plan to be no greater than 

the generosity provided by the most 

generous typical employer plan, because 

a State would be unable to demonstrate 

that a more generous plan was equal in 

scope to any of the typical employer 

plans defined at § 156.111(b)(2)(i). 

Based on this feedback and our 

experience working with the nine States 

that have changed their EHB-benchmark 

plans under § 156.111, we propose to 

remove the generosity standard from the 

scope of benefit requirements at 

§ 156.111(b)(2), for plan years beginning 

on or after January 1, 2027. Under this 

proposal, the scope of benefits in the 

State’s new EHB-benchmark plan would 

no longer be restricted by the generosity 

of the set of prescribed comparison 

plans at § 156.111(b)(2)(ii)(A) and (B), 

which should provide States with 

significant flexibility to more easily 

select a new EHB-benchmark plan and 

remove a burdensome step of the 

actuarial analysis that States are 

required to complete under the existing 

generosity standard when selecting a 

new EHB-benchmark plan. However, we 

still believe that it is appropriate to limit 

the range of benefits that can be 

considered EHB to ensure the 

affordability of the EHB, and believe 

that the proposal to revise the typicality 

standard so that States may select an 

EHB-benchmark plan that provides a 

scope of benefits along a continuous 

range of the scope of benefits provided 

by a State’s least and most generous 

typical employer plans is a more 

appropriate way to limit State EHBbenchmark plan selections in 

accordance with section 1302(b)(2) of 

the ACA. The proposed revisions to the 

typicality standard and the proposed 

removal of the generosity standard 

would also establish an upper bound for 

State EHB-benchmark plan selections 

that better tracks with the scope of 

benefits in typical employer plans as 

they change over time. 

When we finalized the addition of 

§ 156.111 in the 2019 Payment Notice, 

we also published an acceptable 

methodology for States to comply with 

the scope of benefits requirements.208 If 

the proposals contained in this 

proposed rule are finalized, this 

methodology would no longer be 

applicable after the May 1, 2024 

deadline for States to notify us of a new 

EHB-benchmark plan selection for plans 

effective beginning on or after January 1, 

2027. Given that the proposed revisions 

to the scope of benefit requirements are 

designed to reduce State burden, we do 

not believe it is necessary to issue a new 

standalone methodology at this time. 

We believe States could more easily 

comply with these proposed 

requirements, if finalized, by identifying 

the least and most generous typical 

employer plans at § 156.111(b)(2) 

(supplemented by the State as necessary 

to provide coverage within each EHB 

category at § 156.110(a)) and assessing 

their scope of benefits in some 

quantitative manner in accordance with 

generally accepted actuarial principles 

and methodologies. The State would 

then assess the scope of benefits in its 

selected EHB-benchmark plan in the 

same manner. The State would be in 

compliance with the proposed scope of 

benefit requirement if the assessed 

scope of benefits in its proposed EHBbenchmark plan is as or more generous 

than the least generous typical employer 

plan in the State (supplemented by the 

State as necessary to provide coverage 

within each EHB category at 

§ 156.110(a)) and as or less generous 

than the most generous typical 

employer plan in the State 

(supplemented by the State as necessary 

to provide coverage within each EHB 

category at § 156.110(a)). For a State 

adding benefits to its existing EHBbenchmark plan, an acceptable analysis 

under the proposed revisions to 

§ 156.111 could involve the State 

calculating the expected premium for 

covering all the benefits in the State’s 

proposed EHB-benchmark plan and in 

the State’s least and most generous 

typical employer plans at 

§ 156.111(b)(2) at 100 percent actuarial 

value, in accordance with generally 

accepted actuarial principles and 

methodologies. This analysis would 

allow the State to confirm, on an 

estimated premium basis, that the scope 

of benefits in the proposed EHBbenchmark plan is as or more generous 

than the scope of benefits in the least 

generous typical employer plan and as 

or less generous than the scope of 

benefits in the most generous typical 

employer plan in the State 

(supplemented by the State as necessary 

to provide coverage within each EHB 

category at § 156.110(a)). We anticipate 

that we would continue working closely 

with States to provide technical 

assistance to comply with the scope of 

benefit requirements at proposed 

§ 156.111(b)(2). 

In addition, we propose 

corresponding edits to § 156.111(e)(2) to 

require States to submit an actuarial 

certification and an associated actuarial 

report from an actuary, who is a member 

of the American Academy of Actuaries, 

in accordance with generally accepted 

actuarial principles and methodologies, 

that affirms that the State’s EHBbenchmark plan complies with the 

scope of benefits requirements at 

proposed 156.111(b)(2). 

We also propose a technical 

clarification to the language regarding 

supplementation at § 156.111(b)(2)(i), 

which currently states that a State’s new 

EHB-benchmark plan must ‘‘provide a 

scope of benefits equal to, or greater 

than, to the extent any supplementation 

is required to provide coverage within 

each EHB category at § 156.110(a), the 

scope of benefits provided under a 

typical employer plan’’ (emphasis 

added). We have found that the 

language regarding supplementation is 

consistently misunderstood as allowing 

a State’s EHB-benchmark plan to be 

greater than the scope of benefits under 

a typical employer plan for any reason. 

A State’s EHB-benchmark plan may 

only exceed the scope of benefits in a 

typical employer plan when 

supplementation is required to provide 

coverage in the typical employer plan 

within each category at § 156.110(a). To 

address the confusion created by this 

provision, we propose to make a 

technical clarification at 

§ 156.111(b)(2)(i) (which would apply to 

State selections of EHB-benchmark 

plans through plan year 2026) to state 

that a State’s EHB-benchmark plan must 

provide a scope of benefits equal to the 

scope of benefits provided under a 

typical employer plan (supplemented by 

the State as necessary to provide 

coverage within each EHB category at 

§ 156.110(a)). This proposed technical 

clarification would not substantively 

change the existing requirement 

regarding supplementation at 

§ 156.111(b)(2)(i). 

Under 42 CFR 440.347, Medicaid 

ABPs authorized under section 1937 of 

the Act are required to meet EHB 

standards. Under 42 CFR 600.405, in 

States that elect to operate a BHP, the 

standard health plans are required to 

meet EHB standards. The changes to 

State EHB-benchmark plan 

requirements would also be applicable 

to States when choosing a benchmark 

plan used to define EHBs in a Medicaid 

ABP or a BHP standard health plan. 

We seek comment on the proposals to 

revise the typicality standard at 

§ 156.111(b)(2)(i), remove the generosity 

standard at § 156.111(b)(2)(ii), make 

corresponding edits to § 156.111(e)(2), 

and make a technical revision to the 

language regarding supplementation at 

§ 156.111(b)(2)(i). 


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209Spanemberg, J.C., Cardoso, J.A., Slob, E.M.G.B, 

& Lo ́pez-Lo ́pez, J. (2019). Quality of life related to 

oral health and its impact in adults. Journal of 

Stomatology, Oral and Maxillofacial Surgery, 

120(3), 234–239. https://doi.org/10.1016/

j.jormas.2019.02.004. 

210For example, see https://www.regulations.gov/ 

comment/CMS-2022-0186-0567; https://

www.regulations.gov/comment/CMS-2022-0186- 

0586; and https://www.regulations.gov/comment/ 

CMS-2022-0186-0626. 

211National Association of Dental Plans (2023). 

Understanding Dental Benefits. https://

www.nadp.org/about-dental-plans-care/ 

understanding-dental-benefits/. 

212See supra note 15. Also note that another 8.8 

percent buy individual dental coverage, while less 

than 1 percent obtain dental benefits as part of a 

medical plan. 

213National Financial Partners. (2023). US 

Benefits Trend Report 2023. https://www.nfp.com/ 

Portals/25/2023USBenefitsTrendReport.pdf?ver=

H3zZIbZ5N2KDLhC0UfyiYA%3D%3D. 

214Formerly the Kaiser Family Foundation. See 

KFF ‘‘About Us.’’ https://www.kff.org/about-us/. 

215 KFF (2019, September 25). 2019 Employer 

Health Benefits Survey. https://www.kff.org/reportsection/ehbs-2019-section-2-health-benefits-offerrates/#figure217. 

216Section 156.115(d) also currently prohibits 

routine non-pediatric eye exam services, long-term/ 

custodial nursing home care benefits, and nonmedically necessary orthodontia as EHB. We are not 

proposing to remove the prohibition on such 

services as EHB in this proposed rule; however, we 

solicit comment on the extent to which employersponsored or other job-based benefits provide 

coverage for these services. 

217Northridge, M.E., Kumar, A., & Kaur, R. 

(2020). Disparities in Access to Oral Health Care. 

Annual review of public health, 41, 513–535. 

https://doi.org/10.1146/annurev-publhealth040119-094318. 

218Agency for Healthcare Research and Quality. 

(2022). 2022 National Healthcare Quality and 

Disparities Report. https://www.ahrq.gov/sites/ 

default/files/wysiwyg/research/findings/nhqrdr/

2022qdr.pdf. 

c. Drug Formularies 

We propose to revise § 156.111(e)(3) 

to require States to submit a formulary 

drug list as part of their documentation 

provided to change EHB-benchmark 

plans only if the State is seeking to 

change its prescription drug EHB. 

Currently, we require States to submit a 

formulary drug list if the State is 

selecting its EHB-benchmark plan using 

the option at current § 156.111(a)(3), 

even if the State is not seeking to change 

its prescription drug EHB. We 

understand that creation and 

submission of this formulary drug list 

creates a significant amount of burden 

for the State. Since we can carry over 

the State’s existing prescription drug 

EHB, as defined under § 156.122, 

without substantial input from the State 

if the State is not seeking to change its 

prescription drug EHB, we propose to 

revise § 156.111(e)(3) as specified to 

reduce the burden on States. 

We seek comment on this proposal. 

3. Provision of EHB (§ 156.115) 

We propose to remove the regulatory 

prohibition at § 156.115(d) on issuers 

from including routine non-pediatric 

dental services as an EHB. 

In the EHB Rule, we finalized at 

§ 156.115(d) that issuers of a plan 

offering EHB may not include, among 

other services and benefits, routine nonpediatric dental services as an EHB, 

even if the State’s current EHBbenchmark plan includes such services 

as covered benefits. Section 1302(b)(2) 

of the ACA directs the Secretary, in 

defining the EHB, to ensure that they are 

equal in scope to the benefits provided 

under a typical employer plan. In the 

proposed EHB Rule (77 FR 70644), in 

support of the prohibition at 

§ 156.115(d), we stated that routine nonpediatric dental services are not 

typically included in the medical plans 

offered by employers and are often 

provided as excepted benefits by the 

employer. We now believe a more 

natural reading of this provision is one 

that considers all the benefits typically 

covered by employers, regardless of 

whether such benefit is historically 

considered a ‘‘health benefit’’ or 

whether such benefit is ‘‘typically 

covered’’ by an employer’s major 

medical plan or, for example, by a 

limited scope excepted benefits plan. 

Given that oral health has a significant 

impact on overall health and quality of 

life,209 and several commenters on the 

EHB RFI 210 advocated for adult dental 

EHB coverage, we propose specifically 

to remove the regulatory prohibition on 

issuers including routine non-pediatric 

dental services as an EHB. We seek 

comment on whether similar changes 

should be proposed with regard to 

routine non-pediatric eye exam services 

and long-term/custodial nursing home 

care benefits as well. 

In 2020, approximately 110 million 

Americans had private dental 

coverage.211 Of the Americans that have 

private dental coverage, about 91 

percent get their dental benefits through 

their employer or through affiliation 

with an entity such as the American 

Association of Retired Persons 

(AARP).212 According to National 

Financial Partners (NFP)’s 2023 US 

Benefits Trend Report, approximately 

two out of every three employers offer 

at least one dental plan, with 46 percent 

offering one plan, 18 percent offering 

two plans, and 3 percent offering three 

or more plans.213 Furthermore, 

according to KFF,214 among firms 

offering health benefits in 2019 

included in the report, 59 percent of 

small firms (3–199 workers) and 92 

percent of large firms (200 or more 

workers) offered a dental insurance 

program to their workers separate from 

the health plan(s).215 Therefore, it 

appears that routine non-pediatric 

dental services are commonly covered 

as an employer-sponsored or other jobbased benefit to a degree that warrants 

removing the prohibition on their 

provision as an EHB. We solicit 

comment on this understanding of the 

inclusion of routine non-pediatric 

dental services in employer-sponsored 

or other job-based benefits.216

Additionally, we believe that 

prohibiting the inclusion of routine nonpediatric dental services as an EHB on 

the basis that they are not often covered 

by typical employer plans is a more 

restrictive reading of section 1302(b)(2) 

of the ACA than is warranted by a plain 

reading of the statute. Section 1302(b)(2) 

of the ACA states that, in defining the 

EHB, the Secretary shall ensure that the 

scope of the EHB is equal to the scope 

of benefits provided under a typical 

employer plan, as determined by the 

Secretary and as informed by a survey 

by the Secretary of Labor of employersponsored or other job-based coverage to 

determine the benefits typically covered 

by employers. In considering the 

benefits typically covered by employers, 

this statutory section does not require 

the Secretary to consider only those 

benefits provided in major medical 

plans. It also does not require the 

Secretary to consider only those benefits 

that are strictly ‘‘health benefits,’’ if 

such a term excludes coverage of 

routine non-pediatric dental services. 

Therefore, we no longer believe that the 

prohibition on non-pediatric dental 

services as an EHB is warranted. 

Accordingly, we propose to remove the 

regulatory prohibition on including 

routine non-pediatric dental services as 

an EHB at § 156.115(d). 

Removing the prohibition on issuers 

from including routine non-pediatric 

dental services as an EHB would remove 

regulatory and coverage barriers to 

expanding access to routine nonpediatric dental benefits for those plans 

that must cover EHB. This would allow 

States to work to improve adult oral 

health and overall health outcomes, 

which are disproportionately low 

among marginalized communities such 

as people of color and people with low 

incomes.217 Lack of dental insurance 

remains one of the primary barriers to 

accessing dental care,218 and this 

proposed policy would help mitigate 

this barrier. Oral health and overall 

health are inextricably linked; untreated 

oral health conditions can increase risk 

for and complicate the management of 


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82598 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

219 Kapila Y.L. (2021). Oral health’s inextricable 

connection to systemic health: Special populations 

bring to bear multimodal relationships and factors 

connecting periodontal disease to systemic diseases 

and conditions. Periodontology 2000, 87(1), 11–16. 

https://doi.org/10.1111/prd.12398. Periodontal 

disease has been associated with diabetes, 

metabolic syndrome, obesity, eating disorders, liver 

disease, cardiovascular disease, Alzheimer disease, 

rheumatoid arthritis, adverse pregnancy outcomes, 

and cancer. 

220 Dietrich, T., Webb, I., Stenhouse, L., Pattni, A., 

Ready, D., Wanyonyi, K.L., White, S., & Gallagher, 

J.E. (2017). Evidence summary: the relationship 

between oral and cardiovascular disease. British 

dental journal, 222(5), 381–385. https://doi.org/ 

10.1038/sj.bdj.2017.224. 

221Chang, Y., Woo, H.G., Park, J., Lee, J.S., & 

Song, T.J. (2020). Improved oral hygiene care is 

associated with decreased risk of occurrence for 

atrial fibrillation and heart failure: A nationwide 

population-based cohort study. European journal of 

preventive cardiology, 27(17), 1835–1845. https://

doi.org/10.1177/2047487319886018. 

222Hanson, G.R., McMillan, S., Mower, K., Bruett, 

C.T., Duarte, L., Koduri, S., Pinzon, L., Warthen, M., 

Smith, K., Meeks, H., & Trump, B. (2019). 

Comprehensive oral care improves treatment 

outcomes in male and female patients with highseverity and chronic substance use disorders. 

Journal of the American Dental Association (1939), 

150(7), 591–601. https://doi.org/10.1016/

j.adaj.2019.02.016. 

223Families USA in partnership with the 

American Dental Association (ADA), Health Policy 

Institute (HPI), and Community Catalyst. (2021, 

July). Making the Case for Dental Coverage for 

Adults in All State Medicaid Programs. https://

familiesusa.org/wp-content/uploads/2021/07/HPICC-FUSA-WhitePaper_0721.pdf. 

224CMS. (n.d.) Strategic Plan Cross-Cutting 

Initiatives. https://www.cms.gov/files/document/ 

strategic-plan-overview-fact-sheet.pdf. 

225See section 1311(d)(2)(B)(ii) of the ACA for 

more information on offering SADP benefits. 

226See parallel requirements to § 147.126 at 26 

CFR 54.9815–2711, and 29 CFR 2590.715–2711. 

Additionally, section 2707(b) of the PHS Act, as 

added by the ACA, was incorporated by reference 

into section 9815 of the Code and section 715 of 

ERISA. 

other chronic conditions.219 For 

example, studies have shown that 

periodontal disease and tooth loss are 

strongly associated with heart health, 

and oral health care can reduce the risk 

for cardiovascular disease,220 atrial 

fibrillation, and heart failure.221

Additionally, research indicates that 

oral health care has implications for 

substance use disorder (SUD) treatment. 

Individuals who receive comprehensive 

oral health care during SUD treatment 

have been shown to remain in treatment 

longer and have improved treatment 

outcomes at discharge, including an 

increase in employment and drug 

abstinence, as well as a reduction in 

homelessness.222 Furthermore, access to 

oral health care impacts employment 

prospects. Approximately 30 percent of 

low-income adults in the U.S. and 

nearly 60 percent of Medicaid 

beneficiaries without access to dental 

coverage report that the appearance of 

their mouth and teeth limits their ability 

to interview for a job.223

This proposed policy would also align 

with CMS’ Oral Health Cross Cutting 

Initiative, which aims to implement 

policy changes and consider 

opportunities through existing 

authorities to expand access to oral 

health coverage.224 Additionally, it 

would align with the request of several 

commenters on the EHB RFI (87 FR 

74097) for us to remove regulatory and 

coverage barriers to expanding access to 

routine non-pediatric dental care. 

We emphasize that the removal of this 

prohibition would not, by itself, mean 

that routine non-pediatric dental 

services would be an EHB, even in 

States with an EHB-benchmark plan that 

currently describes routine nonpediatric dental services as a non-EHB 

covered benefit. We stress that this 

proposal would not require any State to 

add such services as an EHB, nor would 

we consider any existing language 

regarding routine non-pediatric dental 

services in any State’s current EHBbenchmark plan to have the effect of 

adding such services as an EHB. Under 

this proposal, a State seeking to provide 

any routine non-pediatric dental 

services as an EHB would be required to 

update its EHB-benchmark plan to 

include such services as an EHB 

pursuant to § 156.111. If a State does not 

update its EHB-benchmark plan to add 

coverage of routine non-pediatric dental 

services as an EHB, then such services 

would not be an EHB, even if the 

current benchmark plan document 

includes routine non-pediatric dental 

services. However, we believe this 

proposal would incentivize States to 

add routine non-pediatric dental 

services as an EHB by updating their 

EHB-benchmark plans pursuant to 

§ 156.111. 

Under this proposal, we would expect 

States, in determining whether it is 

appropriate to update their EHBbenchmark plan to add routine nonpediatric dental services as an EHB, to 

weigh the advantages of expanded 

dental services against the challenges of 

providing such services. States should 

consider the ability of plans to add such 

services as an EHB, which, as with 

pediatric oral care, may require plans to 

establish new networks of dental 

providers. Alternatively, issuers could 

comply with this policy by contracting 

with issuers of SADPs to administer 

these services, as long as it is seamless 

to the enrollee. This contracting 

arrangement would not be required, but 

it could be permitted as an option. In 

addition, States should consider that 

some health plans may not currently 

have infrastructure or experience 

working with Current Dental 

Terminology (CDT) codes that report 

dental procedures to dental payers. 

We note that while section 

1302(b)(4)(F) of the ACA permits a 

medical QHP sold on the Exchange to 

omit coverage of pediatric dental EHB 

services if a SADP is offered through an 

Exchange,225 there is no statutory basis 

to extend this exception to routine nonpediatric dental services. Thus, plans 

subject to an EHB-benchmark plan that 

includes routine non-pediatric dental 

services as an EHB may not omit such 

coverage on the basis that a SADP 

already provides such coverage through 

an Exchange. 

This proposal, if finalized, may 

impact plans that are not directly 

subject to the EHB requirements, such 

as self-insured group health plans and 

fully-insured group health plans in the 

large group market, that are required to 

comply with the annual limitation on 

cost sharing and restrictions on annual 

or lifetime dollar limits in accordance 

with applicable regulations with respect 

to such EHBs.226 If a State updates its 

EHB-benchmark plan to add coverage of 

routine non-pediatric dental services as 

an EHB and the sponsor of a selfinsured group health plan or fullyinsured group health plan in the large 

group market selects that EHBbenchmark plan, any routine nonpediatric dental services covered by 

such a group health plan would 

generally be subject to the limitation on 

cost sharing and restrictions on annual 

or lifetime dollar limits. However, if the 

sponsors of such plans offer coverage of 

routine non-pediatric dental services 

through an excepted benefit under 26 

CFR 54.9831–1(c)(3), 29 CFR 

2590.732(c)(3), and 45 CFR 

146.145(b)(3), including a limited-scope 

dental plan, that benefit is generally 

excepted from complying with the 

group market reforms, including the 

limitation on cost sharing and 

restrictions on annual or lifetime dollar 

limits. 

Additionally, under 42 CFR 440.347, 

Medicaid ABPs authorized under 

section 1937 of the Act are required to 

meet EHB standards. Under 42 CFR 

600.405, in States that elect to operate 

a BHP, the standard health plans are 

required to meet EHB standards. Under 

this proposal, States would be permitted 

to include routine non-pediatric dental 

services as EHB for purposes of their 

ABPs or BHP standard health plans. 

We seek comment on the proposal to 

revise § 156.115(d) to remove the 

regulatory prohibition on issuers from 

including routine non-pediatric dental 

services as an EHB, including the 

impact this proposal would have, if 


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227USP Drug Classification. https://www.usp.org/ 

health-quality-safety/usp-drug-classificationsystem. 

finalized, on health insurance coverage 

in the individual, small group, and large 

group markets, as well as self-insured 

plans. 

4. Prescription Drug Benefits (§ 156.122) 

We propose revisions to certain EHB 

prescription drug benefit requirements 

at § 156.122, including proposals to 

revise the minimum membership 

standards for pharmacy & therapeutics 

(P&T) committees and to codify EHB 

policy related to prescription drugs in 

excess of the benchmark. We seek 

comment on these proposals as well as 

a possible future policy proposal to 

replace the United States Pharmacopeia 

(USP) Medicare Model Guidelines 

(MMG) with the USP Drug Classification 

system (DC) to classify the prescription 

drugs required to be covered as EHB 

under § 156.122(a)(1). 

a. Classifying the Prescription Drug EHB 

We seek public comment to confirm 

or further expand our understanding of 

the risks and benefits associated with 

replacing the reference to the USP MMG 

with a reference to the USP DC as a 

means of classifying the drugs required 

to be covered as EHB under 

§ 156.122(a)(1). As finalized in the EHB 

Rule (78 FR 12845 through 12846), to 

provide EHB, a plan must comply with 

§ 156.122(a)(1) and cover at least the 

same number of prescription drugs in 

every USP category and class as covered 

by the State’s EHB-benchmark plan, or 

one drug in every category and class, 

whichever is greater. We stated in the 

EHB Rule (78 FR 12845 through 12846) 

that plans could exceed the minimum 

number of drugs required to be covered 

and that additional drugs would still be 

considered EHB. In that final rule, we 

chose to use USP MMG Version 5.0 

(USP Guidelines) to classify the drugs 

required to be covered as EHB under 

§ 156.122(a)(1). In so doing, we noted in 

the EHB Rule (78 FR 12845 through 

12846) that ‘‘[w]hile there was concern 

among commenters on the use of USP 

as the system, there was no universal 

system identified as a potential 

alternative. We chose the current 

version of USP Medicare Model 

Guidelines (version 5) because it is 

publicly available, and many pharmacy 

benefit managers are familiar with it. 

We believe the USP model best fits the 

needs for the years 2014 and 2015 

during the transitional EHB policy.’’ 

In the 2016 Payment Notice (80 FR 

10814), we solicited comments on 

whether to replace the USP Guidelines 

with a standard based on the American 

Hospital Formulary Service (AHFS) or 

another drug classification system. We 

ultimately decided in the 2016 Payment 

Notice (80 FR 10815) to retain the USP 

Guidelines classification system because 

‘‘[i]ssuers have already developed 2 

years of formularies based on it, States 

have already developed systems to 

review those formularies, and interested 

parties are familiar with the system. 

Thus, while AHFS had the benefit of 

being updated more frequently and 

incorporating a broader set of classes 

and subclasses, commenters did not 

uniformly support its use because of 

several issues, including a lack of 

transparency, the need to supplement 

certain classes when compared with 

USP, and the complexity of the AHFS 

system.’’ In 2017, the USP developed a 

second drug classification system, the 

USP DC, an independent drug 

classification system ‘‘developed in 

response to input from interested parties 

that it would be helpful to have a 

classification system beyond the MMG 

to assist with formulary support outside 

of Medicare Part D.’’ 227

In the EHB RFI (87 FR 74097 through 

74102), we sought input from the public 

regarding a variety of topics related to 

the scope of benefits in health plans 

subject to the EHB requirements of the 

ACA, including whether we should 

consider using an alternative 

prescription drug classification standard 

for defining the EHB prescription drug 

category, such as the USP DC or others. 

Most commenters supported the 

transition from the USP MMG, as 

currently used for EHB purposes and for 

Medicare Part D, to USP DC as the 

standard for defining the EHB 

prescription drug category. Commenters 

noted that USP DC is more inclusive of 

drug classes relevant to the private 

insurance patient base and is updated 

annually, while USP MMG is only 

updated once every three years. In 

particular, advocacy groups and 

provider groups stated that USP DC was 

developed to support formularies 

outside of the Medicare Part D 

population, which is another advantage 

over the current classification system 

designed specifically with Medicare 

beneficiaries in mind. They noted that 

USP MMG inappropriately limits access 

to FDA-approved therapies such as antiobesity medications (AOMs), resulting 

in fewer treatment options. A few 

commenters encouraged us to consider 

implementing an annual review and 

update process that includes input from 

consumers and other interested parties, 

to ensure USP DC continues to remain 

current with the prescription drug 

landscape. Some commenters 

recommended that we retain the USP 

MMG drug classification system. These 

same commenters expressed concern 

regarding the potential administrative 

burden with changing drug 

classification systems, explained that 

both government and commercial plans 

have broad experience with USP MMG, 

and stated that issuers would need to 

undertake potentially significant 

information technology work and 

expense to remap their data warehouses 

to include the new drug categories. A 

few commenters also noted that 

changing to a new classification 

standard could have negative 

consequences for patients as issuers 

could be required to cover high-cost 

drugs with low clinical value, 

increasing the total cost of care and 

potentially increasing premiums for 

members. 

Additionally, some commenters 

stated that new and expanded categories 

and classes under USP DC include antiobesity agents, infertility agents, and 

several new classes of combination 

products, the latter of which often are 

comprised of brand name drugs paired 

with other drugs or devices and are 

more expensive coverage options than 

the individual generic products. Some 

commenters recommended that we 

retain the USP MMG drug classification 

system but noted that we should 

consider adoption of a new 

classification system, while a few 

commenters urged us to develop our 

own prescription drug classification 

standards rather than relying on those 

developed by private entities stating 

that our continued reliance on the USP 

does not address substantial gaps in 

coverage of medically necessary drugs. 

Lastly, a few commenters noted that 

replacement of USP MMG with the 

AHFS or USP DC would not address 

certain prescription drug access issues 

and instead recommended that the 

protected classes policy utilized in the 

Medicare Part D prescription drug 

program be incorporated into the 

prescription drug benefit. 

After reviewing these comments, we 

agree that using the USP DC to 

categorize the drugs provided as EHB 

would assist in strengthening the drug 

benefit due to its inclusion of additional 

drug categories and classes relevant to 

enrollees within the private insurance 

market. The USP MMG was created for 

use by prescription drug plans for the 

Medicare Part D population (eligibility 

for Medicare enrollment is 65) and not 

designed with the health needs of the 

population covered by plans subject to 

the requirement to cover EHB, which 

includes those receiving coverage 

through the Exchanges, such as women 


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82600 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

228USP Medicare Model Guidelines. https://

www.usp.org/health-quality-safety/usp-medicaremodel-guidelines. 

229See section 1860D–2(e)(2) of the Act. 

230See section 1927(d)(2) of the Act. The list of 

drugs subject to restriction include drugs used for 

anorexia, weight loss, weight gain, fertility, 

cosmetic purposes or hair growth, symptomatic 

relief of cough and colds, smoking cessation, 

prescription vitamins and mineral products, 

nonprescription drugs, certain covered outpatient 

drugs, barbiturates, benzodiazepines, and drugs for 

the treatment of sexual or erectile disfunction. 

231Cornier, M. (2002). A Review of Current 

Guidelines for the Treatment of Obesity. Am J 

Manag Care, 28(15), S288–S296. doi:10.37765/ 

ajmc.2022.89292. 232 Grunvald, E., Shah, R., Hernaez, R., Chandar, 

A.K., Pickett-Blakely, O., Teigen, L.M., 

Harindhanavudhi, T., Sultan, S., Singh, S., 

Davitkov, P, (2022). AGA Clinical Practice 

Guideline on Pharmacological Interventions for 

Adults With Obesity. Gastroenterology, 163(5), 

1198–1225. doi:10.1053/j.gastro.2022.08.045. 

233 Id. 

of reproductive age and children whose 

health needs are significantly different 

than those of Medicare Part D 

beneficiaries, in mind. In addition, the 

USP MMG includes notable gaps in 

coverage related to the treatment of 

chronic conditions such as obesity, 

infertility agents, and sexual disorder 

agents. We also note that inclusion of 

additional categories and classes of 

drugs used to manage chronic 

conditions would assist in mitigating 

future risks and complications 

associated with a lack of access to these 

therapies, particularly for vulnerable 

populations. 

In addition, USP DC is updated 

annually instead of every three years, 

allowing for a more rapid incorporation 

of new prescription drugs, drugs that are 

newly or no longer used for a particular 

indication, or discontinued drugs. 

While we are aware that the USP DC 

system has many features that may be 

beneficial to consumers and meet 

evolving public health challenges, we 

recognize the concerns as noted by 

commenters to the EHB RFI regarding 

the potential challenges of switching 

drug classification systems from USP 

MMG to USP DC for defining EHB, 

including the administrative burdens to 

issuers and negative premium impacts 

to patients. We seek public comment to 

confirm or further expand our 

understanding of the risks and benefits 

associated with potentially replacing 

USP MMG with USP DC. 

Further, we seek comment regarding 

concerns noted by interested parties in 

response to the EHB RFI related to the 

challenges that issuers may experience 

transitioning from USP MMG to USP DC 

to include administrative burdens, 

particularly relating to disruptive 

impacts to issuer operations and 

systems to incorporate new drug 

categories and classes into their 

formulary review process. Lastly, we 

seek comment on a reasonable timeline 

for impacted entities to potentially 

migrate from USP MMG to USP DC. 

CMS and the USP developed the USP 

Guidelines in 2004 to implement the 

Medicare Part D Prescription Drug 

Program,228 and as such, the system was 

designed for the Medicare population. 

Section 1860D–2(e) of the Act defines a 

‘‘covered part D drug’’ for purposes of 

the Medicare Part D program, and the 

statutory definition excludes drugs used 

for anorexia, weight loss, weight gain, 

fertility, cosmetic purposes or hair 

growth, symptomatic relief of cough and 

colds, smoking cessation, prescription 

vitamins and mineral products, 

nonprescription drugs, certain covered 

outpatient drugs, barbiturates, 

benzodiazepines, and drugs for the 

treatment of sexual or erectile 

dysfunction.229 230 Consequently, the 

USP Guidelines do not include 

categories and classes to classify these 

excluded drugs, and as a result, these 

drugs are not required to be covered as 

EHB under § 156.122(a)(1), though there 

may be coverage requirements for a 

limited subset of these drugs based on 

other requirements such as the 

requirement to cover preventive services 

under section 2713 of the PHS Act. 

However, certain types of AOMs may 

still be covered as EHB but under a 

different drug category (for example, 

AOMs classified and covered under the 

category for central nervous system 

drugs). Additionally, nothing prevents 

issuers from voluntarily covering these 

drugs as EHB. However, the variation in 

classification for these drugs leads to 

potential coverage gaps for consumers. 

We recognize that there could be 

formulary challenges if we were to 

change drug classification systems, 

particularly as it relates to issuers’ 

coverage and issuers’ affordability of 

AOMs through the formulary benefit 

design. Specifically, although issuers 

would not necessarily be required to 

cover one of the more expensive AOMs 

looking solely at the policy at 

§ 156.122(a)(1), under 

§ 156.122(a)(3)(iii)(H)(2), P&T 

committees are required to ensure that 

issuer formulary drug lists provide 

appropriate access to drugs that are 

included in broadly accepted treatment 

guidelines and that are indicative of 

general best practices at the time. We 

have included a review of current 

guidelines on pharmacological 

interventions for adults with obesity to 

highlight some of the issues that issuers 

and P&T committees would need to 

consider should we move from USP 

MMG to USP DC. We solicit comment 

on the data summarized as well on 

additional clinical data that we should 

review as we continue to consider 

possible future policy proposals related 

to the EHB prescription drug benefit 

requirements. 

Two guidelines, one by the American 

College of Cardiology/American Heart 

Association/The Obesity Society, and 

the other by the American Association 

of Clinical Endocrinologists/American 

College of Endocrinology are considered 

the standard of care in the management 

of overweight and obesity in adults.231

In November 2022, the American 

Gastroenterological Association (AGA) 

issued a new clinical practice guideline 

on pharmacological interventions for 

adults with obesity.232 This guideline 

advances those evidence-based 

recommendations from the American 

College of Cardiology/American Heart 

Association/The Obesity Society, the 

American Association of Clinical 

Endocrinologists/American College of 

Endocrinology, and the Endocrine 

Society. These guidelines note that 

AOMs used with lifestyle modifications 

produce greater and more sustained 

weight loss when compared with 

lifestyle modifications alone. Further, 

the authors of the AGA guideline 

reiterate that AOM selection should be 

based on each patient’s needs and 

highlight that AOMs are generally used 

chronically to treat the chronic disease 

of obesity. In addition, the AGA 

guidelines note that Wegovy, Saxenda, 

Qsymia, and Contrave, which are 

classified in USP DC 2023 as antiobesity agents had a balance of weight 

loss over harm that favored their use. 

The guidelines further state, ‘‘given the 

magnitude of net benefit, Wegovy may 

be prioritized over other approved [antiobesity medications] for the long-term 

treatment of obesity for most 

patients.’’ 233 Additionally, the 

guidelines recommend against the use 

of Xenical. Four drugs are currently 

available in the United States for shortterm weight loss: phentermine, 

benzphetamine, diethylpropion, and 

phendimetrazine. Although the 

American Association of Clinical 

Endocrinologists/American College of 

Endocrinology guidelines recommend 

against use of these treatments, the 

Endocrine Society guideline endorses 

the use of long-term treatment with 

phentermine that is contingent upon 

several conditions being met. The AGA 

guideline also provides a qualified 

endorsement of long-term use of 

phentermine, noting a low quality of 

evidence for this recommendation. 


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Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82601 

234 Duncan, I., Kerr, D., Aggarwal R., & Huynh, N. 

New Drugs for Obesity, Is the Excitement 

Affordable? Population Health Management. Oct 

2023. 356–357.http://doi.org/10.1089/pop.2023.

0086. 

235Hawkins, B., ed. (2011). Principles of a sound 

drug formulary system. Best Practices for Hospital 

and Health System Pharmacy: Positions and 

Guidance Documents of ASHP. American Society of 

Health-System Pharmacists. https://www.ashp.org/- 

/media/assets/policy-guidelines/docs/endorseddocuments/endorsed-documents-principles-sounddrug-formulary-system.pdf. 

236AMCP Partnership Forum: Principles for 

Sound Pharmacy and Therapeutics (P&T) 

Continued 

Phentermine is not FDA-approved for 

long-term treatment of obesity. 

Although some issuers may cover 

AOMs, we are aware that demand for 

effective AOMs is high and expected to 

increase.234 We seek comment on the 

potential financial effects of covering 

AOMs by issuers should we adopt the 

USP DC classification system to define 

EHB; in particular, we are interested in 

understanding estimated enrollee 

medication uptake within plans, 

associated total spending cost, overall 

impact to the medical and prescription 

drug benefit as well as premium impact 

to patients. Further, we seek comment 

on the estimated premium impact to 

patients if issuers were required to cover 

drugs in additional categories/classes of 

the USP DC such as infertility drugs, 

sexual disorder agents and combination 

drugs as part of the transition from USP 

MMG. Additionally, we seek comment 

on how issuers would try to balance 

prescription benefit costs of these newly 

added categories and classes within the 

USP DC with providing members access 

to affordable, clinically proven 

medications. For example, if an issuer 

were to employ utilization management 

strategies (for example, step therapy, 

prior authorization, and quantity limits) 

to ensure that the appropriate patient 

populations receive and benefit from 

these treatments, we are interested in 

understanding how issuers determine 

which of these newly added 

medications would require the 

implementation of utilization 

management strategies and what would 

be included in the clinical coverage 

criteria developed for prior 

authorization or step therapy as well as 

quantity limit guidelines. 

b. Coverage of Prescription Drugs as 

EHB 

We propose to amend § 156.122 to 

codify that prescription drugs in excess 

of those covered by a State’s EHBbenchmark plan are considered EHB. As 

a result, they would be subject to 

requirements including the annual 

limitation on cost sharing and the 

restriction on annual and lifetime dollar 

limits, consistent with § 156.130, unless 

the coverage of the drug is mandated by 

State action and is in addition to EHB 

pursuant to § 155.170, in which case the 

drug would not be considered EHB. 

In the EHB Rule (78 FR 12845), in 

response to commenter concerns 

regarding how plans must address new 

prescription drugs that come onto the 

market during the course of a plan year 

pursuant to § 156.122, we stated that 

while plans must offer at least the 

greater of one drug for each USP 

category and class or the number of 

drugs in the EHB-benchmark plan, plans 

are permitted to go beyond the number 

of drugs offered by the benchmark plan 

without exceeding EHB. Therefore, if 

the plan is covering drugs beyond the 

number of drugs covered by the 

benchmark, all drugs in excess of the 

drug count standard at § 156.122(a) are 

considered EHB, such that they are 

subject to EHB protections and must 

count towards the annual limitation on 

cost sharing. Additionally, we noted 

this policy in the preamble of the 2016 

Payment Notice (80 FR 10749) during a 

discussion of requirements related to 

§ 156.122(c). 

We believed that this policy as noted 

in both the EHB Rule and preamble of 

the 2016 Payment Notice was clearly 

understood by issuers until we received 

comments in response to the EHB RFI 

that included a significant number of 

requests from interested parties to 

clarify this policy in rulemaking. In 

addition, a small number of commenters 

noted concerns regarding some plans in 

the individual, small group, and large 

group markets that have stated that 

some drugs in excess of the drug count 

standard at § 156.122(a) are not EHB and 

have developed programs to provide 

some drugs as ‘‘non-EHB,’’ outside of 

the terms of the rest of the coverage. We 

seek comment regarding how 

widespread these practices are. 

To resolve these concerns, we propose 

to amend § 156.122 to add paragraph (f), 

which would explicitly state that drugs 

in excess of the benchmark are 

considered EHB. To the extent that a 

health plan covers drugs, in any 

circumstance, in excess of the 

benchmark, these drugs would be 

considered an EHB and would be 

required to count towards the annual 

limitation on cost sharing. This policy 

would apply unless the coverage of the 

drug is mandated by State action and is 

in addition to EHB pursuant to 

§ 155.170, in which case the drug would 

not be considered EHB. 

We have been made aware of a few 

plans within the individual and small 

group markets that have either 

developed or are offering programs that 

provide some drugs as ‘‘non-EHB.’’ As 

we have only recently begun receiving 

comments from interested parties 

regarding this issue, we do not believe 

that there are a large number of plans 

that offer these types of programs; 

however, we seek comment regarding 

how widespread these programs are. 

We seek comment on this proposal. 

c. Pharmacy and Therapeutics 

Committee Standards 

For plan years beginning on or after 

January 1, 2026, we propose to amend 

§ 156.122 to provide that the P&T 

committee must include a consumer 

representative. 

In the 2016 Payment Notice (80 FR 

10749), we required plans providing 

EHB to establish P&T committees to 

review and update plan formularies in 

conjunction with the USP MMG. At 

§ 156.122(a)(3)(i), we require P&T 

committees to: (a) have members that 

represent a sufficient number of clinical 

specialties to adequately meet the needs 

of enrollees; (b) consist of a majority of 

individuals who are practicing 

physicians, practicing pharmacists, and 

other practicing healthcare professionals 

who are licensed to prescribe drugs; (c) 

prohibit any member with a conflict of 

interest with respect to the issuer or a 

pharmaceutical manufacturer from 

voting on any matters for which the 

conflict exists; and (d) require at least 20 

percent of its membership to have no 

conflict of interest with respect to the 

issuer and any pharmaceutical 

manufacturer. 

Many of the P&T committee 

requirements are also found in the 

Principles of a Sound Drug Formulary 

System, which was first developed in 

September 1999 by a coalition of 

national organizations representing 

healthcare professionals, government, 

and business leaders and later adopted 

in 2000 by the Academy of Managed 

Care Pharmacy (AMCP), Alliance of 

Community Health Plans, American 

Medical Association, American Society 

of Health-Systems Pharmacists, 

Department of Veterans Affairs, 

Pharmacy Benefits Management 

Strategic Healthcare Group, National 

Business Coalition on Health, and U.S. 

Pharmacopeia.235 Since that time, best 

practices for P&T committees have 

matured throughout the healthcare 

system. In 2019, AMCP convened a 

group of thought leaders, clinicians, 

academics, patient advocacy 

organizations, payer organizations, and 

members of the pharmaceutical industry 

to consider P&T committee best 

practices in today’s evolving healthcare 

system.236 Specifically, the group 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82602 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

Committee Practices: What’s Next? (2020). J Manag 

Care Spec Pharm, 26(1), 48–53. https://doi.org/ 

10.18553/jmcp.2020.26.1.48. 

237Charter: Uniform Formulary Beneficiary 

Advisory Panel. https://health.mil/Military-HealthTopics/Access-Cost-Quality-and-Safety/PharmacyOperations/BAP. 

238The Pennsylvania Department of Human 

Services Pharmacy and Therapeutics Committee. 

See: https://www.dhs.pa.gov/about/DHSInformation/Pages/Stakeholders/PharmacyCommittee.aspx. 239The Connecticut Medical Assistance Program 

Pharmaceutical and Therapeutics Committee. See: 

https://www.cga.ct.gov/current/pub/chap_

319v.htm#sec_17b-274d and https://

www.ctdssmap.com/CTPortal/Portals/0/ 

StaticContent/Publications/CT_PT_COMMITTEE_

BYLAWS_v2.pdf. 240New York State Department of Health Drug 

Utilization Review (DUR). See: https://

www.health.ny.gov/health_care/medicaid/program/ 

dur/docs/board_membership.pdf. 

provided perspectives on: (a) P&T 

committee composition and relevant 

interested parties, (b) evaluation of 

emerging evidence for formulary 

decisions and recommendations around 

training of P&T committee members, 

and (c) characteristics and best practices 

of successful committees. 

While a P&T committee is usually 

composed of actively practicing 

physicians, pharmacists, and other 

healthcare professionals, forum 

participants stated that a well-structured 

committee should also include patient 

representation since it provides 

additional insight into the patient 

perspective regarding the practical use 

of therapies and effect on quality-of-life 

outcomes which can be a helpful 

component of the formulary evaluation 

process. Additionally, participants 

noted that the patient perspective 

should be considered a key voice in 

formulary decisions as they are directly 

affected by P&T committee decisions 

and can assist the committee in better 

understanding the value of different 

treatments and medications for patients. 

