"' ' 

Mid-Valley Health Care Advocates 

Corvallis, Oregon 

November 19,2013 

Centers for Medicare & Medicaid Services 

Department of Health and Human Services 

File Code: CMS-2380-P 

Baltimore, MD 21244-8016 

RE: Comments on September 25,2013 Notice of Proposed Rulemaking: Basic Health 

Program: State Administration of Basic Health Programs; Eligibility and Enrollment in 

Standard Health Plans; Essential Health Benefits in Standard Health Plans; 

Performance Standards for Basic Health Programs; Premium and Cost Sharing for 

Basic Health Programs; Federal Funding Process; Trust Fund and Financial Integrity 

Dear Sir/Madam: 

Mid-Valley Health Care Advocates respectfully submit the following comments in 

response to the proposed regulations for implementing the Basic Health Program, 

published in the Federal Register on September 25,2013. 

The Basic Health Program (BHP) has the potential to improve coverage for poor and 

low-income Oregonians and help ensure the success of the Affordable Care Act. Enabled 

by meaningful administrative rules, the Basic Health Program may be able to reduce 

premiums and out-of-pocket costs for financially strapped households, improve 

enrollment rates, reduce barriers to needed care and support continuity of care. 

We support many of the provisions in the proposed regulations and offer suggestions for 

changes that would help this program meet its potential. Specifically, our 

recommendations are aimed to ensure consumer protection and input, promote adequate 

and stable state financing, facilitate continuity of care and encourage delivery system 

innovations that improve care quality. 

Please note, our comments are listed in order of the sections in the proposed rules; the 

order of our comments does not reflect the priority we place on them. 

Commendations: 

We support the following elements of the proposed rules and ask that they be included in 

the final rules. 

Allow BHP to adopt Medicaid's continuous open enroUment policy (§600.320(d)). 
The BHP population will likely experience frequent income fluctuations and be 

vulnerable to times of financial hardship that may lead them to lose coverage due to 

nonpayment of premiums. Given this context, continuous open enrollment will no doubt 

reduce churn and minimize the length of gaps in coverage that do occur. This option is 

particularly important in states that have already expanded coverage which includes 

continuous open enrollment to this population, because these states may want to use BHP to 

ensure that current enrollees do not lose protections they have had for years. 

Require Basic Health Programs to use the Medicaid appeals process (§600.335(b)). 

From the enrollee perspective, it will be very important to ensure that once in BHP, an 

individual will be able to access needed providers and address any eligibility concerns 

through a robust appeals process, since they are unlikely to be able to afford any other 

option for coverage or care. By using existing Medicaid rules in these areas, HHS will 

afford enrollees the high standard of consumer protections in Medicaid that were 

specifically designed for a low-income population, like the population eligible for BHP. 

Provide flexibility for states in setting up their BHP programs in 2015 (§600.405). 

We appreciate that the proposed rule provides states an exemption from these contracting 

requirements for the first year, so this contracting process will not be a barrier to states' 

getting a BHP up and running by 2015. However, we have concerns about the 

competitive contracting processes required for standard health plans in BHP beyond 

2015, as they would render a BHP impossible in most if not all PCCM states (see more 

on that below). 

Allow states to contract with non-licensed HMOs that participate in Medicaid or CHIP 

(§600.415). 

Contracting with Medicaid plans for BHP coverage will allow states to stretch each 

health care dollar further, since Medicaid plans typically are significantly more efficient 

than private market plans. This will lower out-of-pocket costs for consumers, improving 

coverage rates and access to care. It will also promote continuity of care as beneficiaries' 

income fluctuates between Medicaid and BHP by allowing people to maintain the same 

providers and benefits as they move back and forth. 

Ensure BHP enrollees receive a plan with an actuarial value (A V) at least as high as 

they would get in the Marketplace, accounting for their cost-sharing reductions 

(§600.520). 

This is an essential protection that ensures BHP meets a "do no harm" standard implicit in 

the Basic Health statute by ensuring that those eligible for BHP are no worse off than they 

would have been had they enrolled in the Exchange. 

