11700 Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 

from those other changes occurring in 

the State at the same time through the 

use of comparison or control groups to 

identify the impact of significant aspects 

of the demonstration. 

(v) A proposed date by which a final 

report on findings from evaluation 

activities conducted under the 

evaluation plan must be submitted to 

CMS. 

(vi) Any other information pertinent 

to the State’s research on the policy 

operations of the demonstration 

operations. 

(d) Evaluations for demonstration 

extensions. (1) In the event that the State 

requests to extend the demonstration 

beyond the current approval period 

under the authority of section 1115(a), 

(e), or (f) of the Act, the State must 

submit an interim evaluation report as 

part of the State’s request for a 

subsequent renewal of the 

demonstration. 

(2) State evaluations must be 

published on the State’s public Web site 

within 30 days of submission to CMS. 

(e) Approved evaluation designs. The 

State must publish the CMS-approved 

demonstration evaluation design on the 

State’s public Web site within 30 days 

of CMS approval. 

(f) Federal evaluations. The State 

must comply with all requirements set 

forth in this subpart. 

(g) Federal public notice. CMS will 

post, or provide a link to the State’s 

public Web site, all evaluation 

materials, including research and data 

collection, on its Web site for purposes 

of sharing findings with the public 

within 30 days of receipt of materials. 

§ 431.428 Reporting requirements. 

(a) Annual reports. The State must 

submit an annual report to CMS 

documenting all of the following: 

(1) Any policy or administrative 

difficulties in the operation of the 

demonstration. 

(2) The status of the health care 

delivery system under the 

demonstration with respect to issues 

and/or complaints identified by 

beneficiaries. 

(3) The impact of the demonstration 

in providing insurance coverage to 

beneficiaries and uninsured 

populations. 

(4) Outcomes of care, quality of care, 

cost of care and access to care for 

demonstration populations. 

(5) The results of beneficiary 

satisfaction surveys, if conducted during 

the reporting year, grievances and 

appeals. 

(6) The existence or results of any 

audits, investigations or lawsuits that 

impact the demonstration. 

(7) The financial performance of the 

demonstration. 

(8) The status of the evaluation and 

information regarding progress in 

achieving demonstration evaluation 

criteria. 

(9) Any State legislative developments 

that may impact the demonstration. 

(10) The results/impact of any 

demonstration programmatic area 

defined by CMS that is unique to the 

demonstration design or evaluation 

hypothesis. 

(11) A summary of the annual postaward public forum, including all 

public comments received regarding the 

progress of the demonstration project. 

(b) Submitting and publishing annual 

reports. States must submit a draft 

annual report to CMS no later than 90 

days after the end of each demonstration 

year, or as specified in the 

demonstration’s STCs. The State must 

publish its draft annual report on its 

public Web site within 30 days of 

submission to CMS. 

(1) Within 60 days of receipt of 

comments from CMS, the State must 

submit to CMS the final annual report 

for the demonstration year. 

(2) The final annual report is to be 

published on the State’s public Web site 

within 30 days of approval by CMS. 

Authority: Catalog of Federal Domestic 

Assistance Program No. 93.778, Medical 

Assistance Program. 

Dated: March 9, 2011. 

Donald M. Berwick, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: July 15, 2011. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2012–4354 Filed 2–22–12; 11:15 am] 

BILLING CODE 4120–01–P 

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. 

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 


TKELLEY on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 11701 

1Although 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. 

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: 

• Part I of subtitle D of Title I of the 

Affordable Care Act (relating to the 

establishment of qualified health plans); 

• Part II of subtitle D of Title I of the 

Affordable Care Act (relating to 

consumer choices and insurance 

competition through health benefit 

exchanges); 

• Section 1402 of the Affordable Care 

Act (relating to reduced cost sharing for 

individuals enrolling in qualified health 

plans); and 

• 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: 

• 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); 

• 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); 

• 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); 

• 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 

• 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


TKELLEY on DSK3SPTVN1PROD with RULES3
11702 Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 

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 decisionmaking 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: 

• 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; 

• A copy of the enacted State 

legislation authorizing such waiver 

request, as required under section 

1332(a)(1)(C) of the Affordable Care Act; 

• 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 

• 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-ofpocket 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 


TKELLEY on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 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: 

• 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 

• 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: 

• 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 

• 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: 

• An explanation as to whether the 

waiver increases or decreases the 

administrative burden on individuals, 

insurers, and employers, and if so, how 

and why; 

• 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; 

• 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; 

• 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 

• 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 


TKELLEY on DSK3SPTVN1PROD with RULES3
11704 Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 

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— 


TKELLEY on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 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 comprehensivecoverage 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 costsharing 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. 


