[Federal Register Volume 77, Number 38 (Monday, February 27, 2012)]
[Rules and Regulations]
[Pages 11700-11721]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-4395]


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DEPARTMENT OF THE TREASURY

31 CFR Part 33

RIN 1505-AC30

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 155

[CMS-9987-F]
RIN 0938-AQ75


Application, Review, and Reporting Process for Waivers for State 
Innovation

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS; Department 
of the Treasury.

ACTION: Final rule.

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SUMMARY: This final rule sets forth a procedural framework for 
submission and review of initial applications for a Waiver for State 
Innovation described in section 1332 of the Patient Protection and the 
Affordable Care Act including processes to ensure opportunities for 
public input in the development of such applications by States and in 
the Federal review of the applications.

DATES: These regulations are effective on April 27, 2012.

FOR FURTHER INFORMATION CONTACT: Department of the Treasury: Cameron 
Arterton, (202) 622-0044.
    Centers for Medicare & Medicaid Services: Ben Walker, (301) 492-
4430.

SUPPLEMENTARY INFORMATION:

I. Executive Summary:

A. Purpose of the Regulatory Action

    Section 1332(a)(4)(B) of the Patient Protection and Affordable Care 
Act (the Affordable Care Act) (Pub. L. 111-148, enacted on March 23, 
2010), requires the Secretary of Health and Human Services (HHS) and 
the Secretary of the Treasury (the Secretaries) to issue regulations 
regarding procedures for Waivers for State Innovation under section 
1332 of the Affordable Care Act. On March 14, 2011, the Secretaries 
published proposed rules to satisfy this requirement. This finalizes 
those proposed rules.

B. Summary of the Major Provisions of the Regulatory Action in Question

    These final rules make a small number of changes to the proposed 
rules based on comments received from the public. We have removed a 
requirement for applications to be submitted in printed format, to 
reduce administrative burden. We have clarified that evidence of the 
State public notice and comment must include, ``a description of the 
key issues raised * * *'' during such period, to provide the 
Secretaries with a summary of public consultation to date. We have 
added a provision to specify that States must submit waiver 
applications sufficiently in advance of the requested effective date to 
ensure that an appropriate amount of time is available for 
implementation if the waiver is approved. We have also added a 
provision to specify that a complete application must include an 
implementation timeline, to facilitate an analysis by States and the 
Secretaries regarding the feasibility of the proposed implementation 
schedule. We have also clarified that a State does not have to enact a 
new law in support of a section 1332 waiver if the State already has a

[[Page 11701]]

law in place, to eliminate the need for redundant legislative 
activities.
    Lastly, we have made some structural changes to one section of the 
rules to reduce complexity, without modifying the content.

C. Costs and Benefits

    These regulations are not economically significant, under section 
3(f) of Executive Order 12866.

II. Background

    Section 1332 of the Affordable Care Act creates a new Waiver for 
State Innovation and authorizes the Secretaries to waive all or any of 
the following requirements falling under their respective jurisdictions 
for health insurance coverage within a State for plan years beginning 
on or after January 1, 2017:
    <bullet> Part I of subtitle D of Title I of the Affordable Care Act 
(relating to the establishment of qualified health plans);
    <bullet> Part II of subtitle D of Title I of the Affordable Care 
Act (relating to consumer choices and insurance competition through 
health benefit exchanges);
    <bullet> Section 1402 of the Affordable Care Act (relating to 
reduced cost sharing for individuals enrolling in qualified health 
plans); and
    <bullet> Sections 36B (relating to refundable credits for coverage 
under a qualified health plan), 4980H (relating to shared 
responsibility for employers regarding health coverage), and 5000A 
(relating to tax penalties for the failure to maintain minimum 
essential coverage) of the Internal Revenue Code.
    Section 1332 of the Affordable Care Act provides that references in 
that section to ``Secretary'' refer to the Secretary of HHS for waivers 
relating to Parts I and II of subtitle D of Title I of the Affordable 
Care Act and section 1402 of the Affordable Care Act, and refer to the 
Secretary of the Treasury for waivers relating to sections 36B, 4980H, 
and 5000A of the Internal Revenue Code.
    Section 1332(a)(4)(B) of the Affordable Care Act requires the 
Secretaries to issue regulations that provide the following:
    <bullet> A process for public notice and comment at the State 
level, including public hearings, that is sufficient to ensure a 
meaningful level of public input (section 1332(a)(4)(B)(i) of the 
Affordable Care Act);
    <bullet> A process for the submission of an application that 
ensures the disclosure of (A) the provisions of law that the State 
involved seeks to waive, and (B) the specific plans of the State to 
ensure that the waiver will be in compliance with specified statutory 
requirements relating to the comprehensiveness of coverage, 
affordability of coverage, scope of coverage, and the effect on the 
Federal deficit (as described below) (section 1332(a)(4)(B)(ii) of the 
Affordable Care Act);
    <bullet> A process for providing public notice and comment after 
the application is received by the Secretary that is sufficient to 
ensure a meaningful level of public input and that does not impose 
requirements that are in addition to, or duplicative of, requirements 
imposed under the Administrative Procedure Act (APA), or requirements 
that are unreasonable or unnecessarily burdensome with respect to State 
compliance (section 1332(a)(4)(B)(iii) of the Affordable Care Act);
    <bullet> A process for the submission to the applicable Secretary 
or Secretaries of periodic reports by the State concerning the 
implementation of the program under a waiver (section 1332(a)(4)(B)(iv) 
of the Affordable Care Act); and
    <bullet> A process for the periodic evaluation by the applicable 
Secretary or Secretaries of the program under a waiver (section 
1332(a)(4)(B)(v) of the Affordable Care Act).
    Although section 1332 of the Affordable Care Act does not authorize 
waivers for related programs like Medicaid (title XIX of the Social 
Security Act (the Act)) or the Children's Health Insurance Program 
(CHIP, title XXI of the Act), those programs have existing waiver 
authorities. Section 1332(a)(5) of the Affordable Care Act requires the 
Secretaries to develop a process for coordinating and consolidating the 
State waiver processes applicable under the provisions of section 1332 
of the Affordable Care Act with the existing waiver processes 
applicable under titles XVIII (Medicare), XIX (Medicaid), and XXI 
(CHIP) of the Act, and any waiver processes under other Federal laws 
relating to the provision of health care items or services. Section 
1332(a)(5) of the Affordable Care Act further requires the process 
developed by the Secretaries to permit a State to submit a single 
application for a waiver under any or all of those provisions.
    Proposed rules were issued on March 14, 2011, to implement the 
procedural requirements of section 1332 of the Affordable Care Act. The 
proposed rules were also intended to provide for a waiver application 
process that can be coordinated and consolidated with the processes for 
the submission of applications for waivers under titles XVIII, XIX, and 
XXI of the Act.

III. Summary of the Provisions of the Proposed Regulations and Analysis 
of and Responses to Public Comments

    In the March 14, 2011 Federal Register (76 FR 13553), we published 
proposed rules addressing the procedural requirements of section 1332 
of the Affordable Care Act. We received a total of 32 timely comments 
on the proposed rules. The modifications to the proposed regulations 
that are included in these final regulations reflect consideration of 
the comments submitted.

A. Basis and Purpose (31 CFR 33.100 and 45 CFR 155.1300)

    To implement the provisions of section 1332 of the Affordable Care 
Act, the Department of the Treasury proposed to add new part 33 to 31 
CFR Subtitle A and the CMS, on behalf of HHS, proposed to add new part 
155 to 45 CFR Subtitle A. These new parts address procedures for State 
development and submission of an application for a Waiver for State 
Innovation under section 1332 of the Affordable Care Act (referred to 
in the proposed regulations as a section 1332 waiver), a process for 
providing public notice and opportunity for comment at the State and 
Federal levels, a process for the review of applications by the 
Secretaries, and processes for the monitoring and evaluation of 
approved section 1332 waivers by the States and the Secretaries, 
including the periodic submission of reports by the States to the 
Secretaries.
    The final regulations make no change to the proposed regulations 
regarding these provisions.

B. Coordinated Waiver Process (31 CFR 33.102 and 45 CFR 155.1302)

    The proposed regulations at 31 CFR 33.102 and 45 CFR 155.1302 
permitted, but did not require, States to submit a single application 
for a section 1332 waiver and a waiver under one or more of the 
existing waiver processes applicable under titles XVIII, XIX, and XXI 
of the Act, or under any other Federal law relating to the provision of 
health care items or services, provided that the application is 
consistent with the procedures described in these proposed regulations, 
the procedures for section 1115 demonstrations, if applicable, and the 
procedures under any other applicable Federal law under which the State 
seeks a waiver.\1\
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    \1\ Although section 1332 of the Affordable Care Act does not 
authorize waivers for related programs like Medicaid (title XIX of 
the Act) or the Children's Health Insurance Program (title XXI of 
the Act), those programs have existing waiver authorities.

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[[Page 11702]]

    The proposed regulations required a State seeking a section 1332 
waiver to submit a waiver application to the Secretary of HHS. Upon 
receipt, the Secretary of HHS would transmit any application that 
includes a request for a waiver of provisions under the jurisdiction of 
the Secretary of the Treasury (sections 36B, 4980H and 5000A of the 
Internal Revenue Code) to be reviewed in accordance with the provisions 
of the regulations. The Secretaries would coordinate the review of any 
application that includes a request for a waiver of provisions falling 
under the jurisdiction of each of the Departments of HHS and the 
Treasury (the Departments).
    We received the following comments concerning the proposed 
coordinated waiver process.
    Comment: Commenters supported the proposal to permit the submission 
of a single, coordinated application for a section 1332 waiver and a 
waiver under one or more of the existing waiver processes. Several 
commenters asked that we provide more detail on the coordinated waiver 
process, and align procedures and timelines. One commenter also asked 
that we allow States to submit a single analysis of cost and coverage 
to satisfy both processes.
    Response: The Departments plan to work closely with States that are 
considering submitting multiple waivers to craft a process that meets a 
State's specific circumstances. We anticipate that there may be 
opportunities to streamline and align the processes. We also are 
mindful that each of the specific waiver provisions has unique 
statutory requirements. We encourage any State that is considering a 
coordinated submission to approach the Departments as soon as is 
practicable to discuss how best to proceed to minimize administrative 
complexity while ensuring that the integrity of the review and approval 
processes is maintained.
    Comment: One commenter requested that the Secretaries require 
public comment on the market impacts of a combined waiver application.
    Response: We agree that public comment of this sort is useful, and 
we believe that 31 CFR 33.112 and 45 CFR 155.1312 of the proposed 
regulations, as finalized, allow stakeholders to provide such comments.

C. Application Procedures (31 CFR 33.108 and 45 CFR 155.1308)

    The proposed regulations established procedures for the submission 
of applications for an initial section 1332 waiver.
    Under 31 CFR 33.108(a) and 45 CFR 155.1308(a) of the proposed 
regulations, each application for an initial section 1332 waiver will 
undergo a preliminary review by the Secretaries that will be completed 
within 45 days after the application is submitted.
    During this preliminary review period, the Secretaries would make a 
preliminary determination as to whether a State's application complies 
with the requirements set forth in 31 CFR 33.108(a)(2) and 45 CFR 
155.1308(a)(2). If the Secretaries determined that an application is 
incomplete, the Secretary of HHS would send the State a written notice 
of the elements missing from the application. The proposed regulations 
provided that a preliminary determination that an application is 
complete does not preclude a finding during the 180-day Federal 
decision-making period that a necessary element of the application is 
missing or insufficient, rendering the application incomplete.
    The proposed regulations provided that a submitted application 
would not be considered received until the Secretaries have made this 
preliminary determination that the application is complete.
    The proposed regulations provided that, upon a preliminary 
determination by the Secretaries that an application they have received 
is complete, as defined under the proposed regulations, the Secretary 
of HHS would send the State a written notice informing the State that 
the Secretaries have made such a preliminary determination, and the 
date upon which they have made that preliminary determination. That 
date would also mark the beginning of the Federal public notice and 
comment period and the 180-day Federal decision-making period.
    Under the proposed regulations, an application for initial approval 
of a section 1332 waiver would not be considered complete unless the 
application: (1) Complies with the application procedures of 31 CFR 
33.108(a)(2)(iv) and 45 CFR 155.1308(a)(2)(iv); (2) provides written 
evidence of the State's compliance with the public notice requirements 
set forth in 31 CFR 33.112 and 45 CFR 155.1312; and (3) provides all of 
the following:
    <bullet> A comprehensive description of the enacted State 
legislation and program to implement a plan meeting the requirements 
for a waiver under section 1332, as required under section 
1332(a)(1)(B)(i) of the Affordable Care Act;
    <bullet> A copy of the enacted State legislation authorizing such 
waiver request, as required under section 1332(a)(1)(C) of the 
Affordable Care Act;
    <bullet> A list of the provisions of law that the State seeks to 
waive including a brief description of the reason for the specific 
requests; and
    <bullet> The analyses, actuarial certifications, data, assumptions, 
targets and other information sufficient to provide the Secretaries 
with the necessary data to determine that the State's proposed waiver:
    + As required under section 1332(b)(1)(A) of the Affordable Care 
Act (the comprehensive coverage requirement), would provide coverage 
that is at least as comprehensive as the coverage defined in section 
1302(b) of the Affordable Care Act and offered through Exchanges 
established under Title I of the Affordable Care Act as certified by 
the Office of the Actuary of the Centers for Medicare & Medicaid 
Services based on sufficient data from the State and from comparable 
States about their experience with programs created by the Affordable 
Care Act and the provisions of the Affordable Care Act that would be 
waived;
    + As required under section 1332(b)(1)(B) of the Affordable Care 
Act (the affordability requirement), would provide coverage and cost 
sharing protections against excessive out-of-pocket spending that are 
at least as affordable as the provisions of Title I of the Affordable 
Care Act would provide;
    + As required under section 1332(b)(1)(B)(C) of the Affordable Care 
Act (the scope of coverage requirement), would provide coverage to at 
least a comparable number of its residents as the provisions of Title I 
of the Affordable Care Act would provide; and
    + As prohibited under section 1332(b)(1)(D) of the Affordable Care 
Act (the Federal deficit requirement), would not increase the Federal 
deficit.
    Section 1332(a)(3) of the Affordable Care Act requires that the 
Secretaries provide for an alternative means by which the aggregate 
amount of tax credits or cost-sharing reductions that would have been 
paid had the State not received a waiver, be paid to the State for 
purposes of implementing the waiver. This amount will be determined 
annually by the Secretaries, on a per capita basis, taking into 
consideration the experience of other States for participation in an 
Exchange and tax credits and cost-sharing reductions provided in such 
other States.
    To provide information necessary for the Secretaries to determine 
(1) that the State's proposed waiver meets the comprehensive coverage 
requirement, the affordability requirement, the scope of coverage 
requirement and the Federal