While we are aware that the inclusion 

of consumers in the P&T committee 

process is not common, it has been 

observed in different healthcare 

systems. One example of this practice 

includes the Uniform Formulary 

Beneficiary Advisory Panel (UFBAP), 

which provides independent advice and 

recommendation on the development of 

the TRICARE Uniform formulary.237

Members of the UFBAP include 

nongovernmental organizations and 

associations that represent the views 

and interests of a large number of 

eligible covered beneficiaries, 

contractors responsible for the TRICARE 

retail pharmacy program, contractors 

responsible for the national mail-order 

pharmacy program, and TRICARE 

network providers. Additional examples 

of States that include clinicians such as 

physicians, pharmacists, and other 

specialists along with consumer or 

patient representatives as members 

within their respective P&T committees 

include Pennsylvania,238

Connecticut,239 and New York.240

P&T committee decisions have the 

power to impact a consumer’s overall 

quality of life and encompass important 

elements of care and cost for the 

consumer. Therefore, we propose to add 

paragraph (a)(3)(i)(E) to § 156.122 to 

update P&T membership standards to 

require the P&T committee to include a 

consumer representative as part of its 

membership for plan years beginning on 

or after January 1, 2026. In addition, we 

propose to specify at 

§ 156.122(a)(3)(E)(1) through (4) 

membership standards for consumer 

representatives. Specifically, the 

consumer representative would be 

required to represent the consumer 

perspective as a member of the P&T 

committee and would be required to 

have an affiliation with and/or 

demonstrate active participation in 

consumer or community-based 

organizations. Some examples of these 

types of organizations include those that 

are representative of a community or 

significant segments of a community 

that provide educational or related 

direct services to individuals in the 

community as well as organizations that 

protect consumer rights via advocacy, 

research, or outreach efforts. As a P&T 

committee member, the consumer 

representative would assume 

responsibility for highlighting and 

addressing any potential risks and 

benefits observed that could have a 

direct impact on consumers as a result 

of issues and actions before the P&T 

committee. In addition, an affiliation 

with and/or active participation in a 

consumer or community-based 

organization would provide the 

consumer representative with the 

necessary background to represent 

consumers’ perspectives. If this rule is 

finalized as proposed, issuers would 

also be required to select a consumer 

representative who has experience in 

the analysis and interpretation of 

complex data and is able to understand 

its public health significance, bearing in 

mind that one of the duties as a member 

of a P&T committee includes thoughtful 

consideration of clinical criteria, such as 

drug safety and efficacy data, when 

making a recommendation regarding 

products under review. This individual 

would also be required to have no 

fiduciary obligation to a health facility 

or other health agency and have no 

material financial interest in the 

rendering of health care services. This 

conflict-of-interest standard is intended 

to ensure that, as a member of the P&T 

committee, the consumer representative 

is free from financial interests or other 

relationships that could compromise the 

objectivity of the members of the 

committee as they perform their duties. 

Nothing in this proposal would prevent 

the P&T committee from defining 

additional membership standards 

pertaining to the position of consumer 

representative. 

We believe that proposed 

§ 156.122(a)(3)(i)(E) would ensure that 

the consumer experience with a disease 

or condition is considered in the design 

of formulary benefits. Consumer 

representatives would be able to offer 

insight into real consumer experiences 

that P&T committees may be unaware of 

that would help the committee better 

understand consumer challenges related 

to medication use as well as assist them 

in exploring solutions to these 

challenges during the formulary 

development process. We also note that 

broader inclusion of perspectives on the 

P&T committee would align with other 

groups, including the AMCP. 

We seek comment on these proposals. 

The consumer representative, as a 

member of the P&T committee, would 

be subject to the conflict-of-interest 

standards as specified in § 156.122(a)(3); 

however, we are interested in comments 

regarding whether we should further 

define additional membership standards 

for the consumer representative. In 

particular, we seek comments on the 

qualifications necessary to serve as a 

consumer representative on a P&T 

committee, to include if the 

representative should have a clinical 

background, have served as a 

representative of organizations with a 

regional or Statewide constituency, or 

have been involved in activities related 

to health care consumer advocacy, 

including issues affecting individual 

and small group market enrollees. We 

also seek comment on whether the 

current conflict-of-interest provision is 

sufficient as applied to this proposed 

role, or whether the consumer 

representative role should be subject to 

additional conflict-of-interest standards. 

We seek comment on whether a 

consumer representative should have a 

background for more than one condition 

or disease to sufficiently represent the 


ddrumheller on DSK120RN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82603 

241See also QHP Certification Standardized Plan 

Options FAQs, https://www.qhpcertification.

cms.gov/s/Standardized%20

Plan%20Options%20FAQs. 

242See Or. Admin. R. 836–053–0009. https://

secure.sos.state.or.us/oard/displayDivisionRules

.action?selectedDivision=3778. 

concerns of a diverse population. 

Additionally, we seek comment on the 

number of consumer representatives 

who should be included on a committee 

and if that number should be directly 

proportional to the size of the 

committee. We also recognize that a 

requirement to develop additional P&T 

committee standards, solicit for 

applicants for this new position, and 

provide any necessary training to new 

members would require lead time for 

States, issuers, and pharmacy benefit 

managers to implement and we seek 

comment on the proposed timing for 

implementation. 

5. Publication of the 2025 Premium 

Adjustment Percentage, Maximum 

Annual Limitation on Cost Sharing, 

Reduced Maximum Annual Limitation 

on Cost Sharing, and Required 

Contribution Percentage in Guidance 

(§ 156.130) 

As established in part 2 of the 2022 

Payment Notice (86 FR 24238), we will 

publish the premium adjustment 

percentage, the required contribution 

percentage, and maximum annual 

limitations on cost sharing and reduced 

maximum annual limitation on cost 

sharing, in guidance annually starting 

with the 2023 benefit year. We note that 

these parameters are not included in 

this rulemaking, as we do not propose 

changing the methodology for these 

parameters for the 2025 benefit year. 

Therefore, we will publish these 

parameters in guidance no later than 

January 2024. 

6. Standardized Plan Options 

(§ 156.201) 

HHS proposes to exercise its authority 

under sections 1311(c)(1) and 

1321(a)(1)(B) of the ACA to make minor 

updates to the standardized plan 

options for PY 2025. Specifically, we 

propose to make minor updates to the 

plan designs for PY 2025 to ensure these 

plans have AVs within the permissible 

de minimis range for each metal level, 

and we propose to maintain a high 

degree of continuity with the approach 

to standardized plan options finalized 

in the 2023 and 2024 Payment Notices. 

We do not propose to amend § 156.201. 

Section 1311(c)(1) of the ACA directs 

the Secretary to establish criteria for the 

certification of health plans as QHPs. 

Section 1321(a)(1)(B) of the ACA directs 

the Secretary to issue regulations that 

set standards for meeting the 

requirements of title I of the ACA for, 

among other things, the offering of 

QHPs through such Exchanges. 

In the 2024 Payment Notice (88 FR 

25847 through 25855), we maintained a 

large degree of continuity with the 

approach to standardized plan options 

finalized in the 2023 Payment Notice, 

aside from several minor changes to the 

plan designs. Specifically, in contrast to 

the policy finalized in the 2023 Payment 

Notice, we finalized, for PY 2024 and 

subsequent plan years, to no longer 

include a standardized plan option for 

the non-expanded bronze metal level, 

primarily due to severe AV constraints. 

Thus, for PY 2024 and subsequent PYs, 

we finalized standardized plan options 

for the following metal levels: one 

bronze plan that meets the requirement 

to have an AV up to five points above 

the 60 percent standard, as specified in 

§ 156.140(c)(2) (known as an expanded 

bronze plan), one standard silver plan, 

one version of each of the three incomebased silver CSR plan variations, one 

gold plan, and one platinum plan. 

Consistent with our approach in the 

2023 Payment Notice, in the 2024 

Payment Notice (88 FR 25847 through 

25848), we did not finalize standardized 

plan options for the AI/AN CSR plan 

variations as provided for at 

§ 156.420(b), given that the cost-sharing 

parameters for these plan variations are 

already largely specified. However, we 

continued requiring issuers to offer 

these plan variations for all 

standardized plan options offered, and 

we removed the regulation text language 

that stated that standardized plan 

options for these plan variations were 

not required to be offered. In the 2024 

Payment Notice (88 FR 25847 through 

25848), we further clarified that while 

issuers must continue to offer AI/AN 

CSR plan variations based on 

standardized plan options under 

§ 156.420(b), those plan variations will 

themselves not be standardized plan 

options based on designs specified in 

that rulemaking.241 Instead, similar to 

how all the cost sharing values for 

income-based silver CSR plan variations 

are automatically imputed based on the 

corresponding standard silver plan 

when an issuer enters required data into 

the Plans and Benefits Template as part 

of QHP certification, all the cost sharing 

values for standardized plan option AI/ 

AN CSR plan variations will be 

automatically imputed based on the 

corresponding standardized plan option 

standard silver plan. 

Similar to the approach taken in the 

2023 Payment Notice, in the 2024 

Payment Notice (88 FR 25848), we 

finalized standardized plan options that 

once again resembled the most popular 

QHP offerings that millions were 

already enrolled in by taking the 

following steps: selecting the most 

popular cost-sharing type for each 

benefit category; selecting enrolleeweighted median values for each of 

these benefit categories based on 

refreshed PY 2023 cost sharing and 

enrollment data; modifying these plans 

to ensure they comply with State costsharing laws; and decreasing the AVs 

for these plan designs to be at the floor 

of each AV de minimis range, primarily 

by increasing deductibles. 

Furthermore, in the 2024 Payment 

Notice (88 FR 25848), we finalized two 

sets of standardized plan options at the 

aforementioned metal levels, with the 

same sets of designs applying to issuers 

in the same sets of States as in the 2023 

Payment Notice. Specifically, the first 

set of standardized plan options 

continued applying to FFE and SBE–FP 

issuers in all FFE and SBE–FP States, 

excluding those in Delaware, Louisiana, 

and Oregon, and the second set of 

standardized plan options continued 

applying to Exchange issuers in 

Delaware and Louisiana. 

Also consistent with our approach in 

PY 2023, in the 2024 Payment Notice 

(88 FR 25848), we continued requiring 

issuers in the individual market 

Exchanges on the Federal platform to 

offer the standardized plan options 

specified in the 2023 Payment Notice, 

but we did not apply this requirement 

to issuers in the small group market 

SHOPs. We also continued exempting 

issuers offering QHPs through FFEs and 

SBE–FPs that were already required to 

offer standardized plan options under 

State action taking place on or before 

January 1, 2020, such as issuers in the 

State of Oregon,242 from the requirement 

to offer the standardized plan options 

included in the 2024 Payment Notice. 

We also continued not requiring State 

Exchange issuers to offer the 

standardized plan options included in 

the 2024 Payment Notice. 

Furthermore, consistent with the 

policy finalized in the 2023 Payment 

Notice, in the 2024 Payment Notice (88 

FR 25848), we stated that we would 

continue differentially displaying 

standardized plan options on 

HealthCare.gov pursuant to 

§ 155.205(b)(1), including those 

standardized plan options required 

under State action taking place on or 

before January 1, 2020. We also stated 

that we would continue enforcing the 

standardized plan options display 

requirements for approved web-brokers 

and QHP issuers using a direct 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82604 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

enrollment pathway to facilitate 

enrollment through an FFE or SBE–FP— 

including both the Classic DE and EDE 

Pathways—at §§ 155.220(c)(3)(i)(H) and 

156.265(b)(3)(iv), respectively. 

As such, web-brokers and QHP 

issuers were required to differentially 

display the PY 2024 standardized plan 

options in accordance with the 

requirements under § 155.205(b)(1) in a 

manner consistent with how 

standardized plan options are displayed 

on HealthCare.gov, unless we approved 

a deviation, beginning with the 2024 

benefit year open enrollment period. 

Consistent with the PY 2023 policy, the 

2024 Payment Notice (88 FR 25848) 

provided that any requests from webbrokers and QHP issuers seeking 

approval for an alternate differentiation 

format will continue to be reviewed 

based on whether the same or similar 

level of differentiation and clarity 

would be provided under the requested 

deviation as is provided on 

HealthCare.gov. 

Consistent with the approach to plan 

designs in the 2023 Payment Notice, in 

the 2024 Payment Notice (88 FR 25848), 

we continued using the following four 

tiers of prescription drug cost sharing in 

the standardized plan options: generic 

drugs, preferred brand drugs, nonpreferred brand drugs, and specialty 

drugs. We explained that we believed 

that continued use of four tiers of 

prescription drug cost sharing in 

standardized plan options would result 

in more predictable and understandable 

drug coverage. We also explained that 

we believed that continuing to use four 

tiers of prescription drug cost sharing 

would play an important role in helping 

consumers make informed QHP 

selections by allowing consumers to 

more easily compare formularies 

between plans and make year-to-year 

comparisons with their current plan. We 

also explained that the continued use of 

four tiers would minimize issuer burden 

since, for PY 2023, issuers had already 

created standardized plan options with 

formularies that included only four tiers 

of prescription drug cost sharing. 

We refer readers to the preambles to 

the 2023 and 2024 Payment Notices 

discussing § 156.201 (87 FR 27310 

through 27322 and 88 FR 25847 through 

25855, respectively) for more detailed 

discussion regarding approaches to 

standardized plan options in PY 2024 

and previous PYs. 

For PY 2025, we propose to follow the 

approach finalized in the 2024 Payment 

Notice concerning standardized plan 

option metal levels, and to otherwise 

maintain continuity with our approach 

to standardized plan options finalized 

in the 2023 and 2024 Payment Notices. 

We propose to make only minor updates 

to the plan designs for PY 2025 to 

ensure these plans have AVs within the 

permissible de minimis range for each 

metal level. Our proposed updates to 

plan designs for PY 2025 are detailed in 

Tables 12 and 13, later in this section. 

We propose to maintain a high degree 

of continuity with the approach to 

standardized plan options finalized in 

the 2023 and 2024 Payment Notices for 

several reasons. 

We are continuing to require FFE and 

SBE–FP issuers to offer standardized 

plan options in large part due to 

continued plan proliferation, which has 

only increased since the standardized 

plan option requirements were finalized 

in the 2023 Payment Notice. In light of 

this continued plan proliferation, it is 

increasingly important to continue to 

attempt to streamline and simplify the 

plan selection process for consumers on 

the Exchanges. We believe these 

standardized plan options continue to 

play a meaningful role in that 

simplification by reducing the number 

of variables that consumers must 

consider when selecting a plan option, 

making it easier for consumers to 

compare available plan options. 

More specifically, with these 

standardized plan options, consumers 

continue to be able to more quickly and 

more easily consider meaningful factors, 

such as networks, formularies, and 

premiums, when selecting a plan. We 

further believe these standardized plan 

options include several distinctive 

features, such as enhanced predeductible coverage for several benefit 

categories and copayments instead of 

coinsurance rates for a greater number 

of benefit categories, that will continue 

to play an important role in reducing 

barriers to access, combatting 

discriminatory benefit designs, and 

advancing health equity. Including 

enhanced pre-deductible coverage for 

these benefit categories (specifically, 

primary care visits, specialist visits, 

speech therapy, occupational and 

physical therapy, and generic drugs at 

all metal levels, with an increasing 

number of benefit categories exempt at 

higher metal levels) ensures consumers 

are more easily able to access these 

services without first meeting their 

deductibles. Furthermore, using 

copayments instead of coinsurance rates 

for a greater number of benefit 

categories reduces the risk of 

unexpected financial expenses 

sometimes associated with coinsurance 

rates. 

Additionally, we propose to maintain 

a high degree of continuity with many 

of the standardized plan option policies 

previously finalized in the 2024 

Payment Notice in order to reduce the 

risk of disruption for all involved 

interested parties, including issuers, 

agents, brokers, States, and enrollees. 

We believe making major departures 

from the methodology used to create the 

standardized plan options finalized in 

the 2023 and 2024 Payment Notices 

could result in drastic changes in these 

plan designs that may create undue 

burden for interested parties. For 

example, if the standardized plan 

options that we create vary significantly 

from year to year, those enrolled in 

these plans could experience 

unexpected financial harm if the cost 

sharing for services they rely upon 

differs substantially from the previous 

year. Ultimately, we believe consistency 

in standardized plan options is 

important to allow issuers and enrollees 

to become accustomed to these plan 

designs. 

We seek comment on our proposed 

approach to standardized plan options 

for PY 2025. Additionally, we seek 

comment on requiring issuers offering 

QHPs in individual market State 

Exchanges to offer, in a future plan year, 

some version of standardized plan 

options, while not necessarily 

subjecting them to the full scope of 

standardized plan option requirements 

applicable to issuers on the FFEs or 

SBE–FPs under § 156.201. In particular, 

we seek comment on requiring issuers 

offering QHPs in individual market 

State Exchanges that are not already 

required to offer standardized plan 

options under State requirements to 

offer some version of standardized plan 

options, even if these plan designs differ 

from the requirements of those included 

in the applicable Payment Notice for 

that plan year. We also seek comment 

on requiring States that intend to 

transition their Exchange model type 

from an FFE or SBE–FP to a State 

Exchange to require their issuers to offer 

standardized plan options as one 

condition of this transition. As such, we 

are particularly interested in comments 

from individual market State Exchanges 

that do not currently require QHP 

issuers to offer standardized plan 

options, States with an FFE or SBE–FP 

Exchange model type that intend to 

transition their Exchange model type to 

a State Exchanges, and issuers offering 

QHPs through State Exchanges. 

While we recognize that State 

Exchanges are best positioned to set 

requirements that serve the nuances of 

their respective individual markets, we 

underscore the benefits of offering at 

least some version of standardized plan 

options, which we discussed in greater 

detail in the preamble discussion of 

§ 156.201 in the 2023 Payment Notice 


ddrumheller on DSK120RN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82605 

(87 FR 27316). We also believe that the 

fact that over half of State Exchanges 

currently require issuers to offer 

standardized plan options in one form or another suggests that they, too, see 

value in standardized plan options. 

BILLING CODE 4120–01–P 


ddrumheller on DSK120RN23PROD with PROPOSALS2EP24NO23.024</GPH>

TABLE 12: 2025 Proposed Standardized Options Set One (For All FFE and SBE-FP 

Issuers, Excluding Issuers in Delaware, Louisiana, and Oregon) 

Expanded Standard Silver Silver Silver Gold Platinum Bronze Silver 73CSR 87CSR 94CSR 

Actuarial Value 63.81% 70.01% 73.09% 87.33% 94.14% 78.06% 88.04% 

Deductible $7,500 $5,000 $3,000 $500 $0 $1,500 $0 

Annual Limitation on Cost $9,200 $8,000 $6,400 $3,000 $2,000 $7,800 $4,300 

Sharing 

Emergency Room Services 50% 40% 40% 30% 25%* 25% $100* 

Inpatient Hospital Services 50% 40% 40% 30% 25%* 25% $350* 

(Including Mental Health & 

Substance Use Disorder) 

Primarv Care Visit $50* $40* $40* $20* $0* $30* $10* 

Urgent Care $75* $60* $60* $30* $5* $45* $15* 

Specialist Visit $100* $80* $80* $40* $10* $60* $20* 

Mental Health & Substance $50* $40* $40* $20* $0* $30* $10* 

Use Disorder Outpatient 

Office Visit 

Imaging (CT/PET Scans, 50% 40% 40% 30% 25%* 25% $100* 

MRis) 

Speech Therapy $50* $40* $40* $20* $0* $30* $10* 

Occupational, Physical $50* $40* $40* $20* $0* $30* $10* 

Therapy 

Laboratory Services 50% 40% 40% 30% 25%* 25% $30* 

X-rays/Diagnostic Imaging 50% 40% 40% 30% 25%* 25% $30* 

Skilled Nursing Facility 50% 40% 40% 30% 25%* 25% $150* 

Outpatient Facility Fee 50% 40% 40% 30% 25%* 25% $150* 

(Ambulatory Surgery 

Center) 

Outpatient Surgery 50% 40% 40% 30% 25%* 25% $150* 

Physician & Services 

Generic Drugs $25* $20* $20* $10* $0* $15* $5* 

Preferred Brand Drugs $50 $40* $40* $20* $15* $30* $10* 

Non-Preferred Brand Drugs $100 $80 $80 $60 $50* $60* $50* 

Specialty Drugs $500 $350 $350 $250 $150* $250* $150* 

*Benefit category not subject to the deductible. 
82606 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

BILLING CODE 4120–01–C 

7. Non-Standardized Plan Option Limits 

(§ 156.202) 

HHS proposes to exercise its authority 

under sections 1311(c)(1) and 

1321(a)(1)(B) of the ACA to amend 

§ 156.202 by adding paragraphs (d) and 

(e) to introduce an exceptions process 

that would allow issuers to offer 

additional non-standardized plan 

options (in excess of the limit of two) 

per product network type, metal level, 

inclusion of dental and/or vision benefit 

coverage, and service area for PY 2025 

and subsequent plan years, if issuers 

demonstrate that these additional nonstandardized plans have specific design 

features that would substantially benefit 

consumers with chronic and high-cost 

conditions. Under this proposal, issuers 

would not be limited in the number of 

exceptions permitted per product 

network type, metal level, inclusion of 

dental and/or vision benefit coverage, 

and service area, so long as they meet 

specified criteria. Section 1311(c)(1) of 

the ACA directs the Secretary to 

establish criteria for the certification of 

health plans as QHPs. Section 

1321(a)(1)(B) of the ACA directs the 

Secretary to issue regulations that set 

standards for meeting the requirements 

of title I of the ACA for, among other 

things, the offering of QHPs through 

such Exchanges. 

In the 2024 Payment Notice (88 FR 

25855 through 25865), we finalized 

requirements limiting the number of 

non-standardized plan options that 

issuers of QHPs can offer through 

Exchanges on the Federal platform 

(including SBE–FPs) to four nonstandardized plan options per product 

network type (as described in the 

definition of ‘‘product’’ at § 144.103), 

metal level (excluding catastrophic 

plans), inclusion of dental and/or vision 

benefit coverage, and service area for PY 

2024, and two for PY 2025 and 

subsequent plan years. 

We explained that we phased in this 

limit over 2 plan years (instead of 

adopting the limit of two in PY 2024) 

primarily to decrease the risk of 

disruption for both issuers and 

enrollees, and to provide increased 

flexibility to issuers. Many commenters 

supported adopting a more gradual 

approach in which the number of nonstandardized plan options that issuers 

can offer is incrementally decreased 

over a span of 2 plan years, instead of 


ddrumheller on DSK120RN23PROD with PROPOSALS2EP24NO23.025</GPH>

TABLE 13: 2025 Proposed Standardized Options Set Two (For Issuers in Delaware and 

Louisiana) 

Expanded Standard Silver Silver Silver Gold Platinum Bronze Silver 73 CSR 87CSR 94 CSR 

Actuarial Value 63.81% 70.01% 73.10% 87.36% 94.37% 78.10% 88.07% 

Deductible $7,500 $5,000 $3,000 $500 $0 $1,500 $0 

Annual Limitation on Cost $9,200 $8,000 $6,400 $3,000 $2,000 $7,800 $4,300 

Sharing 

Emergency Room Services 50% 40% 40% 30% 25%* 25% $100* 

Inpatient Hospital Services 50% 40% 40% 30% 25%* 25% $350* 

(Including Mental Health 

& Substance Use Disorder) 

Primary Care Visit $50* $40* $40* $20* $0* $30* $10* 

Urgent Care $75* $60* $60* $30* $5* $45* $15* 

Specialist Visit $100* $80* $80* $40* $10* $60* $20* 

Mental Health & $50* $40* $40* $20* $0* $30* $10* 

Substance Use Disorder 

Outpatient Office Visit 

Imaging (CT/PET Scans, 50% 40% 40% 30% 25%* 25% $100* 

MRis) 

Speech Therapy $50* $40* $40* $20* $0* $30* $10* 

Occupational, Physical $50* $40* $40* $20* $0* $30* $10* 

Therapy 

Laboratory Services 50% 40% 40% 30% 25%* 25% $30* 

X-rays/Diagnostic Imaging 50% 40% 40% 30% 25%* 25% $30* 

Skilled Nursing Facility 50% 40% 40% 30% 25%* 25% $150* 

Outpatient Facility Fee 50% 40% 40% 30% 25%* 25% $150* 

(Ambulatory Surgery 

Center) 

Outpatient Surgery 50% 40% 40% 30% 25%* 25% $150* 

Physician & Services 

Generic Drugs $25* $20* $20* $10* $0* $15* $5* 

Preferred Brand Drugs $50 $40* $40* $20* $5* $30* $10* 

Non-Preferred Brand $100 $80 $80 $60 $10* $60* $50* 

Drugs 

Specialtv Drugs $150 $125 $125 $100 $20* $100* $75* 

*Benefit category not subject to the deductible. 
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82607 

243The weighted average total number of plans 

available to each consumer was 107.8 in PY 2022, 

prior to the introduction of standardized plan 

option requirements, and 113.6 in PY 2023, the first 

year that standardized plan option requirements 

were introduced. 

244Plan-county combinations are the count of 

unique plan ID and FIPS code combinations. This 

measure was used because a single plan may be 

available in multiple counties, and specific limits 

on non-standardized plan options or specific dollar 

deductible difference thresholds may have different 

impacts on one county where there are four plans 

of the same product network type and metal level 

versus another county where there are only two 

plans of the same product network type and metal 

level, for example. 

adopting a limit of two for PY 2024. 

Additionally, regarding the modification 

to factor the inclusion of dental and 

vision benefits into this limit, issuers 

have frequently offered these specific 

benefit categories as additional benefits 

in otherwise identical plan options, 

accounting for the vast majority of 

product ID-based variations 

(approximately 84 percent of such 

variation) offered by issuers within a 

given metal level, network type, and 

service area in PY 2022. We refer 

readers to the preamble of the 2024 

Payment Notice discussing § 156.202 

(88 FR 25855 through 25865) for more 

detailed discussion of our approach to 

non-standardized plan option limits for 

PY 2024 and related background. 

As a result of the limit on the number 

of non-standardized plan options that 

issuers can offer through the Exchanges 

being reduced from four in PY 2024 to 

two in PY 2025, we estimate (based on 

current PY 2024 plan offering data) that 

the weighted average number of nonstandardized plan options available to 

each consumer will be reduced from 

67.3 in PY 2024 to approximately 41.7 

in PY 2025. Furthermore, we estimate 

that the weighted average total number 

of plans, including standardized and 

non-standardized plan options, 

available to each consumer will be 

reduced from 91.8 in PY 2024 to 

approximately 66.2 in PY 2025.243

Furthermore, based on current QHP 

submission data for PY 2024, we 

estimate that approximately 28,275 of 

the total 109,229 non-standardized plan 

option plan-county combinations 244

(25.9 percent) will be discontinued as a 

result of this limit in PY 2025. 

Relatedly, based on trended enrollment 

data from PY 2023 (which we rely on for 

purposes of this estimate because PY 

2024 enrollment data is currently 

unavailable), we estimate that 

approximately 1.78 million of the 14.94 

million enrollees on the FFEs and SBE– 

FPs (11.9 percent) will be affected by 

these discontinuations in PY 2025. 

In the 2024 Payment Notice (88 FR 

25858 through 25859), we also 

announced our intent to propose an 

exceptions process in the 2025 Payment 

Notice proposed rule that would allow 

issuers to offer non-standardized plan 

options in excess of the limit of two per 

product network type, metal level, 

inclusion of dental and/or vision benefit 

coverage, and service area for PY 2025 

and subsequent plan years. 

As such, in this proposed rule, we 

propose an exceptions process at new 

§ 156.202(d) and (e) that would permit 

FFE and SBE–FP issuers to offer more 

than two non-standardized plan options 

per product network type, metal level, 

inclusion of dental and/or vision benefit 

coverage, and service area for PY 2025 

and subsequent plan years, if issuers 

demonstrate that these additional nonstandardized plans beyond the limit at 

§ 156.202(b) have specific design 

features that would substantially benefit 

consumers with chronic and high-cost 

conditions. Issuers would not be limited 

in the number of exceptions permitted 

per product network type, metal level, 

inclusion of dental and/or vision benefit 

coverage, and service area, so long as 

they meet specified criteria. 

Specifically, pursuant to proposed 

§ 156.202(d), issuers would be permitted 

to offer more than two non-standardized 

plan options if these additional plans’ 

cost sharing for benefits pertaining to 

the treatment of chronic and high-cost 

conditions (including benefits in the 

form of prescription drugs, if pertaining 

to the treatment of the condition(s)) is 

at least 25 percent lower, as applied 

without restriction in scope throughout 

the plan year, than the cost sharing for 

the same corresponding benefits in an 

issuer’s other non-standardized plan 

option offerings in the same product 

network type, metal level, and service 

area. The reduction could not be limited 

to a part of the year, or an otherwise 

limited scope of benefits. Instead, 

issuers would be required to apply the 

reduced cost sharing for these benefits 

any time the covered item or service is 

furnished. For example, an issuer could 

not reduce cost sharing for the first three 

office visits or drug fills and then 

increase it for remaining visits or drug 

fills. Furthermore, issuers would be 

prohibited from conditioning reduced 

cost sharing for these benefits on a 

particular diagnosis. That is, although 

the benefit design would have reduced 

cost sharing to address one or more 

articulated conditions, the reduced cost 

sharing must be available to all enrolled 

in the plan who receive the service(s) 

covered by the benefit. 

Under this proposal, no other plan 

design features (such as the inclusion of 

additional benefit coverage, different 

provider networks, different 

formularies, or reduced cost sharing for 

benefits provided through the telehealth 

modality) would be evaluated under 

this exceptions process, meaning no 

other differences in plan design features 

would allow issuers to be excepted from 

the limit to the number of nonstandardized plan options offered per 

product network type, metal level, 

inclusion of dental and/or vision benefit 

coverage, and service area. 

Additionally, as part of this 

exceptions process, at proposed 

§ 156.202(e), issuers would be required 

to submit a written justification in a 

form and manner and at a time 

prescribed by HHS that provides 

additional details and explains how the 

particular plan design the issuer desires 

to offer above the non-standardized plan 

option limit of two satisfies the 

proposed standards for receiving an 

exception to this limit—namely, how 

the particular plan would substantially 

benefit consumers with chronic and 

high-cost conditions. We would provide 

issuers with a justification form upon 

publication of the final rule and when 

the QHP templates for the applicable 

plan year are released. 

This justification form would ask the 

issuer to (1) identify the specific 

condition(s) for which cost sharing is 

reduced, (2) explain which benefits 

would have reduced annual enrollee 

cost sharing (as opposed to reduced cost 

sharing for a limited number of visits) 

for the treatment of the specified 

condition(s) by 25 percent or more 

relative to the cost sharing for the same 

corresponding benefits in an issuer’s 

other non-standardized plan offerings in 

the same product network type, metal 

level, and service area, and (3) explain 

how the reduced cost sharing for these 

services pertains to clinically indicated 

guidelines for treatment of the specified 

chronic and high-cost condition(s). 

Additionally, to allow the Exchange 

adequate time to review these 

justification forms, issuers would need 

to submit their QHP application in a 

form and manner and at a time specified 

by us. We anticipate requesting that 

issuers submit QHP applications for 

non-standardized plan options that 

exceed the two-plan limit by the QHP 

certification Early Bird deadline. 

We propose for PY 2025 to allow 

exceptions only for plans that meet the 

previously described requirements for 

benefits pertaining to the treatment of 

conditions that are chronic and highcost in nature. We clarify that, for 

purposes of this standard, chronic 

conditions are those that have an 

average duration of one year or more 

and require ongoing medical attention 

or limit activities of daily living, or 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82608 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

245National Center for Chronic Disease 

Prevention and Health Promotion. About Chronic 

Diseases, July 21, 2022, https://www.cdc.gov/ 

chronicdisease/about/index.htm. 

246Waters, H, & Graf, M. (2018). The Cost of 

Chronic Disease in the U.S. Milken Institute. 

https://milkeninstitute.org/sites/default/files/ 

reports-pdf/ChronicDiseases-HighRes-FINAL2.pdf. 

both.245 We also clarify that, for 

purposes of this standard, high-cost 

conditions are those that account for a 

disproportionately high portion of total 

Federal health expenditures. We note 

that the four chronic and high-cost 

conditions included in the prescription 

drug adverse tiering for PY 2025 

(specifically, hepatitis C virus, HIV, 

multiple sclerosis, and rheumatoid 

arthritis) are examples of conditions that 

we would consider to be chronic and 

high-cost in nature for purposes of this 

standard. However, for purposes of this 

standard, we clarify that we would also 

consider additional conditions to be 

chronic and high-cost in nature. 

Additional representative examples of 

conditions that we would consider to be 

chronic and high-cost in nature for 

purposes of this proposal include 

Alzheimer’s disease, kidney disease, 

osteoporosis, heart disease, diabetes, 

and all kinds of cancer. Examples of 

conditions that we would not consider 

chronic and high-cost in nature would 

be those that are generally acute in 

nature, including bronchitis, the flu, 

pneumonia, strep throat, and respiratory 

infections. 

We propose this approach for several 

reasons. Considering that chronic and 

high-cost conditions (including the 

examples previously discussed) affect a 

comparatively low number of 

consumers, we anticipate that a 

significant portion of the nonstandardized plan options that may be 

discontinued due to having 

comparatively lower rates of enrollment 

among each issuer’s portfolio of 

offerings could potentially be those that 

have plan design features that benefit 

consumers with these chronic and highcost conditions (such as plans with 

some combination of enhanced predeductible coverage for relevant 

services, reduced cost sharing for 

relevant services, lower MOOPs, lower 

deductibles, more comprehensive 

provider networks with more 

specialized providers, more generous 

formularies with more specialized 

medications, higher AVs, and higher 

premiums). 

Even with comparatively lower rates 

of enrollment, we believe that these 

non-standardized plan options can still 

fulfill an important role in addressing 

chronic and high-cost conditions, which 

are responsible for a disproportionate 

amount of health care expenditures.246

Thus, we believe this proposed 

exceptions process could play an 

important role in enhancing the quality 

of life for those affected by these 

conditions, combatting health 

disparities, advancing health equity, 

and reducing health care expenditures. 

We further believe that introducing such 

an exceptions process while also 

reducing the non-standardized plan 

option limit to two for PY 2025 would 

balance the dual aims of reducing the 

risk of plan choice overload while 

simultaneously ensuring that truly 

innovative plan designs that may benefit 

consumers with chronic and high-cost 

conditions can continue to be offered. 

We further believe that not limiting 

the number of permitted exceptions per 

issuer, product network type, metal 

level, inclusion of dental and/or vision 

benefit coverage, and service area 

(instead of allowing exceptions for only 

two such plans, for example) would 

ensure that issuers are not restricted in 

the number of innovative plans they can 

offer. This would in turn help ensure 

that a greater portion of consumers with 

chronic and high-cost conditions have 

access to plans that reduce barriers to 

access to care for services critical to the 

treatment of their conditions. 

Although issuers would not be 

limited in the number of exceptions 

they may be granted under this 

proposal, we anticipate that most 

issuers would determine that the burden 

of creating and certifying additional 

non-standardized plans intended to 

benefit a comparatively small 

population of consumers would 

outweigh the benefit of doing so. We 

also previously solicited comments on 

innovative plan designs, such as in the 

2024 Payment Notice proposed rule. In 

response to this comment solicitation, 

we received only two examples of plan 

designs that commenters considered to 

be innovative in nature: plan designs 

that have reduced cost sharing for 

benefits provided through telehealth, 

and plan designs that have reduced cost 

sharing for services and medications 

related to the treatment of diabetes 

(such as in the form of insulin). We 

clarify that the former example (reduced 

cost sharing for benefits provided 

through the telehealth) would not 

qualify for this exceptions process, 

while the latter example (reduced cost 

sharing for benefits related to the 

treatment of diabetes) could potentially 

qualify for this exceptions process, if the 

specified criteria are met. 

Regardless, given that we only 

received two examples of plan designs 

that particular issuers considered to be 

innovative in nature, we do not 

anticipate that issuers will seek to have 

a substantial number of nonstandardized plan options excepted 

from the non-standardized plan option 

limit. As a result, we do not anticipate 

this proposal would result in an 

increased risk of plan choice overload 

for consumers interested in plans with 

better benefits for qualifying conditions. 

We further believe that permitting 

exceptions solely based on whether a 

non-standardized plan option has 

reduced cost sharing of 25 percent or 

more for benefits pertaining to the 

treatment of chronic and high-cost 

conditions, as opposed to considering 

other factors (such as specialized 

networks, specialized formularies, or 

specialized benefit packages), is 

appropriate since the current 

standardized plan option requirements 

do not limit issuers in the number of 

standardized plan options they can offer 

per product network type, metal level, 

or service area. Standardized plan 

option requirements do not permit 

issuers to deviate from the specified cost 

sharing parameters for standardized 

plan options—meaning issuers would 

not be able to offer standardized plan 

options with reduced cost sharing of 25 

percent or more for the treatment of 

specific conditions if the benefit 

category’s cost sharing does not comply 

with the specified standards. 

As a result, issuers already have the 

flexibility to offer specialized networks, 

formularies, and benefit packages 

(including those that decrease barriers 

to access for the treatment of chronic 

and high-cost conditions—such as by 

including additional specialized 

providers, prescription drugs, or 

benefits) as standardized plan options. 

We further believe that the cost sharing 

difference threshold of 25 percent or 

more is appropriate since we have 

observed that cost sharing differences 

below this threshold represent normal 

variation within a particular metal level, 

while differences at or above this 

threshold are more often associated with 

cost sharing differences between 

different metal levels. Altogether, we do 

not believe that a difference in a cost 

sharing amount that is of the same 

magnitude as normal variation within a 

particular metal level (specifically, less 

than 25 percent) would warrant being 

excepted from the non-standardized 

plan option limit. 

We note that under this proposed 

exceptions process, if additional plans 

were permitted to be offered in excess 

of the limit of two non-standardized 

plan options, in accordance with the 

guaranteed availability requirements at 


ddrumheller on DSK120RN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82609 

247The nondiscrimination requirements at 

§ 147.104(e) apply to health insurance issuers 

offering non-grandfathered group or individual 

health insurance coverage, and their officials, 

employees, agents, and representatives. The 

nondiscrimination requirements at § 156.200(e) 

apply to QHPs in the individual and small-group 

markets, and the nondiscrimination requirements at 

§ 156.125(b) apply to issuers providing EHB. 

248Section 1322(c)(1)(B) of the ACA and 42 

U.S.C. 18042(c)(1)(B) define a QNHII. 

249 42 U.S.C. 18042(c)(1)(B). 

250See § 156.515(c)(1). 

251ACA section 1322(c)(3)(A); 42 U.S.C. 

18042(c)(3)(A). 

252See § 156.505. 

253See § 156.515(b)(1). 

254 42 U.S.C. 18042(b)(2)(C). 

255 42 U.S.C. 18042(b)(2)(C)(iii) contains specific 

prohibitions, and concomitant penalty, that are not 

relevant here. 

§ 147.104(a), these plans would also be 

required to be made available on the 

same basis to consumers without these 

chronic and high-cost conditions. 

Further, we emphasize that these plans 

would be prohibited from 

discriminating in accordance with the 

nondiscrimination requirements at 

§§ 147.104(e), 156.125, and 

156.200(e).247 To meet these nondiscrimination requirements, these 

plans would be required to apply 

preferential cost sharing to all enrolled 

in the plan, without regard to diagnosis. 

Furthermore, although we acknowledge 

that non-standardized plan options 

excepted under this proposal would 

primarily benefit consumers with 

chronic and high-cost conditions, we 

believe that a sufficiently satisfactory 

range of both non-standardized and 

standardized plan options currently 

exist that are primarily intended for 

consumers without chronic and highcost conditions. As a result, we are not 

concerned that any risk of 

discrimination created by this 

exceptions process would negatively 

impact consumers, including but not 

limited to consumers with chronic and 

high-cost conditions. 

We seek comment on this proposed 

approach. Specifically, we seek 

comment on the proposed exceptions 

process, and whether there should be 

any exceptions at all to the limit on the 

number of non-standardized plan 

options that issuers can offer through 

the Exchanges. In addition, we are 

particularly interested in comments on 

the following topics: whether 

exceptions should be permitted only for 

a specific set of chronic and high-cost 

conditions as opposed to any chronic 

and high-cost condition; whether there 

are other plan attributes we should 

consider outside of sufficiently 

differentiated cost sharing, such as the 

inclusion of alternative payment models 

or sufficiently differentiated benefits, 

networks, or formularies; the specific 

difference threshold for these costsharing amounts, including whether a 

threshold higher or lower than 25 

percent would be more appropriate; the 

specific components of the justification 

form that issuers would be required to 

submit; the deadline for issuers to 

submit the materials necessary for us to 

consider whether non-standardized plan 

options should be excepted from the 

limit; and whether we should require 

that non-standardized plan options 

excepted from the limit be visually 

differentiated from other nonstandardized plan options not excepted 

from the limit—such as by differentially 

displaying these excepted plans on 

HealthCare.gov, or by requiring these 

excepted plans to adopt a particular 

plan marketing name that accurately 

conveys how these plans would 

substantially benefit consumers with 

chronic and high-cost conditions (for 

example, by requiring that an excepted 

plan that reduces cost sharing for the 

treatment of diabetes have a 

corresponding plan marketing name 

related to diabetes). 

We also seek comment on other ways 

to balance the dual aims of reducing the 

risk of plan choice overload while 

simultaneously ensuring that truly 

innovative plan designs that may benefit 

consumers with chronic and high-cost 

conditions can continue to be offered. 

Specifically, we seek comment on 

whether we should limit the number of 

exceptions available such that issuers 

are only permitted to offer one or 

several additional plans pursuant to the 

proposed exceptions process above the 

limit of two non-standardized plans—as 

opposed to not limiting the number of 

exceptions permitted per product 

network type, metal level, inclusion of 

dental and/or vision benefit coverage, 

and service area. 

8. CO–OP Loan Terms (§ 156.520) 

We propose to amend § 156.520(f) to 

enable CMS to approve requests by CO– 

OP borrowers to voluntarily terminate 

their loan agreement with CMS, and 

thereby cease to constitute a qualified 

non-profit health insurance issuer 

(QNHII),248 for the purpose of 

permitting the loan recipient to pursue 

innovative business plans that are not 

otherwise consistent with the 

governance requirements and business 

standards applicable to a CO–OP 

borrower, provided certain conditions 

are met as described in this section. 

Section 1322 of the ACA requires a 

CO–OP loan recipient, or QNHII, to be, 

among other things, an entity 

‘‘substantially all of the activities of 

which consist of the issuance of 

qualified health plans in the individual 

and small group markets in each State 

in which it is licensed to issue such 

plans.’’ 249 This requirement is set forth 

in regulations which require that at least 

two-thirds of the policies or contracts 

for health insurance coverage issued by 

a CO–OP in each State in which it is 

licensed be qualified health plans 

offered in the individual and small 

group markets.250

The ACA also mandates that a QNHII 

be subject to governance by ‘‘a majority 

vote of its members.’’ 251 Accordingly, 

§ 156.515(b) imposes governance 

requirements for each CO–OP that 

include a requirement that the entity 

remain under member control, such that 

a majority of its directors are elected by 

a majority vote of the CO–OP’s 

members. A CO–OP ‘‘member’’ is an 

individual covered by a health 

insurance policy issued by a CO–OP.252

A CO–OP’s voting members consist of 

all persons covered by health insurance 

policies issued by the CO–OP who are 

18 years of age or older.253

Section 1322 of the ACA mandates 

that the Secretary require an entity 

receiving a CO–OP loan to enter into a 

loan agreement with the Secretary. The 

required loan agreement must obligate 

the borrower to ‘‘meet, and to continue 

to meet’’ the requirements of a QNHII, 

and ‘‘any other requirements contained 

in the agreement.’’ 254 No more is 

specified concerning the required 

contents of the loan agreement.255 The 

requirement that a CO–OP be subject to 

a majority vote of its members is, 

accordingly, imposed by regulation, at 

§ 156.515(b), as well as the CO–OP loan 

agreement. Specifically, Section 18.2 of 

the CO–OP loan agreement prohibits 

any ‘‘[o]rganizational [c]hange . . . that 

would result in . . . implementing a 

governance structure that does not meet 

the governance standards codified at 45 

CFR 156.515(b).’’ 

As a result of these requirements, a 

CO–OP cannot pursue new business 

arrangements that would impose a 

governance structure under which it is 

possible for a majority of directors to be 

elected by a majority vote of persons 

who are not covered by health insurance 

policies issued by the CO–OP. A CO–OP 

also cannot enter into new business 

arrangements under which voting 

members need not be individuals 

covered by policies issued by the CO– 

OP. It is also not possible for a CO–OP 

to enter into a business plan under 

which less than two-thirds 

(‘‘substantially all’’) of the company’s 


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82610 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

256CO–OP loan agreement, section 16.1.1(a). 

257The Consolidated Appropriations Act, 2021 

(CAA) was enacted on December 27, 2020. Title I, 

also known as the No Surprises Act, and title II 

(Transparency) of Division BB of the CAA amended 

chapter 100 of the Code, Part 7 of ERISA, and title 

XXVII of the PHS Act. Administrative fees are 

charged in accordance with 45 CFR 149.510(d)(2), 

26 CFR 54.9816–8T(d)(2), and 29 CFR 2590.716– 

8(d)(2). 

258 88 FR 75798. The effective date of any 

finalized proposal related to netting of amounts 

owed to the Federal government from health 

insurance issuers for administrative fees for 

utilizing the No Surprises Act Federal IDR process 

would be no earlier than a time at which both the 

proposals related to netting proposed in the Federal 

Independent Dispute Resolution Operations 

proposed rule and the proposed amendments to 

§ 156.1215 in this proposed rule are finalized. 

259 ‘‘Affiliate’’ refers to any affiliated issuer that 

operates under the same taxpayer identification 

number as an issuer, such as when there are 

multiple Health Insurance Oversight System (HIOS) 

identifiers operating under the same taxpayer 

identification number. See the 2015 Payment Notice 

proposed rule (78 FR 72371). 