Provide states with reasonable financial certainty through quarterly payments 

(§600.615) and retrospective adjustments only in the cases of a mathematical error in 

applying the payment formula or when aggregate enrollment for the quarter differs 

from the predicted amount. (§600.610) 

CMS-2380-P 2 
Our understanding of the proposed rule is that CMS will not require the state to make 

retrospective adjustments to their quarterly payments to account for BHP enrollees' 

income changes throughout the quarter. Rather, the proposed rule will account for 

enrollee income changes - and the corresponding repayment amount that would be owed 

by the individual for their advanced premium tax credits if they were enrolled in the 

Marketplace - in the prospective payment formula. It protects states against unpredictable 

financial risk which would serve as a significant barrier to states taking up BHP. We 

strongly support this decision, and we would appreciate clarifying language that confirms 

that states will not be required to make retrospective adjustments to their quarterly 

payments to account for BHP enrollees' income changes. 

We are concerned that the proposed rules do not adequately promote the financial 

viability of Basic Health programs in several ways. The proposed rules ( 1) miss the plain 

meaning of the statute that BHP payments to states include 100 percent of the value of 

foregone exchange cost-sharing reductions; and (2) do not provide sufficient guidance on 

permissible ways for states to finance the administrative costs of a BHP, given that trust 

fund dollars may not be used for these expenses. These issues are discussed further in our 

recommendations below. 

Recommendations 

We urge you to amend the rules in the following ways. 

Develop specific transparency and public input requirements for states submitting a 

BHP blueprint (§600.115(c) Development and Submission of BHP Blueprint). 

We suggest that you expand the public notice opportunity suggested at 42 CFR § 

600.115(c) to include more detailed steps for public notice and comment as the Basic 

Health Program blueprint is developed. Given that BHP is a new program that will cover 

large numbers of low- income adults, ensuring that there is adequate time for public 

notice and comment is of particular importance. 

We suggest that the BHP blueprint follow the simple but effective steps that are now a 

routine part of the application requirements for Medicaid § 1115 waivers and extensions 

of existing Medicaid § 1115 waivers. These steps would allow the public to comment as 

the state develops a BHP blueprint, and as HHS is considering approval of the blueprint 

and ensure that the public has an opportunity to discuss and understand key elements of 

the BHP as states take steps toward building the program. The Medicaid rules also 

include specific timeframes help to ensure that there is time for meaningful public input. 

Key elements of the Medicaid §1115 Waiver Approval that we suggest the BHP blueprint 

follow are provided below. (The complete rules are available at 42 CFR §431 or at 

http://kaiserfamilyfoundation.files. wordpress.com/20 13/0 I/8292.pdt) 

Transparency and timeframes for input during development of the BHP blueprint: 

• 30-day notice and public comment period at the state level. 

CMS-2380-P 3 
• 

• 

• 

• 

The state's draft BHP blueprint must contain a sufficient level of detail to ensure 

meaningful input from the public. 

The state must keep a current webpage to share the draft BHP blueprint and 

related materials, and allow interested parties to sign up for an email notification 

to be kept in the loop on the application. 

The state must hold at least 2 public hearings on separate dates and locations that 

offer the public a chance to learn about the draft BHP blueprint and comment on 

it. 

The state's proposed BHP blueprint for HHS must include similar specifics to 

those provided in the initial waiver proposal, document the public process 

conducted by the state and include a report on how the state considered issues 

raised by the public. 

Additional transparency and specific timeframes for input as the state shares its proposed 

BHP blueprint with HHS: 

• Within 15 days of state's submission of proposed BHP blueprint to HHS, HHS 

must send the state a notice of receipt, which initiates a 30-day comment period. 

• HHS will publish the notice of receipt, the proposed BHP blueprint and other 

relevant materials on its website along with an email address through which the 

public can send comments that will be made publicly available. 

• To ensure the public has adequate time to provide input in this stage, no federal 

decision on a blueprint would be made until 45 days after the notice of receipt. 

There are a number of other elements in the proposed BHP regulation related to 

transparency that we agree with and urge you to keep in the final rule: 

• 42 CFR § 600.115(c)(l)- The state must also seek public comment on significant 

revisions that alter the core elements of the blueprint required under 42 CFR § 

600.145(e). 