[[Page 11703]]

deficit requirement and (2) the annual amount, if any, of foregone tax 
credits and cost-sharing reductions that will be paid to the State for 
purposes of implementing the waiver pursuant to section 1332(a)(3) of 
the Affordable Care Act, the proposed regulations required that a 
State's application contain:
    (1) Actuarial analyses and actuarial certifications to support the 
State's estimates that the proposed waiver will comply with the 
comprehensive coverage requirement, the affordability requirement and 
the scope of coverage requirement.
    (2) Economic analyses to support the State's estimates that the 
proposed waiver will comply with the comprehensive coverage 
requirement, the affordability requirement, the scope of coverage 
requirement and the Federal deficit requirement, including:
    <bullet> A detailed 10-year budget plan that is deficit neutral to 
the Federal government, as prescribed in section 1332(a)(1)(B)(ii) of 
the Affordable Care Act, and includes all costs under the waiver, 
including administrative costs and other costs to the Federal 
government, if applicable; and
    <bullet> A detailed analysis regarding the estimated impact of the 
waiver on health insurance coverage in the State.
    (3) The data and assumptions used to demonstrate that the State's 
proposal is in compliance with the comprehensive coverage requirement, 
the affordability requirement, the scope of coverage requirement and 
the Federal deficit requirement, including:
    <bullet> Information on the age, income, health expenses and 
current health insurance status of the relevant State population; the 
number of employers, categorized by number of employees and by whether 
the employer offers health insurance; cross-tabulations of these 
variables; and an explanation of data sources and quality; and
    <bullet> An explanation of the key assumptions and methodology used 
to develop the estimates of the effect of the waiver on health 
insurance coverage in the State and on the Federal budget, such as 
individual and employer participation rates, behavioral changes, 
premium and price effects, and other relevant factors.
    (4) Additional information supporting the State's proposed waiver, 
including:
    <bullet> An explanation as to whether the waiver increases or 
decreases the administrative burden on individuals, insurers, and 
employers, and if so, how and why;
    <bullet> An explanation of whether and how the waiver will affect 
the implementation of the provisions of the Affordable Care Act which 
the State is not requesting to waive in the State and at the Federal 
level;
    <bullet> An explanation of how the waiver will affect residents who 
need to obtain health care services out-of-State, as well as the States 
in which such residents may seek such services;
    <bullet> If applicable, an explanation of how the State will 
provide the Federal government with all information necessary to 
administer the waiver at the Federal level; and
    <bullet> An explanation of how the State's proposal will address 
potential individual, employer, insurer, or provider compliance, waste, 
fraud and abuse within the State or in other States.
    (5) For purposes of post-award monitoring, suggested quarterly, 
annual, and cumulative targets for the comprehensive coverage 
requirement, the affordability requirement, the scope of coverage 
requirement and the Federal deficit requirement of section 1332(b) of 
the Affordable Care Act.
    (6) Other information consistent with guidance provided by the 
Secretaries.
    Under the proposed regulations, there is no minimum time specified 
between the submission of an application and start date of the waiver. 
However, we solicited comments on whether a State should be required to 
submit an application at least 12 months in advance of the requested 
effective date, to allow for the effective implementation of approved 
waivers at the State level.
    The requirement in the proposed regulations that a State provide 
certain analysis, certifications, data, assumptions, targets and other 
information as part of a section 1332 waiver application was designed 
to ensure that a State's development of a waiver proposal addresses 
major relevant issues for the State and provides the Secretaries with 
sufficient information to fully assess the projected impact of section 
1332 waiver proposals for the statutory requirements and to accurately 
determine the amount to be paid to the State for purposes of 
implementing the waiver under section 1332(a)(3) of the Affordable Care 
Act. The Secretaries also solicited comments regarding these proposed 
requirements, as well as what other types of analysis, certifications, 
data, assumptions, targets and information States would consider useful 
in supporting an application for a section 1332 waiver and whether 
these regulations should specifically require such additional analyses, 
certifications, data, assumptions, targets and information to be 
included as part of a section 1332 waiver application.
    Lastly, during the Federal review process, the proposed regulation 
provided that the Secretaries may request additional supporting 
information from the State as needed to address public comments or to 
address issues that arise in reviewing the application.
    We received the following comments concerning application 
procedures.
1. Application Contents
    Comment: In general, commenters supported the proposed application 
contents. Several commenters asked that the Secretaries require 
additional information to be submitted with the application, including 
background information on the State's insurance market; the types of 
health plans or other arrangements a State will utilize to provide 
coverage and the criteria for participation in the plan; the health 
benefits that will be covered and how those compare to the essential 
health benefits specified in section 1302(b) of the Affordable Care 
Act; whether and how the waiver will affect age rating and the value of 
financial assistance for individuals of different ages; how the waiver 
will affect children and youth with special health care needs and women 
with high-risk pregnancies; how the State will select the plans and 
monitor their performance; how payment rates for health plans and/or 
providers would be determined; how standards for provider network 
adequacy would be determined and met; how quality and appropriateness 
of care would be assessed; and how transparency in coverage and 
consumer choice and access to essential community providers would be 
monitored.
    Commenters also requested that the Secretaries require a State to 
provide specific information for specific waiver requests. For example, 
one commenter asked that the Secretaries require a State seeking a 
waiver that would affect Federally Qualified Health Centers (FQHCs) or 
essential community providers (ECPs) to provide a set of detailed 
information about the rationale for such a proposal and the financial 
impact of it on FQHCs and ECPs. Another made a similar request with 
respect to waivers that affect essential health benefits.
    Response: We recognize that additional information may be needed to 
determine whether a proposal meets the statutory criteria for approval. 
As set forth in 31 CFR 33.108(a)(2)(iv)(D)(6) and 45 CFR 
155.1308(a)(2)(iv)(D)(6), a State must also submit information 
consistent with guidance provided by the Secretaries, in addition to 
the enumerated data and analyses. This provision of the regulations 
allows the

[[Page 11704]]

Secretaries to request additional information, including information 
suggested by commenters, which is relevant to determine whether a 
waiver proposal meets the statutory criteria for approval. As such, we 
finalized these provisions of the proposed regulations without change.
    Comment: One commenter requested that States provide an 
implementation timeline as part of a waiver application.
    Response: We agree with this comment and have added language to the 
final regulation in 31 CFR 33.108(f)(4)(iv) and 45 CFR 
155.1308(f)(4)(iv). We believe that the inclusion of an implementation 
timeline will help the Secretaries work with States to address the 
concern raised by another commenter that States implement a waiver in a 
manner that does not leave its residents without affordable coverage 
during the implementation period.
    Comment: Several commenters asked the Secretaries to require States 
to provide a description of why the requested waivers are needed.
    Response: We agree that a discussion of the reasons for requesting 
the waiver is important and should be more than cursory. Accordingly, 
the final regulation at 31 CFR 33.108(a)(2)(iv)(C) and 45 CFR 
155.1308(a)(2)(iv)(C) no longer characterizes the required description 
as ``brief.''
    Comment: One commenter asked that the Secretaries permit the 
application to use existing reports and data sources available to the 
Federal government.
    Response: We agree that the process should be minimally burdensome 
for all involved entities, while still ensuring that the Secretaries 
are able to complete the analyses required by statute. We encourage 
States to utilize existing data wherever possible to facilitate the 
waiver approval process and we look forward to working closely with 
States to ensure that the proposed data sources are reliable and 
acceptable.
    Comment: Several commenters asked that the Secretaries require 
applications to include a description of the key issues raised during 
the State public notice and comment period, along with how the State 
considered those comments in developing the application.
    Response: The provisions of 31 CFR 33.108(a)(2)(iv)(B) and 45 CFR 
155.1308(a)(2)(iv)(B) of the proposed regulations require an 
application to provide, ``* * * written evidence of the State's 
compliance with the public notice requirements * * *'' We agree with 
the commenter that this evidence should include a description of the 
key issues raised during the State public notice and comment period, 
and are adding this clarification to 31 CFR 33.108(f)(2) and 45 CFR 
155.1308(f)(2) of the final rule. We believe that the substantive 
contents of the application will allow the Secretaries and interested 
parties to discern how the State considered the comments in 
constructing the proposal.
    Comment: Commenters asked that the Secretaries clarify that in 
addition to providing the proposed actuarial and economic analyses, a 
State must also provide the underlying data and assumptions used to 
develop the analyses.
    Response: We believe that the provisions of the proposed 
regulations require the State to submit the underlying data and 
assumption used to develop the analysis. The proposed regulations at 31 
CFR 33.108(a)(2)(iv)(D)(3) and 45 CFR 155.1308(a)(2)(iv)(D)(3) 
specified that an application must include, ``The data and assumptions 
used to demonstrate that the State's proposed waiver is in compliance 
with the comprehensive coverage requirement, the affordability 
requirement, the scope of coverage requirement and the Federal deficit 
requirement.'' We are maintaining this language in the final 
regulations.
    Comment: One commenter suggested that the Secretaries limit the 
amount of documentation required to be submitted if the waiver proposal 
does not significantly impact the stability of the insurance market.
    Response: The statute requires the Secretaries to determine whether 
an application meets all the statutory approval criteria, regardless of 
its scope. Consequently, the Secretaries must receive and review the 
data and analyses required to be included in the application as 
provided in the regulations. We have no interest in requiring States to 
submit unnecessary information, and will work with States to ensure 
that the application process is appropriately tailored to the specific 
proposal and to the State's circumstances.
    Comment: One commenter asked that the Secretaries require that all 
actuarial estimates of coverage and market stability be performed by 
independent experts.
    Response: The Secretaries plan to evaluate the analyses submitted 
with a State's application. We expect the State analyses to adhere to 
generally accepted standards for quality and the regulations require 
the States to submit the data and assumptions underlying such analyses, 
which will enable the Secretaries to conduct a thoughtful review. As 
such, the final regulations follow the proposed regulations without 
change.
    Comment: One commenter asked the Secretaries to clarify that there 
is interaction between the statutory requirements for approval of a 
section 1332 waiver, for example, that the affordability of coverage 
will affect the number of individuals who will be covered.
    Response: We agree with the comment. We expect States to address 
such connections in the analyses supporting an application.
    Comment: One commenter asked that the Secretaries require that any 
application that requested a waiver of the minimum coverage provision 
be accompanied by detailed projections demonstrating that comparable 
levels of coverage and affordability will be attained and maintained 
over at least a 10-year period in the individual market.
    Response: We appreciate this comment. The Secretaries intend to 
work with States to ensure that the required analyses are consistent 
with one another. For future guidance, we will consider requiring an 
analysis for applications requesting a waiver of specific provisions to 
be provided over a specific time frame.
    Comment: One commenter objected to proposed questions regarding the 
impact of a proposed waiver on unwaived provisions and how the State 
will provide the Federal government with information necessary to 
administer the waiver at the Federal level.
    Response: We believe that these questions are important to assess 
whether the proposal complies with the statutory criteria for approval. 
In particular, we believe that the question about Federal 
administration is important to understand the impact of the proposal on 
the Federal deficit.
    Comment: One commenter suggested that the Secretaries require 
States to provide analysis to ensure that proposed innovations do not 
have the unintended effect of increasing the cost of insurance for the 
remaining market and decreasing enrollment.
    Response: The analyses in 31 CFR 33.108(a)(2)(iv)(C)(4) and 45 CFR 
155.1308(a)(2)(iv)(C)(4) of the proposed rules were based on the 
statutory criteria for waiver approval, as specified in section 
1332(b)(1) of the Affordable Care Act. In describing the scope of 
coverage and affordability requirements, the statute specifies that 
comparisons are to be made with respect to the provisions of title I of 
the Affordable Care Act, which contains the market reform provisions 
that affect the individual and small group markets--

[[Page 11705]]

inside and outside the Exchange. Consequently, we believe that the 
provisions of the proposed regulations specified that a State must 
provide the type of analysis that is requested by the commenter. We 
maintain this language in the final regulations.
2. Timing of Applications
    Comment: We received a number of comments regarding whether the 
Secretaries should require a State to submit an application for a 
section 1332 waiver 12 months (or some other amount of time) in advance 
of the requested effective date, to allow for the careful 
implementation of what may be complex waivers. In general, commenters 
supported a timing requirement of either 12 or 24 months in advance. 
However, some commenters opposed any timing requirement. In addition, 
one commenter asked that the Secretaries require at least 18 months 
between approval and implementation.
    Response: In recognition of the range of time standards recommended 
by commenters, along with the likelihood that the scope of section 1332 
waivers will vary widely based on the provisions a State proposes to 
waive and other related factors, we are amending the proposed language 
to specify that applications must be submitted sufficiently in advance 
of the requested effective date to allow for an appropriate 
implementation timeline. In addition, as discussed previously, the 
final regulations adopt a recommendation to include an implementation 
timeline as part of the waiver application. We believe this new 
timeline requirement will help ensure applications are submitted 
sufficiently in advance of the effective date. We further encourage 
States to contact the Secretaries during the conceptual phase of a 
section 1332 waiver to establish a reasonable timeframe for the 
submission of an application and the effective date of an approved 
proposal.
    Comment: One commenter asked the Secretaries to clarify that there 
can only be one 45-day preliminary review period per application.
    Response: We agree with the commenter's clarification. We note that 
to the extent that a State's application is denied and the State 
resubmits the application, the Secretaries will treat the application 
as a new application that is subject to a 45-day preliminary review 
period.
3. Approval Standards
    We received a number of comments regarding standards a section 1332 
waiver proposal must meet to be approved by the Secretaries. The 
proposed regulations covered only the procedural standards for section 
1332 waivers, and did not address the substantive standards for 
approval beyond restating the statutory criteria.
    Comment: Several commenters asked that the Secretaries define the 
comprehensive-coverage, affordability, and scope of coverage 
requirements specified in sections 1332(b)(1)(A), (B), and (C) of the 
Affordable Care Act. One commenter proposed a specific framework for 
the comprehensive-coverage standard based on the service categories 
specified in section 1302(b) of the Affordable Care Act, along with 
other analyses. Another commenter asked that the Secretaries clarify 
that affordability benchmarks will take into account the income of 
eligible individuals and the premium and cost-sharing subsidies they 
would receive. Another commenter asked that affordability analyses 
include consideration of services that are excluded from the proposed 
waiver. Lastly, one commenter asked that the Secretaries provide 
benchmarks for the scope of coverage analysis and allow public comment 
on such benchmarks.
    Commenters suggested that the Secretaries should expand the 
criteria for approval to include providing a sufficient choice of 
health plans. One commenter specified that the Secretaries should 
require the State to ensure a selection of health plans that meet the 
needs of low-income individuals. Another commenter asked that States be 
required to demonstrate the adequacy of provider networks as a 
condition of approval.
    Commenters also suggested that the Secretaries condition waiver 
approval on the inclusion of specific services and categories of 
services in the benefit package; the coordination of private and public 
delivery systems; the integration of enrollment and renewal processes; 
and the ability of delivery systems to measure acuity and severity and 
adjust cost structures appropriately.
    One commenter asked the Secretaries to specify that if any waiver 
alters Medicaid and CHIP, a State must maintain Medicaid and CHIP 
protections and ``enabling services'' (such as transportation and 
translation) for the Medicaid and CHIP population. Another commenter 
asked the Secretaries to require States to demonstrate adequate 
protections for Medicaid beneficiaries who are included in a section 
1332 waiver. Another commenter asked the Secretaries to require that 
States provide children who are currently covered by CHIP with 
coverage, cost-sharing protections, and benefits comparable to CHIP.
    A commenter asked that the Secretaries require States seeking a 
waiver to provide for a similar age rating rule to the rule in section 
1334 of the Affordable Care Act.
    Commenters also asked that the Secretaries require States to comply 
with other provisions of the Affordable Care Act as a condition of 
waiver approval. These included the nondiscrimination provisions of 
section 1557 of the Affordable Care Act and the market reform rules 
that take effect in 2014.
    One commenter said that States and the Secretaries must consider 
whether a proposal meets the statutory requirements for approval for 
both the overall population and specifically for American Indians and 
Alaska Natives.
    Lastly, one commenter asked the Secretaries to require the CMS 
actuary to certify whether a State's proposal would provide coverage to 
a comparable number of residents purchasing individual insurance 
policies.
    Response: We appreciate the comments submitted on standards for 
approval and will consider them as we develop the substantive component 
of the waiver approval process. Further, we clarify that section 
1332(a)(2) of the Affordable Care Act clearly defines the scope of 
authority under section 1332, and does not extend to subtitle A of 
title I of the Affordable Care Act, which includes the market reform 
provisions, or section 1557 of the Affordable Care Act, which includes 
the nondiscrimination provisions.
4. General
    Comment: Commenters asked the Secretaries to clarify that a State 
does not have to enact a new law and establish new programs if a 
sufficient law or program already exists.
    Response: We agree with this comment. The final regulations at 31 
CFR 33.108(f)(3)(ii) and 45 CFR 155.1308(f)(3)(ii) were modified to 
make clear that States with an existing law or program that addresses 
the waiver process and requirements are not required to enact a new 
law.
    Comment: One commenter suggested that the Secretaries consider not 
requiring applications to be submitted in printed format.
    Response: We agree with the commenter's suggestion, and are 
removing this requirement from the final rules.
    Comment: One commenter asked the Secretaries to specify that they 
will process all submitted applications.