260See May 2022 Bureau of Labor Statistics, 

Occupational Employment Statistics, National 

Occupational Employment and Wage Estimates. 

https://www.bls.gov/oes/current/oes_stru.htm. 

activities potentially may not consist of 

issuing qualified health plans. 

The loan agreements currently in 

force only permit a CO–OP to initiate 

voluntary termination of its loan 

agreement on grounds that the loan 

recipient believes that it cannot create a 

viable and sustainable CO–OP.256 The 

inability to create a viable or sustainable 

CO–OP would consist of a failure to 

become or remain licensed as a health 

insurance company, a failure to qualify 

as a QHP issuer, or a failure to become 

or remain financially solvent. There is 

no avenue currently for a CO–OP to 

request to terminate its loan agreement 

for the purpose of pursuing new 

business ventures that involve a 

governance structure or business model 

inconsistent with CO–OP governance or 

operational standards. 

Informed by 8 years of experience 

with business operations for the CO–OP 

program, we have become aware of 

opportunities that may be available to 

CO–OPs to terminate their loan 

agreement, cease to constitute a QNHII, 

and thus become able pursue new 

opportunities that appear wellcalculated to expand operations from 

regional areas within a State to 

Statewide operations, and also improve 

consumer access to other health 

insurance products, while remaining a 

non-profit, member-focused entity. 

We therefore propose to amend 

§ 156.520(f) to add § 156.520(f)(2) which 

would enable CMS, in its sole 

discretion, to approve requests by CO– 

OP borrowers to voluntarily terminate 

their loan agreement with CMS, and 

thereby cease to constitute a QNHII, for 

the purpose of permitting the loan 

recipient to pursue innovative business 

plans that are not otherwise consistent 

with the governance requirements and 

business standards of a CO–OP 

borrower, provided that (1) all 

outstanding CO–OP loans issued to the 

loan recipient are repaid in full prior to 

termination of the loan agreement, and 

(2) we believe granting the request 

would meaningfully enhance consumer 

access to quality, affordable, memberfocused, non-profit health care options 

in affected markets. We propose to move 

the current regulation text at 

§ 156.520(f) to new § 156.520(f)(1). 

As a general matter, we anticipate that 

plans could be deemed innovative and 

likely to enhance consumer access to 

quality, affordable, member-focused 

health care if they appear to be wellcalculated to lead directly to marketing 

non-profit, member-focused health 

plans in new regions of a State, or to 

offer health plans on a Statewide basis 

for the first time, or to expand 

operations into new States, or to 

enhance consumer access to new nonprofit products that are not qualified 

health plans. These examples of 

innovative business plans are 

illustrative, and not exclusive. 

9. Conforming Amendment to Netting 

Regulation To Include Federal IDR 

Administrative Fees (§ 156.1215) 

We propose conforming amendments 

to the payment and collections process 

set forth at § 156.1215 to align with the 

policies and regulations proposed in the 

Federal Independent Dispute Resolution 

Operations proposed rules (88 FR 

75744). If finalized, these amendments 

would provide that the administrative 

fees for utilizing the No Surprises 

Act 257 Federal IDR process for health 

insurance issuers that participate in 

financial programs under the Patient 

Protection and Affordable Care Act 

would be subject to netting as part of 

HHS’ integrated monthly payment and 

collections cycle.258

To implement this policy, we propose 

to amend § 156.1215(b) to allow HHS to 

net payments owed to issuers and their 

affiliates 259 operating under the same 

tax identification number (TIN) against 

amounts due to the Federal Government 

from the issuers and their affiliates 

operating under the same TIN for APTC, 

advance payments of and reconciliation 

of CSRs, payment of FFE user fees, 

payment of SBE–FP user fees, HHS risk 

adjustment, reinsurance, and risk 

corridors payments and charges, and 

administrative fees from these issuers 

and their affiliates for utilizing the 

Federal IDR process in accordance with 

§ 149.510(d)(2). Additionally, we 

propose to amend § 156.1215(c) to 

provide that any amount owed to the 

Federal Government by an issuer and its 

affiliates for unpaid administrative fees 

due to the Federal Government from 

these issuers and their affiliates for 

utilizing the Federal IDR process in 

accordance with § 149.510(d)(2), after 

HHS nets amounts owed by the Federal 

Government under these programs, 

would be the basis for calculating a debt 

owed to the Federal Government. 

We seek comment on the proposed 

amendments to § 156.1215(b) and (c). 

IV. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. 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 the agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

We are soliciting public comment on 

each of these issues for the following 

sections of this document that contain 

information collection requirements 

(ICRs). 

A. Wage Estimates 

To derive wage estimates, we 

generally use data from the Bureau of 

Labor Statistics to derive average labor 

costs (including a 100 percent increase 

for the cost of fringe benefits and 

overhead) for estimating the burden 

associated with the ICRs.260 Table 14 

presents the median hourly wage, the 

cost of fringe benefits and overhead, and 

the adjusted hourly wage. 

As indicated, employee hourly wage 

estimates have been adjusted by a factor 

of 100 percent. This is necessarily a 

rough adjustment, both because fringe 

benefits and overhead costs vary 

significantly across employers, and 

because methods of estimating these 

costs vary widely across studies. 

Nonetheless, there is no practical 

alternative, and we believe that 


ddrumheller on DSK120RN23PROD with PROPOSALS2
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doubling the hourly wage to estimate total cost is a reasonably accurate 

estimation method. 

B. ICRs Regarding Proposed 

Amendments to Normal Public Notice 

Requirements (31 CFR 33.112, 31 CFR 

33.120 and 45 CFR Part 155.1312, and 

45 CFR 155.1320) 

The Departments propose 

amendments to the section 1332 waiver 

implementing regulations to set forth 

flexibilities related to State public 

notice requirements and post-award 

public participation requirements. 

Current regulations at 31 CFR 33.112 

and 45 CFR 155.1312 specify State 

public notice and comment period and 

participation requirements for proposed 

section 1332 waiver requests, and 31 

CFR 33.116(b) and 45 CFR 155.1316(b) 

specify the public notice and comment 

period and approval requirements under 

the accompanying Federal process. 

However, this proposed rule does not 

propose to alter any of the requirements 

related to section 1332 waiver 

applications, compliance and 

monitoring, or evaluation in a way that 

would impose any additional costs or 

burdens for States seeking waiver 

approval or those States with approved 

waiver plans that have not already been 

captured in prior burden estimates. The 

Departments anticipate that 

implementing these provisions, if 

finalized, would not significantly 

change or decrease the associated 

burden currently approved under OMB 

control number: 0938–1389, expiration 

date: February 29, 2024. 

C. ICRs Regarding Basic Health Program 

Regulations (42 CFR 600.320) 

We propose at 42 CFR 600.320(c)(1) 

through (3) that a State operating a BHP 

must establish a uniform method of 

determining the effective date of 

eligibility for enrollment in a standard 

health plan which follows: (1) the 

Exchange effective date standards at 45 

CFR 155.420(b)(1); (2) the Medicaid 

effective date standards at 42 CFR 

435.915 exclusive of § 435.915(a); or (3) 

an effective date of eligibility of the first 

day of the month following the month 

in which BHP eligibility is determined. 

We note that only 42 CFR 600.320(c)(3) 

is a new proposal. The options under 42 

CFR 600.320(c)(1) and (2) exist. 

We estimate that the proposal under 

42 CFR 600.320(c)(3) would have no 

impact on the information collection 

burden. We note that any cost would be 

incurred 100 percent by the State, as 

Federal BHP funds cannot be used for 

program administration. We seek 

comment on these assumptions. 

D. ICRs Regarding Election To Operate 

an Exchange After 2014 (45 CFR 

155.106) 

We propose amending § 155.106(a)(2) 

to add new paragraphs (a)(2)(i) and (ii) 

to require that, as part of a State’s 

activities for its establishment of a State 

Exchange, the State provide supporting 

documentation demonstrating progress 


ddrumheller on DSK120RN23PROD with PROPOSALS2EP24NO23.026</GPH>

TABLE 14: Adjusted Hourly Wages Used in Burden Estimates 

Business Operations 13-1000 $36.56 $36.56 $73.12 

S ecialist 

Web and Digital Interface 15-1255 $40.02 $40.02 $80.04 

Desi ner 

Web Develo er 15-1254 $37.78 $37.78 $75.56 

13-1041 $34.47 $34.47 $68.94 

Accountant and Auditor 13-2011 $37.50 $37.50 $75.00 

Mana ement Anal st 13-1111 $45.81 $45.81 $91.62 

Chief Executive 11-1011 $91.12 $91.12 $182.24 

Com uter S stems Anal st 15-1211 $49.15 $49.15 $98.30 

Financial Examiners (State 13-2061 $39.52 $39.52 $79.04 

Government, excluding 

schools and hos itals 

Actuary (Member of 15-2011 $54.80 $54.80 $109.60 

American Academy of 

Actuaries 

General and Operations 11-1021 $47.16 $47.16 $94.32 

Mana er 

General Internal Medicine 29-1216 $103.11 $10.113 $206.22 

15-1251 $47.02 $47.02 $94.04 
82612 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

toward meeting State Exchange 

Blueprint requirements, or 

documentation that details a State’s 

plans for how it intends to implement 

and meet the Exchange functional 

requirements as laid out in the State 

Exchange Blueprint. This could include 

a State submitting detailed plans 

regarding its State Exchange consumer 

assistance programs and activities, such 

as information on its direct-to-consumer 

outreach plans, for HHS to assess 

comparability to the FFEs’ consumer 

assistance programs and activities while 

allowing for State flexibility in its 

approach to best serve the State’s 

consumers. Additionally, we are 

proposing to require that that when a 

State submits its State Exchange 

Blueprint application to HHS for 

approval, the State must provide the 

public with notice and a copy of its 

State Exchange Blueprint application. 

Further, at some point following a 

State’s submission of its State Exchange 

Blueprint application to HHS, a State 

must conduct at least one public 

engagement (such as a townhall meeting 

or public hearing), in a timeline and 

manner considered effective by the 

State, with concurrence from HHS, at 

which interested parties can learn about 

the State’s intent to establish a State 

Exchange and the State’s progress 

toward executing that transition. We 

also propose to require that while a 

State is in the process of establishing a 

State Exchange and until HHS has 

approved or conditionally approved the 

State Exchange Blueprint application, a 

State conduct periodic public 

engagements at which interested parties 

can continue to learn about the State’s 

progress towards establishing a State 

Exchange, in a timeline and manner 

considered effective by the State, with 

concurrence from HHS. These 

proposals, if finalized, would impact 

States that are considering, or are in the 

process of, establishing a State Exchange 

for PY 2025 and subsequent years. 

However, if finalized, we anticipate 

minimal burden on these States, as we 

believe they would have sufficient time 

to plan for such public-facing State 

Exchange engagements and activities if 

not already in their plans. 

E. ICRs Regarding Adding and 

Amending Language To Ensure WebBrokers Operating in State Exchanges 

Meet Certain Requirements Applicable 

in the FFEs and SBE–FPs (45 CFR 

155.220) 

The following proposed changes will 

be submitted to OMB for review under 

OMB control number 0938–New (CMS– 

#####). We seek comment on these 

burden estimates. 

We propose to amend § 155.220 to 

apply to web-brokers operating in State 

Exchanges, and consequently in State 

Exchanges, for both the State Exchange’s 

Individual Exchange and SHOP, certain 

existing Federal standards governing 

web-brokers use of non-Exchange 

website to assist consumers with 

enrolling in QHPs and applying for 

APTC/CSRs in a manner that constitutes 

enrollment through the Exchange. The 

burden associated with these proposed 

changes includes costs for web-brokers 

participating in States with State 

Exchanges to meet the requirements 

described in new proposed § 155.220(n) 

and for State Exchanges related to the 

development and oversight of webbroker programs within their State. We 

anticipate that the same number of webbrokers operating in the Exchanges on 

the Federal platform (20) would also 

operate in the 5 State Exchanges and 

would be required to incur this burden 

for each of the 5 State Exchanges they 

may operate in. We estimate the 

relevant costs based on current Federal 

costs. These estimates are described 

below. 

These proposals would impose 

burdens on web-brokers participating in 

State Exchanges for costs related to webdevelopment to meet the website 

display requirements proposed to be 

extended to web-brokers operating in 

these State Exchanges and costs 

associated with creating and submitting 

audit documentation for the applicable 

Exchange’s review. Although we have 

allowed States certain flexibility for 

State Exchanges with regards to 

establishing procedures and 

requirements for website displays and 

demonstration of operational readiness, 

we expect the costs can be reasonably 

estimated based on the Federal costs as 

follows. We also solicit feedback from 

State Exchanges regarding these burden 

estimates and the number of webbrokers expected to participate in State 

Exchanges pursuant to this proposal. 

We estimate it would take 15 hours 

for a Business Operations Specialist at 

an hourly rate of $73.12 to implement 

the standardized disclaimers required 

under § 155.220(c)(3)(i)(A) and (G), 

along with 45 hours at an hourly rate of 

$80.04 for a Web and Digital Interface 

Designer to modify the website to 

implement the standardized disclaimers 

across 5 State Exchanges. Therefore, for 

the standardized disclaimers under 

§ 155.220(c)(3)(i)(A) and (G), we 

estimate each web-broker operating in 

State Exchanges that operate their own 

eligibility and enrollment platform 

would incur a cost of $4,698.60 (15 

hours × $73.12 per hour + 45 hours × 

$80.04 per hour). We estimate a 

cumulative burden of $93,972 for the 

anticipated 20 web-brokers operating 

across the State Exchanges ($4,698.60 × 

20 web-brokers). Additionally, proposed 

new paragraph § 155.220(n)(1) allows 

State Exchanges the flexibility to add 

State-specific information to the 

standardized disclaimers that does not 

conflict with the HHS-provided 

language. We solicit feedback from State 

Exchanges regarding how these 

flexibilities would impact these burden 

estimates. 

Additionally, we anticipate it would 

take up to 100 hours at an hourly rate 

of $80.04 for a Web and Digital Interface 

Designer to modify the website to 

implement and display the standardized 

QHP comparative information required 

under § 155.220(c)(3)(i)(A) (including 

the quality ratings assigned by HHS and 

enrollee satisfaction survey) across 5 

State Exchanges. Therefore, for the 

display of the QHP comparative 

information on web-broker nonExchange websites, we estimate each 

web-broker operating in State Exchanges 

would incur a cost of $8,004 (100 hours 

× $80.04 per hour). We estimate a 

cumulative burden of $160,080 for the 

anticipated 20 web-brokers operating 

across the State Exchanges ($8,400 × 20 

web-brokers). 

We anticipate it would take 50 hours 

for a Web and Digital Interface Designer 

at an hourly rate of $80.04 to modify the 

website to display the APTC and CSR 

eligibility information required under 

§ 155.220(c)(3)(i)(I) across 5 State 

Exchanges. Therefore, for changes 

related to implementation of the Federal 

minimum web-broker standards related 

to display of consumer APTC and CSR 

eligibility information, we estimate each 

web-broker operating in States with 

State Exchanges would incur a cost of 

$4,002 (50 hours × $80.04). We therefore 

estimate a cumulative burden of $80,040 

for the anticipated 20 web-brokers 

operating across the 5 State Exchanges 

($4,002 × 20 web-brokers). Additionally, 

proposed new paragraph § 155.220(n)(1) 

allows State Exchanges the flexibility to 

add State-specific information to the 

standardized disclaimers that does not 

conflict with the HHS-provided 

language and to define and review how 

consumer education information about 

the State Exchange is customized and 

presented on web-brokers websites. We 

solicit feedback from State Exchanges 

regarding how these flexibilities would 

impact these burden estimates. 

New proposed paragraph (c)(4)(iii) 

would extend certain downstream agent 

and broker requirements at 

§ 155.220(c)(4)(i) that currently apply to 

web-brokers in FFE and SBE–FP States 

and govern the use of the web-broker’s 


ddrumheller on DSK120RN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82613 

261OPM. (2023, January). Salary Table 2023–DCB 

Incorporating the 4.1% General Schedule Increase 

and a Locality Payment of 32.49% For the Locality 

Pay Area of Washington-Baltimore-Arlington, DCMD-VA-WV-PA Total Increase: 4.86%. https://

www.opm.gov/policy-data-oversight/pay-leave/ 

salaries-wages/salary-tables/pdf/2023/DCB_h.pdf. 

262 Id. 

non-Exchange website by other agents 

or brokers assisting Exchange 

consumers to also apply to web-brokers, 

and their downstream agents and 

brokers in State Exchanges. Under the 

proposed new provision, web-brokers 

that permit other agents or brokers, 

through a contract or other arrangement, 

to use the web-broker’s non-Exchange 

website to help and applicant or 

enrollee complete a QHP selection or 

complete the Exchange eligibility 

application would be required to meet 

the standards at § 155.220(c)(4)(i)(A), 

(B), (D), and (F) when assisting 

consumers in States with State 

Exchanges. This includes extension of 

requirements for web-brokers to verify 

that any agent or broker accessing or 

using the website is licensed in the State 

in which the consumer is selecting the 

QHP and has completed training and 

registration and has signed all required 

agreements with the applicable State 

Exchange. It would also require webbrokers to terminate the agent or 

broker’s access to its website if the 

applicable State Exchange determines 

the agent or broker is in violation of the 

provisions described in this section 

and/or if the applicable State Exchange 

terminates any required agreement with 

the agent or broker. In addition, it 

would also extend a requirement for 

web-brokers to provide State Exchanges 

with a list of agents and brokers who 

enter into such a contract or other 

arrangement to use the web-broker’s 

non-Exchange website, in a form and 

manner to be specified by the State 

Exchanges similar to the requirement in 

§ 155.220(c)(4)(i)(A) for web-brokers in 

FFE and SBE–FP States to report the 

same information to HHS. We 

understand that web-brokers who work 

with and allow other agents and brokers 

to use the web-brokers’ non-Exchange 

websites to assist Exchange consumers 

typically obtain and manage 

information on each of their 

downstream agents or brokers as part of 

an onboarding process. As a result, we 

expect web-brokers would already have 

the necessary data to provide a list to 

the applicable State Exchange of each of 

the other agents or brokers that allows 

to use the web-brokers’ non-Exchange 

websites to assist Exchange consumers. 

We estimate that it would take up to 240 

hours at an hourly cost of $94.04 for a 

computer programmer to perform the 

necessary programming to comply with 

these requirements in 

§ 155.220(c)(4)(i)(A), (B), and (D), and 20 

hours at an hourly cost of $118.30 for 

a senior manager to develop a listing of 

affiliated third-party agents and brokers 

across all 5 State Exchanges. Therefore, 

for changes related to implementation of 

these Federal minimum web-broker 

standards related to downstream agents 

or brokers, we estimate each web-broker 

operating in State Exchanges would 

incur a cost of $24,935.60 per webbroker (($94.04 × 240 hours) + ($118.30 

× 20 hours)). We estimate a cumulative 

burden of $598,454.40 for an anticipated 

24 web-brokers operating across the 

State Exchanges ($24,935.60 × 24 webbrokers). 

We estimate it would take 95 hours 

for a Business Operations Specialist at 

an hourly rate of $73.12 to oversee and 

monitor compliance with the 

operational readiness requirements 

established by State Exchange, as 

required by new § 155.220(n)(2) across 5 

State Exchanges. Therefore, for 

compliance requirements, we estimate 

each web-broker operating in States 

with State Exchanges would incur a cost 

of $6,946.40 (95 hours × $73.12) for the 

proposed operational readiness 

requirements. We estimate a cumulative 

burden of $138,928 for the anticipated 

20 web-brokers operating across the 5 

State Exchanges ($6,946.40 × 20 webbrokers). These burden estimates are 

provided based on the estimates of the 

cost for DE entities to comply with the 

operational readiness requirements 

established by HHS. Proposed new 

paragraph § 155.220(n)(2) would allow 

State Exchanges to define and establish 

the form and manner for their webbrokers to establish operational 

readiness. Although we anticipate State 

Exchanges would establish 

requirements similar to the 

requirements for demonstrating 

operational readiness to operate in the 

FFE or SBE–FPs, we solicit feedback 

from State Exchanges regarding how 

well these burden estimates reflect their 

anticipated requirements. 

Therefore, we estimate each webbroker operating in all 5 State 

Exchanges would incur a one-time 

burden in PY 2025 of 565 hours at a cost 

of $48,586.60. We estimate a cumulative 

burden of 11,300 hours at an estimated 

cost of $1,071,474.40 for all 20 webbrokers operating across the 5 State 

Exchanges. We seek comment on the 

number of State Exchanges that would 

be interested in establishing a webbroker program to allow web-brokers to 

host non-Exchange websites to assist 

Exchange consumers in their State and 

on the number of web-brokers interested 

in operating in those State Exchanges. 

New proposed paragraph 155.220(n) 

requires State Exchanges to comply with 

the Federally-facilitated Exchange 

standards described above and in the 

preamble. Proposed paragraph 

155.220(n)(1) allows State Exchanges 

the flexibility to add State-specific 

information to the standardized 

disclaimers that does not conflict with 

the HHS-provided language and 

provides flexibility for the State 

Exchanges to define how consumer 

educational information is displayed on 

websites by web-brokers in State 

Exchanges. Proposed paragraph (2) 

under this new section also requires 

State Exchanges to establish the form 

and manner for their web-brokers to 

demonstrate operational readiness and 

compliance with applicable 

requirements, in the form and manner 

specified by the Exchange. The burden 

associated with these proposed changes 

includes costs for existing and future 

State Exchanges related to drafting new 

policy, updating standards, and 

potentially hiring additional staff to 

perform functions not currently being 

performed by the State Exchange, such 

as for drafting web-broker disclaimer 

language, drafting consumer-facing 

educational content, and engaging webbrokers in operational readiness, that 

would now incur new costs related to 

establishment of a web-broker program 

and ongoing monitoring of web-brokers 

to enforce the minimum Federal 

standards and any additional Statespecific requirements. 

We estimate the relevant costs based 

on current Federal costs as follows. We 

estimate that 5 States will opt to host a 

web-broker program for their State 

Exchanges. We anticipate the total 

burden associated with the State 

Exchanges developing the associated 

policies and procedures, including 

providing web-brokers with examples 

and technical assistance (including 

technical implementation guidance 

such as providing the quality ratings 

assigned and enrollee satisfaction 

survey data) to be up to 528 hours per 

State. This assumes 480 hours for a GS– 

13, Step 5 employee at an hourly rate of 

$121.66 (the hourly wage rate for a GS– 

13, Step 5 employee in the Washington, 

DC area,261 doubled to account for 

fringe benefits and overhead) and 48 

hours for a GS–15, Step 5 employee at 

an hourly rate of $169.10 (the hourly 

wage rate for a GS–15, Step 5 employee 

in the Washington, DC area,262 doubled 

to account for fringe benefits and 

overhead). In total, for the 5 State 

Exchanges anticipated to participate, we 

estimate a burden of 2,640 hours (5 


ddrumheller on DSK120RN23PROD with PROPOSALS2
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263 Id. 

264 Id. 

265 Id. 

266 Id. 

State Exchanges × 528 hours per State 

Exchange) at a cost of $332,568 (2,400 

hours × $121.66 + 240 × $169.10). 

We estimate it would take 40 hours 

each for the State Exchange equivalent 

of 2 GS–13, Step 5 employees at an 

hourly rate of $121.66 (the hourly wage 

rate for a GS–13, Step 5 employee in the 

Washington, DC area,263 doubled to 

account for fringe benefits and 

overhead) to complete initial 

documentation review related to all 

web-broker requirements pursuant to 

this proposal, for a total cost to State 

governments of $9,732.8 (2 × 40 hours 

× $121.66) per State Exchange. We 

estimate it would take 8 hours for the 

equivalent of 1 GS–15, Step 5 employee 

at an hourly rate of $169.10 (the hourly 

wage rate for a GS–15, Step 5 employee 

in the Washington, DC area,264 doubled 

to account for fringe benefits and 

overhead) to provide managerial review 

and oversight, for a total cost to State 

governments of $1,352.8 (1 × 8 hours × 

$169.10) per State Exchange. 

Additionally, we estimate the total 

burden for each State government for 

State contract and contractors ongoing 

reviews for oversight would include 

1,087 hours at GS–12, Step 5 with an 

hourly rate of $102.30 (the hourly wage 

rate for a GS–12, Step 5 employee in the 

Washington, DC area,265 doubled to 

account for fringe benefits and 

overhead) and 2,305 hours at GS–13, 

Step 5 with an hourly rate of $121.66 

(the hourly wage rate for a GS–13, Step 

5 employee in the Washington, DC 

area,266 doubled to account for fringe 

benefits and overhead), and the total 

burden across all 5 States to be 16,960 

hours. Therefore, we estimate a cost to 

each State governments of $469,225.60, 

with a total estimated cost to State 

governments of $2,346,128 (5 States × 

$469,225.60). We seek comment from 

State Exchanges on these burden 

estimates. 

We recognize that some State 

Exchanges may utilize web-brokers 

already participating in the FFEs and 

SBE–FPs, and encourage State 

Exchanges to leverage web-broker 

operational readiness demonstrated to 

participate in the FFEs or SBE–FPs 

when possible, as to minimize both 

burden on the State Exchanges and their 

web-brokers. 

F. ICRs Regarding Establishing 

Requirements for DE Entities Mandating 

HealthCare.gov Changes To Be Reflected 

on DE Entity Non-Exchange Websites 

Within a Notice Period Set by HHS (45 

CFR 155.221(b)) 

The following proposed changes will 

be submitted to OMB for review under 

OMB control number 0938–New (CMS– 

#####). We seek comment on these 

burden estimates. 

As discussed in the preamble of this 

proposed rule, we propose to add 

language to § 155.221 requiring that 

display changes adopted by 

HealthCare.gov be reflected on DE entity 

non-Exchange websites within a time 

period specified by HHS, unless HHS 

approves a deviation. 

Based on our experience with 

operating the DE program on the FFEs 

and SBE–FPs over the past several 

years, we estimate that approximately 

three or fewer display changes would be 

required annually. We estimate that a 

total of 100 web-brokers and QHP 

issuers participating in DE in FFE and 

SBE–FP States would be required to 

comply with these requirements. These 

display changes may range from 

changes such as, but not limited to, 

relatively simple text-based updates to 

more complex display changes 

involving the website’s backend display 

methodology or algorithms. We estimate 

approximately two simpler and one 

more complex display change annually. 

We estimate that it would take a Web 

and Digital Interface Designer 30 hours 

annually, at a cost of $80.04 per hour, 

to implement these changes, at a total 

annual cost of approximately $2,401.20 

($80.04 × 30 hours) per web-broker or 

QHP issuer. We therefore estimate a 

total annual burden of 3,000 hours (30 

× 100) at a cost of $240,120 (3,000 hours 

× $80.04 per hour) for all applicable 

web-brokers and QHP issuers. 

We recognize that system constraints 

may prevent DE entity websites from 

conforming to the minimum standards 

defined by HHS for certain 

HealthCare.gov display changes, and 

that DE entities may have an idea for 

implementation that does not meet the 

standards but would effectively 

communicate the same information to 

consumers. We propose DE entities 

participating in FFE and SBE–FPs that 

intend to deviate from the standards 

defined by HHS would be required to 

submit a deviation request. Those 

requests would be subject to review by 

HHS in advance of implementation of 

any alternative website displays. 

Based on internal data, we estimate 

that 25 web-brokers and QHP issuers 

participating in FFE or SBE–FP States 

would submit a request to deviate from 

the standards defined by HHS annually. 

We estimate it would take a compliance 

officer approximately 3 hours annually, 

at a rate of $68.94 per hour, to prepare 

and submit the request to deviate from 

the communicated standards, including 

preparing the rationale explaining for 

the request. We therefore estimate the 

total annual burden for all web-brokers 

and issuers in completing and 

submitting a request to deviate to be 

approximately $5,170.50 annually. 

We do not expect this proposal to 

impose a new burden on EDE entities, 

if finalized, as EDE entities are already 

following the process outlined in this 

proposal through the change request 

processes described in the Third Party 

Auditor Guidelines. 

If the proposal to add and amend 

language to ensure DE entities 

participating in Exchanges, at proposed 

new § 155.221(j), is finalized, we 

estimate that DE entities may incur 

burden related to the website 

development needed to implement 

changes made to State Exchange 

websites per the standards defined by 

the State Exchange. We anticipate that 

the web-development costs cited above 

would apply for each DE entity assisting 

consumers in State Exchanges. As 

described in the preamble, there may be 

burden associated with maintaining DE 

environments tailored to each States’ 

display requirements. However, based 

on our experience conducting oversight 

of DE entity websites, it is our 

understanding that DE entities are 

familiar with and capable of tailoring 

website displays based on specific 

criteria and, as such, we anticipate 

entities are capable of tailoring website 

displays to the requirements of the State 

the consumer is seeking assistance in. 

We anticipate a total annual burden of 

$1,226,452.50 for DE entities 

participating in States with State 

Exchanges associated with 

implementing display changes and 

submitting requests to deviate from the 

standards defined by the State Exchange 

across 5 State Exchanges ($245,290.50 × 

5 State Exchanges). Deviation requests 

would be subject to review by the State 

Exchange in advance of implementation 

of any alternative website displays. We 

seek comment on the burden of this 

proposal on DE entities planning to 

operate in State Exchanges. 

G. ICRs Regarding Adding and 

Amending Language To Ensure DE 

Entities Operating in State Exchanges 

Meet Certain Standards Applicable in 

the FFEs and SBE–FPs (45 CFR 155.221) 

The following proposed changes will 

be submitted to OMB for review under 


ddrumheller on DSK120RN23PROD with PROPOSALS2
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OMB control number 0938–New (CMS– 

#####). We seek comment on these 

burden estimates. 

We propose to amend § 155.221 to 

apply to DE entities operating in State 

Exchanges, and consequently State 

Exchanges that choose to implement a 

DE program, certain existing Federal 

standards regarding DE entities assisting 

consumers with enrolling in QHPs and 

applying for APTC/CSRs, both for the 

State Exchange’s Individual Exchange 

and SHOP program. We anticipate that 

the same number of DE entities 

operating in the Exchanges on the 

Federal platform (100) would also 

operate in the 5 State Exchanges and 

would be required to incur this burden 

for each of the 5 State Exchanges they 

may operate in. The burden associated 

with these proposed changes includes 

costs for DE entities participating in 

State Exchanges to meet the 

requirements described in new 

proposed § 155.221(j) and for State 

Exchanges related to the development 

and oversight of DE programs within 

their State. We estimate relevant costs 

based on current Federal costs. These 

estimates are described below. 

The burden associated with operating 

a DE program includes costs for DE 

entities related to web-development to 

meet the website display requirements 

being applied to DE entities operating in 

States with State Exchanges and costs 

for creating, storing, and submitting 

operational readiness documentation for 

Exchange review. Although these 

proposals allow States certain flexibility 

for State Exchanges with regards to 

establishing procedures and 

requirements for website displays and 

demonstration of operational readiness, 

we expect the costs to reasonably be 

estimated based on the Federal costs as 

follows. 

We estimate it would take 15 hours 

for a DE entity’s Business Operations 

Specialist at an hourly rate of $73.12 to 

implement the standardized disclaimer 

required under § 155.221(b)(2), along 

with 20 hours at an hourly rate of 

$80.04 for a Web and Digital Interface 

Designer to modify the DE entity nonExchange website to implement the 

standardized disclaimer across 5 State 

Exchanges. Therefore, for the 

standardized disclaimer under 

§ 155.221(b)(2), we estimate each DE 

entity operating in State Exchanges that 

operate their own eligibility and 

enrollment platform would incur a 

burden of 35 hours at an estimated cost 

of $2,697.60 (15 hours × $73.12 per hour 

+ 20 hours × $80.04 per hour). We 

estimate the anticipated 100 DE entities 

would incur a cumulative burden 3500 

hours at an estimated cost of $269,760 

($2,697.60 × 100 DE entities). 

Costs related to demonstrating 

operational readiness at new proposed 

§ 155.221(j) would depend on the DE 

entity’s desired enrollment pathway and 

the options made available by the State 

Exchange. Although we are allowing 

States the flexibility to establish 

operational readiness requirements, 

including the form and manner for their 

DE entities to demonstrate operational 

readiness, we encourage State 

Exchanges to leverage the existing items 

in § 155.220(b)(4)(i) and (ii) as the 

starting point for their operationally 

readiness reviews. If State Exchanges 

leverage these items, we anticipate the 

burden associated with DE entity 

demonstration of operational readiness 

can be estimated based on the Federal 

costs as follows. We estimate it would 

take up to 360 hours for an Auditor at 

an hourly rate of $75.00 to submit 

business audit documentation across 5 

State Exchanges, and we estimate 4 DE 

entities would participate in a manner 

that would trigger this information 

collection, resulting in an estimated cost 

of $27,000 per DE entity (360 hours × 

$75.00). We estimate it would take up 

to 610 hours for an Auditor at an hourly 

rate of $75.00 to submit a security and 

privacy audit documentation across 5 

State Exchanges, and we estimate 14 DE 

entities would participate in a manner 

that would trigger this information 

collection, resulting in an estimated cost 

of $45,750 per DE entity (610 hours × 

$75.00). We estimate it would take 45 

hours for a Business Operations 

Specialist to complete and submit a 

typical Enhanced Direct Enrollment 

(EDE) documentation package and 

related information across 5 State 

Exchanges at an hourly rate of $73.12, 

and 77 DE entities would participate in 

a manner that would trigger this 

information collection, resulting in an 

estimated cost of $3,290.40 per DE 

entity (45 hours × $73.12). Therefore, for 

a DE entity to demonstrate operational 

readiness and compliance with 

applicable requirements to State 

Exchanges, we estimate each DE entity 

would incur a burden of up to 1,015 

hours at an estimated cost of up to 

$76,040.40 (360 hours × $75.00 per hour 

+ 610 hours × $75.00 per hour + 45 

hours × $73.12), but many DE entities 

would incur a lower burden and cost 

due to not participating in a manner that 

would trigger some of these information 

collection costs. We estimate a 

cumulative burden of 13,445 hours at an 

estimated cost of $1,001,860.80 for all 

applicable DE entities operating across 

the 5 State Exchanges ($27,000 × 4 DE 

entities + $45,750 × 14 DE entities + 

$3,290.40 × 77 entities). We solicit 

feedback from State Exchanges with 

regards to how the form and manner of 

documentation they would require DE 

entities to submit to demonstrate 

operational readiness, along with the 

estimated burden associated with those 

submissions. 

We estimate it would take 100 hours 

for a Web and Digital Interface Designer 

at a rate of $80.04 per hour to modify 

the DE entity’s non-Exchange website to 

comply with the requirements to 

display and market QHPs offered 

through the Exchange, individual health 

insurance coverage, and any other 

products on at least three separate 

websites pages in accordance with 

§§ 155.221(b)(1) and (3) and (c) across 5 

State Exchanges. Therefore, for these 

website display requirements, we 

estimate each DE entity operating in 

State Exchanges would incur an 

estimated cost of $8,004 (100 hours × 

$80.04 per hour). We estimate 40 DE 

entities would trigger this information 

collection with a cumulative burden of 

4,000 hours at an estimated cost of 

$320,160 across the State Exchanges 

($8,004 × 40 DE entities). 

The burden associated with this 

change also includes costs for DE 

entities operating in State Exchanges 

with oversight of direct enrollment 

entity application assisters, as described 

in § 155.221(d) (citing § 155.415(b)), for 

those DE entities that opt to use these 

application assisters. As described in 

the preamble, the requirements at 

155.415(b)(2) and (b)(3) are already 

applicable to DE entities operating in all 

Exchanges and therefore do not 

represent a new burden for DE entities. 

The extension of § 155.221(d) to DE 

entities operating in State Exchanges 

would require DE entities’ application 

assisters to complete appropriate Staterequired training and registration in a 

manner specified by the State Exchange 

consistent with § 155.415(b)(1). We 

estimate that up to 1,000 application 

assisters will operate in each State that 

opts to implement a DE program and 

allows DE entity application assisters to 

assist Exchange consumers. 

Accordingly, we anticipate that 5,000 

application assisters across an estimated 

5 States will participate. We estimate 

the burden for 100 DE entities to comply 

with this requirement at 3 hours per 

assister for a total annual burden of 

15,000 hours for a Compliance Officer at 

an hourly wage of $68.94 for a total cost 

of $51,705 per entity. We estimate a 

cumulative burden of 75,000 hours at an 

estimated cost of $5,170,500 for 100 DE 

entities operating across the 5 State 

Exchanges ($51,705 × 100 entities). 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82616 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

267OPM. (2023, January). Salary Table 2023–DCB 

Incorporating the 4.1% General Schedule Increase 

and a Locality Payment of 32.49% For the Locality 

Pay Area of Washington-Baltimore-Arlington, DCMD-VA-WV-PA Total Increase: 4.86%. https://

www.opm.gov/policy-data-oversight/pay-leave/ 

salaries-wages/salary-tables/pdf/2023/DCB_h.pdf. 

268 Id. 

269 Id. 

270 Id. 

271 Id. 

272 Id. 

Proposed new paragraph 

§ 155.221(j)(3) extends requirements for 

DE entities operating in State Exchanges 

to implement and prominently display 

changes adopted for display on the State 

Exchanges’ websites and with standards 

defined by State Exchange, unless the 

State Exchange approves a deviation. 

The costs associated with DE entities 

implementing this proposal in State 

Exchanges is discussed in the ICR 

section related to new proposed 

paragraph § 155.221(b)(6). 

Regarding new proposed paragraph 

§ 155.221(a) extending requirements 

under § 156.1230(a) to DE QHP issuers 

operating in State Exchanges, we do not 

anticipate additional burden for QHP 

issuers, beyond the estimated burdens 

for the website display requirements 

described above, to provide consumers 

with correct information, without 

omission of material fact, regarding the 

Exchanges, QHPs offered through the 

Exchanges, and insurance affordability 

programs, or to refrain from marketing 

or conduct that is misleading, coercive, 

or discrimination based on race, color, 

national origin, disability, age, or sex. 

Therefore, we estimate each DE entity 

operating in State Exchanges would 

incur a one-time burden in PY 2025 of 

up to 1,900 hours at a cost of up to 

$138,447 for an overall total for all DE 

entities operating across the State 

Exchanges of up to 95,945 hours at an 

estimated cost of $6,762,280.80 to 

comply with these proposed 

requirements. We seek comment on the 

burden of this proposal on DE entities 

planning to participate in State 

Exchanges. For the purposes of better 

determining burden estimates, we also 

seek comment on the number of State 

Exchanges that operate their own 

eligibility and enrollment platforms and 

would be interested in implementing a 

DE program in their State and on the 

number of DE entities interested in 

operating in those State Exchanges. 

New proposed paragraph § 155.221(j) 

requires State Exchanges to comply with 

the Federally-facilitated Exchange 

standards described above and in the 

preamble. § 155.221(j)(1) allows State 

Exchanges the flexibility to add Statespecific information to the standardized 

disclaimer that does not conflict with 

the HHS-provided language. Proposed 

paragraph (2) under this new section 

also requires State Exchanges to 

establish the form and manner for their 

DE entities to demonstrate operational 

readiness and compliance with 

applicable requirements, in the form 

and manner specified by the Exchange. 

Proposed paragraph (3) requires State 

Exchanges establish requirements for 

their DE entities to implement and 

prominently display changes adopted 

for display on the State Exchanges’ 

website at the direction of the State 

Exchange. The burden associated with 

these proposed changes includes costs 

for State Exchanges related to drafting 

new policy, updating standards, and 

potentially hiring additional staff to 

perform functions not currently being 

performed by the State Exchange, such 

as for drafting DE entity program 

requirements and guidelines, including 

establishment of DE entity operational 

readiness programs, establishment of 

procedures related to defining and 

communicating standards for required 

display changes, establishment of any 

State-specific disclaimer text, and 

ongoing monitoring of DE entity 

compliance with applicable Federal 

standards and any additional Statespecific requirements. DE entities 

operating in States transitioning off of 

the Federal Platform to a State Exchange 

would likely have fewer costs as they 

should already be meeting the Federal 

minimum requirements. No State 

Exchange has implemented DE to date, 

so we are not able to provide precise 

costs estimates of the burden associated 

with these proposed changes for State 

Exchanges. However, we anticipate that 

operational costs related to establishing 

polices and adding staff in order to 

operate a compliant DE program under 

§ 155.221 may be estimated based on 

Federal platform costs and would be 

added to the costs and burdens of 

transitioning to State Exchange. 

We estimate that 5 States will opt to 

host a DE program for their State 

Exchanges. We anticipate the total 

burden associated with the State 

Exchanges developing the associated 

policies and procedures to be up to 528 

hours per State. This assumes 480 hours 

for a GS–13, Step 5 employee at an 

hourly rate of $121.66 (the hourly wage 

rate for a GS–13, Step 5 employee in the 

Washington, DC area,267 doubled to 

account for fringe benefits and 

overhead) and 48 hours for a GS–15, 

Step 5 employee at an hourly rate of 

$169.10 (the hourly wage rate for a GS– 

15, Step 5 employee in the Washington, 

DC area,268 doubled to account for 

fringe benefits and overhead). In total, 

for the 5 State Exchanges anticipated to 

participate, we estimate a burden of 

2,640 hours (5 State Exchanges × 528 

hours per State Exchange) at a cost of 

$332,568 (2,400 hours × $121.66 per 

hour + 240 hours × $169.10 per hour). 

Based on the Federal platform costs, 

we estimate it would take 60 hours each 

for the State Exchange equivalent of 2 

GS–13, Step 5 employees at an hourly 

rate of $121.66 (the hourly wage rate for 

a GS–13, Step 5 employee in the 

Washington, DC area,269 doubled to 

account for fringe benefits and 

overhead) to complete initial 

documentation review related to all DE 

entity requirements pursuant to this 

proposal, for a total cost to State 

governments of $14,599.20 (2 employees 

× 60 hours per employee × $121.66 per 

hour) per State Exchange. We estimate 

it would take 12 hours for the 

equivalent of 1 GS–15, Step 5 employee 

at an hourly rate of $169.10 (the hourly 

wage rate for a GS–15, Step 5 employee 

in the Washington, DC area,270 doubled 

to account for fringe benefits and 

overhead) to provide managerial review 

and oversight, for a total cost to State 

governments of $2,029.20 (12 hours × 

$169.10 per hour) per State Exchange. 

Additionally, we estimate the total 

burden for each State government for 

State contract and contractors ongoing 

reviews for oversight would include 

1,631 hours for a GS–12, Step 5 

employee with an hourly rate of $102.30 

(the hourly wage rate for a GS–12, Step 

5 employee in the Washington, DC 

area,271 doubled to account for fringe 

benefits and overhead) and 3,458 hours 

for a GS–13, Step 5 employee with an 

hourly rate of $121.66 (the hourly wage 

rate for a GS–13, Step 5 employee in the 

Washington, DC area,272 doubled to 

account for fringe benefits and 

overhead). We estimate a burden to each 

State government of 5,089 hours at an 

estimated cost of $587,551.58 for State 

contracts and contractors ongoing 

reviews for oversight. Therefore, each 

State would incur a burden of 5,749 

hours at an estimated cost of 

$670,693.58 ($66,513.60 + $14,599.20 + 

$2,029.20 + $587,551.58) in total for 

these proposals, and all 5 States would 

incur a total burden of 28,745 hours at 

an estimated cost of $3,353,468 (5 States 

× $670,693.58). We seek comment from 

State Exchanges on these burden 

estimates. 

We recognize that some State 

Exchanges may decide to utilize DE 

entities already participating in the 

FFEs and SBE–FPs and encourage State 

Exchanges to leverage DE operational 

readiness demonstrated to participate in 

the FFEs or SBE–FPs when possible, so 


ddrumheller on DSK120RN23PROD with PROPOSALS2
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as to minimize burden on both the State 

Exchanges that operate their own 

eligibility and enrollment platform and 

their DE entities. 

H. ICRs Regarding Failure To File and 

Reconcile Process (45 CFR 155.305(f)(4)) 

We propose amending § 155.305(f)(4) 

to provide that State Exchanges must 

notify a tax filer that has been identified 

as having FTR status for one-year of the 

requirement to file and reconcile their 

APTC, or risk losing their eligibility for 

APTC if they remain FTR for the 

subsequent tax-year. This proposed 

requirement would ensure that State 

Exchanges provide notifications, similar 

to how Exchanges on the Federal 

platform do, and that tax filers on State 

Exchanges are adequately educated on 

the requirement to file and reconcile. 

The proposed rule, if finalized, would 

impact State Exchange FTR noticing 

processes for PY 2025 and subsequent 

years. For State Exchanges, FTR would 

be conducted in the same manner it had 

previously been conducted with respect 

to collection of information, with 

minimal changes to the language of the 

Exchange application questions 

necessary to obtain relevant 

information; as such, we anticipate that 

the proposed amendment, if finalized, 

would not impact the existing 

information collection requirements 

(OMB control number: 0938–1191) or 

burden for consumers. 

Under previous FTR policy, State 

Exchanges were already required to 

notify tax filers identified as FTR at a 

minimum of once per year. As such, we 

do not anticipate this requirement 

increasing State Exchanges’ burden of 

noticing beyond their existing FTR 

processes. We seek comment on these 

assumptions. 