• 42 CFR § 600.115(c)(2)- Federally-recognized tribes have to be included in 

process, and by creating public comment and notice periods, others will also have 

a chance to participate in the process. 

• 42 CFR § 600.11 0( c) -Requirement that HHS make BHP blueprints available 

online. 

• 42 CFR § 600.41 0( d)- Tracking and monitoring of grievance and appeals. 

Define the type of "significant change(s)" that would require a state to revise its BHP 

blueprint to capture a broad range of changes (§600.125(a)). 

What might be considered a small change in some programs could be much more significant 

in BHP, since, without BHP, consumers would be able to access coverage through the 

Exchange. Anything that could potentially alter the calculus of whether consumers would be 

better off in BHP versus in the Exchange should be subject to public input. 1 

1 For guidance on how to define the type of program changes that would trigger resubmission of a 

blueprint, CMS could look to the types of changes that would trigger a State Plan Amendment in 

Medicaid. Medicaid law currently requires State Plan Amendments for any "material changes in 

State law, organization, or policy, or in the State's operation of the Medicaid program." (42 

C.F.R. § 430.12(c)(l)(ii)). 

CMS-2380-P 4 
Specifically, we encourage you to define "significant program change" in such a way that 

would ensure public input before a state makes a change in its BHP program that would 

affect: 

• 

• 

• 

• 

• 

premiums and out-of-pocket costs; 

covered benefits; 

choice of plans or providers; 

the appeals, enrollment or renewal process; and 

the contracting process . 

Give states the option to provide Basic Health to low-income adults when an offer of 

employer-sponsored insurance is una/fordable and give states flexibility in how they 

fund coverage of this group (600.305(a)(3)(ii)). 

Now known as "the family glitch," a drafting error in the Affordable Care Act leaves 

many children and spouses, whose coverage through a worker's employer is 

unaffordable, without access to premium tax credits in an exchange. While we know you 

cannot fix this drafting error through BHP regulations, we suggest that you give states 

flexibility in how they fund coverage of this group in the Basic Health Program. 

Fortunately, states can cover children caught in the family glitch through CHIP. We 

suggest that states have the option to cover spouses caught in the family glitch through 

BHP, and that they be given the greatest flexibility allowable in how they choose to 

finance the coverage. 

As currently drafted, the proposed rules would require low-income spouses with 

unaffordable employer-sponsored coverage to be eligible for BHP but does not provide 

federal Basic Health Program dollars to finance their coverage. The specific provisions 

that create this circumstance are as follows. 

• The proposed rules, 600.305(a)(3)(ii), require a BHP to cover low-income individuals 

when an offer of employer coverage is unaffordable (as defined by (IRC 5000A 

(e)(l)(A)). Our understanding is that that requirement would apply to individuals in 

the family glitch, namely those spouses whose coverage through a worker's employer 

is unaffordable while self-only coverage for the worker is affordable. 

• Under the proposed rules, 600.605, BHP payments to states include the advanced 

premium tax credits that the enrollees would be eligible for if they were enrolled in an 

exchange plan. However, the state payments will not include the value of tax credits 

for spouses in the family glitch. This is because under the IRS rules that create the 

family glitch, workers' spouses whose coverage is unaffordable while self-only 

worker coverage is affordable, are not eligible for premium tax credits in the 

marketplace (26 CFR 1.36B-2(c)(3)(v)). 

Therefore, we recommend revising the rules to give states the option - but not require 

them- to cover spouses in the family glitch, since the payment methodology does not 

include funding for their coverage. We also suggest you explicitly give states flexibility 

to finance coverage for these individuals, including allowing them to use BHP trust fund 

carry-over dollars for this purpose. 

Allow states to provide 12-month continuous eligibility (§600.340). 

CMS-2380-P 5 
The proposed rules require BHP enrollees to report changes in circumstances, at least to 

the extent that they would be required to report such changes if enrolled in coverage 

through the Exchange, and requires the state to re-determine their eligibility at that time. 