[[Page 11706]]

    Response: We agree with the comment and believe that the proposed 
regulations address it. As set forth in 31 CFR 33.108(a)(2) and 45 CFR 
155.1308(a)(2), the Secretaries will make a determination as to whether 
each submitted application is complete, and 31 CFR 33.116(c) and 45 CFR 
155.1316(c) of the proposed rules specified that the Secretaries will 
make a final decision regarding all applications that are found to be 
complete. We are maintaining these provisions in the final regulations.

D. State Public Notice Requirements (31 CFR 33.112 and 45 CFR 155.1312)

    Consistent with the provisions of section 1332 of the Affordable 
Care Act, to facilitate public involvement in the review and approval 
of section 1332 waiver applications, 31 CFR 33.112(a)(1) and 45 CFR 
155.1312(a)(1) of the proposed regulations required a State to provide 
a public notice and comment period sufficient to ensure a meaningful 
level of public input for a section 1332 waiver application prior to 
the submission of that application to the Secretary of HHS for review 
and consideration. In addition, the proposed regulations required a 
State with one or more Federally-recognized Indian tribes within its 
borders to consult with those Indian tribes in accordance with 
Executive Order 13175.
    Because meaningful input requires notice of the nature of the 
section 1332 waiver application, as part of the State public notice and 
comment period, the proposed regulations required a State to provide 
the public with the following information prior to the submission of an 
application:
    <bullet> A comprehensive description of the section 1332 waiver 
application to be submitted to the Secretary of HHS, including 
information and assurances related to all statutory requirements and 
other information consistent with guidance provided by the Secretaries;
    <bullet> Where copies of the section 1332 waiver application are 
available for public review and comment;
    <bullet> How and where written comments may be submitted and 
reviewed by the public, and the timeframe during which public comments 
may be submitted; and
    <bullet> The location, date and time of public hearings that will 
be convened by the State to seek public input on the section 1332 
waiver application.
    31 CFR 33.112(a)(2) and 45 CFR 155.1312(a)(2) of the proposed 
regulations required States to conduct public hearings that provide 
interested parties with the opportunity to learn about and comment on 
the contents of the section 1332 waiver application.
    The State public notice and comment process must comply with 
applicable civil rights rules for accessibility, which require, for 
example--
    <bullet> The provision of auxiliary aids and services such as 
interpreters for persons with disabilities where necessary for 
effective communication;
    <bullet> The use of accessible meeting places for the hosting of 
public forums provided for in the Rule;
    <bullet> Reasonable steps to provide meaningful access for limited 
English proficient (LEP) persons, such as the inclusion of ``tag 
lines'' on State web sites containing phone numbers for LEP persons to 
call to reach ``language line'' interpreters for assistance; and
    <bullet> Other civil rights requirements applicable to the States 
under the Americans with Disabilities Act, section 504 of the 
Rehabilitation Act of 1973 and Title VI of the Civil Rights Act of 
1964, among others.
    We received the following comments concerning the proposed State 
public notice and comment process.
1. Timing
    Comment: In general, commenters expressed support for a robust 
State public notice and comment process. Several commenters suggested 
that the Secretaries should specify a minimum amount of time for the 
State public notice and comment process, ranging from 45 to 90 days.
    Response: We agree with commenters that the State public notice and 
comment period is an important element of a transparent approach. The 
proposed regulations require that the State public notice period be, 
``sufficient to ensure a meaningful level of public input''. Because 
section 1332 waiver applications may take on a wide range of proposals, 
we believe that this approach better suits section 1332 waivers. To the 
extent that a proposal is particularly wide-ranging, the proposed 
regulations will support a longer State public notice and comment 
period, and if the proposal is minor, it can support a shorter period. 
As such, we are maintaining the language of the proposed regulations in 
the final rules. We further encourage States to contact the Secretaries 
during the conceptual phase of a section 1332 waiver to establish a 
reasonable timeframe for the State public notice and comment period.
2. Tribal Consultation
    Comment: One commenter suggested that the Secretaries encourage 
States to use Medicaid tribal consultation procedures in the section 
1332 waiver process.
    Response: As set forth in 31 CFR 33.112(a)(2) and 45 CFR 
155.1312(a)(2), a State with one or more Federally-recognized tribes 
within its borders must conduct a separate process for meaningful 
consultation with such tribes as part of the State public notice and 
comment process. In the preamble associated with this section, the 
Secretaries noted that such process is in accordance with Executive 
Order 13175, which mandated the establishment of regular and meaningful 
consultation and collaboration with tribal officials in the development 
of Federal policies that have ``tribal implications,'' which are 
defined as policies or actions ``with substantial direct effects on one 
or more Indian tribes, on the relationship between the Federal 
Government and Indian tribes, or on the distribution of power and 
responsibilities between the Federal Government and Indian tribes.'' As 
this executive order also applies to Medicaid, a State could use a 
Medicaid consultation process to satisfy the consultation needed for a 
section 1332 waiver. We agree with the commenter and encourage States 
to consider whether the use of such a process would be appropriate for 
section 1332 proposals.
3. Public Hearings
    Comment: Commenters supported the requirement for public hearings. 
Commenters suggested allowing States to determine the appropriate 
number of public hearings, with a minimum of one or two. One commenter 
asked the Secretaries to specify that hearings must happen in multiple 
geographic locations.
    Response: As set forth in 31 CFR 33.112(c)(1) and 45 CFR 
155.1312(c)(1), ``* * * a State must conduct public hearings regarding 
the State's application.'' We believe that the proposed regulation 
permits a State to determine the appropriate number of hearings, but, 
by definition, ``hearings'' means no less than two. As such, the final 
regulations were not changed.
    31 CFR 33.112(c)(2) and 45 CFR 155.1312(c)(2) provides that ``Such 
public hearings shall provide an interested party the opportunity to 
learn about and comment on the contents of the application for a 
section 1332 waiver.'' We interpret this to mean that a State must 
provide the opportunity for parties throughout a State to comment, 
either through multiple hearings in different locations, or through the 
use of phone or videoconferencing. We will maintain this provision in 
the final regulations.
    Comment: Commenters supported the provisions in 31 CFR 33.112(c)(2) 
and

[[Page 11707]]

45 CFR 155.1312(c)(2) that specify that public hearings must provide an 
opportunity for an interested party to comment on the contents of an 
application for a section 1332 waiver. One commenter recommended that 
the Secretaries specify that legislative hearings can substitute for 
the State public notice and comment process. Other commenters opposed 
this recommendation, noting that legislative hearings may provide only 
limited opportunities for members of the public to comment.
    Response: While the proposed rules do not specifically address 
whether legislative hearings may satisfy the public hearing 
requirement, 31 CFR 33.112(c)(2) and 45 CFR 155.1312(c)(2) of the 
proposed regulation provide that, ``Such public hearings shall provide 
an interested party the opportunity to learn about and comment on the 
contents of the application for a section 1332 waiver.'' If a 
legislative hearing provides an opportunity for interested parties to 
comment on the contents of a waiver application, then it meets the 
public hearing requirement; if, however, a legislative hearing does not 
allow the public to contribute, it does not meet the requirement. 
Specifically, we believe that to use a legislative hearing towards 
meeting this requirement, a State would need to provide a concrete 
proposal for comment well in advance of the hearing, as well as an 
opportunity for the public to speak at the hearing. We are maintaining 
this approach in the final regulations to provide States with 
flexibility but at the same time ensure that the public has a 
meaningful opportunity to comment.
4. General
    Comment: One commenter recommended that the Secretaries require 
consumers to be full participants as waivers are designed, implemented, 
and monitored, and that such participation should include serving on an 
advisory board and a governing board.
    Response: We agree with the commenter that States should involve 
consumers in the development, implementation, and monitoring of section 
1332 waivers. We believe that the proposed State and Federal public 
notice and comment processes, along with the post-award public forum 
provision, ensure formal opportunities for participation. To ensure 
that consumers can participate, we clarify that the State public notice 
and comment process, the post-award public forum, and the draft and 
final annual reports published on a State's public Web site must comply 
with applicable civil rights requirements for accessibility, which are 
discussed in the preamble to this section. We also note that we expect 
that States will inform consumers and other interested parties 
regarding the availability of auxiliary aids and services for public 
forums.
    We encourage States to consider where other opportunities for 
consumer involvement exist. Given that section 1332 waivers may be 
broad or narrow in scope, we have not modified the proposed regulation 
to add a provision requiring the establishment of advisory or governing 
boards. We believe that such a requirement would be overly burdensome 
for a State seeking a waiver that is limited in scope. We will work 
closely with States to ensure that the State public notice and comment 
process is sufficient to ensure a meaningful level of public input, as 
proposed in 31 CFR 33.112(a)(1) and 45 CFR 155.1312(a)(1).
    Comment: A commenter asked that the Secretaries require that a 
State send a copy of any waiver proposal affecting FQHCs or ECPs 
directly to each FQHC in the State as well as to the State primary care 
association, and that the State allow the primary care association and 
at least two FQHCs time to speak at the public hearing.
    Response: We acknowledge the critical role that FQHCs and ECPs have 
in providing services to low-income and other vulnerable populations. 
Given the potentially broad scope of section 1332 waivers, the 
Secretaries opted to take a broad approach to describing the State 
public notice and comment process in the proposed rules, to ensure that 
it would remain flexible to accommodate comments from all key 
stakeholders. The provisions of 31 CFR 33.112(a)(1) and 45 CFR 
155.1312(a)(1) specify that, ``a State must provide public notice and 
comment period sufficient to ensure a meaningful level of public input 
* * * '' This will give FQHCs, ECPs, and other interested or affected 
stakeholders an opportunity for engagement.
    Comment: A few commenters asked the Secretaries to clarify that the 
description of the proposal that is shared with the public must include 
specific details of the proposal, including analyses of financing and 
enrollment.
    Response: We agree with the commenters that this information is 
important to ensuring that stakeholders have an opportunity to provide 
meaningful input. As set forth in 31 CFR 33.112(b)(1) and 45 CFR 
155.1312(b)(1), the public notice must include the following: ``A 
comprehensive description of the application for a section 1332 waiver 
to be submitted to the Secretary including information and assurances 
related to all statutory requirements and other information consistent 
with guidance provided by the Secretary and the Secretary of the 
Treasury.'' We believe that this provision addresses the commenters' 
recommendations by ensuring that the public will have access to in-
depth information needed to assess the impact of the proposal. We also 
retain the flexibility to clarify this provision in future guidance to 
address any areas in which additional information is needed to ensure 
that the State public notice and comment period is sufficient to ensure 
a meaningful level of public input.

E. Federal Public Notice and Approval Process (31 CFR 33.116 and 45 CFR 
155.1316)

    Consistent with section 1332 of the Affordable Care Act and the 
Secretaries' desire to implement a State waiver application process 
that promotes transparency, facilitates public involvement and input, 
and encourages sound decision-making at all levels of government, 31 
CFR 33.116 and 45 CFR 155.1316 of the proposed regulations provided for 
a Federal public notice and comment period following a preliminary 
determination by the Secretaries that a State's application for a 
section 1332 waiver is complete.
    To facilitate public participation in the section 1332 waiver 
application process, the proposed regulations required the Secretary of 
HHS to provide the public with notice of a section 1332 waiver 
application that has been preliminarily determined to be complete, 
including any supplemental materials received from a State during the 
Federal public notice and comment period, as well as regular updates 
for the status of a State's section 1332 waiver application. In 
addition, the Secretary of HHS would provide the public with 
information relating to (A) where copies of the section 1332 waiver 
application are available for public review and comment; (B) how and 
where written comments may be submitted and reviewed by the public, and 
the timeframe during which comments may be submitted; and (C) any 
public comments received during the Federal public notice and comment 
period.
    Following the conclusion of the Federal notice and comment period, 
but in no event later than 180 days following the preliminary 
determination by the Secretaries that a State's application for a 
section 1332 waiver is complete, the final decision of the Secretaries 
on a State's section 1332

[[Page 11708]]

