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# Mid-Valley Health Care Advocates Corvallis, Oregon

November 19,2013

Centers for Medicare & Medicaid Services Department ofHealth and Human Services File Code: CMS-2380-P Baltimore, MD 21244-8016

RE: Comments on September 25,2013 Notice ofProposed Rulemaking: Basic Health Program: StateAdministration of BasicHealth Programs; Eligibility andEnrollment in StandardHealth Plans; EssentialHealth Benefits in StandardHealth Plans; Performance Standards for BasicHealth Programs; Premium andCostSharing for BasicHealth Programs; Federal FundingProcess; Trust FundandFinancialIntegrity Dear Sir/Madam:
Mid-Valley Health Care Advocates respectfully submitthe following comments in response to the proposed regulations for implementing the Basic Health Program, published inthe Federal Register on September 25,2013. The Basic Health Program (BHP) has the potential to improve coverage for poorand low-income Oregonians andhelp ensure the success ofthe 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 strappedhouseholds, improve enrollment rates, reduce barriers to needed care and support continuity ofcare. We support many ofthe provisions inthe proposed regulations and offer suggestions for changes that would help this program meet its potential. Specifically, our recommendations are aimed to ensure consumerprotection and input, promote adequate and stable state financing, facilitate continuity ofcare and encourage delivery system innovations that improve care quality. Please note, our comments are listed in order ofthe sections inthe proposed rules; the order ofour comments does not reflect the priority we place on them. 

### Commendations:
We support the following elements ofthe proposed rules and ask that they be included in the final rules.
AllowBHPto adoptMedicaid's continuous open enroUment policy (§600.320(d)).The BHP population will likely experience frequent income fluctuations and be vulnerable to times offinancial hardship that may lead them to lose coverage due to nonpayment ofpremiums. Given this context, continuous open enrollment will no doubt reduce churn and minimize the length ofgaps 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. 

### RequireBasicHealth Programs to use theMedicaidappealsprocess (§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 ofconsumerprotections in Medicaid that were specifically designed for a low-income population, like the population eligible for BHP. 

### Provide flexibility forstates in setting up theirBHP programs in 2015 (§600.405).
We appreciate that the proposedrule 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 ifnot all PCCM states (see more on that below). 

### Allowstates to contract with non-licensedHMOs thatparticipate inMedicaid or CHIP (§600.415). Contracting with Medicaidplans 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. Itwill also promote continuity ofcare as beneficiaries' income fluctuates between Medicaid and BHPby allowing people to maintain the same providers and benefits as they move back and forth. 

### EnsureBHPenrollees receive aplan with an actuarialvalue (A V) 

### atleastas high as they wouldget in theMarketplace, 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 offthan they would have been had they enrolled in the Exchange. 

### Provide states with reasonable financial certaintythrough quarterlypayments (§600.615) andretrospective adjustments only in the cases of a mathematicalerror in applying thepayment formula orwhen aggregate enrollment for thequarterdiffers from thepredictedamount. (§600.610) CMS-2380-P 2Ourunderstanding ofthe proposed rule is that CMS will 

### notrequire 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 amountthatwouldbe owed by the individual for their advanced premium

### tax credits ifthey were enrolled inthe Marketplace

- inthe prospective payment formula. Itprotects states against unpredictable financial risk which would serve as a significant barrier to states taking up BHP. We strongly supportthis decision, and we would appreciate clarifying language that confirms that states will notbe required to make retrospective adjustments to their quarterly payments to account for BHP enrollees' income changes.
We are concerned thatthe proposed rules do not adequately promotethe financial viability ofBasic Healthprograms in several ways. The proposed rules (1) miss the plain meaning ofthe statute that BHP paymentsto states include 100 percent ofthe value of foregone exchange cost-sharing reductions; and (2) do notprovide sufficient guidance on permissible ways for states to finance the administrative costs ofa BHP, giventhat trust fund dollars may not be used for these expenses. These issues are discussed further in our recommendations below.