But in~ome of the low-income individuals served by BHP is uniquely variable. They tend 

to recetve an hourly wage rather than a salary. This makes their income immediately 

impacted by seasonal, market or other workplace changes. Further, wage workers are 

more likely to experience periodic layoffs and re-hire. Indeed, we know that half of 

people below 200% FPL are predicted to experience a shift in eligibility from Medicaid 

to BHP or Marketplace coverage, or the reverse.2 Under this policy, we can expect a 

significant portion of BHP enrollees to experience reportable income changes that would 

trigger eligibility redetermination and necessitate their transfer to a new health coverage 

program. 

Twelve-month eligibility would help ensure the levels of coverage stability common 

among higher income groups and reduce the administrative burdens for public agencies 

and insurers of serving this population. It would also be consistent with existing state 

options to institute 12-month continuous eligibility in Medicaid and CHIP. For families 

with parents on BHP and children in CHIP, this would allow the whole family to have the 

same eligibility terms. 

For these reasons we urge HHS to give states the option to institute 12-month continuous 

eligibility in BHP. 

Explicitly allow states flexibility to include additional benefits at state option 

(§600.405). 

In the proposed rules, the Basic Health Program is required to include, at a minimum, the 

essential health benefits and to use as a reference plan one of the commercial insurance 

benchmark plan options (proposed rules, 42 CFR 600.405). In addition, the preamble of 

the rules suggests that a state can choose to add additional benefits to its standard health 

plan, but this language is not included in the actual regulation text. The rules preamble 

says that adopting the determination of the exchange about which mandated benefits are 

inside the reference plan premium structure, is "not the same as a state choosing to add 

additional benefits only to its standard health plan(s)," and "Payment for these benefits 

would come from either state funds or trust fund surplus" (preamble, p. 59129). 

However, these elements of the preamble are not reflected in the proposed regulation 

text. 

We suggest that you add explicit language to the regulation text that allows states to add 

additional benefits at state option beyond the commercial insurance benchmark plan. 

While some states may want to use the commercial market EHB benchmark plan already 

selected in their state, other states may choose to include additional benefits beyond the 

reference plan. The state's choice of benefit design may depend on a number of factors 

2 Sommers, Benjamin, and Sara Rosenbaum. "Issues In Health Reform: How Changes In 

Eligibility May Move Millions Back And Forth Between Medicaid And Insurance Exchanges." 

Health Affairs 30.2 (2011): 228-236. http://content.healthaffairs.org/content/30/2/228.full.html 

CMS-2380-P 6 
including how the state assesses the population's needs, how they intend to administer the 

program and how they plan to organize service delivery. As you know, some states may 

run the BHP from their state marketplace, and some may do it from the Medicaid or 

Human Service agency. Some states would choose to build off of benefits and delivery 

systems of the commercial market. Others would fmd it most effective to build on the 

Medicaid delivery system and in doing so would need flexibility to add benefits. 

We suggest that after 600.405(b) you add "(c)" to specify additional benefits that 

standard health plans must include, as follows: 

"(c) Additional benefits at state option. The state may specify additional benefits that 

standard health plans must include." 

Require that a state adopt Medicaid or Exchange standards for network adequacy and 

essential community providers (§600.41 0( d)). 

Network adequacy has been identified as a critical issue in the new health insurance 

marketplaces, and it has long been a concern in Medicaid managed care plans. 3 If 

networks do not have sufficient available providers, enrollees' geographic access, ability 

to see appropriate providers, and their wait time for appointments are compromised. 

DHHS, recognizing the seriousness of this issue in the federal marketplace, and to 

implement the federal regulation requiring sufficiency in number and type of providers, 

including "essential community providers," issued guidance that requires QHPs to 

meeting minimum network adequacy standards.4 In addition, detailed network adequacy 

standards apply to Medicaid managed care plans, intended to assure access to care for 

vulnerable individuals.5 

BHP enrollees' access to health care services is only minimally discussed in the proposed 

rules. We appreciate that the proposed rule §600.415(b)(l) will require states to include 

network adequacy standards in their contracts with Standard Health Plans, and urge CMS 

to include additional specifics. Proposed §600.410(d) requires states to negotiate plan 

contracts based on a number of factors. The primary ones are premiums, benefits, costs 

and "innovative features." Network adequacy considerations are relegated to an "other 

considerations" category in this list of factors; one of these considerations is "local 

availability of, and access, to health care providers." 