waiver application would be issued by the Secretary of HHS.
    We received the following comments concerning the proposed Federal 
public notice and approval process.
1. Federal Public Notice Process
    Comment: Commenters suggested that the Secretaries post 
applications and supporting materials on a dedicated Web site.
    Response: As set forth in 31 CFR 33.116(b)(2) and 45 CFR 
155.1316(b)(2), the Secretary of HHS, `` * * * will make available 
through its Web site and otherwise, and shall update as appropriate, 
public notice * * *.'' The proposed rules list the contents of this 
public notice, which include applications and supporting materials. We 
will consider whether to implement this requirement through a dedicated 
Web site, or through a page on the main HHS or CMS Web site.
    Comment: Several commenters asked that the Secretaries require a 
specific length for the Federal public notice and comment period. One 
commenter suggested 45 days.
    Response: We agree with commenters that the Federal public notice 
and comment period is an important element of a transparent approach. 
The proposed regulations require that the Federal public notice period 
be, ``sufficient to ensure a meaningful level of public input.'' 
Because the waiver applications may cover a wide range of proposals, we 
believe that this approach better suits section 1332 waivers. To the 
extent that a proposal is particularly wide-ranging, the proposed 
regulation will support a longer Federal public notice and comment 
period, and if the proposal is minor, it can support a shorter period. 
As such, we are maintaining the language of the proposed regulations in 
the final rules.
    Comment: Commenters suggested that the Secretaries create an 
electronic mailing list to notify interested parties of the submission 
of an application and other actions taken.
    Response: We will consider this suggestion as we develop the 
details of the Federal public notice and comment process.
    Comment: Commenters asked that the Secretaries specify that the 
Secretaries will electronically publish all comments received during 
the Federal public notice and comment process.
    Response: We agree with the commenter's suggestion. This provision 
was included in 31 CFR 33.116(b)(2)(iv) and 45 CFR 155.1316(b)(2)(iv) 
of the proposed regulations, and we will maintain this in the final 
regulations.
    Comment: One commenter suggested that the Secretaries modify the 
proposed process to incorporate a notification of the State primary 
care association in any State that is requesting to waive provisions 
related to FQHCs, and to require the Secretaries to provide written 
responses related to comments on this topic, as well as explanations 
and supporting information related to the approval of any proposal that 
contains such provisions.
    Response: We acknowledge the critical role that FQHCs have in 
providing services to low-income and other vulnerable populations. 
Given the potentially broad scope of section 1332 waivers, the 
Secretaries opted to take a broad approach to describing the Federal 
public notice and comment process in the proposed rules, to ensure that 
it would remain flexible to accommodate comments from all key 
stakeholders. 31 CFR 33.116(b)(1) and 45 CFR 155.1316(b)(1) specified 
that, ``the Secretary and the Secretary of the Treasury will provide 
for a public notice and comment period that is sufficient to ensure a 
meaningful level of public input * * *'' This will give FQHCs, ECPs, 
and other interested or affected stakeholders an opportunity for 
engagement.
    Comment: One commenter expressed concerns as to whether comments 
from entities outside a State requesting a waiver would be applicable 
to the State's proposal.
    Response: We recognize that entities within a State requesting a 
waiver are well positioned to contribute meaningful comments; we also 
recognize that there are entities throughout the country that will have 
an interest in and expertise in the topics of waiver proposals, 
particularly to the extent that a State's waiver proposal could affect 
other States. In the interests of creating a transparent process, the 
Secretaries will consider all comments submitted during the Federal 
public notice and comment period, and make decisions in accordance with 
the statutory criteria for approval.
2. Approval Process
    Comment: One commenter suggested that the Secretaries establish a 
waiver review panel that consists of consumers, providers, and federal 
and nongovernmental technical experts to review testimony and comments 
and make recommendations regarding the approval of a waiver.
    Response: We will consider this suggestion, along with other 
approaches to creating an efficient and transparent process, as we move 
closer to the point at which States will begin to develop section 1332 
proposals.
    Comment: Commenters asked for clarification on how the Secretaries 
would implement the 180-day Federal decision-making period. One 
commenter suggested that the Secretaries should allow reasonable 
adjustments to an application without affecting timeframes, when the 
adjustments are the result of State-Federal negotiations. Another 
commenter asked the Secretaries to clarify whether the provision 
allowing the Secretaries to determine an application incomplete after 
first determining it complete was purposeful, and asked for the 
Secretaries to revise this provision such that it would not affect the 
180-day Federal decision-making period.
    Response: The Secretaries intend to develop protocols related to 
the Federal decision-making process that are responsive to the needs of 
each State and promote efficiency and transparency. These protocols may 
vary from proposal to proposal, and will certainly evolve as States and 
the Secretaries gain additional expertise in navigating the process. We 
will strive to ensure clear and open lines of communication between a 
State and the Secretaries throughout the Federal decision-making 
process.
    We agree with the comment regarding the allowance to modify an 
application without affecting the timeframe as a result of negotiation. 
We anticipate that this will be a regular occurrence during the Federal 
decision-making period, and that making agreed-upon changes as the 
process moves forward will facilitate an efficient process for all 
involved parties.
    We clarify that the provision in 31 CFR 33.108(a)(2)(i)(C) and 45 
CFR 155.1308(a)(2)(i)(C) of the proposed regulations was indeed 
purposeful in specifying that a preliminary finding that an application 
is complete does not preclude the Secretaries from later finding that 
an application is not complete. We anticipate that conversations 
between a State and the Secretaries may reveal additional information 
that is needed to evaluate whether an application meets the statutory 
requirements for approval. When such a situation occurs without 
sufficient time for the State to respond before the end of the 180-day 
Federal decision-making period, the Secretaries can either deny the 
application or find the application incomplete; we believe that the 
latter option provides greater flexibility to States, and reduces 
duplicate burden that would be placed on States and on the Federal 
government if an application must be

[[Page 11709]]

resubmitted. As such, we are maintaining this provision in the final 
regulations. As noted above, we intend to work closely with States to 
create an efficient process for waiver approval, and preserve 
timeframes wherever possible.

F. Monitoring and Compliance (31 CFR 33.120 and 45 CFR 155.1320)

    As section 1332 waivers are likely to a have a significant impact 
on individuals, States and the Federal government, the proposed 
regulations established processes and methodologies to ensure that the 
Secretaries receive adequate and appropriate information regarding 
section 1332 waivers (consistent with section 1332(a)(4)(B)(iv) of the 
Affordable Care Act).
    Under 31 CFR 33.120(a) and 45 CFR 155.1320(a) of the proposed 
regulations, a State is required to comply with all applicable Federal 
laws, regulations, policy statements and Departmental guidance unless a 
law or regulation has specifically been waived. Further, the proposed 
regulations required a State to come into compliance with any changes 
in Federal law, regulation, or policy affecting section 1332 waivers 
within the timeframes specified in law, regulation, interpretive 
policy, or guidance, unless the provision being changed is expressly 
waived, and to comply with the terms and conditions of the agreement 
entered into between the Secretaries and the State to implement a 
section 1332 waiver, or the section 1332 waiver would be suspended or 
terminated in whole or in part by the Secretaries.
    Under 31 CFR 33.120(b) and 45 CFR 155.1320(b) of the proposed 
regulations, as part of the terms and conditions of any section 1332 
waiver, a State must conduct periodic reviews related to the 
implementation of the waiver. The Secretaries would review, and when 
appropriate investigate, documented complaints that a State is failing 
to materially comply with requirements specified in the terms and 
conditions of the section 1332 waiver. In addition, the Secretaries 
would share with the State any complaint that has been received and 
notify the State of any applicable monitoring and compliance issues.
    Under 31 CFR 33.120(c) and 45 CFR 155.1320(c) of the proposed 
regulations, to ensure continued public input after the initial six 
months of the waiver's implementation, and annually thereafter, States 
were required to hold a public forum at which members of the public 
have an opportunity to provide comments on the progress of the section 
1332 waiver. The proposed regulation further required States to include 
a summary of this forum to the Secretary of HHS as part of the 
quarterly and annual reporting requirements under 31 CFR 33.124 and 45 
CFR 155.1324.
    Under 31 CFR 33.120(c)(1) and 45 CFR 155.1320(c)(1) of the proposed 
regulations, States were required to publish the date, time, and 
location of the public forum in a prominent location on the State's 
public Web site at least 30 days prior to the date of the planned 
public forum.
    Under 31 CFR 33.120(d) and 45 CFR 155.1320(d) of the proposed 
regulations, the Secretaries reserved the right to suspend or terminate 
a section 1332 waiver, in whole or in part, any time before the date of 
expiration, if the Secretaries determined that the State materially 
failed to comply with the terms and conditions of the section 1332 
waiver. In the event that all or a portion of a section 1332 waiver is 
terminated or suspended by the Secretaries, or if all or a portion of a 
section 1332 waiver is withdrawn, Federal funding would be limited to 
normal closeout costs associated with an orderly termination of the 
section 1332 waiver, as described in 31 CFR 33.120(e) and 45 CFR 
155.1320(e).
    Under 31 CFR 33.120(f) and 45 CFR 155.1320(f) of the proposed 
regulations, in the event that the Secretaries undertook an independent 
evaluation of any component of the section 1332 waiver, the State must 
cooperate fully with the Secretaries or the independent evaluator 
selected by the Secretaries. This cooperation would include, but is not 
limited to, the submission of all necessary data and information to the 
Secretaries or the independent evaluator.
    We received the following comments concerning the proposed 
provisions regarding monitoring and compliance.
1. Post-Award Public Forum
    Comment: In general, commenters supported the proposal for an 
annual public forum. Some commenters requested that the Secretaries 
provide additional detail on the post-award public forum requirement, 
including requiring the development of a formal advisory body similar 
to the Medical Care Advisory Committee (MCAC). Commenters also asked 
the Secretaries to clarify that the public must have an opportunity to 
comment at a post-award public forum, and that the Secretaries should 
require States to publish the date, time, and location of public forums 
in the State equivalent of the Federal Register.
    Response: We believe that it is appropriate to provide a State with 
flexibility to determine the appropriate public forums. Consequently, 
we have not added a provision requiring a State to establish an 
advisory board. Further, given the possibility for section 1332 waivers 
to be broad or narrow in scope, we want to avoid requiring the creation 
of burdensome structures.
    We agree with commenters that the public should have an opportunity 
to comment at a post-award public forum, which was reflected in 31 CFR 
33.120(c) and 45 CFR 155.1320(c) of the proposed regulations. We are 
maintaining this provision in the final regulations.
    We also agree that the public should have notice of a public forum. 
As set forth in 31 CFR 33.120(c)(1) and 45 CFR 155.1320(c)(1), a State 
must publish the date, time, and location of a post-award public forum 
in a prominent location on the State's public Web site at least 30 days 
prior to the forum. We believe that a State's public web site is a more 
effective means of communication to the public than a State's 
equivalent of the Federal Register, and as such, will maintain this 
provision in the final regulation. With that said, we encourage States 
to publish the notice of a post-award forum in other locations that 
will ensure appropriate public notice.
    Comment: One commenter asked that the Secretaries consider delaying 
the initial post-award public forum and removing the requirement after 
2 to 3 years of operation, with the potential to trigger forums when 
changes occur.
    Response: We support the commenter's desire to reduce burden on 
States. However, we believe that post-award forums will be critical to 
ensuring that public has a regular opportunity to learn about and 
comment on the progress of a waiver. As such, we are maintaining this 
provision in the final regulations.
2. General
    Comment: One commenter suggested that 31 CFR 33.120(a) be modified 
to remove the term ``interpretive guidance.'' The commenter stated that 
States should be subject only to ``laws, regulations, and interpretive 
policy that have been published and are of general applicability.
    Response: We believe that the authority available to States under 
section 1332 demands that the Federal government have a broad set of 
tools for ensuring ongoing compliance with the statutory criteria for 
the approval of waivers and providing needed clarifications to States, 
including interpretive guidance. With that noted, we will work closely 
with States to provide as much advance notice as possible of upcoming 
guidance that

[[Page 11710]]

affects waivers, as well as to incorporate State input in crafting such 
guidance where possible.
    Comment: A commenter asked the Secretaries to reduce Federal 
discretionary authority to discontinue waivers.
    Response: As set forth in 31 CFR 33.120(d) and 45 CFR 155.1320(d), 
the Secretaries' authority to terminate or suspend a waiver is limited 
to situations in which the Secretaries find, ``* * * that a State has 
materially failed to comply with the terms of a section 1332 waiver.'' 
We believe that this provision is sufficiently limited and is critical 
to ensuring that Federal dollars are spent in accordance with 
applicable rules. As such, we will maintain this provision in the final 
regulations.
    Comment: One commenter asked that the Secretaries require States to 
develop a transition plan that would allow the public to continue to 
have access to quality, affordable health care should a State's waiver 
be terminated or suspended.
    Response: We agree that it would be useful for States to develop a 
transition plan, depending on the scope of the approved section 1332 
waiver. We will consider including this as a standard component of the 
terms and conditions of an approved waiver.
    Comment: One commenter asked the Secretaries to closely monitor 
approved waivers to ensure fair and adequate access to and payment for 
FQHC services.
    Response: We believe that there are many areas in which monitoring 
will be particularly important to ensure that approved waivers continue 
to meet the statutory criteria for approval. To the extent possible, we 
will align this monitoring with each State's waiver design to reduce 
administrative burden.

G. State Reporting Requirements (31 CFR 33.124 and 45 CFR 155.1324)

    Section 1332 of the Affordable Care Act requires that the 
Secretaries provide for a process for the periodic submission of 
reports by a State concerning the implementation of the program under a 
section 1332 waiver.
    For the Secretaries to effectively monitor the implementation of a 
waiver, the proposed regulations required a State to submit a quarterly 
progress report in accordance with the terms and conditions of the 
State's section 1332 waiver. States were also required to submit an 
annual report, as described in 31 CFR 33.124(b) and 45 CFR 155.1324(b), 
documenting the following:
    <bullet> The progress of the section 1332 waiver;
    <bullet> Data on compliance with section 1332(b)(1)(A) through (D) 
of the Affordable Care Act;
    <bullet> A summary of the annual post-award public forum, including 
all public comments received regarding the progress of the section 1332 
waiver and action taken in response to such concerns or comments; and
    <bullet> Other information consistent with the State's approved 
terms and conditions.
    Under 31 CFR 33.124(c) and 45 CFR 155.1324(c) of the proposed 
regulations, States were required to submit a draft annual report to 
the Secretary of Health and Human Services no later than 90 days after 
the end of each waiver year. Within 60 days of receipt of comments from 
the Secretary of Health and Human Services, a State would be required 
to submit a final annual report for the waiver year to the Secretary of 
Health and Human Services. Finally, a State would be required to 
publish the draft and final annual reports on the State's public web 
site.
    The Secretaries noted that they intended to issue future guidance 
under section 1332 regarding periodic reports.
    We received the following comments concerning the proposed process 
for State reporting on approved waivers.
    Comment: Several commenters requested that the Secretaries require 
States and the Federal government to publish quarterly and annual 
reports on State and Federal web sites in a timely fashion.
    Response: The provisions of 31 CFR 33.124(c)(2) and 45 CFR 
155.1324(c)(2) specify that a State must publish both draft and final 
annual reports on its public web site. We are maintaining this 
provision in the final regulations. We will consider the other elements 
of this comment in developing future guidance on reporting.
    Comment: In general, commenters supported the proposed quarterly 
and annual reporting provisions. Some commenters requested that the 
Secretaries add specific reporting topics and analyses in regulation, 
as opposed to addressing this in future guidance.
    Response: We appreciate the commenters' detailed suggestions. We 
are not including additional specificity in the final regulations at 
this time, given that the rules regarding the underlying provisions are 
not yet final. We will consider the specific suggestions in developing 
future guidance on reporting, as well as in crafting the reporting 
provisions that may be specific to an approved waiver.
    Comment: One commenter recommended that the frequency of reporting 
be reduced from quarterly to semi-annual for the first 2 to 3 years of 
a waiver period, with annual reporting after that. The commenter also 
suggested that annual reports be replaced with high-level summaries 
after the first 2 to 3 years of a waiver period.
    Response: We support the commenter's desire to reduce burden on 
States. However, we believe that given the potentially broad scope of 
section 1332 waivers, quarterly and annual reporting will be critical 
to ensuring that the Secretaries can exercise appropriate oversight of 
approved waivers, and States can formally communicate areas in which 
best practices have emerged or technical assistance may be needed. We 
also believe that such reporting is important to enable the Secretaries 
to calibrate future budgetary estimates. Within this construct, we 
intend to work with States to ensure that quarterly and annual 
reporting do not include duplicative or unnecessary information, and 
are closely aligned to the design of a State's waiver.
    Comment: One commenter objected to the provision that allows the 
Secretaries to review a draft version of the annual report prior to its 
release to the public.
    Response: Consistent with the practice that we are adopting for 
section 1115 waivers, which is specified in a concurrently issued final 
rule in 42 CFR 431.428(b), the provisions of 31 CFR 33.124(c)(2) and 45 
CFR 155.1324(c)(2) specify that a State must publish the draft annual 
report on a public Web site within 30 days of submission to the 
Secretary of HHS. We believe that this is appropriate to allow the 
State to complete any internal process it has for preparing the 
document for publication (for example, ensuring that the document meets 
electronic accessibility standards) and posting it electronically. We 
are maintaining this provision in the final rules.