### Recommendations
We urge youto amend the rules inthe following ways. 

### Develop specific transparency andpublic inputrequirements for states submittinga BHPblueprint (§600.115(c) DevelopmentandSubmission of BHPBlueprint).
We suggest that you expandthe public notice opportunity suggested at 42 CFR § 600.115(c) to include more detailed steps for public notice and comment as the Basic Health Programblueprint is developed. Given that BHP is a newprogramthat will cover large numbers oflow- income adults, ensuring that there is adequate time for public notice and comment is ofparticular importance.
We suggest that the BHP blueprint follow the simple but effective steps that are now a routine part ofthe application requirements for Medicaid §1115 waivers and extensions ofexisting Medicaid §1115 waivers. These steps would allow the public to comment as the state develops a BHP blueprint, and as HHS is considering approval ofthe 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 thatthere is time for meaningful public input. Key elements ofthe 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/2013/0I/8292.pdt) Transparency and timeframes for input during development ofthe BHP blueprint: • 30-day notice and public commentperiod atthe state level. CMS-2380-P 3

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• The state's draft BHP blueprint must contain a sufficient level ofdetail to ensure meaningful input from the public. The state mustkeep a current webpage to share the draft BHP blueprint and related materials, and allow interestedparties to sign up for an email notification to 

### be kept in the loop on the application. The state musthold 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'sproposed BHP blueprint for HHS must include similar specifics to those provided inthe initial waiverproposal, document the public process conducted by the state and include a report onhowthe 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 ofstate's submission ofproposed BHP blueprintto HHS, HHS must send the state a notice ofreceipt, which initiates a 30-day commentperiod. • HHS will publishthe notice ofreceipt, 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 inthis stage, no federal decision on a blueprint would be made until 45 days afterthe notice ofreceipt.
There are a number ofother elements inthe 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 seekpublic comment on significant revisions that alter the core elements ofthe blueprintrequired under42 CFR 

### § 600.145(e). • 42 CFR 

### § 600.115(c)(2)- Federally-recognized tribes have to be included in process, andby creatingpublic comment and notice periods, others will also have a chance to participate in the process. • 42 CFR § 600.110( c) -Requirementthat HHS make BHP blueprints available online. • 42 CFR § 600.410(d)- Tracking and monitoring ofgrievance and appeals. 

### Definethe type of"significantchange(s)"thatwouldrequire a state to revise its BHP blueprintto capture a broadrange 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 ofwhether consumers would be better offin BHP versus in the Exchange should be subject to public input. 1

1For guidance on how to define the type ofprogram changes that would trigger resubmission ofa blueprint, CMS could look to the types ofchanges 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 ofthe Medicaid program." (42 C.F.R. § 430.12(c)(l)(ii)). CMS-2380-P 4Specifically, 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: 

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### • • 

### • premiums and out-of-pocket costs; covered benefits; choice ofplans or providers; the appeals, enrollment orrenewal process; and the contracting process. Give states the option toprovideBasicHealth to low-income adults when an offerof employer-sponsored insurance is una/fordableandgivestates flexibility in howthey fund coverage of thisgroup (600.305(a)(3)(ii)).
Nowknown as "the family glitch," a drafting error inthe Affordable Care Act leaves many children and spouses, whose coverage through a worker's employer is unaffordable, without access to premiumtax credits in an exchange. While we knowyou cannot fix this drafting errorthrough BHP regulations, we suggest that you give states flexibility in howthey fund coverage ofthis 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 inthe family glitch through BHP, and that they be given the greatest flexibility allowable in howthey 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 ofemployer 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 proposedrules, 600.605, BHP payments to states include the advanced premium tax credits that the enrollees would be eligible for ifthey were enrolled in an exchange plan. However, the state payments will not include the value oftax credits for spouses inthe 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 inthe marketplace (26 CFR 1.36B-2(c)(3)(v)). Therefore, we recommend revising the rules to give states the option

- butnotrequire them- to cover spouses inthe 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 themto use BHP trust fund carry-over dollars for this purpose. Allowstates toprovide 12-month continuous eligibility (§600.340).