BHP enrollees, who are the lower-income group of the exchange population, should not 

have less protection than QHP enrollees. They will have more limited plan choice than 

3 See, e.g., National Committee for Quality Assurance (NCQA), "Network Adequacy & Exchanges: How 

delivery system reform and technology may change how we evaluate health plan provider networks" 

(20 13 ), http://www .ncqa.org/Portals/0/Pub lic%20Po !icy /Exchanges&N etworkAdequacy 2.11.13. pdf. 4 -

45 C.F.R. §§ 156.230 (network adequacy), 156.235 (ECPs); see also Center for Consumer 

Information and Insurance Oversight, Centers for Medicare and Medicaid Services, Affordable 

Exchanges Guidance 6-10 (2013), available at 

http://www.cms.gov/CCIIO/Resources/Regulations-andGuidance/Downloads/20 14 letter to issuers 040520 13.pdf, . 5 42 C.F.R. §§ 438-206-438.208. 

CMS-2380-P 7 
QHP enrollees, and should have network adequacy protections at least as strong. States 

should also be allowed to align BHP network adequacy standards with Medicaid 

standards. This will be an important option for states doing joint procurement of 

Medicaid and BHP. We recommend that §600.410(d) be revised to require that states 

align BHP network adequacy standards with either their QHP standards or their Medicaid 

managed care standards. 

Provide flexibility in competitive contracting (§600.410). 

The competitive bidding requirements in rule §600.41 0 are too strict relative to the way 

that Primary Care Case Management (PCCM) states contract with individual practices. 

Although being a PCCM provider may be demanding, these practices are not submitting 

sealed bids and not engaging in price competition. But in having to meet strict PatientCentered Medical Home certification requirements, they are effectively competing on the 

basis of quality. This type of competitive bidding should be sufficient under the 

regulations. In any event, the competitive bidding requirement should allow a non-risk 

ASO assisting the PCCM practices and contracted with through a competitive bidding 

process to meet this requirement, even if such contract was previously in place under 

Medicaid (i.e., grandfathering of ASO entities already under contract with the state, if 

those related contracts were competitively bid). 

Further, we suggest broadly defming what constitutes competitive contracting to 

encourage development of innovative models of care delivery. Specifically, initially 

permitting less than two responsible bidders serving a local health care market could be 

helpful to states pursuing far-reaching delivery system reform. Under community-based 

coordinated care-global budget models and other kinds of ambitious efforts, it may take 

time for many competitors to emerge. CMS could challenge such states to adopt 

strategies to prevent the risks to consumers typical of a marketplace that lacks vigorous 

competition and to take steps to foster competition in future Basic Health contracting. 

Explicitly provide flexibility for states to have either a single benefit package or a single 

offeror of coverage (§600.420). 

We are concerned that the proposed rule §600.420 is ambiguous. The rule may be 

interpreted to require BHP states to offer a choice of "standard health plans" without 

clearly stating that this may be a choice between either benefit packages or between plans 

offered by different carriers. The proposed rule could be interpreted to require only the 

former, but we believe the statute is inclusive and permits the latter. In the interest of 

state flexibility to create choice that is most beneficial to BHP consumers, both options 

should be available to states. 

Limiting state options regarding choice could be detrimental to consumers for a number 

of reasons. Requiring multiple benefit packages could add significantly to administrative 

costs. Federal BHP funds are not available for administrative costs, so these costs are 

likely to be passed on to these low-income, price-sensitive consumers. In addition, if 

states are required to offer multiple benefit packages, it would defeat a state's ability to 

align with Medicaid and would create needless complexity and confusion- for example 

CMS-2380-P 8 
by r~quiring a lesser-benefit package to be offered when a very comprehensive one is 

provided by a state for a zero premium. 