I. ICRs Regarding Verification Process 

Related to Eligibility for Enrollment in a 

QHP Through the Exchange (45 CFR 

155.315(e)) 

The following proposed changes will 

be submitted to OMB for review under 

OMB control number 0938–1312 (CMS– 

10593). We seek comment on these 

burden estimates. 

We propose several revisions to 

§ 155.315(e) that, if finalized, would 

allow Exchanges to accept consumer 

attestation of incarceration status 

without further verification or, 

alternatively, to propose an alternative 

data source for incarceration verification 

for HHS approval. Exchanges that elect 

to verify incarceration status would 

continue to be required to use the DMI 

process if the data source provides a 

mismatch against the consumer 

attestation of incarceration status or 

other information provided by the 

applicant or in the records of the 

Exchange. Should a State Exchange 

choose to propose using an alternative 

electronic data source for verifying 

incarceration status, HHS would review 

such proposals for consistency with the 

proposed standard in § 155.315(e)(2). 

Of the 18 State Exchanges (operating 

in 12 States and the District of 

Columbia) that have incarceration 

verification processes, 8 conduct 

incarceration verifications similar to the 

one used to date by Exchanges on the 

Federal platform, and 5 have connected 

to an individual State or local 

incarceration facility for verifications 

and have received approval to do so 

from HHS. Additionally, 3 States are 

currently in process of transitioning to 

State Exchanges for PY 2024 or beyond 

and may choose to connect to an 

alternative incarceration verification 

data source with HHS approval. 

Subtracting the 5 Exchanges with 

preexisting approvals, we anticipate 11 

State Exchanges could connect to an 

alternative incarceration verification 

data source, should they assess that an 

alternative data source exists and want 

to continue verification of consumer 

incarceration status using it. 

For the purposes of assessing whether 

an alternative data source should be 

used, we estimate that a Management 

Analyst would spend 20 hours, at an 

hourly rate of $91.62, to synthesize a 

cost-benefit analysis regarding whether 

the Exchange should continue to verify 

incarceration status using an approved 

data source instead of accepting a 

consumer’s attestation that they are not 

incarcerated. If the Exchange finds a 

viable alternative data source and 

determines that it should be used, we 

anticipate that a Business Operations 

Specialist would take about 2 hours, at 

an hourly rate of $73.12, to submit a 

request for HHS approval. We also 

anticipate that it would take a Chief 

Executive equivalent for the Exchange 1 

hour, at an hourly rate of $182.24, to 

approve the paperwork for submission 

to request HHS approval of the 

alternative incarceration data source. In 

total, the assessment of whether the 

Exchange should continue to verify 

incarceration status using an alternative 

data source instead of accepting 

consumer attestation would take 20 

hours at a cost of $1,832.40, and the 

process of approving and submitting a 

request for HHS approval would take 3 

hours at a cost of $328.48. Therefore, the 

total one-time burden for each Exchange 

that elects to verify incarceration status 

using an HHS-approved data source in 

2025 would be 23 hours at a cost of 

approximately $2,161, and the total 

burden across all 11 State Exchanges 

would be 253 hours at a cost of 

approximately $23,770. 

J. ICRs Regarding Eligibility 

Redetermination During a Benefit Year 

(45 CFR 155.330(d)) 

The following proposed changes will 

be submitted to OMB for review under 

OMB control number 0938–1207 (CMS– 

10468). We seek comment on these 

burden estimates. 

We propose amending § 155.330(d) to 

require that Exchanges periodically 

examine available data sources 

described in §§ 155.315(b)(1) and 

155.320(b) to identify changes related to 

death of an applicant on whose behalf 

advance payments of the premium tax 

credit or cost-sharing reductions are 

being provided. The Exchanges have 

developed electronic data exchanges to 

support obtaining this information to 

determine the applicant’s eligibility at 

the point of application and could reuse 

those data exchanges here. 

Consequently, we estimate costs 

associated with this requirement to be 

minimal. 

However, State Exchanges not already 

conducting death PDM with the 

required frequency or not deemed in 

compliance with the newly proposed 

PDM requirements would be required to 

engage in IT system development 

activity to communicate with these 

programs and act on enrollment data 

either in a new way, or in the same way 

more frequently. Thus, there may be 

additional associated administrative 

cost for these State Exchanges to 

implement the proposed PDM 

requirement. 

Based on experience with other 

PDMs, for each State Exchange not 

already conducting death PDM at least 

twice a year, we estimate that it would 

take 40 hours by a Computer Systems 

Analyst at an hourly rate of $98.30 to 

implement this proposed provision, for 

a cost of $3,932 per State Exchange. 

Therefore, for all 11 State Exchanges not 

currently meeting the proposed 

requirement, we estimate a total burden 

of 440 hours at a cost of $43,252. We 

assume that this burden would be 

incurred primarily in 2025. 

K. ICRs Regarding Establishment of 

Exchange Network Adequacy Standards 

(45 CFR 155.1050) 

The burden associated with subjecting 

QHP issuers in State Exchanges and 

SBE–FPs to time and distance standards 

as proposed at § 155.1050 is covered by 

the information collection currently 

approved under OMB control number 

0938–1312 (CMS–10593). We note that 

we are also revising the information 


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collection currently approved under 

OMB control number 0938–1415 (CMS– 

10803) regarding appointment wait time 

standards encompassed in previously 

finalized regulations at 45 CFR 

156.230(a)(2)(B). We seek comment on 

these burden estimates. 

Effective for plan years beginning on 

or after January 1, 2025, we propose to 

amend § 155.1050 to require that State 

Exchanges and SBE–FPs establish and 

impose quantitative time and distance 

QHP network adequacy standards that 

are at least as stringent as the FFEs’ time 

and distance standards established for 

QHPs under § 156.230. We also propose 

that State Exchanges and SBE–FPs be 

required to conduct quantitative 

network adequacy reviews prior to 

certifying any plan as a QHP, consistent 

with the reviews conducted by the FFEs 

under § 156.230. Specifically, when we 

refer to the review being consistent with 

the network adequacy reviews 

conducted by the FFEs under § 156.230, 

we propose that State Exchanges and 

SBE–FPs would be required to conduct, 

prior to QHP certification, quantitative 

network adequacy reviews to evaluate 

compliance with requirements under 

§ 156.230(a)(1)(ii) and (iii), and 

(a)(2)(i)(A), while providing QHP 

certification applicants the flexibilities 

described under § 156.230(a)(2)(ii) and 

(a)(3) and (4). Under this proposal, State 

Exchanges and SBE–FPs would be 

prohibited from accepting an issuer’s 

attestation as the only means for plan 

compliance with network adequacy 

standards. We further propose to require 

State Exchanges and SBE–FPs to permit 

issuers that are unable to meet the 

specified network adequacy standards 

to participate in a justification process 

after submitting their initial network 

adequacy data, consistent with the 

processes specified under 

§ 156.230(a)(2)(ii) and (a)(3) and (4), to 

account for variances and potentially 

earn QHP certification. In addition, for 

States Exchanges that employ robust, 

quantitative network adequacy 

standards that differ from those used by 

the FFEs, but still ensure that QHPs 

provide consumers with reasonable, 

timely access to practitioners and 

facilities to manage their health care 

needs, we propose a framework for 

granting exceptions to the requirements 

that State Exchanges and SBE–FPs are 

required to establish and impose 

network adequacy time and distance 

standards for QHPs that are at least as 

stringent as the standards applicable to 

QHPs in FFEs and conduct quantitative 

network adequacy reviews that are 

consistent with those carried out by the 

FFEs under § 156.230. Finally, we 

propose to mandate that State 

Exchanges and SBE–FPs require all 

issuers seeking QHP certification to 

submit information to the State 

Exchange or SBE–FP about whether 

network providers offer telehealth 

services. 

We estimate that the total annual 

burden associated with State Exchanges 

and SBE–FPs establishing and imposing 

the proposed network adequacy 

standards, conducting the network 

adequacy reviews as proposed, 

collecting telehealth information from 

issuers seeking QHP certification, and 

submitting any exception to be up to 

900 hours. Assuming the compliance 

officer average hourly rate of $68.94 per 

hour, we estimate the cost of the data 

collection, operations, and maintenance 

pertaining to these proposed 

requirements on each State Exchange 

and SBE–FP to be $62,046 per year (900 

hours × $68.94 per hour). In total, for 

the 19 State Exchanges and 3 SBE–FPs 

anticipated to be operational in 2025, 

we estimate a burden of 19,800 hours 

(22 State Exchanges and SBE–FPs × 900 

hours per Exchange) at a cost of 

$1,365,012 (22 State Exchanges and 

SBE–FPs × 900 hours per Exchange × 

$68.94 per hour). 

We estimate that the burden for QHP 

issuers in State Exchanges and SBE–FPs 

to gather and submit the time and 

distance data, including any 

justification, to the respective State 

Exchanges or SBE–FPs would be 10 

hours in total for each medical QHP 

issuer (a QHP issuer that is not an SADP 

issuer) and 2 hours in total for each 

SADP issuer submitted by a compliance 

officer at a rate of $68.94 per hour. The 

10-hour estimate includes the burden 

associated with the requirement that all 

issuers seeking QHP certification submit 

information to the State Exchange or 

SBE–FP about whether network 

providers offer telehealth services. 

Approximately half of the parent 

companies of issuers on the State 

Exchanges also offer Medicare 

Advantage plans. Since Medicare 

Advantage offers a telehealth credit for 

network adequacy, we expect those 

issuers would already have telehealth 

information available for their 

providers. We further believe that those 

QHP issuers that do not currently 

collect this information may do so using 

the same means and methods by which 

they already collect information from 

their network providers relevant to time 

and distance standards and provider 

directory information. For these reasons, 

we estimate that any additional burden 

relative to the requirement that all 

issuers seeking QHP certification submit 

information to the State Exchange or 

SBE–FP about whether network 

providers offer telehealth services 

would lead to a minimal increase in 

burden for many issuers. 

The requirement that all issuers 

seeking QHP certification submit 

information to the State Exchange or 

SBE–FP about whether network 

providers offer telehealth services 

would account for 3 of the total 10 

hours we estimate for gathering and 

submitting the time and distance data to 

the respective State Exchange or SBE– 

FP for medical QHP issuers and 30 

minutes of the total 2 hours we estimate 

for SADP issuers. We believe the cost 

estimates of 3 hours for medical QHP 

issuers and 30 minutes for SADP issuers 

to be a maximum and that the burden 

could be less to issuers that are already 

collecting telehealth data for other 

purposes. 

We estimate that the total annual 

burden associated with QHP issuers in 

State Exchanges and SBE–FPs to gather 

and submit the time and distance and 

telehealth data to the respective State 

Exchanges or SBE–FPs for up to 149 

medical QHP issuers in State Exchanges 

and SBE–FPs would be up to 1,490 

hours (10 hours × 149 medical QHP 

issuers). Assuming the compliance 

officer average hourly rate of $68.94 per 

hour, we estimate that the cost of 

gathering and submitting this network 

adequacy data for an individual medical 

QHP issuer could be up to $689.40 (10 

hours × $68.94 per hour), and for all 149 

medical QHP issuers in State Exchanges 

and SBE–FPs, up to $102,720.60 (149 

medical QHP issuers × 10 hours per 

issuer × $68.94 per hour). We estimate 

that the total annual burden associated 

with this requirement for 89 SADP 

issuers in State Exchanges and SBE–FPs 

would be up to 178 hours (2 hours × 89 

SADP issuers). Assuming the 

compliance officer average hourly rate 

of $68.94 per hour, we estimate that the 

cost of gathering and submitting the 

network adequacy data for an individual 

SADP could be up to $137.88 (2 hours 

× $68.94 per hour), and for all 89 SADP 

issuers in State Exchanges and SBE– 

FPs, up to $12,271.32 (89 SADP issuers 

× 2 hours per issuer × $68.94 per hour). 

We estimate the total annual burden 

associated with this proposed 

requirement across both medical QHP 

and SADP issuers in State Exchanges 

and SBE–FPs beginning in 2025 would 

be approximately $114,992. 

L. ICRs Regarding the State Selection of 

EHB-Benchmark Plans for Plan Years 

Beginning on or After January 1, 2027 

(45 CFR 156.111) 

The existing OMB approval (0938– 

1174) PRA package, for which we are 


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seeking a renewal for use beginning in 

March 2024, would remain in effect 

until the proposed changes to § 156.111 

would come into effect, if finalized, for 

the State selection of EHB-benchmark 

plans in 2025, impacting plans that are 

effective beginning on January 1, 2027. 

We seek comment on these burden 

estimates. 

We propose several revisions to 

§ 156.111 that, if finalized as proposed, 

would reduce the burden associated 

with State selection of EHB-benchmark 

plans. For plan years beginning on or 

after January 1, 2027, we propose to 

revise the standards for State selection 

of EHB-benchmark plans at § 156.111 to 

consolidate the options for States to 

change EHB-benchmark plans at 

§ 156.111(a); revise the scope of benefit 

requirements at § 156.111(b)(2); and 

revise § 156.111(e)(3) to require States to 

submit a formulary drug list as part of 

their application to change EHBbenchmark plans only if the State is 

seeking to change their prescription 

drug EHB. We also propose revisions to 

the actuarial certification requirements 

at § 156.111 to reflect the proposed 

scope of benefit changes. If the proposed 

changes to § 156.111 are finalized as 

proposed, they would not be effective 

until 2025, and the anticipated 

reduction in burden to States would not 

be realized until that time. 

If the proposed changes to § 156.111 

are finalized as proposed, we anticipate 

an overall reduction in burden on States 

to change their EHB-benchmark plans in 

accordance with the revisions to 

§ 156.111. If finalized as proposed in 

this rule, the revisions to § 156.111 

would remove the requirement that 

States report which option under 

§ 156.111(a) they are using as a basis to 

change their EHB-benchmark plans, 

their methodology for confirming 

compliance with the generosity 

standard at current § 156.111(b)(2)(ii), 

and the submission of a formulary drug 

list under § 156.111(e)(3) unless the 

State is seeking to make changes to their 

prescription drug EHB. We would also 

change the information States submit to 

HHS to confirm compliance with the 

scope of benefit requirements at 

§ 156.111(b)(2), for which we estimate 

an overall reduction in burden. 

These proposals would not change the 

number of documents States would be 

required to submit to change their EHBbenchmark plans under § 156.111(e)(3), 

unless the State is not seeking to make 

changes to its prescription drug EHB, in 

which case, the State would not be 

required to submit a formulary drug list 

as specified in § 156.111(e)(3). In 

addition, a response would not be 

required from all States under current 

§ 156.111 and its proposed revisions, if 

finalized as proposed in this rule. Only 

States choosing to modify the State’s 

EHB-benchmark plan would need to 

submit this information to HHS. 

Since finalizing the addition of 

§ 156.111 in the 2019 Payment Notice, 

between one and three States have 

changed their EHB-benchmark plan 

each year between 2019 and 2023. 

While we anticipate that the proposed 

revisions to § 156.111 would reduce 

overall burden on States and incentivize 

more frequent changes to EHBbenchmark plans, we anticipate that at 

most 5 States would choose to make a 

change to their EHB-benchmark plans in 

any given year (15 States over 3 years 

within the authorization of this ICR). 

To change an EHB-benchmark plan, a 

State currently provides confirmation 

that the State’s EHB-benchmark plan 

selection complies with certain 

requirements, including those under 

§ 156.111(a), (b), and (c). This 

information collection would be revised 

under the proposals in this rule, if 

finalized. To comply with the proposed 

requirement, we estimate that a 

financial examiner would require 4 

hours (at a rate of $79.04 per hour) to 

fill out, review, and transmit a complete 

and accurate document. We estimate 

that it would cost each State 

approximately $316.16 to meet the 

proposed reporting requirement, with a 

total annual burden for all 5 States of 20 

hours and an associated total cost of 

$1,580.80. 

Section 156.111(e)(2) currently 

requires States to submit an actuarial 

certification and associated actuarial 

report of the methods and assumptions 

when selecting options under 

§ 156.111(a). Presently, before compiling 

this report, States must consider which 

of the options provided at current 

§ 156.111(a) best facilitate their 

intended EHB-benchmark changes. This 

deliberation often involves both 

research and discussion within the State 

and between the State and HHS. The 

proposed consolidation of the options 

currently available at § 156.111(a) into 

one overarching approach for EHBbenchmark plan updates would 

eliminate the need for, and time spent 

by, States contemplating the merits of 

one option or another. This actuarial 

certification and associated actuarial 

report must also demonstrate 

compliance with section 

§ 156.111(b)(2)(i), which requires a 

State’s EHB-benchmark plan to provide 

a scope of benefits that is equal in scope 

to the scope of benefits under one of the 

typical employer plans at 

§ 156.111(b)(2)(i)(A) and (B). While the 

proposed revisions to § 156.111(b)(2)(i) 

would still require a State’s EHBbenchmark plan to provide benefits that 

are equal in scope to the scope of 

benefits under a typical employer plan, 

they would also allow a State to select 

any scope of benefits that is as or more 

generous than the scope of benefits in 

the least generous plan (supplemented 

by the State as necessary to provide 

coverage within each EHB category at 

§ 156.110(a)), and as or less generous 

than the scope of benefits in the most 

generous plan in the State 

(supplemented by the State as necessary 

to provide coverage within each EHB 

category at § 156.110(a)), among the 

plans currently defined at 

§ 156.111(b)(2)(i)(A) and (B). We 

anticipate that these proposed revisions 

would substantially reduce the burden 

on States to perform the required 

actuarial analyses. Under this proposed 

revision, we anticipate that a State 

would typically only need to perform 

three actuarial analyses to determine the 

scope of benefits in the least and most 

generous plans among the plans 

currently defined at § 156.111(b)(2)(i)(A) 

and (B), and the scope of benefits in the 

State’s new EHB-benchmark plan. 

Under current regulation, a State may 

need to perform an indeterminate 

number of actuarial analyses of the 

plans defined at § 156.111(b)(2)(i)(A) 

and (B) until the State identifies a plan 

with a scope of benefits equal to the 

State’s EHB-benchmark plan. This 

proposed revision would significantly 

reduce the likelihood that a State would 

need to perform as many actuarial 

analyses. Accordingly, we would 

anticipate a reduction in the estimated 

burden on States to perform the 

actuarial analysis to confirm compliance 

with § 156.111(b)(2)(i). 

This actuarial certification and 

associated actuarial report must also 

demonstrate compliance with 

§ 156.111(b)(2)(ii), which currently 

requires a State’s EHB-benchmark plan 

to not exceed the generosity of the most 

generous among a set of comparison 

plans. For benefit years beginning on or 

after January 1, 2027, we are proposing 

to remove this requirement and would 

revise this estimate to reflect a reduced 

burden on States that would no longer 

need perform the actuarial analyses 

required to confirm compliance with 

§ 156.111(b)(2)(ii). 

The actuarial certification that would 

be collected under this ICR would be 

required to include an actuarial report 

that complies with generally accepted 

actuarial principles and methodologies. 

This estimate includes complying with 

all applicable actuarial standards of 

practice (ASOPs) (including ASOP 41 

on actuarial communications). For 


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273 Information on Essential Health Benefits 

(EHB) Benchmark Plans. Accessed at https://

www.cms.gov/CCIIO/Resources/Data-Resources/ 

ehb.html. 

274This is calculated as follows: (29 hours for the 

financial examiner + 12 hours for the actuary) × 5 

States = 205 hours. 

275This is calculated as follows: ($11,460.80 for 

the financial examiner + $6,576.00 for the actuary) 

× 5 States = $18,036.80. 

example, ASOP 41 on actuarial 

communications includes disclosure 

requirements, including those that 

apply to the disclosure of information 

on the methods and assumptions being 

used for the actuarial certification and 

report. The actuarial certification for 

this requirement currently includes an 

attestation that the standard actuarial 

practices have been followed or that 

exceptions have been noted. The signing 

actuary is required to be a Member of 

the American Academy of Actuaries. 

These requirements would continue to 

apply if this policy is finalized as 

proposed. 

We estimate that an actuary, who is a 

member of the American Academy of 

Actuaries, would be required to 

complete 12 hours of work (at a rate of 

$109.60 per hour) on average for 

§ 156.111(e)(2). This would include the 

certification and associated actuarial 

report from an actuary to affirm, in 

accordance with generally accepted 

actuarial principles and methodologies 

that the State’s EHB-benchmark plan 

must provide a scope of benefits that is 

equal to the scope of benefits provided 

under a typical employer plan. For these 

calculations, the actuary would need to 

conduct the appropriate calculations to 

create and review an actuarial 

certification and associated actuarial 

report, including minimal time required 

for recordkeeping. The precise level of 

effort for the actuarial certification and 

associated actuarial report under 

§ 156.111(e)(2) would likely vary 

depending on the State’s approach to its 

EHB-benchmark plan and this 

certification requirement, but we are 

estimating 12 hours of work for the 

actuary to complete the actuarial 

certification and associated report in 

this proposed rule in recognition that 

the definition of typical employer plan 

may require the actuary to determine 

whether the typical employer plan 

meets minimum value requirements. We 

estimate that it would cost each State 

approximately $1,315.20 to meet this 

reporting requirement, with a total 

annual burden for all 5 States of 60 

hours and an associated total cost of 

$6,576. 

We estimate that a financial examiner 

would require 1 hour (at a rate of $79.04 

per hour) to review, combine, and 

electronically transmit these documents 

to HHS, as part of a State’s EHBbenchmark plan submission. We 

estimate that each State would incur a 

burden of 1 hour with an associated cost 

of $79.04 with a total annual burden for 

5 States of 5 hours at associated total 

cost of $395.20. 

We require at § 156.111(e)(3) that each 

State submit its new EHB-benchmark 

plan documents. The level of effort 

associated with this requirement could 

depend on the State’s selection of the 

EHB-benchmark plan options under the 

regulation at § 156.111(a). However, for 

the purposes of this estimate, we 

estimate that it would require a 

financial examiner (at a rate of $79.04 

per hour) 12 hours on average to create, 

review, and electronically transmit the 

State’s EHB-benchmark plan document 

that accurately reflects the benefits and 

limitations, resulting in a burden of 12 

hours and an associated cost of $948.48, 

with a total annual burden for all 5 

States of 60 hours and an associated cost 

of $4,742.40. This estimate of 12 hours 

would also include the burden 

necessary for a State to submit a 

formulary drug list for the State’s EHBbenchmark plan in a format and manner 

specified by HHS, in accordance with 

§ 156.111(e)(3). However, we propose to 

revise § 156.111(e)(3) in this proposed 

rule to require a State to submit this 

formulary drug list only if the State is 

changing the prescription drug EHB. We 

do not anticipate that all States would 

change prescription drug EHB, so we 

anticipate this burden would be lower 

for some States. To collect the formulary 

drug list, the State would be required to 

use the template provided by HHS and 

must submit the formulary drug list as 

a list of RxNorm Concept Unique 

Identifiers (RxCUIs). 

Section 156.111(e)(4) requires a State 

to submit the documentation necessary 

to operationalize the State’s EHBbenchmark plan. This reporting 

requirement includes the EHB summary 

file that is currently posted on CCIIO’s 

website and is used as part of the QHP 

certification process and is integrated 

into HHS’ IT Build systems that feeds 

into the data that is displayed on 

HealthCare.gov.273 We estimate that it 

requires a financial examiner 12 hours, 

on average, (at a rate of $79.04 per hour) 

to create, review, and electronically 

submit a complete and accurate 

document to HHS resulting in a burden 

of 12 hours and an associated cost of 

$948.48, with a total annual burden for 

all 5 States of 60 hours and an 

associated cost of $4,742.40. 

We estimate that the total number of 

respondent States would be 5 per year, 

for a total yearly burden of 205 hours 274

and an associated cost of approximately 

$18,036 275 to meet these reporting 

requirements. 

M. ICRs Regarding Non-Standardized 

Plan Option Limits (45 CFR 156.202) 

The following proposed changes will 

be submitted to OMB for review under 

OMB control number 0938–New (CMS– 

#####). We seek comment on these 

burden estimates. 

As was previously discussed in the 

preamble to this proposed rule, we 

propose to permit issuers to offer nonstandardized plan options in excess of 

the limit of two per product network 

type, metal level, inclusion of dental 

and/or vision benefit coverage, and 

service area for PY 2025 and subsequent 

years, if issuers demonstrate that these 

additional non-standardized plans 

beyond the limit at § 156.202(b) have 

specific design features that would 

substantially benefit consumers with 

chronic and high-cost conditions. 

Specifically, issuers would be 

permitted to offer more than two nonstandardized plan options if these 

additional plans’ cost sharing for 

benefits pertaining to the treatment of 

chronic and high-cost conditions 

(including benefits in the form of 

prescription drugs, if pertaining to the 

treatment of the condition(s)) is at least 

25 percent lower, as applied without 

restriction in scope throughout the plan 

year, than the cost sharing for the same 

corresponding benefits in an issuer’s 

other non-standardized plan option 

offerings in the same product network 

type, metal level, and service area. The 

reduction could not be limited to a part 

of the year, or an otherwise limited 

scope of benefits. Instead, issuers would 

be required to apply the reduced cost 

sharing for these benefits any time the 

covered item or service is furnished. For 

example, an issuer could not reduce 

cost sharing for the first three office 

visits or drug fills and then increase it 

for remaining visits or drug fills. 

Furthermore, issuers would be 

prohibited from conditioning reduced 

cost sharing for these benefits on a 

particular diagnosis. That is, although 

the benefit design would have reduced 

cost sharing to address one or more 

articulated conditions, the reduced cost 

sharing must be available to all enrolled 

in the plan who receive the service(s) 

covered by the benefit. 

Under this proposal, no other plan 

design features (such as the inclusion of 

additional benefit coverage, different 

provider networks, different 

formularies, or reduced cost sharing for 


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benefits provided through the telehealth 

modality) would be evaluated under 

this exceptions process, meaning no 

other differences in plan design features 

would allow issuers to be excepted from 

the limit to the number of nonstandardized plan options offered per 

product network type, metal level, 

inclusion of dental and/or vision benefit 

coverage, and service area. 

Additionally, as part of this 

exceptions process, issuers would be 

required to submit a written justification 

in a form and manner and at a time 

prescribed by HHS that provides 

additional details and explains how the 

particular plan design the issuer desires 

to offer above the non-standardized plan 

option limit of two satisfies the 

proposed standards for receiving an 

exception to this limit—namely, how 

the particular plan would substantially 

benefit consumers with chronic and 

high-cost conditions. We would provide 

issuers with a justification template 

upon publication of the final rule and 

when the QHP templates for the 

applicable plan year are released. We 

anticipate requesting that issuers submit 

QHP applications for non-standardized 

plan options that exceed the two-plan 

limit by the QHP certification Early Bird 

deadline. 

This justification form would ask the 

issuer to: (1) identify the specific 

condition(s) for which cost sharing is 

reduced, (2) explain which benefits 

would have reduced annual enrollee 

cost sharing (as opposed to reduced cost 

sharing for a limited number of visits) 

for the treatment of the specified 

condition(s) by 25 percent or more 

relative to the cost sharing for the same 

corresponding benefits in an issuer’s 

other non-standardized plan offerings in 

the same product network type, metal 

level, and service area, and (3) explain 

how the reduced cost sharing for these 

services pertains to clinically indicated 

guidelines for treatment of the specified 

chronic and high-cost condition(s). 

In order for an issuer to complete the 

necessary documentation to submit a 

request to be excepted from the nonstandardized plan option limit at 

§ 156.202(b) in accordance with the 

proposed requirements at § 156.202(d), 

we estimate that it would take an 

actuary (OES occupational code 15– 

2011) 5 hours annually at a median 

hourly cost of $109.60 per hour 

(amounting to $548 annually) to create 

a new plan design with sufficiently 

differentiated cost sharing and to set the 

premium rate for this plan; a general 

internal medicine physician (OES 

occupational code 29–1216) 2 hours 

annually at a median hourly cost of 

$206.22 (amounting to $412.44 

annually) to complete the justification 

form for this exceptions process; and a 

general and operations manager (OES 

occupational code 11–1021) 10 hours 

annually at a median hourly cost of 

$94.32 per hour (amounting to $943.20 

annually) to review and submit the 

justification form, including all required 

data, as part of an issuer’s portfolio of 

plan offerings that it seeks certification 

of during QHP certification. 

Altogether, we estimate a total burden 

of 17 hours at a cost of $1,903.64 per 

issuer annually to submit a request for 

each additional non-standardized plan 

option to be excepted from the nonstandardized plan option limit. 

Although issuers would not be limited 

in the number of potential exceptions 

they may be granted under this 

proposal, we do not anticipate that 

issuers would seek to have more than 

one additional non-standardized plan 

options excepted from the limit. We 

further estimate that approximately 50 

FFE and SBE–FP issuers (of the 228 

issuers based on current PY 2024 plan 

offering data, amounting to 

approximately 22 percent) would 

request to be excepted from the nonstandardized plan option limit in order 

to offer these additional plans annually, 

at a total burden of 850 hours and 

associated cost of $95,182 for all issuers 

annually. We estimate that only 50 

issuers would submit a request to be 

excepted from the non-standardized 

plan option limit since we anticipate 

that most issuers would believe that the 

burden of creating and certifying 

additional plans intended to benefit a 

comparatively small population of 

consumers would outweigh the benefit 

of doing so. 

N. Summary of Annual Burden 

Estimates for Proposed Requirements 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82622 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

O. Submission of PRA-Related 

Comments 

We have submitted a copy of this 

proposed rule to OMB for its review of 

the rule’s information collection and 

recordkeeping requirements. These 

requirements are not effective until they 

have been approved by the OMB. 

To obtain copies of the supporting 

statement and any related forms for the 

proposed collections discussed above, 

please visit our website at 

www.cms.hhs.gov/PaperworkReduction

Actof1995, or call the Reports Clearance 

Office at 410–786–1326. 

We invite public comments on these 

potential information collection 

requirements. If you wish to comment, 

please submit your comments 

electronically as specified in the 

ADDRESSES section of this proposed rule 

and identify the rule (CMS–9895–P), the 

ICR’s CFR citation, CMS ID number, and 

OMB control number. 

ICR-related comments are due January 

16, 2024. 

V. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

VI. Regulatory Impact Analysis 

A. Statement of Need 

This rule proposes to make several 

HHS risk adjustment updates, such as to 

use the 2019, 2020, and 2021 data for 

recalibration of the HHS risk adjustment 

models for benefit year 2025; to update 

and retain the AI/AN CSR adjustment 

factors for benefit year 2025 and 

beyond, unless changed through noticeand-comment rulemaking; to establish 

the risk adjustment user fee for benefit 

year 2025; and to give HHS the 

authority to require corrective action 

plans for certain observations identified 

as a result of high-cost risk pool audits. 

The rule further proposes State 

Exchange and agent, broker, web-broker, 

and DE entity standards; requiring State 

Exchanges and State Medicaid and CHIP 

agencies to pay to access and use 

optional CSI data from the Hub for 

income verification; eligibility and auto 

re-enrollment standards; open 

enrollment period and special 

enrollment period standards; and 

permitting enrollees to retroactively 

terminate their enrollment in a QHP 

through the Exchange when the enrollee 

enrolls in Parts A or B Medicare 

retroactively effective to the date 

Medicare coverage begins. Additionally, 

the rule proposes the FFE and SBE–FP 

user fee rates for the 2025 benefit year, 

as well as EHB-benchmark plan 

selection updates, other EHB updates, 

minor updates to the standardized plan 

options for PY 2025, an exceptions 

process for issuers to offer additional 

non-standardized plan options in excess 

of the limit of two for PY 2025, 

Consumer Operated and Oriented Plan 

(CO–OP) loan term revisions, and 

modifications to section 1332 waiver 

implementing regulations governing 

public hearing procedures. 

B. Overall Impact 

We have examined the impacts of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (January 18, 

2011), Executive Order 14094 entitled 

‘‘Modernizing Regulatory Review’’ 

(April 6, 2023), the Regulatory 

Flexibility Act (RFA) (September 19, 

1980, Pub. L. 96–354), section 1102(b) of 

the Act, section 202 of the Unfunded 

Mandates Reform Act of 1995 (March 

22, 1995; Pub. L. 104–4), and Executive 

Order 13132 on Federalism (August 4, 

1999). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 


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TABLE 15: Proposed Annual Recordkeeping and Reporting Requirements 

45 CFR 155.1050 0938- 22 22 900 19,800 1,365,012 1,365,012 

xxxx 

45 CFR 155.220 0938- 20 20 565 11,300 1,071,474 1,071,474 

xxxx 

45 CFR 155.220 0938- 5 5 4,008 20,040 2,346,128 2,346,128 

xxxx 

45 CFR 155.221 0938- 100 100 1,900 95,945 6,762,280 6,762,280 

xxxx 

45 CFR 155.221 0938- 5 5 5,749 28,745 3,353,468 3,353,468 

xxxx 

45CFR 0938- 100 100 33 3,300 1,226,453 1,226,453 

155.22l(b)(6) xxxx 

45 CFR 155.315 0938- 11 11 23 253 23,770 23,770 

xxxx 

45 CFR 155.330(d) 0938- 11 11 40 440 43,252 43,252 

xxxx 

45 CFR 156.111 0938-1174 5 5 41 205 18,036 18,036 

45 CFR 156.202 0938- 50 50 17 850 95,182 95,182 

xxxx 

TOTAL 329 329 180,878 15,078,602 15,078,602 
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82623 

276Executive Order 14094. https://

www.whitehouse.gov/briefing-room/presidentialactions/2023/04/06/executive-order-onmodernizing-regulatory-review/. 

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). The April 6, 2023 Executive 

Order on Modernizing Regulatory 

Review 276 amends Section 3(f) of 

Executive Order 12866 to define a 

‘‘significant regulatory action’’ as an 

action that is likely to result in a rule 

that may: (1) have an annual effect on 

the economy of $200 million or more 

(adjusted every 3 years by the 

Administrator of OMB’s Office of 

Information and Regulatory Affairs 

(OIRA) for changes in gross domestic 

product), or adversely affect in a 

material way the economy, a sector of 

the economy, productivity, competition, 

jobs, the environment, public health or 

safety, or State, local, territorial, or tribal 

governments or communities; (2) create 

a serious inconsistency or otherwise 

interfere with an action taken or 

planned by another agency; (3) 

materially alter the budgetary impacts of 

entitlements, grants, user fees, or loan 

programs or the rights and obligations of 

recipients thereof; or (4) raise legal or 

policy issues for which centralized 

review would meaningfully further the 

President’s priorities or the principles 

set forth in the Executive Order, as 

specifically authorized in a timely 

manner by the Administrator of OIRA in 

each case. 

A regulatory impact analysis (RIA) 

must be prepared for significant rules. 

OMB’s OIRA has determined that this 

rulemaking is ‘significant’ as measured 

by the $200 million threshold under 

section 3(f)(1). We have prepared an RIA 

that to the best of our ability presents 

the costs and benefits of the rulemaking. 

OMB has reviewed these proposed 

regulations, and the Departments have 

provided the following assessment of 

their impact. 

C. Impact Estimates of the Payment 

Notice Provisions and Accounting Table 

As required by OMB Circular A–4 

(available at https://

www.whitehouse.gov/wp-content/ 

uploads/legacy_drupal_files/omb/ 

circulars/A4/a-4.pdf.), we have 

prepared an accounting statement in 

Table 16 showing the classification of 

the impact associated with the 

provisions of this proposed rule. 

This proposed rule implements 

standards for programs that will have 

numerous effects, including providing 

consumers with access to affordable 

health insurance coverage, reducing the 

impact of adverse selection, and 

stabilizing premiums in the individual 

and small group (including merged) 

health insurance markets and in 

Exchanges. We are unable to quantify all 

the benefits and costs of this proposed 

rule. The effects in Table 16 reflect 

qualitative assessment of impacts and 

estimated direct monetary costs and 

transfers resulting from the provisions 

of this proposed rule for health 

insurance issuers and consumers. The 

annual monetized transfers described in 

Table 16 include changes to costs 

associated with the risk adjustment user 

fee paid to HHS by issuers. 


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82624 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 


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TABLE 16: Accounting Table 

Benefits: Estimate Year Dollar Discount Rate Period Covered 

Annualized Monetized ($/year) $25.79 million 2023 7 percent 2024-2028 

$26.32 million 2023 3 percent 2024-2028 

Quantitative: 

• Annual cost savings to State Exchanges of approximately $20,317,000 beginning in 2025 associated with the proposal 

to permit Exchanges to accept consumer incarceration attestations without further verification. 

• Annual cost savings to the Federal Government of approximately $570,000 beginning in 2025 due to the proposal to 

stop generating incarceration DMis and thereby stop paying the PUPS annual maintenance and transaction fees for the 

purposes of verification incarceration status for QHP eligibility. 

• Annual cost savings to the Federal Government of approximately $12.5 million associated with the proposal to conduct 

an additional death PDM check annually beginning in 2025. 

Qualitative: 

• Increased State flexibility with respect to determining the effective date of eligibility for emollment in a standard health 

plan for purposes of a BHP. 

• Improved transparency as a result of the proposal to require States seeking to transition to a State Exchange to provide 

the public with a notice and copy of its State Exchange Blueprint application at the time of submission to HHS for 

approval, and conduct periodic public engagements whereby interested parties can learn about the State's intent to 

transition, as well as a State's progress toward transitioning. Although, historically, States that have transitioned to State 

Exchanges conducted some level of public engagements that would meet what is being proposed, they have done so 

voluntarily, so this proposal would set a clear expectation moving forward for all States that intend to establish and operate 

a State Exchange. 

• Improved consumer experience associated with the proposal to require that Exchange call centers must provide 

consumers with access to a live call center representative during the Exchanges' published hours of operations who must 

be able to assist consumers with submitting their application for QHP coverage. 

• Improved consumer experience and access to accurate insurance information associated with the proposal to require all 

Exchanges to have a centralized eligibility and emollment platform on its website. Although all current Exchanges meet 

this requirement, there may be States transitioning to State Exchanges in the future that would not consider operating a 

centralized eligibility and emollment platform in the absence of this proposed amendment. This proposal would set a clear 

expectation moving forward for all States that intend to establish and operate a State Exchange. 

• Increased transparency for agents, brokers, and web-brokers by specifying who will be reviewing their reconsideration 

request. 

• Improved consumer experience on non-Exchange websites by requiring DE entities to implement HealthCare.gov and 

State Exchange website display changes that enhance the consumer experience, simplify the plan selection process, and 

increase consumer understanding of plan benefits, cost-sharing responsibilities and eligibility for financial assistance. 

• Reduced burdens and barriers to care for applicants as a result of the proposal to permit Exchanges to accept 

incarceration attestations without further verification. 

• Improved continuity of coverage for emollees due to the proposal to require Exchanges to automatically re-emoll 

emollees in catastrophic coverage into QHP coverage for the coming plan year. 

• Reduced consumer confusion and increased consumer access to assisters as a result of the proposal to require State 

Exchanges to adopt an open emollment period that begins on November 1 of the calendar year preceding the benefit year 

and ends no earlier than January 15 of the applicable benefit year, with the option to extend the open emollment period 

beyond January 15. 

• Reduced consumer confusion and coverage gaps due to the proposal to align the effective dates of coverage after 

selecting a plan during certain special emollment periods across all Exchanges. 

• Reduced overlaps in coverage and premium payments for Exchange enrollees who retroactively emoll in Medicare Part 

A or B as a result of the proposal to permit Exchange enrollees to retroactively terminate Exchange coverage back to the 

date in which they retroactively emoll in Medicare Part A or B. 

• Reduced costs for States to perform actuarial analyses to confirm compliance of ERB-benchmark plans with scope of 

benefit requirements at~ 156.11 l(b)(2). 
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82625 


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• Reduced coverage barriers to expanding access to adult dental benefits, improved State flexibility to add benefits to 

improve adult oral health, and promotion of health equity associated with the proposal to remove the prohibition on 

including routine non-pediatric dental services as an EHB. 

• Increased issuer flexibility in plan design as a result of the proposed exceptions process to allow issuers to offer 

additional non-standardized plan options in excess of the limit of two per product network type, metal level, including of 

dental and/or vision benefit coverage, and service area, if particular requirements are met 

• Streamlined payments and collections processes and limited administrative burden for operating HHS programs due to 

the proposal to align netting regulations at§ 156.1215 with the policies proposed in the Federal Independent Dispute 

Resolution <IDR) Process Administrative Fee and Certified IDR Entitv Fee Ran_ges pronosed rule. 

Costs: Estimate Year Discount Rate Period Covered 

Dollar 

Annualized Monetized ($/year) $11.41 million 2023 7 percent 2024-2028 

$11.37 million 2023 3 percent 2024-2028 

Quantitative: 

• Cost to issuers being audited for high-cost risk pool payments of approximately $25,078 to complete, submit to HHS, 

and implement corrective action plans for certain high-cost risk pool audit observations for each benefit year being 

audited, if required by HHS. 

• One-time cost in PY 2025 to web-brokers operating in State Exchanges of approximately $1,071,474 due to the 

proposal to ensure agents, brokers, and web-brokers operating in these State Exchanges are meeting certain requirements 

applicable in the FFE and SBE-FPs. 

• Costs to States of $2,346,128 associated with the policy that agents, brokers, and web-brokers operating in State 

Exchanges meet certain requirements applicable in the FFEs and SBE-FPs. 

• Costs to DE entities operating in FFE and SBE-FP States of approximately $240,120 annually beginning in 2025 as a 

result of the proposal to require that changes adopted by HealthCare.gov be reflected on DE entity websites within a 

notice period set by HHS, unless HHS approves a deviation in advance. 

• Costs to DE entities participating in State Exchanges of approximately $1,226,452.50 annually beginning in 2025 

associated with implementing display changes and submitting requests to deviate from the standards defined by the State 

Exchange. 

• Costs to DE entities operating in FFE and SBE-FP States of approximately $5,171 to submit a request to deviate from 

the display approach adopted by HealthCare.gov standards defined by HHS annually beginning in 2025. 

• Costs to States of $3,353,468 associated with the policy that DE entities operating in State Exchanges meet certain 

requirements applicable in the FFEs and SBE-FPs, including the costs for States associated with policy surrounding DE 

entities operating in State Exchanges regarding implementing display changes and reviewing associated deviation 

requests. 

• One-time cost in PY 2025 to DE entities in State Exchanges of approximately $6,762,281 to comply with the proposal 

to add language to ensure DE entities operating in these State Exchanges are meeting certain requirements applicable in 

the FFE and SBE-FPs. 

• One-time cost in PY 2025 to State Exchanges of $23,770 to conduct an analysis of whether to accept consumer 

attestation of incarceration status or identify an alternative data source to verify incarceration status and to make changes 

to their eligibility systems and processes to either accept consumer attestation or use an alternative data source to verify 

incarceration status. 

• One-time cost to HHS of $2.3 million in 2024 to build the structure and set up operations for the purposes of 

distinguishing costs of accessing CSI data through the VCI Hub service between the State Exchange and State Medicaid 

agency and annual costs of $1 million starting in 2024 to administer this process. 

• One-time cost to 1 to 3 States with State Exchanges, who currently have one Hub connection shared between the State 

Exchange and Medicaid, of approximately $3 to 6 million in 2024 (averaged to approximately $4.5 million for purposes of 

this proposed rule) if they elect to build a second, separate Hub connection for the purposes of distinguishing costs of 

accessing CSI data through the VCI Hub service between the State Exchange and State Medicaid agency. Should any of 

these States elect to build a second Hub connection, the State would determine if the State Exchange or Medicaid agency 

would finance the implementation and operational costs associated with the second Hub connection. 

• One-time cost in 2025 of approximately $43,252 to 11 State Exchanges that are not currently meeting the proposed 

requirement to conduct death PDM at least twice a year. 

• Costs to 5 States per year of approximately $18,036 to comply with the proposal regarding the State selection of EHBbenchmalk plans. 

• Costs to 50 issuers of approximately $95,182 annually to complete the proposed exceptions process in order to offer 

one additional non-standardized plan option in excess of the non-standardized option plan limit of two for PY 2025 and 
82626 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 


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subsequent years. 

• Costs to QHP issuers in State Exchanges and SBE-FPs of approximately $114,992 annually beginning in 2025 

associated with the network adequacy proposals in this proposed rule. 

• Costs to State Exchanges and SBE-FPs of approximately $1,365,012 annually beginning in 2025 associated with the 

network adequacy proposals in this proposed rule. 

• Costs to interested parties of approximately $136,937 in 2024 to review and interpret this rule. 

• Costs to HHS per year of approximately $58,923 to conduct an additional check for deceased enrollees associate with 

the proposal to require Exchanges to conduct periodic checks for deceased enrollees twice yearly and subsequently end 

deceased enrollees' QHP coverage beginning with the 2025 calendar year. 

• One-time cost in 2025 of $1,540,000 to HHS to modify the Federal platform's current incarceration verification 

processes for the purposes of verifying eligibility for QHP, and to update the Federal platform's system logic for HHS to 

stop sending incarceration verification requests to PUPS. 

Qualitative: 

• Increased premium amounts and FTC, to the extent that the proposals to address State-mandated benefits and the 

process to change ERB-benchmark plans incentivize States to update and modernize the EHB with additional benefits, 

including routine non-pediatric dental services. 