CMS-2380-P 5The proposed rules require BHP enrollees to report changes in circumstances, at least to the extent that they would be required to report such changes ifenrolled in coverage through the Exchange, and requires the state to re-determine their eligibility atthat time.
But

### in~ome ofthe 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 halfof people below 200% FPL are predicted to experience a shift in eligibility from Medicaid to BHP orMarketplace coverage, orthe reverse. 2 Under this policy, we can expect a significantportion ofBHP enrollees to experience reportable income changes that would trigger eligibility redetermination and necessitate their transfer to a newhealth coverage program. Twelve-month eligibility would help ensure the levels ofcoverage stability common among higher income groups and reduce the administrative burdens for public agencies and insurers ofserving this population. Itwould also be consistent with existing state options to institute 12-month continuous eligibility in Medicaid and CHIP. For families withparents onBHP 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 additionalbenefits atstate 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 ofthe 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, butthis language is not included in the actual regulation text. The rules preamble says that adopting the determination ofthe exchange about which mandated benefits are inside the reference plan premium structure, is "notthe same as a state choosing to add additional benefits only to its standard health plan(s)," and "Paymentfor these benefits would come from either state funds ortrust fund surplus" (preamble, p. 59129). However, these elements ofthe preamble are notreflected inthe 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 benchmarkplan. While some states may want to use the commercial market EHB benchmarkplan already selected intheir state, other states may choose to include additional benefits beyond the reference plan. The state's choice ofbenefit design may depend on a number offactors

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 6including howthe state assesses the population's needs, howthey intend to administer the program and howthey planto organize service delivery. As youknow, 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 offofbenefits and delivery systems ofthe commercial market. Others would fmd itmost effective to build onthe 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 atstate option. The state may specify additional benefits that standard health plans must include."
Requirethata state adoptMedicaidorExchangestandards for networkadequacy and essentialcommunityproviders (§600.410( d)). Network adequacy has been identified as a critical issue inthe newhealth insurance marketplaces, and ithas 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 ofthis issue in the federal marketplace, and to implement the federal regulation requiring sufficiency innumber and type ofproviders, including "essential community providers," issued guidance thatrequires 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 inthe proposed rules. We appreciate thatthe proposedrule §600.415(b)(l) will require states to include network adequacy standards intheir 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 offactors. The primary ones are premiums, benefits, costs and "innovative features." Network adequacy considerations are relegated to an "other considerations" category in this list offactors; one ofthese considerations is "local availability of, and access, to health care providers."
BHP enrollees, who are the lower-income group ofthe 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" (2013), http://www.ncqa.org/Portals/0/Public%20Po!icy /Exchanges&NetworkAdequacy 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 athttp://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 7QHP 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 doingjointprocurement of Medicaid and BHP. We recommend that §600.410(d) berevised to require that states align BHP network adequacy standards with either their QHP standards ortheir Medicaid managed care standards. 

### Provide flexibility in competitive contracting (§600.410).
The competitive bidding requirements in rule §600.410 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 inprice competition. Butinhaving to meet strict PatientCentered Medical Home certificationrequirements, they are effectively competing onthe basis ofquality. This type ofcompetitive 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 ifsuch contract was previously inplace under Medicaid (i.e., grandfathering ofASO entities already under contract withthe state, if those related contracts were competitively bid). Further, we suggestbroadly defming what constitutes competitive contracting to encourage development ofinnovative models ofcare delivery. Specifically, initially permitting less than two responsible bidders serving a local health care market couldbe helpful to states pursuing far-reaching delivery system reform. Under community-based coordinated care-global budgetmodels and otherkinds ofambitious 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 ofa marketplace that lacks vigorous competition and to take steps to foster competition in future Basic Health contracting. 