States should also be able to offer a choice of benefit packages when there are not two 

managed care organizations available. This is the only way to ensure that a state can 

participate in BHP if it has low managed care organization penetration and only one plan 

is available to contract, or if there are two plans and one drops out. 

Affordable Care Act, Section 1331 may be interpreted to allow state flexibility in offering 

consumer choice of either benefit package or offeror. Section 1331 ( c )(3){A) provides: 

(3) ENHANCED AVAILABILITY.-

(A) MULTIPLE PLANS.-A State shall, to the maximum extent feasible, seek to 

make multiple standard health plans available to eligible individuals within a 

State to ensure individuals have a choice of such plans. 

The language of the statute does not specifY that the intended meaning of "standard 

plans" in this section is limited to multiple benefit packages. It could mean either 

packages or offerors of plans. And neither is it an absolute requirement as the "maximum 

extent feasible" clause and the word "seek" make clear. 

The definition of "Standard Health Plan" in § 1331 (b )

6 is not a model of clarity. The first 

clause of the definition is "a health benefits plan that the State contracts with under this 

section," suggesting that "plan" refers to the contracting entity, eg, the offeror. The 

remainder of the definition has clauses that could be used to support either interpretation. 

Similarly, "Qualified Health Plan" is sometimes referred to as a contracting entity, as in 

§1311(h)(l) ("a qualified health plan may contract with (A) a hospital. .. ; or (B) a health 

care provider ... "), but at other times as a benefit package. This is significant since 

Section § 1331 draws many parallels between SHPs and QHPs. 

In addition, this section of the Affordable Care Act was closely modeled on an existing 

state-based program, the Washington Basic Health program. Section 1331 was offered as 

an amendment by Washington's Senator Maria Cantwell. In Washington's BHP, a single 

benefit package is offered through multiple issuers. 

For these reasons, it is reasonable to interpret the "choice" requirement of§ 1331 as 

meaning a choice of either benefit packages or of plans. 

Further, §1331(c)(3)(A) recognizes that a state may have challenges achieving consumer 

choice, and therefore includes the "maximum extent feasible" qualifier. The purpose is to 

offer consumers as much choice as possible. 

6 (b) STANDARD HEALTH PLAN.-In this section, the term "standard heath plan" means a health benefits 

plan that the State contracts with under this section-

(1) under which the only individuals eligible to enroll are eligible individuals; 

(2) that provides at least the essential health benefits described in section 1302(b ); and 

(3) in the case of a plan that provides health insurance coverage offered by a health insurance issuer, 

that has a medical loss ratio of at least 85 percent. 

CMS-2380-P 9 
In some states or regions of states, a state may only be able to contract with one offeror, 

but could offer a choice of benefit packages. In others, the state may contract with 

multiple offerors and determine that the trust funds could be better spent on a single 

benefit package. For example, a state may be able to contract with multiple offerors to 

offer a zero-premium, comprehensive benefit package with minimal or no cost-sharing 

that is aligned with the Medicaid package. It would be unfeasible in this situation to come 

up with another, lesser benefit package with higher cost-sharing, just to meet the choice 

requirement. Moreover, this could disadvantage all BHP enrollees by adding 

administrative costs. Such a state should have the option of offering a choice of 

companies/entities rather than a choice of packages. 

However, another state may best serve consumers by creating an efficient BHP that 

maximizes continuity of care. In the case of PCCM in conjunction with an ASO 

specifically, the state does not contract with risk-bearing entities so there are not multiple 

offerors of plans. Rather, it contracts on a non-risk basis with individual practices 

throughout the state to coordinate care for enrollees, while administering the program 

through a single statewide system that includes a contract with a single ASO to conduct 

some administrative functions. Requiring multiple plans in this situation would be 

confusing and inefficient. As such, it is not feasible for a state to offer multiple "plans" 

under its PCCM program extended to BHP enrollees. 