• Increased administrative burden to States and issuers to develop criteria used to select a consumer representative for the 

P&T committee, to create or revise standard operating procedures for the committee, as well as for anv additional training. 

Transfers: Estimate Year Discount Period Covered 

Dollar Rate 

Annualized Monetized ($/year) $1.86 billion 2023 7 percent 2024-2028 

$1.92 billion 2023 3 percent 2024-2028 

Quantitative: 

• Estimated average transfers of costs from the Federal government to Medicaid beneficiaries of approximately $0 

million to $538 million per year beginning in 2025 (averaged to $269 million for the purposes of this proposed rule) for 

additional health care benefits paid by the Medicaid program to new beneficiaries covered under States using the proposed 

eligibility flexibilities. 

• Estimated average transfers of costs from States to beneficiaries of approximately $0 million to $3 92 million per year 

beginning in 2025 (averaged to $196 million for the purposes of this proposed rule) for additional health care benefits paid 

by the Medicaid program to new beneficiaries covered under States using the proposed eligibility flexibilities. 

• Estimated transfers of costs from the Federal government to States of approximately $78 million to $122 million per 

year beginning in 2024 (averaged to $100 million for purposes of this proposed rule) by requiring State Exchanges and 

State Medicaid agencies to pay for their use of the optional CSI income data accessed through the VCI Hub service. 

• Reduction in risk adjustment user fee transfers from issuers to the Federal government of approximately $3 .5 million 

for benefit year 2025 compared to the prior benefit year. 

• Estimated increased FTC outlays from the Federal government to issuers of $2 billion to $3 billion (averaged to $2.5 

billion for purposes of this proposed rule) annually beginning in 2026 associated with the proposal to remove the 

limitation that the 150 percent FPL SEP be available only when the applicable taxpayer's applicable tax percentage is set 

to zero. 

Qualitative: 

• Provide States additional flexibilities to cover more Medicaid beneficiaries and improve health care for those 

individuals as a result of the Medicaid proposal in this proposed rule. 

• Increase in the overall absolute value of risk adjustment State transfers calculated under the State payment transfer 

formula of approximately 8 percent in Oklahoma, 2.5 percent in Alaska, 2 percent in Montana, and less than 0.5 percent in 

South Dakota and North Dakota as a result of the proposal to recalibrate the CSR adjustment factors for AI/ AN plan 

variant enrollees. 
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82627 

277Reinsurance collections ended in FY 2018 and 

outlays in subsequent years reflect remaining 

payments, refunds, and allowable activities. 

1. Proposed Amendments to Normal 

Public Notice Requirements (31 CFR 

33.112, 31 CFR 33.120, 45 CFR 

155.1312, and 45 CFR 155.1320) 

In this proposed rule, the 

Departments propose modifications to 

the section 1332 waiver implementing 

regulations to set forth flexibilities in 

the public notice requirements and postaward public participation requirements 

for section 1332 waivers. However, this 

proposed rule does not propose to alter 

any of the requirements related to 

section 1332 waiver applications, 

compliance and monitoring, or 

evaluation in a way that would create 

any additional costs or burdens for 

States submitting proposed waiver 

applications or those States with 

approved waiver plans that have not 

already been captured in prior burden 

estimates. The Departments are of the 

view that both States with approved 

section 1332 waivers and States that 

apply for section 1332 waivers would be 

minimally impacted or would benefit 

from reduced burden by these proposed 

changes in policy, if finalized. The 

Departments anticipate that 

implementing these provisions would 

not significantly change the associated 

burden currently approved under OMB 

control number: 0938–1389, Expiration 

date: February 29, 2024. The 

Departments are of the view that section 

1332 waivers help increase State 

innovation, which in turn could lead to 

more affordable health coverage for 

individuals and families in States that 

consider implementing a section 1332 

waiver program. 

The Departments seek comment on 

these impacts and assumptions. 

2. Increase State Flexibility in the Use 

of Income and Resource Disregards for 

Non-MAGI Populations (42 CFR 

435.601) 

Current 42 CFR 435.601(d) authorizes 

States to apply less restrictive 

methodologies than those that would 

otherwise be required to be considered 

in the individual’s eligibility 

determination. Paragraph (d)(4) requires 

that the application of less restrictive 

methodologies by State Medicaid 

agencies be comparable for all persons 

within each Medicaid eligibility group. 

For example, if a State wants to apply 

an income disregard to an eligibility 

group serving individuals who are 65 

years old or older, it must either agree 

to apply the income disregard to all 

members of the eligibility group who are 

65 years old or older or forego 

application of the disregard. 

In this proposed rule, we propose to 

remove the requirement that less 

restrictive methodologies be comparable 

for all members of an eligibility group. 

This would allow States that want to 

expand their Medicaid eligibility rules 

through the use of less restrictive 

methodologies to have more flexibility 

in managing the extent to which their 

programs are expanded. 

This proposed rule, however, would 

not create an entirely new State option, 

but, instead, would permit States to 

exercise an existing option in a more 

limited manner. Additionally, the 

proposed rule, if finalized, would not 

require new State plan material or 

impose any new administrative tasks for 

States in their development and 

submission of State plan amendments. 

We therefore do not anticipate that 

implementing this provision would 

create any new information collection 

burden for States. 

Estimating the impact on Medicaid 

enrollment and expenditures is difficult. 

Notably, it is not known how many 

States would use this new authority, 

and the extent to which they would use 

this. Some States may be interested in 

using this flexibility to make a 

significant expansion to coverage, and 

in turn, spending on Medicaid services. 

Other States may not use these options 

at all or may use them to a limited 

degree. Moreover, how States use this 

authority—which populations would be 

affected, the number of people in these 

groups, and the underlying healthcare 

needs of these individuals—is also 

unknown. Therefore, we have estimated 

a range of potential impacts as part of 

the regulatory impact analysis. 

At the low end of the range, we have 

assumed that the impact on enrollment 

and Medicaid expenditures would be 0 

(or negligible). In this scenario, we 

assume that States do not make any 

substantial changes under this new 

authority, and as a result there is no 

measurable increase in enrollment or 

spending. Historically, States have had 

many options in expanding coverage, 

including but not limited to other 

authorities to use income and resource 

disregards and section 1115 waivers. 

Recent State plan amendments to 

expand the use of income disregards 

(either broadly or targeted to certain 

groups) have been modest, ranging from 

estimated impacts of $0 million to $49 

million per year. Thus, it may be 

possible that the use of these 

flexibilities is limited and the impacts 

relatively small. 

On the other hand, it is possible that 

States may be more active in using these 

proposed options. To estimate the high 

end of the range, we made the following 

assumptions. First, we assumed that 10 

States would take up these options. 

Second, we assumed that States would 

apply these options to non-MAGI 

populations (mainly enrollees age 65 

and over, and enrollees qualifying on 

the basis of a disability) and have an 

average increase of 1 percent in 

enrollment among these groups. We 

assumed the average total, Federal, and 

State Medicaid costs for these enrollees 


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TABLE 17: Estimated Federal Government Outlays and Receipts for the HHS Risk 

Adjustment and Reinsurance Programs from Fiscal Year 2025-2029, in billions of dollars277 

HHS Risk Adjustment and 

Reinsurance Pro ram Pa ments 

HHS Risk Adjustment and 

Reinsurance Pro ram Collections 

8 

9 

9 47 

49 

Note: HHS risk adjustment program payments and receipts lag by one quarter. Receipt will fully offset 

payments over time. Source: Congressional Budget Office. Federal Subsidies for Health Insurance 

Coverage for People Under Age 65: CBO and JCT's May 2023 Baseline Projections. Table 2. May 2023. 

https:/lwww.cbo.govlsystem/.fi les/2 0 2 3-05/512 98-2 0 2 3-05-healthinsurance .pdf 
82628 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

278See 83 FR 16930 at 16953; 84 FR 17478 

through 17479; 85 FR 29190; 86 FR 24181; 87 FR 

27235 through 27236; and 88 FR 25772 through 

25774. 

would be equal to the national average 

for these groups. 

Under these assumptions, we project 

that enrollment would increase by 

36,000 to 38,000 across 10 States (or 

3,600 to 3,800 per State) and Medicaid 

expenditures would increase by about 

$4,660 million over the first 5 years 

($2,700 million Federal, $1,960 million 

State share). (The estimates rely on 

projections of enrollment and spending 

from the Mid-Session Review of the 

President’s FY 2024 Budget.) 

It is important to note that there is a 

wide range of outcomes due to the 

flexibility afforded in the proposed rule. 

We expect actual costs and enrollment 

impacts to fall within the range shown 

here, but the effects are highly 

dependent on which States would take 

up these options and how extensively 

such options are used. 

We seek comment on these impacts 

and assumptions. 

3. Changes to the Basic Health Program 

Regulations (42 CFR 600.320) 

Section 1331 of the ACA (42 U.S.C. 

18051) requires the Secretary to 

establish a BHP, and section 1331(c)(4) 

specifically provides that a State shall 

coordinate the administration of, and 

provision of benefits under the BHP 

with other State programs. These 

proposed regulations build from 

previous BHP regulations to provide for 

options for BHP implementation and 

operations beginning with program year 

2024. 

In this proposed rule, we propose to 

add an option for a State establishing a 

uniform method of determining the 

effective date of eligibility for 

enrollment in a standard health plan. 

We believe this proposal would provide 

additional flexibility for States when 

implementing their BHP. If the State 

chooses to follow this new effective date 

of eligibility option, we believe this 

proposal would also benefit enrollees by 

providing coverage sooner than if the 

State were to follow the Exchange 

effective date of eligibility option. We 

do not anticipate any costs to States 

because of this proposal, as we are only 

proposing to provide another option by 

which a State could determine the 

effective date of eligibility for purposes 

of its BHP. We seek comment on these 

impacts and assumptions. 

4. HHS Risk Adjustment (45 CFR 

153.320) 

We propose to recalibrate the HHS 

risk adjustment models for the 2025 

benefit year using the 2019, 2020, and 

2021 enrollee-level EDGE data. We 

believe that continuing to maintain the 

approach of blending (or averaging) 3 

years of separately solved coefficients 

provides stability within the HHSoperated risk adjustment program and 

minimizes volatility in changes to risk 

scores from the 2024 benefit year to the 

2025 benefit year. We also propose to 

continue applying a market pricing 

adjustment to the plan liability 

associated with Hepatitis C drugs in the 

HHS risk adjustment models, consistent 

with the approach adopted beginning 

with the 2020 benefit year HHS risk 

adjustment models. 

We propose to recalibrate the CSR 

adjustment factors for AI/AN zero-cost 

sharing and limited cost sharing CSR 

plan variant enrollees for the 2025 

benefit year, and to retain the proposed 

AI/AN CSR adjustment factors, if 

finalized, for all future benefit years 

unless changed through notice-andcomment rulemaking. We also propose 

to maintain the current CSR adjustment 

factors for silver plan variant enrollees 

(70 percent, 73 percent, 87 percent, and 

94 percent AV plan variants) 278 for the 


ddrumheller on DSK120RN23PROD with PROPOSALS2EP24NO23.032</GPH>

TABLE 18: Projected Impacts on Medicaid Enrollment and Expenditures 

Low scenario 2025 2026 2027 2028 2029 2025-2029 

Enrollment 0 0 0 0 0 

Expenditures (millions) 

Total $0 $0 $0 $0 $0 $0 

Federal $0 $0 $0 $0 $0 $0 

State $0 $0 $0 $0 $0 $0 

High scenario 2025 2026 2027 2028 2029 2025-2029 

Enrollment 36,000 36,000 37,000 38,000 38,000 

Expenditures (millions) 

Total $890 $910 $930 $950 $980 $4,660 

Federal $510 $530 $540 $550 $570 $2,700 

State $380 $380 $390 $400 $410 $1,960 
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82629 

279Public Law 117–2. 

2025 benefit year and beyond, unless 

changed through notice-and-comment 

rulemaking. In addition, we affirm that 

for plan liability risk score calculations 

under the State payment transfer 

formula, we use the CSR adjustment 

factors that align with the AV of the 

plan. Thus, for unique State-specific 

plans that have higher plan liability 

than the standard silver plan variants 

(for example, CSR wrap-around and 

Medicaid-expansion plans), we would 

continue to apply the applicable CSR 

adjustment factor that corresponds to 

the plan’s AV, as determined by HHS in 

consultation with the applicable State 

Departments of Insurance and other 

relevant State institutions. 

We anticipate that this proposal 

would result in an increase in overall 

individual market risk pool HHS risk 

adjustment transfers under the State 

payment transfer formula in States with 

a sizable share of AI/AN enrollees. All 

things being equal, we anticipate that 

recalibrating the AI/AN CSR adjustment 

factors as proposed would increase 

transfer payments (or decrease transfer 

charges) to the issuers with the larger 

shares of the AI/AN subpopulation and 

increase transfer charges (or decrease 

transfer payments) under the State 

payment transfer formula for the issuers 

with smaller shares of the AI/AN 

subpopulation. Therefore, we anticipate 

that issuers with larger shares of AI/AN 

enrollees would have the ability to 

lower premium rates slightly, as the 

additional plan liability associated with 

AI/AN CSR recipients would be offset 

by the increase in HHS risk adjustment 

transfer payments (or decrease in 

transfer charges) to these issuers. 

Based on internal analyses, the States 

with the highest proportion of AI/AN 

enrollees as a percentage of member 

months in the 2021 benefit year were 

Oklahoma (15 percent), Alaska (4 

percent), Montana (2 percent), South 

Dakota (2 percent), and North Dakota (1 

percent). Based on internal analyses of 

2021 enrollee-level EDGE data, we 

anticipate that recalibrating the AI/AN 

CSR adjustment factors as proposed 

would increase total transfers under the 

State payment transfer formula by 8 

percent in Oklahoma, 2.5 percent in 

Alaska, 2 percent in Montana, and less 

than 0.5 percent in South Dakota and 

North Dakota. We further anticipate that 

these transfer impacts would result in 

modest decreases in premiums among 

issuers that enroll a high proportion of 

AI/AN consumers, as issuers with larger 

AI/AN enrollment would benefit from 

increased transfer payments (or 

decreased transfer charges) under the 

State payment transfer formula. We do 

not anticipate that States with a low 

proportion of AI/AN enrollees would 

experience a transfer or premium 

impact due to the very low number of 

enrollees (less than 1 percent) who 

would be impacted by the proposed 

recalibrated CSR adjustment factors for 

this population in those States. 

We seek comment on these impacts 

and assumptions. 

5. HHS Risk Adjustment User Fee for 

2025 Benefit Year (45 CFR 153.610(f)) 

For the 2025 benefit year, HHS will 

operate risk adjustment in every State 

and the District of Columbia. As 

described in the 2014 Payment Notice 

(78 FR 15416 through 15417), HHS’ 

operation of risk adjustment under 

section 1343 of the ACA on behalf of 

States is funded through a risk 

adjustment user fee. For the 2025 

benefit year, we propose to use the same 

methodology to estimate our 

administrative expenses to operate the 

HHS risk adjustment program as was 

used in the 2024 Payment Notice. As 

discussed previously in this proposed 

rule, risk adjustment user fee costs for 

the 2025 benefit year are expected to 

increase from the prior 2024 benefit year 

estimates. However, we project higher 

enrollment than our prior estimates in 

the individual and small group 

(including merged) markets in the 2024 

and 2025 benefit years due to the 

enhanced PTC subsidies provided for in 

section 9661 of the ARP 279 and 

extended through the 2025 benefit year 

pursuant to section 12001 of the IRA. 

We estimate that the total cost for 

HHS to operate the risk adjustment 

program on behalf of all States and the 

District of Columbia will increase from 

$60 million in 2024 to approximately 

$65 million in 2025. However, we 

believe that the increased enrollment 

projections will more than offset the 

increased risk adjustment user fee costs, 

and therefore, the proposed risk 

adjustment user fee would be reduced 

from the $0.21 PMPM for the 2024 

benefit year to $0.20 PMPM for the 2025 

benefit year. We expect the proposed 

risk adjustment user fee for the 2025 

benefit year to reduce the amount 

transferred from issuers of risk 

adjustment covered plans to the Federal 

government by approximately $3.5 

million. 

We seek comment on these impact 

estimates and assumptions. 

6. Audits and Compliance Reviews of 

Risk Adjustment Covered Plans (45 CFR 

153.620(c)) 

We propose amending § 153.620(c)(4) 

to require issuers of risk adjustment 

covered plans to complete, implement, 

and provide to HHS written 

documentation of any corrective action 

plans when required by HHS if a highcost risk pool audit results in the 

inclusion of a finding or certain 

observations in the final audit report. 

Based on data from the 2018 benefit 

year high-cost risk pool audits, we 

estimate that each issuer audited may 

receive approximately 2 observations on 

average in future benefit years of highcost risk pool audits where there is 

evidence of non-compliance with 

applicable Federal requirements, 

thereby triggering the proposed 

requirement for the issuer to take 

corrective action. We also estimate that 

it would take approximately 4 hours by 

a business operations specialist (at 

$73.12 per hour), 2 hours by a 

compliance officer (at $68.94 per hour), 

and 2 hours by a computer systems 

analyst (at $98.30 per hour) to complete, 

implement, and provide documentation 

to HHS of a corrective action plan for 2 

observations. This results in a total cost 

per issuer of $626.96 (4 hours × $73.12 

per hour + 2 hours × $68.94 per hour + 

2 hours × $98.30 per hour). We estimate 

that we may conduct high-cost risk pool 

audits for approximately 40 issuers for 

each benefit year. Therefore, the total 

estimated cost to issuers of risk 

adjustment covered plans for each 

benefit year being audited would be 

approximately $25,078.40 (40 issuers × 

$626.96 per issuer). 

We seek comment on these burden 

estimates and assumptions. 

7. Approval of a State Exchange (45 CFR 

155.105) 

We propose to add a requirement that 

a State seeking to transition to a State 

Exchange must first operate an SBE–FP, 

meeting all requirements under 

§ 155.200(f), for at least one plan year, 

including its first open enrollment 

period. 

We do not anticipate this proposal 

would create an additional burden to 

the States that are currently 

transitioning to a State Exchange, since 

those States have already operated an 

SBE–FP for at least 1 year or will first 

be operating an SBE–FP. Since PY 2020, 

all States that have transitioned to a 

State Exchange have first transitioned to 

an SBE–FP for one or more plan years. 

Furthermore, based on our experience, 

the costs for a State to transition from 

the FFE to operating an SBE–FP is 

relatively low in comparison to the costs 

a State would incur to transition from 

an FFE, or an SBE–FP, to establishing a 

State Exchange. This is due to the 

significant investment of costs incurred 

in implementing and operating a State 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82630 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

Exchange consumer-facing website, 

eligibility and enrollment technology 

platform, and associated eligibility and 

enrollment support infrastructure, such 

as the State Exchange’s consumer call 

center technology and resources, that 

FFEs and SBE–FPs rely on HHS to 

provide. We would also expect the 

impact and costs to States that are 

considering, or may consider, 

establishing a State Exchange in the 

future to be minimal because we believe 

there would be sufficient time to plan 

for operating as an SBE–FP before 

operating as a State Exchange. 

We believe that one of the primary 

benefits of States operating an SBE–FP 

prior to implementing and operating a 

State Exchange lies in the investment of 

time and resources that a State 

transitioning to, and operating, an SBE– 

FP makes in the establishment of direct 

relationships with their consumers, 

assisters, issuers, and other interested 

parties that will ultimately help in the 

successful implementation and 

operation of its State Exchange. 

Furthermore, we believe that the benefit 

of these activities to a State and its 

consumers and partners far outweigh 

the relatively low cost for the State to 

first transition to, and operate, an SBE– 

FP for at least one year before 

implementing and operating a State 

Exchange. We are also of the view that 

this proposal would mitigate the 

significant risk and disruption, for 

consumers, assisters, issuers, and other 

interested parties, associated with a 

scenario where a State wishes to 

transition from an FFE to establishing 

and operating a State Exchange in a 

timeframe of less than a year or 

otherwise not in alignment with the 

timelines associated with the approval 

of a State Exchange specified in 

§ 155.106. 

We seek comment on these 

assumptions of the financial impact of 

this proposal, if finalized, on States that 

transition to an SBE–FP for at least one 

plan year before operating a State 

Exchange pursuant to this proposal, if 

finalized. 

8. Election To Operate an Exchange 

After 2014 (45 CFR 155.106) 

As discussed in the preamble, we 

propose to add that we may require that 

a State submitting a Blueprint 

Application to implement a State 

Exchange provide supplemental 

documentation demonstrating progress 

toward meeting State Exchange 

Blueprint requirements, or 

documentation that details a State’s 

implementation of its State Exchange 

Blueprint requirements. This could 

include a State submitting detailed 

plans regarding its State Exchange 

consumer assistance, such as 

information on its direct outreach plans. 

We do not anticipate additional 

burden associated with this proposal, as 

HHS already has the authority to request 

any evidence it determines necessary for 

the State to show progress towards 

implementing the required Exchange 

functionality in the State Exchange 

Blueprint, or documentation that details 

the implementation of the required 

Exchange functionality. In this proposal, 

we are merely seeking to codify in our 

regulations a clear expectation for a 

State establishing a State Exchange that, 

as part of the State’s submission of a 

State Exchange Blueprint Application. 

The information collection burden 

associated with this proposal is already 

accounted for under approved OMB 

control number: 0938–1172, Expiration 

date: August 31, 2025. 

Further, as discussed in the preamble, 

we propose to require that when a State 

submits its State Exchange Blueprint 

application to HHS for approval, the 

State must provide the public with 

notice and a copy of its State Exchange 

Blueprint application. We also propose 

to require that at some point following 

a State’s submission of its State 

Exchange Blueprint application to HHS, 

a State must conduct at least one public 

engagement (such as a townhall meeting 

or public hearing), in a timeline and 

manner considered effective by the 

State, with concurrence from HHS, at 

which interested parties can learn about 

the State’s intent to transition to a State 

Exchange and the State’s progress 

toward effectuating that transition. We 

also propose to require that while a 

State is making this transition and until 

HHS has approved or conditionally 

approved the State Exchange Blueprint 

application, a State conducts periodic 

public engagements at which interested 

parties can continue to learn about the 

State’s progress toward finalizing its 

transition to a State Exchange, in a 

timeline and manner, either in-person 

or virtually, considered effective by the 

State. 

We do not anticipate significant 

additional burden associated with these 

proposals, as States are currently 

required to submit a State Exchange 

Blueprint application to HHS for 

approval, and so the impact of sharing 

a copy of the submitted Exchange 

Blueprint application with the public 

using their website would be de 

minimis. Further, we believe that since 

States seeking to establish, or are in the 

process of establishing, a State Exchange 

for PY 2025 or in subsequent years 

would be given broad flexibility to 

design the public engagements in a 

manner that best suits their respective 

State, for meeting the interested party 

consultation requirement under 

§ 155.130, that States will design their 

public engagements in a manner such 

that the additional burden incurred by 

the State would be minimal. The goal of 

the proposed changes at 

§ 155.106(a)(2)(ii) is to clearly state, for 

States who are seeking to establish State 

Exchanges, HHS’ expectations of the 

State engaging with the public regarding 

its transition to a State Exchange, thus 

strengthening the transparency 

requirements of the State Exchange 

Blueprint review and approval process. 

We believe this proposal would help 

States that establish a State Exchange 

meet the consultation requirements of 

interested parties at § 155.130 during 

the period when the State is establishing 

a State Exchange, by formalizing a 

process whereby States and interested 

parties communicate about the State’s 

establishment of a State Exchange 

throughout the transition process. As 

such, we believe the impact of this 

proposal would be de minimis. 

We seek comment on this burden 

estimate and assumptions. 

9. Additional Required Benefits (45 CFR 

155.170) 

We propose to amend § 155.170(a)(2) 

to provide that benefits covered in a 

State’s EHB-benchmark plan would not 

be considered in addition to EHB and 

thus would not be subject to defrayal by 

the State beginning with PY 2025. We 

believe that this revision would have a 

mixed effect on the cost to the Federal 

government. In States that update EHBbenchmark plans to include benefits, 

the costs of which are currently being 

defrayed, the percentage of premium 

attributable to coverage of EHB for 

purpose of calculating APTC may 

increase just as if the State updated its 

EHB-benchmark plan through the 

process set forth in § 156.111 and any 

increase remains subject to the 

typicality requirement in that section. In 

a State that enacts a mandate for a 

benefit that is currently covered in its 

EHB-benchmark plan, there will be no 

effect on Federal government expense as 

the benefit was already included in the 

percentage of premium attributable to 

coverage of EHB for purpose of 

calculating APTC since it was EHB. 

States may choose to evaluate the 

overlap between mandates and EHB 

benchmark-plans for benefits they are 

currently defraying the costs of but are 

not required to. Issuers may have to 

make modifications to their plan 

designs and plan filings to reflect any 

possible changes in designation of 

benefits as EHB because of this 


ddrumheller on DSK120RN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82631 

proposal, if finalized, in the regular 

course of updating those annual 

materials. We do not anticipate an 

additional burden on States or issuers 

associated with this proposal. 

We seek comment on these impacts 

and assumptions. 

10. Consumer Assistance Tools and 

Programs of an Exchange (45 CFR 

155.205) 

As discussed in the preamble, we 

propose additional minimum standards 

for Exchange call center operations, 

such that Exchanges, other than SBE– 

FPs and SHOP Exchanges that do not 

provide for enrollment in SHOP 

coverage through an online SHOP 

enrollment platform, meet the following 

additional requirements: their call 

center must provide consumers with 

access to a live call center representative 

during the Exchanges’ published hours 

of operation and their live call center 

representatives must be able to assist 

consumers with submitting their 

application for QHP coverage. 

We believe this proposal would 

support the intent of sections 

1311(d)(4)(B) and 1413(b)(1)(A)(ii) of the 

ACA by codifying the requirement that 

a consumer must be able to obtain live 

call center support with submitting an 

application for QHP coverage during 

reliable, published hours of operation. It 

is our presumption that speaking to a 

live representative would better aid in 

troubleshooting consumer QHP 

application issues, provide a real time 

opportunity for a live representative to 

explain QHP application terminology to 

a consumer, provide for a live 

representative to ensure the consumer 

provides the most correct information to 

the QHP application (thereby alleviating 

unnecessary follow-up), and provide 

greater overall consumer satisfaction. 

As stated in the preamble, we believe 

that all State Exchanges already meet 

these proposed minimum standards, 

and we know that the Exchanges on the 

Federal platform do. As such, we do not 

anticipate an additional burden 

associated with this proposal. 

We seek comment on these impacts 

and assumptions. 

11. Requirement for Centralized 

Exchange Eligibility and Enrollment 

Platform on the Exchange’s Website (45 

CFR 155.205(b) and 155.302(a)(1)) 

We propose to amend § 155.205(b)(4) 

to require that an Exchange operate a 

centralized eligibility and enrollment 

platform on the Exchange’s website (or, 

for an SBE–FP, through the Federal 

eligibility and enrollment platform) 

such that the Exchange allows for the 

submission of the single, streamlined 

application for enrollment in a QHP and 

insurance affordability programs by 

consumers, in accordance with 

§ 155.405, through the Exchange’s 

website and performs eligibility 

determinations for all consumers based 

on submissions of the single, 

streamlined application. Further, we 

propose to amend § 155.302(a)(1) to 

clarify that the Exchange, through the 

centralized eligibility and enrollment 

platform operated on the Exchange’s 

website (or, for an SBE–FP, the Federal 

eligibility and enrollment platform) is 

the entity responsible for making all 

determinations regarding the eligibility 

for QHP coverage and insurance 

affordability programs regardless of 

whether an individual files an 

application for enrollment in a QHP on 

the Exchange’s website, or on a website 

operated by an entity described under 

§ 155.220, such as a web-broker defined 

at § 155.20, or a direct enrollment entity 

or QHP issuer described under 

§ 155.221. This amendment to 

§ 155.302(a)(1) would also clarify that 

only entities that an Exchange elects to 

contract with to operate its centralized 

eligibility and enrollment platform can 

perform this function on behalf of an 

Exchange and would prohibit 

Exchanges from solely relying on nonExchange entities, including a webbroker (defined at § 155.20) or other 

entities under § 155.220 or § 155.221, 

from making such eligibility 

determinations on behalf on an 

Exchange. 

We also propose to amend 

§ 155.205(b)(5) to require that an 

Exchange operate a centralized 

eligibility and enrollment platform 

through the Exchange’s website (or, for 

an SBE–FP, by relying on the Federal 

eligibility and enrollment platform) so 

that the Exchange (or, for an SBE–FP, 

the Federal eligibility and enrollment 

platform) meets the requirement under 

§ 155.400(c) to maintain records of all 

effectuated enrollments in QHPs, 

including changes in effectuated QHP 

enrollments. 

Since all Exchanges, including State 

Exchanges, SBE–FPs, and FFEs, 

currently provide access to a centralized 

eligibility and enrollment platform and 

process for consumers that they serve, 

and all Exchanges also currently 

perform all eligibility determinations 

through the operation of a centralized 

eligibility and enrollment platform on 

their websites, we believe the burden of 

this proposal on Exchanges and 

interested parties would be minimal. 

We seek comment on the assumptions 

and estimated impacts of this proposal. 

12. Adding and Amending Language To 

Ensure Web-Brokers Operating in State 

Exchanges Meet Certain Standards 

Applicable in the FFEs and SBE–FPs (45 

CFR 155.220) 

We propose to amend § 155.220 to 

apply to web-brokers operating in State 

Exchanges, and consequently in State 

Exchanges, for both the State Exchange’s 

Individual Exchange and SHOP, certain 

existing Federal standards governing 

use of web-brokers’ non-Exchange 

websites to assist consumers with 

enrolling in QHPs and applying for 

APTC/CSRs in a manner that constitutes 

enrollment through an Exchange. As 

discussed in the preamble of this 

proposed rule, the proposed regulatory 

amendments would require these State 

Exchanges to draft policy, update 

standards, and potentially hire more 

staff to perform functions not currently 

being performed by the State Exchange 

as a result of applying the identified 

§ 155.220 standards to web-brokers 

participating in State Exchanges. These 

proposed changes would also require 

web-brokers hosting non-Exchange 

websites in these State Exchanges to 

perform web-development and oversight 

to ensure compliance with the Federal 

minimum standards this rulemaking 

proposes to extend to these web-brokers. 

These proposed changes would also 

require web-brokers in State Exchanges 

who want to assist consumers with 

enrolling in QHPs and applying for 

ATPC and CSRs to display standardized 

disclaimers, display QHP comparative 

information, display information 

pertaining to a consumer’s eligibility for 

APTC or CSRs, to participate in 

operational readiness reviews and 

potentially maintain relevant 

documentation, and to extend 

downstream agent and broker 

requirements to web-brokers operating 

in State Exchanges. Although these 

proposals allow States certain flexibility 

for State Exchanges with regards to 

establishing procedures and 

requirements for website displays 

(including flexibility to add Statespecific information to required 

disclaimers and for the State Exchange 

to determine how consumer educational 

information is displayed), downstream 

agent and broker access to and use of 

web-broker non-Exchange websites, and 

demonstration of operational readiness, 

we expect the impact and costs to be 

reasonably based on the impacts seen on 

the FFEs and SBE–FPs. 

Although there would be some 

additional burden for web-brokers 

operating in State Exchanges, 

amounting to approximately $48,586.60 

per web-broker as discussed in the 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82632 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

information collection requirements 

section of this proposed rule, we 

anticipate that some of these State 

Exchanges may utilize web-broker 

entities already participating in the 

FFEs and SBE–FPs, which would help 

provide administrative savings related 

to the approval process if the State 

Exchange does not impose additional 

State-specific requirements beyond the 

HHS minimum standards. We 

encourage State Exchanges to leverage 

web-broker operational readiness 

demonstrated for the FFEs and SBE–FPs 

when possible. Additionally, we expect 

those web-brokers already participating 

in the FFEs and SBE–FPs to be able to 

leverage their existing web-development 

work with additional burden and costs 

only required for tailoring the website 

display, operational readiness, and 

downstream agent and broker access to 

any State-specific requirements adopted 

by the applicable State Exchange. 

Additionally, as described in the 

accompanying ICR discussion, we 

anticipate an impact on State 

governments totaling $2,346,128 for 5 

States to opt to host a web-broker 

program for their State Exchange. 

We estimate a total cumulative 

burden of $1,071,474.40 associated with 

this proposal for an estimated 20 webbrokers operating across the 5 State 

Exchanges. We anticipate these 

proposed changes to extend certain HHS 

minimum standards governing webbroker participation in FFEs and SBE– 

FPs to also apply to State Exchanges and 

their web-brokers would be beneficial to 

consumers by establishing uniform, 

baseline requirements for agent, broker, 

and web-broker participation across all 

Exchange types. These proposed 

changes would allow State Exchanges to 

leverage the framework that has already 

been established and currently applies 

to FFEs and SBE–FPs, thereby 

decreasing the burden to these State 

Exchanges to establish such a program, 

while providing some flexibility for 

these State Exchanges to tailor the new 

requirements to include State-specific 

content (such as the updating disclaimer 

language to refer to the State Exchange 

website rather than the HealthCare.gov 

website). Additionally, these proposed 

changes would establish administrative 

and operational consistency throughout 

the Exchanges, which is beneficial to 

agents, brokers, and web-brokers by 

allowing them to expand their business 

into States with State Exchanges in a 

more streamlined fashion, as well as to 

Exchanges and their consumers. 

We seek comment on these estimated 

impacts and assumptions. 

13. Ability of States To Permit Agents 

and Brokers and Web-Brokers To Assist 

Qualified Individuals, Qualified 

Employers, or Qualified Employees 

Enrolling in QHPs (45 CFR 155.220(h)) 

As discussed in the preamble to this 

proposed rule, we propose to revise and 

add language to § 155.220(h) to specify 

that the CMS Administrator, a principal 

officer, would review agent, broker, and 

web-broker requests for reconsideration 

of decisions to terminate their Exchange 

agreement(s) under § 155.220(h)(3). We 

propose that the CMS Administrator’s 

determination would be final and 

binding. We believe this proposal would 

positively impact agents, brokers, and 

web-brokers by ensuring entities who 

utilize the FFE and SBE–FPs know, 

through increased transparency, who 

would be responsible for handling these 

reconsideration decisions under 

§ 155.220(h)(3). 

14. Establishing Requirements for DE 

Entities Mandating HealthCare.gov 

Changes Be Reflected on DE Entity NonExchange Websites Within a Notice 

Period Set by HHS (45 CFR 155.221(b)) 

We propose to amend § 155.221 to 

require that DE Entity non-Exchange 

websites implement and prominently 

display website changes in manner 

consistent with that adopted by HHS for 

HealthCare.gov by implementing 

standards defined by HHS within a 

notice period set by HHS, unless HHS 

approves a deviation. We also propose 

to require State Exchanges implement a 

similar process to require display 

changes on State Exchange websites be 

reflected on the websites of their DE 

entities, with the procedures for 

defining standards defined by the State 

Exchange 

As discussed in the preamble of this 

proposed rule, this proposal would 

require web-brokers and QHP issuers 

participating in DE to update their nonExchange websites to incorporate 

website display changes that mirror 

those adopted by HHS for 

HealthCare.gov by conforming with 

standards defined by HHS. This 

proposal would provide DE entities 

flexibility in their user interface graphic 

design, provided that their design 

complies with the standards defined by 

HHS. This proposal would also allow 

DE entities to submit a deviation request 

for review and approval by HHS if they 

would like to implement a display that 

does not meet those standards. We 

anticipate an average of three or fewer 

required display changes annually, with 

the majority of changes being simpler 

website display changes that are 

relatively easy to implement. 

Furthermore, HHS would provide 

examples and associated disclaimer text 

with the release of any required website 

display changes pursuant to this 

proposal, and therefore we expect the 

overall impact of these simple website 

display changes to be minimal. As 

described in the information collection 

requirements section of this proposed 

rule, we estimate a total cumulative 

annual burden of $240,120 associated 

with the requirement for DE entity nonExchange websites to incorporate 

website display changes that mirror 

those adopted by HHS for 

HealthCare.gov and a burden of $5,171 

associated with completing and 

submitting a request to deviate from the 

HealthCare.gov display. 

As discussed in the preamble for this 

rule, we continue to support DE entities’ 

use of innovative decision-support tools 

and user interface designs, and this 

proposal is not intended to prohibit the 

implementation of display features 

beyond the baseline provided by 

HealthCare.gov. As such, there may be 

occasions where some web-brokers and 

QHP issuers participating in direct 

enrollment may have implemented the 

standards of the desired display before 

the change was made on 

HealthCare.gov. In these instances 

where the DE entity non-Exchange 

website is already meeting the 

minimum standards associated with the 

website display changes communicated 

by HHS pursuant to this proposal, the 

entity would not have to make any 

further website updates. We also 

anticipate approximately one more 

complex display change per plan year, 

potentially involving updates to 

backend UI algorithms and display 

methodologies. Although more complex 

display changes may represent 

additional burden for DE entities, we 

would ease the burden by providing 

them with examples of HealthCare.gov’s 

display, technical implementation 

guidance (including Marketplace API 

(MAPI) or Public Use Files (PUF) data 

integration guidance), and technical 

assistance as needed. We anticipate that 

giving examples of a user interface 

design that meets HHS’ standards will 

ease the burden of implementation as 

compared to solely providing HHS’ 

standards and relying on DE entities to 

determine how to configure their 

websites to meet those standards. 

The proposed new § 155.221(j) would 

extend this new proposed DE entity 

non-Exchange website display 

requirement to require State Exchanges 

to require their DE entities to implement 

and prominently display changes 

adopted for display on the State 

Exchanges’ websites on their nonVerDate Sep<11>2014 22:04 Nov 22, 2023 Jkt 262001 PO 00000 Frm 00124 Fmt 4701 Sfmt 4702 E:\FR\FM\24NOP2.SGM 24NOP2

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Exchange websites for purposes of 

assisting consumers with DE in QHPs 

offered through the Exchange in a 

manner that constitutes enrollment 

through the Exchange. This would 

require State Exchanges to establish 

requirements for DE entities operating 

in State Exchanges to reflect changes to 

the State Exchange website on their DE 

entity non-Exchange websites. This 

change would also require State 

Exchanges to establish processes for 

communicating and defining standards 

and for setting advance notice periods. 

We also encourage State Exchanges to 

consider the same factors (that is, 

complexity of the change and the 

urgency with which the change must be 

reflected on the DE entity’s nonExchange website) when setting 

advance notice periods. Similarly, we 

encourage State Exchanges to provide 

DE entities operating in their States 

examples of the State Exchange display, 

and technical assistance, including 

technical implementation guidance, to 

ease the burden of required display 

changes. 

We anticipate this proposal would 

benefit consumers by codifying and 

expanding our existing EDE HHSinitiated change request process to 

apply to all DE entities and ensuring 

that all Exchange consumers receive 

consistent, clear, and accurate 

information in a timely fashion as they 

navigate the QHP selection and 

enrollment process. We are further of 

the view that this proposal would 

mitigate the risk that consumers receive 

different, and possibly confusing or 

misleading, information based on the 

platform they choose to utilize when 

enrolling in or applying for coverage. 

This proposal would help ensure 

consumers using the DE pathways 

benefit from policies we introduce to 

improve the HealthCare.gov website 

display, and in State Exchanges the 

State Exchange website, by enhancing 

the consumer experience, increasing 

consumer understanding, and 

simplifying the plan selection process. 

As discussed in the ICR for this 

proposal, the cumulative cost estimate 

as a result of this proposal would be 

approximately $1,226,453 for 100 

entities operating in the Exchanges 

(including State Exchanges under new 

proposed paragraph § 155.221(j)(3)) in 

the 2025 benefit year. Entities that 

submit a request to deviate from the 

display approach adopted by 

HealthCare.gov, or in State Exchanges, 

the State Exchange website, would incur 

a cumulative cost of approximately 

$31,023 annually. 

We seek comment on the estimated 

impacts associated with this proposal. 

15. Adding and Amending Language To 

Ensure DE Entities Operating in State 

Exchanges Meet Certain Standards 

Applicable in the FFEs and SBE–FPs (45 

CFR 155.221) 

We propose to amend § 155.221 to 

apply to DE entities operating in State 

Exchanges, and consequently State 

Exchanges that utilize DE entities, 

certain existing Federal standards 

regarding DE entities assisting 

consumers with enrolling in QHPs and 

applying for APTC/CSRs, both for the 

State Exchange’s Individual Exchange 

and SHOP. 

As discussed earlier in this proposed 

rule, the proposed regulatory 

amendments would require these State 

Exchanges to draft policy, update 

standards, and potentially hire 

additional staff to perform functions not 

currently being performed by the State 

Exchange because of applying certain 

§ 155.221 standards to State. The 

proposal would also require DE entities 

participating in DE programs in State 

Exchanges to perform web-development 

to ensure compliance with the Federal 

minimum standards this rulemaking 

proposes to extend to these DE entities, 

along with any State-specific 

requirements that may be adopted under 

the proposed flexibility provided to 

State Exchanges in this rulemaking. 

Although there will be additional 

burden for DE entities operating in State 

Exchanges, amounting to approximately 

$138,447 per DE entity, as discussed in 

the information collection requirements 

section of this proposed rule, we 

anticipate that some of these State 

Exchanges may utilize DE entities 

already participating in the FFEs and 

SBE–FPs, which would help provide 

administrative savings related to the 

approval process under § 155.221(b)(4) 

if the State does not impose additional 

State-specific requirements beyond the 

Federal standards. We encourage State 

Exchanges to leverage DE operational 

readiness demonstrated for the FFEs 

and SBE–FPs when possible. 

Additionally, we expect those DE 

entities already participating in the 

FFEs and SBE–FPs to be able to leverage 

their existing web-development work 

with additional burden only required 

for tailoring the website display to any 

State-specific requirements adopted by 

the State Exchange (for example, 

updating website disclaimers to 

reference the State Exchange website 

rather than the HealthCare.gov website). 

Although these proposals allow States 

certain flexibility for State Exchanges 

with regards to establishing procedures 

and requirements for website displays 

and demonstration of operational 

readiness, we expect the impact and 

costs to be reasonably based on the 

impacts seen on the FFEs and SBE–FPs. 

As described in the information 

collection requirements section, we 

anticipate a total cumulative burden of 

$6,762,281 for DE entities in State 

Exchanges to comply with this proposal 

to ensure DE entities operating in these 

State Exchanges are meeting certain 

requirements applicable in the FFEs and 

SBE–FPs. Additionally, we anticipate 

this proposal would have an impact on 

State governments totaling 

$3,353,467.90 for 5 States to opt to host 

a DE program for their State Exchange. 

We anticipate that these proposed 

changes to extend certain minimum 

Federal standards governing DE entity 

participation in FFEs and SBE–FPs to 

also apply to State Exchanges would 

benefit consumers by establishing 

uniform, baseline requirements for DE 

entity participation across all Exchange 

types. These proposed changes would 

allow State Exchanges to leverage the 

framework that has already been 

established and currently applies to 

FFEs and SBE–FPs, thereby decreasing 

the burden to these State Exchanges to 

establish such a program, while 

providing some flexibility for these 

State Exchanges to tailor the applicable 

standards to include State-specific 

content. Additionally, this proposal 

would establish administrative and 

operational consistency throughout the 

Exchanges, which benefits DE entities 

by allowing them to expand their 

business into States with State 

Exchanges with minimal costs and 

burdens. Consumers would also benefit 

by the expansion of entities and 

enrollment pathways available to assist 

with enrolling in health insurance 

coverage. 

We seek comment on these estimated 

impacts and assumptions. 

16. Failure To Reconcile (FTR) Process 

(45 CFR 155.305(f)(4)) 

We are proposing in connection with 

the FTR process described in 

§ 155.305(f)(4) that Exchanges would be 

required to send notices to tax filers for 

the first year in which they failed to 

reconcile APTC as an initial warning to 

inform and educate tax filers that they 

need to file and reconcile, or risk being 

determined ineligible for APTC if they 

fail to file and reconcile for a second 

consecutive year. 

Under this policy, Exchanges on the 

Federal platform would continue to 

send notices to tax filers for the year in 

which they have failed to reconcile 

APTC as an initial warning to inform 

and educate tax filers that they need to 

file and reconcile, or risk being 


ddrumheller on DSK120RN23PROD with PROPOSALS2
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280Robert Apel, Gary Sweeten, The Impact of 

Incarceration on Employment during the Transition 

to Adulthood, Social Problems, Volume 57, Issue 3, 

1 August 2010, Pages 448–479, https://doi.org/ 

10.1525/sp.2010.57.3.448. 281 Id. 

determined ineligible for APTC if they 

fail to file and reconcile for a second 

consecutive tax year. Our proposal to 

codify this practice and require it of all 

Exchanges, including State Exchanges, 

would ensure that tax filers who have 

been determined to have FTR status for 

1 year are adequately educated on the 

file and reconcile requirement, and have 

ample opportunity to address the issue 

and file and reconcile their APTC before 

they are determined to have FTR status 

for 2 consecutive years. We request 

comment on how best to conduct 

outreach to tax filers who need more 

intensive assistance in understanding 

FTR status, including directing them to 

resources such as Navigator or Assisters 

that could help explain what they need 

to do to reconcile their APTC. 