H. Periodic Evaluation Requirements (31 CFR 33.128 and 45 CFR 155.1328)

    Section 1332 of the Affordable Care Act requires that the 
Secretaries provide for a process for the periodic evaluation of 
section 1332 waivers by the Secretary or Secretaries with jurisdiction 
over the provisions for which the waiver was granted. The proposed 
regulations required that each periodic evaluation include a review of 
all annual reports submitted by the State in accordance with 45 CFR 
155.1324 and 31 CFR 33.124 that relate to the period of time covered by 
the evaluation.
    As part of this proposed regulation, the Secretaries solicited 
public comments regarding specific components of the periodic 
evaluation

[[Page 11711]]

of a section 1332 waiver. The Secretaries noted that potential 
components of a periodic evaluation could include, but not be limited 
to, the impact of the waiver on the following:
    <bullet> Choice of health plans for individuals and employers;
    <bullet> Stability of coverage for individuals and employers;
    <bullet> Small businesses, individuals with pre-existing 
conditions, and the low-income population;
    <bullet> The overall health care system in the State; and
    <bullet> Other States and the Federal Government.
    The Secretaries noted that they intended to issue future guidance 
under section 1332 regarding periodic evaluations.
    We received the following comments concerning the proposals 
regarding the evaluation of approved waivers.
    Comment: Several commenters asked the Secretaries to include 
additional specific evaluation criteria in regulation, including, the 
use of Healthcare Effectiveness Data and Information Set (HEDIS) and 
the Consumer Assessment of Healthcare Providers and Systems (CAHPS); 
system-wide, audited quality outcome measures; and metrics on 
accessibility, cost, health and wellness, administrative expenses, 
evidence-based practices, and the impact of the waiver on individuals 
with pre-existing conditions and low-income populations.
    Commenters also offered additional suggestions for the evaluation 
process, including requiring comparisons with States without waivers; 
requiring that evaluations be conducted by objective, independent, 
peer-reviewed evaluators at least every 3 years; and allowing States 
flexibility in constructing evaluations.
    Response: We have carefully reviewed the submitted comments and 
will consider them as we develop guidance on this topic. We intend to 
work closely with States and stakeholders to ensure that evaluations 
are aligned with the design and goals of a State's waiver and section 
1332.
    Comment: Commenters asked that evaluation criteria not necessarily 
include choice of health plans, to allow evaluation criteria to 
accommodate different approaches that States may take in section 1332 
waivers.
    Response: The potential evaluation criteria offered in the preamble 
to the proposed regulations represents a starting point for the 
development of guidance on the evaluation of approved section 1332 
waivers. We anticipate that the primary focus of the evaluation will be 
the four statutory criteria for approval specified in section 
1332(b)(1) of the Affordable Care Act. As noted above, we intend to 
work closely with States to ensure that evaluations are aligned with 
the design and goals of a State's waiver and section 1332.
    Comment: Commenters asked that the Secretaries, and not the States, 
conduct evaluations.
    Response: We are maintaining the language in 31 CFR 33.128(a)(1) 
and 45 CFR 155.1328(a)(1), as the law requires periodic evaluations by 
the Secretaries. We will consider how best to carry out this 
responsibility as we develop future guidance related to the evaluation 
process.

I. Other Comments

    We received the following comments, which were not related to a 
specific section of the proposed regulation.
1. Scope of Waivers
    Comment: We received a number of comments that requested that the 
Secretaries clarify or restrict waiver authority in various ways, 
including prohibiting States from: imposing more stringent coverage 
requirements on employers; waiving the minimum coverage provision; 
waiving provisions related to essential community providers; granting 
exceptions from the medical loss ratio requirement; or affecting 
employer-sponsored insurance. One commenter also asked that the 
Secretaries emphasize the importance of preserving employer-based 
coverage.
    In particular, a number of commenters asked the Secretaries to 
clarify the interaction between section 1332 waivers and the Employee 
Retirement Income Security Act (ERISA).
    In addition, one commenter asked whether States will be permitted 
to use redirected premium tax credits and cost-sharing reductions to 
fund Health Savings Accounts (HSAs).
    Response: Section 1332(a)(2) of the Affordable Care Act specifies 
that waiver authority is limited to parts I and II of subtitle D of the 
Affordable Care Act; section 1402 of the Affordable Care Act; and 
sections 36B, 4980H, and 5000A of the Internal Revenue Code. Further, 
section 1332(c) of the Affordable Care Act states while the Secretaries 
have broad discretion to determine the scope of a waiver, no Federal 
laws or requirements may be waived that are not within the Secretaries' 
authority. As previously noted, we encourage States to contact the 
Secretaries to discuss specific waiver proposals, particularly after 
the substantive rules subject to section 1332 waivers are finalized.
2. General
    Comment: One commenter asked that the Secretaries include 
provisions for waiver amendments and renewals, and clarify which 
requirements apply in these situations. Another commenter recommended 
that the renewal process include a thorough reevaluation.
    Response: We acknowledge that information regarding waiver 
amendments and renewals will be needed as we move closer to the date on 
which section 1332 waivers could be effective. However, amendments and 
renewals are beyond the purview of the proposed rules, which were 
limited in accordance with section 1332(a)(4)(B) of the Affordable Care 
Act.
    Comment: A commenter asked that the Secretaries clarify that 
waivers are approved for a fixed timeframe.
    Response: We note that section 1332(e) of the Affordable Care Act 
specifies that the initial term of a section 1332 waiver may not extend 
longer than five years.
    Comment: One commenter asked how HHS will determine the total 
amount of Federal funding under an approved waiver.
    Response: We will provide additional information on this issue as 
we move closer to the date on which section 1332 waivers could be 
effective and regulations regarding the underlying provisions are 
promulgated.

IV. Provisions of the Final Regulations

    For the most part, these final rules incorporate the provisions of 
the proposed rules. Those provisions of these final rules that differ 
from the proposed rules are as follows:

A. Coordinated Waiver Process (31 CFR 33.102 and 45 CFR 155.1302)

    We have clarified that ``section 1115 demonstration'' in 31 CFR 
33.102(a) and 45 CFR 155.1302(a) refers to a demonstration under 
section 1115 of the Act.
    We have replaced the word ``and'' with the word ``or'' in 31 CFR 
33.102(b) and 45 CFR 155.1302(b) to clarify that the Secretary of 
Health and Human Services will transmit any proposal that requests to 
waive one or more of the provisions under the authority of the 
Secretary of the Treasury to the Secretary of the Treasury.

B. Definitions (31 CFR 33.104 and 45 CFR 155.1304)

    We have revised the definition of ``Complete application'' to 
reflect structural changes in 31 CFR 33.108 and 45 CFR 155.1308.

[[Page 11712]]

C. Application Procedures (31 CFR 33.108 and 45 CFR 155.1308)

    We have revised 31 CFR 33.108 and 45 CFR 155.1308 substantially to 
adopt a simpler structural layout. We have revised and added headings 
and sections for (a), (b), (c), (d), (e), and (f), now titled, 
``Acceptable formats for applications''; ``Application timing''; 
``Preliminary review''; ``Notification of preliminary determination''; 
``Public notice of completed application''; and, ``Criteria for a 
complete application'', respectively. We also made changes to cross-
references to reflect the new layout. With the exception of the new 
headings, revised cross-references, and the below modifications, all 
content is the same.
    We have modified 31 CFR 33.108(a) and 45 CFR 155.1308(a) to remove 
the requirement that a State submit applications in printed format.
    We have added a provision at 31 CFR 33.108(b) and 45 CFR 
155.1308(b) to specify that States must submit waiver applications 
sufficiently in advance of the requested effective date to allow for an 
appropriate implementation timeline.
    We have modified 31 CFR 33.108(f)(2) and 45 CFR 155.1308(f)(2) to 
clarify that written evidence of the State's compliance with the public 
notice and comment process includes, ``a description of the key issues 
raised during the State public notice and comment period.''
    We have amended 31 CFR 33.108(f)(3)(ii) and 45 CFR 
155.1308(f)(3)(ii) to clarify that the requirement to provide a copy of 
a law that provides the State with authority to implement the proposed 
waiver can be satisfied through the submission of an existing law, if 
such a law exists.
    We have amended 31 CFR 33.108(f)(3)(iii) and 45 CFR 
155.1308(f)(3)(iii) to remove the word ``brief'' from the provision 
describing information that States must provide regarding the rationale 
for a State's specific waiver requests.
    We have made minor wording changes to 31 CFR 33.108(f)(3)(v)(A)-(D) 
and 45 CFR 155.1308(f)(3)(v)(A-D) to improve clarity.
    We have added a provision at 31 CFR 33.108(f)(4)(iv) and 45 CFR 
155.1308(f)(4)(iv) to specify that States must submit an implementation 
timeline as part of the supporting information required for a complete 
initial application.
    We have modified 31 CFR 33.108(g)(1) and 45 CFR 155.1308(g)(1) to 
clarify that requests for additional information from the Secretary of 
the Treasury will be transmitted to a State through the Secretary of 
Health and Human Services, which follows the process used elsewhere in 
the rules.

D. General

    Throughout 45 CFR 155 subpart N, we have added, ``as applicable'' 
after references to the Secretary of the Treasury, to clarify that the 
specified requirements only involve the Secretary of the Treasury to 
the extent that a waiver proposal or approved waiver includes a waiver 
of a provision under the authority of the Secretary of the Treasury.

V. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), the Departments 
are required to provide notice in the Federal Register and solicit 
public comment before a collection of information requirement is 
approved by the Office of Management and Budget (OMB). To fairly 
evaluate whether an information collection should be approved by OMB, 
section 3506(c)(2)(A) of the PRA requires that the Departments solicit 
comment on the following issues:
    <bullet> The need for the information collection and its usefulness 
in carrying out the proper functions of the Departments.
    <bullet> The accuracy of the Departments' estimate of the 
information collection burden.
    <bullet> The quality, utility, and clarity of the information to be 
collected.
    <bullet> Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    The Departments will be able to more accurately estimate the burden 
until the provisions that section 1332 authorizes the Secretaries to 
waive pursuant to an application by a State take effect in 2014. The 
Departments solicited public comments on the annual number of waiver 
applications that the Departments may receive, but did not receive any 
responses. With that said, the Departments developed estimates of the 
burden associated with information collection requirements in the 
proposed regulations, and has modified them based on the below 
comments. Further, the burden estimates provided are estimated 
averages, and the actual burden will vary based on the scope of the 
waiver and the State's existing infrastructure for these activities.
    We received the following comments on information collection 
requirements.
    Comment: One commenter asked that we estimate the number of States 
that will seek waivers.
    Response: We solicited comment on this in the proposed rules, and 
did not receive any responses. Given the lack of response and length of 
time before the earliest possible effective date for section 1332 
waivers, the Secretaries have no way to accurately quantify the number 
of States that will seek waivers. With that said, we believe that the 
per-State burden estimates provided in the proposed rule provide 
adequate information regarding the collections related to these rules. 
As such, for the purpose of this estimate, we use one State.
    Comment: One commenter asked that we explain the average wage used 
in the burden analyses. Another suggested that the calculated burden 
estimates were too low.
    Response: We have revisited the average wage used and agree with 
the commenter that it was too low. We have also revisited some of the 
estimates of the number of hours and adjusted them. The combined impact 
of these changes is to increase the overall burden estimate, both in 
terms of hours and dollars. We have recomputed the average wage based 
on a 75 percent/25 percent blend for a Management Analyst (Occupation 
No. 13-1111 in the Bureau of Labor Statistics' May 2010 National 
Occupational Employment and Wage Estimate; Industry: State Government; 
Category: Business and Financial Operations Occupations) and a General 
and Operations Manager (Occupation No. 11-1021 in the May 2010 Bureau 
of Labor Statistics' National Occupational Employment and Wage 
Estimate; Industry: State Government; Category: Management 
Occupations). We believe that this better reflects wages for these 
activities by using actual average wages for State government employees 
at an expected staff/management mix. In addition, we have incorporated 
a factor of 31.2 percent to account for additional employer costs (paid 
leave, supplemental pay, insurance, retirement and savings, and 
legally-required benefits) by using the State and local government rate 
for such costs for management, professional, and related workers from 
the Bureau of Labor Statistics' September 2011 Employer Costs for 
Employee Compensation survey. By using this methodology, we have 
revised the average wage from $20.67 per hour to $46.67 per hour, which 
results in commensurate increases to all of the burden estimates.
    The Departments solicited public comment on each of these issues 
for the following sections of this document that

[[Page 11713]]

contain information collection requirements (ICRs):

A. ICRs Regarding the Coordinated Waiver Process (31 CFR 33.102 and 45 
CFR 155.1302) and Application Procedures (31 CFR 33.108 and 45 CFR 
155.1308)

    Under certain conditions, 31 CFR 33.102 and 45 CFR 155.1302(a) and 
(b) provide that a State may submit a single application for a waiver 
under section 1332 of the Affordable Care Act and a waiver under one or 
more of the existing waiver processes applicable under titles XVIII, 
XIX, and XXI of the Act, or under any other Federal law relating to the 
provision of health care items or services. 31 CFR 33.108 and 45 CFR 
155.1308 establish the application process for section 1332 waivers. 
Under 31 CFR 33.108(a) and 45 CFR 155.1308(a), a State's application 
for approval of a section 1332 waiver must be submitted to the 
Secretary as an electronic document. Paragraph (f) of 31 CFR 33.108 and 
45 CFR 155.1308 specifies that an application for a section 1332 waiver 
will not be considered complete unless the application meets all of the 
conditions set out those sections.
    The burden associated with the requirements in 31 CFR 33.102 and 
33.108 and 45 CFR 155.1302 and 155.1308 is the time and effort 
necessary for a State to develop and submit a complete application for 
a section 1332 waiver. The Departments estimate that it will take 400 
hours for a State to develop and submit a complete section 1332 waiver 
application, at a cost of $18,668.

B. ICRs Regarding State Public Notice Requirements (31 CFR 33.112 and 
45 CFR 155.1312)

    Paragraph (a) of 31 CFR 33.112 and 45 CFR 155.1312 require a State 
to provide a public notice and comment period prior to submitting an 
application for a section 1332 waiver.
    The public notice must address the information requirements listed 
in paragraphs (b)(1) through (4) of 31 CFR 33.112 and 45 CFR 155.1312. 
The burden estimate associated with the requirements in paragraph 
(a)(1) and (b) of this section is the time and effort necessary to 
develop and provide public notice and obtain and consider public 
comments. The Departments estimate that each State submitting an 
application for a section 1332 waiver will require 80 hours to comply 
with the requirements in this section, at a total cost of $3,734 per 
State.
    Paragraph (a)(2) of 31 CFR 33.112 and 45 CFR 155.1312 require 
States with 1 or more Federally-recognized Indian tribes to consult 
with such tribes before submitting a section 1332 waiver application. 
Paragraph (f)(2) of 31 CFR 33.108 and 45 CFR 155.1308 explain that 
documentation of the State's public notice, which incorporates this 
consultation, must be included in the waiver application.
    The burden associated with these requirements is both the time and 
effort necessary for a State to conduct its tribal consultations and 
the time and effort necessary to notify CMS of the State's compliance 
with paragraph (f)(2) of 31 CFR 33.108 and 45 CFR 155.1308. The 
Departments estimate that each State with federally recognized tribes 
that submits an application for a section 1332 waiver will require 40 
hours to both conduct its tribal consultations and to submit the 
aforementioned evidence to CMS, at a total cost of $1,867.
    Paragraph (c) of 31 CFR 33.112 and 45 CFR 155.1312 specify that 
after issuing the public notice and prior to submitting an application 
for a section 1332 waiver, a State must conduct public hearings 
regarding the State's waiver application. While this requirement is 
subject to the PRA, the Departments believe the associated burden is 
exempt under 5 CFR 1320.3(h)(4). Facts or opinions submitted in 
response to general solicitations of comments from the public, 
published in the Federal Register or other publications, regardless of 
the form or format thereof, provided that no person is required to 
supply specific information pertaining to the commenter, other than 
that necessary for self-identification, as a condition of the agency's 
full consideration of the comment are not subject to the PRA.