Some states are fixing their fragmented health care systems by extensively coordinating 

care through local community-based coordinating organizations operating within global 

Medicaid budgets. Not all enrollees in such states have multiple coordinated care plan 

options, because in some cases the local health system and participant pool are not large 

enough to support multiple plans. Allowing them to continue these delivery system 

innovations within BHP would be appropriate when it is beneficial to low-income 

enrollees, especially considering the "maximum extent feasible" clause, and in light of 

the Affordable Care Act's interest in pursuing these kinds of approaches. Perhaps high 

standards for network adequacy and other consumer safeguards can be used to meet the 

consumer interests that would otherwise be met through multiple plan options. 

Circumstances will vary from state to state as to what type of "choice" is most 

meaningful to consumers. The statutory language contains the flexibility to allow states 

to make this determination in light of what is most desirable given the local health care 

and financing landscape. 

Proposed rule §600.420 requires states to "include in its BHP Blueprint an assurance that 

at least two standard health plans are offered under BHP, and if applicable, a description 

of how it will further ensure enrollee choice of standard health plans." The preamble 

language in the proposed rule at page 59131 indicates, on the one hand, the agency's 

intent to ensure choice of benefit packages, and on the other hand, its intent to protect 

consumers "in the event that a single standard health plan becomes unavailable," because 

"BHP, unlike Medicaid, does not have a fee-for-service program available" in that event. 

This clearly refers to choice-of-plan as a choice of offerors. 

CMS-2380-P 10 
While we do not support an inflexible requirement of benefit package choice or offeror 

choice, we believe CMS has the authority and responsibility to review Blueprints to 

ensure that they comply with the statutory intent of offering meaningful choice to 

consumers to the maximum extent feasible. This authority should serve as a check on a 

state that might be overly restrictive in its offerings to consumers. 

In light of the statutory language and goal of BHP state flexibility, the proposed rule 

should be clarified as follows: 

(a) Choice of standard health plans. The State must include in its BHP Blueprint an 

assurance that at least two standard health plans, or at least one standard health 

plan offered by two or more offerors, are offered under BHP, and if applicable, a 

description of how it will further ensure enrollee choice of standard health plans. 

When certifying a Blueprint under §600.120, the Secretary shall waive this 

requirement based upon a finding that it is not feasible for a state to offer a choice 

of plans or offerors. Such a finding shall be reviewed annually. 

Clarify that cost-sharing subsidies are to be administered in a manner that is invisible 

to the consumer. (§600.520(c)(3)). 

We appreciate your responsiveness to consumer concerns regarding cost-sharing 

administration, by requiring in §600.520(c)(3) that states ensure that consumers are not 

held responsible for monitoring cost-sharing reductions. We would appreciate further 

clarification that consumers should not be required to pre-pay the full amount of costsharing, including the subsidy amount, and then seek reimbursement of the subsidy. 

Since we know all BHP enrollees will qualify for these reductions, there should be no 

reason not to administer the cost-sharing in a seamless manner. 

Ensure that states do not terminate coverage of BHP enrollees who fail to pay a de 

minimis part of their premium payment (§600.525). 

We support the proposal to align disenrollment procedures and consequences for 

nonpayment of premiums with the state's disenrollment policies for either the Exchange 

or Medicaid. However, we urge HHS to ensure that states do not terminate coverage of 

enrollees who fail to pay only a de minimis part oftheir insurance premiums. States doing 

so would be overly punitive in the case of an enrollee who has paid most of the premium 

due. 

Include in the federal BHP payment 100 percent of the cost-sharing reduction for 

which the eligible individual would have qualified in the Marketplace (§600.605). 

The proposed rule fails to recognize a fundamental distinction between the premium tax 

credits and the cost-sharing reduction amounts provided to states, resulting in an 

erroneous conclusion that states may only receive 95% of cost-sharing reductions. 

The intent of§ 1331 ( d)(3 )(i) of the Affordable Care Act is to provide states with 95% of 

the tax credits that would otherwise be provided to enrollees, with the expectation that 

states can efficiently manage these funds, negotiating standard plan premium rates that 

CMS-2380-P 11 
save at least 5% over commercial market plans. Once purchased, however, these standard 

plans must charge enrollees cost-sharing no higher than the Exchange would (Proposed 

rule §600.520(c)). That is, the state must provide for cost-sharing reductions to the 

enrollee (sometimes referred to as "actuarial boost") at least equivalent to what they 

would receive in an Exchange silver plan. States have no discretion (nor should they) to 

negotiate or bargain with enrollees to lower these subsidies; they must provide 100% of 

the reductions to enrollees. 