This proposal would support 

compliance with the filing and 

reconciling requirement under 36B(f) of 

the Code and its implementing 

regulations at 26 CFR 1.36B–4(a)(1)(i) 

and (a)(1)(ii)(A), minimize the potential 

for APTC recipients to incur large tax 

liabilities over time, and support 

eligible enrollees’ continuous 

enrollment in Exchange coverage with 

APTC by avoiding situations where 

enrollees become uninsured when their 

APTC is terminated. Additionally, this 

proposal would better align State 

Exchanges’ failure to reconcile 

processes with that of the Exchanges on 

the Federal platform. 

We are aware of seven States that will 

operate their own State Exchange for PY 

2025 and have not yet fully 

implemented the infrastructure to run 

FTR operations for plan years through 

2024 due to the flexibility the 

Exchanges were given to temporarily 

pause FTR operations due to the 

COVID–19 PHE. We are seeking 

comment on the estimated one-time 

costs for these States to fully implement 

the functionality and infrastructure to 

conduct FTR operations, and the 

estimated annual costs to maintain FTR 

operations. 

17. Verification Process Related to 

Eligibility for Enrollment in a QHP 

Through the Exchange (45 CFR 

155.315(e)) 

We believe that the proposal to revise 

§ 155.315(e) so that Exchanges can 

accept incarceration attestations without 

further verification and verify 

incarceration status using an HHSapproved data source only if they 

choose to, would minimize 

administrative costs and burdens for 

Exchanges. Flexibility in verifying 

incarceration status for Exchanges 

would result in significant cost savings 

through not creating and processing 

incarceration DMIs. The current 

incarceration verification process 

resulted in a high number of DMIs, 

almost all of which are resolved in favor 

of the applicant and has been 

burdensome and costly for the 

Exchanges to implement. By revising 

the current incarceration verification 

process, this proposal would also 

eliminate undue burdens and barriers to 

care for applicants, particularly formerly 

incarcerated people, a population 

comprised of a significant number of 

people with disabilities.280 Many 

documents that can prove incarceration 

status cannot be obtained without an 

unexpired proof of identity document, 

and most cannot be obtained without 

submitting non-refundable payments. 

Incarceration may inhibit one’s financial 

savings, and formerly incarcerated 

individuals are less likely to secure 

employment.281 As discussed further in 

the information collection requirements 

section for this proposal, we anticipate 

a one-time cost to 11 State Exchanges of 

approximately $23,770 to conduct 

analyses to determine whether to accept 

consumer attestation of incarceration 

status or use an alternative data source 

to verify incarceration status and to 

submit such request to HHS, and make 

associated changes to their eligibility 

systems and processes to implement the 

option they choose. 

From PY 2018 to 2019, there were 

110,802 incarceration DMIs generated. 

In PY 2019, nearly 38,000 out of 78,000 

applicants submitted documents to 

attempt to resolve the incarceration 

DMI. Conducting an intensive 

incarceration verification check through 

the DMI process for each DMI caused 

HHS to incur additional costs totaling 

about $0.57 million per year for 

verification of incarceration along with 

the PUPS annual maintenance and 

transaction fees. The additional costs 

associated with generating incarceration 

DMIs include the costs to inform 

applicants of their DMI through their 

eligibility determination notice, and to 

process the DMI and any documentation 

mailed by the applicants. State 

Exchanges have likely incurred similar 

costs. Of the 13 State Exchanges 

(operating in 12 States and the District 

of Columbia) with incarceration 

verification processes, eight conduct 

incarceration verifications similar to 

those conducted by the Exchanges on 

the Federal platform. We estimate that 

incarceration DMI processing costs 

approximately $9,561,000 annually 

across all eight of these State Exchanges. 

Of the 13 State Exchanges with 

incarceration verification processes, five 

State Exchanges connected to an 

individual State or local incarceration 

facility for verifications and fully 

process incarceration DMIs. These State 

Exchanges currently incur DMI 

processing costs, including costs 

associated with noticing the applicant of 

their DMIs and costs associated with 

DMI and appeals casework. Based on 

costs incurred by the Exchanges on the 

Federal platform to process DMIs, we 

estimate that incarceration DMI 

processing costs State Exchanges 

approximately $7,171,000 annually 

across all 5 of these State Exchanges. 

Finally, 3 States are transitioning to 

State Exchanges. We anticipate their 

incarceration verification operations 

would cost approximately $3,585,000 

annually. In total, the costs to an 

anticipated 16 State Exchanges would 

be approximately $20,317,000 annually 

if current policy continued. 

By providing flexibility to Exchanges 

to verify incarceration status and 

allowing Exchanges to accept applicant 

attestations without verification, this 

proposal would enable HHS and 

Exchanges to avoid incurring the 

aforementioned costs associated with 

DMI creation and processing. Exchanges 

would not have to invest resources into 

building data transfer connections with 

an alternative incarceration verification 

data source and would not have to 

invest in providing DMI notices and 

support to applicants. Therefore, the 

cost savings to State Exchanges 

associated with this proposal would be 

approximately $20,317,000. 

As previously mentioned, conducting 

an intensive incarceration verification 

check through the DMI process for each 

DMI caused HHS to incur additional 

costs totaling approximately $570,000 

per year for verification of incarceration 

along with the PUPS annual 

maintenance and transaction fees. While 

overall, this proposal would reduce the 

burden and costs associated with 

incarceration verification operations 

and data sourcing, there would be a 

modest up-front cost of $1,200,000 to 

HHS to modify the Federal platform’s 

current incarceration verification 

processes for the purposes of verifying 

eligibility for QHP, and it would cost 

$340,000 to update the Federal 

platform’s system logic for HHS to stop 

sending incarceration verification 

requests to PUPS. Once these operations 

and noticing have stopped, no further 

costs should be incurred by HHS, or by 

Exchanges that opt to act on the 

flexibilities provided by this proposal. 


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Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82635 

In total, we anticipate a cost of 

$1,540,000 to HHS because of this 

proposal. We reiterate that this cost 

would be overshadowed by the 

expected savings of approximately 

$20,317,000 as a result of this proposal, 

if finalized. 

We seek comment on these estimates. 

18. Verification Process Related to 

Eligibility for Insurance Affordability 

Programs (45 CFR 155.320) 

We are proposing to amend 

§ 155.320(c) by adding a new 

requirement at paragraph (c)(1)(iii) to 

now require that State Exchanges pay in 

advance for their utilization of the CSI 

data provided by the VCI Hub service to 

verify a tax household’s attested annual 

income and, or the current income of 

the Medicaid household for an 

application member due to our 

reinterpretation of State Exchange and 

State Medicaid and CHIP agency use of 

the Hub to access and use the income 

data provided by the optional VCI Hub 

service as a State Exchange or a State 

Medicaid and CHIP agency function. We 

propose that beginning on July 1, 2024, 

State Exchanges will be required to pay 

in advance for 100 percent of the costs 

of their utilization of the CSI data. We 

anticipate working with States to 

develop an estimate of their annual 

usage of the CSI data service. States that 

notify HHS that they want to continue 

to use the CSI data through the VCI Hub 

service must pay in advance to HHS for 

the total each respective State 

Exchange’s anticipated annual 

utilization, specifically the anticipated 

number of successful transactions to the 

VCI Hub service that return usable CSI 

data, as defined by the criteria discussed 

above in preamble, multiplied by the 

fixed price. We are also planning that 

beginning on July 1, 2024, State 

Medicaid agencies and HHS will share 

in the costs with State Medicaid 

agencies being responsible for 25 

percent of the cost of the utilization of 

the VCI Hub service and HHS 

responsible for the remaining 75 percent 

of the costs. 

Because the price per transaction for 

CSI data is proprietary information, we 

are unable to provide those numbers, or 

the precise utilization rates for State 

Exchanges and State Medicaid agencies 

as this would be a direct conflict of the 

contract that HHS holds with the CSI 

contractor. However, based on HHS’ 

own analysis, in fiscal year (FY) 2022, 

State Exchange utilization of the VCI 

Hub service led to costs of 

approximately $26 million dollars. 

Similarly, in FY 2022, State Medicaid 

agency utilization of the VCI Hub 

service resulted in costs of 

approximately $77 million dollars. We 

also estimate that by having State 

Medicaid agencies pay for 25 percent of 

their transaction costs, the Federal 

government can save between $32 to 

$55 million per year. By having State 

Exchanges pay for 100 percent of their 

transaction costs, we estimate savings to 

the Federal government could be 

between $39 and $67 million per year; 

this cost estimate includes an 

assumption of one to two States 

transitioning to State Exchanges in 

future years. Assuming one to two new 

States transition to a State Exchange in 

the next 4 years, we applied a 5 percent 

increase to estimate the additional pings 

from these additional States. We 

estimate that taken together, this 

proposed policy would result in a 

transfer of between $72 to $122 million 

per year of costs from the Federal 

government to States beginning in 2024. 

We are aware that six State Exchanges 

currently only have one connection for 

both their State Exchange and State 

Medicaid agency, which may pose a 

challenge when determining which VCI 

Hub transactions are attributable to the 

State Exchange, and which are 

attributed to the State Medicaid agency. 

We anticipate that one to three State 

Exchanges may elect to build a separate 

connection in order to accurately 

account for which VCI Hub transactions 

originate from their State Exchange and 

their State Medicaid agency and we 

estimate about $1 to 3 million in onetime costs in 2024 to build the IT 

infrastructure for a second Hub 

connection, totaling about $3 to 6 

million in one-time costs for the one to 

three States that choose to make any 

changes with how they currently access 

the VCI Hub service. States that do not 

elect to build a separate connection 

would instead need to develop a cost 

allocation methodology to track VCI 

Hub transaction volume from their State 

Exchange and State Medicaid agency 

and communicate this to HHS so that 

HHS can invoice accurately and 

appropriately. 

As noted in preamble, under this 

proposal, States would pay annually in 

advance for their anticipated utilization 

of the optional VCI Hub service. States 

would be required to reconcile with 

HHS on an annual basis the anticipated 

utilization of CSI data provided by the 

VCI Hub service with the actual 

utilization. In the alternative, HHS 

would invoice States on a monthly basis 

for their actual utilization of CSI data 

provided by the VCI Hub service after 

that utilization occurs. Because we are 

still exploring how HHS will invoice 

States and State Medicaid agencies for 

their respective utilization of the VCI 

Hub Service depending on which 

invoicing methodology HHS ultimately 

finalizes, we believe that there may be 

some increased costs to the Federal 

Government, including contractor 

resources and administrative costs 

associated with collecting these funds 

from States. We estimate the ongoing 

administrative annual costs beginning 

in 2024 to be approximately $1 million 

and cover operational expenses for 

maintaining systems and collections. 

We estimate an additional $2.3 million 

as a one-time cost in 2024 to build the 

invoicing process/structure and setup 

operations. We note, however, that these 

estimates may be higher or lower, as 

they are dependent on whether HHS 

finalizes advanced billing as proposed 

or an alternative invoicing structure, 

such as monthly billing. 

We seek comment on these estimates. 

19. Eligibility Redetermination During a 

Benefit Year (45 CFR 155.330(d)) 

We propose to revise § 155.330(d) to 

require Exchanges to conduct periodic 

checks for deceased enrollees twice 

yearly and subsequently end deceased 

enrollees’ QHP coverage beginning with 

the 2025 calendar year. Additionally, 

we propose to amend § 155.330(d)(3) to 

grant the Secretary the authority to 

temporarily suspend the PDM 

requirement during certain situations or 

circumstances that lead to the 

unavailability of data needed to conduct 

PDM. 

Currently, § 155.330(d)(3) defines 

‘‘periodically’’ only for PDM activities 

that identify enrollment in Medicare, 

Medicaid, CHIP, and BHP, meaning that 

Exchanges must conduct Medicare 

PDM, Medicaid or CHIP PDM, and BHP 

PDM twice a year. The current 

regulation does not specify the 

frequency by which PDM activities to 

identify deceased enrollees must occur. 

The 2019 Program Integrity Rule did not 

require Exchanges to perform PDM for 

death at least twice in a calendar year 

so that Exchanges could prioritize the 

implementation of the new requirement 

to conduct PDM for Medicare, 

Medicaid, CHIP and, if applicable, BHP 

eligibility or enrollment at least twice 

yearly. Periodic checks for deceased 

enrollees are a critical aspect to 

ensuring Exchange program integrity. 

We propose to revise § 155.330(d) to 

require Exchanges to conduct periodic 

checks for deceased enrollees twice 

yearly and subsequently end deceased 

enrollees’ QHP coverage beginning with 

the 2025 calendar year. This proposal 

would not only align with current 

policy and operations on the Exchanges 

on the Federal platform but would also 

prevent overpayment of QHP premiums 


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and accurately capture household QHP 

eligibility based on household size. 

Based on internal data, we anticipate 

that it will cost the Federal Government 

approximately $58,923 to conduct an 

additional check for deceased enrollees 

per year. In 2023, we conducted two 

rounds of Death PDM where the average 

number of expired households was 

7,151; the average APTC amount per 

household was $549 per month; and, at 

the time of the expiration activities, 

there was an average of 6.5 months left 

in the plan year. We calculate the APTC 

savings to be approximately $25 

million. Prior to implementing Death 

PDM in 2019, we looked at the number 

of consumers that were removed from 

coverage by the surviving family 

without the aid of Death PDM and close 

to 50 percent of the deceased consumers 

were removed from coverage. Thus, we 

estimate the net amount of APTC saved 

is estimated would be approximately 

$12.5 million per year beginning in 

2025. 

State Exchanges that are not already 

conducting Death PDM with the 

proposed required frequency, or deemed 

in compliance with PDM requirements, 

would be required to engage in IT 

system development activity to 

communicate with these programs and 

act on enrollment data either in a new 

way, or in the same way more 

frequently if this proposal is finalized. 

Thus, there may be additional 

associated administrative cost for these 

State Exchanges to implement the 

proposed PDM requirement, if finalized. 

As discussed in the information 

collection requirements section of this 

proposed rule, for a State Exchange not 

already conducting death PDM at least 

twice a year, we estimate that it would 

cost approximately $3,932 per State 

Exchange (a total of $43,252 for all 11 

State Exchanges currently not meeting 

the proposed requirement) to implement 

this proposed provision through their 

system. We assume that this cost would 

be incurred primarily in 2025 by State 

Exchanges. These costs would be 

incurred by the State Exchanges as they 

are required to be financially selfsustaining and do not receive Federal 

funding for their establishment or 

operations. 

We seek comments in response to the 

burden estimates for this policy. 

20. Incorporation of Catastrophic 

Coverage Into the Auto Re-Enrollment 

Hierarchy (45 CFR 155.335(j)) 

We propose to amend the regulations 

at § 155.335(j)(1) and (2) to require 

Exchanges to re-enroll enrollees in 

catastrophic coverage as defined in 

section 1302(e) of the ACA into QHP 

coverage for the coming plan year. We 

believe that some Exchanges already reenroll these enrollees, and we generally 

do so in Exchanges on the Federal 

platform when issuers include a plan 

crosswalk information for catastrophic 

plans when they submit the information 

part of the annual QHP Certification 

process. However, explicitly 

incorporating catastrophic plan 

enrollees into the rules at § 155.335(j) 

would help ensure continuity of 

coverage in cases where the issuer does 

not offer the catastrophic plan for the 

subsequent plan year and these 

enrollees do not actively select a 

different QHP. We also propose to add 

new § 155.335(j)(5) to establish that an 

Exchange may not newly auto re-enroll 

an enrollee into catastrophic coverage 

who is currently enrolled in coverage of 

a metal level as defined in section 

1302(d) of the ACA. We believe that 

Exchanges likely also adhere to this 

practice, but that all interested parties 

would benefit from clear regulation on 

this aspect of the re-enrollment process. 

If this proposal is finalized, we would 

also update the FFE Enrollment Manual 

to incorporate catastrophic coverage 

into the re-enrollment hierarchy for 

alternate enrollments, which we use to 

implement the regulation to crosswalk 

enrollees whose current issuer will no 

longer offer plans available to them 

through the Exchange under 

§ 155.335(j)(3). 

The inclusion of additional criteria in 

the auto re-enrollment process may 

result in a small increase in costs and 

burden for issuers and Exchanges. 

However, burden in Exchanges on the 

Federal platform would be mitigated 

because we already encourage issuers to 

submit crosswalk options for 

catastrophic enrollees, including those 

who will lose eligibility for catastrophic 

coverage. We solicit comment on 

whether these proposals reflect current 

practices of State Exchanges that are not 

on the Federal platform. Finally, we 

believe this change would make it more 

likely that catastrophic coverage 

enrollees will be auto re-enrolled. This 

support may disproportionately benefit 

enrollees who are less likely to have the 

time or background knowledge to 

compare their coverage options for the 

coming plan year, such as those with 

limited health insurance literacy. 

We seek comment on these impacts 

and assumptions. 

21. Premium Payment Deadline 

Extensions (45 CFR 155.400(e)(2)) 

We anticipate that the proposal to 

amend § 155.400(e)(2) to codify that 

flexibility for issuers experiencing 

billing or enrollment problems due to 

high volume or technical errors is not 

limited to extensions of the binder 

payment will benefit issuers. Because 

HHS has already provided enforcement 

discretion in the past to account for 

such situations, we do not anticipate 

that there would be any additional costs 

for HHS associated with this proposal, 

nor do we anticipate any costs to 

interested parties. 

We seek comment on these impacts 

and assumptions. 

22. Initial and Annual Open Enrollment 

Periods (45 CFR 155.410) 

We propose amending 

§ 155.410(e)(4)(ii) to revise parameters 

around the adoption of an alternative 

open enrollment period by a State 

Exchange not utilizing the Federal 

platform. We propose that for benefit 

years beginning on or after January 1, 

2025, State Exchanges may extend the 

open enrollment period so that the open 

enrollment period begins on November 

1 of the calendar year preceding the 

benefit year and ends no earlier than 

January 15 of the applicable benefit 

year. 

We have previously observed that 

when open enrollment ends in 

December, certain consumers may be 

subjected to unexpected plan cost 

increases that they may not be notified 

about until January. This proposal 

would benefit consumers by reducing 

the number of consumers who may be 

subjected to such unexpected plan cost 

increases. This proposal would also 

ensure ample time for Navigators, 

certified application counselors, agents, 

and brokers to fully assist all interested 

consumers during open enrollment 

while also improving access to health 

coverage by giving consumers ample 

time to react to updated plan cost 

information and seek enrollment 

assistance, including consumers in 

underserved communities who face 

additional barriers to accessing health 

coverage. Finally, by reducing consumer 

confusion, increasing consumer access 

to assisters, and giving consumers more 

time to consider up-to-date plan cost 

information, this proposal could 

increase QHP enrollment, benefiting all 

interested parties, including consumers, 

Exchanges, issuers, and assisters. 

All 18 State Exchanges except one 

already meet these proposed 

parameters, beginning their annual open 

enrollment periods on November 1 and 

concluding on or after January 15 of the 

benefit year, pursuant to current 

§ 155.410(e)(4)(ii). Moreover, many 

continue open enrollment beyond 

January 15 of the benefit year. Since 

most State Exchanges already are 

aligned with the parameters described 


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Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82637 

in the new proposal, we anticipate that 

this proposal would have a de minimis 

impact and not impose significant 

additional burden overall. 

We seek comment on this burden 

estimate and assumptions. We are 

particularly interested in comments 

regarding whether this proposal would 

impose a significant burden on outlying 

State Exchanges and interested parties 

(for instance, Navigators, assisters, 

issuers). 

23. Special Enrollment Periods— 

Effective Dates of Coverage (45 CFR 

155.420(b)) 

We propose amending § 155.420(b)(1) 

and (b)(3)(i) to align the effective dates 

of coverage after selecting a plan during 

certain special enrollment periods 

across all Exchanges, including State 

Exchanges, so that during a special 

enrollment period that follows the 

regular effective dates of coverage listed 

at § 155.420(b)(1), qualifying individuals 

or enrollees who select and enroll in a 

QHP receive coverage beginning the first 

day of the month after the consumer 

selects a QHP. 

In the 2021 Payment Notice final rule 

(85 FR 29251) where this policy was 

finalized for Exchanges on the Federal 

platform, we noted that ensuring that 

consumers who select a plan during a 

special enrollment period provided 

using the regular effective dates at 

§ 155.420(b)(1) receive coverage on the 

first day of the following month, rather 

than on the first day of the second 

month following plan selection, would 

result in several benefits, such as 

reducing consumer confusion and 

minimizing coverage gaps while also 

enhancing operational efficiency. In 

addition, we noted that the 

standardization of effective coverage 

dates for special enrollment periods 

provided using the regular effective 

dates at § 155.420(b)(1) would result in 

standardization for issuers due to more 

plans beginning in the same month, 

Exchanges, and consumers; the 

reduction of system errors and related 

casework, including reduced confusion 

among relevant consumer support staff; 

and simplified Exchange billing 

practices due to the expedited effective 

dates. We believe that State Exchanges, 

and the issuers and consumers in those 

States will also experience these 

benefits under the proposal to align the 

effective coverage dates across all 

Exchanges for special enrollment 

periods that use the regular effective 

dates of coverage at § 155.420(b)(1) 

(unless an earlier coverage effective date 

were selected pursuant to 

§ 155.420(b)(3), which would reduce 

potential burdens associated with this 

proposal. 

Additionally, we maintain our 

expectation that issuers will not incur 

substantial new costs as a result of 

applying this policy across Exchanges 

since they routinely effectuate coverage 

on the first of the month following plan 

selection or earlier when permitted or 

required under applicable regulation. 

We expect that consumers in States 

which do not currently apply this policy 

will also benefit from a faster 

effectuation of coverage, as this will 

result in fewer coverage gaps for 

consumers transitioning between or 

newly enrolling in a health insurance 

plan. 

We seek comment on these 

assumptions. 

24. Special Enrollment Periods— 

Monthly Special Enrollment Period for 

APTC-Eligible Qualified Individuals 

With a Household Income At or Below 

150 Percent of the Federal Poverty Level 

(45 CFR 155.420(d)(16)) 

We are proposing to amend 

§ 155.420(d)(16) to revise the parameters 

around the availability of a special 

enrollment period (SEP) for APTCeligible qualified individuals with a 

projected household income at or below 

150 percent of the Federal Poverty Level 

(FPL), hereinafter referred to as the ‘‘150 

percent FPL SEP.’’ Specifically, we are 

proposing to remove the limitation that 

this SEP be available only when the 

applicable taxpayer’s applicable tax 

percentage is set to zero, a circumstance 

provided for under section 9661 of the 

American Rescue Plan (ARP) and later 

under the Inflation Reduction Act (IRA). 

The impact of this policy would be 

zero if enhanced subsidies under the 

IRA were continued beyond 2025. It is 

difficult to estimate, with confidence, 

the impacts of this policy on premiums, 

PTC payments, and enrollment if the 

enhanced subsidies are not continued, 

and we note that those impacts are 

likely to be quite different by State. 

However, under various scenarios, we 

estimate that if this proposed policy 

were to be finalized, national premiums 

in the individual market could increase 

by an average of 3 to 4 percent for plan 

year 2026 when the enhanced PTC 

provisions of the IRA are due to expire. 

We would expect that any average 

national impact would have a high 

variance between States that have 

expanded Medicaid coverage compared 

to States that have not, because States 

that have not expanded Medicaid 

coverage are likely to have more 

consumers with projected annual 

household income below 150 percent 

FPL applying for coverage through the 

Exchange. Unknown factors making 

these parameters difficult to estimate 

include the utilization of this SEP by 

healthy and unhealthy enrollees, the 

impact to the average duration of 

coverage for enrollees, and additional 

policy changes between now and 2025. 

At an aggregate level, PTC outlays could 

increase nationally up to $2 billion to $3 

billion beginning in 2026. The direction 

and magnitude of enrollment changes in 

the individual market is also highly 

uncertain. 

We seek comment on these estimates, 

including on the premium impacts at 

the State level. 

25. Termination of Exchange Enrollment 

or Coverage (45 CFR 155.430) 

We anticipate that the proposal to 

permit enrollees in Exchanges on the 

Federal platform to retroactively 

terminate coverage back to the date in 

which they retroactively enroll in 

Medicare Part A or B would benefit 

enrollees by allowing them to avoid an 

overlap in coverage and paying 

premiums for coverage they do not 

need. We anticipate that there would be 

some minor costs for HHS associated 

with processing the additional requests 

for retroactive terminations of coverage 

allowed by this proposal. However, we 

do not have adequate data to estimate 

the number of requests for retroactive 

termination HHS is likely to receive, 

and so we cannot provide an estimate 

for these costs, nor for the amount of 

APTC that is likely to be returned to the 

government as a result of this proposal. 

In addition, we anticipate that there 

would be a minor financial impact to 

issuers associated with processing the 

additional retroactive termination 

requests allowed by this proposal, 

including reversing claims and 

refunding premium paid by the 

enrollee, but we likewise do not have 

adequate data to estimate these costs. 

Finally, we also anticipate that there 

may be a financial impact to State 

Exchanges associated with 

implementing this proposal if the rule is 

finalized such that implementation is 

optional for State Exchanges or required 

for all Exchanges. However, we do not 

have access to the data necessary to 

estimate the costs to State Exchanges 

associated with implementing this 

proposal, nor do we have access to the 

data necessary to determine how long it 

would take State Exchanges to 

implement it. 

We seek comment on these impacts 

and assumptions, as well as any 

additional data sources we could use to 

estimate the costs associated with this 

proposal. 


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82638 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

26. Establishment of Exchange Network 

Adequacy Standards (45 CFR 155.1050) 

Effective for plan years beginning on 

or after January 1, 2025, we propose to 

require that State Exchanges and SBE– 

FPs establish and impose quantitative 

time and distance QHP network 

adequacy standards that are at least as 

stringent as the FFEs’ time and distance 

standards established for QHPs under 

§ 156.230. We also propose that State 

Exchanges and SBE–FPs be required to 

conduct quantitative network adequacy 

reviews prior to certifying any plan as 

a QHP, consistent with the reviews 

conducted by the FFEs under § 156.230. 

We further propose to require State 

Exchanges and SBE–FPs to permit 

issuers that are unable to meet the 

specified network adequacy standards 

to participate in a justification process 

after submitting their initial network 

adequacy data to account for variances 

and potentially earn QHP certification. 

Finally, we propose to mandate that 

State Exchanges and SBE–FPs require 

all issuers seeking QHP certification to 

submit information to the State 

Exchange or SBE–FP about whether 

network providers offer telehealth 

services. 

For purposes of the proposal to 

require State Exchanges and SBE–FPs to 

establish and impose quantitative time 

and distance network adequacy 

standards for QHPs that are at least as 

stringent as standards for QHPs 

participating on the FFEs under 

§ 156.230, ‘‘as stringent as’’ means time 

and distance standards that use a 

specialty list that includes at least the 

same specialties as our provider 

specialty lists and time and distance 

parameters that are at least as short as 

our parameters. States would be 

permitted to implement network 

adequacy standards that are more 

stringent than those performed by the 

FFEs under § 156.230. In other words, 

States could use a specialty list that is 

broader than our specialty lists, but it 

must include all the provider specialties 

included in our lists. Similarly, the time 

and distance parameters could also be 

narrower than our parameters, meaning 

they could require shorter time and/or 

distances, but they cannot be less 

demanding than our time and distance 

parameters. Consistent with the 

standards for the FFEs, the State 

Exchanges and SBE–FPs’ time and 

distance standards would be calculated 

at the county level and vary by county 

designation. State Exchanges and SBE– 

FPs would be required to use a county 

type designation method that is based 

upon the population size and density 

parameters of individual counties. 

Under this proposal, the time and 

distance standards State Exchanges and 

SBE–FPs would establish and impose 

would apply to our provider specialty 

lists. To count towards meeting the time 

and distance standards, individual and 

facility providers in these lists would 

have to be appropriately licensed, 

accredited, or certified to provide 

services in their State, as applicable, 

and would need to have in-person 

services available. 

We propose that State Exchanges and 

SBE–FPs be required to conduct 

quantitative network adequacy reviews 

prior to QHP certification, and that they 

conduct them consistent with network 

adequacy reviews conducted by the 

FFEs under § 156.230. When we refer to 

the review being consistent with the 

network adequacy reviews conducted 

by the FFEs under § 156.230, we 

propose that State Exchanges and SBE– 

FPs would be required to conduct, prior 

to QHP certification, quantitative 

network adequacy reviews to evaluate 

compliance with requirements under 

§ 156.230(a)(1)(ii) and (iii), and 

(a)(2)(i)(A), while providing QHP 

certification applicants the flexibilities 

described under § 156.230(a)(2)(ii) and 

(a)(3) and (4). Under this proposal, State 

Exchanges and SBE–FPs would be 

prohibited from accepting an issuer’s 

attestation as the only means for plan 

compliance with network adequacy 

standards. We further propose that State 

Exchanges and SBE–FPs would make 

available to SADP applicants the limited 

exception available to SADPs under 

§ 156.230(a)(4), pursuant to which 

SADPs may not be required to meet FFE 

network adequacy standards under 

§ 156.230(a)(4). This exception is not 

available to medical QHP issuers. 

We acknowledge that State-specific 

challenges may necessitate exceptions, 

and so we propose to require State 

Exchanges and SBE–FPs to permit 

issuers that are unable to meet the 

specified standards to participate in a 

justification process after submitting 

their initial data to account for 

variances, consistent with the processes 

specified under § 156.230(a)(2)(ii) and 

(a)(3) and (4). The issuer would include 

this justification as part of its QHP 

application and describe how the plan’s 

provider network provides an adequate 

level of service for enrollees and how 

the plan’s provider network will be 

strengthened and brought closer to 

compliance with the network adequacy 

standards prior to the start of the plan 

year. The issuer would be required to 

provide information as requested by the 

State Exchange or SBE–FP to support 

this justification. State Exchanges and 

SBE–FPs would be required to review 

the issuer’s justification to determine 

whether making such health plan 

available through the Exchange is in the 

interests of qualified individuals in the 

State or States in which such Exchange 

operates as specified under 

§ 156.230(a)(3). In making this 

determination, the factors State 

Exchanges and SBE–FPs could consider 

include whether the exception is 

reasonable based on circumstances such 

as the local availability of providers and 

variables reflected in local patterns of 

care. If the State Exchange or SBE–FP 

determines that making such health 

plan available through its Exchange is in 

the interests of qualified individuals in 

the State or States in which such 

Exchange operates, it could then certify 

the plan as a QHP. 

We are aware that some States 

Exchanges employ robust, quantitative 

network adequacy standards that differ 

from those used by the FFEs, but still 

ensure that QHPs provide consumers 

with reasonable, timely access to 

practitioners and facilities to manage 

their health care needs, consistent with 

the ultimate aim of these proposals. In 

light of this, we propose a framework for 

granting exceptions to the requirements 

that State Exchanges and SBE–FPs are 

required to establish and impose 

network adequacy time and distance 

standards for QHPs that are at least as 

stringent as the standards applicable to 

QHPs in FFEs and conduct quantitative 

network adequacy reviews that are 

consistent with those carried out by the 

FFEs under § 156.230. HHS could grant 

State Exchanges and SBE–FPs an 

exception if it determines that the 

Exchange applies and enforces 

quantitative network adequacy 

standards that are different from the 

FFEs’ but ensure reasonable access as 

defined under § 156.230. The exception 

would be available only to State 

Exchanges and SBE–FPs that conduct 

quantitative reviews of network 

adequacy prior to certifying plans as 

QHPs. Exchanges seeking to employ 

alternative quantitative network 

adequacy standards would be required 

to submit an exception request, in a 

form and manner specified by HHS, and 

to support their exception request with 

evidence-based data demonstrating that 

such standards ensure reasonable access 

as defined under § 156.230. 

We further propose to require State 

Exchanges and SBE–FPs to require that 

all issuers seeking certification of plans 

to be offered as QHPs submit 

information to the respective State 

Exchanges or SBE–FPs about whether 

network providers offer telehealth 

services. This data would be for 

informational purposes; it would be 


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Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82639 

intended to help inform the future 

development of telehealth standards 

and would not be displayed to 

consumers. We note that this proposal 

is not intended to suggest that telehealth 

services would be counted in place of 

in-person service access for the purpose 

of meeting network adequacy standards 

for PY 2025. While we acknowledge the 

growing importance of telehealth, we 

want to ensure that telehealth services 

do not reduce the availability of inperson care. For this purpose, telehealth 

encompasses professional consultations, 

office visits, and office psychiatry 

services delivered through technologybased methods, including virtual checkins, remote evaluation of pre-recorded 

patient data, and inter-professional 

internet consultations. Currently, for 

issuers in FFEs to comply with 

telehealth reporting standards, issuers 

must indicate whether each provider 

offers telehealth with the options ‘Yes,’ 

‘No,’ or ‘Requested information from the 

provider, awaiting their response.’ We 

are proposing that State Exchanges and 

SBE–FPs also impose this same 

standard. 

As discussed in the information 

collection requirements section of this 

proposed rule, we estimate that the total 

annual burden associated with State 

Exchanges and SBE–FPs establishing 

and imposing the proposed network 

adequacy standards, conducting the 

network adequacy reviews as proposed, 

collecting telehealth information from 

issuers seeking QHP certification, and 

submitting any exception to be up to 

19,800 hours and to have a total cost of 

$1,365,012 per year. This estimate 

includes State Exchanges and SBE–FPs 

developing the proposed standards, 

reviewing any issuer justification, and 

submitting any exception requests to 

HHS. We further estimate that the total 

annual burden associated with both 

medical QHP and SADP issuers in State 

Exchanges and SBE–FPs gathering and 

submitting the time and distance and 

telehealth data, including any 

justification, to the respective State 

Exchanges or SBE–FPs beginning in 

2025 would be approximately $114,992. 

As discussed in the information 

collection requirements section of this 

proposed rule, the proposed 

requirement that State Exchanges and 

SBE–FPs collect telehealth data may 

increase related administrative costs for 

State Exchange and SBE–FP issuers that 

do not already possess these data, 

though many issuers already collect and 

submit this information for network 

adequacy submissions in other markets. 

While we anticipate that increased 

burden related to telehealth data 

collection would be minimal for many 

State Exchange and SBE–FP issuers, the 

increased burden could ultimately lead 

to an increase in premiums for 

consumers. As noted previously, we 

believe that obtaining telehealth 

information and using it to inform 

future network adequacy standards is in 

the best interests of both QHP enrollees 

and QHP issuers. As such, we anticipate 

that the additional burden would be 

outweighed by the expected benefits. 

We seek comment on the potential 

costs and benefits associated with this 

proposal. 

27. FFE and SBE–FP User Fee Rates for 

the 2025 Benefit Year (45 CFR 156.50) 

We propose an FFE user fee rate of 2.2 

percent of monthly premiums for the 

2025 benefit year, which is the same 

FFE user fee rate finalized in the 2024 

Payment Notice (88 FR 25845 through 

25847). We also propose an SBE–FP 

user fee rate of 1.8 percent for the 2025 

benefit year, which is the same SBE–FP 

user fee rate finalized in the 2024 

Payment Notice. Therefore, because this 

proposal would impose the same user 

fee rates as the 2024 Payment Notice, we 

do not anticipate that these proposed 

user fee rates would have any impact on 

premiums compared to the 2024 benefit 

year. We believe that maintaining the 

same user fee rates as in the 2024 

Payment Notice (that is, the previous 

benefit year) will provide stability and 

certainty to issuers and enrollees. 

We seek comment on these impact 

estimates and assumptions. 

28. State Selection of EHB-Benchmark 

Plans for Plan Years Beginning on or 

After January 1, 2027 (45 CFR 156.111) 

For plan years beginning on or after 

January 1, 2027, we propose to revise 

the standards for State selection of EHBbenchmark plans at § 156.111 to 

consolidate the options for States to 

change EHB-benchmark plans at 

§ 156.111(a); revise the regulatory 

standard for States to comply with 

scope of benefit requirements at 

§ 156.111(b)(2); and revise 

§ 156.111(e)(3) to require States to 

submit a formulary drug list as part of 

their application to change EHBbenchmark plans only if the State is 

seeking to change their prescription 

drug EHB. 

We understand that certain aspects of 

the current process to change EHBbenchmark plans under § 156.111 may 

impose unanticipated difficulty for and 

burden on States, and we have received 

feedback that this difficulty can have a 

chilling effect on States’ ability to make 

more frequent or more substantial 

changes to their EHB-benchmark plans. 

We believe that, to the extent States take 

advantage of the proposed changes to 

the EHB-benchmark plan standards, if 

finalized, States would experience an 

overall decrease in burden to develop 

new EHB-benchmark plans compared to 

if they were to do so under the existing 

requirements at § 156.111. We anticipate 

that these proposals would reduce the 

burden on States to perform additional 

actuarial analyses to comply with the 

typicality and generosity standards at 

§ 156.111(b)(2)(i) and (ii), respectively. 

Instead of performing an indeterminate 

number of actuarial analyses to find a 

typical employer plan with an actuarial 

equivalent scope of benefits, a State may 

only need to perform two such actuarial 

analyses to identify the State’s least 

generous typical employer plan and the 

State’s most generous typical employer 

plan. Further, States would no longer 

need to perform an actuarial analysis to 

demonstrate compliance with the 

generosity standard at § 156.111, which 

we are proposing to remove as a 

requirement in this proposed rule. As a 

result, we estimate an overall decrease 

in burden to States utilizing this 

proposed provision to change their 

EHB-benchmark plan. 

We also estimate a potential increase 

in burden to States and issuers to 

develop new policies and implement 

new plan designs, to the extent these 

proposed changes would result in more 

frequent or more substantial changes to 

EHB-benchmark plans by States. It is 

our aim that these proposals would 

allow States and issuers to offer more 

comprehensive and innovative benefit 

structures that benefit the consumer, 

including by addressing health equity 

concerns. However, we realize that this 

proposed policy would have varied 

impact on consumers depending on 

how a State chooses to implement these 

proposals. To the extent these proposed 

changes result in more frequent or more 

substantial changes to EHB-benchmark 

plans by States, consumers enrolled in 

individual and small group market 

plans would be impacted by changes to 

EHB in that their benefits may change, 

and in some cases, premiums could 

increase or decrease depending upon 

State implementation of the proposed 

policies. Additionally, a new EHBbenchmark plan selection may impact 

the amount of PTC and CSRs for 

enrollees in a State. For these 

consumers, subsidies would increase or 

decrease when compared to their State’s 

current EHB-benchmark plan. PTC is 

available only for that portion of a 

plan’s premium attributed to EHB, so to 

the extent that a State’s EHB-benchmark 

plan leads to lower premiums for the 

second lowest cost silver plan, PTC 


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82640 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

would be reduced, but not the percent 

of income a consumer with PTC is 

expected to contribute to their premium. 

This effect would represent a transfer 

from consumers who receive PTC to the 

Federal government. Individual and 

small group market enrollees who do 

not receive PTC would experience lower 

premiums for less comprehensive 

coverage that could result in more 

affordable coverage options but possibly 

higher out-of-pocket costs for the 

consumer. To the extent that a State’s 

EHB-benchmark plan leads to higher 

premiums for the second lowest cost 

silver plan, we expect the opposite 

outcome to occur. 

Consumers who have specific health 

needs may also be impacted by the 

proposed changes. In the individual and 

small group markets, depending on the 

selection made by the State in which the 

consumer lives, consumers with more 

comprehensive plans may gain coverage 

for certain services. In other States, 

again depending on State choices, 

consumers may no longer have coverage 

for some services, though we note that 

no State has sought to remove benefits 

from their EHB-benchmark plan to date 

under § 156.111. 

Although we are uncertain as to how 

States might take advantage of these 

proposals, if finalized, and as States are 

not required to make any changes under 

this policy, we also believe the reduced 

burden might produce premium savings 

in the long-term, as States would have 

greater incentive to update their EHBbenchmark plans more frequently and 

more substantively. We believe that 

States with more regular and more 

substantive EHB-benchmark plan 

changes would better respond to public 

health priorities and would contribute 

to greater overall population health, 

which would improve the health of the 

State’s risk pool over time and reduce 

plan premiums, increasing affordability 

of health insurance for consumers in the 

individual and small group markets in 

the State. 

We stress that States would not be 

required to make any changes under this 

proposal; as already implemented at 

§ 156.115(d)(1), if a State does not make 

an EHB-benchmark plan selection by 

the first Wednesday in May of the year 

that is 2 years before the effective date 

of the new EHB-benchmark plan, or its 

benchmark plan selection does not meet 

the requirements of this section and 

section 1302 of the ACA, the State’s 

EHB-benchmark plan for the applicable 

plan year will be that State’s EHBbenchmark plan applicable for the prior 

year. 

As discussed in the ICR for this 

policy, we anticipate a total annual cost 

estimate associated with this policy of 

approximately $18,036. 

We solicit comments on the impact of 

these proposals on the EHB-benchmark 

plan selection process and whether 

other impacts should be considered. 

29. Provision of EHB (45 CFR 156.115) 

We propose to remove the regulatory 

prohibition at § 156.115(d) on issuers 

from including routine non-pediatric 

dental services as an EHB. 

Removing the prohibition on issuers 

from including routine non-pediatric 

dental services as an EHB would remove 

regulatory and coverage barriers to 

expanding access to adult dental 

benefits. This would allow States greater 

flexibility to add benefits to improve 

adult oral health and overall health 

outcomes, which are disproportionately 

low among marginalized communities 

such as people of color and people with 

low incomes. Therefore, this policy 

would promote health equity by 

addressing adult oral health disparities 

and improving the health outcomes of 

vulnerable populations. 

Pursuant to section 2707(b) of the 

ACA, a group health plan must ensure 

that any annual cost sharing imposed 

under the plan does not exceed the 

limitations provided for under section 

1302(c)(1) of the ACA. To the extent that 

a group health plan selects an EHBbenchmark plan that includes nonroutine pediatric dental coverage as an 

EHB, such plan would need to ensure 

that any cost sharing for those services 

is limited in accordance with section 

1302(c)(1) of the ACA. 

We do not anticipate any immediate 

costs to the Federal government, States, 

issuers, or enrollees because of this 

proposed policy. This proposal would 

simply remove the prohibition on 

issuers from including routine nonpediatric dental services as an EHB; it 

would not automatically make any 

routine non-pediatric dental services an 

EHB. This policy would only have a 

premium impact to the extent that 

States choose to include routine nonpediatric dental services in their EHBbenchmark plans. It may also increase 

costs for issuers to expand their 

networks to cover these new required 

services, although issuers could contract 

with a dental vendor to administer the 

routine non-pediatric dental EHB if 

such a benefit is adopted by a State as 

an EHB. It should also be noted that the 

size of adult dental networks varies by 

State. Therefore, some States would be 

affected by the need to build a new 

network of dental providers (or contract 

with dental vendors) more than others. 

It is up to each State to consider the 

potential costs and network burden and 

determine whether to add routine nonpediatric dental services as an EHB. 

We solicit comment on the impact of 

this proposal to remove the regulatory 

prohibition on issuers from including 

routine non-pediatric dental services as 

an EHB and whether other impacts 

should be considered. 

30. Prescription Drug Benefits (45 CFR 

156.122) 

At § 156.122(a)(3)(i), we propose to 

update P&T membership standards by 

adding a new proposed 

§ 156.122(a)(3)(i)(E), which would 

require the P&T committee to include a 

consumer representative as part of its 

membership for plan years beginning on 

or after January 1, 2025. While there is 

no Federal requirement to provide 

compensation to P&T committee 

members, those plans or issuers that 

choose to compensate their P&T 

committee members for their service to 

the committee may incur a nominal fee 

when adding an additional member to 

the committee. Further, we estimate a 

potential increase in burden to States 

and issuers to develop criteria used to 

select a consumer representative for the 

P&T committee, to create or revise 

standard operating procedures for the 

committee, as well as for any additional 

training that may be required of the 

selectee because of the new membership 

standard. We believe that the impact of 

this burden would be most notable 

during the initial plan year that this 

policy, if finalized, goes into effect and 

should be minimal in future years. We 

solicit comments on the impact of this 

proposal to the P&T committee 

membership standards and whether 

other impacts should be considered. 

We also propose to amend § 156.122 

to codify the requirement for coverage of 

prescription drug benefits. Specifically, 

we propose to amend § 155.122 by 

adding a new § 156.122(f) to further 

clarify that, to the extent that a health 

plan covers drugs in excess of the 

benchmark, these drugs would be 

considered an EHB and are subject to 

requirements, including that cost 

sharing incurred for drugs must count 

towards the annual limitation on cost 

sharing and the restriction on annual 

and lifetime dollar limits, consistent 

with § 156.130. This policy would apply 

unless the coverage of the drug is 

mandated by State action and is in 

addition to EHB pursuant to § 155.170, 

in which case the drug would not be 

considered EHB. Given that this 

revision merely codifies our existing 

policy regarding the coverage of 

prescription drugs as EHB, we do not 

anticipate any additional burden on 

States or issuers. 