### Explicitlyprovide flexibility for states to haveeithera single benefitpackage ora single offerorof coverage (§600.420).
We are concerned that the proposedrule §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 benefitpackages orbetweenplans offered by different carriers. The proposed rule couldbe interpreted to require only the former, but we believe the statute is inclusive and permits the latter. Inthe 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 ofreasons. Requiring multiple benefitpackages could add significantly to administrative costs. Federal BHP funds are not available for administrative costs, so these costs are likely to be passed onto these low-income, price-sensitive consumers. In addition, if states are required to offer multiple benefitpackages, it would defeat a state's ability to align with Medicaid and would create needless complexity and confusion- for example

CMS-2380-P 8by

### 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 ofbenefitpackages when there are not two managed care organizations available. This is the only way to ensure that a state can participate in BHP ifit has low managed care organizationpenetration and only one plan is available to contract, or ifthere are two plans and one drops out. Affordable Care Act, Section 1331 may be interpreted to allow state flexibility in offering consumer choice ofeitherbenefitpackage or offeror. Section 1331(c)(3){A) provides: (3) ENHANCED AVAILABILITY.- (A) MULTIPLE PLANS.-A State shall, to the maximum extent feasible, seekto make multiple standard health plans available to eligible individuals within a State to ensure individuals have a choice ofsuch plans.
The language ofthe statute does not specifY that the intended meaning of"standard plans" in this section is limited to multiple benefit packages. Itcould mean either packages or offerors ofplans. 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 ofclarity. The first clause ofthe definition is "ahealth benefits plan thatthe State contracts with under this section," suggesting that "plan" refers to the contracting entity, eg, the offeror. The remainder ofthe 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 ofthe Affordable Care Act was closely modeled on an existing state-based program, the WashingtonBasic Health program. Section 1331 was offered as an amendment by Washington's SenatorMaria Cantwell. In Washington's BHP, a single benefit package is offered through multiple issuers.
Forthese reasons, it is reasonable to interpret the "choice" requirement of§1331 as meaning a choice ofeither benefit packages or ofplans. 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, theterm "standard heath plan" means a healthbenefits planthatthe State contracts with underthis section- (1) underwhich the onlyindividuals eligible to enroll are eligible individuals; (2) thatprovides atleastthe essential health benefits described in section 1302(b); and (3) in the case ofa plan thatprovides health insurance coverage offered bya health insurance issuer, thathas a medical loss ratio ofatleast 85 percent. CMS-2380-P 9In some states or regions ofstates, a state may only be able to contract with one offeror, but could offer a choice ofbenefitpackages. 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 benefitpackage with minimal orno cost-sharing that is aligned with the Medicaid package. It would be unfeasible inthis situationto come up with another, lesser benefitpackage with higher cost-sharing,justto meet the choice requirement. Moreover, this could disadvantage all BHP enrollees by adding administrative costs. Such a state should have the option ofoffering a choice of companies/entities rather than a choice ofpackages. However, another state may best serve consumers by creating an efficient BHP that maximizes continuity ofcare. Inthe case ofPCCM in conjunction with anASO specifically, the state does not contract withrisk-bearing entities so there are not multiple offerors ofplans. Rather, it contracts on a non-risk basis with individual practices throughoutthe state to coordinate care for enrollees, while administering the program through a single statewide systemthat includes a contract with a single ASO to conduct some administrative functions. Requiring multiple plans inthis 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 participantpool 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 inpursuing these kinds ofapproaches. Perhaps high standards for network adequacy and other consumer safeguards can be used to meet the consumer interests that would otherwise be metthrough 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 ofwhat 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 ifapplicable, a description ofhow it will further ensure enrollee choice ofstandard health plans." The preamble language inthe proposed rule at page 59131 indicates, onthe one hand, the agency's intent to ensure choice ofbenefitpackages, and onthe otherhand, its intent to protect consumers "inthe 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 ofofferors.