C. ICRs Regarding Monitoring and Compliance (31 CFR 33.120 and 45 CFR 
155.1320)

    31 CFR 33.120(b) and 45 CFR 155.1320(b) require States to 
periodically perform reviews of the implementation of the section 1332 
waiver. The Departments estimate that it will take a State 80 hours 
annually to periodically review the waiver's implementation, at a total 
cost of $3,734.
    Paragraph (c) of 31 CFR 33.120 and 45 CFR 155.1320 further 
specifies that at least 6 months after the implementation date of the 
waiver and annually thereafter, the State must hold a public forum to 
solicit comments on the progress of a section 1332 waiver. As specified 
in paragraph (c)(1) of 31 CFR 33.120 and 45 CFR 155.1320, the State 
must publish the date, time, and location of the public forum in a 
prominent location on the State's public Web site, at least 30 days 
prior to the date of the planned public forum.
    The burden associated with these provisions includes the time and 
effort necessary to conduct the public meeting and the time and effort 
necessary for a State to publish the date, time, and location of the 
public forum in a prominent location on the State's public Web site, at 
least 30 days prior to the date of the planned public forum. While 
these requirements are subject to the PRA, the Departments believe the 
associated burden is exempt from the PRA. As discussed previously in 
this collection, facts or opinions submitted in response to general 
solicitations of comments from the public, published in the Federal 
Register or other publications, regardless of the form or format 
thereof, provided that no person is required to supply specific 
information pertaining to the commenter, other than that necessary for 
self-identification, as a condition of the agency's full consideration 
of the comment are not subject to the PRA. Therefore, the burden 
associated with the annual public hearing requirement is exempt. 
Similarly, the Departments believe the time and effort necessary for a 
State to publish the date, time, and location of the public forum in a 
prominent location on the State's public Web site is a burden that 
would be incurred in the course of usual and customary State business 
practices and is therefore exempt from the PRA under 5 CFR 
1320.3(b)(3).

D. ICRs Regarding State Reporting Requirements (31 CFR 33.124 and 45 
CFR 155.1324)

    Paragraph (a) of 31 CFR 33.124 and 45 CFR 155.1324 requires States 
to submit quarterly reports to CMS in accordance with the terms and 
conditions of a State's approved section 1332 waiver. The burden 
associated with this reporting requirement is the time and effort 
necessary to develop and submit quarterly reports to CMS. The 
Departments estimate that it will take 10 hours per quarter for each 
State to comply with this reporting requirement, for a total of 40 
hours per year, at a total annual cost of $3,734.
    Paragraph (b) of 31 CFR 33.124 and 45 CFR 155.1324 requires States 
to submit annual reports to CMS documenting the information listed in 
paragraphs (b)(1) through (4) of 31 CFR 33.124 and 45 CFR 155.1324. As 
part of the submission process, paragraph (c) of 31 CFR 33.124 and 45 
CFR 155.1324 requires States to submit draft annual reports to CMS no 
later than 90 days after the end of each

[[Page 11714]]

waiver year, or as specified in the State's terms and conditions. The 
burden associated with this reporting requirement is the time and 
effort necessary to develop and submit draft annual reports to CMS. The 
Departments estimate that it will take 40 hours for each State to 
comply with this reporting requirement, at a total cost of $1,867.
    Paragraph (c)(1) of 31 CFR 33.124 and 45 CFR 155.1324 specifies 
that within 60 days of receipt of comments from CMS, the State must 
submit to CMS the final annual report for the waiver year. While this 
requirement is subject to the PRA, the Departments believe the 
associated burden is exempt under 5 CFR 1320.3(h)(9). Facts or opinions 
obtained or solicited through non-standardized follow-up questions 
designed to clarify responses to approved collections of information 
are not subject to the PRA.
    Paragraph (c)(2) of 31 CFR 33.124 and 45 CFR 155.1324 specify that 
the draft and final annual reports must be published on the State's 
public Web site. The burden associated with this is the time and effort 
required for a State to post the aforementioned information on the 
State's public Web site. The Departments estimate that it will take 4 
hours for each State to comply with this requirement, at a total cost 
of $187.

E. ICRs Regarding Periodic Evaluation Requirements (31 CFR 33.128 and 
45 CFR 155.1328)

    31 CFR 33.128 and 45 CFR 155.1328 specify that the Secretary of 
Health and Human Services and the Secretary of the Treasury shall 
periodically evaluate the implementation of section 1332 waivers. The 
Departments recognize that evaluation will likely involve information 
collections, but are not seeking OMB approval for collections related 
to this provision at this time. The Departments will seek OMB approval, 
as needed, once it develops guidance for States regarding this 
evaluation requirement. Such approval will be requested following the 
60- and 30-day comment periods required by the PRA.

                                              Table 1--Estimated Annual Recordkeeping and Reporting Burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    Hourly labor  Total labor      Total
                                OMB Control                               Burden per  Total annual     cost of       cost of     capital/     Total cost
    Regulation section(s)           No.        Respondents   Responses     response       burden      reporting    reporting    maintenance      ($)
                                                                           (hours)       (hours)         ($)          ($)       costs  ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
31 CFR 33.108 and 45 CFR       0938-New.....             1            1          400           400         46.67      $18,668             0      $18,668
 155.1308.
Paragraph (a)(1) of 31 CFR     0938-New.....             1            1           80            80         46.67        3,734             0        3,734
 33.112 and 45 CFR 155.1312.
Paragraph (a)(2) of 31 CFR     0938-New.....             1            1           40            40         46.67        1,867             0        1,867
 33.112 and 45 CFR 155.1312.
Paragraph (b)(1) of 31 CFR     0938-New.....             1            1           80            80         46.67        3,734             0        3,734
 33.120 and 45 CFR 155.1320.
Paragraph (a) of 31 CFR        0938-New.....             1            4           10            40         46.67        1,867             0        1,867
 33.124 and 45 CFR 155.1324.
Paragraph (b) of 31 CFR        0938-New.....             1            1           40            40         46.67        1,867             0        1,867
 33.124 and 45 CFR 155.1324.
Paragraph (c)(2) of 31 CFR     0938-New.....             1            1            4             4         46.67          187             0          187
 33.124 and 45 CFR 155.1324.
                                             -----------------------------------------------------------------------------------------------------------
    Total....................  .............             1           10  ...........           684  ............       31,922             0       31,922
--------------------------------------------------------------------------------------------------------------------------------------------------------

    If you comment on these information collection and recordkeeping 
requirements, please submit your comments to the Office of Information 
and Regulatory Affairs, Office of Management and Budget, Attention: CMS 
Desk Officer, [CMS-9987-F], Fax: (202) 395-6974; or Email: <a href="/cdn-cgi/l/email-protection#e0afa9b2a1bf9395828d899393898f8ea08f8d82ce858f90ce878f96"><span class="__cf_email__" data-cfemail="d7989e859688a4a2b5babea4a4beb8b997b8bab5f9b2b8a7f9b0b8a1">[email protected]</span></a>.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it obtains a control 
number assigned by OMB.

VI. Regulatory Impact Statement

    The Departments have examined the impacts of these final rules as 
required by Executive Order 13563 on Improving Regulation and 
Regulatory Review (January 18, 2011), Executive Order 12866 on 
Regulatory Planning and Review (September 30, 1993), the Regulatory 
Flexibility Act (RFA) (5 U.S.C. 601 et seq.), section 202 of the 
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), Executive Order 
13132 on Federalism (August 4, 1999), and the Congressional Review Act 
(5 U.S.C. 804(2)).
    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). These rules have been 
designated ``significant regulatory actions'' although not economically 
significant, under section 3(f) of Executive Order 12866. Accordingly, 
these rules have been reviewed by the Office of Management and Budget.
    The RFA requires agencies to analyze options for regulatory relief 
for small entities, if a rule has a significant economic impact on a 
substantial number of small entities. For purposes of the RFA, small 
entities include small businesses, nonprofit organizations, and small 
governmental jurisdictions. Most hospitals and most other health care 
providers and suppliers are small entities, either by being nonprofit 
organizations or by meeting the SBA definition of a small business and 
having revenues of less than $7 million to $34.5 million in any 1 year. 
(For details, see the Small Business Administration's final rule that 
set forth size standards for health care industries, at 65 FR 69432, 
November 17, 2000). Individuals and States are not included

[[Page 11715]]

in the definition of a small entity. The Departments are not preparing 
an analysis for the RFA because the Departments have determined, and 
the Secretaries certify, that these final rules will not have a 
significant economic impact on a substantial number of small entities.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
(Pub. L. 104-4) also requires that agencies assess anticipated costs 
and benefits before issuing any rule whose mandates require spending in 
any 1 year of $100 million or more in 1995 dollars, updated annually 
for inflation. In 2011, that threshold is approximately $136 million. 
Because these rules do not mandate State participation in section 1332 
waivers, there is no obligation for the State to make any change to 
their existing programs. As a result, there is no mandate for the 
State. Therefore, the Departments estimate these rules will not mandate 
expenditures in the threshold amount of $136 million in any 1 year.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates 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. Since these regulations would not impose costs on State 
or local governments, the requirements of Executive Order 13132 are not 
applicable. In accordance with the provisions of Executive Order 12866, 
these regulations were reviewed by the Office of Management and Budget.

List of Subjects

31 CFR Part 33

    Health care, Health insurance, Reporting and recordkeeping 
requirements.

45 CFR Part 155

    Health care, Health insurance, Reporting and recordkeeping 
requirements.

Department of the Treasury

31 CFR Subtitle A

    For the reasons set forth in the preamble, the Department of the 
Treasury amends 31 CFR subtitle A by adding part 33 to read as follows:

PART 33--WAIVERS FOR STATE INNOVATION

Sec.
33.100 Basis and purpose.
33.102 Coordinated waiver process.
33.104 Definitions.
33.108 Application procedures.
33.112 State public notice requirements.
33.116 Federal public notice and approval process.
33.120 Monitoring and compliance.
33.124 State reporting requirements.
33.128 Periodic evaluation requirements.

    Authority:  Sec. 1332, Pub. L. 111-148, 124 Stat. 119.


Sec.  33.100  Basis and purpose.

    (a) Statutory basis. This part implements provisions of section 
1332 of the Patient Protection and Affordable Care Act (Affordable Care 
Act), Public Law 111-148, relating to Waivers for State Innovation, 
which the Secretary may authorize for plan years beginning on or after 
January 1, 2017. Section 1332 of the Affordable Care Act requires the 
Secretary to issue regulations that provide for all of the following:
    (1) A process for public notice and comment at the State level, 
including public hearings, sufficient to ensure a meaningful level of 
public input.
    (2) A process for the submission of an application that ensures the 
disclosure of all of the following:
    (i) The provisions of law that the State involved seeks to waive.
    (ii) The specific plans of the State to ensure that the waiver will 
meet all requirements specified in section 1332 of the Affordable Care 
Act.
    (3) A process for the provision of public notice and comment after 
a waiver application is received by the Secretary of Health and Human 
Services, that is sufficient to ensure a meaningful level of public 
input and that does not impose requirements that are in addition to, or 
duplicative of, requirements imposed under the Administrative 
Procedures Act, or requirements that are unreasonable or unnecessarily 
burdensome with respect to State compliance.
    (4) A process for the submission of reports to the Secretary by a 
State relating to the implementation of a waiver.
    (5) A process for the periodic evaluation by the Secretary of 
programs under waivers.
    (b) Purpose. This part sets forth certain procedural requirements 
for Waivers for State Innovation under section 1332 of the Affordable 
Care Act.


Sec.  33.102  Coordinated waiver process.

    (a) Coordination with applications for waivers under other Federal 
laws. A State may submit a single application to the Secretary of 
Health and Human Services for a waiver under section 1332 of the 
Affordable Care Act and a waiver under one or more of the existing 
waiver processes applicable under titles XVIII, XIX, and XXI of the 
Social Security Act, or under any other Federal law relating to the 
provision of health care items or services, provided that such 
application is consistent with the procedures described in this part, 
the procedures for demonstrations under section 1115 of the Social 
Security Act, if applicable, and the procedures under any other 
applicable Federal law under which the State seeks a waiver.
    (b) Coordinated process for section 1332 waivers. A State seeking a 
section 1332 waiver must submit a waiver application to the Secretary 
of Health and Human Services. Any application submitted to the 
Secretary of Health and Human Services that requests to waive sections 
36B, 4980H, or 5000A of the Internal Revenue Code, in accordance with 
section 1332(a)(2)(D) of the Affordable Care Act, shall upon receipt be 
transmitted by the Secretary of Health and Human Services to the 
Secretary to be reviewed in accordance with this part.


Sec.  33.104  Definitions.

    For the purposes of this part:
    Complete application means an application that has been submitted 
and for which the Secretary and the Secretary of Health and Human 
Services have made a preliminary determination that it includes all 
required information and satisfies all requirements that are described 
in Sec.  33.108(f).
    Public notice means a notice issued by a government agency or 
legislative body that contains sufficient detail to notify the public 
at large of a proposed action consistent with Sec.  33.112.
    Section 1332 waiver means a Waiver for State Innovation under 
section 1332 of the Affordable Care Act.


Sec.  33.108  Application procedures.

    (a) Acceptable formats for applications. Applications for initial 
approval of a section 1332 waiver shall be submitted in electronic 
format to the Secretary of Health and Human Services.
    (b) Application timing. Applications for initial approval of a 
section 1332 waiver must be submitted sufficiently in advance of the 
requested effective date to allow for an appropriate implementation 
timeline.
    (c) Preliminary review. Each application for a section 1332 waiver 
will be subject to a preliminary review by the Secretary and the 
Secretary of Health and Human Services, who will make a preliminary 
determination that the application is complete. A submitted application 
will not be deemed received until the Secretary and the Secretary of 
Health and Human Services have made the preliminary