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282These differential display requirements were 

first effective and enforced beginning with PY 2018. 

See 81 FR 94117 through 94118, 94148. 

We seek comment on these impact 

estimates and assumptions. 

31. Standardized Plan Options (45 CFR 

156.201) 

We propose to update the 

standardized plan options for PY 2025 

with minor changes to ensure these 

plans continue to have AVs within the 

permissible de minimis range for each 

metal level. We believe that maintaining 

a high degree of continuity in the 

approach to standardized plan options 

year over year minimizes the risk of 

disruption for interested parties, 

including issuers, agents, brokers, 

States, and enrollees. We believe that 

making major departures from the 

approach to standardized plan options 

set forth in the 2023 and 2024 Payment 

Notices could result in changes that may 

cause undue burden for interested 

parties. For example, if the standardized 

plan options we create vary significantly 

from year to year, those enrolled in 

these plans could experience 

unexpected financial harm if the cost 

sharing for services they rely upon 

differs substantially from the previous 

year. Ultimately, we believe consistency 

in standardized plan options is 

important to allow both issuers and 

enrollees to become accustomed to these 

plan designs. 

Thus, like the approach taken in the 

2023 and 2024 Payment Notices, we 

propose standardized plan options that 

would continue to resemble the most 

popular QHP offerings that millions of 

consumers are already enrolled in. As 

such, these proposed standardized plan 

options are based on updated PY 2023 

cost sharing and enrollment data to 

ensure that these plans continue to 

reflect the most popular offerings in the 

Exchanges. 

By proposing to maintain an approach 

to standardized plan options like that 

taken in the 2023 and 2024 Payment 

Notices, issuers would continue to be 

able to utilize many existing benefit 

packages, networks, and formularies, 

including those paired with 

standardized plan options for PY 2024. 

Also, issuers would continue to not be 

required to extend plan offerings 

beyond their existing service areas. 

Furthermore, as discussed earlier in 

the preamble, we would continue to 

differentially display standardized plan 

options on HealthCare.gov per 

§ 155.205(b)(1). Since we would 

continue to assume responsibility for 

differentially displaying standardized 

plan options on HealthCare.gov, FFE 

and SBE–FP issuers would continue to 

not be subject to this burden. 

In addition, as noted in the preamble, 

we would continue enforcement of the 

standardized plan option display 

requirements for approved web-brokers 

and QHP issuers using a direct 

enrollment pathway to facilitate 

enrollment through an FFE or SBE–FP— 

the Classic DE and EDE Pathways—at 

§§ 155.220(c)(3)(i)(H) and 

156.265(b)(3)(iv), respectively. We 

believe that continuing the enforcement 

of these differential display 

requirements would not impose a 

significant burden on these entities or 

require major modification of their nonExchange websites, especially since the 

bulk of this burden was previously 

imposed in the 2018 Payment Notice,282

which finalized the standardized plan 

option differential display requirements, 

or during the PY 2023 open enrollment 

period, when enforcement of these 

requirements resumed. 

Finally, since we would continue to 

allow approved web-brokers and QHP 

issuers to submit requests to deviate 

from the manner in which standardized 

plan options are differentially displayed 

on HealthCare.gov, the burden on these 

entities would continue to be minimal. 

We intend to continue providing access 

to information on standardized plan 

options to web-brokers through the 

Health Insurance Marketplace Public 

Use Files (PUFs) and QHP Landscape 

file to further minimize burden by 

ensuring that affected entities have 

timely access to accurate and helpful 

information on standardized plan 

option requirements, including those 

related to the differential display of 

these plans. 

We seek comment on these impact 

estimates and assumptions. 

32. Non-Standardized Plan Option 

Limits (45 CFR 156.202) 

In this proposed rule, we propose an 

exceptions process at § 156.202 that 

would allow issuers to offer additional 

non-standardized plan options more 

than the limit of two per product 

network type, metal level, inclusion of 

dental and/or vision benefit coverage, 

and service area if particular 

requirements are met. We previously 

finalized this limit in the 2024 Payment 

Notice (88 FR 25855 through 25865). 

Specifically, issuers would be 

permitted to offer more than two nonstandardized plan options if these 

additional plans’ cost sharing for 

benefits pertaining to the treatment of 

chronic and high-cost conditions 

(including benefits in the form of 

prescription drugs, if pertaining to the 

treatment of the condition(s)) is at least 

25 percent lower, as applied without 

restriction in scope throughout the plan 

year, than the cost sharing for the same 

corresponding benefits in an issuer’s 

other non-standardized plan option 

offerings in the same product network 

type, metal level, and service area. The 

reduction could not be limited to a part 

of the year, or an otherwise limited 

scope of benefits. Instead, issuers would 

be required to apply the reduced cost 

sharing for these benefits any time the 

covered item or service is furnished. For 

example, an issuer could not reduce 

cost sharing for the first three office 

visits or drug fills and then increase it 

for remaining visits or drug fills. 

Furthermore, issuers would be 

prohibited from conditioning reduced 

cost sharing for these benefits on a 

particular diagnosis. That is, although 

the benefit design would have reduced 

cost sharing to address one or more 

articulated conditions, the reduced cost 

sharing must be available to all enrolled 

in the plan who receive the service(s) 

covered by the benefit. 

Under this proposal, no other plan 

design features (such as the inclusion of 

additional benefit coverage, different 

provider networks, different 

formularies, or reduced cost sharing for 

benefits provided through the telehealth 

modality) would be evaluated under 

this exceptions process, meaning no 

other differences in plan design features 

would allow issuers to be excepted from 

the limit to the number of nonstandardized plan options offered per 

product network type, metal level, 

inclusion of dental and/or vision benefit 

coverage, and service area. 

We do not anticipate that the 

exceptions process proposed in this rule 

would substantially impact the average 

weighted number of non-standardized 

plan options available to each 

consumer, the average weighted number 

of standardized plan options available 

to each consumer, the average weighted 

number of total plan options available to 

each consumer, the number of plancounty discontinuations, or the number 

of affected enrollees since we do not 

anticipate a substantial number of 

issuers would utilize this exceptions 

process to offer the aforementioned 

additional non-standardized plan 

options that would substantially benefit 

consumers with chronic and high-cost 

conditions. This is because we expect 

that most issuers would believe that the 

burden of creating and certifying 

additional plans intended to benefit a 

comparatively small population of 

consumers would outweigh the benefit 

of doing so. We also previously solicited 

comment on innovative plan designs, 

such as in the 2024 Payment Notice 


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283 Disadvantaged populations are groups of 

persons that experience a higher risk of poverty, 

social exclusion, discrimination, and violence than 

the general population, including, but not limited 

to, ethnic minorities, migrants, people with 

disabilities, isolated elderly people, and children. 284Waters, H, & Graf, M. (2018). The Cost of 

Chronic Disease in the U.S. Milken Institute. 

https://milkeninstitute.org/sites/default/files/ 

reports-pdf/ChronicDiseases-HighRes-FINAL_2.pdf. 

proposed rule, but received only two 

examples of such plan designs. 

Although we do not anticipate that a 

substantial number of issuers would 

utilize this exceptions process, we 

acknowledge that issuers that choose to 

do so would be impacted. Specifically, 

if issuers choose to utilize this 

exceptions process, they would be 

required to design additional nonstandardized plan options and proceed 

through QHP certification for these 

plans, which would necessarily entail 

additional burden. 

Furthermore, issuers would be 

required to submit a written justification 

in a form and manner and at a time 

prescribed by HHS that would: (1) 

identify the specific condition(s) for 

which cost sharing is reduced, (2) 

explain which benefits would have 

reduced annual enrollee cost sharing (as 

opposed to reduced cost sharing for a 

limited number of visits) for the 

treatment of the specified condition(s) 

by 25 percent or more relative to the 

cost sharing for the same corresponding 

benefits in an issuer’s other nonstandardized plan offerings in the same 

product network type, metal level, and 

service area, and (3) explain how the 

reduced cost sharing for these services 

pertain to clinically indicated 

guidelines for treatment of the specified 

chronic and high-cost condition(s). We 

estimate the burden of this would be 

approximately $95,182 for an estimated 

50 issuers annually, and we discuss this 

burden in further detail in the ICRs 

Regarding Non-Standardized Plan 

Option Limits (§ 156.202) section of the 

Collection of Information Requirements 

section of this proposed rule. 

We also acknowledge that this 

exceptions process could impact 

consumers in a range of ways. 

Specifically, if we were to finalize this 

proposed exceptions process, and if 

issuers choose to utilize this exceptions 

process to offer additional nonstandardized plan options, consumers 

with qualifying chronic and high-cost 

conditions would benefit from reduced 

cost sharing for benefits that pertain to 

the treatment of these conditions. We 

reiterate that, for purposes of this 

standard, chronic conditions are those 

that have an average duration of one 

year or more and require ongoing 

medical attention or limit activities of 

daily living, or both. We also reiterate 

that, for purposes of this standard, highcost conditions are those that account 

for a disproportionately high portion of 

total Federal health expenditures. 

Reduced cost sharing for these benefits 

would reduce barriers to access to 

benefits important to consumers with 

these chronic and high-cost conditions, 

which could play an important role in 

combatting health disparities and 

advancing health equity since 

disadvantaged populations 283 are 

disproportionately affected by many of 

these conditions.284 In addition to 

enhancing health outcomes, this 

exceptions process could also reduce 

the risk of financial harm to individuals 

with chronic and high-cost conditions 

by reducing their cost sharing 

obligations for treatment for those 

conditions. 

We do not have sufficient data to 

further estimate the costs associated 

with these proposed changes. As such, 

we seek comment from interested 

parties regarding cost estimates 

associated with this proposal and data 

sources that may be used to determine 

those estimates. 

33. CO–OP Loan Terms (45 CFR 

156.520) 

In this rule, we propose to revise 

§ 156.520(f) to provide a clear 

mechanism by which an existing CO– 

OP may request termination of its loan 

agreement with CMS to enable it to 

pursue new, innovative business plans 

that are otherwise not compatible with 

CO–OP requirements, but which CMS 

believes would be in the best interest of 

affected consumers. Of the 23 CO–OP 

loan agreements CMS successfully 

executed with qualified borrowers in 

2012, only 3 remain in operation as 

active insurance companies offering 

QHPs. The others have been placed in 

receivership by State regulators, or 

otherwise gone out of business due to 

the borrower’s inability to establish a 

viable CO–OP that is financially stable 

and on course to ultimately repay the 

loans. As discussed in section III.E.8 of 

this preamble, CO–OPs operate under 

governance and product limitations that 

can present significant obstacles to new 

business opportunities. To provide a 

means to overcome these limitations, 

under the proposed revisions to 

§ 156.520(f), we would be able to 

consider proposals initiated by a CO–OP 

to terminate its loan agreement with us 

if we believe the proposal would benefit 

consumers by enhancing consumer 

access to quality, affordable, memberfocused, non-profit health care options 

in affected markets. Examples of such 

proposals that may be deemed 

innovative and in the interests of 

consumers would be plans that appear 

well-calculated to lead directly to 

marketing non-profit, member-focused 

health plans in new regions of a State, 

to offer health plans on a Statewide 

basis for the first time, to expand 

operations into new States, or enhance 

consumer access to new non-profit 

products that are not qualified health 

plans, in particular when such plans are 

likely to favorably impact traditionally 

underserved communities. These 

examples are illustrative, however, not 

exclusive. 

This regulatory proposal also 

contemplates plans that involve nonprofit enterprises, and that reflect a 

strong consumer focus. A strong 

consumer focus would generally consist 

of an enterprise that focuses 

informational or financial resources, or 

plans to focus informational or financial 

resources, on member-oriented 

programs such as health education, 

consumer education, or forms of direct 

or indirect health-related financial 

assistance. We recognize that significant 

coordination with State regulators 

would be essential to implementing any 

plans to act on the proposed regulatory 

changes, if finalized. 

Given that only three CO–OPs remain 

in business operating with small 

portfolios across five States, we do not 

believe there would be a significant 

economic impact because of this 

proposal for at least several years, if 

ever. We seek comment on these impact 

estimates and assumptions. 

34. Conforming Amendment to Netting 

Regulation To Include Federal IDR 

Administrative Fees (45 CFR 156.1215) 

We propose to amend § 156.1215(b) 

and (c) to align with the policies and 

regulations proposed in the Federal 

Independent Dispute Resolution 

Operations proposed rule (88 FR 75744). 

If finalized, these amendments would 

provide that administrative fees for 

utilizing the No Surprises Act Federal 

IDR process for health insurance issuers 

that participate in financial programs 

under the ACA would be subject to 

netting as part of HHS’ integrated 

monthly payment and collections cycle. 

To implement this policy, we propose 

to amend § 156.1215(b) to allow HHS to 

net payments owed to issuers and their 

affiliates operating under the same TIN 

against amounts due to the Federal 

government from the issuers and their 

affiliates operating under the same TIN 

for APTC, advance payments of and 

reconciliation of CSRs, payment of FFE 

user fees, payment of SBE–FP user fees, 

HHS risk adjustment, reinsurance, and 

risk corridors payments and charges, 


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285 88 FR 75814 through 75815. 

286See 86 FR at 55982 (explaining that the No 

Surprises Act applies to group health plans and 

health insurance issuers offering group or 

individual health insurance coverage in the Code, 

ERISA, and the PHS Act). 

287https://www.bls.gov/oes/current/oes_nat.htm. 288See 83 FR 16930 at 16953; 84 FR 17478 

through 17479; 85 FR 29190; 86 FR 24181; 87 FR 

27235 through 27236; and 88 FR 25772 through 

25774. 

and administrative fees from these 

issuers and their affiliates for utilizing 

the Federal IDR process in accordance 

with § 149.510(d)(2). We also propose to 

amend § 156.1215(c) to provide that any 

amount owed to the Federal government 

by an issuer and its affiliates for unpaid 

administrative fees due to the Federal 

government from these issuers and their 

affiliates for utilizing the Federal IDR 

process after netting under proposed 

§ 156.1215(b) would be the basis for 

calculating a debt owed to the Federal 

government. 

We do not believe that the proposed 

amendments would impose substantial 

additional costs to HHS beyond the 

costs previously estimated in the 

Federal Independent Dispute Resolution 

Process proposed rule.285 Furthermore, 

this proposal would only apply to those 

issuers and their affiliates operating 

under the same TIN that participate in 

the financial programs under the ACA. 

Since the provisions of the Federal IDR 

process apply more broadly to include 

issuers and their affiliates that do not 

participate in the financial programs 

under the ACA currently specified in 

the list of programs for which netting is 

permitted,286 we believe that only a 

small proportion of issuers that utilize 

the Federal IDR process would be 

subject to netting under this proposal. 

Therefore, we anticipate that this 

proposal would streamline our 

payments and collections processes and 

limit the administrative burden for 

operating our programs. 

We seek comment on these impact 

estimates and assumptions. 

35. Regulatory Review Cost Estimation 

If regulations impose administrative 

costs on private entities, such as the 

time needed to read and interpret this 

proposed rule, we should estimate the 

cost associated with regulatory review. 

Due to the uncertainty involved with 

accurately quantifying the number of 

entities that will review the rule, we 

assume that the total number of unique 

commenters on last year’s proposed rule 

(286) will be the number of reviewers of 

this proposed rule. We acknowledge 

that this assumption may understate or 

overstate the costs of reviewing this 

rule. It is possible that not all 

commenters reviewed last year’s rule in 

detail, and it is also possible that some 

reviewers chose not to comment on the 

proposed rule. For these reasons, we 

believe that the number of past 

commenters would be a fair estimate of 

the number of reviewers of this rule. We 

welcome any comments on the 

approach in estimating the number of 

entities which will review this proposed 

rule. 

We also recognize that different types 

of entities are in many cases affected by 

mutually exclusive sections of this 

proposed rule, and therefore, for the 

purposes of our estimate we assume that 

each reviewer reads approximately 50 

percent of the rule. We seek comments 

on this assumption. 

Using the wage information from the 

BLS for medical and health service 

managers (Code 11–9111), we estimate 

that the cost of reviewing this rule is 

$100.80 per hour, including overhead 

and fringe benefits.287 Assuming an 

average reading speed of 250 words per 

minute, we estimate that it would take 

approximately 4.75 hours for the staff to 

review half of this proposed rule. For 

each entity that reviews the rule, the 

estimated cost is $478.80 (4.75 hours × 

$100.80 per hour). Therefore, we 

estimate that the total cost of reviewing 

this regulation is approximately 

$136,937 ($478.80 per reviewer × 286 

reviewers). 

D. Regulatory Alternatives Considered 

For the HHS-operated risk adjustment 

program (§ 153.320), we propose to 

recalibrate the CSR adjustment factors 

for AI/AN zero cost sharing and limited 

cost sharing CSR plan variant enrollees 

for the 2025 benefit year, and we 

propose to retain the proposed AI/AN 

CSR adjustment factors for future 

benefit years unless changed through 

notice-and-comment rulemaking. We 

also propose to maintain the current 

CSR adjustment factors for silver plan 

variant enrollees (70 percent, 73 

percent, 87 percent, and 94 percent AV 

plan variants) 288 for the 2025 benefit 

year and beyond, unless changed 

through notice-and-comment 

rulemaking. As an alternative, we 

considered not proposing any changes 

to the CSR adjustment factors used in 

the State payment transfer formula. 

However, after continuing to conduct 

analyses on more recently available 

enrollee-level EDGE data, we found the 

underprediction of plan liability in the 

State payment transfer formula for AI/ 

AN zero cost sharing and limited cost 

sharing CSR plan variant enrollees 

continued. We also considered 

recalibrating all the silver CSR 

adjustment factors. However, we are not 

proposing any changes to those factors 

at this time, because we continue to find 

that the current silver CSR adjustment 

factors (70 percent, 73 percent, 87 

percent, and 94 percent plan variants) 

are reasonably accurately predicted 

given the offsets, described above, that 

continue to occur for these enrollees. 

As an alternative to our proposed 

amendments to § 155.315(e), we 

considered using an electronic data 

source other than PUPS to verify 

applicant incarceration status. However, 

we estimate that sourcing an alternative 

national incarceration verification data 

source would be a significant expense to 

HHS, costing the agency approximately 

$35 million annually. Additionally, 

these other data sources are currently 

not sufficiently comprehensive to meet 

the needs of the Exchanges using the 

Federal eligibility and enrollment 

platform and therefore may not provide 

Exchanges with accurate results on a 

consistent basis. Thus, the alternative 

data source must be current, accurate, 

and minimize burden and costs to 

administration. 

About the proposed changes to 

§ 155.320(c), we considered taking no 

action to add new language in paragraph 

(c)(1)(iii) that State Exchanges and State 

Medicaid agencies must pay in advance 

for their use of the VCI Hub service to 

verify income. However, we determined 

that this proposed reinterpretation and 

proposed policy change is appropriate 

given our better understanding of how 

the VCI Hub service is used by State 

Exchanges and State Medicaid agencies 

to verify eligibility for QHP coverage or 

other insurance affordability programs. 

We also considered requiring State 

Medicaid agencies and State Exchanges 

to obtain their own contracts to 

administer their CSI data usage; 

however, we had concerns that these 

services cannot be procured reasonably 

and expeditiously, which would 

undermine the system we have 

implemented under section 1413 of the 

ACA. We also believe that there may be 

benefits to the State Medicaid agencies 

and State Exchanges that prefer to use 

the CSI data accessible through the VCI 

Hub service in their States. Therefore, 

we propose to retain optional access to 

the VCI Hub service on behalf of State 

Medicaid agencies and State Exchanges 

that prefer to continue to use this 

service and are willing to pay for their 

CSI data usage in advance. Under this 

proposal, State Medicaid agencies and 

State Exchanges can choose to 

discontinue their use of the CSI data 

accessible through the VCI Hub service. 

As described in the preamble of this 

rulemaking, we are also seeking 

comment on an alternative approach 


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that we could finalize that would have 

HHS invoice States on a monthly basis 

for their actual utilization of CSI data 

provided by the VCI Hub service after 

that utilization occurs. 

About amending 155.330(d)(2), we 

have considered maintaining the status 

quo for continuing the PDM 

requirements under § 155.330(d)(1)(i) 

and (d)(ii) but note that it may be 

difficult or infeasible to operationalize 

existing processes and operations 

during certain emergency situations. 

Allowing consumers to go uninsured 

during a national emergency, such as a 

public health emergency like the 

COVID–19 public health emergency, 

will not improve the national health and 

well-being of all consumers. We found 

it to be least burdensome for Exchanges 

to implement as a successful pause of 

PDM operations occurred during the 

2020 pandemic. 

We considered only updating subregulatory guidance to incorporate 

catastrophic coverage into the auto reenrollment hierarchy, for example, 

through the annual draft and final 

Letters to Issuers. However, we believe 

that instead incorporating catastrophic 

coverage into the auto re-enrollment 

hierarchy in regulation at § 155.335(j) 

creates stronger authority for Exchanges 

to auto re-enroll catastrophic enrollees 

and provides better transparency for our 

auto re-enrollment operations in the 

Exchanges on the Federal platform. 

We considered taking no action 

regarding the proposal to amend 

§ 155.400(e)(2) to codify that the 

flexibility for issuers experiencing 

billing or enrollment problems due to 

high volume or technical errors is not 

limited to extensions of the binder 

payment. However, we believe it is 

important to clarify for interested 

parties that HHS may provide 

enforcement discretion for other 

premium payment requirements. 

We considered taking no action 

related to amending § 155.420(d)(16), to 

revise the parameters around the 

availability of a SEP that grants APTCeligible qualified individuals with a 

projected household income at or below 

150 percent of the FPL. However, HHS 

believes that many consumers will 

benefit from having additional 

opportunities to enroll in low-cost 

Exchange coverage, and that those who 

will be eligible for this special 

enrollment period and who do not 

enroll during the annual open 

enrollment period are likely to have 

been unaware of their option to enroll 

in a plan with no monthly premium 

through the Exchange, after application 

of APTC. 

We considered taking no action 

regarding our proposal to modify 

§ 155.430(b)(1)(iv) to permit enrollees in 

Exchanges on the Federal Platform to 

retroactively terminate coverage back to 

the date in which they retroactively 

enroll in Medicare Part A. However, we 

believe it is important to allow enrollees 

to retroactively terminate coverage 

when they were unable to do so 

prospectively due to retroactive 

enrollment in Medicare coverage. We 

considered whether to also permit 

Exchange enrollees to retroactively 

terminate coverage back to the date in 

which they enrolled in Medicaid, CHIP, 

or BHP coverage retroactively, but we 

determined that this would not be 

appropriate due to the increased risk 

that claims reversed by QHP issuers 

would not be covered by providers 

under these programs. 

For standardized plan options 

(§ 156.201), we considered a range of 

proposals, such as modifying the 

methodology used to create the 

standardized plan options for PY 2025. 

Specifically, we considered lowering 

the deductibles in these plan designs 

and offsetting this increase in plan 

generosity by increasing cost sharing 

amounts for several benefit categories. 

We also considered simultaneously 

maintaining the current cost-sharing 

structures and decreasing the 

deductibles for these plan designs, 

which would increase the AVs of these 

plans to the ceiling of each AV de 

minimis range. Ultimately, we decided 

to propose to maintain the AVs of these 

plans near the floor of each de minimis 

range by largely maintaining the cost 

sharing structures and deductible values 

from the standardized plan options from 

PY 2024, as well as by increasing the 

MOOP values and, to a lesser degree, 

the deductible values for these plan 

designs. We believe this proposed 

approach strikes the greatest balance in 

providing enhanced pre-deductible 

coverage while ensuring competitive 

premiums for these standardized plan 

options. 

For non-standardized plan option 

limits (§ 156.202), we considered a 

range of proposals. Specifically, for PY 

2025 and subsequent years, we 

considered maintaining the PY 2024 

limit of four non-standardized plan 

options per product network type, metal 

level, inclusion of dental and/or vision 

benefit coverage, and service area. We 

also considered not proposing an 

exceptions process that would allow 

issuers to offer non-standardized plan 

options more than the limit of two that 

we previously finalized for PY 2025 and 

subsequent years. We also considered 

basing this exceptions process on a 

range of other factors, including the 

degree of plan proliferation in a given 

service area (as determined by the 

number of plan offerings per consumer 

or issuer), whether a plan has a 

sufficiently differentiated network, and 

whether a plan has a sufficiently 

differentiated formulary. We also 

considered permitting issuers to request 

to offer only one additional nonstandardized plan option per product 

network type, metal level, and service 

area, as opposed to an indefinite 

number (as in the current proposal). We 

also considered permitting exceptions 

only for an exclusive list of chronic and 

high-cost conditions, as opposed to any 

condition that is chronic and high-cost 

in nature (as described in the current 

proposal). 

However, we ultimately decided to 

propose an exceptions process that 

would allow issuers to offer more than 

two non-standardized plan options if 

these additional plans’ cost sharing for 

benefits pertaining to the treatment of 

chronic and high-cost conditions 

(including benefits in the form of 

prescription drugs, if pertaining to the 

treatment of the condition(s)) is at least 

25 percent lower, as applied without 

restriction in scope throughout the plan 

year, than the cost sharing for the same 

corresponding benefits in an issuer’s 

other non-standardized plan option 

offerings in the same product network 

type, metal level, and service area, 

which is discussed in greater detail in 

section III.E.7 of the preamble to this 

rule. 

We proposed this approach primarily 

because we believe that allowing 

exceptions to the non-standardized plan 

option limit of two could play an 

important role in enhancing the quality 

of life for those affected by these 

conditions, combatting health 

disparities, advancing health equity, 

and reducing health care expenditures. 

We further believe that introducing this 

exceptions process would balance the 

dual aims of reducing the risk of plan 

choice overload while simultaneously 

ensuring that issuers can continue to 

offer truly innovative plan designs that 

may benefit consumers with chronic 

and high-cost conditions. 

E. Regulatory Flexibility Act (RFA) 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities, if a rule has a significant impact 

on a substantial number of small 

entities. For purposes of the RFA, we 

estimate that small businesses, 

nonprofit organizations, and small 

governmental jurisdictions are small 

entities as that term is used in the RFA. 

The great majority of hospitals and most 


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289 DE entities are QHP issuers approved by CMS 

to enroll consumers in Exchange coverage directly 

from their websites. 

290https://www.sba.gov/document/support-- 

table-size-standards. 

291https://www.cms.gov/CCIIO/Resources/DataResources/mlr.html. 

other healthcare providers and suppliers 

are small entities, either by being 

nonprofit organizations or by meeting 

the SBA definition of a small business 

(having revenues of less than $8.0 

million to $41.5 million in any 1 year). 

We do not anticipate that providers 

would be directly impacted by the 

provisions in this proposed rule. 

Individuals and States are not included 

in the definition of a small entity. The 

provisions in this proposed rule would 

affect issuers, agents, brokers, webbrokers, and DE entities. 

For purposes of the RFA, we believe 

that health insurance issuers and DE 

entities 289 will 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 annual receipts of 

$47 million or less will be considered 

small entities for these NAICS codes. 

Issuers could possibly be classified in 

621491 (HMO Medical Centers) and, if 

this is the case, the SBA size standard 

will be $44.5 million or less.290 We 

believe that few, if any, insurance 

companies underwriting comprehensive 

health insurance policies (in contrast, 

for example, to travel insurance policies 

or dental discount policies) fall below 

these size thresholds. Based on data 

from MLR annual report submissions for 

the 2021 MLR reporting year, 

approximately 87 out of 483 issuers of 

health insurance coverage nationwide 

had total premium revenue of $47 

million or less.291 This estimate may 

overstate the actual number of small 

health insurance issuers that may be 

affected, since over 77 percent of these 

small issuers belong to larger holding 

groups, and many, if not all, of these 

small companies are likely to have nonhealth lines of business that will result 

in their revenues exceeding $47 million. 

Therefore, although it is likely that 

fewer than 87 issuers are considered 

small entities, for the purposes of this 

analysis, we assume 87 small issuers/DE 

entities would be impacted by this 

proposed rule. 

We further believe that agents, 

brokers, and web-brokers will be 

classified under NAICS code 524210 

(Insurance Agencies and Brokerages). 

According to SBA size standards, 

entities with average annual receipts of 

$15 million or less will be considered 

small entities for these NAICS codes. 

Therefore, based on SBA data and for 

purposes of this analysis, we assume 

122,547 agents, brokers, and webbrokers are small entities. However, the 

policies impacting agents, brokers, and 

web-brokers proposed in this rule 

would only impact such entities in 

States with State Exchanges that host 

web-broker programs. Currently, no 

States with State Exchanges host webbroker programs, but we estimate 5 

States could opt to host a web-broker 

program for their State Exchange in the 

future. We further estimate that 20 webbrokers could operate in those States in 

the future and seek comment on this 

estimate. 

The proposed policies that would 

result in an increased burden to small 

entities are described below. 

We propose to require issuers of risk 

adjustment covered plans to complete, 

implement, and provide to HHS written 

documentation of any corrective action 

plans when required by HHS if a highcost risk pool audit results in the 

inclusion of a finding or certain 

observations in the final audit report. 

The annual burden per issuer associated 

with this proposal is $627. For more 

details, please refer to the Regulatory 

Impact Analysis section associated with 

this policy in this proposed rule. 

We propose to apply to agents, 

brokers, and web-brokers operating in 

State Exchanges that operate their own 

eligibility and enrollment platform, and 

consequently in State Exchanges, for 

both the State Exchange’s Individual 

Exchange and SHOP, certain existing 

Federal standards regarding web-brokers 

assisting consumers with enrolling in 

QHPs and applying for APTC/CSRs. The 

one-time burden per agent, broker, or 

web-broker associated with this 

proposal is $48,587. For more details, 

please refer to the information 

collection requirements section 

associated with this policy in this 

proposed rule. 

We propose to require that display 

changes adopted by HealthCare.gov be 

reflected on DE entity websites within a 

time period specified by HHS, unless 

HHS approves a deviation. The annual 

burden associated with this proposal is 

$2,608 ($2,401 to comply with the 

requirements and $207 to make a 

request to deviate from the 

requirements). For more details, please 

refer to the information collection 

requirements section associated with 

this policy in this proposed rule. 

We propose to apply to DE entities 

operating in State Exchanges that 

operate their own eligibility and 

enrollment platform, and consequently 

State Exchanges that utilize DE entities, 

certain existing Federal standards 

regarding DE entities assisting 

consumers with enrolling in QHPs and 

applying for APTC/CSRs, both for the 

State Exchanges Individual Exchange 

and SHOP program. The one-time 

burden per DE entity associated with 

this proposal is $138,447. For more 

details, please refer to the information 

collection requirements section 

associated with this policy in this 

proposed rule. 

We also propose to require State 

Exchange and SBE–FP issuers to gather 

and submit network adequacy data, 

including time and distance data and 

telehealth data. The annual burden per 

issuer associated with this proposal is 

$689. For more details, please refer to 

the information collection requirements 

section associated with this policy in 

this proposed rule. 

Finally, we propose to permit issuers 

to offer non-standardized plan options 

in excess of the limit of two per product 

network type, metal level, inclusion of 

dental and/or vision benefit coverage, 

and service area for PY 2025 and 

subsequent years, if issuers demonstrate 

that these additional non-standardized 

plans beyond the limit at § 156.202(b) 

have specific design features that would 

substantially benefit consumers with 

chronic and high-cost conditions. The 

annual burden per issuer associated 

with this proposal is $1,904. For more 

details, please refer to the information 

collection requirements section 

associated with this policy in this 

proposed rule. 

Thus, the per-entity estimated annual 

cost for small issuers and DE entities is 

$5,828, and the total estimated annual 

cost for small issuers and DE entities is 

$507,036. The per-entity estimated onetime cost for small issuers and DE 

entities is $138,447, and the total 

estimated one-time cost for small issuers 

and DE entities is $12,044,889. The perentity estimated one-time cost for small 

agents, brokers, and web-brokers is 

$48,587, and the total estimated onetime cost for small agents, brokers, and 

web-brokers is $971,740. There is no 

estimated annual cost for small agents, 

brokers, and web-brokers. See Tables 19, 

20, 21, and 22. 


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82646 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

292United States Census Bureau (March 2020). 

2017 SUSB Annual Data Tables by Establishment 

Industry, Data by Enterprise Receipt Size. https:// 

www.census.gov/data/tables/2020/econ/susb/2020- 

susb-annual.html. 

The annual cost per small issuer/DE 

entity of $5,828 is approximately 0.32 

percent of the average annual receipts 

per small issuer. We anticipate that 

small issuers could pass on these 

increased costs to consumers in the 

form of higher premiums, resulting in 

an increase in receipts commensurate 

with the increase in costs. However, 

because the proportion of cost to 

receipts is so small, we anticipate this 

would have a de minimis impact on 

premiums, if any impact at all. We seek 

comment on this assumption. 

We seek comment on this analysis 

and seek information on the number of 

small issuers/DE entities, agents, 

brokers, or web-brokers that may be 

affected by the provisions in these 

proposed rules. 

As its measure of significant 

economic impact on a substantial 

number of small entities, HHS uses a 

change in revenue of more than 3 to 5 

percent. We do not believe that this 

threshold will be reached by the 

requirements in this proposed rule, 

given that the annual per-entity cost of 

$5,828 per small issuer represents 

approximately 0.32 percent of the 

average annual receipts for a small 

issuer,292 and there is no annual perentity cost per small agent, broker, or 

web-broker. Therefore, the Secretary has 

certified that this proposed rule will not 

have a significant economic impact on 

a substantial number of small entities. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 603 of the 

RFA. For the purposes of section 

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

rural hospital as a hospital that is 

located outside of a metropolitan 

statistical area and has fewer than 100 

beds. While this rule is not subject to 

section 1102 of the Act, we have 

determined that this rule will not affect 

small rural hospitals. Therefore, the 

Secretary has certified that this 

proposed rule will not have a significant 

impact on the operations of a substantial 

number of small rural hospitals. 

F. Unfunded Mandates Reform Act 

(UMRA) 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any 1 year of $100 

million in 1995 dollars, updated 

annually for inflation. In 2023, that 

threshold is approximately $177 

million. Although we have not been 

able to quantify all costs, we expect that 

the combined impact on State, local, or 

Tribal governments and the private 


ddrumheller on DSK120RN23PROD with PROPOSALS2EP24NO23.033</GPH> EP24NO23.034</GPH> EP24NO23.035</GPH> EP24NO23.036</GPH>

TABLE 19: Detailed Annual Costs for Small Entities 

Descriotion of Cost Annual Cost oer Small Issuer/DE Entitv 

Hi.e;h-cost risk pool audit $627 

Applying HealthCare.gov display changes $2,608 

Network adequacy $689 

Non-standardized plan options $1.904 

Total $5,828 

TABLE 20: Aggregate Annual Costs for Small Entities 

Affected Entity Affected Small Annual Cost per Entity Aggregate Annual Cost for 

Entities Small Entities 

Issuers/DE entities 87 $5,828 $507,036 

TABLE 21: One-Time Costs for Small Entities 

Description of Cost One-Time Cost per Small One-Time Cost per Small Agent, 

Issuer/DE Entity Broker, or Web-broker 

Applying Federal standards to State $138,447 $48,587 

Exchange entities 

Total $138,447 $48,587 

TABLE 22: Aggregate One-Time Costs for Small Entities 

Affected Entity Affected Small One-Time Cost per Aggregate One-Time Cost 

Entities Entity for Small Entities 

Issuers/DE entities 87 $138,447 $12,044,889 

Agents, brokers, and web- 20 $48,587 $971,740 brokers 
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82647 

sector does not meet the UMRA 

definition of unfunded mandate. 

G. Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it issues a proposed 

rule (and subsequent final rule) that 

imposes substantial direct requirement 

costs on State and local governments, 

preempts State law, or otherwise has 

Federalism implications. 

In compliance with the requirement 

of E.O. 13132 that agencies examine 

closely any policies that may have 

Federalism implications or limit the 

policy making discretion of the States, 

we have engaged in efforts to consult 

with and work cooperatively with 

affected States, including participating 

in conference calls with and attending 

conferences of the NAIC, and consulting 

with State insurance officials on an 

individual basis. 

While developing this rule, we 

attempted to balance the States’ 

interests in regulating health insurance 

issuers with the need to ensure market 

stability. By doing so, we complied with 

the requirements of E.O. 13132. 

Because States have flexibility in 

designing their Exchange and Exchangerelated programs, State decisions will 

ultimately influence both administrative 

expenses and overall premiums. States 

are not required to establish an 

Exchange or risk adjustment program. 

For States that elected previously to 

operate an Exchange, those States had 

the opportunity to use funds under 

Exchange Planning and Establishment 

Grants to fund the development of data. 

Accordingly, some of the initial cost of 

creating programs was funded by 

Exchange Planning and Establishment 

Grants. After establishment, Exchanges 

must be financially self-sustaining, with 

revenue sources at the discretion of the 

State. Current State Exchanges charge 

user fees to issuers. 

In our view, while this proposed rule 

will not impose substantial direct 

requirement costs on State and local 

governments, this regulation has 

Federalism implications due to 

potential direct effects on the 

distribution of power and 

responsibilities among the State and 

Federal Governments relating to 

determining standards relating to health 

insurance that is offered in the 

individual and small group markets. For 

example, we propose to add 

requirements by which a State seeking 

to transition to a State Exchange provide 

the public with a notice and copy of its 

State Exchange Blueprint application. 

We further propose to require that a 

State, within 3 months of submitting its 

State Exchange Blueprint to HHS for 

approval, conduct at least one public 

hearing whereby interested parties can 

learn about the State’s intent to 

transition, as well as a State’s progress 

toward transitioning, and conduct 

regular hearings every 3 months until 

the transition is complete. However, we 

believe the Federalism implications of 

this proposal are mitigated because 

States have the option to establish their 

own Exchange, and we do not anticipate 

any additional burden on States because 

of this proposal. 

We believe that the proposal to revise 

§ 155.220(h) does not have Federalism 

implications as the CMS Administrator 

review of agent, broker, and web-broker 

requests for reconsideration of decisions 

to terminate their Exchange 

agreement(s) is not based on State law, 

nor does it prevent a State from taking 

other legal actions under State law 

against an entity whose Exchange 

agreement(s) are terminated for cause by 

HHS. 

We believe that the proposals to 

revise §§ 155.220 and 155.221 to apply 

certain web-broker and DE entity 

standards to State Exchanges that 

operate their own eligibility and 

enrollment platform may have 

Federalism implications, but they are 

substantially mitigated by allowing 

State Exchanges to leverage the 

oversight framework established by 

HHS for Exchanges that utilize the 

Federal Platform to evaluate web-broker 

and DE entity operational readiness to 

participate in an Exchange. We expect 

State Exchanges would be able to 

leverage audits conducted for the FFEs 

and SBE–FPs, as well as disclaimer 

language developed by HHS, while State 

operational costs would include any 

State-specific requirements or language 

to be added at the States’ discretion. We 

believe that providing State Exchanges 

the opportunity to leverage the FFEs’ 

oversight framework would likely 

reduce costs to State Exchanges as 

compared to the costs associated with 

State Exchanges establishing an 

independent framework for oversight 

and web-broker or DE entity approval 

independent of the FFEs. 

We believe that the proposal to revise 

§ 155.315(e) has Federalism 

implications due to our proposal to use 

existing requirements and flexibilities 

under § 155.315(e) permitting all 

Exchanges to accept consumer 

attestation of incarceration status 

without further electronic verification. 

However, Exchanges that wish to 

continue electronically verifying an 

individual’s incarceration status would 

be permitted do so, if HHS determines 

their data source is current, accurate, 

and minimizes administrative costs and 

burdens. 

In addition, we believe this proposed 

rule does have Federalism implications 

due to the proposed revisions pertaining 

to State selection of EHB-benchmark 

plans. The existing requirements 

pertaining to State selection of EHBbenchmark plans at § 156.111 already 

imposed Federalism implications on 

States that choose to change or revise 

their EHB-benchmark plans. As 

discussed elsewhere in this proposed 

rule, we understand that certain aspects 

of the current process to change or 

revise EHB-benchmark plans may 

impose unanticipated difficulty on and 

create confusion for States. Accordingly, 

the proposals to revise § 156.111 are 

intended to reduce State burden and 

confusion to change or revise EHBbenchmark plans. As a result, we 

believe the proposals to revise § 156.111 

would reduce the existing Federalism 

implications. 

We believe that our proposal to 

amend § 155.320 by adding new 

paragraph (c)(1)(iii) does have 

Federalism implications for States given 

that State Exchanges and State Medicaid 

agencies use the VCI Hub service. 

However, we believe that the 

Federalism implications are mitigated as 

State Exchanges and State Medicaid 

agencies continue to have flexibility as 

the use of the VCI Hub service is 

optional and that States continue to 

have flexibility under § 155.315(h) and 

§ 155.320(c)(3)(iv) to use other data 

sources, like State wage data, when 

income is not verified using IRS tax data 

or SSA Title II data. 

We believe that our proposal to 

amend § 155.420(d)(16) has Federalism 

implications; however, we believe that 

by maintaining the 150 percent FPL SEP 

to be available at the option of the 

Exchange, these implications are 

mitigated because we allow State 

Exchanges to decide whether to 

implement it based on their specific 

market dynamics, needs, and priorities. 

Chiquita Brooks-LaSure, 

Administrator of the Centers for 

Medicare & Medicaid Services, 

approved this document on XX XX, 

2023. 

List of Subjects 

31 CFR Part 33 

Health care, Health insurance, and 

Reporting and recordkeeping 

requirements. 

42 CFR Part 435 

Eligibility in the States, District of 

Columbia, the Northern Mariana 

Islands, and American Samoa. 


ddrumheller on DSK120RN23PROD with PROPOSALS2
82648 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

42 CFR Part 600 

Administrative practice and 

procedure, Health care, health 

insurance, Intergovernmental relations, 

Penalties, Reporting and recordkeeping 

requirements. 

45 CFR Part 153 

Administrative practice and 

procedure, Health care, Health 

insurance, Health records, 

Intergovernmental relations, 

Organization and functions 

(Government agencies), Reporting and 

recordkeeping requirements. 

45 CFR Part 155 

Administrative practice and 

procedure, Advertising, Brokers, 

Conflict of interests, Consumer 

protection, Grants administration, Grant 

programs-health, Health care, Health 

insurance, Health maintenance 

organizations (HMO), Health records, 

Hospitals, Indians, Individuals with 

disabilities, Intergovernmental relations, 

Loan programs-health, Medicaid, 

Organization and functions 

(Government agencies), Public 

assistance programs, Reporting and 

recordkeeping requirements, Technical 

assistance, Women and youth. 

45 CFR Part 156 

Administrative practice and 

procedure, Advertising, Advisory 

committees, Brokers, Conflict of 

interests, Consumer protection, Grant 

programs-health, Grants administration, 

Health care, Health insurance, Health 

maintenance organization (HMO), 

Health records, Hospitals, Indians, 

Individuals with disabilities, Loan 

programs-health, Medicaid, 

Organization and functions 

(Government agencies), Public 

assistance programs, Reporting and 

recordkeeping requirements, State and 

local governments, Sunshine Act, 

Technical assistance, Women, and 

Youth. 

Department Of The Treasury 

For the reasons set forth in the 

preamble, the Department of the 

Treasury proposes to amend 31 CFR 

subtitle A, part 33 as set forth below: 

PART 33—WAIVERS FOR STATE 

INNOVATION 

■ 1. The authority citation for part 33 

continues to read as follows: 

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

Stat. 119. 

■ 2. Section 33.112 is amended by 

adding paragraph (c)(3) to read as 

follows: 

§ 33.112 State public notice requirements. 

* * * * * 

(c) * * * 

(3) Such public hearings shall be 

conducted in an in-person, virtual (that 

is, one that uses telephonic, digital, and/ 

or web-based platforms), or hybrid (that 

is, one that provides for both in-person 

and virtual attendance) format. 

* * * * * 

■ 3. Section 33.120 is amended by 

revising paragraph (c) introductory text 

to read as follows: 

§ 33.120 Monitoring and compliance. 

* * * * * 

(c) Post award. Within at least 6 

months after the implementation date of 

a section 1332 waiver and annually 

thereafter, a State must hold a public 

forum to solicit comments on the 

progress of a section 1332 waiver. The 

State must hold the public forum at 

which members of the public have an 

opportunity to provide comments and 

must provide a summary of the forum 

to the Secretary as part of the quarterly 

report specified in § 33.124(a) that is 

associated with the quarter in which the 

forum was held, as well as in the annual 

report specified in § 33.124(b) that is 

associated with the year in which the 

forum was held. The public forum shall 

be conducted in an in-person, virtual 

(that is, one that uses telephonic, digital, 

and/or web-based platforms), or hybrid 

(that is, one that provides for both inperson and virtual attendance) format. 

* * * * * 

Department Of Health And Human 

Services 

For the reasons set forth in the 

preamble, under the authority at 5 

U.S.C. 301, the Department of Health 

and Human Services proposes to amend 

42 CFR chapter IV, subchapters C and 

I, and 45 CFR subtitle A, subchapter B, 

as set forth below. 

Title 42 Public Health 

PART 435—ELIGIBILITY IN THE 

STATES, DISTRICT OF COLUMBIA, 

THE NORTHERN MARIANA ISLANDS, 

AND AMERICAN SAMOA. 