Under the proposed rule, however, states receive only 95% of the cost-sharing funds from 

the federal government and are thus left financing the remaining 5% from the BHP trust 

fund7

• But the only other money in the BHP trust fund is from the 95% premium tax 

credits. The inescapable conclusion is that states must use some of this tax credit money 

to make up for insufficient cost-sharing dollars. So the tax credits available to a state to 

contract for standard health plan coverage would be less than 95% of the tax credits, 

possibly making a Basic Health program prohibitive. 

To describe a hypothetical example, the silver benchmark QHP premium in a state's 

exchange is $500. An enrollee's subsidy is $400 and their average cost-sharing reduction 

is $80. Under the proposed rule, a BHP state would receive a premium tax credit of $380 

and a cost-sharing reduction payment of $76. The state must ensure that the person 

receives a $80 cost-sharing reduction, so $4 is allocated from the $380 tax credit for this 

purpose. $376 remains to subsidize a silver-equivalent plan, which is 94% of the person's 

premium tax credit amount. 

Based on the above analysis, it seems clear that in order to avoid effectively reducing 

premium tax credits below 95% -- and potentially passing these reductions on to very 

low-wage consumers, states must be provided 100 percent of the cost-sharing reductions 

that BHP enrollees would have been eligible for in the Exchange. 

In order to avoid the unfortunate result of "raiding" tax credit funds to provide costsharing subsidies, the statute must be interpreted to provide states with 1 00% financing of 

cost-sharing subsidies. This interpretation is consistent with the literal reading of the 

statute. Section 1331(d)(3)(i) specifies that the Secretary should transfer to the state an 

amount 

equal to 95 percent of the premium tax credits under section 36B ofthe Internal 

Revenue Code of 1986, and the cost-sharing reductions under section 1402, that 

would have been provided for the fiscal year to eligible individuals [ ... ]. 

A plain-reading of this statutory language indicates that Congress intended to offer 95% 

financing for the premium tax credits and 100% financing for the cost-sharing reductions. 

Congress placed the comma after the word "1986" to indicate that the 95% refers only to 

the tax premium credits and does not refer to the cost-sharing reductions. If Congress had 

intended the 95% to apply to the cost-sharing reductions, there would be no need for a 

comma and the commencement of a separate clause concerning the cost-sharing 

7 We estimate this amount to be in the range of$3-$6 per member per month. 

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reductions. Accordingly, the proposed rule should be revised to ensure that a state that 

opts for a BHP receives adequate financing. 

Provide states with explicit options for paying the administrative costs of BHP, 

including using some of the user-fee assessments built into Exchange carrier rates 

(§600. 705(d)). 

We understand that BHP funds may not be used for administrative costs, but we would 

appreciate regulations and/or guidance that provide states with options for paying the 

administrative costs ofBHP. We understand from earlier communications that CMS 

intends to allow states to impose user fees and assessments, including those that are built 

into carrier rates in the Exchange, to cover administrative costs picked up by the BHP 

instead of the Exchange. These are logical funding sources for BHP administrative costs, 

since a BHP enrollee population will be carved out of the Exchange. Helping states 

identify funds for the administrative costs ofBHP is essential to BHP's success, since the 

administrative costs could otherwise create a barrier to states taking up BHP. 

We reserve judgment on the decision to remove BHP from the regular Affordable Care 

Act risk adjustment approach until we have the opportunity to evaluate how risk 

adjustment applies to BHP payments to states, as will be proposed in the forthcoming 

Payment Notice. 

Thank you for the opportunity to provide comments on this proposed rule, and for 

keeping consumers a priority as you continue the important work of implementing the 

Affordable Care Act. If you have any questions regarding our comments, please contact 

Mid-Valley Health Care Advocates 

P.O. Box242 

Corvallis, OR 97339 

Sincerely, 

Ronald J. Green 

Chair, Mid-Valley Health Care Adovcates 

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