[[Page 11716]]

determination that the application is complete.
    (1) The Secretary and the Secretary of Health and Human Services 
will complete the preliminary review of the application within 45 days 
after it is submitted.
    (2) If the Secretary and the Secretary of Health and Human Services 
determine that the application is not complete, the Secretary of Health 
and Human Services will send the State a written notice of the elements 
missing from the application.
    (3) The preliminary determination that an application is complete 
does not preclude a finding during the 180-day Federal decision-making 
period that a necessary element of the application is missing or 
insufficient.
    (d) Notification of preliminary determination. Upon making the 
preliminary determination that an application is complete, as defined 
in this part, the Secretary of Health and Human Services will send the 
State a written notice informing the State that the Secretary and the 
Secretary of Health and Human Services have made such a preliminary 
determination. That date will also mark the beginning of the Federal 
public notice process and the 180-day Federal decision-making period.
    (e) Public notice of completed application. Upon receipt of a 
complete application for an initial section 1332 waiver, the Secretary 
of Health and Human Services will--
    (1) Make available to the public the application, and all related 
State submissions, including all supplemental information received from 
the State following the receipt of a complete application for a section 
1332 waiver.
    (2) Indicate the status of the application.
    (f) Criteria for a complete application. An application for initial 
approval of a section 1332 waiver will not be considered complete 
unless the application meets all of the following conditions:
    (1) Complies with paragraphs (a) through (f) of this section.
    (2) Provides written evidence of the State's compliance with the 
public notice requirements set forth in Sec.  33.112, including a 
description of the key issues raised during the State public notice and 
comment period.
    (3) Provides all of the following:
    (i) A comprehensive description of the State legislation and 
program to implement a plan meeting the requirements for a waiver under 
section 1332;
    (ii) A copy of the enacted State legislation that provides the 
State with authority to implement the proposed waiver, as required 
under section 1332(a)(1)(C) of the Affordable Care Act;
    (iii) A list of the provisions of law that the State seeks to 
waive, including a description of the reason for the specific requests; 
and
    (iv) The analyses, actuarial certifications, data, assumptions, 
analysis, targets and other information set forth in paragraph (f)(4) 
of this section sufficient to provide the Secretary and the Secretary 
of Health and Human Services with the necessary data to determine that 
the State's proposed waiver:
    (A) As required under section 1332(b)(1)(A) of the Affordable Care 
Act (the comprehensive coverage requirement), will provide coverage 
that is at least as comprehensive as the coverage defined in section 
1302(b) of the Affordable Care Act and offered through Exchanges 
established under the Affordable Care Act as certified by the Office of 
the Actuary of the Centers for Medicare & Medicaid Services based on 
sufficient data from the State and from comparable States about their 
experience with programs created by the Affordable Care Act and the 
provisions of the Affordable Care Act that the State seeks to waive;
    (B) As required under section 1332(b)(1)(B) of the Affordable Care 
Act (the affordability requirement), will provide coverage and cost 
sharing protections against excessive out-of-pocket spending that are 
at least as affordable as the provisions of Title I of the Affordable 
Care Act would provide;
    (C) As required under section 1332(b)(1)(C) of the Affordable Care 
Act (the scope of coverage requirement), will provide coverage to at 
least a comparable number of its residents as the provisions of Title I 
of the Affordable Care Act would provide; and
    (D) As prohibited under section 1332(b)(1)(D) of the Affordable 
Care Act (the Federal deficit requirement), will not increase the 
Federal deficit.
    (4) Contains the following supporting information:
    (i) Actuarial analyses and actuarial certifications. Actuarial 
analyses and actuarial certifications to support the State's estimates 
that the proposed waiver will comply with the comprehensive coverage 
requirement, the affordability requirement, and the scope of coverage 
requirement.
    (ii) Economic analyses. Economic analyses to support the State's 
estimates that the proposed waiver will comply with the comprehensive 
coverage requirement, the affordability requirement, the scope of 
coverage requirement and the Federal deficit requirement, including:
    (A) A detailed 10-year budget plan that is deficit neutral to the 
Federal government, as prescribed by section 1332(a)(1)(B)(ii) of the 
Affordable Care Act, and includes all costs under the waiver, including 
administrative costs and other costs to the Federal government, if 
applicable; and
    (B) A detailed analysis regarding the estimated impact of the 
waiver on health insurance coverage in the State.
    (iii) Data and assumptions. The data and assumptions used to 
demonstrate that the State's proposed waiver is in compliance with the 
comprehensive coverage requirement, the affordability requirement, the 
scope of coverage requirement and the Federal deficit requirement, 
including:
    (A) Information on the age, income, health expenses and current 
health insurance status of the relevant State population; the number of 
employers by number of employees and whether the employer offers 
insurance; cross-tabulations of these variables; and an explanation of 
data sources and quality; and
    (B) An explanation of the key assumptions used to develop the 
estimates of the effect of the waiver on coverage and the Federal 
budget, such as individual and employer participation rates, behavioral 
changes, premium and price effects, and other relevant factors.
    (iv) Implementation timeline. A detailed draft timeline for the 
State's implementation of the proposed waiver.
    (v) Additional information. Additional information supporting the 
State's proposed waiver, including:
    (A) An explanation as to whether the waiver increases or decreases 
the administrative burden on individuals, insurers, and employers, and 
if so, how and why;
    (B) An explanation of how the waiver will affect the implementation 
of the provisions of the Affordable Care Act which the State is not 
requesting to waive in the State and at the Federal level;
    (C) An explanation of how the waiver will affect residents who need 
to obtain health care services out-of-State, as well as the States in 
which such residents may seek such services;
    (D) If applicable, an explanation as to how the State will provide 
the Federal government with all information necessary to administer the 
waiver at the Federal level; and
    (E) An explanation of how the State's proposal will address 
potential individual, employer, insurer, or

[[Page 11717]]

provider compliance, waste, fraud and abuse within the State or in 
other States.
    (vi) Reporting targets. Quarterly, annual, and cumulative targets 
for the comprehensive coverage requirement, the affordability 
requirement, the scope of coverage requirement, and the Federal deficit 
requirement.
    (vii) Other information. Other information consistent with guidance 
provided by the Secretary and the Secretary of Health and Human 
Services.
    (g) Additional supporting information. (1) During the Federal 
review process, the Secretary may request additional supporting 
information from the State via the Secretary of Health and Human 
Services as needed to address public comments or to address issues that 
arise in reviewing the application.
    (2) Requests for additional information, and responses to such 
requests, will be made available to the public in the same manner as 
information described in Sec.  33.116(b).


Sec.  33.112  State public notice requirements.

    (a) General. (1) Prior to submitting an application for a new 
section 1332 waiver to the Secretary of Health and Human Services for 
review and consideration, a State must provide a public notice and 
comment period sufficient to ensure a meaningful level of public input 
for the application for a section 1332 waiver.
    (2) Such public notice and comment period shall include, for a 
State with one or more Federally-recognized Indian tribes within its 
borders, a separate process for meaningful consultation with such 
tribes.
    (b) Public notice and comment period. The State shall make 
available at the beginning of the public notice and comment period, 
through its Web site or other effective means of communication, and 
shall update as appropriate, a public notice that includes all of the 
following:
    (1) A comprehensive description of the application for a section 
1332 waiver to be submitted to the Secretary of Health and Human 
Services including information and assurances related to all statutory 
requirements and other information consistent with guidance provided by 
the Secretary and the Secretary of Health and Human Services.
    (2) Information relating to where copies of the application for a 
section 1332 waiver are available for public review and comment.
    (3) Information relating to how and where written comments may be 
submitted and reviewed by the public, and the timeframe during which 
comments will be accepted.
    (4) The location, date, and time of public hearings that will be 
convened by the State to seek public input on the application for a 
section 1332 waiver.
    (c) Public hearings. (1) After issuing the public notice and prior 
to submitting an application for a new section 1332 waiver, a State 
must conduct public hearings regarding the State's application.
    (2) Such public hearings shall provide an interested party the 
opportunity to learn about and comment on the contents of the 
application for a section 1332 waiver.
    (d) Submission of initial application. After the State public 
notice and comment period has concluded, the State may submit an 
application to the Secretary of Health and Human Services for an 
initial waiver in accordance with the requirements set forth in Sec.  
33.108.


Sec.  33.116  Federal public notice and approval process.

    (a) General. The Federal public notice and approval process begins 
on the first business day after the Secretary and the Secretary of 
Health and Human Services determine that all elements for a complete 
application were documented and submitted to the Secretary of Health 
and Human Services.
    (b) Public notice and comment period. (1) Following a determination 
that a State's application for a section 1332 waiver is complete, the 
Secretary and the Secretary of Health and Human Services will provide 
for a public notice and comment period that is sufficient to ensure a 
meaningful level of public input and that does not impose requirements 
that are in addition to, or duplicative of, requirements imposed under 
the Administrative Procedures Act, or requirements that are 
unreasonable or unnecessarily burdensome with respect to State 
compliance.
    (2) At the beginning of the Federal notice and comment period, the 
Secretary of Health and Human Services will make available through its 
Web site and otherwise, and shall update as appropriate, public notice 
that includes all of the following:
    (i) The complete application for a section 1332 waiver, updates for 
the status of the State's application, and any supplemental materials 
received from the State prior to and during the Federal public notice 
and comment period.
    (ii) Information relating to where copies of the application for a 
section 1332 waiver are available for public review and comment.
    (iii) Information relating to how and where written comments may be 
submitted and reviewed by the public, and the timeframe during which 
comments will be accepted.
    (iv) Any public comments received during the Federal public notice 
and comment period.
    (c) Approval of a section 1332 waiver application. The final 
decision of the Secretary and the Secretary of Health and Human 
Services on a State application for a section 1332 waiver will be 
issued by the Secretary of Health and Human Services no later than 180 
days after the determination by the Secretary and the Secretary of 
Health and Human Services that a complete application was received in 
accordance with Sec.  33.108.


Sec.  33.120  Monitoring and compliance.

    (a) General. (1) Following the issuance of a final decision to 
approve a section 1332 waiver by the Secretary and the Secretary of 
Health and Human Services, a State must comply with all applicable 
Federal laws, regulations, interpretive policy statements and 
interpretive guidance unless expressly waived. A State must, within the 
timeframes specified in law, regulation, policy, or guidance, come into 
compliance with any changes in Federal law, regulation, or policy 
affecting section 1332 waivers, unless the provision changed is 
expressly waived.
    (2) A State must comply with the terms and conditions of the 
agreement between the Secretary, the Secretary of Health and Human 
Services, and the State to implement a section 1332 waiver.
    (b) Implementation reviews. (1) The terms and conditions of an 
approved section 1332 waiver will provide that the State will perform 
periodic reviews of the implementation of the section 1332 waiver.
    (2) The Secretary and the Secretary of Health and Human Services 
will review documented complaints that a State is failing to comply 
with requirements specified in the terms and conditions of any approved 
section 1332 waiver.
    (3) The Secretary and the Secretary of Health and Human Services 
will promptly share with a State any complaint that the Secretary and 
the Secretary of Health and Human Services has received and will also 
provide notification of any applicable monitoring and compliance 
issues.
    (c) Post award. Within 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

[[Page 11718]]

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 of Health and Human Services as part of the quarterly report 
specified in Sec.  33.124(a) that is associated with the quarter in 
which the forum was held, as well as in the annual report specified in 
Sec.  33.124(b) that is associated with the year in which the forum was 
held.
    (1) The State must publish the date, time, and location of the 
public forum in a prominent location on the State's public Web site, at 
least 30 days prior to the date of the planned public forum.
    (2) [Reserved]
    (d) Terminations and suspensions. The Secretary and the Secretary 
of Health and Human Services reserve the right to suspend or terminate 
a section 1332 waiver in whole or in part, at any time before the date 
of expiration, whenever the Secretaries determine that a State has 
materially failed to comply with the terms of a section 1332 waiver.
    (e) Closeout costs. If all or part of a section 1332 waiver is 
terminated or suspended, or if a portion of a section 1332 waiver is 
withdrawn, Federal funding is limited to normal closeout costs 
associated with an orderly termination, suspension, or withdrawal, 
including service costs during any approved transition period, and 
administrative costs of disenrolling participants.
    (f) Federal evaluators. (1) A State must fully cooperate with the 
Secretary, the Secretary of Health and Human Services, or an 
independent evaluator selected by the Secretary or the Secretary of 
Health and Human Services to undertake an independent evaluation of any 
component of a section 1332 waiver.
    (2) As part of this required cooperation, a State must submit all 
requested data and information to the Secretary, the Secretary of 
Health and Human Services, or the independent evaluator.


Sec.  33.124  State reporting requirements.

    (a) Quarterly reports. A State must submit quarterly reports to the 
Secretary of Health and Human Services in accordance with the terms and 
conditions of the State's section 1332 waiver. These quarterly reports 
must include, but are not limited to, reports of any ongoing 
operational challenges and plans for and results of associated 
corrective actions.
    (b) Annual reports. A State must submit an annual report to the 
Secretary of Health and Human Services documenting all of the 
following:
    (1) The progress of the section 1332 waiver.
    (2) Data on compliance with section 1332(b)(1)(A) through (D) of 
the Affordable Care Act.
    (3) A summary of the annual post-award public forum, held in 
accordance with Sec.  33.120(c), including all public comments received 
at such forum regarding the progress of the section 1332 waiver and 
action taken in response to such concerns or comments.
    (4) Other information consistent with the State's approved terms 
and conditions.
    (c) Submitting and publishing annual reports. A State must submit a 
draft annual report to the Secretary of Health and Human Services no 
later than 90 days after the end of each waiver year, or as specified 
in the waiver's terms and conditions.
    (1) Within 60 days of receipt of comments from the Secretary of 
Health and Human Services, a State must submit to the Secretary of 
Health and Human Services a final annual report for the waiver year.
    (2) The draft and final annual reports are to be published on a 
State's public Web site within 30 days of submission to and approval by 
the Secretary of Health and Human Services, respectively.


Sec.  33.128  Periodic evaluation requirements.

    (a) The Secretary and the Secretary of Health and Human Services 
shall periodically evaluate the implementation of a program under a 
section 1332 waiver consistent with guidance published by the Secretary 
and the Secretary of Health and Human Services and any terms and 
conditions governing the section 1332 waiver.
    (b) Each periodic evaluation must include a review of the annual 
report or reports submitted by the State in accordance with Sec.  
33.124 that relate to the period of time covered by the evaluation.

Department of Health and Human Services

45 CFR Subtitle A

    For the reasons set forth in the preamble, the Department of Health 
and Human Services amends 45 CFR subtitle A, subchapter B by adding 
part 155 to read as follows:

PART 155--WAIVERS FOR STATE INNOVATION

Subparts A Through M [Reserved]
Subpart N--State Flexibility
Sec.
155.1300 Basis and purpose.
155.1302 Coordinated waiver process.
155.1304 Definitions.
155.1308 Application procedures.
155.1312 State public notice requirements.
155.1316 Federal public notice and approval process.
155.1320 Monitoring and compliance.
155.1324 State reporting requirements.
155.1328 Periodic evaluation requirements.

    Authority:  Sec. 1332, Pub. L. 111-148, 124 Stat. 119.

Subparts A Through M [Reserved]

Subpart N--State Flexibility


Sec.  155.1300  Basis and purpose.

    (a) Statutory basis. This subpart implements provisions of section 
1332 of the Affordable Care Act, relating to Waivers for State 
Innovation, which the Secretary may authorize for plan years beginning 
on or after January 1, 2017. Section 1332 of the Affordable Care Act 
requires the Secretary to issue regulations that provide for all of the 
following:
    (1) A process for public notice and comment at the State level, 
including public hearings, sufficient to ensure a meaningful level of 
public input.
    (2) A process for the submission of an application that ensures the 
disclosure of all of the following:
    (i) The provisions of law that the State involved seeks to waive.
    (ii) The specific plans of the State to ensure that the waiver will 
meet all requirements specified in section 1332.
    (3) A process for the provision of public notice and comment after 
a waiver application is received by the Secretary, that is sufficient 
to ensure a meaningful level of public input and that does not impose 
requirements that are in addition to, or duplicative of, requirements 
imposed under the Administrative Procedures Act, or requirements that 
are unreasonable or unnecessarily burdensome with respect to State 
compliance.
    (4) A process for the submission of reports to the Secretary by a 
State relating to the implementation of a waiver.
    (5) A process for the periodic evaluation by the Secretary of 
programs under waivers.
    (b) Purpose. This subpart sets forth certain procedural 
requirements for Waivers for State Innovation under section 1332 of the 
Affordable Care Act.


Sec.  155.1302  Coordinated waiver process.

    (a) Coordination with applications for waivers under other Federal 
laws. A State may submit a single application to the Secretary for a 
waiver under section 1332 of the Affordable Care Act and a waiver under 
one or more of the existing waiver processes applicable under titles

[[Page 11719]]

XVIII, XIX, and XXI of the Act, or under any other Federal law relating 
to the provision of health care items or services, provided that such 
application is consistent with the procedures described in this part, 
the procedures for demonstrations under section 1115 of the Act, if 
applicable, and the procedures under any other applicable Federal law 
under which the State seeks a waiver.
    (b) Coordinated process for section 1332 waivers. A State seeking a 
section 1332 waiver must submit a waiver application to the Secretary. 
Any application submitted to the Secretary that requests to waive 
sections 36B, 4980H, or 5000A of the Code, in accordance with section 
1332(a)(2)(D) of the Affordable Care Act, shall upon receipt be 
transmitted by the Secretary to the Secretary of the Treasury to be 
reviewed in accordance with 31 CFR Part 33.


Sec.  155.1304  Definitions.