■ 1. The authority citation of part 435 

continues to read as follows: 

Authority: 42 U.S.C 1302. 

§ 435.601 [Amended] 

■ 2. Section 435.601 is amended by 

removing paragraph (d)(4), 

redesignating paragraph (d)(5) as 

paragraph (d)(4). 

PART 600—ADMINISTRATION, 

ELIGIBILITY, ESSENTIAL HEALTH 

BENEFITS, PERFORMANCE 

STANDARDS, SERVICE DELIVERY 

REQUIREMENTS, PREMIUM AND 

COST SHARING, ALLOTMENTS, AND 

RECONCILIATION 

■ 3. The authority citation for part 600 

continues to read as follows: 

Authority: Section 1331 of the Patient 

Protection and Affordable Care Act of 2010 

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

by the Health Care and Education 

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

124 Stat. 1029). 

■ 4. Section 600.320 is amended by 

revising paragraph (c) to read as follows: 

§ 600.320 Determination of eligibility for 

and enrollment in a standard health plan. 

* * * * * 

(c) Effective date of eligibility. The 

State must establish a uniform method 

of determining the effective date of 

eligibility for enrollment in a standard 

health plan which – 

(1) Follows the Exchange effective 

date standards at 45 CFR 155.420(b)(1); 

(2) Follows the Medicaid effective 

date standards at 42 CFR 435.915 

exclusive of § 435.915(a); or 

(3) Follows an effective date of 

eligibility of the first day of the month 

following the month in which BHP 

eligibility is determined. 

* * * * * 

Title 45 Public Welfare 

PART 153—STANDARDS RELATED TO 

REINSURANCE, RISK CORRIDORS, 

AND HHS RISK ADJUSTMENT UNDER 

THE AFFORDABLE CARE ACT 

■ 5. The heading for Part 153 is revised 

to read as set forth above: 

■ 6. The authority citation for part 153 

continues to read as follows: 

Authority: 42 U.S.C. 18031, 18041, and 

18061 through 18063. 

■ 7. Section 153.620 is amended by 

revising the section heading and 

paragraph (c)(4) introductory text to 

read as follows: 

§ 153.620 Compliance with HHS risk 

adjustment standards. 

* * * * * 

(c) * * * 

(4) Final audit findings. If an audit 

results in the inclusion of a finding or 

observation in the final audit report, the 

issuer must comply with the actions set 

forth in the final audit report in the 

manner and timeframe established by 

HHS, and the issuer must complete all 

of the following, if required by HHS: 

* * * * * 


ddrumheller on DSK120RN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82649 

PART 155—EXCHANGE 

ESTABLISHMENT STANDARDS AND 

OTHER RELATED STANDARDS 

UNDER THE AFFORDABLE CARE ACT 

■ 8. The authority citation for part 155 

continues to read as follows: 

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

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

and 18081–18083. 

■ 9. Section 155.105 is amended— 

■ a. In paragraph (b)(2) by removing 

‘‘and’’ after the semicolon; 

■ b. In paragraph (b)(3) by removing ‘‘.’’ 

and adding in its place ‘‘; and’’; and 

■ c. Adding paragraph (b)(4). 

The revision reads as follows: 

§ 155.105 Approval of a State Exchange. 

* * * * * 

(b) * * * 

(4) The Exchange first operates 

successfully a State Exchange on the 

Federal platform under § 155.106(c), 

meeting all requirements established 

under § 155.200(f), for at least one plan 

year, including its first open enrollment 

period, as part of the establishment of a 

State Exchange. 

* * * * * 

■ 10. Section 155.106 is amended by 

revising paragraph (a)(2) to read as 

follows: 

§ 155.106 Election to operate an Exchange 

after 2014. 

(a) * * * 

(2) Submit an Exchange Blueprint 

application for HHS approval at least 15 

months prior to the date on which the 

Exchange proposes to begin open 

enrollment as a State Exchange. HHS 

requires that a State submitting a 

Blueprint Application to operate a State 

Exchange provide, upon request, 

supplemental documentation to HHS 

detailing the State’s implementation of 

its State Exchange functionality. 

(i) Public notice. Upon submission of 

an Exchange Blueprint application to 

operate a State Exchange, the State shall 

issue a public notice of its Exchange 

Blueprint application submission 

through its website and include a copy 

of the Exchange Blueprint application, a 

description of the Plan Year for which 

the State seeks to transition to a State 

Exchange, language indicating that the 

State is seeking approval from HHS to 

transition to a State Exchange, and 

information about when and where the 

State will conduct public engagements 

regarding the State’s Exchange Blueprint 

application, as described in paragraph 

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

(ii) Public engagements. After a State 

issues its public notice as described in 

paragraph (a)(2)(i) of this section and 

until HHS approves, or conditionally 

approves, the State’s Exchange 

Blueprint application, a State must 

conduct at least one public engagement 

(such as a townhall meeting or public 

hearing) either in-person or virtually, 

regarding the State’s Exchange Blueprint 

application progress, in a timeline and 

manner considered effective by the State 

and with HHS’ concurrence. A State 

shall provide public notice of the public 

engagement. Such public engagement 

shall also provide interested parties the 

opportunity to learn about the State’s 

progress in transitioning to a State 

Exchange and offer input on that 

transition. Following the initial public 

engagement described in this paragraph 

and until HHS approves or 

conditionally approves the State 

Exchange Blueprint application, a State 

shall conduct periodic public 

engagements, either in-person or 

virtually, in a timeframe and manner 

considered effective by the State. 

* * * * * 

■ 11. Section 155.170 is amended by 

revising paragraph (a)(2) to read as 

follows: 

§ 155.170 Additional required benefits. 

(a) * * * 

(2) A benefit required by State action 

taking place on or before December 31, 

2011, a benefit required by State action 

for purposes of compliance with Federal 

requirements, or a benefit covered in the 

State’s EHB-benchmark plan is 

considered an EHB. A benefit required 

by State action taking place on or after 

January 1, 2012, other than for purposes 

of compliance with Federal 

requirements that is not a benefit 

covered in the State’s EHB-benchmark 

plan, is considered in addition to the 

essential health benefits. 

* * * * * 

■ 12. Section 155.205 is amended by 

revising paragraphs (a) introductory text 

and (b)(4) and (5) to read as follows: 

§ 155.205 Consumer assistance tools and 

programs of an Exchange. 

(a) Call center. If the Exchange is not 

an Exchange described in paragraphs 

(a)(1) or (2) of this section, the Exchange 

must provide for operation of a toll-free 

call center that addresses the needs of 

consumers requesting assistance and 

meets the requirements outlined in 

paragraphs (c)(1), (c)(2)(i), and (c)(3) of 

this section. At a minimum, the 

Exchange call center must provide 

consumers with access to a live call 

center representative during an 

Exchange’s published hours of 

operation and a live call center 

representative who must be able to 

assist consumers with their QHP 

application, including providing 

consumers with information on their 

eligibility for advance premium tax 

credits and cost-sharing reductions, 

helping consumers understand their 

QHP options, helping consumers select 

a QHP, and helping consumers submit 

QHP enrollment applications to the 

Exchange. If the Exchange is an 

Exchange described in paragraphs (a)(1) 

or (2) of this section, the Exchange must 

provide at a minimum a toll-free 

telephone hotline that includes the 

capability to provide information to 

consumers about eligibility and 

enrollment processes, and to 

appropriately direct consumers to the 

applicable Exchange website and other 

applicable resources. 

* * * * * 

(b) * * * 

(4) Allows for an individual to submit 

a single streamlined eligibility 

application to the Exchange in 

accordance with § 155.405 and for the 

Exchange to make all determinations of 

eligibility for enrollment in a QHP and 

insurance affordability programs, in 

accordance with subpart D of this part, 

through the operation of a centralized 

eligibility and enrollment platform on 

the Exchange’s website; or, if the 

Exchange is a State-based Exchange on 

the Federal platform, through the 

Federal eligibility and enrollment 

platform. 

(5) Allows a qualified individual to 

select a QHP and allows the Exchange 

to maintain records of all QHP 

enrollments, in accordance with subpart 

E of this part, through the operation of 

a centralized eligibility and enrollment 

platform on the Exchange’s website; or, 

if the Exchange is a State-based 

Exchange on the Federal platform, 

through the Federal eligibility and 

enrollment platform. 

* * * * * 

■ 13. Section 155.220 is amended by— 

■ a. Adding paragraph (c)(4)(iii); 

■ b. Revising paragraphs (h)(2) and (3); 

and 

■ c. Adding paragraph (n). 

The additions and revisions read as 

follows: 

§ 155.220 Ability of States to permit agents 

and brokers and web-brokers to assist 

qualified individuals, qualified employers, 

or qualified employees enrolling QHPs. 

* * * * * 

(c) * * * 

(4) * * * 

(iii) Web-brokers operating in State 

Exchanges that do not use the Federal 

platform that permit other agents and 

brokers, through a contract or other 

arrangement, to use their internet 

website to help an applicant or enrollee 

complete a QHP selection or complete 


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the Exchange eligibility application 

must comply with the standards in 

paragraphs (c)(4)(i)(A), (B), (D) and (F), 

except that all references to ‘‘Federallyfacilitated Exchange’’ or ‘‘HHS’’ in 

paragraphs (c)(4)(i)(A), (B), (D), and (F) 

of this section will be understood to 

mean ‘‘the applicable State Exchange.’’ 

* * * * * 

(h) * * * 

(2) Timeframe for request. The agent, 

broker, or web-broker must submit a 

request for reconsideration to the CMS 

Administrator within 30 calendar days 

of the written notice from HHS. 

(3) Notice of reconsideration decision. 

The CMS Administrator will provide 

the agent, broker, or web-broker with a 

written notice of the reconsideration 

decision within 60 calendar days of the 

date the CMS Administrator receives the 

request for reconsideration. This 

decision will constitute HHS’ final 

determination. 

* * * * * 

(n) Application to State Exchanges 

that do not use the Federal platform. A 

web-broker that assists or enrolls 

qualified individuals, qualified 

employers or qualified employees in 

coverage in a manner that constitutes 

enrollment through the State Exchange, 

or assists individual market consumers 

with submission of applications for 

advance payments of the premium tax 

credit and cost-sharing reductions 

through the State Exchange, must 

comply with the Federally-facilitated 

Exchange standards in paragraphs 

(c)(3)(i)(A), (G), (I), and (j)(2)(i) of this 

section, including any additional Statespecific standards under paragraph 

(n)(1) of this section, and the State 

Exchange’s operational readiness 

standards under paragraph (n)(2) of this 

section. For the purposes of paragraph 

(j)(2)(i) of this section, references to 

‘‘HHS’’ and ‘‘the Federally-facilitated 

Exchanges’’ will be understood to mean 

‘‘the applicable State Exchange, applied 

for web-brokers’’, and the reference to 

‘‘HealthCare.gov’’ will be understood to 

mean ‘‘the State Exchange website, 

applied for web-brokers.’’ 

(1) State Exchanges may add Statespecific information to the standardized 

disclaimers and information under 

paragraphs (c)(3)(i)(A), (G), and (I) of 

this section that does not conflict with 

the HHS-provided language. 

(2) State Exchanges must establish the 

form and manner for their web-brokers 

to demonstrate operational readiness 

and compliance with applicable 

requirements prior to the web-broker’s 

internet website being used to complete 

an Exchange eligibility application or a 

QHP selection, which may include 

submission or completion of the 

following items to the State Exchange, 

in the form and manner specified by the 

Exchange: 

(i) Operational data including 

licensure information, points of contact 

and third-party relationships; 

(ii) Enrollment testing, prior to 

approval or renewal; 

(iii) website reviews performed by the 

State Exchange; 

(iv) Security and privacy 

documentation, including: 

(A) Penetration testing results; 

(B) Security and privacy assessment 

reports; 

(C) Vulnerability scan results; 

(D) Plans of action and milestones; 

and 

(E) System security and privacy plans. 

(v) Agreements between the webbroker and the State Exchange. 

■ 14. Section 155.221 is amended by— 

■ a. Revising paragraphs (a) 

introductory text; and 

■ b. Adding paragraphs (a)(1)(i) and (ii), 

(b)(6), and (j). 

The revisions and addition read as 

follows: 

§ 155.221 Standards for direct enrollment 

entities and for third-parties to perform 

audits of direct enrollment entities. 

(a) Direct enrollment entities. All 

Exchanges may permit the following 

entities to assist consumers with direct 

enrollment in QHPs offered through the 

Exchange in a manner that is considered 

to be through the Exchange, to the 

extent permitted by applicable State 

law: 

(1) * * * 

(i) For purposes of applying the 

requirements of § 156.1230(b) of this 

subchapter to State Exchanges, all 

references to ‘‘Federally-facilitated 

Exchange’’ and ‘‘HHS’’, and 

‘‘HealthCare.gov’’ will be understood to 

mean ‘‘the applicable State Exchange’’, 

‘‘the applicable State Exchange’’, and 

‘‘the applicable State Exchange 

website’’, respectively. 

(ii) [Reserved] 

* * * * * 

(b) * * * 

(6) Implement and prominently 

display website changes in a manner 

consistent with display changes made to 

the Federally-facilitated Exchange 

website by meeting standards 

communicated and defined by HHS 

within a time period set by HHS, unless 

HHS approves a deviation from those 

standards. Direct enrollment entities 

may request a deviation by submitting a 

proposed alternative display and 

accompanying rationale to HHS for 

review. 

* * * * * 

(j) Application to State Exchanges 

that do not use the Federal platform. A 

direct enrollment entity that enrolls 

qualified individuals, qualified 

employers, or qualified employees in 

coverage in a manner that constitutes 

enrollment through the State Exchange, 

or assists consumers with submission of 

applications for advance payments of 

the premium tax credit and cost-sharing 

reductions through the State Exchange, 

must comply with the Federallyfacilitated Exchange standards in 

paragraphs (b)(1), (2), (3), and (d) of this 

section, including the exceptions in 

paragraph (c) of this section, where 

applicable; any additional State-specific 

standards under paragraph (j)(1) of this 

section; the State Exchange’s 

operational readiness standards under 

paragraph (j)(2) of this section; and the 

State Exchange’s website display change 

standards under paragraph (j)(3) of this 

section. Paragraph (d) references 

§ 155.415(b), and § 155.415(b)(1) will be 

understood to also apply to State 

Exchanges. 

(1) State Exchanges may add Statespecific information to the standardized 

disclaimer under paragraph (b)(2) of this 

section that does not conflict with the 

HHS-provided language. 

(2) State Exchanges must establish the 

form and manner for their direct 

enrollment entities to demonstrate 

operational readiness and compliance 

with applicable requirements prior to 

the direct enrollment entity’s internet 

website being used to complete an 

Exchange eligibility application or a 

QHP selection, which may include 

submission or completion of the 

following documentation to the State 

Exchange, in the form and manner 

specified by the Exchange: 

(i) Business audit documentation 

including: 

(A) Notices of intent to participate 

including auditor information; 

(B) Documentation packages 

including privacy questionnaires, 

privacy policy statements, and terms of 

service; and 

(C) Business audit reports including 

testing results. 

(ii) Security and privacy audit 

documentation including: 

(A) Interconnection security 

agreements; 

(B) Security and privacy controls 

assessment test plans; 

(C) Security and privacy assessment 

reports; 

(D) Plans of action and milestones; 

(E) Privacy impact assessments; 

(F) System security and privacy plans; 

(G) Incident response plans; and 

(H) Vulnerability scan results. 

(3) State Exchanges must require their 

direct enrollment entities to implement 


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and prominently display changes 

adopted for display on the State 

Exchanges’ websites, consistent with the 

process of defining and communicating 

standards and setting advance notice 

periods in paragraph (b)(6) of this 

section, except that all references to 

‘‘Federally-facilitated Exchange 

website’’ would be understood to mean 

‘‘State Exchange website’’ and 

references to ‘‘HHS’’ would be 

understood to mean ‘‘State Exchange’’ 

in paragraph (b)(6) of this section. 

■ 15. Section 155.302 is amended by 

revising paragraph (a)(1) to read as 

follows: 

§ 155.302 Options for conducting eligibility 

determinations. 

(a) * * * 

(1) Directly, through contracting 

arrangements in accordance with 

§ 155.110(a) under which the Exchange 

carries out all eligibility determinations 

for QHP coverage and related insurance 

affordability programs; or, as a Statebased Exchange on the Federal platform, 

through a Federal platform agreement 

under which HHS carries out eligibility 

determinations and other requirements 

contained within this subpart; or 

* * * * * 

■ 16. Section 155.305 is amended by 

adding paragraphs (f)(4)(i) and (ii) to 

read as follows: 

§ 155.305 Eligibility standards. 

* * * * * 

(f) * * * 

(4) * * * 

(i) If HHS notifies the Exchange as 

part of the process described in 

§ 155.320(c)(3) that APTC payments 

were made on behalf of either the tax 

filer or spouse, if the tax filer is a 

married couple, for 1 year for which tax 

data would be utilized for verification of 

household income and family size in 

accordance with § 155.320(c)(1)(i), and 

the tax filer or the tax filer’s spouse did 

not comply with the requirement to file 

an income tax return for that year as 

required by 26 U.S.C. 6011, 6012, and 

their implementing regulations and 

reconcile APTC for that period, the 

Exchange must send a notification, 

consistent with the standards applicable 

to the protection of Federal Tax 

Information to the tax filer, that informs 

the tax filer that the Exchange has 

determined that the tax filer or the tax 

filer’s spouse, if the tax filer is part of 

a married couple, has failed to file and 

reconcile, and educate the tax filer that 

they need to file and reconcile or risk 

being determined ineligible for APTC if 

they fail to file and reconcile for a 

second consecutive tax year. Only the 

FTR Open Enrollment notices sent 

directly to the tax filer may directly state 

that the IRS data indicates the tax filer 

failed to file and reconcile. 

(ii) [Reserved] 

* * * * * 

■ 17. Section 155.315 is amended by 

revising paragraph (e) to read as follows: 

§ 155.315 Verification process related to 

eligibility for enrollment in a QHP through 

the Exchange. 

* * * * * 

(e) Verification of incarceration 

status. The Exchange must verify an 

applicant’s attestation that the applicant 

meets the requirements of 

§ 155.305(a)(2) by— 

(1) Accepting an applicant’s 

attestation that they are not currently 

incarcerated; or 

(2) Verifying an applicant’s attestation 

of incarceration status using any 

electronic data source that is available 

to the Exchange and which has been 

approved by HHS for this purpose. HHS 

will approve an electronic data source 

for incarceration verification if it 

provides data that are current and 

accurate, and if its use minimizes 

administrative costs and burdens. 

(3) If an Exchange verifies an 

applicant’s attestation of incarceration 

status using an approved data source 

under paragraph (e)(2) of this section, to 

the extent that an applicant’s attestation 

is not reasonably compatible with 

information from the approved data 

source or other information provided by 

the applicant or in the records of the 

Exchange, the Exchange must follow the 

procedures specified in § 155.315(f). 

* * * * * 

■ 18. Section 155.320 is amended by 

adding paragraph (c)(1)(iii) to read as 

follows. 

§ 155.320 Verification process related to 

eligibility for insurance affordability 

programs. 

* * * * * 

(c) * * * 

(1) * * * 

(iii) Payment to use income data 

through the Verify Current Income Hub 

service. Beginning July 1, 2024, State 

Exchanges that elect the option to access 

the Verify Current Income service 

through the Federal Data Services Hub 

(‘‘the Hub’’) to verify an individual’s 

income as described in paragraph 

(c)(3)(vi)(A) of this section, must pay an 

annual advanced payment to HHS, in 

the timeframe and manner established 

by HHS, for use of the income data 

provided by the Verify Current Income 

Hub service equal to the product of the 

anticipated number of purchased 

transactions returned from the Verify 

Current Income Hub service and the 

price per transaction established under 

the contract maintained by HHS to 

provide the VCI Hub service. 

Participating States would be required 

to reconcile with HHS on an annual 

basis the anticipated utilization of CSI 

data provided by the VCI Hub service 

with the actual utilization. 

* * * * * 

■ 19. Section 155.330 is amended by 

revising paragraph (d)(3) to read as 

follows: 

§ 155.330 Eligibility redetermination during 

a benefit year. 

* * * * * 

(d) * * * 

(3) Definition of periodically. (i) 

Beginning with the 2021 calendar year, 

the Exchange must perform the periodic 

examination of data sources described 

in paragraphs (d)(1)(ii) of this section at 

least twice in a calendar year. State 

Exchanges that have implemented a 

fully integrated eligibility system with 

their respective State Medicaid 

programs, that have a single eligibility 

rules engine that uses MAGI to 

determine eligibility for advance 

payments of the premium tax credit, 

cost-sharing reductions, Medicaid, 

CHIP, and the BHP, if a BHP is 

operating in the service area of the 

Exchange, will be deemed in 

compliance with the Medicaid/CHIP 

PDM requirements and, if applicable, 

BHP PDM requirements, in paragraphs 

(d)(1)(ii) and (d)(3) of this section. 

(ii) Beginning with the 2025 calendar 

year, the Exchange must perform the 

periodic examination of data sources 

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

section at least twice in a calendar year. 

(iii) Notwithstanding the 

requirements of paragraphs (d)(3)(i) and 

(ii) of this section, the Secretary has 

authority to temporarily suspend the 

requirement that Exchanges conduct the 

PDM processes described at paragraphs 

(d)(3)(i) or (ii) of this section during 

certain situations or circumstances that 

lead to the unavailability of data needed 

to conduct PDM. 

* * * * * 

■ 20. Section 155.335 is amended by— 

■ a. Revising paragraphs (j)(1)(ii) 

through (iv); 

■ b. Adding paragraph (j)(1)(v); 

■ c. Revising paragraphs (j)(2)(i) through 

(iii); and 

■ d. Adding paragraphs (j)(2)(iv) and 

(j)(5). 

The revisions and additions read as 

follows: 

§ 155.335 Annual eligibility 

redetermination. 

* * * * * 

(j) * * * 


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(1) * * * 

(ii) If the enrollee’s current QHP is not 

available through the Exchange, the 

Exchange will re-enroll the enrollee in 

a QHP within the same product at the 

same coverage level as described in 

sections 1302(d) or (e) of the ACA as the 

enrollee’s current QHP that has the most 

similar network compared to the 

enrollee’s current QHP; 

(iii) If the enrollee’s current QHP is 

not available through the Exchange and 

the enrollee’s product no longer 

includes a QHP at the same coverage 

level as described in sections 1302(d) or 

(e) of the ACA as the enrollee’s current 

QHP and— 

(A) The enrollee’s current QHP is a 

silver level plan, the Exchange will reenroll the enrollee in a silver level QHP 

under a different product offered by the 

same QHP issuer that is most similar to 

the enrollee’s current product and that 

has the most similar network compared 

to the enrollee’s current QHP. If no such 

silver level QHP is available for 

enrollment through the Exchange, the 

Exchange will re-enroll the enrollee in 

a QHP under the same product that is 

coverage level higher or lower than the 

enrollee’s current QHP and that has the 

most similar network compared to the 

enrollee’s current QHP; or 

(B) The enrollee’s current QHP is not 

a silver level plan, the Exchange will reenroll the enrollee in a QHP under the 

same product that is one coverage level 

higher or lower than the enrollee’s 

current QHP and that has the most 

similar network compared to the 

enrollee’s current QHP; 

(iv) If the enrollee’s current QHP is 

not available through the Exchange and 

the enrollee’s product no longer 

includes a QHP that is at the same 

coverage level as described in sections 

1302(d) or (e) of the ACA as, or one 

coverage level higher or lower than, the 

enrollee’s current QHP, the Exchange 

will re-enroll the enrollee in any other 

QHP offered under the product in which 

the enrollee’s current QHP is offered in 

which the enrollee is eligible to enroll 

and that has the most similar network 

compared to the enrollee’s current QHP; 

or 

(v) Notwithstanding the other 

provisions in paragraph (j)(1) of this 

section, if the enrollee’s current QHP is 

a catastrophic plan as described in 

section 1302(e) of the ACA, and the 

enrollee will no longer meet the criteria 

for enrollment in a catastrophic plan as 

described in section 1302(e)(2) of the 

ACA: 

(A) The Exchange will re-enroll the 

enrollee in a bronze metal level QHP 

within the same product as the 

enrollee’s current QHP that has the most 

similar network compared to the 

enrollee’s current QHP; or 

(B) If no bronze plan is available 

through this product, the Exchange will 

re-enroll the enrollee in the QHP with 

the lowest coverage level offered under 

the product in which the enrollee’s 

current QHP is offered in which the 

enrollee is eligible to enroll and that has 

the most similar network compared to 

the enrollee’s current QHP. 

(2) * * * 

(i) The Exchange will re-enroll the 

enrollee in a QHP at the same coverage 

level as the enrollee’s current QHP in 

the product offered by the same issuer 

that is the most similar to the enrollee’s 

current product and that has the most 

similar network compared to the 

enrollee’s current QHP; 

(ii) If the issuer does not offer another 

QHP at the same coverage level as the 

enrollee’s current QHP, the Exchange 

will re-enroll the enrollee in a QHP that 

is one coverage level higher or lower 

than the enrollee’s current QHP and that 

has the most similar network compared 

to the enrollee’s current QHP in the 

product offered by the same issuer 

through the Exchange that is the most 

similar to the enrollee’s current product; 

(iii) If the issuer does not offer another 

QHP through the Exchange at the same 

coverage level as, or one metal level 

higher or lower than the enrollee’s 

current QHP, the Exchange will reenroll the enrollee in any other QHP 

offered by the same issuer in which the 

enrollee is eligible to enroll and that has 

the most similar network compared to 

the enrollee’s current QHP in the 

product that is most similar to the 

enrollee’s current product; or 

(iv) Notwithstanding the other 

provisions in paragraph (j)(2) of this 

section, if the enrollee’s current QHP is 

a catastrophic plan as described in 

section 1302(e) of the ACA, and the 

enrollee will no longer meet the criteria 

for enrollment in a catastrophic plan as 

described in section 1302(e)(2) of the 

ACA: 

(A) The Exchange will re-enroll the 

enrollee in a bronze metal level QHP 

offered by the same issuer in which the 

enrollee is eligible to enroll and that has 

the most similar network compared to 

the enrollee’s current QHP in the 

product that is most similar to the 

enrollee’s current product; or 

(B) If no bronze plan is available 

through this product, the Exchange will 

re-enroll the enrollee in the QHP with 

the lowest coverage level offered under 

the product in which the enrollee’s 

current QHP is offered in which the 

enrollee is eligible to enroll and that has 

the most similar network compared to 

the enrollee’s current QHP. 

* * * * * 

(5) For purposes of this section, 

catastrophic coverage is not a coverage 

level that is considered higher or lower 

than metal level coverage when reenrolling an enrollee to a plan that is a 

metal level higher or lower than their 

current plan, and an Exchange may not 

re-enroll an enrollee that has coverage 

under section 1302(d) into catastrophic 

coverage. 

* * * * * 

■ 21. Section 155.400 is amended by 

revising paragraph (e)(2) to read as 

follows: 

§ 155.400 Enrollment of qualified 

individuals into QHPs. 

* * * * * 

(e) * * * 

(2) Premium payment deadline 

extension. Exchanges may, and the 

Federally-facilitated Exchanges and 

State-based Exchanges on the Federal 

platform will, allow issuers 

experiencing billing or enrollment 

problems due to high volume or 

technical errors, or issuers directed to 

do so by applicable State or Federal 

authorities, to implement a reasonable 

extension of the binder payment and 

other premium payment deadlines. 

* * * * * 

■ 22. Section 155.410 is amended by 

revising paragraph (e)(4)(ii) to read as 

follows: 

§ 155.410 Initial and annual open 

enrollment periods. 

* * * * * 

(e) * * * 

(4) * * * 

(ii) For State Exchanges, for the 

benefit years beginning on or after 

January 1, 2025, a longer annual open 

enrollment period end date may be 

adopted, such that the open enrollment 

period begins on November 1 of the 

calendar year preceding the benefit year 

and ends no earlier than January 15 of 

the benefit year. 

* * * * * 

■ 23. Section 155.420 is amended by 

revising paragraphs (b)(1), (b)(3)(i) and 

(d)(16) to read as follows: 

§ 155.420 Special enrollment periods. 

* * * * * 

(b) * * * 

(1) Regular effective dates. Except as 

specified in paragraphs (b)(2) and (3) of 

this section, for a QHP selection 

received by the Exchange from a 

qualified individual, the Exchange must 

ensure a coverage effective date of the 

first day of the month following the 

QHP selection; except that before 


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January 1, 2025, for a QHP selection 

received by the Exchange from a 

qualified individual between the 

sixteenth and the last day of any month, 

the Exchange may ensure a coverage 

effective date of the first day of the 

second month following QHP selection. 

* * * * * 

(3) * * * 

(i) For a QHP selection received by 

the Exchange under a special 

enrollment period for which the 

effective dates of coverage specified in 

paragraph (b)(1) or (b)(2)(i) of this 

section would apply, the Exchange may 

provide a coverage effective date that is 

earlier than specified in such paragraph. 

* * * * * 

(d) * * * 

(16) At the option of the Exchange, a 

qualified individual or enrollee, or the 

dependent of a qualified individual or 

enrollee, who is eligible for advance 

payments of the premium tax credit, 

and whose household income, as 

defined in 26 CFR 1.36B–1(e), is 

expected to be at or below 150 percent 

of the Federal poverty level, may enroll 

in a QHP or change from one QHP to 

another one time per month. 

* * * * * 

■ 24. Section 155.430 is amended by 

revising paragraph (b)(1)(iv) 

introductory text and adding paragraph 

(b)(1)(iv)(D) to read as follows: 

§ 155.430 Termination of Exchange 

enrollment or coverage. 

* * * * * 

(b) * * * 

(1) * * * 

(iv) The Exchange must permit an 

enrollee to retroactively terminate or 

cancel the enrollee’s coverage or 

enrollment in a QHP in the following 

circumstances, and State Exchanges 

may permit an enrollee to retroactively 

terminate or cancel the enrollee’s 

coverage or enrollment in a QHP in 

accordance with paragraph (D): 

* * * * * 

(D) In a Federally-facilitated Exchange 

or a State-based Exchange on the 

Federal platform, the enrollee 

demonstrates to the Exchange that the 

enrollee enrolled in Medicare Part A or 

B coverage with a retroactive effective 

date, and requests retroactive 

termination within 60 days of the 

enrollment. The effective date of the 

retroactive termination must be no 

sooner than the day before the first day 

of coverage under Medicare Part A or B. 

* * * * * 

■ 25. Section 155.1050 is amended by 

revising paragraph (a) to read as follows: 

§ 155.1050 Establishment of Exchange 

network adequacy standards. 

(a) Except with regard to multi-State 

plans: 

(1) A Federally-facilitated Exchange 

must ensure that the provider network 

of each QHP meets the standards 

specified in § 156.230 of this subtitle. 

(2) State Exchanges and State-based 

Exchanges on the Federal Platform must 

ensure that the provider network of each 

QHP meets applicable standards 

specified in § 156.230(a)(1)(ii), (a)(1)(iii) 

and (a)(4) of this subtitle. 

(i) For plan years beginning on or after 

January 1, 2025, to comply with the 

requirement under paragraph (a)(2) of 

this section, State Exchanges and Statebased Exchanges on the Federal 

platform must: 

(A) Establish and impose network 

adequacy time and distance standards 

for QHPs that are at least as stringent as 

standards for QHPs participating on the 

Federally-facilitated Exchanges under 

§ 156.230(a)(2)(i)(A) of this subtitle; 

(B) Conduct, prior to QHP 

certification, quantitative network 

adequacy reviews to evaluate 

compliance with requirements under 

§ 156.230(a)(1)(ii), (a)(1)(iii), and 

(a)(2)(i)(A) of this subtitle, while 

providing QHP certification applicants 

the flexibilities described under 

§ 156.230(a)(2)(ii) and (a)(3) and (4) of 

this subtitle; and 

(C) Require that all issuers seeking 

certification of a plan as a QHP submit 

information to the Exchange reporting 

whether or not network providers offer 

telehealth services. 

(ii) HHS may grant an exception to the 

requirements described under paragraph 

(a)(2)(i) of this section to a State 

Exchange or State-based Exchange on 

the Federal platform that demonstrates 

with evidence-based data, in a form and 

manner specified by HHS, that: 

(A) the Exchange applies and enforces 

alternate quantitative network adequacy 

standards that are reasonably calculated 

to ensure a level of access to providers 

that is as great as that ensured by the 

Federal network adequacy standards 

established for QHPs under § 156.230 of 

this subtitle; and 

(B) the Exchange evaluates whether 

plans comply with applicable network 

adequacy standards prior to certifying 

any plan as a QHP. 

* * * * * 

■ 26. Section 155.1312 is amended by 

adding paragraph (c)(3) to read as 

follows: 

§ 155.1312 State public notice 

requirements. 

* * * * * 

(c) * * * 

(3) Such public hearings shall be 

conducted in an in-person, virtual (that 

is, one that uses telephonic, digital, and/ 

or web-based platforms), or hybrid (that 

is, one that provides for both in-person 

and virtual attendance) format. 

* * * * * 

■ 27. Section 155.1320 is amended by 

revising paragraph (c) introductory text 

to read as follows: 

§ 155.1320 Monitoring and compliance. 

* * * * * 

(c) Post award. Within at least 6 

months after the implementation date of 

a section 1332 waiver and annually 

thereafter, a State must hold a public 

forum to solicit comments on the 

progress of a section 1332 waiver. The 

State must hold the public forum at 

which members of the public have an 

opportunity to provide comments and 

must provide a summary of the forum 

to the Secretary as part of the quarterly 

report specified in § 155.1324(a) that is 

associated with the quarter in which the 

forum was held, as well as in the annual 

report specified in § 155.1324(b) that is 

associated with the year in which the 

forum was held. The public forum shall 

be conducted in an in-person, virtual 

(that is, one that uses telephonic, digital, 

and/or web-based platforms), or hybrid 

(that is, one that provides for both inperson and virtual attendance) format. 

* * * * * 

PART 156—HEALTH INSURANCE 

ISSUER STANDARDS UNDER THE 

AFFORDABLE CARE ACT, INCLUDING 

STANDARDS RELATED TO 

EXCHANGES 

■ 28. The authority citation for part 156 

continues to read as follows: 

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

18032, 18041–18042, 18044, 18054, 18061, 

18063, 18071, 18082, and 26 U.S.C. 36B. 

■ 29. Section 156.111 is amended by 

revising paragraphs (a), (b)(2), and (e)(2) 

and (3) to read as follows: 

§ 156.111 State selection of EHBbenchmark plans for plan years beginning 

on or after January 1, 2020. 

(a)(1) Subject to paragraphs (b) 

through (e) of this section, for plan years 

beginning on or after January 1, 2020 

through December 31, 2026, a State may 

change its EHB-benchmark plan by: 

(i) Selecting the EHB-benchmark plan 

that another State used for the 2017 plan 

year under §§ 156.100 and 156.110; 

(ii) Replacing one or more categories 

of EHBs established at § 156.110(a) in 

the State’s EHB-benchmark plan used 

for the 2017 plan year with the same 

category or categories of EHB from the 

EHB-benchmark plan that another State 


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82654 Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 

used for the 2017 plan year under 

§§ 156.100 and 156.110; or 

(iii) Otherwise selecting a set of 

benefits that would become the State’s 

EHB-benchmark plan. 

(2) Subject to paragraphs (b), (c), (d), 

and (e) of this section, for plan years 

beginning on or after January 1, 2027, a 

State may change its EHB-benchmark 

plan by selecting a set of benefits that 

would become the State’s EHBbenchmark plan. 

(b) * * * 

(2) Scope of benefits. (i) For plan years 

beginning on or after January 1, 2020 

through December 31, 2026: 

(A) Provide a scope of benefits equal 

to the scope of benefits provided under 

a typical employer plan (supplemented 

by the State as necessary to provide 

coverage within each EHB category at 

§ 156.110(a)), defined as either: 

(1) One of the selecting State’s 10 

base-benchmark plan options 

established at § 156.100, and available 

for the selecting State’s selection for the 

2017 plan year; or 

(2) The largest health insurance plan 

by enrollment within one of the five 

largest large group health insurance 

products by enrollment in the State, as 

product and plan are defined at 

§ 144.103 of this subchapter, provided 

that: 

(i) The product has at least 10 percent 

of the total enrollment of the five largest 

large group health insurance products in 

the State; 

(ii) The plan provides minimum 

value, as defined under § 156.145; 

(iii) The benefits are not excepted 

benefits, as established under 

§ 146.145(b), and § 148.220 of this 

subchapter; and 

(iv) The benefits in the plan are from 

a plan year beginning after December 

31, 2013. 

(B) Not exceed the generosity of the 

most generous among a set of 

comparison plans, including: 

(1) The State’s EHB-benchmark plan 

used for the 2017 plan year, and 

(2) Any of the State’s base-benchmark 

plan options for the 2017 plan year 

described in § 156.100(a)(1), 

supplemented as necessary under 

§ 156.110. 

(ii) For plan years beginning on or 

after January 1, 2027, provide a scope of 

benefits that is equal to the scope 

benefits of a typical employer plan in 

the State. The scope of benefits in a 

typical employer plan in a State is any 

scope of benefits that is as or more 

generous than the scope of benefits in 

the least generous plan (supplemented 

by the State as necessary to provide 

coverage within each EHB category at 

§ 156.110(a)), and as or less generous 

than the scope of benefits in the most 

generous plan in the State 

(supplemented by the State as necessary 

to provide coverage within each EHB 

category at § 156.110(a)), among the 

following: 

(A) One of the selecting State’s 10 

base-benchmark plan options 

established at § 156.100, and available 

for the selecting State’s selection for the 

2017 plan year; or 

(B) The largest health insurance plan 

by enrollment within one of the five 

largest large group health insurance 

products by enrollment in the State, as 

product and plan are defined at 

§ 144.103 of this subchapter, provided 

that: 

(1) The product has at least 10 percent 

of the total enrollment of the five largest 

large group health insurance products in 

the State; 

(2) The plan provides minimum 

value, as defined under § 156.145; 

(3) The benefits are not excepted 

benefits, as established under 

§ 146.145(b), and § 148.220 of this 

subtitle; and 

(4) The benefits in the plan are from 

a plan year beginning after December 

31, 2013. 

* * * * * 

(e) * * * 

(2) An actuarial certification and an 

associated actuarial report from an 

actuary, who is a member of the 

American Academy of Actuaries, in 

accordance with generally accepted 

actuarial principles and methodologies, 

that affirms that the State’s EHBbenchmark plan complies with the 

applicable scope of benefits 

requirements at paragraph (b)(2) of this 

section. 

(3) The State’s EHB-benchmark plan 

document that reflects the benefits and 

limitations, including medical 

management requirements, a schedule 

of benefits and, if the State is changing 

the number of prescription drugs 

pursuant to § 156.122(a)(1)(ii), a 

formulary drug list in a format and 

manner specified by HHS; and 

* * * * * 

■ 30. Section 156.115 is amended by 

revising paragraph (d) to read as 

follows: 

§ 156.115 Provision of EHB. 

* * * * * 

(d) An issuer of a plan offering EHB 

may not include routine non-pediatric 

eye exam services, long-term/custodial 

nursing home care benefits, or nonmedically necessary orthodontia as 

EHB. 

■ 31. Section 156.122 is amended by 

adding paragraphs (a)(3)(i)(E) and (f) to 

read as follows: 

§ 156.122 Prescription drug benefits. 

(a) * * * 

(3) * * * 

(i) * * * 

(E) For plan years beginning on or 

after January 1, 2026, include a 

consumer representative who must: 

(1) Represent the consumer 

perspective as a member of the P&T 

committee. 

(2) Have an affiliation with and/or 

demonstrate active participation in 

consumer or community-based 

organizations. 

(3) Have experience in the analysis 

and interpretation of complex data and 

be able to understand its public health 

significance. 

(4) Have no fiduciary obligation to a 

health facility or other health agency 

and have no material financial interest 

in the rendering of health services. 

* * * * * 

(f) If a health plan covers prescription 

drugs in excess of the prescription drugs 

required to be covered under paragraph 

(a)(1) of this section, the additional 

prescription drugs are considered an 

essential health benefit and subject to 

the cost-sharing requirements at 

§ 156.130, unless coverage of the drug is 

mandated by State action and is in 

addition to an essential health benefit 

pursuant to § 155.170, in which case the 

drug would not be considered an 

essential health benefit. 

■ 32. Section 156.202 is amended by 

adding paragraphs (d) and (e) to read as 

follows: 

§ 156.202 Non-standardized plan option 

limits. 

* * * * * 

(d) For plan year 2025 and subsequent 

years, an issuer may offer additional 

non-standardized plan options per 

product network type, metal level, 

inclusion of dental and/or vision benefit 

coverage, and service area if it 

demonstrates that these additional 

plans’ cost sharing for benefits 

pertaining to the treatment of chronic 

and high-cost conditions (including 

benefits in the form of prescription 

drugs, if pertaining to the treatment of 

the condition(s)) is at least 25 percent 

lower, as applied without restriction in 

scope throughout the plan year, than the 

cost sharing for the same corresponding 

benefits in an issuer’s other nonstandardized plan option offerings in 

the same product network type, metal 

level, and service area. The reduction 

must not be limited to a part of the year, 

or an otherwise limited scope of 

benefits, and the reduced cost sharing 

for these benefits cannot be conditioned 

on a consumer having a particular 

diagnosis. Chronic and high-cost 


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Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Proposed Rules 82655 

conditions that may qualify an issuer for 

this exception will be determined by 

HHS. 

(e) An issuer that seeks to utilize this 

exceptions process is required to submit 

a written justification in a form and 

manner and at a time prescribed by HHS 

that: 

(1) Identifies the specific condition(s) 

for which cost sharing is reduced; 

(2) Explains which benefit(s) would 

have reduced annual enrollee cost 

sharing (as opposed to reduced cost 

sharing for a limited number of visits) 

for the treatment of the specified 

condition(s) relative to the same 

corresponding benefits in an issuer’s 

other non-standardized plan offerings in 

the same product network type, metal 

level, and service area; and 

(3) Explains how the reduced cost 

sharing for these benefits pertain to 

clinically indicated guidelines for 

treatment of the specified chronic and 

high-cost condition(s). 

■ 33. Section 156.520 is amended by 

revising paragraph (f) to read follows: 

§ 156.520 Loan terms. 

* * * * * 

(f) Conversions and voluntary 

terminations. (1) The loan recipient 

shall not convert or sell to a for-profit 

or non-consumer operated entity at any 

time after receiving a loan under this 

subpart. The loan recipient shall not 

undertake any transaction that would 

result in the CO–OP implementing a 

governance structure that does not meet 

the standards in this subpart. 

(2) CMS may, in its sole discretion, 

approve a request by a loan recipient to 

voluntarily terminate its loan agreement 

with CMS, and cease to constitute a 

QNHII, for the purpose of permitting a 

loan recipient to pursue innovative 

business plans that are not otherwise 

consistent with the requirements of this 

subpart, provided that all outstanding 

CO–OP loans issued to the loan 

recipient are repaid in full prior to 

termination of the loan agreement, and 

CMS believes granting the request 

would meaningfully enhance consumer 

access to quality, affordable, memberfocused, non-profit health care options 

in affected markets. 

■ 34. Section 156.1215 is amended by 

revising paragraphs (b) and (c) to read 

as follows: 

§ 156.1215 Payment and collections 

processes. 

* * * * * 

(b) Netting of payments and charges 

for later years. As part of its payment 

and collections process, HHS may net 

payments owed to issuers and their 

affiliates operating under the same tax 

identification number against amounts 

due to the Federal government from the 

issuers and their affiliates under the 

same taxpayer identification number for 

advance payments of the premium tax 

credit, advance payments of and 

reconciliation of cost-sharing 

reductions, payment of Federallyfacilitated Exchange user fees, payment 

of State Exchanges utilizing the Federal 

platform user fees, HHS risk adjustment, 

reinsurance, and risk corridors 

payments and charges, and 

administrative fees for utilizing the 

Federal Independent Dispute Resolution 

process in accordance with 

§ 149.510(d)(2). 

(c) Determination of debt. Any 

amount owed to the Federal government 

by an issuer and its affiliates for 

advance payments of the premium tax 

credit, advance payments of and 

reconciliation of cost-sharing 

reductions, Federally-facilitated 

Exchange user fees, including any fees 

for State-based Exchanges utilizing the 

Federal platform, HHS risk adjustment, 

reinsurance, risk corridors, and unpaid 

administrative fees for utilizing the 

Federal Independent Dispute Resolution 

process in accordance with 

§ 149.510(d)(2), after HHS nets amounts 

owed by the Federal government under 

these programs, is a determination of a 

debt. 

Xavier Becerra, 

Secretary, Department of Health and Human 

Services. 

Lily L. Batchelder, 

Assistant Secretary of the Treasury (Tax 

Policy), Department of the Treasury. 

[FR Doc. 2023–25576 Filed 11–16–23; 4:15 pm] 

BILLING CODE 4120–01–P 


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