CMS-2380-P 10While we do not support an inflexible requirement ofbenefitpackage choice or offeror choice, we believe CMS has the authority and responsibility to reviewBlueprints to ensure that they comply with the statutory intent ofoffering 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 ofthe statutory language and goal ofBHP state flexibility, the proposed rule should be clarified as follows: (a) Choice of standardhealthplans. The State must include inits BHP Blueprint an assurance that at leasttwo standard health plans, orat least one standard health plan offered by two ormore offerors, are offered under BHP, and ifapplicable, a description ofhow it will further ensure enrollee choice ofstandard 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 ofplans or offerors. Such a finding shall be reviewed annually. 

### Clarify thatcost-sharingsubsidies are to beadministeredin a mannerthat 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 notbe required to pre-pay the full amount ofcostsharing, including the subsidy amount, and then seekreimbursement ofthe subsidy. Since we know all BHP enrollees will qualify for these reductions, there should be no reason not to administerthe cost-sharing in a seamless manner. 

### Ensure thatstates do notterminate coverage of BHPenrollees who fail topaya de minimispartof theirpremiumpayment (§600.525).
We support the proposal to align disenrollment procedures and consequences for nonpayment ofpremiums with the state's disenrollment policies for eitherthe Exchange or Medicaid. However, we urge HHS to ensure that states do not terminate coverage of enrollees who fail to pay only a deminimispart oftheirinsurance premiums. States doing so would be overly punitive inthe case ofan enrollee who has paid most ofthe premium due. 

### Include in the federalBHP payment100percentof the cost-sharing reduction for which the eligible individualwouldhavequalifiedin theMarketplace (§600.605). The proposed rule fails to recognize a fundamental distinction between the premiumtax credits and the cost-sharing reduction amounts provided to states, resulting in an erroneous conclusion that states may only receive 95% ofcost-sharing reductions. The intent of§1331(d)(3)(i) ofthe 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 planpremium rates that CMS-2380-P 11save at least 5% over commercial market plans. Oncepurchased, 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 silverplan. States have no discretion (nor should they) to negotiate orbargain with enrollees to lower these subsidies; they must provide 100% of the reductions to enrollees. Underthe proposed rule, however, states receive only 95% ofthe cost-sharing funds from the federal government and are thus left financing the remaining 5% from the BHP trust fund7• Butthe only other money inthe BHP trust fund is from the 95% premiumtax credits. The inescapable conclusion is that states mustuse some ofthis 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% ofthe tax credits, possibly making a Basic Healthprogramprohibitive.
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 premiumtax 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% ofthe person's premiumtax 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 onto very low-wage consumers, states must be provided 100 percent ofthe cost-sharing reductions that BHP enrollees would have beeneligible 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 ofthe statute. Section 1331(d)(3)(i) specifies that the Secretary should transferto the state an amountequal to 95 percent ofthe premium tax credits under section 36B ofthe Internal Revenue Code of 1986, and the cost-sharing reductions under section 1402, that would have beenprovided for the fiscal year to eligible individuals [

...].
A plain-reading ofthis 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 onlyto the taxpremium credits and does notrefer to the cost-sharing reductions. IfCongress had intended the 95% to apply to the cost-sharing reductions, there would be no need for a comma and the commencement ofa separate clause concerning the cost-sharing

7 We estimate this amount to be in the range of$3-$6 per member per month. CMS-2380-P 12reductions. Accordingly, the proposedrule shouldbe revised to ensure that a state that opts for a BHP receives adequate financing. 

### Provide states with explicit options forpayingthe administrative costs of BHP, including usingsomeof the user-fee assessments built intoExchange 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 thatprovide 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 ofthe Exchange. These are logical funding sources for BHP administrative costs, since a BHP enrollee population will be carved out ofthe 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 reservejudgmentonthe decisionto remove BHP from the regular Affordable Care Act risk adjustment approach until we have the opportunity to evaluate howrisk adjustment applies to BHP payments to states, as will be proposed inthe forthcoming PaymentNotice.
Thank you for the opportunity to provide comments onthis proposed rule, and for keeping consumers a priority as you continue the important work ofimplementing the Affordable Care Act. Ifyouhave 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

CMS-2380-P 13