TKELLEY on DSK3SPTVN1PROD with RULES3
11706 Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 

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: 

• 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; 

• Where copies of the section 1332 

waiver application are available for 

public review and comment; 

• How and where written comments 

may be submitted and reviewed by the 

public, and the timeframe during which 

public comments may be submitted; and 

• 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— 

• The provision of auxiliary aids and 

services such as interpreters for persons 

with disabilities where necessary for 

effective communication; 

• The use of accessible meeting 

places for the hosting of public forums 

provided for in the Rule; 

• 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 

• 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 Federallyrecognized 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 


TKELLEY on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 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 


TKELLEY on DSK3SPTVN1PROD with RULES3
11708 Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 

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 StateFederal 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 decisionmaking 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 


TKELLEY on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 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 postaward 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 postaward 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 


TKELLEY on DSK3SPTVN1PROD with RULES3
11710 Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 

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: 

• The progress of the section 1332 

waiver; 

• Data on compliance with section 

1332(b)(1)(A) through (D) of the 

Affordable Care Act; 

• A summary of the annual postaward 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 

• 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 


TKELLEY on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 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: 

• Choice of health plans for 

individuals and employers; 

• Stability of coverage for individuals 

and employers; 

• Small businesses, individuals with 

pre-existing conditions, and the lowincome population; 

• The overall health care system in 

the State; and 

• 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, evidencebased 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 costsharing 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. 


TKELLEY on DSK3SPTVN1PROD with RULES3
11712 Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 

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: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of the 

Departments. 

• The accuracy of the Departments’ 

estimate of the information collection 

burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

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 perState 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 


TKELLEY on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 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 


TKELLEY on DSK3SPTVN1PROD with RULES3
11714 Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 

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 nonstandardized 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

Regulation section(s) OMB 

Control No. Respondents Responses 

Burden per 

response 

(hours) 

Total annual 

burden 

(hours) 

Hourly labor 

cost of 

reporting 

($) 

Total labor 

cost of 

reporting 

($) 

Total capital/ 

maintenance 

costs 

($) 

Total cost 

($) 

31 CFR 33.108 and 45 

CFR 155.1308.

0938–New .. 1 1 400 400 46.67 $18,668 0 $18,668 

Paragraph (a)(1) of 31 

CFR 33.112 and 45 

CFR 155.1312.

0938–New .. 1 1 80 80 46.67 3,734 0 3,734 

Paragraph (a)(2) of 31 

CFR 33.112 and 45 

CFR 155.1312.

0938–New .. 1 1 40 40 46.67 1,867 0 1,867 

Paragraph (b)(1) of 31 

CFR 33.120 and 45 

CFR 155.1320.

0938–New .. 1 1 80 80 46.67 3,734 0 3,734 

Paragraph (a) of 31 CFR 

33.124 and 45 CFR 

155.1324.

0938–New .. 1 4 10 40 46.67 1,867 0 1,867 

Paragraph (b) of 31 CFR 

33.124 and 45 CFR 

155.1324.

0938–New .. 1 1 40 40 46.67 1,867 0 1,867 

Paragraph (c)(2) of 31 

CFR 33.124 and 45 

CFR 155.1324.

0938–New .. 1 1 4 4 46.67 187 0 187 

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: 

OIRA_submission@omb.eop.gov. 

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 


TKELLEY on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 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. 

§ 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. 

§ 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. 

§ 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 § 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 § 33.112. 

Section 1332 waiver means a Waiver 

for State Innovation under section 1332 

of the Affordable Care Act. 

§ 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 


TKELLEY on DSK3SPTVN1PROD with RULES3
11716 Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 

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 

§ 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-ofpocket 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; crosstabulations 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 


TKELLEY on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 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 § 33.116(b). 

§ 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 § 33.108. 

§ 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 § 33.108. 

§ 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 


TKELLEY on DSK3SPTVN1PROD with RULES3
11718 Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 

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 § 33.124(a) 

that is associated with the quarter in 

which the forum was held, as well as in 

the annual report specified in 

§ 33.124(b) that is associated with the 

year in which the forum was held. 

(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. 

§ 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 postaward public forum, held in accordance 

with § 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. 

§ 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 § 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 

§ 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. 

§ 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 


TKELLEY on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 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. 

§ 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 § 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 § 155.1312. 

Section 1332 waiver means a Waiver 

for State Innovation under section 1332 

of the Affordable Care Act. 

§ 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 

§ 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-ofpocket 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 


TKELLEY on DSK3SPTVN1PROD with RULES3
11720 Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 

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; crosstabulations 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 § 155.1316(b). 

§ 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 § 155.1308. 

§ 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 


TKELLEY on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 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 § 155.1308. 

§ 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 § 155.1324(a) that is 

associated with the quarter in which the 

forum was held, as well as in the annual 

report specified in § 155.1324(b) that is 

associated with the year in which the 

forum was held. 

(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. 

§ 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 postaward public forum, held in accordance 

with § 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. 

§ 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 § 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 


TKELLEY on DSK3SPTVN1PROD with RULES3