    For the purposes of this subpart:
    Complete application means an application that has been submitted 
and for which the Secretary and the Secretary of the Treasury, as 
applicable, have made a preliminary determination that it includes all 
required information and satisfies all requirements that are described 
in Sec.  155.1308(f).
    Public notice means a notice issued by a government agency or 
legislative body that contains sufficient detail to notify the public 
at large of a proposed action consistent with Sec.  155.1312.
    Section 1332 waiver means a Waiver for State Innovation under 
section 1332 of the Affordable Care Act.


Sec.  155.1308  Application procedures.

    (a) Acceptable formats for applications. Applications for initial 
approval of a section 1332 waiver shall be submitted in electronic 
format to the Secretary.
    (b) Application timing. Applications for initial approval of a 
section 1332 waiver must be submitted sufficiently in advance of the 
requested effective date to allow for an appropriate implementation 
timeline.
    (c) Preliminary review. Each application for a section 1332 waiver 
will be subject to a preliminary review by the Secretary and the 
Secretary of the Treasury, as applicable, who will make a preliminary 
determination that the application is complete. A submitted application 
will not be deemed received until the Secretary and the Secretary of 
the Treasury, as applicable, have made the preliminary determination 
that the application is complete.
    (1) The Secretary and the Secretary of the Treasury, as applicable, 
will complete the preliminary review of the application within 45 days 
after it is submitted.
    (2) If the Secretary and the Secretary of the Treasury, as 
applicable, determine that the application is not complete, the 
Secretary will send the State a written notice of the elements missing 
from the application.
    (3) The preliminary determination that an application is complete 
does not preclude a finding during the 180-day Federal decision-making 
period that a necessary element of the application is missing or 
insufficient.
    (d) Notification of preliminary determination. Upon making the 
preliminary determination that an application is complete, as defined 
in this part, the Secretary will send the State a written notice 
informing the State that the Secretary and the Secretary of the 
Treasury, as applicable, have made such a preliminary determination. 
That date will also mark the beginning of the Federal public notice 
process and the 180-day Federal decision-making period.
    (e) Public notice of completed application. Upon receipt of a 
complete application for an initial section 1332 waiver, the Secretary 
will--
    (1) Make available to the public the application, and all related 
State submissions, including all supplemental information received from 
the State following the receipt of a complete application for a section 
1332 waiver.
    (2) Indicate the status of the application.
    (f) Criteria for a complete application. An application for initial 
approval of a section 1332 waiver will not be considered complete 
unless the application meets all of the following conditions:
    (1) Complies with paragraphs (a) through (f) of this section.
    (2) Provides written evidence of the State's compliance with the 
public notice requirements set forth in Sec.  155.1312, including a 
description of the key issues raised during the State public notice and 
comment period.
    (3) Provides all of the following:
    (i) A comprehensive description of the State legislation and 
program to implement a plan meeting the requirements for a waiver under 
section 1332;
    (ii) A copy of the enacted State legislation that provides the 
State with authority to implement the proposed waiver, as required 
under section 1332(a)(1)(C) of the Affordable Care Act;
    (iii) A list of the provisions of law that the State seeks to waive 
including a description of the reason for the specific requests; and
    (iv) The analyses, actuarial certifications, data, assumptions, 
analysis, targets and other information set forth in paragraph (f)(4) 
of this section sufficient to provide the Secretary and the Secretary 
of the Treasury, as applicable, with the necessary data to determine 
that the State's proposed waiver:
    (A) As required under section 1332(b)(1)(A) of the Affordable Care 
Act (the comprehensive coverage requirement), will provide coverage 
that is at least as comprehensive as the coverage defined in section 
1302(b) of the Affordable Care Act and offered through Exchanges 
established under the Affordable Care Act as certified by the Office of 
the Actuary of the Centers for Medicare & Medicaid Services based on 
sufficient data from the State and from comparable States about their 
experience with programs created by the Affordable Care Act and the 
provisions of the Affordable Care Act that the State seeks to waive;
    (B) As required under section 1332(b)(1)(B) of the Affordable Care 
Act (the affordability requirement), will provide coverage and cost 
sharing protections against excessive out-of-pocket spending that are 
at least as affordable as the provisions of Title I of the Affordable 
Care Act would provide;
    (C) As required under section 1332(b)(1)(C) of the Affordable Care 
Act (the scope of coverage requirement), will provide coverage to at 
least a comparable number of its residents as the provisions of Title I 
of the Affordable Care Act would provide; and
    (D) As prohibited under section 1332(b)(1)(D) of the Affordable 
Care Act (the Federal deficit requirement), will not increase the 
Federal deficit.
    (4) Contains the following supporting information:
    (i) Actuarial analyses and actuarial certifications. Actuarial 
analyses and actuarial certifications to support the State's estimates 
that the proposed waiver will comply with the comprehensive coverage 
requirement, the affordability requirement, and the scope of coverage 
requirement;
    (ii) Economic analyses. Economic analyses to support the State's 
estimates that the proposed waiver will comply with the comprehensive 
coverage requirement, the affordability requirement, the scope of 
coverage requirement and the Federal deficit requirement, including:
    (A) A detailed 10-year budget plan that is deficit neutral to the 
Federal government, as prescribed by section 1332(a)(1)(B)(ii) of the 
Affordable Care

[[Page 11720]]

Act, and includes all costs under the waiver, including administrative 
costs and other costs to the Federal government, if applicable; and
    (B) A detailed analysis regarding the estimated impact of the 
waiver on health insurance coverage in the State.
    (iii) Data and assumptions. The data and assumptions used to 
demonstrate that the State's proposed waiver is in compliance with the 
comprehensive coverage requirement, the affordability requirement, the 
scope of coverage requirement and the Federal deficit requirement, 
including:
    (A) Information on the age, income, health expenses and current 
health insurance status of the relevant State population; the number of 
employers by number of employees and whether the employer offers 
insurance; cross-tabulations of these variables; and an explanation of 
data sources and quality; and
    (B) An explanation of the key assumptions used to develop the 
estimates of the effect of the waiver on coverage and the Federal 
budget, such as individual and employer participation rates, behavioral 
changes, premium and price effects, and other relevant factors.
    (iv) Implementation timeline. A detailed draft timeline for the 
State's implementation of the proposed waiver.
    (v) Additional information. Additional information supporting the 
State's proposed waiver, including:
    (A) An explanation as to whether the waiver increases or decreases 
the administrative burden on individuals, insurers, and employers, and 
if so, how and why;
    (B) An explanation of how the waiver will affect the implementation 
of the provisions of the Affordable Care Act which the State is not 
requesting to waive in the State and at the Federal level;
    (C) An explanation of how the waiver will affect residents who need 
to obtain health care services out-of-State, as well as the States in 
which such residents may seek such services;
    (D) If applicable, an explanation as to how the State will provide 
the Federal government with all information necessary to administer the 
waiver at the Federal level; and
    (E) An explanation of how the State's proposal will address 
potential individual, employer, insurer, or provider compliance, waste, 
fraud and abuse within the State or in other States.
    (vi) Reporting targets. Quarterly, annual, and cumulative targets 
for the comprehensive coverage requirement, the affordability 
requirement, the scope of coverage requirement and the Federal deficit 
requirement.
    (vii) Other information. Other information consistent with guidance 
provided by the Secretary and the Secretary of the Treasury, as 
applicable.
    (g) Additional supporting information. (1) During the Federal 
review process, the Secretary may request additional supporting 
information from the State as needed to address public comments or to 
address issues that arise in reviewing the application.
    (2) Requests for additional information, and responses to such 
requests, will be made available to the public in the same manner as 
information described in Sec.  155.1316(b).


Sec.  155.1312  State public notice requirements.

    (a) General. (1) Prior to submitting an application for a new 
section 1332 waiver to the Secretary for review and consideration, a 
State must provide a public notice and comment period sufficient to 
ensure a meaningful level of public input for the application for a 
section 1332 waiver.
    (2) Such public notice and comment period shall include, for a 
State with one or more Federally-recognized Indian tribes within its 
borders, a separate process for meaningful consultation with such 
tribes.
    (b) Public notice and comment period. The State shall make 
available at the beginning of the public notice and comment period, 
through its Web site or other effective means of communication, and 
shall update as appropriate, a public notice that includes all of the 
following:
    (1) A comprehensive description of the application for a section 
1332 waiver to be submitted to the Secretary including information and 
assurances related to all statutory requirements and other information 
consistent with guidance provided by the Secretary and the Secretary of 
the Treasury, as applicable.
    (2) Information relating to where copies of the application for a 
section 1332 waiver are available for public review and comment.
    (3) Information relating to how and where written comments may be 
submitted and reviewed by the public, and the timeframe during which 
comments will be accepted.
    (4) The location, date, and time of public hearings that will be 
convened by the State to seek public input on the application for a 
section 1332 waiver.
    (c) Public hearings. (1) After issuing the public notice and prior 
to submitting an application for a new section 1332 waiver, a State 
must conduct public hearings regarding the State's application.
    (2) Such public hearings shall provide an interested party the 
opportunity to learn about and comment on the contents of the 
application for a section 1332 waiver.
    (d) Submission of initial application. After the State public 
notice and comment period has concluded, the State may submit an 
application to the Secretary for an initial waiver in accordance with 
the requirements set forth in Sec.  155.1308.


Sec.  155.1316  Federal public notice and approval process.

    (a) General. The Federal public notice and approval process begins 
on the first business day after the Secretary and the Secretary of the 
Treasury, as applicable, determine that all elements for a complete 
application were documented and submitted to the Secretary.
    (b) Public notice and comment period. (1) Following a determination 
that a State's application for a section 1332 waiver is complete, the 
Secretary and the Secretary of the Treasury, as applicable, will 
provide for a public notice and comment period that is sufficient to 
ensure a meaningful level of public input and that does not impose 
requirements that are in addition to, or duplicative of, requirements 
imposed under the Administrative Procedures Act, or requirements that 
are unreasonable or unnecessarily burdensome with respect to State 
compliance.
    (2) At the beginning of the Federal notice and comment period, the 
Secretary will make available through its Web site and otherwise, and 
shall update as appropriate, public notice that includes all of the 
following:
    (i) The complete application for a section 1332 waiver, updates for 
the status of the State's application, and any supplemental materials 
received from the State prior to and during the Federal public notice 
and comment period.
    (ii) Information relating to where copies of the application for a 
section 1332 waiver are available for public review and comment.
    (iii) Information relating to how and where written comments may be 
submitted and reviewed by the public, and the timeframe during which 
comments will be accepted.
    (iv) Any public comments received during the Federal public notice 
and comment period.
    (c) Approval of a section 1332 waiver application. The final 
decision of the Secretary and the Secretary of the Treasury, as 
applicable, on a State

[[Page 11721]]

application for a section 1332 waiver will be issued by the Secretary 
no later than 180 days after the determination by the Secretary and the 
Secretary of the Treasury, as applicable, that a complete application 
was received in accordance with Sec.  155.1308.


Sec.  155.1320  Monitoring and compliance.

    (a) General. (1) Following the issuance of a final decision to 
approve a section 1332 waiver by the Secretary and the Secretary of the 
Treasury, as applicable, a State must comply with all applicable 
Federal laws, regulations, interpretive policy statements and 
interpretive guidance unless expressly waived. A State must, within the 
timeframes specified in law, regulation, policy or guidance, come into 
compliance with any changes in Federal law, regulation, or policy 
affecting section 1332 waivers, unless the provision being changed is 
expressly waived.
    (2) A State must comply with the terms and conditions of the 
agreement between the Secretary, the Secretary of the Treasury, as 
applicable, and the State to implement a section 1332 waiver.
    (b) Implementation reviews. (1) The terms and conditions of an 
approved section 1332 waiver will provide that the State will perform 
periodic reviews of the implementation of the section 1332 waiver.
    (2) The Secretary and the Secretary of the Treasury, as applicable, 
will review documented complaints that a State is failing to comply 
with requirements specified in the terms and conditions of any approved 
section 1332 waiver.
    (3) The Secretary and the Secretary of the Treasury, as applicable, 
will promptly share with a State any complaint that the Secretary and 
the Secretary of the Treasury has received and will also provide 
notification of any applicable monitoring and compliance issues.
    (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 Sec.  155.1324(a) that is associated with the quarter in 
which the forum was held, as well as in the annual report specified in 
Sec.  155.1324(b) that is associated with the year in which the forum 
was held.
    (1) The State must publish the date, time, and location of the 
public forum in a prominent location on the State's public web site, at 
least 30 days prior to the date of the planned public forum.
    (2) [Reserved]
    (d) Terminations and suspensions. The Secretary and the Secretary 
of the Treasury, as applicable, reserve the right to suspend or 
terminate a section 1332 waiver in whole or in part, at any time before 
the date of expiration, whenever the Secretary or the Secretary of the 
Treasury, as applicable, determines that a State has materially failed 
to comply with the terms of a section 1332 waiver.
    (e) Closeout costs. If all or part of a section 1332 waiver is 
terminated or suspended, or if a portion of a section 1332 waiver is 
withdrawn, Federal funding is limited to normal closeout costs 
associated with an orderly termination, suspension, or withdrawal, 
including service costs during any approved transition period, and 
administrative costs of disenrolling participants.
    (f) Federal evaluators. (1) A State must fully cooperate with the 
Secretary, the Secretary of the Treasury, as applicable, or an 
independent evaluator selected by the Secretary or the Secretary of the 
Treasury, as applicable, to undertake an independent evaluation of any 
component of a section 1332 waiver.
    (2) As part of this required cooperation, a State must submit all 
requested data and information to the Secretary, the Secretary of the 
Treasury, as applicable, or the independent evaluator.


Sec.  155.1324  State reporting requirements.

    (a) Quarterly reports. A State must submit quarterly reports to the 
Secretary in accordance with the terms and conditions of the State's 
section 1332 waiver. These quarterly reports must include, but are not 
limited to, reports of any ongoing operational challenges and plans for 
and results of associated corrective actions.
    (b) Annual reports. A State must submit an annual report to the 
Secretary documenting all of the following:
    (1) The progress of the section 1332 waiver.
    (2) Data on compliance with section 1332(b)(1)(A) through (D) of 
the Affordable Care Act.
    (3) A summary of the annual post-award public forum, held in 
accordance with Sec.  155.1320(c), including all public comments 
received at such forum regarding the progress of the section 1332 
waiver and action taken in response to such concerns or comments.
    (4) Other information consistent with the State's approved terms 
and conditions.
    (c) Submitting and publishing annual reports. A State must submit a 
draft annual report to the Secretary no later than 90 days after the 
end of each waiver year, or as specified in the waiver's terms and 
conditions.
    (1) Within 60 days of receipt of comments from the Secretary, a 
State must submit to the Secretary the final annual report for the 
waiver year.
    (2) The draft and final annual reports are to be published on a 
State's public web site within 30 days of submission to and approval by 
the Secretary, respectively.


Sec.  155.1328  Periodic evaluation requirements.

    (a) The Secretary and the Secretary of the Treasury, as applicable, 
shall periodically evaluate the implementation of a program under a 
section 1332 waiver consistent with guidance published by the Secretary 
and the Secretary of the Treasury, as applicable, and any terms and 
conditions governing the section 1332 waiver.
    (b) Each periodic evaluation must include a review of the annual 
report or reports submitted by the State in accordance with Sec.  
155.1324 that relate to the period of time covered by the evaluation.

    Authority: Sec. 1332 of the Patient Protection and Affordable 
Care Act (Pub. L. 111-148).

    Approved: January 26, 2012.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.

    Approved: January 30, 2012.
Kathleen Sebelius,
Secretary of Health and Human Services.
Emily S. McMahon,
Acting Assistant Secretary (Tax Policy), Department of the Treasury.
[FR Doc. 2012-4395 Filed 2-22-12; 11:15 am]
BILLING CODE 4510-29-P; 4120-01-P


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